With Great Demographics Comes Great Power

Date: 15-06-2019
Source: Foreign Affairs By Nicholas Eberstadt

Why Population Will Drive Geopolitics

Demographics may not be destiny, but for students of geopolitics, they come close. Although conventional measures of economic and military power often receive more attention, few factors influence the long-term competition between great powers as much as changes in the size, capabilities, and characteristics of national populations.

The United States is a case in point. In 1850, the United States was home to some 23 million people, 13 million fewer than France. Today, the U.S. population is close to 330 million, larger than the British, Dutch, French, German, and Italian populations combined. For more than a century, the United States has had the world’s largest skilled work force, and by measures such as mean years of adult schooling, it has long had among the world’s most highly educated populations. These favorable demographic fundamentals, more than geography or natural resources, explain why the United States emerged as the world’s preeminent economic and military power after World War II—and why it still occupies that position today.

Amerikas ungewöhnliche Konjunkturerholung ist jetzt auch seine längste

Jun 11, 2019 Mohamed A. El-Erian, Project Syndicate

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers in 2009, 2010, 2011, and 2012. He is the author, most recently, of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

LONDON – Im Laufe der kommenden Monate zur Veröffentlichung anstehende Daten werden zeigen, dass die derzeitige wirtschaftliche Expansion in den USA die längste seit Beginn der Aufzeichnungen ist. Doch obwohl die Wirtschaftsentwicklung in den USA die anderer hochentwickelter Volkswirtschaften nach wie vor übertrifft, hat dieser Erfolg das von vielen Amerikanern empfundene anhaltende Gefühl wirtschaftlicher Unsicherheit und Frustration bisher nicht vertrieben, und auch die Sorgen über politischen Spielraum zur Reaktion auf die nächste Rezession oder finanzielle Erschütterung mildert es nicht.

Die aktuelle Wirtschaftsexpansion begann Mitte 2009 nach der Finanzkrise von 2008 und der „Großen Rezession“. Beflügelt zunächst durch außergewöhnliche fiskalpolitische Interventionen und eine zuvor undenkbare Geldpolitik, schuf die Konjunktur eine ausreichend starke Grundlage für die Rückkehr des Verbrauchervertrauens und die Erholung der Unternehmensbilanzen. Im Verbund mit sich beschleunigenden Fortschritten bei neuen Technologien ging die weitere Expansion dann weitgehend von Technologie- und Plattformunternehmen aus, die über eine neue „Gig Economy“ präsidierten. Einen zusätzlichen Schub erhielt sie durch wachstumsfreundliche Maßnahmen, zu denen Deregulierungsmaßnahmen und Steuersenkungen gehörten.Angesichts einer US-Arbeitslosenquote von 3,6% ist bei den (inflationsbereinigten) Reallöhnen nun ein Wachstum von 1,6% zu verzeichnen. Und laut den jüngsten Quartalsdaten, die an annualisiertes BIP-Wachstum von 3,1% zeigen, übertrifft die US-Wirtschaftsaktivität jene in Europa und Japan erheblich.

The Self-Destruction of American Power

Date: 12-06-2019
Source: By Fareed Zakaria, Foreign Affairs

Washington Squandered the Unipolar Moment

Sometime in the last two years, American hegemony died. The age of U.S. dominance was a brief, heady era, about three decades marked by two moments, each a breakdown of sorts. It was born amid the collapse of the Berlin Wall, in 1989. The end, or really the beginning of the end, was another collapse, that of Iraq in 2003, and the slow unraveling since. But was the death of the United States’ extraordinary status a result of external causes, or did Washington accelerate its own demise through bad habits and bad behavior? That is a question that will be debated by historians for years to come. But at this point, we have enough time and perspective to make some preliminary observations.

As with most deaths, many factors contributed to this one. There were deep structural forces in the international system that inexorably worked against any one nation that accumulated so much power. In the American case, however, one is struck by the ways in which Washington—from an unprecedented position—mishandled its hegemony and abused its power, losing allies and emboldening enemies. And now, under the Trump administration, the United States seems to have lost interest, indeed lost faith, in the ideas and purpose that animated its international presence for three-quarters of a century.

