Noah Smith: Trump 2.0’s Impact on Asia + The New Tech Right
Does Taiwan need nuclear weapons? Will China’s manufacturing overcapacity doom the rest of East Asia to economic stagnation? And what is going on with Silicon Valley’s pro-Trump constituency? Our guest today is the legendary economist Noah Smith. Noah was a professor at Stony Brook University and a columnist for Bloomberg. He now publishes his prolific writing on the No Opinions Substack, and he is the author of an upcoming book on the revival of the Japanese economy. Noah, welcome to China Talk.
Howdy, it’s great to be here. Let’s talk first about presidential powers in the second Trump administration. So you wrote that piece about the restraints on Elon Musk. And I’m interested in the similar question, which is, what do you think are the constraints on Trump within this new coalition that he’s put together?
The thing is that Trump lost a lot of his old allies. You know, Rudy Giuliani and all these people were discredited by their involvement with January 6th or, you know, various legal efforts to overturn the 2020 election. And Trump is very old. He was sort of running on fumes and had lost a lot of his allies. Then in swoops Elon Musk and the sort of the tech right, as we call them, and kind of bails them out. He might have won the election anyway, just because people were so dissatisfied with Biden. I’m not a politics expert; I don’t know. But certainly, the tech right seems to be the most influential faction within Trump’s team right now.
However, being the most influential faction doesn’t mean they are omnipotent. So it’s not clear going forward what the balance of power within the Trump coalition is going to be. What are they going to spend this influence on, do you think? Right. I mean, I think the number one thing they’ll spend influence on is things that will make the business climate better in America. They are business people. You can call that corruption if you want, but it has a long history in America, China, and elsewhere. In Japan, you know, Kadan Ren’s influence within the LDP is not dissimilar.
I think that business people have political influence and use it to support a better business climate. Honestly, if you want my personal editorializing, I think that we do need some of those things and not others of those things. I think there’s lots of deregulation that needs to happen. It’s become pretty clear at this point that deregulation is the next frontier of economic policy. It’s something we were unable to do for many years. Even Reagan was unable to do it. Carter was the last real deregulator. I guess Clinton deregulated finance, and it blew up, and then the appetite for deregulation just died. Now we absolutely need deregulation in America.
The tech right is going to push for that. Democrats will unfortunately resist it, but they will lose, I think. And that’s good. I’m a Democrat, but I think they need to lose on this because I think that progressive love for regulation for regulation’s sake is just killing and strangling America. Unfortunately, this is going to come with a small side of some kinds of deregulation that shouldn’t be done. Like financial deregulation, I think, is often bad, but it allows rich people to cash out very quickly on their asset appreciation. So, yeah, I’m highly optimistic that the tech right is going to get good deregulation done, but I think it’s going to come with a side of some bad financial deregulation.
I see. Do you think they’ll oppose tariffs? That’s a really good question, and I don’t know the answer to that. No insights from the parties in San Francisco? Everyone at the parties is saying nice things about tariffs, and that means nothing. They’re saying nice things about that because they feel like they were part of this coalition that won. They were part of this winning coalition, and Trump says tariffs, and so tariffs mean we have an army on our side. But when it comes down to the actual nitty-gritty of whether you want tariffs that will impact the component sourcing for your businesses, things might get different very quickly.
So you might see some push to make the tariffs symbolic; behind the scenes, what people say in public might not equal. I’m completely speculating; I don’t know. But I think that anything that hurts tech businesses is something I wouldn’t bet on happening. Now, one interesting thing about tech people is that, you know, Elon is a hardware guy, but a lot of tech people are software guys. And software doesn’t source a lot of components from overseas. Tariffs aren’t going to hurt them very much. The software people aren’t necessarily going to pose tariffs very hard because they don’t get hit by tariffs.
Sure. They do get hit by, you know, restrictions on immigration, though. Exactly. Which is why you saw this titanic fight over high-skilled immigration, especially H1Bs, especially Indian immigration. You saw this fight on the right around Christmas time. Yeah, that was a great post. You also wrote that export controls are going to be kind of the litmus test for whether or not Trump has what it takes to stand up to China. If he starts canceling them, then that’s a really bad sign. So if that starts happening, what do you think about, you know, the China hawks within Trump’s coalition? What kind of measures do you foresee them implementing to do sort of damage control?
There are discussions and fights behind closed doors that I’m not privy to, and I also don’t know what people’s real objective functions are here. It could be that Elon Musk just, you know, loves China and thinks that like, you know, authoritarianism is great, and he will rule the world as one of the three great authoritarian leaders of the world in a new meternic system that will crush global wokeness, which is something someone suggested to me the other day. But that said, I have no idea if that’s real at all.
I don’t know. It could be that Elon Musk is, you know, just using China and waiting to sort of like backstab China and like knows that we need to oppose them. You know, he notably hasn’t turned any SpaceX stuff over to China. SpaceX stuff is specifically stuff that could oppose China in very concrete ways. And he’s shown no, you know, Tesla electric car stuff; it was clear China was going to just win on electric cars on its own. So it could be a pragmatic move. It could be that he says like, you know, Taiwan is part of China or whatever because that’s what you have to say to do business with China. The NBA has to say that; every business person has to say that. It could be that he really resents having to say that because I know I would if I were him.
And it could be that he is, you know, preparing a counterstrike that will restore American power vis-a-vis China. So I don’t know what his objective function is, and I don’t claim to know. As for what other people want, I think you see the pro-China faction is all finance. The finance guys are pro-China. They have been sort of downgraded in the Trump administration. Tech’s very anti-China in general because China shut out tech. And so China is like, no, Google, you can’t come in. No, Facebook, you can’t come in. They shut out all this tech. Tech fears China, rightfully, correctly fears China. Finance just wants to make a quick buck off of investing in China, although the degree to which they think they can do that is falling rapidly.
I talked to private equity guys, and two years ago, they were saying like, what’s with this de-risking? What’s with this decoupling? You know, what are you talking about? This is crap, you know? And they were pouring money into China. Now you see all these news stories about private equity being kicked out of China, trying desperately to get their money out of China. And I talked to some of these same private equity guys on email, and they’re like, you know, you’re right. You know, like de-risking is a thing. I was like, a modicum of foresight is useful in the investment world. So the finance guys are becoming less pro-China.
The reason Trump might sell it to China is personal, right? You know, China, by all accounts, changed the TikTok algorithm to promote pro-Trump content, right? If TikTok is a pro-Trump media thing in America, Trump will not want to ban it. Right. And Jeff, yes, this billionaire owns a lot of TikTok from the American side. He contributed a ton to Trump. Right. Trump can be bought. Trump is a deeply corrupt individual and always has been. That’s just a fact. And who knows how China can use its levers to control Trump as a man, as a person, in ways that it couldn’t control the U.S. right or the conservative movement in ways that it couldn’t control Elon Musk as a man, probably.
Sure. And so I doubt that Elon Musk can be controlled by China so easily. I don’t buy the idea that Elon Musk will just do anything to salvage like Tesla Shanghai. Sure. I think that, you know, he’s his own man in that sense. Who knows? I’m speculating about Musk. But I think Trump is much more viable; Trump is much more controllable. And so if Trump is going to sell it to China, watch those export controls.
