I asked if I could write on the coronavirus outbreak, but was told that the Sun tries to avoid hot takes. I did not want to write a hot take on what we see and ring the bell that millions could die. This is not about the curious coincidences of bioweapons arrests and corrupt Chinese grad students engaging in espionage in America. This is not a hot take, but more a popcorn take. Coronavirus has the opportunity to shred a collection of strong narratives that the entire globe accepts as certain.
The dominant meme globally is that America is in decline and China is ascending to take the top spot. I will admit that I too am a believer in this one. By the mid-’20s, their GDP will be so much larger than ours that America will have a true competitor on the global stage for the ability to buy off vassals. With their manufacturing power, China could flex their muscle and create proxy war problems for us or supply themselves well if the US government were dumb enough to provoke a direct confrontation, which by all signs the Pentagon wants.
How is China going to sell itself as the top dog if it cannot contain a virus? Some are jumping to conclusions and calling this the CCP’s Chernobyl, which is unfair at this time. China is taking rather draconian measures to try to contain this and is somewhat open about things. The challenge remains though like a competency test of the regime, can they contain the virus? It is the type of crisis that makes or breaks a regime. If they pass, it is a remarkable achievement for the regime. If they fail, it can lead to a legitimacy crisis. China did ask for CDC help, so this may be beyond their capabilities, but once again, it is so early on, we do not know. You know who does ask for help immediately when they have outbreaks? Sub-Saharan nations.
The Chinese Miracle
The economic story of China has been miraculous. It has been the main driver in eliminating global poverty so that really, backwards Africa is all that is left as a major source for global poor numbers. Chinese cities shine. The skyscrapers and gigantic economic hubs were practically raised out of the ground in one generation. With that in mind, that should be a marker for a nation that can contain a virus outbreak. They should have the infrastructure and organization to quarantine, inoculate, and solve this problem.
What if the economic growth of China was not organic? What if it was just that the Chinese are a smart group of human capital and they benefited from a treasonous West that stabbed its own manufacturing base in the back? China stole intellectual property, twisted arms for access to their markets that would create Chinese competitors magically in no time and engaged in dollar recycling to create Bretton Woods 2 to prevent currency corrections so that trade would balance. China also had zero concern for environmental effects, and allowed that enviro regulation arbitrage game to flourish. America and the EU just exported their environmental damage to China. It never went away, it just moved a continent over.
The real special genius was that China did have over a billion impoverished but competent people to use as labor for the Western banks and management class to play labor arbitrage. Each enhancement to trade openness was really for the movement of capital. This movement of capital meant the share of income derived by firms could go to domestic management salaries but more importantly, shareholders. Every consultant suggesting a firm use Gavekal platform firms was also a dabbler in their stock, and every CEO saw his or her compensation packages (designed by high end recruiters wired into boards of directors) become less about salary and more about stock options.
China was so unique in that they could continuously add to the labor supply without causing the price of labor to reach above a point where the arbitrage would not work in companies’ favor. There were always millions more to employ, and with so many, you never had to worry about paying them more. Labor pressures have risen, but now, Chinese firms now shift work to Vietnam and take a cut in the entire supply chain. There are other consulting firms in America that specialize in bringing production back to America. This is because managing global supply chains is beyond some firms’ capabilities. These fools often are amazed to find that rather than moving from New Jersey to China, they could have moved production to northern Alabama and not seen as large a cost savings but seen a smoother operation up to American standards.
Globalization will not go away, but this is a test of the current iteration of globalization. Argentinians and Australians once fed England a century ago. American and Egyptian cotton were used by textile firms all over the globe even earlier. At different times, the current set up for global flows changes. Think of how little we truly screen what enters our ports. This is a security risk, but we do not care for the drag proper security would put on Muh GDP. Wide open borders may see its end. All it takes is one pandemic, a few million dead globally, and then suddenly, there is a real life consequence to the insane infinity immigration policies of the West. It will not be abstract if people bury their loved ones because the open borders economic shills and the immigration as a weapon shills get their way in the face of a pandemic.
These tests moved from the more immediate to the more fantastic. If one believes in black swans and if one believes in great men, a potential pandemic in the ascendant superpower is a black swan and is a test of a potential great man at the helm. It does also test the fight across the West right now. When do we shut the doors? Why did we let over 300,000 Chinese nationals study at American universities? Why did we let STEM firms hire Chinese nationals who smuggle pathogens out? It is not who we are. It is that decision makers up and down the ladder and across the managerial class sold out their nation piece by piece for thirty silver coins.