When the State plays god

When a government tries to control every aspect of life, the Law of Unintended Consequences isn’t far behind. Exhibit A: China, which from 1980 to 2015 ruthlessly enforced a “one-child policy:”

China’s population shrank last year for the first time in 70 years, experts said, warning of a “demographic crisis” that puts pressure on the country’s slowing economy…

China’s median age was 22 in 1980. By 2018, it was 40. That will rise to 46 in 2030 and 56 in 2050. In the US, the median age was 30 in 1980 and 38 in 2018. In 2030, it will be 40, and 44 in 2050. India, by comparison, had a median age of 20 in 1980 and 28 in 2018.

Get that? By mid-century, half of China’s population will be 56 or older. There will be many more years of population decline ahead. Why? Because after two generations of using everything from fines to abortion and forced sterilization to enforce one child per family, single-child or childless families are now the Chinese social norm:

Northeast China – Heilongjiang, Liaoning and Jilin provinces – has a population of about 109 million, and its socio-educational level is several years ahead of the country average. The fertility rate in northeast China was only 0.9 in 2000 and 0.56 in 2015. This means that the next-generation population in this region is only a quarter the size of the last generation.

Demographers consider a fertility rate of 2.1 (children per woman) to be the “replacement” rate, neither increasing or decreasing a country’s population.  A fertility rate of 0.56 roughly means only 1 in 4 women of childbearing age have a child!  Absent an extraordinary event, China is well established on the road to demographic and economic decline previously pioneered by Japan.

Japan’s economic crisis was essentially a demographic crisis. The decline in young people in the labour force has led to a shortage in manufacturing: the workforce employed in industry decreased from 22.9 million in 1992 to 17 million in 2017, and the workforce is ageing, leading to a decline in production and innovation. As a result, Japan’s manufacturing exports as a share of the global total declined from 12.5 per cent in 1993 to 5.2 per cent in 2017, and the number of Japanese firms ranked in the Fortune Global 500 fell from 149 in 1994 to 52 in 2018.

In any society, an increase in the number of elderly leads to a drop in savings, and a decrease in the labour force leads to a decline in return on investment, which reduces the investment rate…

Since 2000, China’s total fertility rate has been lower than that of Japan. The average in 2010-2016 was 1.18 in China and 1.42 in Japan. This means China’s ageing crisis will be more severe than Japan’s, and its economic outlook bleaker.

In Japan’s case, the demographic crisis was precipitated by cultural changes. Women found new opportunities outside the home and began marrying later… if at all.  Unwed parenting still carries social stigma in Japan, so this had a dramatic effect. Add to that the notorious Japanese work ethic of self-destructive loyalty to a corporation, and it’s easy to understand why professional couples have been also reluctant to have children for more than a generation.

China, however, will have to face the fact its government prevented or aborted the next generation. But before we look down on our noses at them, it’s important to recognize the impact of our own government’s actions. Since the Roe v. Wade Supreme Court decision, millions of babies have been voluntarily aborted in the United States. In this era of heated debate over immigration, legal or otherwise, it’s significant to realize that without such immigration, the population of the United States and of most Western European nations would be in decline as well.  That doesn’t mean I support the ongoing invasion of the U.S., however.

The future belongs first to those who show up.  It looks very likely the world powers of today have sown the seeds of their own overthrow, and are destined to be replaced.  Groups have been dispossessed of their patrimony and replaced before.  Perhaps reservations await the descendants of those who developed the concept for the original Native Americans.  History has a knack for that kind of irony.

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A worthwhile New Years resolution

…would be for the United States to admit we’ve achieved everything we’re likely to in Afghanistan (i.e. not much), and end the operation:

No other country in the world symbolizes the decline of the American empire as much as Afghanistan. There is virtually no possibility of a military victory over the Taliban and little chance of leaving behind a self-sustaining democracy — facts that Washington’s policy community has mostly been unable to accept…

Indeed, Afghanistan represents the triumph of the deterministic forces of geography, history, culture, and ethnic and sectarian awareness, with Pashtuns, Tajiks, Uzbeks and Hazaras and other groups competing for patches of ground. Tribes, warlords and mafia-style networks that control the drug trade rule huge segments of the country…

The United States’ special adviser to Afghanistan, Zalmay Khalilzad, is trying to broker a diplomatic solution that allows the United States to draw down its forces without the political foundation in Kabul disintegrating immediately.

