The Dive, 2/1/25
Your monthly compilation of what's what on global politics, American society, and an assortment of odds and ends
Quote of the Month
Exiled Thucydides knew All that a speech can say About Democracy, And what dictators do, The elderly rubbish they talk To an apathetic grave; Analysed all in his book, The enlightenment driven away, The habit-forming pain, Mismanagement and grief: We must suffer them all again. - W.H. Auden, "September 1, 1939"
What I’m Reading:
1. Why China’s trade surpluses are bad
Why you should read it: On his Substack, former New York Times columnist Paul Krugman explains why China’s trillion-dollar trade surplus is bad for the rest of the world.
“Should China be celebrating its achievement? No — this surplus is a sign of weakness, not strength, a symptom of China’s apparent inability to grapple with its fundamental economic problems… Giant Chinese trade surpluses create problems in other countries too — although not the problems crude mercantilists like Donald Trump imagine. And China’s attempt to export its problems (for that’s what this amounts to) will meet a protectionist backlash; in fact, this would have happened even if Trump weren’t about to take office.”
“…the Chinese economy is having big problems adjusting to the prospect of slower economic growth; extremely high rates of investment are no longer sustainable in the face of diminishing returns, yet the government remains unwilling to do the obvious, and promote higher consumer spending… Without question, China’s big trade surplus is helping to keep its economy afloat — for now. But the weak yuan policy is almost certain to backfire, big time, because the rest of the world won’t accept those surpluses for very long.”
Why it matters: “As a practical matter, however, regional job loss in the face of import surges generates a powerful political backlash. So the rest of the world just isn’t going to accept China’s attempt to export its way out of policy failure. Trump would probably slap high tariffs on China no matter what, but that giant trade surplus means that Europe, the UK, and probably everyone else will do the same… Tariffs on China are unavoidable unless China makes major policy changes, but the tariffs should be smart and reflect real policy concerns, not a visceral belief that trade deficits mean you’re losing. Also, even given what I’ve said, 60 percent tariffs are wildly excessive. And since China’s trade surplus is a global concern, we should be acting in concert with our allies, not alienating Europe, Canada and Mexico with tariffs on everyone. Among other things, let’s not forget that Trump basically wimped out on China last time after the Chinese retaliated against U.S. farm exports; that would be much less likely to happen if America was working with its allies, not against them.”
2. What America needs to do to round out its China policy
Why you should read it: Former Biden administration China advisers Elizabeth Economy and Melanie Hart argue in Foreign Affairs that the United States needs more trade deals with friends and allies around the world to compete fully with Beijing.
“Washington, however, is still competing with one hand tied behind its back, and progress, although significant, is moving too slowly. It will take a full suite of economic incentives, public-private partnerships, and investment and trade deals to reduce the United States’ and its partners’ reliance on China. U.S. partners, concerned about Chinese influence themselves, are eager to work with Washington… Many countries and multinationals recognize that they are too reliant on China and are seeking other options. The COVID-19 pandemic demonstrated the risk of overdependence on any single supplier, even a benevolent one. And Beijing has shown that it is not benevolent. Countries now worry about Chinese economic coercion reducing their exports and investments, Chinese overcapacity harming their domestic industries, and potential Chinese military action against Taiwan disrupting critical supply chains.”
“Efforts to de-risk the U.S. economy and the economies of U.S. allies and partners through supply chain diversification and targeted infrastructure investment have made real, measurable gains. Supply chains are moving. New projects are coming online. But progress is slow, labor-intensive, and expensive. If the goal is to secure U.S. and global supply chains and reduce China’s leverage over the United States and its partners, then Washington cannot holster the biggest weapon in its arsenal: trade… If the global market is set up in ways that make Chinese goods more attractive than others, subsidies and other direct incentives are rowing upstream. They can incentivize companies to build new mines and fabrication plants, but those companies still need to find buyers for their products. Doing so is difficult when Chinese alternatives are always cheaper—and Beijing can drop prices even lower if it chooses. As the Chinese government continues to subsidize both domestic manufacturing and overseas investment and sign new trade deals that further reduce the cost of trade with China relative to trade with the United States or its partners, Beijing will persistently undermine the progress Washington has made.”
