Donald Trump’s unwitting surrender to China by Edward Luce

Great piece in today’s UK Financial Times by Edward Luce.

Basically it says that Trump really is an unwitting Chinese rather than Russian Trojan Horse, and I think he and the GOP is too deeply stupid to realize it. And I think the Democrats not much better, clueless on the subject. And US capitalism too quarter by quarter short sighted to even care. US dominance was built on government-private sector partnership that China is emulating and Trump is determined to destroy for corrupt plutocracy serving reasons.

Sixty years ago Russia shocked the world with the launch of the Sputnik satellite. Donald Trump was 11 years old. That display of superiority jolted America to outspend the USSR in a drive that produced the internet and the global positioning system. Today’s Sputnik moment, by contrast, appears to have bypassed America’s 71-year-old president.

China openly plans to dominate artificial intelligence by 2030. Mr Trump appears too busy tweeting to have noticed. Yet China’s AI ambitions pose a greater long-term threat to US security than North Korea’s nuclear reach. Pyongyang can probably be contained by the guarantee of annihilation. There is no obvious barrier to China’s aim of leapfrogging the US.

“Whoever becomes the leader in [AI] will become the ruler of the world,” Russia’s president, Vladimir Putin, said recently. His observation followed China’s announcement that it intends to draw even with the US by 2020, overtake it by 2025 and dominate global AI five years after that. America’s leading technologists believe China’s ambitions are plausible.

“Just stop for a sec,” said Eric Schmidt, executive chairman of Alphabet, last week. “The Chinese government said that.” Unlike Sputnik, there is no single Chinese action that is likely to drive the threat home. But the trend lines are stark for those who care to look. President Xi Jinping has broadcast China’s AI superiority as a strategic goal.

Mr Trump has said nothing about America’s ambitions. But his budget proposal speaks volumes. He wants to cut US public funding of “intelligent systems” by 11 per cent and overall federal research and development spending by almost a fifth. Nasa’s budget would also shrink. Likewise, Mr Trump wants to halve the inflow of legal immigrants, which would hit America’s ability to recruit the brightest researchers. It would make far more sense to offer them a green card. Chinese students often win Google’s coding competitions. “If you have any kind of prejudice . . . that somehow their educational system is not going to produce the kind of people that I’m talking about, you’re wrong,” said Mr Schmidt.

Can America prevail in spite of Mr Trump’s myopia? That is quite possible. The big US tech companies remain world leaders. But the gap is narrowing. China has two key advantages. The first is that more of its economy is online than America’s. Forty per cent of global e-commerce takes place inside China, mostly via Alibaba, Tencent and Baidu, the big three Chinese tech companies. Their ability to manipulate vast troves of data faces few legal limits. Likewise, their scale is daunting. Last week, Tencent overtook Facebook to exceed a market capitalisation of $500bn.

In some areas, such as online payments, visual recognition and voice software, China is already ahead of its Silicon Valley counterparts. It is fast catching up on autonomous driving. Almost all such technologies have military application. Think of swarm drone warfare. Second, China’s private sector is hand in glove with government. That might seem like a handicap to libertarians.

But people have short memories. Just as Dwight Eisenhower underwrote the rise of Silicon Valley, so Beijing is subsidising China’s mastery of deep learning machine technology. Moreover, its digital sector is increasingly self-sufficient. With the exception of microprocessors, which remains US-led, most of China’s capacities are produced at home. It is decreasingly vulnerable to disruptions in the global supply chain. Should a global trade war break out, China could press on largely unhindered with its AI development. There is the reason China has locked out Google, Facebook, Twitter and others.

The same applies to China’s space technology. Last weekend, John Hyten, the general in charge of US nuclear weapons, caused a stir when he said he would resist an “illegal” order by the president. But he was simply reiterating the rule book. More ominous were his comments on China’s big leaps in 21st-century warfare technology. When someone suggested China’s space threat was as hyped as the infamous “missile gap” with the Soviets, Gen Hyten said: “What I see is very aggressive [Chinese and Russian] actions to build a force structure that would counter our entire space capabilities.”

If you want to read a nation’s priorities, look at its budget. Mr Trump’s main ambition is to cut the US corporate tax rate to 20 per cent. During Eisenhower’s time, the marginal income tax rate was above 90 per cent. That did not stop US public and private ingenuity from racing ahead of the Soviets. Today America is the world’s technological leader. With Mr Trump in the cockpit, tomorrow may look very different.