And, you know, I know that we’re all spitballing here. So please spitball away. But what do you think about, you know, the conservatives like Marco Rubio? Like if things start to go badly and Trump starts to appease China or try and make some grand bargain, what do you foresee him doing? I think that it will be very hard. You saw this with the TikTok ban. You saw Mike Johnson have to pull tons of gymnastics in order to pass the TikTok ban. You saw restrictions on investment in China that would have hurt Elon Musk get removed from the continuing resolution. That’s what they really wanted to remove, and as soon as those were removed, they didn’t care about all the spending that was being done. The idea that we want austerity, we don’t want all the spending, we don’t want this like giant stacked bill, whatever, blah, blah, blah. All BS; they wanted to remove the China investment restrictions.
How generalizable that will be is an open question, and they might still put the China investment restrictions in a later version of the bill. That fight’s not over. So all this stuff is up in the air. It annoys me to have a country where these clandestine sort of backroom deals between rich business people, conservative power brokers, and, you know, a corrupt president determine what American policy will be. That scares me and annoys me that we have a country like that.
It’s where what gets said in the press doesn’t matter as much. What gets said in public, just public opinion, the press, the opposition, you know, none of these things matter. What The New York Times doesn’t map right doesn’t matter anymore. There were all these checks and balances before, but because of Trump’s victory and because of the shift in media to social media, TikTok, and the ghost of Twitter—especially TikTok now rule our media in ways that like CBS and, you know, The New York Times do not. That’s a scary world to live in, the idea that some shadowy forces are making these decisions in a backroom somewhere, and you are not privy to them at all. You don’t matter, you know?
And so we lived in that 120 years ago. We lived during the days of the Spanish Civil War and, you know, or the Spanish American War, I’m sorry, the Spanish American War and, you know, William McKinley being influenced by all the, like by Mark Hanna and William Randolph Hearst controlling politicians by threatening them with media and like the days of caucuses and smoky backrooms and stuff like that. Pre-FDR, pre-World War II, that’s the political world in which we did live. We may be heading back to something like that, but I understand how people could sit there and feel powerless at the national level to affect politics because elites are controlling everything, and you, the regular person, can’t even get good information.
You’re getting lies on TikTok; you’re getting just absolute bullshit screeching on, on X, you know, that doesn’t help you. And like, yeah, sure. You know, The New York Times would bullshit you sometimes like, and CBS would bullshit you sometimes. But the degree of bullshitting was less, and it was also consistent in that their biases were at least consistent and knowable where they were just like whatever partisan screechers happened to like take over X today or like whatever stupid TikToks happened to go viral with misinformation.
Now you live in a media ecosystem that’s much more similar to the era of the yellow press, 120 years ago back in the day. And, and secret bosses are controlling what we do in a way. It feels like being in Turkey. In Turkey, if you talk to any Turks about politics, they’ll be like, there are dark forces, you know? Turkish people are some of the most embracing of conspiracy theories in the world. Why? Because they can’t control anything.
Sure. Yeah. And you know, living in Taiwan, it’s kind of, people ask me about this sometimes, and they feel pretty okay about Trump’s election because they think, oh, well, Trump is crazier than Xi Jinping. So we’re not going to get invaded. Or, you know, Marco Rubio really likes Taiwan. And so I don’t know; I’m not convinced either. It feels to be in a really precarious position to say like, “Oh, it’s Taiwan’s darkest hour. Help us, Marco Rubio. You’re our only hope.” Do you think this unpredictability is going to be an asset in foreign policy in any way? Or do you think that, you know, Trump is now predictable to adversaries based on their experiences in the first administration?
Unpredictability is a complete total asset. That is great. It is not the only thing going on. The corruption is a negative. Trump can be bribed; that’s bad. But the unpredictability is great because Chinese leaders do not understand America at all. Their models of America are even worse than the models in the minds of like Taiwan or Japan or someone who knows us better. They’re totally guessing. They’re totally in the dark.
You can see China take policy cues from like progressive Twitter. I suspect that one reason that she kept zero COVID for so long was because all the COVID dead-end or progressives on Twitter praised him for it. Really? And then his MFA people, you know, Ministry of Foreign Affairs people and Global Times people or whoever was reporting on what Americans think was saying like, you know, the progressive faction just hails you as this great leader because you’ve managed to control COVID, which is true of some, you know, you had people like crazies like Taylor Lorenz saying Xi Jinping is the greatest because of their zero-COVID approach.
Even after Omicron made it clear that zero COVID wasn’t working, the dead-enders would really praise China for being the last holdout. And so I think this is not unprecedented. You saw the one-child policy was based in part on the population bomb by Paul Ehrlich—a stupid book that had stupid, bad forecasts of population just did not understand fertility dynamics at all, or resource dynamics, or just economics, or anything that got China to, you know, reduce the number of Chinese people by like hundreds of millions.
But yet it showed China taking its cues from the American left. And that’s insane, but also real because we live in an insane age now.
Sure.
Okay, let’s talk about proliferation. Speaking of insanity. So you’ve argued that Japan, South Korea, and maybe Poland need their own nuclear weapons. That’s right. Do you think the case for that applies to Taiwan also? No, because they can’t. I mean, obviously, if Taiwan had gotten its nuclear weapons in the sixties, that would have been great. America stopped them from doing it and therefore doomed Taiwan. It’s too late. Ukraine might be able to do it; I don’t know. Ukraine should. If they can get nukes, you know, that would stop them from being conquered and make sure that they have territorial integrity. I don’t think they can do it.
But we live in a world in which, once again, great powers see fit to conquer smaller countries. You know, Russia thinks it’s their right to conquer Ukraine. Of course, then later they’ll try to conquer Moldova and the Baltics and maybe Poland—probably not Poland, Georgia, the Baltics, Moldova—all of these places, whatever is part of the old Soviet Union. They would willingly retake because I think they think of the Soviet Union as Russia.
The worst of packed countries, they just try to dominate externally and bully. I don’t think they actually tried to incorporate Poland into the Russian empire again. But they learn their lesson. The poles don’t want them. But that’s a big break in the world. You know, America didn’t try to make Iraq the 51st state. Trump larps about like, oh, we’re going to take over Greenland, Panama, Canada. No, you’re not.
Anyway, so, but Xi Jinping definitely wants to take over Taiwan and a part of India, part of Japan, part of, you know, Okinawa certainly, various parts of other countries he has designs on. If Russia did suffer some kind of collapse, I bet that China would actually, for safekeeping as to protect it, take the part of the, you know, the Russian Far East, north of the Amur River, like, you know, that they used to have, that they still mark on some of their government maps as theirs. Yes.
They probably do that if Russia were in like a state of collapse. Right now, they’ll be their like staunch ally. As soon as Russia, like, you know, as soon as the tanks start rolling through Moscow or whatever like that, it’s like, oh, this is ours for safekeeping. I think they do that. So I think Xi Jinping is an expansionist. Maybe not as much as Putin, but I think he is. He certainly would like to, maybe he would like to get North Korea to conquer South Korea, but I think he’d rather just dominate South Korea and have it be a satellite state of his.