Why it matters: “If the global market is set up in ways that make Chinese goods more attractive than others, subsidies and other direct incentives are rowing upstream. They can incentivize companies to build new mines and fabrication plants, but those companies still need to find buyers for their products. Doing so is difficult when Chinese alternatives are always cheaper—and Beijing can drop prices even lower if it chooses. As the Chinese government continues to subsidize both domestic manufacturing and overseas investment and sign new trade deals that further reduce the cost of trade with China relative to trade with the United States or its partners, Beijing will persistently undermine the progress Washington has made.”
3. Why Trump’s talk of seizing Greenland echoes the run up to the Iraq war
Why you should read it: Talking Points Memo proprietor Josh Marshall details the ways in which Trump’s threats against Greenland resemble the discourse that preceded the 2003 invasion of Iraq.
“I’m starting to get a strong Iraq War vibe about Greenland… I don’t mean that I expect a catastrophic and ruinous U.S. invasion to take place. I’m referring to something different… but let’s just say: still not great. One of my strongest memories of those dark times 20-plus years ago was a peculiar dynamic that took hold in Washington after the 9/11 terrorist attacks. The desire to invade Iraq was already a big thing in elite conservative circles in the late Clinton years. That was the origin of the ‘Iraq Liberation Act’ of 1998. After the 9/11 attacks, the Bush administration quickly made clear it wanted to overthrow the Iraqi regime either as retaliation for the attacks or as some sort of preemptive action to forestall future attacks… From the first weeks after the 9/11 attacks, there was a kind of competitive bidding largely though not exclusively in right-wing DC circles proposing arguments for the invasion. There was the democracy argument, the WMD argument, the Saddam-bin Laden alliance argument among a lot of others. These almost entrepreneurial proposals moved between the think tanks and the administration with a range of policy entrepreneurs and agitators bubbling in the mix. For anyone there at the time and watching all this closely it was impossible not to ask, what’s the real story here? What’s actually motivating this? I discussed this at the time not only here at TPM but in a number of articles in The Washington Monthly. One of my abiding memories of those months is being at a party in DC and having a pro-Iraq War journalist walk me through these different arguments for the war. At a certain point in the conversation I said, Okay, I get the logic in each of those cases. But these aren’t really arguments. They’re rationales. Which is the actual reason why the people leading this charge want to do this? It can’t be a bunch of logically unrelated rationales.”
“What I eventually decided was that there actually was no reason. Or to put it more specifically, the idea of invading Iraq and overthrowing its government had become a sort of idée fixe in 2002 in Washington, DC. Once it became clear that people at the highest levels of the administration really, really wanted to do this there was a kind of unannounced contest to come up with a reason why it was a great idea. It’s started to feel like that again today. Donald Trump is a bit obsessed with possessing Greenland. And that’s creating a kind of gravitational pull to come up with reasons to justify the idea… Needless to say, all of these ideas are fairly weird. What seldom gets discussed in what we must now call ‘Greenland discourse’ is that the U.S. already has a military base in Greenland with about 100 soldiers permanently stationed there. To the extent that Greenland becomes an even more strategically placed piece of land in a warmed Earth future (which is quite possible, even likely) there’s every reason to think we can come to some agreement with either Denmark (the current national government) or Greenland itself (if it becomes independent) to secure everyone’s defense interests. The Greenlanders probably don’t want to be invaded by China or Russia any more than we’d want that to happen. And similar to the situation with the Panama Canal, it’s all kind of moot.”
Why it matters: “This is all a long way of saying that these Greenland ideas are solutions in search of a problem. But you can see how Trump’s obsession is creating that same gravitational pull, creating a hot house climate where upstart national revivalists are coming up with new reasons to conquer or buy Greenland, explaining the mix of economic, strategic or spiritual awesomeness doing so would bring in its wake… But it is worth keeping an eye on the Trumper freak show that is busy spinning up these ideas. Remember, this didn’t go great last time.”
4. How DOGE turns over the government to Elon Musk and other would-be oligarchs
Why you should read it: Substacker Don Moynihan outlines the ways the so-called Department of Government Efficiency (DOGE) represents a hostile takeover of the U.S. government by techno-oligarchs like Elon Musk and Marc Andreessen.
