JD Vance on the weirdness of the current US - China relationship
2024-10-20 17:05:00 +07:00 by Mark Smith
The All-In podcast guys had a conference recently and tgey have started publishing interviews they did. One that dropped a few days ago was an interview with JD Vance, running for vice president. I thought the following question and Vance's answer was particularly interesting:
David Friedberg: The structural relationship that the United States has with China is a very codependent relationship. They buy our bonds, I guess they are selling them off now, we buy a lot of product from them, it allows us to go into a Walmart and get 40 dollar scooters for our kids, the technology industry is deeply dependant on a supply chain coming from China, there is a great commercial interdependency with China, they have historically been a very important partner to the United States and our economic prosperity, and I know about the hollowing out of the middle class because of moving everything offshore to China, but how do we rip that band aid off and not cause massive problems with inflation? How do we not drive the cost of everything up by tariffing things that are coming in from China? What is the way forward with China? Is it necessarily a deeply divided Cold War? Or is there a path that allows us to maintain a balanced trading relationship and a peaceful transition with China, as they continue to build up their capabilities economically and with energy? Which I think is one of the biggest drivers for their success.
JD Vance: [...] I don’t want to go to war with China, I think that it would be hugely destructive, but I do think we have to re-shore more american manufacturing. Be of the weird things about China, if you think about past eras of developing nations. Right so go back to when the UK was the most advanced economy in the world and America was a developing nation, well one of the things that happened was capital was flowing from the UK into the United States. From the developed into the developing nation.
What’s really weird about China is that it’s like americans borrow money from chinese peasants to then buy the things the chinese peasants are making for us. It’s not just the goods flow that are jacked up, it’s the capital flows that are jacked up. [...] You need to balance both the capital and the goods flows. I’m not saying we are going to have absolutely no trade with China, but right now the relationship is fundamentally that the chinese have figured out they can create a massively powerful producerer society while america becomes a weaker weaker consumerer society. That is the broken nature of the relationship, and I think rebalancing is the right way to think about it, but we have got to do it and I think we are way way behind the [TBD].
I had never heard the dynamic described like that before. You don’t have to be an economist to see that that is indeed an extremely perverted relationship. It’s crazy that the situation is like this.
What is going on with the world that there are these complete reality inversions happening everywhere? I notice it in my life constantly, but it appears to be happening at all levels of scale.
It’s a really good interview, worth listening to the whole thing. #