Sure. Keep Korea divided. Who knows what he wants? But that’s my instinct. He certainly wants to dominate and humiliate and impoverish Japan. And so Japan needs nuclear weapons yesterday. South Korea needs nuclear weapons yesterday. These two countries need nuclear weapons right the fuck now. And, you know, it’s insanity that they’re not getting them. They need them. That single policy change will stabilize East Asia more than anything else. Nothing the United States does is as powerful as those countries having nukes. Nothing.
Even if the United States maintained a full security commitment protecting every inch of territorial integrity of blah, blah, blah and fought to defend Taiwan and all that, it would still not be as important as Japanese and South Korean nukes. Are you worried at all about a preemptive reaction once, you know, China finds out that these nuclear arsenals are being built, but before the bombs are actually completed, like a preemptive strike or some kind of, you know, hack like we did on the Iranian centrifuges, for example? They can try the hack; it’ll fail.
Cause those countries already have the materials and the technology to go nuclear very quickly. They’ll try to sabotage the nuclear programs, but they’ll probably fail. But those countries should exert lots of effort and, you know, care toward making sure that they don’t get sabotaged and have things not very networked, so you can’t hack them very easily. And so, I mean, Iran does that. We just, you know, Israel’s really good at it, I don’t know. But, you know, China has a lot of people working on this kind of stuff. They need to do this. If Taiwan goes nuclear, the invasion will start tomorrow or missile strikes, whatever they will stop them.
But if Japan and South Korea go nuclear, China will not attack them. My guess is that China would not be able to stop them from going nuclear and that this would stabilize the situation in East Asia and make it so that North Korea will not attack and conquer South Korea. China will not, if they do, China will not attempt to support them. I don’t think North Korea could beat South Korea on their own. I think that if South Korea has nukes, the balance of power on the Korean Peninsula is restored. If Japan has nukes, it means Japan’s territorial integrity is assured pretty much.
Great powers do not attack nuclear-armed states. They can sabotage them; they can erode their power; they can try to compromise them; they can use all sorts of gray zone warfare and whatever, you know, to try to compromise them. But they do not invade them because they’re too scared of nukes. The downside is too large. When I’m talking about nukes, I think that Japan and South Korea should build up like hundreds of nukes. I’m not talking about five nukes; I’m talking about hundreds of nukes. Sure. Maybe even thousands, depending on how many China builds, but certainly as many as China has, they should have.
Enough to blow up all the tier-one cities in China easily. Like, you know, vaporize the Forbidden City, you know, all that stuff. Vaporize the tomb of Shi Huangdi. I don’t know; like, it’s not worth it to China. You don’t want to do that; you don’t want to start a nuclear war, but have enough. Ultimately, Japan and South Korea would lose that war because they’d get obliterated. But mutual assured destruction is a powerful deterrent.
I would get nuclear weapons, and Poland should probably do it too at this point because America, when I wrote that post saying Poland might want to do it, it wasn’t clear whether or not support for Ukraine would still be sufficient to allow the Ukrainians to defeat the Russians outright, in which case it would be maybe, maybe not. The Russian threat would recede. Now it’s looking more like support for Ukraine is going to vanish from Germany too, because Germany is even worse than the United States in many ways.
And so, Poland now, yes, Poland needs nukes. In fact, that’s why Poland’s in NATO. Poland said, we’re going to get nukes unless you put us in NATO. So we put them in NATO. But now if the NATO guarantee is gone because Trump is there and won’t answer an Article Five summons, and won’t fight the Russians under any circumstances, then you need nukes. The deal’s off. Get the nukes. We’ve seen countries with nukes; like no one is going to attack North Korea, right? No one’s going to attack Pakistan, right? No one is going to attack Israel.
Well, I mean, like Iran won’t attack Israel in a serious way. They can get them nuked by Israel. Instead, Iran uses proxies to attack Israel, which are not doing well lately, but that’s what it does. You know, Russia just uses gray zone warfare against the European countries. Then India versus Pakistan has basically calmed down. North Korea, like nobody’s like, there’s no talk of bombing North Korea. I think Trump talked about a nosebleed strike on North Korea during his first term, but that didn’t happen.
So not seriously. Yeah, not seriously. Trump talks a lot of shit. Sure. So anyway, Japan and South Korea need nukes yesterday. They need them right now. There’s no ambiguity—do it. And then Poland needs it too.
Sure.
So then Taiwan should have gotten nukes in the 60s. Now it can’t. It’s done. Well, there were nuclear weapons stationed on Taiwan during the Cold War, but they were secret. And the question is like, why would you have a secret nuclear arsenal? Because it wasn’t secret from the Chinese—they knew it was there. It wasn’t just public; it just wasn’t publicized. Exactly. Because, you know, the fact needs to be known in order for it to be a deterrent, right? That’s right.
It was just, you had plausible deniability from the public by making it secret. Right. So, I mean, they didn’t invade then. The nukes left Taiwan in 1974. Okay. So China did have nukes for quite a bit of that; like maybe there are secret nukes still in Taiwan, but I doubt it. Also, we don’t need them because we have submarines. Like, America doesn’t need to put nukes in Taiwan. At that time, we would launch nukes with like intermediate-range ballistic missiles. It was Cuban Missile Crisis kind of stuff. Now, submarines can just do it all.
But if submarines become detectable, it might be, it might go back to short-range missiles. I don’t know. Yeah, no. When I say Japan and South Korea need nukes, I do not mean American nukes. Yeah. Do not get American nukes. Get your own nukes. Yeah. Do not simply station American nukes on your soil like Germany does. Get your own launch codes. Get your own nuke.
100% control over your own nuclear weapons. This will ensure your independence. Not 100% because you could still get such a madman in China that like that madman would launch a nuclear war, like preemptively. That can happen, maybe. I don’t know. Hitler would do it. I don’t know if we’ll get a guy like Hitler ever again. But Xi Jinping, I don’t think would. I do not think Xi Jinping would attack a nuclear-armed state with a major conventional attack.
Let’s say China attempts to invade Taiwan and fails spectacularly for some unknown reason. Do you think Taiwan should declare independence after declaring victory? Yeah. Yeah? Yeah. Why not? I mean, like, you won’t get another chance. Declaring independence after China fails. Yeah. I mean, like, I can’t see much of a downside because it’s like they already tried to invade you. At that point, you might as well—like, everybody likes a winner. At that point, you’re going to get the maximum support for your independence bid.
I read a paper about this. It said the opposite thing, that said the United States should tell Taiwan not to kick China while they’re down. Oh, because China would nuke them or something. I also think there’s a—if China’s leaders are reasonable, in other words, if it wasn’t Xi Jinping, there is room for a bargain to be struck, I think, where China says we’re granting Taiwan conditional independence that’s temporary.
Taiwan declares independence as Taiwan, not as the Republic of China, gives up any claim of China, all this stuff. Then Taiwan writes into their constitution that they will reunify with China and that every X number of years, say five years, they will hold reunification talks with China. Basically, China says it’s temporary independence, and then Taiwan writes into their constitution, we’re an independent country, but we’re actually, you know, part of China.
We will eventually reunify with them after talks. After talks. Then they just do talks. That bargain, I think Taiwan would support because it preserves the status quo. China would support because it would allow them to claim we reincorporated Taiwan, even as they grant them formal independence and, you know, whatever, and then basically diffuse the—and, you know, America could possibly help facilitate this deal by agreeing to withdraw military forces from the area and, you know, saying we relinquish all alliance with the new independent country of Taiwan, and Taiwan becomes neutral.