That may be the real reason the United States keeps spending so heavily in Afghanistan. The Pentagon is terrified of a repeat of 1975, when panicked South Vietnamese fled Saigon as Americans pulled out and North Vietnamese forces advanced on the city. The United States military did not truly begin to recover from that humiliation until its victory in the Persian Gulf war of 1991. An abrupt withdrawal from Afghanistan could conceivably provide a new symbol of the decline in American hard power.

There is also the fear that an Afghanistan in chaos could once again provide a haven for an international terrorist group determined to perpetrate another Sept. 11-scale attack. Of course, Yemen, Somalia and a number of other places could also provide the setting for that.  The point is, we remain in Afghanistan out of fear of even worse outcomes, rather than in the expectation of better ones.

Afghanistan has become America’s “tar baby.”  The more we try to do there, the more we seem “stuck” with no vision or endgame in sight.  The writer of the linked article is correct that our misadventures there are likely to signal to our adversaries we aren’t the power we used to be.  But what is far worse is that our indecision and inability to know “when to fold them” demonstrates poor strategic judgment as well.  Nothing encourages aggression like thinking your potential opponent is both weak AND a fool.

(Chinese) Rear Admiral Lou Yuan has told an audience in Shenzhen that the ongoing disputes over the ownership of the East and South China Seas could be resolved by sinking two US super carriers.

His speech, delivered on December 20 to the 2018 Military Industry List summit, declared that China’s new and highly capable anti-ship ballistic and cruise missiles were more than capable of hitting US carriers, despite them being at the centre of a ‘bubble’ of defensive escorts.

“What the United States fears the most is taking casualties,” Admiral Lou declared.
He said the loss of one super carrier would cost the US the lives of 5000 service men and women. Sinking two would double that toll.

Our extended presence in both Iraq and Afghanistan underscored our country’s emphasis upon what the military calls “force protection.”  It’s natural for any military to seek to limit casualties, but when it becomes apparent that even a few deaths are enough to change national policy, outside observers begin to doubt one’s resolve.  The thoughts expressed by Admiral Lou Yuan echo those of the Japanese militarists in 1940: the U.S. is a paper tiger, and will acquiesce to its rivals if smacked hard enough on the nose.  Japan’s miscalculation led to a brutal Pacific War that ended in atomic fireballs over two of its cities.  To see the line of thought being resurrected by the Chinese, whose potential to oppose the U.S. dwarfs that of Russia, should give plenty of people pause.

Afghanistan is known as “the graveyard of empires” for a reason.  The sooner we recognize that, and take steps to restore the deterrent credibility we’ve lost there, the better.  The misguided 17-year (and counting) occupation may have sought to avoid another 9/11.  But at this point, it risks far worse outcomes by emboldening rivals who believe they’ve taken our measure by watching us there.  Perhaps America in 2019 lacks the ability to muster the resolve shown after Pearl Harbor in 1941.  Then again, perhaps not.

The only certain thing is it’s better to ensure we never have to find out.

Why are we buying from China?

It’s no secret the U.S. and China are increasingly at odds with each other.  China fully recognizes — even embraces — this development, pouring effort into projects like the Confucious Institutes and developing spies among the key staff of important members of Congress.  China holds a significant fraction of the U.S. public debt — a potential lever in any showdown, given our nation’s reliance on deficit-spending.  While we’ve heard nothing but “Russia, Russia, Russia” since the 2016 presidential election, it’s China that poses the most long-term threat to U.S. national security.

And yet, we continue to enable them:

There are two ways for spies to alter the guts of computer equipment. One, known as interdiction, consists of manipulating devices as they’re in transit from manufacturer to customer. This approach is favored by U.S. spy agencies, according to documents leaked by former National Security Agency contractor Edward Snowden. The other method involves seeding changes from the very beginning.

