Trade as the focus of foreign policy

“They come over here, they sell their cars, their VCRs, they knock the hell out of our companies.” -Trump on Japan, 1988

In case his intentions haven’t already been obvious for a long time, the new American president is beginning to offer unmistakable proof that he is deadly serious about completely overhauling US trade policy; it was never just a campaign talking point. Ditto for foreign policy. In fact, the two issues are inextricably linked, as Trump aims to replace national security with trade as the core American foreign policy issue. The implications are nothing short of mind-boggling.

From Brave New War author John Robb comes an important article explaining this sea change in American strategy. The Washington Post has a good report on Robb’s analysis:

By cozying up to Russia, and in his disdain for NATO, President Trump appears to have flipped decades of U.S. foreign policy thinking on its head. It has left many experts puzzled, and plenty outraged.

But for anyone trying to figure out Trump’s worldview, here’s a really interesting way of looking at things, courtesy of John Robb, who runs the Global Guerrillas blog and is an author and military analyst.

In a nutshell, Robb argues that trade — rather than national security — dominates Trump’s foreign policy thinking, inverting decades of U.S. practice. By implication, that makes any country running a large trade surplus with the United States a direct competitor.

If Robb is right, that’s very bad news for China, but it doesn’t make welcome reading for countries such as Mexico, Germany and Japan. Unless they can take steps to reduce their trade imbalances with the United States, they are unlikely to be fully trusted by a man who sees trade as a zero-sum game, and sees anyone “beating” the United States as a threat.

And a quote from Robb:

National security under this regime will be used to reinforce and grow positive trade relationships. For example, military tension with China creates the opportunity for sanctions that simulate the function of tariffs (allowing the U.S. to circumvent trade organizations and domestic resistance to tariffs). In a national security policy slaved to trade, any and all security guarantees extended to other nations will require a positive trade arrangement with the U.S. The U.S. simply won’t protect or extent security guarantees to any nation that has a non-beneficial economic relationship with the U.S. (i.e. runs a trade deficit).

Whatever the pros and cons of this approach, it’s increasingly clear that the global political and economic order is in for some… significant adjustments. If you want some guideposts to understand the changes we are about to see, this chart should help:

Ranking of countries by 2015 trade balance with the US

The first horseman – riding soon?

No comment:

Yesterday morning, I published a story about the silent spread of resistance against the antibiotic of last resort, colistin—a major step toward the emergence of a superbug resistant to all antibiotics. While reporting this story, I interviewed Alex Kallen, an epidemiologist at the CDC, and I asked if anyone had found such a superbug yet. “Funny you should ask,” he said.

Funny—by which we all mean scary—because yesterday afternoon, the CDC also released a report about a Nevada woman who died after an infection resistant to 26 antibiotics, which is to say all available antibiotics in the U.S. The woman, who was in her 70s, had been previously hospitalized in India after fracturing her leg, eventually which led to an infection in her hip. There was nothing to treat her infection—not colistin, not other last-line antibiotics. Scientists later tested the bacteria that killed her, and found it was somewhat susceptible to fosfomycin, but that antibiotic is not approved in the U.S. to treat her type of infection.

Computers that know how to bluff

A computer is playing a quartet of top human poker players at no-limit Texas hold’em. Will it win? So far the AI, dubbed Libratus, is crushing the human race, but we’re only four days into the 20-day tournament, so stay tuned.

One of the vaguely disturbing things about machines that compete with people is that they never get tired, ever. In this YouTube video, one of the players talks about how grueling it was to play marathon daily sessions, lasting eight to ten hours a day for two weeks straight, with a computer than reportedly never broke a sweat. He was talking about the 2015 “Brains vs. AI” poker tournament, in which team human beat a predecessor of Libratus. This year’s edition of the AI is much more sophisticated:

“The thing that impressed me the most is how unpredictable and random it was able to maneuver post-flop,” said Jimmy Chou, another pro. “It also seems to understand some advanced strategies that many top regulars implement in their own game. We lost the battle today but we are looking to strike back tomorrow!”

