Brilliant angry well based rant but mebbe facebook ( or arsepage as l call it) twitter (Xrated) instragram and Chinese crafty Tiktok have more blame to shoulder than quality press. Even amongst the 'intellectuals' and more the pseudo pseudo intellectuals who run the Orange useful idiot. ATTENTION SCANS have minimised to a few nanoseconds now in face of barrage of (anti)social 'media' bullshit providing a multicoloured poisonous gas smokescreen for the phoney economists and crypto snakeoil merchants. Also Is Trump en familie profiting from crypto insider deals to tune of $400bn ( so far) as some say?
Marginal at best when it comes to actual historical analysis, and Tooze clearly has no desire to be confined to that niche—he relishes his celebrity, along with the fame and influence it brings. (case in point: the degeneration of the Chartbook, which was at least mildly readable when it began)
Thank you so much for naming those fake economists, whom I have wished to disappear from the public discourse for so long! I might add two clowns, Pettis and Sester, share something in common: They love to throw around a few accounting identities all the time, mistakenly take them as causalities.
I've been looking for a "one stop shop" for evidence against the claims of Pettis Miran et al. so this is extremely useful, thank you!
The concluding points regarding our media ecosystem is also insightful, it is not emphasised enough the degree to which elite media is the lode bearing weight of our entire system. When it starts pumping out garbage, the risks are massive.
By the way, a point I haven't heard discussed in relation to Miran's arguments that really struck me when I first came across them- they weirdly remind one of Yanis Varoufakis' 2014 "global minotaur" model of net imbalances but with the roles inverted, with the US recast from villain to victim.
I don't know why USA has to wage a cold war against china when it has no issue with kingdoms like UK😄. Why you want USA to fight china ? because you want malaysia, indonesia etc., to be with USA and you feel sad that they may not be.
US allies( Europe and easterners) love USA so much and they aren't going to ditch USA. Going to Beijing is temporary. Otherwise what's the point of cold war with USSR ( communism) earlier.
I'd like to know why all you pundits are so hung up on bringing back manufacturing, outside of nostalgia. America was never a quality manufacturer, well maybe the Chrysler slant-six engine was a winner but its examples of post-WWII quality are few and far between and of course US power during that time was achieved in a vacuum until the true economic thought leaders of the world were able to pick themselves up and quickly surpass us in quality and production.
So why such focus? It's because we really only ant to feed the military industrial complex. Even Mirian says so, explaining how important our military projection is to safeguarding an abundant lifestyle. Well who gives a fuck about perpetuating global genocide and murder? I don't want that stain on my soul.
So let's focus on being number one in services - which WE ARE! Does no one recognize that we were the first to patent a biologic, I believe it was 1982 - around the same time China issued its very first patent - and we quickly created the rise of the biochemistry and biopharmaceutical industries worldwide. Okay let's say we stumbled upon that thanks to a couple smart guys at GE. We still have the basis for expanding our services sectors beyond the often attacked FIRE sector.
Services today are knowledge-based as much if not more than manufacturing which can be performed in dark factories by robot slaves. I'm not talking about waiting tables jobs, although even future Ph.D.'s need such financial backing as they pursue their college degrees. And what about our gaps in education for tradesmen and women? Where is the national policy and strategy for their services?
So really, why go backwards, why not develop a national service-sectors policy.
You clearly have no training in the sciences or engineering. How much time and repeated assays are needed, and by teams of how many PhD level experts, are required to get a single article published in a peer reviewed major science or engineering journal (unless the PI is established)? Complex manufacturing lines simply spring up overnight like mushrooms on the forest floor, eh?
In the social sciences, it’s a poorly kept secret how many flagrantly false ‘studies’ with manipulated data sets are published (witness the cascade of retractions in the wake of Harvard’s Francesca Gino scandal — thankfully she was tossed, unlike the previous president of Stanford who merely resigned and retreated to his full professorship).
As for services, the list of fraudulent (even downright crooked) consultants’ reports by McKinsey would freeze your brain. You’re obviously not in consulting or accountancy either.
