The wisdom of Larry Summers

I see a tiny glimmer of hope on the China issue. There is beginning to be some pushback against the cold warriors in the US government. Here’s Bloomberg:

Former Treasury Secretary Lawrence Summers warned US policy makers to focus on building the country’s own economic strengths in its contest with China, rather than on attacking its adversary.

“If we change our focus from building ourselves up to tearing China down, I think we will be making a very risky and very unfortunate choice,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin. The US should instead concentrate on its own innovation, infrastructure, education and challenges such as opioid deaths, he said.

Summers also suggested that recent rhetoric coming out of the US government has increased the risk of a US-China war over Taiwan, which would be madness:

“We need to be very careful about giving China the sense that we are trying to change the traditional one-China policy,” said Summers, a Harvard University professor and paid contributor to Bloomberg Television. “Because I think that could risk disastrous conflict.”

This caught my attention:

The right approach is instead to “stand up for some of our fundamental interests in security and fair economic competition — but to leave it at that point,” he said. “I think ultimately we will prevail in this broad contest with China,” he said. 

I’m not sure what he means here. Taken literally, I agree with the statement. Fair economic competition is in our interest. But if he’s implying that the US supports fair economic competition, then I strongly disagree. I know of no other nation that flouts international trade agreements with such insolent disregard for the rule of law. It’s as if we think the rules don’t apply to us.

Another Bloomberg piece points out that Europeans are resisting the US push toward a new cold war:

President Xi Jinping started his week overseas mending ties with the US, and ended it with European leaders making the case for resisting the Biden administration’s sweeping chip curbs on China. . . .

On Friday, French President Emmanuel Macron called for engagement with Beijing and resisting efforts to divide the world into competing blocs. That followed similar appeals from German Chancellor Olaf Scholz, who visited China earlier this month, and efforts by Dutch Prime Minister Mark Rutte to coordinate with other key chipmaking nations in resisting US pressure. 

China is a danger to Taiwan. Putin’s Russia is a danger to much of the developed world. Commenters sometimes tell me that that there’s less that a 50-50 chance of a nuclear war with Russia, as if I’m supposed to be reassured that there’s less than a even chance of a few hundred millions deaths.

If China invades Taiwan, then put economic sanctions on China, just as we’ve done with Russia. Until then, all of our focus should be on stopping Russia. We need to do much more to help Ukraine (but stop short of US military involvement.)



20 Responses to “The wisdom of Larry Summers”

  1. Gravatar of dtoh dtoh
    19. November 2022 at 12:07

    I totally agree with Summers…

    “The right approach is instead to “stand up for some of our fundamental interests in security and fair economic competition — but to leave it at that point,” he said. ”

    Specifically, no trade, investment or travel between the U.S. and China unless…

    1. U.S. companies can invest and sell freely in China.

    2. China doesn’t steal U.S. trade secrets and violate patent/copyright laws and treaties

    3. China does not spy on or censor U.S. companies (including social media platforms) that are operating in China.

    4. China does not carry out military aggression or threaten military aggression against its neighbors.

  2. Gravatar of TGGP TGGP
    19. November 2022 at 13:57

    If Russia isn’t even capable of defeating Ukraine, it doesn’t seem like much of a threat to the rest of the world.

  3. Gravatar of Travis Allison Travis Allison
    19. November 2022 at 16:57

    Authoritarian states need to be treated differently when engaging in commerce. We treated the Soviet Union differently. So the question is whether China should be treated differently. If we value the freedom of Taiwan and we’ve seen how China has treated Hong Kong, so I think there’s a good case to be made to do what is necessary to keep the Chinese military weak. That includes preventing China from having the most advanced electronics. Unfortunately, there are consequences for Chinese economic prosperity, but that is a trade-off that I am willing to make.

  4. Gravatar of ssumner ssumner
    19. November 2022 at 17:52

    dtoh, By your logic, no one should trade with the US.

  5. Gravatar of dtoh dtoh
    19. November 2022 at 18:29

    You honestly believe that? The U.S. is not an autocratic state, its existence does not threaten civilization, and the scale and scope of transgressions is totally different between the U.S. and China.

    It’s actually unbelievable that you would think there is some kind of equivalence. You sound like Charles Lindbergh or Walter Duranty.

  6. Gravatar of Sara Sara
    19. November 2022 at 22:43

    “stand up for some of our fundamental interests in security and fair economic competition — but to leave it at that point,”

    Why not stand up for all of our fundamental interests? Why only some?

    And your commenters have not been telling you that a nuclear war with Russia is 50/50. What they have told you repeatedly is that U.S. interventionism abroad, our religious crusade to dispose of politicians that disagree with the neo liberal order, and sanction, threaten, bully, and in many cases “bomb” them into submission — just ask somalian tribes — is the biggest threat to world peace since Nazi, Germany.