One country in particular has an advantage executing this kind of attack: China, which by some estimates makes 75 percent of the world’s mobile phones and 90 percent of its PCs

Supermicro had been an obvious choice to build Elemental’s servers. Headquartered north of San Jose’s airport, up a smoggy stretch of Interstate 880, the company was founded by Charles Liang, a Taiwanese engineer who attended graduate school in Texas and then moved west to start Supermicro with his wife in 1993. Silicon Valley was then embracing outsourcing, forging a pathway from Taiwanese, and later Chinese, factories to American consumers, and Liang added a comforting advantage: Supermicro’s motherboards would be engineered mostly in San Jose, close to the company’s biggest clients, even if the products were manufactured overseas.

Today, Supermicro sells more server motherboards than almost anyone else. It also dominates the $1 billion market for boards used in special-purpose computers, from MRI machines to weapons systems. Its motherboards can be found in made-to-order server setups at banks, hedge funds, cloud computing providers, and web-hosting services, among other places. Supermicro has assembly facilities in California, the Netherlands, and Taiwan, but its motherboards—its core product—are nearly all manufactured by contractors in China…

“Think of Supermicro as the Microsoft of the hardware world,” says a former U.S. intelligence official who’s studied Supermicro and its business model. “Attacking Supermicro motherboards is like attacking Windows. It’s like attacking the whole world.”

The entire, detailed article, is worth reading. As you do, consider that our government increasingly uses server-enabled cloud computing, even for the most sensitive of information. Does it make sense for our government and military to use hardware produced by our all-but-in-name adversary? What carefully implanted surprises now await us in an actual showdown with this emerging power? Shouldn’t our policy be to encourage cost-effective manufacturers here at home?

Over the past 30 years the world became obsessed with obtaining cheap products from China. We’re finding out now they may have cost more than we ever suspected.

Make America great again — make America self-reliant, manufacturing its own goods again.

Still out there… even in China

Hollywood is beginning to notice there are still quite a few people left who are interested in uplifting and edifying entertainment:

Given the crop of projects being shopped at the Cannes film market that features Christian-themed narratives — notably An Interview With God, Samson and God Bless the Broken Road — and with Wim Wenders’ doc Pope Francis: A Man of His Word playing as an official selection at the festival, there are signs that fare once ignored by international buyers and Cannes programmers is receiving a warm welcome…

“When I was first approached to take on [An Interview With God], I felt reluctant because I thought, ‘Oh my God, there really isn’t an evangelical community outside of the United States,’” says Wander. “But we’ve been getting interest from places like China — I never would have thought that — Japan, the U.K., spots that typically don’t respond to these kinds of films.”

One has to be careful here, because what Hollywood calls “faith-based” is often over-the-top heretical and completely un-Biblical (see: Noah).  That said, recent films like Paul – Apostle of Christ are showing it doesn’t take a large bankroll to produce a film worth seeing, particularly when one stays respectful of the source material.  When such films triple their production budget in ticket receipts, even secular (but profit-minded) Hollywood begins to take note.

This is one reason it’s critical Christians are careful with our entertainment vote, which consists of how we choose to spend our money.  Noah only made money because of the overseas market – it would have been a flop on domestic tickets alone.  While Hollywood knows the overseas market is lucrative, the experience with Noah will give them pause.  Similarly, A Wrinkle In Time, which largely abandoned what Christian influence was in the original book, has also underwhelmed at the box office (and is rumored to have lost $100 million for Disney).

There is great potential here.  Moviemakers who desire to honor God with their work have raised their game, rising above some of the cheesy stereotypes of their past efforts.  If Hollywood decides this is a financially winning formula, it’s possible they’ll support these projects, even if they personally disdain the worldview involved.  I don’t expect Hollywood to become a source of evangelical proselytizing.  But moving the window closer to God’s perspective would be a great development for our culture.  He can speak even through the unlikeliest of messengers.