It’s Finlandization. You say, like, Taiwan will not have allegiances with any like foreign power. So you Finlandize it. I think that there is a possible bargain to be struck there. I don’t think Xi would go for this. I think Jiang Zemin might have gone for this. But those days are done. But they may come again, like Xi Jinping is kind of a bumbling doofus. The thing about Fox News Dad is that he was really good at like being a realtor or whatever he did in his day job. But like he didn’t really know how to run anything, a country. And so I don’t think Xi Jinping is that great at running China. I think he’s good at writing herd on the CCP and being in control and being like, I am the king. You know, he’s good at like saying I’m the king and having everybody agree. Yes, you’re the king, sir. Tell me about your new 20 volume Xi Jinping thought book. But like, oh, so profound. But then like, he’s good at that, but he’s not good at actually writing shit. And so once you get once he’s gone, once you get someone who is good at writing shit, there’s a possibility they could make this deal with Taiwan.
So I think the personal failings of Xi Jinping are much more of a factor in China’s problems than people from China would admit openly or than people outside of China really realize yet. Like he has the trappings of an effective person because he has taken credit for all the great things China has done through the efforts of other people, through, you know, like the entrepreneurs who built Huawei and who built BYD and who built DJI and these companies like Tencent. Or the, you know, the leaders who came before him, the sort of elites that Deng Xiaoping and his chosen successors Jiang Zemin and Hu Jintao picked to run the party, the highly competent Chinese state. Xi Jinping has taken credit for that and is prepared to spend that inheritance down.
He is going to go cash that out in an analogous way to how Putin is making war in Ukraine using a whole bunch of tanks and artillery that the Soviet Union built. I think Putin has made us appreciate the Soviet Union more than we did. Yes, the Soviet Union was dysfunctional. Yes, it was suboptimal. Yes, it collapsed in the end. But before that, it built the greatest land army that the human race had ever seen. Putin is spending that army to just devastate Ukraine incompetently, taking like a few centimeters of Ukrainian territory for a whole bunch of casualties and getting all his tanks and artillery from the Soviet inheritance blown up.
Like in the same way, I think that Xi Jinping is in many ways spending the institutional inheritance that Deng Xiaoping, Jiang Zemin, and Hu Jintao and other people, like Wen Jiabao, Li Keqiang and all those people, have built up. All these great men of modern China built this stuff up, and Xi Jinping is prepared to spend it down. And that’s a tragedy for the people of China.
Because I think the engagement policy that America did toward China did not fail as hard. It failed, but it didn’t fail nearly as badly as most people now believe. I think China liberalized in many ways under Jiang, Hu, and Deng. They were still an authoritarian state, but they were a much more liberal authoritarian state where you could be a female Mao impersonator and no one would care. You could make Jiang Zemin is the toad memes, you know? It was just like, it was a much, you had a pseudo-free press, you had civil society. It was much more liberal. You had local elections.
Americans don’t understand gradations of democracy. They don’t understand the deep roots of democracy because they’re so far removed in history from their own democratization process in the 1700s and early 1800s. They don’t remember what it’s like to build those institutions, and they couldn’t see it happening in China. All they know now is friend of America or foe. Like that’s how they determine what’s a democracy and what’s not. China was headed toward greater democracy in an analogous way to how Japan under the Taisho Emperor was headed toward democracy in the 20s.
In Japan’s case, that blew up because of civil unrest and right-wing cults. But in China, that was not going to happen. China went back toward authoritarianism for a simple reason, which is they got the wrong guy in power. And that’s why I can’t go to China because I say that. Because, you know, I think I am not a China bear. I am a Xi Jinping bear.
That’s a pretty good rant. I think that was excellent. Okay. You want to talk about your new book? What’s it about? Sure. The book will be coming out, I think, in March. And half the book is blog posts that I have already written about Japan. It’s coming out with a Japanese publisher. And the other half of the book is new stuff that I’ve written about foreign direct investment, how Japan can leverage people’s love for Japan to promote foreign direct investment and exports in Japan.
Cool. Do you want to talk about some of the key recommendations? Maybe, but I think I should just come back on when the book comes out. Sure. You don’t want to give too much away. Well, based on the research you did for that book, or I guess in the process of writing those blog posts too, do you have any new recommendations for Taiwan’s development?
For Taiwan’s development, I think that Taiwan’s best – so one thing is that the constant threat from China has inhibited Taiwan from finding a new economic model. They haven’t been able to think in the long term and do long-term planning because they’ve been focused on the short-term threat from China. That’s unfortunate, but there is a way to do purposeful economic development and resist the threat from China, which is to become an arms manufacturer.
One thing that people have noticed is that the United States can’t make anything anymore. Taiwan – the other day, there was a story about how Taiwan wants to be America’s new drone manufacturer. Taiwan doesn’t have much. It doesn’t really have a car industry. It doesn’t really have a ship industry. It doesn’t really have all this stuff. Japan and Korea do. Taiwan has an electronics industry. Taiwan knows how to make stuff with batteries, and they know how to – and they’re able to do it. I think their environmental protections are less. Taiwan knows how to make drones.
Taiwan as the arsenal of drones and as the arsenal of batteries and as the arsenal of everything electric that you don’t want to source from China is the obvious play. It’s a way to develop your economy, to build specialization in these industries. Japan has ignored all this stuff. South Korea has ignored most of this stuff. I mean, I guess Kia is building EVs, but they’ve really dropped the ball. They really turn out to be more like Germany, wedded to heavy industry, you know, and then less – you know, they do lots of good electronic stuff, but I think that Taiwan has the same sort of electric-first orientation China does.
So Taiwan needs to go hard for all the stuff China is going for, and maybe if they still thought of themselves as the Republic of China, they would have already done this just because China did it. Right. But I think that, you know, nobody except China is building drones, nobody except China is building batteries. EVs may be a bridge too far. I don’t know. Phones, like, you know, get all those like laptop contract manufacturers, Asus and Acer and Quanta and all those people, get those people to all like, you know, make drones, make batteries, combine defense manufacturing and defense exports with electrification and electric manufacturing technology. That is what Taiwan should do.
Great. Okay. Let’s talk about China and China’s problems. First, do you want to compare and contrast China’s real estate bust with the popping of the Japanese asset bubble in 1992? Sure. So the similarity is that a bunch of people borrowed a bunch of money to buy land. And then a lot of that borrowing was based on the idea that land prices would appreciate and then it didn’t. This is also the exact same as the U.S. real estate bubble. And so there was massive debt involved here.
So China has a huge amount of private debt and everybody owes everybody money. China doesn’t have a huge amount of external debt. It’s internal. Rationalization of that debt means will require deciding who gets to be poorer on paper and who gets to be richer on paper. Who takes the paper losses? This is a big problem because whoever ends up being stuck with the paper losses is going to be angry. I mean, you’d be right.
So basically, it’s this game of musical chairs to determine who takes these losses. And the natural thing to do is extend and pretend, is to pretend that no one has taken any paper losses and that everyone is just as rich as they were in 2019. And they’re not. And so that will delay economic recovery, I think, in China because the fundamental financial problems will not be dealt with.