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Ranting: Channeling my Inner Steve Carell from the movie “The Big Short”

Some of my posts on this blog, people tell me, who know me and have heard me rant on the insanity of much present day politics, should be heard through the lens of the character Mark Baum, who is played by Steve Carell in the movie The Big Short and this scene in particular.

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Beware The Tory Cult that is Steering Brexit: Simon Kuper

Someone else shares my view that the UK Conservative Party is in the grip of Cargo Cult with catastrophic consequences: “The difficulty of Brexiting is part of the appeal: only a great tribe can renew itself through sacrifice” 

In South Africa in 1856, the spirits of three ancestors visited a 15-year-old Xhosa girl called Nongqawuse. According to her uncle, who spoke for her, the spirits wanted the Xhosa to destroy their crops and cattle. The tribe’s ancestors would then return and drive the white settlers into the ocean. New, beautiful cattle would appear. The sun would turn red. The Xhosa duly began killing cattle and burning crops. This type of self-destructive quest for riches and freedom is now known as a “cargo cult”. (The word “cargo” denotes the western goods the tribe hopes to obtain.)

Brexit voters come in endless varieties. However, the particular sect now steering Brexit — the Europhobe wing of the Conservative party — is turning into a cargo cult. At the heart of it is ancestor worship. There’s a widespread belief in Britain that “the past is the real us”, says Catherine Fieschi, head of the Counterpoint think-tank. Perhaps no other country has as happy a relationship with its chequered history. And the self-appointed guardian of this relationship is the Conservative party.

Hardly any of today’s Tories actually remember Britain’s golden age of ruling India and winning the second world war. Even the party’s ageing members are merely the children of the Dunkirk generation. Economically, they have been the luckiest cohort in British history. But they and many other Tory MPs feel the shame of late birth. They disdain the UK’s tame, vegetarian, low-stakes, Brussels-based, post-imperial incarnation, which in 70 years offered nothing more glorious than the Falklands war.

Now they have their own heroic project: Brexit. Cargo cults typically start when the tribe feels it is in decline, surpassed by foreigners. In Melanesia, the Pacific region with a tradition of cargo cults, locals came to feel like “rubbish men” (the phrase is pidgin English) in comparison with rich Europeans. “A recurring feature of these cults is a belief that Europeans in some past age tricked Melanesians and are withholding from them their rightful share of material goods,” writes Paul Sillitoe, an anthropologist at Durham University. To get these goods, the tribe has to the British population at large) to shut off trade with Europe. If the correct rituals are followed, the ancestors will return. The sect leader, Boris Johnson, in his biography of Winston Churchill, sometimes seems to cast himself as the reincarnation of the great “glory-chasing, goalmouth-hanging opportunist”. But the cargo cult is threatened by non-believers. They can ruin things by angering the ancestors. 

For 15 months, Nongqawuse blamed the failure of her prophecy on the few Xhosa — amagogotya, or “stingy ones” — who refused to kill their cattle. Now, leading Conservatives are hunting British amagogotya. Chris Heaton-Harris seeks to out Remainer university teachers, Jacob Rees-Mogg castigates the BBC and the Bank of England’s governor Mark Carney as “enemies of Brexit”, while John Redwood urges the Treasury “to have more realistic, optimistic forecasts”. 

The sect also suspects Theresa May and Brexit secretary David Davis of being closet amagogotya. That is probably accurate: as Britain’s point-people in the negotiations, these two sense that cattle-killing might not be a winning strategy. Sillitoe says it’s wrong to dismiss cargo cultists as “irrational and deluded people” who mimic modern rituals that seem to have made advanced societies rich. Melanesians built airfields to receive the ancestors’ cargo.

The Brexiter flies around signing trade deals. Meanwhile, the inferior goods of today’s “rubbish men” must be destroyed. Hence the eagerness in this Tory sect (but not among
among the British population at large) to shut off trade with Europe. If the correct rituals are followed, the ancestors will return. The sect leader, Boris Johnson, in his biography of Winston Churchill, sometimes seems to cast himself as the reincarnation of the great “glory-chasing, goalmouth-hanging opportunist”.