You did not address my point. I am not arguing that manufacturing is easy to deploy. I grew up in manufacturing, worked in manufacturing. I'm saying we are ignoring our competitive advantage by almost worshipping and trying to reinvent manufacturing by nostalgia instead of figuring out how to strengthen and extend our services sectors.
The “services sectors” consists of multiple different silos which cannot be “strengthened” by a uniform policy.
Services are also in decline in the US for the same reasons as manufacturing is: financialization. Ever hear of Enron? Lack of integrity at highest levels (a Stanford accounting professor was on the board). Ever hear of Bechtel in construction services? Where is it now? It was once a mark of distinction to work for Price Waterhouse. They audited the notorious Evergrande Chinese estate company. Soon they will be cast aside. The prestige and allure of US services companies has eroded quickly.
In business school, where I went after engineering school, you learn about “competitive advantage”. In the real world, you realize that this is a fleeting moment in any enterprise. It can only be sustained by excellence, and financialization (leveraged buyouts) can never restore an enterprise weakened by the pursuit of maximum financial returns to management.
“But with extraordinary power comes extraordinary responsibility” except in reality in the US, no it does not. The media complex has long seen itself as part of the entertainment industry, and the newspapers you mentioned, pressed for survival after the raise of social media, have long joined the trend. Their target audience is different, but truth is at best an afterthought, unfortunately. That is why I think you need some top-down media regulation where proven expertise must matter in who gets aired and you are potentially held accountable for claims that are not true.
Thanks for this. I have several questions, some of which are longstanding, perhaps others have some takes:
(1) You say that "Surpluses tend to appreciate currencies at the margin, which tends to reduce your share of world manufacturing since your producers become less competitive on the world market for tradables" but later on explain that in the US case "a mightier dollar would predict a decline in US manufacturing employment...There is no such relationship". Why is it that the US bucks the trend you mention in point one, wherein there relationship between currency value and manufacturing competitiveness seems not to apply as it would in the case of for example Chinese-to-Vietnam manufacturing movement?
(2) Couldn't a Miran argue (does he? I not read his working paper) that USD as reserve currency enables the "power of finance over industry" that you mention? Thinking backwards in terms of empire, this seems a common pattern -- London, Amsterdam -- no? And might this be a valid complaint of a trade off of having the reserve currency that ought to be taken seriously. Or in other words: can many of your "specific factors" listed be understood as symptoms of the so called "dollar dutch disease" and are they common to most imperial cores past? A recent read of the wikipedia page of decline of imperial Spain has me wondering along these lines...
(3) Lastly, how do we understand or delineate between Pettis' arguments and "persistent world-system trade imbalances are probably bad" which many commentators (and economists? im not sure) seem to make room for (even Keynes, for, this is what Bancor was about) even when they dismiss Pettis?
(Please excuse my ignorance. My questions are by no means meant as a defense of Miran.)
"Why is it only the American working class that has suffered so? ... the power of finance over industry!" Yes, surely America leads the competition to squeeze the working class. See this post on bluesky (need to be logged in) https://bsky.app/profile/danielagabor.bsky.social/post/3lmji5hcwn22b. (For some reason substack has no way of attaching images to comments).
I thought the tariffs weren’t ends but means to coerce chronic-surplus countries to adopt corrective policies. With trading partners dealing, it doesn’t look like the US is isolating itself. And who knows, maybe the deals will be politically popular win-wins.
The rise of the bond yield and the sudden drop of the dollar say otherwise. They show our allies are abandoning us. They are the main reason our currency is the reserve currency. All these calls by our allies are just to buy time because the tarrifs were a nuclear bomb Trump just dropped. We will see further rise in the bond yields and more dollar depreciation as China moves to protect its $10 trillion in Western assets. It was a mistake to wake the dragon.
Great article. Can't help but wonder if you'd get more traction, and a broader audience, if you could find a way to debunk firmly but without insulting.
If you had read Pettis' and Setser's ravings for the past year–and the desperate attempts by real experts like Glenn Luk to correct them–you would want to do much more than insult them, trust me.