Consider that seriously when you choose your entertainment.  Are you helping to strengthen our mass media culture, or going along with its slide?

Sounding a Mayday

A new memoir by retired Air Force Chief of Staff General Norton Schwartz revisits the decision by then-Secretary Robert Gates to shut down the F-22 Raptor production line well short of the service’s calculated minimum operational requirement.  The wars in Afghanistan and Iraq have been tremendously expensive for the United States, both in lives and money.  As time goes on, we may find the largest cost of those conflicts was to cause such an intense focus on counterinsurgency warfare that our higher-end capabilities were allowed to atrophy.  Since the dissolution of the Soviet Union in 1991, the United States has considered Russia and China “near peer competitors” — in short, not quite the superpower America is.  That situation is changing more rapidly than many planners anticipated even a decade ago.  China fielded its first operational stealth aircraft years before expected.  While they are still having some growing pains, this development invalidated some of the reasoning behind shutting down the F-22 — that the U.S. Air Force was largely untouchable.

…Schwartz’s predecessor General Mike Moseley “never gave up in his principled attempts to get those 381 F-22s” the book states. That push ended up getting Moseley fired along with his civilian counterpart, Air Force Secretary Mike Wynn. After the culling, the brass thought that the new bomber was simply too important and that the chances of winning both the F-22 and bomber arguments with Gates, who was staunchly averse to building high-priced weapons that couldn’t be used in Iraq or Afghanistan, was next to zero.

Schwartz, in an attempt to see if a reduced F-22 production number would be palatable to the Defense Secretary, executed an independent assessment that ended up stating 243 F-22s was the absolute minimum the force could get by with. But Gates balked at that number as well.

In the end, the production line was shut down after only 188 Raptors were built.  The F-22 is designed to ensure air supremacy by sweeping adversaries’ aircraft from the skies.  For context, it is assuming that role from the 1970s-vintage F-15 Eagle, of which the Air Force procured nearly 900 over the decades since its debut.  That number does not include the 225 F-15E “Strike Eagles” specially designed with more focus on ground attack missions than air-to-air operations.  The F-15 production line continues to operate today, fielding orders from major U.S. allies more than a dozen years after the United States bought its last Eagle.

In short, the U.S. bought far too few Raptors, and now has no option to build more (the production line having been dismantled).  The Air Force was able to replenish its F-15 fleet over the years, purchasing newer aircraft and retiring older airframes.  This will not be an option for the F-22 design, as reopening production is cost-prohibitive.  As a result of this shortfall, the Air Force has kept a large number of F-15s in service as teammates to the Raptor.  But this generates the cost of maintaining four distinct fighter platforms: the F-22, the F-15, the smaller F-16 (most known for its use by the Thunderbird Demonstration Team), and the new F-35 attack aircraft.  The F-15 and F-16 were built concurrently as a “high-low” mix: a smaller number of highly capable F-15s to defeat enemy air forces, and considerably more of the less capable (and less expensive) F-16s to operate in a mostly “permissive” environment.  The same approach was intended for the F-22 and F-35.  With the premature closure of the F-22 line, the Air Force has to choose between keeping the F-15s around longer (adding to budget strain), or shifting some of their air superiority mission to the larger (but less capable) F-16 fleet until sufficient numbers of stealthy F-35s are flying.

This was not the first time the U.S. shot itself in the foot while buying a major aircraft system.  The B-2 bomber, which critics love to point out cost more per unit than any aircraft in history, was originally supposed to be a fleet of 100 aircraft.  Rattled by the program cost at a time the Cold War was winding down, Congress funding the Air Force for only 21 (of which only 19 are in operation today).  After 9/11 the system proved far more versatile than its original mission of nuclear combat with the Soviet Union, flying incredibly long missions non-stop from the U.S. to Afghanistan, Iraq, Libya and elsewhere.  Instead of 16 nuclear weapons, the aircraft can carry up to 80 satellite-guided 500-pound bombs, accurately hitting scores of targets on each mission.  Such capability creates high demand, but with such a small fleet these demands have worn out the B-2 force and the Air Force is scrambling to produce a replacement system as mentioned in the book excerpt above.  It’s arguable an original fleet of 100 aircraft would have reduced or eliminated the need for another design procurement this soon.