But the cargo cult is threatened by non-believers. They can ruin things by angering the ancestors. For 15 months, Nongqawuse blamed the failure of her prophecy on the few Xhosa — amagogotya, or “stingy ones” — who refused to kill their cattle.

Now, leading Conservatives are hunting British amagogotya. Chris Heaton-Harris seeks to out Remainer university teachers, Jacob Rees-Mogg castigates the BBC and the Bank of England’s governor Mark Carney as “enemies of Brexit”, while John Redwood urges the Treasury “to have more realistic, optimistic forecasts”. The sect also suspects Theresa May and Brexit secretary David Davis of being closet amagogotya. That is probably accurate: as Britain’s point-people in the negotiations, these two sense that cattle-killing might not be a winning strategy. Sillitoe says it’s wrong to dismiss cargo cultists as “irrational and deluded people”.

In fact, he writes, “Cargo cults are a rational indigenous response to traumatic culture contact with western society.” Comical as the participants might seem, “they are neither illogical nor stupid”. Certainly the Conservative cult follows its own logic. The aim isn’t simply to reduce immigration the EU is welcomed as a ritual re-enactment of Britain’s past glorious conflicts. Hence the ovations for any speaker at last month’s Conservative conference who urged walking out with no deal. 

A recent blog by Pete North, a founder of the Leave Alliance, beautifully sums up many of these attitudes. North, who favoured staying in the European single market, predicts Brexit will send Britain into “a 10-year recession”. He writes: “After years of the left bleating about austerity, they are about to find out what it actually means.” And yet, he continues, “My gut instinct tells me that culturally it will be a vast improvement on the status quo.” He says modern Britons have become “spoiled and self-indulgent . . . in the absence of any real challenges or imperatives to grow as a people”. 

As the psychiatrist says of the TV character Basil Fawlty, there’s enough material here for an entire conference. After the cattle-killing, many Xhosa starved to death, while flocks of vultures reportedly watched from above. Refugees who fled to the British Cape Colony were forced into serf-like labour contracts. But Nongqawuse lived on for another 40 years, albeit in exile, under a changed name.”

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Sea Lion in Debates

OK I admit I am a Sea Lion on line with Trump supporters:


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Radical Lean Manufacturing

When I point out the complete vacuum on new ideas or a new strategy for the economy from progressives, I get challenged: so what’s your idea. I don’t have one idea, I have lots but here’s one as an example: 

Well personally I see radical potential, that no one else does, in something called Lean Manufacturing. Toyota invented it post war when they were getting going, and other companies have tried it but mostly their cultures are too resistant to do it properly. It is very threatening to the hierarchies of most organizations.

It basically says work process is best designed by the people in teams who do the work, with a very clear idea of/strong feedback loops from the customer for the work, next stage of the production process and end consumer, and very great respect for team members. And management and admin layers are kept to a minimum and only added by the value adders when they need it to better add value. One of my mentees for instance as well as her day job made her the finance consultant to a lean team of Ford line workers so they could see the cost benefit of different ideas. This would apply to any sort of work, academic, retail whatever.

But the hard part is that it has to go with profit sharing so there is something in it for the workers to eliminate waste from the production process and there has to be a state safety net for people displaced by efficiency, retraining, guaranteed income floor and a welfare state for health care etc. And means to fund all the work needed to fix the environment etc. that is not being done. Ditto elder care. And the Lean process might even see the planet as one customer. Any value add process is amenable to lean and I tried to get it into health care having supported it in Ford and in the US military logistics Agency. My consultants had even done it in a landscape gardening business and I have heard surgical teams try it.

But this is just an example of the sort of focus that is lacking. Currently value add work is an empty set across the political spectrum. I happen to know about Lean. Others may know something else. You also have to fix Wall Street to support this to make it more buy and hold shares and for that you need a Tobin Tax….and so on.

Anyway, my point is not to bang a drum for one specific idea but to say: innovative thinking like this please…. 

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My evening with Joan Robinson and the Tractatus: Edward Fullbrook

A marvelous piece from Real World Economics on intellectual development and intellectual integrity and also about economics but that’s not the main point: 

“The General Theory of Employment, Interest and Money was the first book I ever read with pleasure.  I was 22.