“The shape of the [oligarchic] America that Biden describes is revealed in a variety of ways. Trump has assembled a Cabinet of the very rich. The three richest men in the world sat in the front row of his inauguration. He has authorized the very richest man to reorganize American government… Here is a factual description of DOGE: it is a group run by right-wing billionaires who oppose government regulation of their businesses, and benefit from government contracts. It avoids accountability standards that we expect of other groups who seek to influence government. It is not run by people who have a deep knowledge of the function of government, or have much patience with the procedural requirements that flow from laws… DOGE will bypass normal policymaking processes or rebuttals by experts. Years of carefully developed policy compromises will be portrayed as corrupt and broken. Andreessen proposed that ‘of course you want efficiency, and of course you want cost cutting wherever you can get it, and of course you want to eliminate fraud and abuse and all these things.’ Evoking norms like ‘efficiency’ or cutting ‘fraud and abuse’ serves to abstract real cuts to real programs that people depend upon. But with a sophisticated enough messaging operation, maybe you can change the policy before enough people realize what has been taken from them.”
“Because you cannot separate DOGE from Musk, it comes with the power that he brings to the table. This includes extraordinary media power: Musk owns what is (still) the most influential social media platform in the world. How might he use this power? Andreessen provided one clue, which is that DOGE will become a propaganda machine, doing for government programs what LibsOfTikTok has done for school teachers: amplifying negative messaging to undermine public support… Andreessen's argument is that if people really understood government programs like Social Security — the way that some very online tech billionaires who don't understand government do — they would not support them. And the billionaires will use their social media make the public misunderstand these programs the way they do.”
Why it matters: “To be clear, America in 2024 is not 1990s Russia. And so, the use of oligarchy as a description has its limits. But in the weeks and months ahead, we should be willing to apply a critical lens to DOGE and its work, rather than taking its claims at face value. Unwilling to follow the rules, it needs to earn trust through its actions. And ‘oligarchy’ seems like a reasonable if extreme alternative to the lens of ‘good government commission….’ I don’t know what the answer will be, but we should be ready to ask: Does DOGE work for the American government, or does the American government work for its sponsors?”
5. How Germany’s economic model broke—and why there’s no good ideas on how to fix it
Why you should read it: Wall Street Journal reporters Tom Fairless and Bertrand Benoit describe how Germany’s export-fueled economic model ran into deep trouble—and why few German politicians have proposed real alternatives.
“Slowing economic growth in China and growing competition from companies there have undercut German industry as a whole. Combined with exploding energy costs and the threat of new trade tariffs, the forecast is grim…Gross domestic product has roughly flatlined since 2019, before the start of the Covid-19 pandemic—the longest period of stagnation since the end of World War II. Most economists expect it will stagnate again this year… Germany’s industrial output has fallen by 15% since 2018, and the total number of people employed in the manufacturing sector is down 3%. Manufacturers in Germany’s metal and electrical industry, weighed down by costs, could lay off as many as 300,000 workers over the next five years, said Stefan Wolf, president of a lobby group for the sector. ‘Deindustrialization is in full swing,’ said Wolf, adding that over €300 billion in investment capital has flowed out of Germany since 2021.”
“The country, with 83 million inhabitants, grew into the world’s third largest economy by making and exporting the engineering products—cars, robots, trains, factory machinery—others wanted to buy. Now, the world is turning its back on made-in-Germany, and Germany has no plan B… Trade in goods is more critical to Germany’s economy than oil is to Texas or tech to California—an overdependence that is the result of decades of government policy that supported export manufacturing while creating hurdles to investment in new sectors such as IT or in the country’s infrastructure. Exports support roughly one in four German jobs. More than two-thirds of cars produced in Germany are exported. Since the mid-1990s, exports’ share of Germany’s GDP doubled, reaching 43% of GDP, four times the share in the U.S. and twice as high as China.”
