Here in Malaysia, I'm already seeing more Americans, Britons, Australians, and Europeans, including quite a few Irish, settling in for extended stays, whether through visa runs, digital nomad setups, or retirement schemes. If these tariffs continue, they’ll squeeze the cost of living even further for most ordinary people in those US-aligned countries.
most people in the west these days are victims of uber financialized capitalism without knowing that. When they travel to other parts of the world, they find out life doesn't have to be the treadmill as at home. It's a liberation not to be a debt peonage.
Democratic vs authoritarian isn't relevant. The US / western post 1970's, neo-liberal financialized rentier capitalism model is unsustainable. The system China operates on is very similar to the Hamiltonian productive industrial capitalism model that the US and much of Europe used to work on. That model is sustainable. https://en.wikipedia.org/wiki/American_School_(economics)
exactly. China practices a different capitalism than the US today. the China model is a market-based state and private mixed model (some call state capitalism). two books have explored this concept - Keyu Jin's the New China Playbook and Tobias Lanz' Beyond Capitalism and Socialism. I don't agree with everything argued in those books but they do provide a refreshing perspective.
This isnt a new idea but I could the decoupling be being done deliberately and aggressively by the US simply because they know they're running out of time. I suspect that In another decade China's productivity will so significantly lead the US that no country would contemplate joining the side likely to lose a hot war.
I think you are right. Trump sure has a perverse way to get countries into submission through bullying and coersion - look at the smirk on Rubio's face when Trump talked about how Mark Rutte called him daddy. I honestly don't think countries with sovereignty wants to side with the US. Even its vassals do it out of necessity rather than true commitment. For most, it makes sense to trade with both China and the US and China is counting on the innate appeal of its economic and financial value proposition to win over more trade partners.
The Chinese block will win because it is not dependent on cheap labor. It means wealth can be had by all unlike the Western block. Over time, the brain drain from the West will get to a point where innovation can not be sustained. When this happens, countries will be pulling out of the Western block, and it dies.
in the long run, when global south nations have more equitable access to capital, technology and infrastrure, many will pull themselves out of poverty and grow their economies more successfully than under the resource exploitation model in the old colonial arrangement. With better economic prospects, indeed the brain drain to the west could reverse together with capital drain.
thanks for the compliment. I am glad you find the piece informative. I always subscribe to facts telling the story rather than abstract ideology-based narratives.
though I am not officially a communist (probably not qualified enough:), I am a long time admirer of Che. Che is a true revolutionary - an increasingly rare breed these days. He is a humanist and fighter for the exploited, the disfranchised and the underdog. An ideal combination of humanism and irrepressible fighting spirit. I think of him as the comrade and leader of all righteous people.
As I see it, it is all about economies of scale and on this basis the West is about to become an economic back water, accelerated by it refusal to bring in genuine reform, endless wars and delusional imperial ambitions.
What has become so clear with China's success is strong economies are the road to success, not endless barbarism and militarism. The thugs in Washington are oblivious to the dynamic power shifts going on and they are in no position to challenge them. There are no quick fixes.
indeed it seems the west is incapable of fundamental reforms these days despite campaign slogans and promises in each election cycle. Trump doubled down on the debt-fueled spending splurge and tax cuts that will benefit the 1% at the expense of the rest, after he campaigned on the opposite. Europe and britain are the same. there are shelves of books analyzing the economic and social problems facing the west, and even politicians are proficient in describing the foes. However, no reform is ever pursued to rectify the situation. There simply are no visionaries like Deng in the west. It's probably a good sign the western hegemony is coming to an end as the system degenerates and dies from within.
I have just seen the first reports from the Alaska summit and it was a disaster for Trump. I wonder if his days as president are now numbered? His presidency only accelerates the decline. By his own hand he killed MAGA and it never was his intention.
with Trump, one should know what one is getting - he is a fraud. None of the campaign promise he made got delivered (no new wars, reduce debt, solve immigration problem). Just like his first term when his primary contribution was the tax cut to the super rich and large corporations, his second term will be the same - BBB will be his signature achievement on behalf of the oligarchs. the rest is unimportant.
He may truly aspire to MAGA but he doesn't know the first thing how to do it. He surrounds himself with unapologetic sychophants who will do whatever crazy crap he wants. there is no hope for reform.