So in your essay, Xi Jinping versus macroeconomics, you explained that a lack of aggregate demand is worsening China’s local debt crisis and real estate was via deflation. So do you want to talk about debt deflation a little bit here? Yes. So there’s two kinds of economic crises, and we tend to sometimes get these confused in our minds. One is the emerging market crisis, which is inflationary, where your currency crashes, everything gets too expensive, and that’s a problem. This is brought on by excessive government debt, excessive external borrowing, currency pegs, and other things.
I don’t want to talk too much about this because China’s not in much danger of this. Some people think China’s in danger of it, and China’s own leaders think that they’re in danger of it, but they’re not. The second kind of crisis, and the one that lasts longer, although it’s less acute, but it lasts longer, is the deflationary depression. This is the United States Great Depression, this is the Great Recession of 2008 to 2009 and beyond, this is Japan’s stagnation in the 90s, and this is Sweden’s stagnation in the 90s, which people haven’t heard of.
And a deflationary depression happens when a whole bunch of people within a country have borrowed money from each other domestically. And then something happens to make their expectations abruptly more negative. What that thing is, that is a great debate of macroeconomics, and no one knows what that is. But something happens to make their expectations more negative, and suddenly people shift to starting to pay down these debts. Now, if I owe you money and you owe me money, and we both downshift our spending so we can pay each other back, we don’t go out and buy haircuts, or beer, or pizza, or medical care, or whatever we’d buy.
Usually, you say rabbit food when you go on this list. Rabbit food. Yeah. What would you buy? I don’t know. What do you think you want? Flowers. What do I concern? Bubble tea. Bubble tea. There you go. Podcasting equipment. Yeah. All good ideas. Bubble tea is certainly in the right place. But then, you buy less bubble tea. Right. Recession happens. Sure. Right? Because none of the bubble tea and podcasting equipment companies are getting consumption. So what do they do?
Well, they cut their prices. Right? They cut their prices, and they also cut wages. That’s called deflation. Deflation happens. When deflation happens. Now, sometimes it’s not outright deflation. In the Great Recession, America had like one quarter of deflation, I think. And then after that, we just had very, very low inflation for a long time. But deflation or disinflation, which means low but still positive inflation, happens. That makes debt more of a burden. Because suppose you owe $10,000, U.S. dollars, right? And suppose your salary gets cut in half and the prices of everything in the world get cut in half.
Well, you’re still able to afford as much like podcasting equipment and bubble tea as before. But your debt just became double the burden it was before. Because your debt is still the same number of dollars. It’s not in real terms. It’s fixed in number of dollars, which we call nominal terms. So then you’re like, oh, shit. I owe this. I still owe this money. And my salary got cut. And even if prices are lower, I still owe the same amount of money. Oh, man, I need to cut back on consumption even more. Well, what happens then? Aggregate demand falls. Prices go down. And the cycle repeats because your debt gets even worse.
Irving Fisher, the guy who invented the Rolodex and also was a famous economist, he figured this out. It’s called Fisherian debt deflation. He figured this out in the Depression. It’s not the thing that instigates a depression, but it pours fuel on the fire. It makes it last longer and be nastier. So that is happening in China right now. China’s producer prices are falling. China has a glut of stuff. Everybody says this. China just subsidizes supply massively, much more than Japan or Korea ever did. They subsidize supply, supply, supply. That means they have too much stuff.
Now they’re trying to offload that stuff by exporting. That will relieve some of the pressure. It is relieving some of the pressure, but not all of the pressure. And when people start tariffing them, it’s going to relieve even less of the pressure. You’re going to have a million electric car companies selling a million electric cars into China. Deflation will happen. You’re going to have everybody selling everything they can, you know, supply, supply, supply. And you’re going to have a weakness of aggregate demand, especially because Xi Jinping is fairly austerity minded. He does not want to raise central government debt too high.
And also, you have all this giant unsolvable tangle of debts from the real estate era of the 2010s, and, well, and before. And so then you have this giant tangle of debts that makes people not want to buy stuff. The government’s not stepping in. And now you have deflation from the government subsidizing supply and from banks subsidizing supply on behalf of the government. Supply, supply, supply drives prices down, makes debt more of a burden. People consume less, and you get this long stagnation.
Right. And that’s not going to destroy China’s economy. It’s not going to cause a collapse. It is just going to hobble them for years. For our listeners, I do want to emphasize just how taboo the topic of deflation is in China right now. Because if you search the Mandarin word for deflation on any of the major news sites, you get no results from 2024. And like Chinese social media is full of posts downplaying the risks or negative consequences of deflation. And, of course, Ling Ling Wei’s article in the Wall Street Journal quoted Xi Jinping as saying, what’s so bad about deflation? Don’t people like it when things are cheaper?
So you mentioned that it would hobble China’s economy over the long term. But can you explain a little bit more about what the consequences are if the CCP just kind of infinitely doubles down on not addressing bad debt and not addressing deflation? So if you just keep doing that forever, you eventually recover. But it takes a decade to recover. And what happens is that people have to do the really hard work of paying down all those debts to each other. People eventually exit retrenchment mode. It will just take them longer.
You know, the people are still there. The factories are still there. Everything’s still there. Although, I guess in 10 years, the aging problem is going to start to bite. We could see Chinese economic weakness through 2030, I think, or even 2032. We could see this if, you know, Xi Jinping doesn’t change the way that he thinks about macroeconomics.
Sure. We can talk about the population aging. I remember recently that you tweeted a picture of the Chinese population pyramid and said, like, this is an underexplored reason why China wouldn’t want to invade Taiwan. We’re at a local minimum of fighting age men. I mean, obviously, they have enough people to take Taiwan; they’re, you know, 50 times the size. They have the manpower to take Taiwan, but do they have the manpower to fight America, Japan, India, and just fight a general war right now? Well, they might want to wait a few years because they’ve got this big generation coming through.
So China had this weird population pattern during the communist era, during the Mao era, where they had this giant baby boom in the 60s, like this huge baby boom, and then this giant baby bust, right? The one-child policy was only added to the baby bust. It was all, most of the baby bust was just independent. What that means is that you get this big echo, this demographic echo of that big generation. That echo, even with low fertility rates, you get an echo. Even if the generation doesn’t reproduce itself, there’s such a huge bulge in the snake, right? There’s such a huge bulge in the pyramid that they will have a big cohort, a big cohort.
And right now you see the millennial generation being really big, and China’s generation Z is small. Right. But then the alphas are not going to be super big because of low fertility, but they’re going to be pretty big because of the size of this double echo from the big boomer generation. So the alpha generation that’s now 5 to 15, I would say, somewhere around there, they are a big generation. And China’s working age population has been falling for years. It is going to increase this year, and it is going to increase the next year, and it is going to increase the next year. And in 2027, it is going to peak.
I see. And then it will start to fall, and then it will not stop falling. That will be the end of that. But unless they figure out a way to solve the population problem, I just heard they’re having people call up women randomly, government people call up women and tell them, shouldn’t you have kids yet? They don’t realize that moms already do that.
And it doesn’t work. It backfires. Yeah. Eventually, most countries will try an extreme thing, which is to cut off pensions to childless people. But that’s going to cause massive social unrest. If China tries that now, there’s a chance the country could collapse because all these people without pensions will be really, really angry, no future, and they’ll have nothing to lose. You know, they’ll be like 30 years old, 40 years old. They know they’re not having kids. They have nothing to lose. Just torch things because you know you’re dead when you’re old.