A STAR IS BORN

G-20 Financial Leaders Criticize Trade Tensions for Impact on Growth

Date: 10-06-2019
Source: The Wall Street Journal

The U.S. was at odds with most countries on how tariffs have impacted global growth and how to resolve trade conflicts

Finance ministers and central bankers fretted about trade and geopolitical tensions and agreed to stand ready with action in case those risks intensify, according to a statement released Sunday after a weekend Group of 20 meeting in Japan.

FUKUOKA, Japan—The Group of 20 major economies decried worsening trade tensions and their impact on global growth, with the U.S. and China locked in a protracted trade battle since negotiations fell apart a month ago.

Finance ministers and central bankers fretted about the trade and geopolitical tensions and agreed to stand ready with action in case those risks intensify, according to a statement released Sunday after a weekend meeting in Japan. Their statement didn’t mention the tariffs the U.S. and China have used, though the measures and their effect weighed on the officials’ closed-door discussions.

The technology industry is rife with bottlenecks

Date: 07-06-2019
Source: The Economist

The US-China tech cold war is making companies more aware of them than ever

Japan had long since lost its lead in electronics. Or so many thought. When an earthquake and tsunami hit the country in 2011, its continued centrality to the industry quickly became apparent. Copper foils for printed circuit boards, silicon wafers to make chips, resin to package them—for many components Japan was the home of the biggest, sometimes only, supplier. As production ground to a halt, customers scrambled to find alternatives. Many had to limit their output, like carmakers reliant on Renesas Electronics, a leading maker of engine-controlling chips whose wafer-fabrication plant sustained heavy damage.

Natural disasters—whether cataclysmic like the Japanese earthquake or merely destructive like floods or wildfires—regularly test the electronics supply chain. Now a geopolitical shock from President Donald Trump’s efforts to isolate China has thrown the industry’s structure into sharp relief—and exposed its choke points (see table).

Taiwan’s computing titans are caught up in the US-China tech war

Date: 07-06-2019
Source: The Economist

They would rather remain in the shadows

In the shadow of Taipei 101, the Taiwanese capital’s tallest skyscraper, 42,000 people attended Computex, one of the world’s biggest electronics trade expos, which concluded on June 1st. They bought, sold and ogled every electronic component imaginable. Neon-pulsating fans. Computer casings in every imaginable shade of beige. Infinite varieties of fibre-optic cables. And, of course, chips. If silicon had a smell, Computex would be oozing it.

The massive exhibition space is in fact a sideshow. The real action takes place high above, in the hotel suites of central Taipei. The world’s technology firms book them, then fly in for meetings with the Taiwanese companies that are the beating heart of the global electronics supply chain. Taiwan is, in effect, Computex writ large.

The largest Taiwanese tech companies are contract manufacturers, which make products for other firms rather than sell them directly to consumers. The combined sales of the 19 biggest last year totalled $394bn. They co-ordinate the fiendish logistics of getting hundreds of parts sourced from Asia and beyond to arrive in the right place at the right time, in order to keep their assembly plants, many located in China, humming. Largan, Pegatron, Quanta and tsmc are not household names. Their customers—Huawei, Apple, Amazon—are. But the global tech value chains atop which these illustrious firms sit would break without their Taiwanese links.

President Donald Trump is trashing deals in favour of tariffs

Date: 07-06-2019
Source: The Economist

That may backfire on America

New fronts in President Donald Trump’s assault on the global trading system are opening up by the day. On May 30th he dropped a bombshell on Mexico, threatening a 5% tariff on all its exports to America, rising to 25% by October if immigration flows do not fall. On May 31st he turned to India, announcing the end of longstanding trade preferences on around $6bn-worth of its exports to America. A proposal is being considered to enable the administration to increase tariffs on imports from countries deemed to be manipulating their currencies. The appointment of judges to the court of appeals of the World Trade Organisation (wto) is being blocked. Japan and the European Union are on notice that America may impose tariffs on their cars. Meanwhile the biggest trade fight of all, with China, is getting bloodier.