It's the innovation cycle in China. For example, a new car model in China takes only 18 months or less while the West takes at minimum 3 years. It means China can charge less and still make more money than the West. This is the result of decades of investment in human capital, infrastructures, and R&D. Capitalism doesn't do this. It's why it'll die.
indeed. Chinese car makers are thinking about model development in the same cycle as smart phones. Same philosophy applies in the military tech space. It's called "small step, run fast" in Chinese - meaning rapid iterations of innovation cycles with constant incremental improvements. this is in stark contrast to the US weapon development which focuses on drastic step-function improvements that turn out to be overly costly with long dev cycle and low reliability and integration challenges. F-35 is a perfect example.
as for the root cause, I think it's not capitalism's fault per se but the particular oligarchic and financialized form the west has evolved into that is the problem. there is simply a lack of true competitiveness as vested interests such as the top tech firms or military contractors work to prevent any true competition so they can reap monopoly profits.
Oligarchy and financialization are the product of the cheap labor capitalism. It doesn't value people and human capital. It leads to monopoly and the destruction of innovation. We see this in Europe. We see this in Japan. We are starting to see this in America.
Capitalism is not inherently bad. Like a lot of things it can be corrupted out of existence. The capitalism of the West is sadly corrupted and utterly predatory.
agreed. the industrial capitalism practised in the US and Germany at the turn of the 20th century was very productive in lifting standards of living and creating societal improvement. but that form of capitalism has evolved into the financialized oligarchic system of today which rejects true market-based competition and corrupt the economy through rent-seeking and monopoly profits. today's west, especially US and UK, is a typical rentier economy, similar to the feudal system that preceded industrial capitalism
Capitalism is a tool. To worship it like the West is wrong. The strength of any civilization is it's people, and capitalism doesn't value people. The dependence on cheap labor is not sustainable. It's why the West will fall.
It's why the West is failing. It's mainly about using money to control and motivate people. Capitalism in the West is about exploitation. It seems to be an extension of the Viking culture of raiding and plundering. An economic system based on exploitation is a zero sum system, and it is not sustainable. As a society grows larger there will be less and less resources to go around resulting in infighting. The exploitation nature of capitalism fails to address the growth of resources needed to sustain a society.
Capitalism in the East seems to be about cooperation and addresses the resource growth problem. We see it in the population size of the East vs the West. It stems from the rice culture where the whole community is needed to farm the rice fields. China has a history of public works to enrich the community/country. We see this in China's investments in human capital, infrastructures, and R&D.
Great article Hua and well researched as usual. I’m beginning to understand how China has succeeded so spectacularly. The idealised socialist model ‘from each according to their ability, to each according to their need’, fails at a personal motivational level and lacks an efficient resource allocation process.
A capitalist free enterprise system provides these shortcomings if you have ‘perfect markets’ but is locked into its own destruction by imperfect markets and bottlenecks in capital, infrastructure, long term human capital development etc.. inevitably capitalism slides into oligopoly, oligarchy and monopoly rentier extraction.
The Chinese state seems to systematically remove every market imperfection via regulation, capital bottlenecks via state banks, infrastructure bottlenecks via state planning, and human capital bottlenecks via state provision, thus removing rentier elements.
What you have left is raw energy, and its effects are wonderful to see.
most MNCs in fact made a lot of money in China. for example, GM wouldn't have survived the 2008 financial crisis without its highly profitable China business. Yum Brands, the owner of KFC, P&G, Apple, Nike still make a lot of money in China. What's different is that they have more competition these days - the wonder of the market.
the decoupling will hurt US businesses more than China as they lose both a large market and a low-cost high-efficiency production base. when you visit China, you can see lots of US brands in the shops and on the street. but when you visit the US, you don't see Chinese brands for the most part even when the products are made in China. US brand owners take most of the retail profit rather than Chinese manufacturers.
those are economics 101 but don't count on the US political establishment to understand such basics and make rational decisions.
Here in Malaysia, I'm already seeing more Americans, Britons, Australians, and Europeans, including quite a few Irish, settling in for extended stays, whether through visa runs, digital nomad setups, or retirement schemes. If these tariffs continue, they’ll squeeze the cost of living even further for most ordinary people in those US-aligned countries.
most people in the west these days are victims of uber financialized capitalism without knowing that. When they travel to other parts of the world, they find out life doesn't have to be the treadmill as at home. It's a liberation not to be a debt peonage.