I’d be scared of that. China’s always scared of internal dissent. China’s biggest threat has always been China, just like America, right? Our biggest threat has always been us, and China’s the same way. In many ways, China and America are a lot more similar than either of them would like to admit. I could go on a giant rant about how Chinese culture and American culture – Chinese culture is actually the culture most similar to American culture of all the cultures on Earth.
Should I go on that rant? I think you’ve been on that rant the last time you were on China Jack, actually. How we just like to wear Crocs and drive to the mall. Wear Crocs and drive to the mall. That’s right. And just buy real estate and have big, unrealistic dreams of being rich. Yeah. Yeah. But anyway, so China fears internal dissent, so I don’t think it’s going to do that soon. China’s demographics are fine right now. They are fine for the next—certainly the rest of this decade. They are absolutely fine.
China will have about as many working-age people at the end of this decade as it does right now. It’s not going to change because it’s going to go up and down a little bit. It is—in the 2030s, it starts going more gently down. It’s really in the 2040s, it starts going down a lot. And then by 2050, you have a severe situation similar to where Japan is now. So China in 2045, I want to say, will be around where Japan is now. So China’s got 20 years, you know, before it gets to where Japan is now.
And in the rest of Xi Jinping’s term in office, you know, if Xi—I don’t know whether Xi Jinping’s last term will end in 32, but I think there’s a chance because he’s going to be 79, like he’s going to be old, like maybe he’ll stay on through like 37. I don’t know. We’ll see. But he didn’t grow up with great nutrition. I don’t know if he’s going to make it. Wait, is he short? No, he’s as tall as me. Really? He’s perfectly average height. Oh. 5’11”. Yeah, no, she—the Russians were always short. The Chinese leaders are always like my height.
Oh. I’m the same height as Mao Zedong and Xi Jinping. Well, Deng Xiaoping, the best Chinese emperor, was a super short guy. He was tiny. Yeah, he was—but he was obviously just a much better leader than Mao or Xi. He was the true great man of Chinese history and a really short guy. Really short. So China, try short guy. Great. Yeah, Jiang Zemin was kind of short, too. Who’s like a short, famous guy in China? They should put Pony Ma in charge of China.
Yeah, you think so? I mean, did a great job with Tencent, you know? Yeah, they should put him—they should make him like the oligarch ruler, like Shadow. He should be the Elon Musk of—they won’t do any of that. Anyway, Xi Jinping will remain in charge because he’s just—he’s really good at one thing, which is being in charge. And, okay, so China’s demographics are fine until the 2040s, at least maybe through the 2050s.
And so I wouldn’t worry about it if I were them, except in the general sense that everyone worries about low fertility now, but their demographic is going to be much more favorable than most of their opponents, even, I would argue, than America, because America is going through a social spasm where they’re cutting off immigration, and China gains from that. So China will have a favorable demographic profile compared to its rivals for the next two decades, and they don’t need to worry until after that. So they’ve got time.
That makes sense. So Dworkish recently vacationed in China. Yes. And he expressed interest in a Georgist analysis of China’s property market. Would you like to riff on that? A Georgist analysis of China’s property market. Okay, so China does officially have the Communist Party own all the land. And what you really have is a lease on the land, which Singapore does as well. This gives you the opportunity to basically do an in-kind land tax by choosing to force redevelopment wherever you want.
In practice, people don’t like this because everyone’s wealth is in those leases. So in practice, you know, America actually has eminent domain. Eminent domain is Georgist, right? So we can, if we just simply declare it’s in the interest of the state, we can just use your house. We can redevelop your house for whatever we want. And we have to pay you a fair price, which are like, hmm, I think $5 is fair. What do y’all think? Yeah, anyway.
The way China is anti-Georgist is that they refuse to have property tax. Noah’s cultural essentialist historical view of China is that China has had this giant weakness throughout its entire history, right? And it’s not Confucianism or anything. It’s low taxes. China has always been a Grover Norquist country. China has always been a low tax country. And this has screwed them again and again. Like they just, I don’t know why China like can’t tax its people.
Like, obviously, you can be—Denmark is too high tax of a country. You can go too high with this. But like China doesn’t have property taxes, which is why local governments relied on land sales to actually fund public services and infrastructure. That was nuts. You were selling land. Did you think that was going to last forever? The answer is yes, they did. But the point is that China is anti-Georgist because Georgism uses land value tax and China is allergic to property tax. A land value tax is simply a property tax plus a tax credit for developing the land. That’s it. That’s the great Georgist idea is just property tax with a development incentive. Sure. That’s it.
And do you think China could implement some kind of land value tax and like allowed people to privately own land? Of course. And you think this would, how much do you think this would solve their problem? I don’t think a private land ownership is going to do anything because I think the leases are already treated as land ownership. But I think that the property tax would do wonders for China. And they’re not doing it for some political reasons that I don’t understand. Probably, you know, if China is just like, you know, America across the Pacific, then it’s because it’s like Prop 13 in California.
Sure. China, giant California, except California actually doesn’t build anything and China builds everything. Right. California cannot build a single mile of high-speed rail. China can build all the miles of high-speed rail in the world.
So have you ridden the Chinese high-speed rail? No, I haven’t. I would go. But, you know, I posted so many memes of Xi Jinping in the CIA hats. Every time he would like make some blunder, I would be like, ha ha, he’s working for the CIA. But then like, they’re mad at me, I think.
Yeah. They probably would take me out for tea if I went there. You know, I went there without a visa. And they have this program that allows you to transit from country A, China, country C. It’s like part of your vacation. But it has to—there are no domestic flights allowed. And I flew in from Taiwan and I pretended I didn’t speak Mandarin.
The guy calls a supervisor on the phone and says in Mandarin, “So there’s this girl flying in from Taiwan. Does that count as a separate country from China for the purposes of this visa-free entry program?” And the guy on the phone thinks about it for a second. He goes, “You should let the girl in.” And then he hangs up the phone and he’s like, and he says in English, “Oh, sorry about that. That was some other thing.” And I was like, “Yeah, sounded important.” But so I don’t know if I would roll the dice on that again.
But oh, you can’t ride the high-speed rail on the visa-free entry, though. Huh. Yeah. And if you apply for the visa, you have to list all the jobs you ever had and stuff. And I feel like they’d like look me up and see this video.
You know, I think one thing that we’ve forgotten about that was true that we sort of knew in the 90s, but have like since chosen to forget about is that free countries are nicer to live in. Yeah. Like it kind of sucks to like have people always checking your hookah or whatever for like what you can do. Yeah. Like that’s kind of balls.
Yeah. Yeah, it sure is. You want to talk about health care?
Health care. Yeah. So China’s health care system is patchy. Another one of the many ways in which China is like America is that they fear that a universal health care system will make the government too expensive and will make people decadent and complacent. Americans think this, too. It’s dumb. They’re wrong. But China and America both fear having like the kind of health care system that like other rich countries have implemented.
