Mon, Sep 09, 2019 - Page 6 News List

Walter Lohman On Taiwan: You can be a China-hawk and also a believer in economic freedom

There is a dominant train of thought in Washington policy circles — perhaps even a consensus now — that the US is engaged in a great power competition with China. It is explicitly stated in the Trump administration’s strategy documents. It is bi-partisan. And it is well-reflected in a frenzy of China-focused legislative proposals over the last couple years — some of which are actually good ideas.

Indeed, the US and China do have fundamental disagreements about the shape of the international order, and several diametrically conflicting regional interests — most notably over the future of Taiwan, but also the South China Sea, East China Sea, the Mekong and other areas.

Taken as a whole, very clearly, the Chinese are pursuing a hegemony in the Western Pacific that the US cannot and will not abide.

What’s more, the rivalry is compounded by opposing founding philosophies involving the relationship between man and the state/party. For this reason, Americans and their government are always going to have something to say about the rights of the Chinese people. This extends, then, the tension to areas like Tibet, Xinjiang, and Hong Kong. It makes religious liberty an issue.

The US must challenge Beijing across the full range of these interests and values. Not only this, but the US must marshal and deploy its resources across domains — diplomatic, information, and military — to best position it to do so.

Those who believe this we can fairly call “China hawks.”

However, one domain often listed among these three, “economic,” doesn’t belong. It doesn’t fit because in the American system, economy is not a function of government. It belongs to individuals making investment decisions and trading with one another, within borders and beyond them. It involves risk which these persons willingly take for gains they are entitled to for their trouble.

When the government interferes in these decisions, it compromises the virtue of the free market and arbitrarily distorts its outcomes to deleterious, often unintended effect.

Let’s look at a few examples:

1) The US government today is aggressively pursuing a trade offensive against China. The expressed objective is variable. It is one of the following: Curbing the theft of intellectual property, a geopolitically-motivated decoupling of the US and Chinese economies, correcting the budget deficit, or increasing federal revenues.

The first, protecting intellectual property rights, is a laudable cause with a policy approach that is failing. After two years, there is still no agreement to stem China’s abuse.

The second, decoupling, is not possible. Note the latest report by Rhodium that American investment in China is actually up this year. Perhaps this is behind President Trump’s misguided demand that American companies disinvest. It’s like wage and price controls. Once the government starts trying to dictate economic outcomes, the effort assumes its own freedom-sapping logic.

The third, the budget deficit, is principally attributable to structural problems in America’s own economy and should otherwise not be a cause for concern.

The final, raising money for the government, is actually working. But, like anytime taxes are raised, money is being taken out of the pockets of Americans who could better spend it on their own. Not incidentally, it is also provoking retaliation that is hitting certain sectors harder than others, and in fact, pushing farmers onto the dole.

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