Democratic vs authoritarian isn't relevant. The US / western post 1970's, neo-liberal financialized rentier capitalism model is unsustainable. The system China operates on is very similar to the Hamiltonian productive industrial capitalism model that the US and much of Europe used to work on. That model is sustainable. https://en.wikipedia.org/wiki/American_School_(economics)
exactly. China practices a different capitalism than the US today. the China model is a market-based state and private mixed model (some call state capitalism). two books have explored this concept - Keyu Jin's the New China Playbook and Tobias Lanz' Beyond Capitalism and Socialism. I don't agree with everything argued in those books but they do provide a refreshing perspective.
This isnt a new idea but I could the decoupling be being done deliberately and aggressively by the US simply because they know they're running out of time. I suspect that In another decade China's productivity will so significantly lead the US that no country would contemplate joining the side likely to lose a hot war.
I think you are right. Trump sure has a perverse way to get countries into submission through bullying and coersion - look at the smirk on Rubio's face when Trump talked about how Mark Rutte called him daddy. I honestly don't think countries with sovereignty wants to side with the US. Even its vassals do it out of necessity rather than true commitment. For most, it makes sense to trade with both China and the US and China is counting on the innate appeal of its economic and financial value proposition to win over more trade partners.
The Chinese block will win because it is not dependent on cheap labor. It means wealth can be had by all unlike the Western block. Over time, the brain drain from the West will get to a point where innovation can not be sustained. When this happens, countries will be pulling out of the Western block, and it dies.
in the long run, when global south nations have more equitable access to capital, technology and infrastrure, many will pull themselves out of poverty and grow their economies more successfully than under the resource exploitation model in the old colonial arrangement. With better economic prospects, indeed the brain drain to the west could reverse together with capital drain.
Very thorough and revealing analysis. Thank you. I see your Che slogan attached to your profile. Are you a communista?
thanks for the compliment. I am glad you find the piece informative. I always subscribe to facts telling the story rather than abstract ideology-based narratives.
though I am not officially a communist (probably not qualified enough:), I am a long time admirer of Che. Che is a true revolutionary - an increasingly rare breed these days. He is a humanist and fighter for the exploited, the disfranchised and the underdog. An ideal combination of humanism and irrepressible fighting spirit. I think of him as the comrade and leader of all righteous people.
Exactly.
As I see it, it is all about economies of scale and on this basis the West is about to become an economic back water, accelerated by it refusal to bring in genuine reform, endless wars and delusional imperial ambitions.
What has become so clear with China's success is strong economies are the road to success, not endless barbarism and militarism. The thugs in Washington are oblivious to the dynamic power shifts going on and they are in no position to challenge them. There are no quick fixes.
indeed it seems the west is incapable of fundamental reforms these days despite campaign slogans and promises in each election cycle. Trump doubled down on the debt-fueled spending splurge and tax cuts that will benefit the 1% at the expense of the rest, after he campaigned on the opposite. Europe and britain are the same. there are shelves of books analyzing the economic and social problems facing the west, and even politicians are proficient in describing the foes. However, no reform is ever pursued to rectify the situation. There simply are no visionaries like Deng in the west. It's probably a good sign the western hegemony is coming to an end as the system degenerates and dies from within.
I have just seen the first reports from the Alaska summit and it was a disaster for Trump. I wonder if his days as president are now numbered? His presidency only accelerates the decline. By his own hand he killed MAGA and it never was his intention.
with Trump, one should know what one is getting - he is a fraud. None of the campaign promise he made got delivered (no new wars, reduce debt, solve immigration problem). Just like his first term when his primary contribution was the tax cut to the super rich and large corporations, his second term will be the same - BBB will be his signature achievement on behalf of the oligarchs. the rest is unimportant.
He may truly aspire to MAGA but he doesn't know the first thing how to do it. He surrounds himself with unapologetic sychophants who will do whatever crazy crap he wants. there is no hope for reform.