Famous last words for human cognitive supremacy?

If Libratus can beat some of the world’s best humans in No-Limit Texas Hold’em, it will be a milestone in AI research comparable to Deep Blue’s triumph in chess and AlphaGo’s victory last year in Go. In fact, it may be more significant, as most real-world problems are closer to a game of poker, a delicate dance between multiple people, all lacking a perfect view of the entire situation. As John Von Neumann, one of the pioneers of game theory put it, “Real life is not like that. Real life consists of bluffing, of little tactics of deception, of asking yourself what is the other man going to think I mean to do.”

Unlike chess and go, poker is an imperfect information game, meaning that each player has incomplete knowledge about what’s going on (i.e. what cards the other player(s) is holding). In that sense, poker strategies have applications to real-world decision-making in the realms of business and politics, among others. If AI masters poker, it may be only a matter of time before computers are enlisted to hammer out deals in corporate boardrooms and ministerial meetings.

On being a half-curmudgeon

This is a very perceptive article that hits home for me as an early millennial (I was born in 1985):

We’re an enigma, those of us born at the tail end of the 70s and the start of the 80s. …

A big part of what makes us the square peg in the round hole of named generations is our strange relationship with technology and the internet. We came of age just as the very essence of communication was experiencing a seismic shift, and it’s given us a unique perspective that’s half analog old school and half digital new school.

You Have Died of Dysentery

If you can distinctly recall the excitement of walking into your weekly computer lab session and seeing a room full of Apple 2Es displaying the start screen of Oregon Trail, you’re a member of this nameless generation, my friend.

Oregon Trail! I remember it well, especially the hilarity of being told by the computer that I had just died of dysentery or a snake bite. The other stuff, too – computer lab, Apple IIe’s running software off 5.25″ floppy disks, dial-up internet, card catalogs in the library – been there, done that. The author captures the era perfectly.

I played LucasArts games like Indiana Jones and the Fate of Atlantis, Day of the Tentacle, and The Secret of Monkey Island obsessively on my family’s home computer, which we bought in the mid-90s. It wasn’t until my senior year in high school that I opened a personal email account (AOL). Facebook didn’t exist when I was in high school.

I distinctly remember using pay phones to call home during my first few weeks or months at college. I quickly got my first cell phone, but of course it was a basic flip phone that only allowed for calling, texting, and taking grainy photos. The first iPhone was introduced almost exactly 10 years ago, when I was a senior in college. (I’ve never owned one.)

It turns out that being born in the mid-80s was a really smart move, because as the article says:

Because we had one foot in the traditional ways of yore and one foot in the digital information age, we appreciate both in a way that other generations don’t. We can quickly turn curmudgeonly in the face of teens who’ve never written a letter, but we’re glued to our smartphones just like they are.

Those born in the late 70s and early 80s were the last group to have a childhood devoid of all the technology that makes childhood and adolescence today pretty much the worst thing imaginable. We were the last gasp of a time before sexting, Facebook shaming, and constant communication.

This is exactly correct. I can’t even imagine spending my formative years glued to a smartphone and social media, and the effect that would have on my personality and character. I feel that I can unplug from the internet anytime I want without psychic anguish, because I grew up before the internet had become the ubiquitous, Matrix-like entity it is today. As much as I enjoy and depend on the internet as an adult, my core personality is solidly anchored in a slower, simpler, less connected world, which is nice – although I guess any post-industrial generation can say the same thing. I’ll still say it, though.

Shenzhen built more skyscrapers than the US in 2016

Because it can:

Skyscraper construction saw another year of superlatives in 2016, according to the latest annual report from the Council on Tall Buildings and Urban Habitat. An unprecedented 128 buildings of 200 meters’ height or more (656 feet) were completed around the globe last year (some of which are pictured in this article), a new record that comes on the heels of two previous record-setting years. Since 2000, 903 such buildings have been constructed, a 441 percent increase.