Why it matters: “Most politicians are focusing on how to tweak and improve the current export-reliant, manufacturing-heavy economic model. New ideas to encourage investment and consumption, boost trade inside Europe or open up to fast-growing tech or services sectors are virtually absent… Decades of government underinvestment have left Germany with a depleted transportation infrastructure, including trains that no longer run on time and a military that is a shadow of what it was during the Cold War. In May, the business-affiliated IW economic institute and the trade union-owned IMK think tank estimated Germany would need €600 billion in spending over the next 10 years to offset its investment gap, modernize the country’s education system, fix its transport networks, upgrade its power grid and digitize its public administration.”
6. How Trump’s budget cuts will cripple American science
Why you should read it: Jake Steckler of TechPolicy.Press shows how federal budget cuts proposed by the Trump administration will eviscerate America’s capacity for research and innovation.
“This is how many major innovations originated—from someone motivated to solve a problem, driven not by profit but by discovery, and often funded by the government. Yet, today, many of Silicon Valley’s most influential leaders helped re-insert Donald Trump into the White House, whose administration is hostile to federal agency funding and likely to govern in ways anathema to technological progress. Dismantling the federal agencies that lead and support the nation’s scientific research will have devastating effects on the type of innovation that saves lives and improves our standard of living… The MAGA coalition has already revealed itself to be a credible threat to vital government-funded projects. Last month, President Trump and Elon Musk’s recent demands for a leaner budget led Congress to remove funding for child cancer research in the most recent funding bill. Now, a Trump executive order caused the National Institute of Health’s (NIH) operations to abruptly halt, putting frontier biomedical research at risk. An OMB memo further ordered agencies to pause the disbursement of funds for clean energy projects associated with the Inflation Reduction Act.”
“Many of our truly groundbreaking inventions since the Industrial Revolution are the fruits of research motivated by an intractable problem and fueled by government agencies. Not just the internet, which carries our information across the globe, but the jet engines that power us to physically do the same, and the GPS that steers us the right way. NASA-funded research gave us the baby formula that nourishes our infants, and the NIH and National Science Foundation have enabled many of our most profound medical breakthroughs, from vaccines to MRI machines. Even the duct tape that literally holds things together was borne out of a project greenlighted by FDR during World War II… Trump’s first administration proposed major cuts to the NIH, NSF, NASA, DOE, and the EPA. His proposals largely failed, thanks to Congress wielding the power of the purse. But with a more politically experienced Trump inner circle and a Republican-controlled Congress—not to mention Elon Musk, who is calling for $2 trillion in federal spending cuts as the head of the Department of Government Efficiency (DOGE)—the odds of Trump having his way are higher this time around. The irony of Musk’s austerity crusade is the early survival of Musk’s Tesla hinged on government grants and subsidies. SpaceX, another Musk venture, has earned over $20B in government contracts since 2008.”
Why it matters: “A policy approach that encourages innovation is one that prioritizes funding for basic research, actively attracts the world’s best talent to the United States, and places a premium on education. Preventing catastrophic impacts to the agencies that have long enabled the critical R&D on which America relies will only require a few Republican congress members to vote against the Trump coalition’s proposals. But critics fear that Congressional loyalty to Trump is stronger than ever before… If Congress toes the line on anti-R&D policies, American innovation will falter at a time when it’s desperately needed.”
7. Why the TikTok ban is good, actually
Why you should read it: On his Substack, Center for New Liberalism honcho takes TikTok apologists to task for ignoring the social media platform’s very real threats to American national security.
“The TikTok ban is coming, and TikTok’s user base is doing a speed run of the five stages of grief… [TikTok creator] Soupy’s rant about the TikTok ban has been shared widely across the web, and it’s emblematic of TikTok in general. There’s no specific argument other than vaguely conspiratorial vibes. There’s a wild misunderstanding of what terms like ‘free speech’ and ‘fascism’ mean. There’s no facts or data or hard evidence presented. The video is laced with the pseudo-intellectualism of a college freshman who just got high for the first time. Soupy doesn’t actually understand what’s happening, but social media incentivizes her to be righteously angry about it. And because we’re all addicted to being outraged the video went viral.”