I've tuned them out long ago, and I understand. But when conveying message with purpose, the path matters. Human nature is such.
The esteemed author here is a sharp analyst, and may be one of a small number among free-range commentators, who escaped the propaganda machine, are interested in the subject matter, are competent, credentialed, maintained their integrity, and from time to time find an audience with some connection to formulation of policy in the future. It would be a shame if this were undone by age old realities of rhetoric.
Sadly, we have lost whatever military advantage we had over China.
In truth, our military advantage over China hasn't existed since 1951, when they inflicted on us the worst defeat (a rout) in modern military history and took 40,000 of us POW.
Things are more dire today: their effective fleet is twice the size of ours, half its age and much more powerfully armed with weapons a generation ahead of ours. Ditto their air force. And their army is the biggest, most powerful on earth.
We have not developed a successful arms system in the past 20 years, yet every technology we've failed at–hypersonics, rail guns–they've had success.
Even the USN Gerald Ford, our next-gen carrier, has failed, thanks to a design decision to run it on AC power–with which we are familiar–rather than the technologically challenging DC of which their State Grid is the leader. So their new carrier, the Fujian, is a much better boat than the Ford.
All this information is readily accessible in the professional media, but we have remained ignorant of it, thanks to extraordinary censorship of unwelcome news.
(I prepare weekly China reports for lower-level government and financial folks, and am thus required to stay on top of such developments).
And this is not to mention China’s complete supply chain in armaments, military equipment and ordnance. I look forward to reading how the US is desperate for tungsten for its armor plated tanks.
Provide a list of names! Make it happen
I have already told people that the most serious expert of international economics is Itskhoki.
Sounds absolutely terrible.
Brilliant angry well based rant but mebbe facebook ( or arsepage as l call it) twitter (Xrated) instragram and Chinese crafty Tiktok have more blame to shoulder than quality press. Even amongst the 'intellectuals' and more the pseudo pseudo intellectuals who run the Orange useful idiot. ATTENTION SCANS have minimised to a few nanoseconds now in face of barrage of (anti)social 'media' bullshit providing a multicoloured poisonous gas smokescreen for the phoney economists and crypto snakeoil merchants. Also Is Trump en familie profiting from crypto insider deals to tune of $400bn ( so far) as some say?
The lieks of Pettis and Setser will slowly fade away, but somone really needs to show Tooze his place...
I think of Tooze as an historian, and I believe that in that narrower sense he retains some utility.
Marginal at best when it comes to actual historical analysis, and Tooze clearly has no desire to be confined to that niche—he relishes his celebrity, along with the fame and influence it brings. (case in point: the degeneration of the Chartbook, which was at least mildly readable when it began)
Tooze, I believe craves more than anything, the approval of people of influence and authority.
Thank you so much for naming those fake economists, whom I have wished to disappear from the public discourse for so long! I might add two clowns, Pettis and Sester, share something in common: They love to throw around a few accounting identities all the time, mistakenly take them as causalities.
An incredibly important and timely post.
I've been looking for a "one stop shop" for evidence against the claims of Pettis Miran et al. so this is extremely useful, thank you!
The concluding points regarding our media ecosystem is also insightful, it is not emphasised enough the degree to which elite media is the lode bearing weight of our entire system. When it starts pumping out garbage, the risks are massive.
By the way, a point I haven't heard discussed in relation to Miran's arguments that really struck me when I first came across them- they weirdly remind one of Yanis Varoufakis' 2014 "global minotaur" model of net imbalances but with the roles inverted, with the US recast from villain to victim.
I don't know why USA has to wage a cold war against china when it has no issue with kingdoms like UK😄. Why you want USA to fight china ? because you want malaysia, indonesia etc., to be with USA and you feel sad that they may not be.
US allies( Europe and easterners) love USA so much and they aren't going to ditch USA. Going to Beijing is temporary. Otherwise what's the point of cold war with USSR ( communism) earlier.