    The U.S., not Russia, started this war when it thought overthrowing an elected leader was a wonderful idea. Donbas residents are on video discussing the shellings over the last eight years, and so they did what rational people do when they are facing an overwhelming force of hatred and bigotry and contempt for their views; they went to Russia and said “help us” please, and that’s no different than the U.S. asking for France to help them during the revolution. You just don’t like it; you want to pretend it never happened, because you want to use those people as a means to your end. You hate Russians, those people are of Russian ethnicity, and so you think shelling them until they all die is fine and dandy.

    Some of us call that genocide.

    Not everyone is going to prostrate before your neo liberal order. You’re a degenerate; and they don’t like your neo liberal ideas.

    It’s you that’s the problem. Not them.

  7. Gravatar of jim jim
    20. November 2022 at 04:14

    You posted a paragraph about Europe’s take, which referenced the chip issue, but you didn’t comment on the chip issue. What’s your take? What do you think about the US’ take on Huawei? Did we over do it, or is it cool to have an aggressive foreign power with leanings toward world domination producing our communications gear? Are China’s companies arms of China’s government or not?

    My take on Europe’s view on anything goes back to a funny map I saw of Reagan’s view of the world, with massively distorted California and a word that starts with “P” over Europe. “Credulous” would be a nicer way to say it. Europe is finally seemingly in full swing sending arms to Ukraine but it took a massive US + UK + Baltic + Poland armaments campaign to embarrass them into doing anything, and that’s with missiles raining down. How limp would they be in the face of carefully planned Trojan horse economic attack? Scholz and Macron make the noodles in Campbell’s Soup look stiff.

    I’m not sure I agree with Summers or not. It’s not our policy that’s so bad, its more that Biden keeps using his big mouth to publicly rub China’s nose in it. This is so obviously stupid I have to wonder if its intentional – Biden trying to bury his highly accommodating history with China. But that’s probably reading too much into it: never ascribe to design what can properly be attributed to stupidity.

  8. Gravatar of Lizard Man Lizard Man
    20. November 2022 at 08:06

    The US seems to me to seek to preserve the status quo on Taiwan, while it seems like Xi wants to change things. I think that whether or not there is a new Cold War rests largely in Xi’s hands. China could decide to leave Taiwan alone, and given a real commitment to that and a little bit of time, the Cold War with the US would very likely end.

  9. Gravatar of ssumner ssumner
    20. November 2022 at 10:30

    dtoh. That’s a complete non-sequitor. You mentioned lots of stuff that’s equally true of the US. Then you responded with ridiculous claims that I think the US is as autocratic as China, or that there is some sort of moral equivalence. Read what I wrote.


    1. The US has lots of trade and investment barriers. We violate our trade agreements as much as any country on Earth.

    2. The US developed its economy by stealing intellectual secrets from Britain.

    3. The US spies on China.

    4. The US carries out military aggression against many countries. Much more than does China.

    If you had said we should not trade with China because its repressive, I would have disagreed with you (lots of countries are repressive), but I would not have argued the US is equally repressive. But that’s not the argument you actually made. I responded to the argument you actually made.

    Jim, I think free trade with China reduces the risk of war. There are presumably military areas (such as control of nuclear weapons) where Huawei equipment is not appropriate. I don’t have the expertise to comment on exactly where. But those claiming that we need to ban TikTok?

    Lizard, I’d also like to preserve the status quo in Taiwan. Indeed it would be fine with me if China chose to grant Taiwan independence. But in a legal sense Taiwan is part of China (even Taiwan’s constitution says that), and given the nationalism in China that makes for a very tricky issue. Under international law, regions don’t have a right to unilaterally secede. (Consider Crimea.) Let’s not make things worse with reckless rhetoric.

    As far as a cold war with China, it’s already begun and we started it (although China’s getting increasingly worse, and deserves much of the blame.)

  10. Gravatar of Spencer Spencer
    20. November 2022 at 10:41

    A fall in our exchange rate will not correct our trade deficit problem.

    The only solution is to sell higher quantities, of higher quality, and lower unit costs of production, relative to our trading partners.

    The Chinese first did this with cheap labor. Looking to the future the Chinese will ultimately replace their labor advantage with a machine tool advantage. We need much more gov’t incentivized investment in AI and robots.

  11. Gravatar of foosion foosion
    20. November 2022 at 11:26

    When looking at trade issues, I find it helpful to consider that different classes of people and entities have different interests. For example, on the importing side:

    Consumers. Trade seems unambiguously good. The exporter may be stealing or exploiting or getting massive government subsidies or whatever, but you get cheaper prices and more choice.