“The actual argument for banning TikTok has always been about national security. China under Xi Jinping’s rule is a totalitarian nightmare state. It is still actively genociding minority populations, it crushes dissent and human rights, and it’s America’s geopolitical enemy. It would be absolutely insane to allow the CCP to control one of the most important information channels in our country… Some people conflate this as just being about ‘data’, but that’s wrong. Data privacy is a concern, but the larger concern is about control of the algorithm and control of what hundreds of millions of people see. During the Cold War, we wouldn’t have dreamed of letting the USSR control NBC, directing whatever propaganda they wanted into American households. Why would we let the CCP control one of the largest social media sites today? It’s shocking how few people address this, even those arguing directly against the ban. You’re more likely to see a direct acknowledgement that it happens. ‘I know China is influencing me or spying on me, but that’s better than Mark Zuckerberg!…’ It really isn’t in question that TikTok is beholden to the CCP and that they’re already using their power to influence public opinion.”
Why it matters: “Arguably one of the most dangerous uses of social media by both foreign and domestic actors has been to convince an entire generational cohort that the US government is literally Satan while other governments have only friendly intentions. This knee-jerk anti-Americanism is spread by the alt-right, by the far left, and by the foreign governments that benefit from extremist political discourse in America. It’s why such a sizable pro-Russia contingent exists online when Russia’s war of aggression against Ukraine is a fairly uncomplicated good vs evil situation. It’s why people can say with a straight face that Mark Zuckerberg is equal to or worse than a genocidal dictatorship. It’s why so many Zoomers assume the US government is at all times deliberately trying to ruin their lives, while China is just a cute lil guy who wants to be friends. If Xi Jinping invaded Hawaii next week there would undoubtedly be a contingent of young people who would embrace Xi Jinping Thought and say that the US deserved it… All that’s left is the cope. Both ByteDance and their users have proven in the last few weeks exactly why it’s so dangerous to give a totalitarian state control of your information channels. People will spend the next week flipping out, but absent a last-minute deal where someone buys TikTok the ban is happening. I don’t love strengthening two already gigantic social media behemoths. But it’s preferable to having the CCP own TikTok.”
8. How the campaign against “neoliberalism” failed
Why you should read it: The Atlantic columnist Jonathan Chait observes that the left’s “post-neoliberal” program failed politically by failing to win over the working-class voters its proponents said it would.
“On the substance, Biden’s economic agenda has registered some meaningful successes. The hot labor market raised wages; union organizers at a handful of companies, such as Starbucks and Amazon, have made breakthroughs; and the administration’s public investments in chip production and green energy have built up strategic domestic industries. As a political strategy, however, post-neoliberalism has clearly failed. Biden’s popularity dropped to catastrophic levels in his first year and never recovered, leaving his successor, Vice President Kamala Harris, unable to escape his gravitational pull. If rejecting neoliberalism for four years did nothing to pull working-class voters away from Trump, perhaps Trumpism was never a revolt against neoliberalism in the first place.”
“Some Democrats have responded to the disaster of 2024 by insisting that the way forward for the party is to keep doing what Biden did, but louder and more insistently. In fact, Trump’s reelection ought to call into question the whole foundation upon which the strategy was constructed… In November, working-class voters of all races, the very constituency that Biden’s anti-neoliberal turn was supposed to court, deserted the party. Perhaps hoping for Roosevelt-size majorities was a bit ambitious, but Biden’s sweeping, historic changes ought to have had at least some positive directional impact for the party. Unless, that is, the post-neoliberal theory of politics was wrong all along… The pro-Trump swings were small [in places that received Biden investments], ranging from 0.1 percent to 3.5 percent—well below the national average. One could spin this as evidence that Biden’s domestic build-out had brought some marginal benefits—fractional gains concentrated in areas that were chosen as the staging grounds for gigantic national expenditures. But we are talking about small local shifts, obtained via many billions of dollars of federal investment. That is not a scalable national strategy.”
Why it matters: “Public policy, of course, is not just about winning elections; it’s about improving people’s lives. Some of the policies Biden implemented are worth preserving on the merits. The blue-collar workers of Lordstown may well be in a better position than they were four years ago. But the electorate’s diffidence in the face of these measures is bracing. The notion that there is a populist economic formula to reversing the rightward drift of the working class has been tried, and, as clearly as these things can be proved by real-world experimentation, it has failed. It turns out there’s more to popularity than populism.”