I'd like to know why all you pundits are so hung up on bringing back manufacturing, outside of nostalgia. America was never a quality manufacturer, well maybe the Chrysler slant-six engine was a winner but its examples of post-WWII quality are few and far between and of course US power during that time was achieved in a vacuum until the true economic thought leaders of the world were able to pick themselves up and quickly surpass us in quality and production.
So why such focus? It's because we really only ant to feed the military industrial complex. Even Mirian says so, explaining how important our military projection is to safeguarding an abundant lifestyle. Well who gives a fuck about perpetuating global genocide and murder? I don't want that stain on my soul.
So let's focus on being number one in services - which WE ARE! Does no one recognize that we were the first to patent a biologic, I believe it was 1982 - around the same time China issued its very first patent - and we quickly created the rise of the biochemistry and biopharmaceutical industries worldwide. Okay let's say we stumbled upon that thanks to a couple smart guys at GE. We still have the basis for expanding our services sectors beyond the often attacked FIRE sector.
Services today are knowledge-based as much if not more than manufacturing which can be performed in dark factories by robot slaves. I'm not talking about waiting tables jobs, although even future Ph.D.'s need such financial backing as they pursue their college degrees. And what about our gaps in education for tradesmen and women? Where is the national policy and strategy for their services?
So really, why go backwards, why not develop a national service-sectors policy.
You clearly have no training in the sciences or engineering. How much time and repeated assays are needed, and by teams of how many PhD level experts, are required to get a single article published in a peer reviewed major science or engineering journal (unless the PI is established)? Complex manufacturing lines simply spring up overnight like mushrooms on the forest floor, eh?
In the social sciences, it’s a poorly kept secret how many flagrantly false ‘studies’ with manipulated data sets are published (witness the cascade of retractions in the wake of Harvard’s Francesca Gino scandal — thankfully she was tossed, unlike the previous president of Stanford who merely resigned and retreated to his full professorship).
As for services, the list of fraudulent (even downright crooked) consultants’ reports by McKinsey would freeze your brain. You’re obviously not in consulting or accountancy either.
You did not address my point. I am not arguing that manufacturing is easy to deploy. I grew up in manufacturing, worked in manufacturing. I'm saying we are ignoring our competitive advantage by almost worshipping and trying to reinvent manufacturing by nostalgia instead of figuring out how to strengthen and extend our services sectors.
The “services sectors” consists of multiple different silos which cannot be “strengthened” by a uniform policy.
Services are also in decline in the US for the same reasons as manufacturing is: financialization. Ever hear of Enron? Lack of integrity at highest levels (a Stanford accounting professor was on the board). Ever hear of Bechtel in construction services? Where is it now? It was once a mark of distinction to work for Price Waterhouse. They audited the notorious Evergrande Chinese estate company. Soon they will be cast aside. The prestige and allure of US services companies has eroded quickly.
In business school, where I went after engineering school, you learn about “competitive advantage”. In the real world, you realize that this is a fleeting moment in any enterprise. It can only be sustained by excellence, and financialization (leveraged buyouts) can never restore an enterprise weakened by the pursuit of maximum financial returns to management.
“But with extraordinary power comes extraordinary responsibility” except in reality in the US, no it does not. The media complex has long seen itself as part of the entertainment industry, and the newspapers you mentioned, pressed for survival after the raise of social media, have long joined the trend. Their target audience is different, but truth is at best an afterthought, unfortunately. That is why I think you need some top-down media regulation where proven expertise must matter in who gets aired and you are potentially held accountable for claims that are not true.
And actually if we’re serious about it I think proven expertise must be a prerequisite for any civil servant or elected government representative.
I suspect some consideration of who owns what I sneeringly call “the western corporate media organs” may have something to do with their perfidy.
Thanks for this. I have several questions, some of which are longstanding, perhaps others have some takes:
(1) You say that "Surpluses tend to appreciate currencies at the margin, which tends to reduce your share of world manufacturing since your producers become less competitive on the world market for tradables" but later on explain that in the US case "a mightier dollar would predict a decline in US manufacturing employment...There is no such relationship". Why is it that the US bucks the trend you mention in point one, wherein there relationship between currency value and manufacturing competitiveness seems not to apply as it would in the case of for example Chinese-to-Vietnam manufacturing movement?