But such is the “penny-wise, pound-foolish” ways of government acquisition.  The F-22 and B-2 are arguably the most advanced and capable aircraft ever built — and no more of either can be produced because the facilities have shut down.  It has been 65 years since an American soldier was lost to enemy airpower — in 1953, during the Korean War.  Three generations of military planners have been able to reasonably assume the U.S. would control the skies in any conflict they foresaw.

Our investment decisions in recent years may soon call that assumption into serious question.  Penny-wise, pound-foolish is bad, but not nearly as bad as penny-wise, blood-foolish.

Never take for granted

The right to assemble for worship:

Chinese police officers demolished one of the country’s largest evangelical churches this week, using heavy machinery and dynamite to raze the building where more than 50,000 Christians worshiped.

The Golden Lampstand Church in Shanxi Province was one of at least two Christian churches demolished by the authorities in recent weeks, part of what critics describe as a national effort to regulate spiritual life in China.

Under President Xi Jinping, the government has destroyed churches or removed their steeples and crosses as part of a campaign that reflects the Communist Party’s longstanding fear that Christianity, viewed as a Western philosophy, is a threat to the party’s authority.

And never forget there are plenty of people living in the United States, Canada and Europe who’d like nothing more than to take down all the crosses and dynamite all the churches here, too.

By the purse strings

Since leaving the military, former Chairman of the Joint Chiefs Admiral Michael Mullen has spoken often about what he considers to be the biggest danger to U.S. security: the national debt.

China may be about to give us an object lesson in that assessment:

China added to bond investors’ jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market.  Senior government officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, according to people familiar with the matter.

China holds the world’s largest foreign-exchange reserves, at $3.1 trillion, and regularly assesses its strategy for investing them. It isn’t clear whether the officials’ recommendations have been adopted. The market for U.S. government bonds is becoming less attractive relative to other assets, and trade tensions with the U.S. may provide a reason to slow or stop buying American debt…

Most Americans who pay attention to government spending habits are happy merely to see the deficit fall.  But even if the deficit were brought to zero (i.e. the government miraculously balanced its budget) the outstanding debt still has to be renegotiated periodically, as old bonds mature and new ones are issued.  When there is less demand for new bonds, the yield (interest) has to rise in order to become more attractive.  Thus, even with a balanced budget, our roll-over debt is a potential time bomb.

For the last decade, the U.S. has been able to take advantage of record low bond yields as the Federal Reserve held interest rates at historic lows in the wake of the mortgage debt crisis in 2008.  This, incidentally, is why your bank pays you next to nothing on your savings any more — the same policy that keeps the government’s borrowing costs low essentially robs individual savers.  Unlike taxes, people don’t immediately recognize this fiscal effect the debt has on them.

If forces beyond the government’s control — say, the largest holder of U.S. debt decided not to roll over its holdings — caused bond yields and interest rates to rise faster than desired, the results would bankrupt the U.S. Treasury overnight:

Given its sheer size, if the interest rate on that debt were to rise by even 1%, the annual federal deficit rises by $200 billion. A 2% increase in interest rate levels would up the federal deficit by $400 billion, and if rates were 5% higher, the annual federal deficit rises by a full $1 trillion per year.

The only way to begin mitigating this risk is to not just balance the budget but to start paying down the debt.  Think that will happen?

Me neither.  The day may be fast approaching when the government, in order to service its creditors, has no choice but to cut many of the programs people have become entirely dependent upon.  It may also impose confiscatory taxation, seizing the property of those who’ve managed to save and invest during these irresponsible years.  In both cases, the social consequences will be enormous.

As the Instapundit likes to say, “things that can’t go on forever, don’t.”  The exponential rise of our national debt can’t go on forever.  It’s simply a question of when an event will occur that undeniably shows the emperor has no clothes.