From age five to sixteen the school system had me classified as borderline mentally retarded.  My luck changed in my penultimate year of high school when a non-conformist English teacher gave me the chance to pretend I was not mentally deficient.  She also taught me how to write a sentence, after which, inflated with fantasises of normality, I taught myself how to read textbooks and take exams, and soon became academically proficient and for a long time thereafter very neurotic.

As an undergraduate I cut classes as often as I attended them and waited till the night before an exam to open the textbook.  Sometimes I only managed a C but in economics it was always an A and that was the only reason I had for becoming an economics graduate student.

Till then mine had been an all-American, all-textbook education.  The textbook genre requires its authors to pretend to know it all and talk down to their readers.  Reading The General Theory, I encountered for the first time an author who was openly struggling to understand what he was writing about.  I too was struggling and so I – and what could have been more preposterous – immediately identified on an existential level with John Maynard Keynes.  It meant that for the first time ever while reading a book my resentments and fears from my educational past receded to the background.  And when they did the most astonishing thing happened.  My brain started giving me an intensity of pleasure that, except for sex, I hadn’t thought possible.  So it was that an intellectual was born. 

I had read the whole of The General Theory before I opened Alvin Hansen’s A Guide to Keynes, the book we had been assigned to help us understand the original work.  Reading it was a shock.  Either Hansen was in some way corrupt or when it came to economics one of us was rather more intelligent than the other.  Given my history, the second possibility was extremely worrying.  But my emerging new self was saved when a fellow grad student loaned me a copy of Joan Robinson’s Introduction to the Theory of Employment.  It both confirmed my reading of Keynes and offered me one that was much deeper.  Because of that and because Robinson’s brilliance made serious inroads against my inherited sexist bigotry, she along with Keynes became one of my first two intellectual heroes.

Not long after my intellectual birth a conversational experience and its aftermath turned me off economics – and I thought forever.  Having from five onwards been marginalized at school, I had compensated by outside of school organizing my peers in games, fort-building, expeditions, clubs, teams, a league, hell-raising and minor pranks.  These organizing inclinations continued into my twenties, and as a graduate student I gathered some of my new peers into a discussion group.  Once a month we would meet with a case of beer and a guest professor in one of our basement apartments.  One month our guest was a young professor whom I liked and who was soon to make millions off his textbook.  Halfway through our case of beer someone asked him, “What do you do if after you’ve been working on your dissertation for a year or longer you discover that the data you’ve collected doesn’t support your hypothesis?”  You reselect the data was his answer.  “How do you do that?”  The professor volunteered to hold a short series of seminars to show us how.  When the time came for the first one, I couldn’t make myself go.  My peers came away from it enthused.  Likewise for the second and third.  I decided economics was not for me.

With a backpack half-full of books – I was reading widely and seriously now – I set off to see the world.  Sixteen years and many adventures and misadventures later, I found myself living in Cambridge UK.  One day walking on a back street near the centre, a shop window caught my eye.  It was a photographer’s shop belonging to the widow of Frank Ramsey, the philosopher, mathematician and economist who back in the 20s died at the age of 26.  The shop window was full of old black-and-white photos, and soon I was recognizing faces from the Bloomsbury Group: Virginia and Leonard Woolf, Duncan Grant, Keynes and others.  One photograph was larger than all the others and the longer I stood there, although I didn’t recognize the subject, the more I found myself looking at it: a woman in her early to mid-twenties in an oddly patterned dress sitting on a sofa with her legs folded under her.  It wasn’t that she was particularly good-looking but rather that there was more character in her face than you would expect in someone her age.  Eventually I leaned down to read the small print on the bottom of the frame: “Joan Robinson”.

A few nights later I was at a chamber music concert.  It had yet to begin and I was watching people taking their seats.  An elderly couple, entering arm-in-arm, caught my eye.  The woman sitting next to me appeared to recognize them, so I asked her who they were.  “They’re famous economists: Piero Sraffa and Joan Robinson.”

A month later I was at a dinner party.  Sitting opposite me was an Indian woman who was a Cambridge English don.  We mostly talked literature until we got to the cheese course when she asked what I “read” in university.  “Oh”, she replied, “I too did a degree in economics. After my undergraduate degree in English I decided to get one in economics before going on for my doctorate in English.”  She said she still kept up her economics contacts and occasionally had “econ evenings” and would invite me to the next one.