    Companies: You’d probably rather not have the competition, especially if it’s stealing your IP.

    Workers: Probably similar interests to companies – you don’t want the competition.

    Geopolitical: I’d think trade reduces tensions.

    Other persons: You suffer from harm to the environment. You don’t like people to be exploited. You are also a worker or company shareholder.

    Of course, many people fall under more than one category.

  12. Gravatar of seer of things seer of things
    20. November 2022 at 13:03

    Have you and Larry Summers considered that the CPC cannot say no to trade, investment, education, and tourism conditional on freedom of expression. Afraid of YouTube and Twitter? That would be impossible to justify.

  13. Gravatar of Edward Edward
    21. November 2022 at 03:22

    I think this photo summarizes the situation between Kiev and Moscow nicely.

    On the one side, you have professionals in suits willing to negotiate and compromise (i.e., Russian diplomats). On the other side, you have hoodlums in baseball caps and sweatshirts. Some of them, no doubt, neo-nazi thugs, like the one being paraded around NYC for his artwork, as he covers his nazi tatoos with long sleeves. Thankfully, at least some people have integrity: thank you Spain for banning him.

    Meanwhile, the propaganda outlets continue with the narrative. Russia bad. Ukraine good. Russia attacked for no reason and no provacation, so don’t look any deeper. Trust us and our hand-picked experts, because we will always tell you the truth!

    Don’t ask about Donbas. That’s fake news.
    Don’t ask about why Russia would attack for no reason, because attacking for no reason is perfectly logical, despite no historical nation ever attacking for no reason.
    Don’t ask about anything. Just watch your football, watch your hollywood, and shutup, or we might call you a hard right nazi; and if you really push back, we might freeze your bank accounts, call you a terrorist, and arrest you. So keep those trucks at home and be a good boy.

  14. Gravatar of veritas veritas
    21. November 2022 at 06:05

    “The Wisdom of Larry Summers”

    Summers is on Epstein’s flight logs as having flown to Charlotte Amalie, Virgin Islands, the airport close to Little St James island, aka Epstein’s pedophile island.

    On one trip he took his newlywed second wife, Elisa New, to Epstein’s Island for their Honeymoon in 2005.

    While at Harvard, Larry Summers helped launder Jeffrey Epstein’s reputation.

    inb4: Trump also flew on Epstein’s airplane (yes, from Florida to Newark, NJ…never to pedophile island).

  15. Gravatar of David S David S
    21. November 2022 at 07:57

    The New Yorker article on the China-Taiwan-U.S. dilemma was quite good. In particular the commentary on how a blockade of the island would actually be more disastrous than an invasion.

    In terms of dealing with foreign partners who don’t slot neatly into the American/EU/Japanese democratic governance system I’d rather engage more with China than many Gulf states. No beer at a soccer match?—madness.

  16. Gravatar of veritas veritas
    21. November 2022 at 12:52

    Elon Musk just essentially admitted that child exploitation was allowed and even promoted on Twitter before he gained control.

    The question you have to ask yourself about prior mgmt, you know, the one that nobody in the Democrat Party worried about or called out or investigatee (other than to use C_A language of ‘conspiracy theory’): Why did the previous mgmt allow CHILD EXPLOITATION?

    Hopefully Twitter’s servers still have all the DM’s.

  17. Gravatar of Spencer Spencer
    21. November 2022 at 15:44

    Wisdom? It’s exactly as Lawrence K. Roos, Past President, Federal Reserve Bank of St. Louis and past member of the FOMC (the policy arm of the Fed) as cited in the WSJ April 10, 1986:

    “…I do not believe that the control of money growth ever became the primary priority of the Fed. I think that there was always and still is, a preoccupation with stabilization of interest rates”.

  18. Gravatar of Michael M. Michael M.
    27. November 2022 at 00:53

    This should be a debate about tactics, not about the goal. Yes, it is foolish for politicians to compete in 1950s fashion about “who can be tougher on the Commies”. BUT: as was the case then, our goal needs to be to put their political system in the rubbish bin of history by competing, constantly pressuring, and ultimately outlasting it. I think your impressions of China are stuck in 2005 or even 2015. Things have changed there.

  19. Gravatar of ssumner ssumner
    27. November 2022 at 07:59

    Michael, China is nothing like the Soviet Union, at least in terms of foreign policy.

  20. Gravatar of Richard A. Richard A.
    27. November 2022 at 12:09

    The average tariff rate in Japan on Chinese imports is about 3% from what I have found on the internet. Here in the US the average tariff rate on Chinese imports thanks to Trump is at least 12.5% and probably higher.

    Our politically leaders seem to want to increase the trade restrictions on Chinese imports far worse than we have now.

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