The trade element of Trumponomics is a striking departure from previous administrations’ policies, and a stiff challenge to the multilateral trading system. But critics must face some uncomfortable truths. The first is that some of America’s frustrations with its trading partners are justified. China’s system of subsidies and state-directed capitalism harms competing firms elsewhere, and raises questions about surveillance and security. India’s protectionism has long been an obstacle to trade liberalisation. And the wto’s dispute-settlement system has serious weaknesses.

What to Do About China?

Date: 06-06-2019
Source: by J. Bradford DeLong

J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

By attempting to „get tough“ with China, US President Donald Trump’s administration is highlighting the extent to which America’s star has fallen this century. If the US ever wants to reclaim the standing it once had in the world, it must become the country it would have been if Al Gore had won the 2000 presidential election.

BERKELEY – In a recent issue of The New York Review of Books, the historian Adam Tooze notes that, “across the American political spectrum, if there is agreement on anything, it is on the need for a firmer line against China.” He’s right: On this singular issue, the war hawks, liberal internationalists, and blame-somebody-else crowd all tend to agree. They have concluded that because the United States needs to protect its relative position on the world stage, China’s standing must be diminished.

Big Tech’s Weird Day of Reckoning

Date: 05-06-2019
Source: The Wall Street Journal

Investors spooked by the prospect of a broad U.S. crackdown

The government even rained on Apple’s party.

The opening of Apple Inc.’s annual Worldwide Developers Conference on Monday was clouded by a report from Reuters that the Justice Department might be looking into the company’s business as part of a broader examination of Big Tech. That followed reports over the weekend from The Wall Street Journal that Google-parent Alphabet and Facebook and are undergoing similar probes from the Justice Department and Federal Trade Commission, respectively. Apple’s shares slipped on the news and closed down 1% Monday. Alphabet and Facebook fell more than 6% by the close.

It is easy to see why such headlines spook investors, especially given Big Tech’s unpopularity on both sides of the political aisle. But the reports also raised more questions than answers given the odd approach of the two agencies who typically oversee antitrust matters. According to the Journal, the two have agreed to have Apple and Google fall under the purview of the Justice Department while Facebook and e-commerce giant Amazon.com come under the FTC. That means two companies that generate most of their business through online advertising will be examined by two different bodies.

The case is even more muddled with Apple. The iconic iPhone that made the company the titan it is accounted for only 41% of smartphone sales in the U.S. last year, according to according to Counterpoint. Apple’s Mac computers also make up a relatively small portion of the PC market. The closed nature of the company’s App Store does effectively give it a lock over how apps can be distributed to its mobile devices. But the revenue generated from the sale of apps makes up a relatively tiny portion of the company’s business.

Trump’s Case Against Europe

Date: 04-06-2019
Source: The Wall Street Journal By Walter Russell Mead

The president sees Brussels as too weak, too liberal, and anti-American on trade.

President Trump

“Why does he hate us?” is the question American foreign-policy types often hear from European friends and colleagues when the subject of Donald Trump comes up—as it often does. With Mr. Trump and Secretary of State Mike Pompeo in Europe this week, it seems an auspicious time to attempt an answer.

The news isn’t all bad. When Mr. Trump and senior administration officials talk about China, they attack it for abusing the international system in a ruthless quest for global hegemony. Their reading of Europe is different: that a mix of dysfunctional policies, unrealistic ideas about world politics, and poor institutional arrangements has locked the Continent on a trajectory of decline. As Mr. Trump’s team sees it, they aren’t trying to weaken Europe; they are trying to save Europe from itself.

There are five elements of the Trump critique of the European Union. First, some of the “new nationalists” believe multinational entities like the EU are much weaker and less effective than the governments of nation-states—so much so that the development of the EU has weakened the Western alliance as a whole. In this view, cooperation between nation-states is good and through it countries can achieve things they couldn’t achieve on their own. But trying to overinstitutionalize that cooperation is a mistake. The resulting bureaucratic structures and Byzantine politics and decision-making processes paralyze policy, alienate public opinion, and create a whole significantly less than the sum of its parts.