(2) Couldn't a Miran argue (does he? I not read his working paper) that USD as reserve currency enables the "power of finance over industry" that you mention? Thinking backwards in terms of empire, this seems a common pattern -- London, Amsterdam -- no? And might this be a valid complaint of a trade off of having the reserve currency that ought to be taken seriously. Or in other words: can many of your "specific factors" listed be understood as symptoms of the so called "dollar dutch disease" and are they common to most imperial cores past? A recent read of the wikipedia page of decline of imperial Spain has me wondering along these lines...
(3) Lastly, how do we understand or delineate between Pettis' arguments and "persistent world-system trade imbalances are probably bad" which many commentators (and economists? im not sure) seem to make room for (even Keynes, for, this is what Bancor was about) even when they dismiss Pettis?
(Please excuse my ignorance. My questions are by no means meant as a defense of Miran.)
"Why is it only the American working class that has suffered so? ... the power of finance over industry!" Yes, surely America leads the competition to squeeze the working class. See this post on bluesky (need to be logged in) https://bsky.app/profile/danielagabor.bsky.social/post/3lmji5hcwn22b. (For some reason substack has no way of attaching images to comments).
I thought the tariffs weren’t ends but means to coerce chronic-surplus countries to adopt corrective policies. With trading partners dealing, it doesn’t look like the US is isolating itself. And who knows, maybe the deals will be politically popular win-wins.
The rise of the bond yield and the sudden drop of the dollar say otherwise. They show our allies are abandoning us. They are the main reason our currency is the reserve currency. All these calls by our allies are just to buy time because the tarrifs were a nuclear bomb Trump just dropped. We will see further rise in the bond yields and more dollar depreciation as China moves to protect its $10 trillion in Western assets. It was a mistake to wake the dragon.
Great article. Can't help but wonder if you'd get more traction, and a broader audience, if you could find a way to debunk firmly but without insulting.
If you had read Pettis' and Setser's ravings for the past year–and the desperate attempts by real experts like Glenn Luk to correct them–you would want to do much more than insult them, trust me.
Pettis is from a stable of particularly repellant regular writers for the FT who leave/left a wake of bile in most of their pieces.
I've tuned them out long ago, and I understand. But when conveying message with purpose, the path matters. Human nature is such.
The esteemed author here is a sharp analyst, and may be one of a small number among free-range commentators, who escaped the propaganda machine, are interested in the subject matter, are competent, credentialed, maintained their integrity, and from time to time find an audience with some connection to formulation of policy in the future. It would be a shame if this were undone by age old realities of rhetoric.
JFYI, Kyle forgot to include the General Agreement on Trade and Tariffs. I added it in this version.
Which version?
Sorry, chart didn’t show up. Here: https://substack.com/@realcharts/note/c-107319509?r=ue0q0&utm_medium=ios&utm_source=notes-share-action
Wu Mao says what?
Sadly, we have lost whatever military advantage we had over China.
In truth, our military advantage over China hasn't existed since 1951, when they inflicted on us the worst defeat (a rout) in modern military history and took 40,000 of us POW.
Things are more dire today: their effective fleet is twice the size of ours, half its age and much more powerfully armed with weapons a generation ahead of ours. Ditto their air force. And their army is the biggest, most powerful on earth.
We have not developed a successful arms system in the past 20 years, yet every technology we've failed at–hypersonics, rail guns–they've had success.
Even the USN Gerald Ford, our next-gen carrier, has failed, thanks to a design decision to run it on AC power–with which we are familiar–rather than the technologically challenging DC of which their State Grid is the leader. So their new carrier, the Fujian, is a much better boat than the Ford.
All this information is readily accessible in the professional media, but we have remained ignorant of it, thanks to extraordinary censorship of unwelcome news.
(I prepare weekly China reports for lower-level government and financial folks, and am thus required to stay on top of such developments).
And this is not to mention China’s complete supply chain in armaments, military equipment and ordnance. I look forward to reading how the US is desperate for tungsten for its armor plated tanks.