9. The pseudo-intellectual origins of our Silicon Valley techno-oligarchy
Why you should read it: A blast from the past—Corey Pein’s 2014 piece in The Baffler that profiles the neoreactionary mentality exemplified by PayPal cofounder Peter Thiel and logorrheic blogger Curtis “Mencius Moldbug” Yarvin that had already seized the imaginations of many in Silicon Valley.
“Welcome to the latest political fashion among the California Confederacy: total corporate despotism. It is a potent and bitter ideological mash that could have only been concocted at tech culture’s funky smoothie bar—a little Steve Jobs here, a little Ayn Rand there, and some Ray Kurzweil for color… Moldbuggism, for now, remains mostly an Internet phenomenon. Which is not to say it is ‘merely’ an Internet phenomenon. This is, after all, a technological age. Last November, [Curtis] Yarvin [aka ‘Mencius Moldbug’] claimed that his blog had received 500,000 views. It is not quantity of his audience that matters so much as the nature of it, however. And the neoreactionaries do seem to be influencing the drift of Silicon Valley libertarianism, which is no small force today. This is why I have concluded, sadly, that Yarvin needs answering.”
“If the Koch brothers have proved anything, it’s that no matter how crazy your ideas are, if you put serious money behind those ideas, you can seize key positions of authority and power and eventually bring large numbers of people around to your way of thinking. Moreover, the radicalism may intensify with each generation. Yesterday’s Republicans and Independents are today’s Libertarians. Today’s Libertarians may be tomorrow’s neoreactionaries, whose views flatter the prejudices of the new Silicon Valley elite… California libertarian software developers inhabit a small and shallow world. It should be no surprise then, that, although [PayPal cofounder Peter] Thiel has never publicly endorsed Yarvin’s side project specifically, or the neoreactionary program in general, there is definitely a whiff of something Moldbuggy in Thiel’s own writing. For instance, Thiel echoed Moldbug in an infamous 2009 essay for the Cato Institute in which he explained that he had moved beyond libertarianism. ‘I no longer believe that freedom and democracy are compatible,’ Thiel wrote.”
Why it matters: “Might a dictatorial approach, in Thiel’s opinion, also work better for society at large? He doesn’t say so in his Stanford lecture (although he does cast tech CEOs as the heirs to mythical ‘god-kings’ such as Romulus). But Thiel knows where to draw the line in mixed company. Ordinary people get so ‘uncomfortable’ when powerful billionaires start talking about the obsolescence of participatory government and ‘the unthinking demos,’ as he put it in his Cato essay. Stupid proles! They don’t deserve our brilliance!… It is clear that Thiel sees corporations as the governments of the future and capitalists such as himself as the kings, and it is also clear that this is a shockingly common view in Thiel’s cohort.”
Odds and Ends
How Italian scientists discovered the perfect cacio e pepe recipe…
Archaeologists in England have unearthed a remarkably well-preserved sword from the fifth or sixth century, one with a silver-and-gold hilt inscribed with runic script…
How sunken shipwrecks tell the story of World War II’s Aleutian Islands campaign…
NASA announces that samples of the asteroid Bennu returned by the OSIRIS-REx probe contain the requisite building blocks for life as we know it…
How one Danish fossil hunter found a regurgitalite—66 million year old fossilized shark vomit—and what it can tell us about the late Cretaceous food chain…
What I’m Listening To and Watching
Star Wars: Skeleton Crew, an entertaining mash-up of The Goonies and Pirates of the Caribbean set in the Star Wars universe and featuring Jude Law as a ruthless, Force-wielding pirate captain.
Cunk on Life, in which landmark documentary presenter Philomena Cunk (deadpan comedian Diane Morgan) explores the meaning of life.
All Blues, guitar hero Peter Frampton’s 2019 album of blues covers—perfect listening for a road trip.
“Backwater Blues,” the penultimate track from blues guitar legend B.B. King’s last studio album, 2008’s One Kind Favor.
“The Cross,” a smoldering track from Prince’s classic 1987 album Sign O’ The Times that’s one of his most spiritual songs.
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