And, no surprise, China is the world leader by a wide margin, with 84 percent of the total stock of new, 200-meter-plus structures going up in that country, including the 111-floor Guangzhou CTF Finance Centre. The city of Shenzhen saw 11 of these towers completed last year. For comparison, seven such structures were built in the entire United States in 2016.

According to CTBUH, there are 328 skyscrapers at least 200 meters tall under construction across China. Wow.

Shenzhen CFC Changfu Center (completed 2016)

China’s ghost cities are filling up

As expected:

A half-decade ago, China counted perhaps three dozen ghost towns like Tianducheng, places author Wade Shepard called “the stillborn carcasses of cities that never knew life” in his book, Ghost Cities of China.

Littered across the landscape, they were warning signs pointing to the excesses in China’s building boom, an era of unconstrained growth that was the biggest the world has ever seen. But today, they are looking less like epic mistakes and more like temporary disasters.

“There’s not a single one in the country that isn’t in the process of filling up,” said Mr. Shepard.

Or look at Ordos Kangbashi, the Inner Mongolia city built in the desert and so famous for its desolation that tourists flocked to the bizarre site of its Genghis Khan sculpture soaring over emptiness.

The joke used to be that the only people walking the streets of Ordos were BBC reporters.

Now, its population is nearing 100,000, about a third of what it was built to accommodate, and the local government is handing out housing exchange certificates to nearby residents to encourage them to move in.

Ghost towns, it turns out, are easier to fix than the masses of empty apartment towers wedged into the corners of urban centres across the country.

Also, don’t count on the filling-up trend to continue indefinitely. The Chinese government announced a plan in 2013 to steer the movement of some 250 million people from the countryside to the cities over the following dozen years; this was downgraded in 2014 to the more “modest” goal of 100 million people by 2020. This endless supply of people would presumably soak up much of the empty housing inventory in the burgeoning cities.

But life doesn’t always work out according to the plans of Chinese bureaucrats. About 9 million people moved to the cities per year in the 2000s. However, this epic migration has dramatically slowed. In 2015, it appeared to reverse itself, as the migrant population shrank for the first time in three decades, by 5.68 million.

Check out the quoted article for some great images of Tianducheng, a former ghost town with a 354-foot-tall replica of the Eiffel Tower, along with a surreal music video filmed there.

Robots and AI are coming for your job

Computers make humans redundant, Japanese edition:

A future in which human workers are replaced by machines is about to become a reality at an insurance firm in Japan, where more than 30 employees are being laid off and replaced with an artificial intelligence system that can calculate payouts to policyholders.

Fukoku Mutual Life Insurance believes it will increase productivity by 30% and see a return on its investment in less than two years. The firm said it would save about 140m yen (£1m) a year after the 200m yen (£1.4m) AI system is installed this month. Maintaining it will cost about 15m yen (£100k) a year.

The move is unlikely to be welcomed, however, by 34 employees who will be made redundant by the end of March.

The system is based on IBM’s Watson Explorer, which, according to the tech firm, possesses “cognitive technology that can think like a human”, enabling it to “analyse and interpret all of your data, including unstructured text, images, audio and video”.

Here’s some background on IBM’s Watson, which made a name for itself in 2011 by mopping the floor with two human champions on Jeopardy!

Japan’s shrinking, ageing population, coupled with its prowess in robot technology, makes it a prime testing ground for AI.

According to a 2015 report by the Nomura Research Institute, nearly half of all jobs in Japan could be performed by robots by 2035.

“Computer systems” would be a more accurate term here than robots.

Sci-fi writer Jerry Pournelle says that half of all jobs in the US could be performed by robots by 2024 or sooner. I don’t know how he arrives at that figure, but if it’s even remotely accurate, we’re going to have an interesting decade. 2024 is seven years from now – less than two presidential terms away…

You’d think that the imminent loss of tens of millions of jobs (about 152 million Americans are currently employed) would command more attention from our political, academic and media elites, but few people seem to be thinking seriously about the problem. That will change, probably rather quickly.