It's the innovation cycle in China. For example, a new car model in China takes only 18 months or less while the West takes at minimum 3 years. It means China can charge less and still make more money than the West. This is the result of decades of investment in human capital, infrastructures, and R&D. Capitalism doesn't do this. It's why it'll die.
indeed. Chinese car makers are thinking about model development in the same cycle as smart phones. Same philosophy applies in the military tech space. It's called "small step, run fast" in Chinese - meaning rapid iterations of innovation cycles with constant incremental improvements. this is in stark contrast to the US weapon development which focuses on drastic step-function improvements that turn out to be overly costly with long dev cycle and low reliability and integration challenges. F-35 is a perfect example.
as for the root cause, I think it's not capitalism's fault per se but the particular oligarchic and financialized form the west has evolved into that is the problem. there is simply a lack of true competitiveness as vested interests such as the top tech firms or military contractors work to prevent any true competition so they can reap monopoly profits.
Oligarchy and financialization are the product of the cheap labor capitalism. It doesn't value people and human capital. It leads to monopoly and the destruction of innovation. We see this in Europe. We see this in Japan. We are starting to see this in America.
Capitalism is not inherently bad. Like a lot of things it can be corrupted out of existence. The capitalism of the West is sadly corrupted and utterly predatory.
agreed. the industrial capitalism practised in the US and Germany at the turn of the 20th century was very productive in lifting standards of living and creating societal improvement. but that form of capitalism has evolved into the financialized oligarchic system of today which rejects true market-based competition and corrupt the economy through rent-seeking and monopoly profits. today's west, especially US and UK, is a typical rentier economy, similar to the feudal system that preceded industrial capitalism
Capitalism is a tool. To worship it like the West is wrong. The strength of any civilization is it's people, and capitalism doesn't value people. The dependence on cheap labor is not sustainable. It's why the West will fall.
Usage of the term "capitalism" is mainly rhetorical, functioning less as an actual concept than as a gesture toward the need for a concept
It's why the West is failing. It's mainly about using money to control and motivate people. Capitalism in the West is about exploitation. It seems to be an extension of the Viking culture of raiding and plundering. An economic system based on exploitation is a zero sum system, and it is not sustainable. As a society grows larger there will be less and less resources to go around resulting in infighting. The exploitation nature of capitalism fails to address the growth of resources needed to sustain a society.
Capitalism in the East seems to be about cooperation and addresses the resource growth problem. We see it in the population size of the East vs the West. It stems from the rice culture where the whole community is needed to farm the rice fields. China has a history of public works to enrich the community/country. We see this in China's investments in human capital, infrastructures, and R&D.
Great article Hua and well researched as usual. I’m beginning to understand how China has succeeded so spectacularly. The idealised socialist model ‘from each according to their ability, to each according to their need’, fails at a personal motivational level and lacks an efficient resource allocation process.
A capitalist free enterprise system provides these shortcomings if you have ‘perfect markets’ but is locked into its own destruction by imperfect markets and bottlenecks in capital, infrastructure, long term human capital development etc.. inevitably capitalism slides into oligopoly, oligarchy and monopoly rentier extraction.
The Chinese state seems to systematically remove every market imperfection via regulation, capital bottlenecks via state banks, infrastructure bottlenecks via state planning, and human capital bottlenecks via state provision, thus removing rentier elements.
What you have left is raw energy, and its effects are wonderful to see.
We have just witnessed the funerary death of brinkmanship... where there is no credibility it doesn't exist.... https://robert94015.substack.com/p/the-timely-death-of-brinkmanship?utm_source=post-email-title&publication_id=1105276&post_id=171132335&utm_campaign=email-post-title&isFreemail=false&r=r89db&triedRedirect=true&utm_medium=email
❤️👍💯
most MNCs in fact made a lot of money in China. for example, GM wouldn't have survived the 2008 financial crisis without its highly profitable China business. Yum Brands, the owner of KFC, P&G, Apple, Nike still make a lot of money in China. What's different is that they have more competition these days - the wonder of the market.
the decoupling will hurt US businesses more than China as they lose both a large market and a low-cost high-efficiency production base. when you visit China, you can see lots of US brands in the shops and on the street. but when you visit the US, you don't see Chinese brands for the most part even when the products are made in China. US brand owners take most of the retail profit rather than Chinese manufacturers.
those are economics 101 but don't count on the US political establishment to understand such basics and make rational decisions.