And you think doing a whole bunch of health care spending would alleviate some of the aggregate demand problem? Yes. 100%. Freeing people up to spend because they don’t have to take care of grandma is this incredibly liberating thing. That’s why Social Security in America in the Depression was a big stimulus because suddenly all these working-age people were like, wait a second, you know, I don’t have to spend and take care of grandma. Well, taxes were doing it. So you still were doing it; you were just doing it through taxes.
But like, yeah, so basically using the state to take some of the burden of elder care off of people’s hands frees people to go spend money and start an inflationary cycle to beat that deflation and get aggregate demand flowing again. So I understand why they don’t do it. It’s a bad, stupid reason just like why America doesn’t do it. America is also stupid. Yeah. And so they should do it. That would really help them out of this hole. It’s the most obvious way to just have the government boost consumption. Boost old people’s consumption.
Now, the thing about China is that old Chinese people have very, very austere tastes because they grew up really poor. Have you ever seen that video where they have Chinese people and their American kids eating Panda Express? No, I haven’t. Oh, the American kids are like, “Oh, my God, so disgusting, low class, blah, blah, blah.” The Chinese parents are like, “Oh, oh, I would eat this every day.” It has sugar in it, calories, you know, like because they grew up poor.
And so they have these very austere tastes. They don’t consume a lot. Getting them to consume more, giving like a golden retirement to the Chinese boomer generation as a thank you for all their service to the Chinese state would be a really nice thing to do and would free up younger Chinese people to consume on their own because some of the burden of elder care would be alleviated.
China’s leaders, especially Xi Jinping, who is recognizable as sort of like a 2007 era Fox News dad, you know, like that’s—that’s by the way, I feel like despite not being a quote unquote China hand at all, like I’ve managed to do a decent job predicting and understanding Xi Jinping himself because I understand that he’s basically a conservative boomer. You know, and you can imagine this guy in 2007, like listening to Fox News, like, you know, like watching like Bill O’Reilly or whatever and saying like software isn’t real technology. It’s not a physical product. Only manufacturing is real technology or like, you know, why do we have all these girly men on TV? We shouldn’t have girly men on TV.
And now we have the gays. Why? You’re playing too many video games. If the government pays for you, people won’t work for themselves and take care of their families like they ought to. And so that’s why he’s not doing it. Stimulus. It’s a sugar high. It’s a temporary sugar high. It’ll make people get decadent and consume more. You know, you can just imagine these.
Yeah. Yeah. That makes sense. We got a little off topic, but I like the rant. You like my boomer Xi Jinping? Yeah, I think that’s pretty good. Uh, okay. Have you read about the process of like transitioning to NHI in Japan? No, I haven’t read about the historical process of it. I know a lot about the system as it exists now, but I don’t know much about the history. So educate me.
Okay, well, I don’t know about what it looked like in, in Japan, but I know in Taiwan, uh, they started with like a public option essentially for specific types of workers. Uh, and then they did a big audit, uh, based on the health consumption of all the people in that healthcare pool, uh, to set the first reimbursal prices for everybody else and transition everybody in. So the big difference between the Japanese system and the Taiwanese system is in Japan that, you know, you have to pay like a certain percentage.
Yeah, in Taiwan you don’t. But like, why Taiwan is such sheep up here, I don’t know how they do that. They use a prospective payment system to set copays. So no matter what intensity of treatment you get, you pay a set fee to see the pathogen doctor, regardless of whether or not you like are having a hypochondria episode or like if you actually are on death’s door.
And then the premium calculation is like a payroll tax, which is split between people, employers and, uh, the government. But if you’re rich and poor, you pay the same premium. It’s the same percentage. Same percentage. Yeah. So that’s, so it’s mean-tested. Uh, yeah. Which is something that in America that’s not mean-tested. Yeah. So, so mean-tested premium on healthcare. Yes.
That’s cool. Um, and then the other thing that Taiwan does, they set the reimbursal rate. Uh, so there’s a set amount that the government’s willing to pay hospitals for any service. Right. Uh, and then if the hospital negotiates with suppliers to get a better deal, then they get to keep the rest of that as profits. So they make the hospitals do all the dirty work to negotiate with suppliers.
But in Japan, they set the prices and you can’t charge more and you can’t charge less either. Right, right, exactly. They do price controls. Um, but yeah, everything on the, like, the care side is, is privatized here. Um, and then these negotiations become public eventually because every few years the government does an audit to figure out where we can lower the reimbursal rates.
And so if one, like, city on the island gets a good deal from a certain supplier, then that deal now becomes public to the entire island. I see. Yeah. So basically everything is about crushing providers. Perhaps. Yeah. I mean, so Japan’s like that too. The price control system is more rigid, but the national health insurer basically figures out, like, it figures out what it can afford to pay. Sure.
And Medicare negotiating with people would be like this too if we did that. The problem is this can hurt innovation if you do it. Uh, what you should do is do it with regards to how much profit the suppliers are making, not with regard to how much prices they’re charging. So if you wring money out of the suppliers, let’s say, if you wring money out of them by forcing them to forego innovation and be short-termist, then they’re free riding on American medical innovation.
Um, but so, so what you need to do is you need to base your haggling on their profits, not on their prices. Because, um, if they are investing a whole lot in innovation, that should mean that they get to charge higher prices. That makes sense. Uh, you know, as long as they’re not using mislabeled innovation expenses to secretly pay themselves out. Yeah.
Which they’ll try to do. They try to do it with the R&D tax credit right now. Sure, yeah. I’ll say one more interesting thing about the Taiwanese healthcare system, which is that if the government suspects providers of, like, squeezing out profit in the wrong areas, they can, like, pull the rug out from some of their revenue sources by suddenly no longer requiring a prescription for certain drugs.
So, like, you don’t need a prescription for parasite medications here. You don’t need a prescription for arthritis medications or inhalers or birth control. You don’t need a prescription for any of it. That’s great. Here. And in Japan, you do. Uh, and it’s kind of like a warning shot to, like, force, uh, healthcare providers to charge lower prices or else, like, they’ll cut off the revenue streams and put them at local pharmacies.
But anyway, uh, so do you have strong feelings about why the Japanese model is the one that is right for, for China? Oh, I don’t know if it’s right for China. China could do the Taiwanese model. China could do the German model. China could do the French model. They’re fine. Sure. Just do something.
For America, the Japanese model is the right model because it’s similar to what we already do for old people. Like, Medicare works very similar to the way Japan and Korea’s healthcare systems work for everyone. Mm-hmm. So it would be simplicity itself to simply do Medicare, but for all. Sure. Yet not the Medicare for all plan that Bernie does, which is, you know, much more similar to, to Canada’s system.
Right. So, um, or it’s actually a more boneheaded version of Canada’s system. Yeah. So, so Bernie’s plan styled itself Medicare for all, but it’s not, it’s not like Medicare. Japan’s system is like Medicare for all. And so everyone, you know, let’s call it Medicare for everyone. Medicare for everyone. Love it. Yeah.
Okay. We can go back to spitballing a little bit. All right. I love spitballing. Do you have a spicy take for Taiwanese diplomacy? If they can’t get nuclear weapons, uh, then what do you think they should do? I mean, honestly, the only thing they can do that they haven’t done is reach out to Russia. You know, funny enough, Taiwan’s submarine technology, they got technology transfer from Putin because Chen Shui-bian, the former president of Taiwan and Putin used to be buddies.