I had zero interest in economics, but when a few weeks later I received the promised invitation I thought it might be interesting as a social occasion.  So, more than a little nervous, I went along.

I was the last to arrive.  Entering a large sitting room, there in an armchair directly in front of me was Joan Robinson.  The gathering had been forewarned that an odd American was coming, and I had barely crossed the threshold when the great woman, with the whole room listening, asked me a question about the current state of the American economy.  She did so with the kindest possible face, but I had not read anything about any economy for over a decade, and I froze.  Thankfully, Sita, the hostess, covered for me and dinner was served.

After dinner – by now I had had a couple of glasses – I decided I had to make something of this once-in-a-lifetime opportunity to engage with one of my heroes.  Joan – there was absolutely no edge to the woman so it already seemed natural to think of her as Joan – was in the armchair again, and I sat down on the floor facing her at her feet.  I began by asking her what it was like being a student at Cambridge back in the Twenties.  After recalling the lectures of the literary critic I. A. Richards, she moved on to Wittgenstein and Sraffa and their weekly one-on-one discussions over tea.  It was one  of those discussions – and in her raspy voice she repeated Sraffa’s account of it – that led to Wittgenstein’s famous turn from belief in a world comprised of atomistic sets of propositional facts to one where meaning depends on the anthropological setting in which propositions are conveyed.  At this point Sita, who was now sitting on the floor beside me, sought to bring the whole room into the conversation by making a broad and potentially contentious statement about the meaning of Wittgenstein’s Tractatus.  I still had not read the book, but had read one or more books about it, and suspecting it was likewise with Sita, I decided as a way of becoming friends with her to argue against her.  It was immediately obvious that she liked my challenge and soon the whole room of economists was debating the meaning of Tractatus Logico-Philosophicus. And, bizarrely, something was about to happen that would change the course of my life.

As the debate continued it occurred to me that perhaps no one in the room had really read the Tractatus.  Joan Robinson stayed out of the debate and, although I was still sitting at her feet, I now had my back to her.  Then suddenly from behind me her loud raspy voice broke into the conversation.  Here are her exact words.

The world is all that is the case.  The world is the totality of facts, not of things.  The world is determined by the facts, and by their being all the facts.  For the totality of facts determines what is the case, and also whatever is not the case.  Those are the first four propositions of the Tractatus.  I’ve never been able to understand them.

With her eyes turned away from us and into her thoughts, she tried to explain what she couldn’t understand.  She was not arguing; she was making a confession.  Except for maybe herself, the singularity of her behaviour was lost on no one in the room.  It was a magic moment for me – the relaxed integrity of her intellect was so plain to see.  And such a contrast to the outcome of my conversation sixteen years before.  I wasn’t yet in a position where I could change my life’s course, but in time I was, and if it hadn’t been for that evening with Joan Robinson and the Tractatus I would never have become an economist.”

Excerpt from, What is Heterodox Economics: Conversations with Leading Economists,
Sebastian Berger, Andrew Mearman and Danielle Guizzo, (eds), Routledge, forthcoming.


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Conservative Vulnerability to Political Lies

I was thinking as I walked this morning: why are lies now so effective in politics and when the lies are pointed out, it has no effect? Well, here’s some riff on the Right, someone else can do the Left especially please the Stein supporters.

Being conservative in psychological tests correlates with being fearful. Not lacking in courage but fearing things. And I guess the thing they fear most, almost by definition, is change, and especially one assumes change to pecking order/social dominance based on gender, race, religion whatever.

And times of rapid change like now involve threats to their sense of pecking order and thus their sense of how the world is. And they are not good at systemic understanding of change but tend to lean scapegoaty.

Now this whole enchilada makes them very open to lies that tell them that change can be and will be reversed, if only we deal with these scapegoats who caused it all: liberals, women, minorities, climate scientists etc. And so desperate are they to make sense of things that not only will any old lie (Trump promises, Brexit promises) do, but they cling to the lies whatever the counter evidence. And my guess is that about a third of the population of any country lean conservative in this change fearing sense. Hence our politics.

But then I may be mistaken…and they really do love the truth and they embrace change with enthusiasm: perhaps I am open to counter evidence in ways they are not…. 

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