Radical social and economic changes are in the offing. Whether they take the form of a Universal Basic Income, or vast make-work projects to keep people employed, or a ban on new technologies, or total social breakdown, or something else entirely, I don’t know. Possibly the economy will generate huge numbers of useless jobs that add no real value but keep people off the streets. (Arguably this has already happened.) But I doubt even that will be enough to soak up all the armies of people made redundant by computers.

They’re coming for your job next

Scary math

America is falling apart, because math

Peter Turchin is a scientist at the University of Connecticut who uses mathematical modeling to analyze historical patterns and predict the future. Here he explains how a combination of tectonic social forces is ripping America apart:

Cliodynamics is a new “transdisciplinary discipline” that treats history as just another science. Ten years ago I started applying its tools to the society I live in: the United States. What I discovered alarmed me.

My research showed that about 40 seemingly disparate (but, according to cliodynamics, related) social indicators experienced turning points during the 1970s. Historically, such developments have served as leading indicators of political turmoil. My model indicated that social instability and political violence would peak in the 2020s.

According to Turchin, there are three main drivers of social and political instability:

  1. “Elite overproduction” – literally, too many elites, with not enough positions of power to go around, leading to intra-elite conflict (by far the most important driver);
  2. “Popular immiseration (the stagnation and decline of living standards)”; and
  3. “Declining fiscal health of the state (resulting from falling state revenues and rising expenses)”

I fear Turchin may be right. Cliodynamics may offer our best hope of understanding the problem and figuring out some way to head off, or at least mitigate, the more ugly scenarios:

So what’s to be done? I find myself in the shoes of Hari Seldon, a fictional character in Isaac Asimov’s Foundation, whose science of history (which he called psychohistory) predicted the decline and fall of his own society. Should we follow Seldon’s lead and establish a Cliodynamic Foundation somewhere in the remote deserts of Australia?

This would be precisely the wrong thing to do. …

No, the only way forward is through an open discussion of problems and potential solutions, and broad-based collective action to implement them. It’s messy and slow, but that’s how lasting positive change usually comes about.

Can we change the future if we can see what’s coming? I have no idea, but it seems worth trying.

I see social instability in your future

(Here is a more in-depth treatment by Turchin.)

The Jetsons, with smog

Speaking of Chinese rail, this is alarming:

China’s national observatory today renewed alerts for air pollution and fog across the country as the gleaming white bullet trains turned dark brown while travelling in pollution hit areas, major expressways closed and over flights getting cancelled. Photos of the trains with brown stains went viral and even flashed in the official media websites as thick smog shrouded Beijing and 71 cities for the past five days.

The national observatory renewed alerts for air pollution and fog for some areas in northern, eastern and central China, including Beijing.

Heavy smog will persist in parts of Beijing, Tianjin, Hebei, Henan, Shandong, Shanxi, Shaanxi, Anhui, Jiangsu, Hubei, Jiangxi and Hunan till tomorrow the National Meteorological Centre (NMC), which renewed an orange alert for those areas said.

The US doesn’t have high-speed rail; but then again, Americans can be grateful that they don’t have pollution like that. As a visual metaphor for modern China, a photo of a grime-covered bullet train is almost too perfect.

From Yiwu to London

China’s rail empire expands:

China has launched a direct rail freight service to London, as part of its drive to develop trade and investment ties with Europe.

China Railway already runs services between China and other European cities, including Madrid and Hamburg.

The train will take about two weeks to cover the 12,000 mile journey and is carrying a cargo of clothes, bags and other household items.

It has the advantage of being cheaper than air freight and faster than sea.

The proliferation of routes linking China and Europe is part of a strategy launched in 2013 aimed at boosting infrastructure links with Europe along the former Silk Road trading routes.

The old Silk Road didn’t go all the way to London

Incidentally, the route starts in the city of Yiwu, Zhejiang province, which I have not visited but which boasts the world’s largest wholesale market for cheap crap (Chinese media claims that more than 60% of the world’s Christmas decorations are made in Yiwu):

Where Christmas is made

This is another big achievement for China’s Eurasian infrastructure and trade strategy, annoyingly called “One Belt, One Road.”