Uh, and so Putin personally sent teams of submarine scientists to Taiwan to teach him how to build the narwhal, the indigenous submarine that they just built here. Yeah. So one thing about reaching out to Russia is that it will make it easier to befriend both India and the Trump administration. India remains pro-Russia because of Cold War ties and because of geopolitical hedging and just sentimentality, um, because Russia was on their side.
And, um, Trump is reflexively pro-Russia because Democrats said that he’s pro-Russia and so he has to be. Like Democrats said Russia helped him get elected in 2016. So he thinks favorably of Russia. You know, he thinks of Putin as like his, his fellow macho man and blah, blah, blah.
A number of, a number of like smaller states are like Vietnam quietly reaching out to Russia. North Korea is scared of China and is quietly like helping Russia with the Ukraine war so that it wants Russia to defend it. Russia probably doesn’t have the capacity to defend it, but Russia maintains an almost mystical hold on the Chinese imagination because Russia helped China, uh, in its, you know, during the Republican period, Russia helped China.
And then during, uh, the early communist period, Russia helped China. And so I think Chinese people, the boomers who are now in charge of China grew up thinking of Russia as their big brother. And now they know Russia is much weaker than before, but they still respect it. They, you know, she still treats Putin as an equal. There’s no obvious contempt for Putin like there is for North Korea or, you know, um, even like, you know, what, I guess Pakistan, like China just plays open contempt for these and just, you know, considers them inferior satellites, but it considers Russia as the Russian America, the country that China considers equal in the world.
And does Russia deserve it? No. But if Taiwan somehow, you know, hedges its bets by, by getting close to Russia, maybe that can work and exercise some kind of hold on the Chinese imagination where the people in charge of China will be like, will, you know, um, not attack Taiwan because Russia says not to, I don’t, I don’t know, but it’s the last card they can play diplomatically.
It’s funny that you call it a card because when, I mean, Chiang Kai-shek tried to do this explicitly, uh, and it failed, but he called it the Russia. Right. Called it the Soviet card.
Uh, I’ve got a couple of questions to wrap up about your production process. I really admire that you are willing to admit when you’re wrong as was the case with like the BMD pessimism stuff. Uh, cause you don’t have an editor. I think you wrote a post where you were like, I was wrong about BMD. It worked. Israel shot down a bunch of missiles.
Uh, well, I, I supported Elizabeth Warren. She turned out to be a lot worse than anybody expected. She said a lot of great stuff and she had some good ideas back in the day. And I thought, oh, good. But then she just like turned into this weird, like backroom dealer, like anti-business sort of, you know, fixer.
Yeah. Who just sucked. Elizabeth Warren, you sucked much more than I thought you would. I’m disappointed, but I got it wrong. Um, I didn’t expect inflation to, to rise as fast, you know, to do what it did because I thought that people’s spending habits during the pandemic would be prolonged for another year, but they weren’t. Sure.
Um, yeah, I get things wrong all the time. Yeah. So how often when you’re researching a post do you think, oh, the basis of this post was not correct? Do you have any advice for like, uh, self-employed writers who want to like gut-check their ideas? I do your best. And sometimes you will fail. You will, you will fail. Just don’t be the kind of person who builds your career on saying you were always right.
Otherwise you’ll spend so much of your time just, you know, defending your old claims and claiming, “Well, actually I just, it would be like I was wrong.” Sure. Move on. That’s good advice. No one, you humans are fallible. And if people want infallible commentators, they ought to know that they’re getting charlatans.
Yeah. Uh, okay. Next question. How do you come up with your ideas? I have no idea. You have no idea. Okay. And I have a, so, so the one thing I do, by the way, that, um, so, so I basically write three types of posts. One is a type of post where I already, I see something in the news. I already know how to explain everything and I just write it. That’s the kind of post I wrote today. I wrote a post about how to measure the relative sizes of economies.
I know all the stuff. So I just posted the chart that people were sharing around and the Wall Street Journal had. And I was like, well, okay, what’s really going on is this. And let me explain. So that’s the first kind. And the second kind is where I’m like, okay, I’m really interested to find out why American manufacturing productivity stagnated. So I’m going to spend a whole day reading about this and then tell you what I found. Sure.
And that’s, that’s a pretty typical kind of post as well. Those are two, you know, and then, um, the third kind of post though, is the kind that I think people don’t, uh, really realize how to do. So here’s the secret sauce. Whenever I see an interesting article, I put it in a single Google doc. That Google doc has a hundred topic headings, each with, you know, stuff underneath it, links underneath it.
As soon as there is some, that becomes the focus, that topic becomes a big thing in the news, the current thing in the news. I pull it out. I write about it. I have all the links already done. I’ve already thought about it. I’m ready. So as you read, if you want to write every day, everything you read, you can’t write about everything you read every day. Read a lot. You have to read a lot.
Um, save all those things for a rainy day. And when the day comes, when that’s the thing in the news, then you write about that. So for example, uh, a couple of weeks ago, they had this giant blow-up about Indian immigration. Well, I had been meaning to write a post about Indian immigration, H1Bs and all that stuff for like months and months.
And it saved up a whole ton of links about it, including academic papers, other people’s blog posts and what and news stories. Then when they were, I was like, “Oh, that’s what this is about.” So I scrolled down to that, grabbed it, copied, you know, cut and paste to the top of the Google doc. And then I just, you know, control, click, control, click, control, click in Chrome until I opened all the links that I had.
Then I just started writing, and then I had my research already done. And so that kind of like preemptive research, just from what you read, I think a lot of people read stuff like I should write about that someday and then forget about it and then go looking for it later. Or, um, or they decide I’m going to write about X today. Let me go research that.
Whereas I’m more like, I’m going to read everything interesting in the world today and I’m going to put it and I’m going to take all those links and I’m going to put them under topic headings. You’re going to file it for later. Very smart.
Okay. Let’s follow it up with a fun one. What’s your bubble tea order? My bubble tea order is just an absolute classic or so Hong Kong style milk tea. Oh yeah. I love that. And, um, and, uh, some will have a Japanese flavor. That’s also very good. Anyway, those are all great, but classic boba. Always classic boba. Never get lychee, you know, jelly cubes or whatever like that. No. Boba.
Although I do sometimes like the tiny boba. Yeah. Those are pretty good. Those are fun.
What’s your favorite thing about Taiwan? My favorite thing about Taiwan is how laid back it is. I have never seen a country that’s laid back. It’s just so chill. Yes. They’ll mess up your order sometimes. You know, yes. People mill about aimlessly in the train station. Like I apply, I just mentally apply all my rules from Japan for living here and they don’t work, but like, it’s just really sweet and nice. Like people are just really chill.
I hate the idea that China would blow up a place this chill. Yeah. Like that’s just a crime.
And what song would you like to end the episode with? Um, I would like to recommend, uh, Wifey by Dizzy Dizzo, which is a great, really great song. Um, it is an underrated portrait of the female wives of mafia leaders of the KMT era who, you know, like who are these just extremely strong women who would essentially run their husbands like, you know, illegal business empires and were just utter bosses and are sort of lost to history.
Great. Perfect. Well, Noah Smith, thank you so much for being a part of China Talk. It’s been great. Thanks for having me on.
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