President Donald Trump has turned his attention to the matter of China and the matter of the economy after “No Collusion, No Obstruction” closed off a distracting debate that arguably no one cares about.
When it comes to China, everyone cares because everyone is affected. This space too, both in the short term and long term.
China has retaliated today with tariffs on $60 billion of imports from US, mainly food. They claim precision in their actions, by which they mean they’ll focus their tariffs on Trump supporters.
The problem for them is in this matter there’s bipartisanship. There is no such thing as Trump supporter when it concerns this very complex issue.
The second thing China claims is that effectively they’re run by the civil service, while they can wait out Trump.
Obviously anyone who thinks Trump is running the country doesn’t quite know much about the system. He gives the general vision and priorities, and of course does have significant influence, but just how much depends on just how keen the US civil service is on the matter.
Here they’re arguably very keen because for once America is quite united. They’ll be even more united if China takes a confrontational attitude by going ahead with their whispered threat of selling US Treasury bonds.
This space might benefit from such action, but it benefits a lot more from a strong and open economy which welcomes this space and the freedom of innovation.
It is quite insulting to see some of our media parroting these authoritarians and their boastings of their system somehow being better and being better able to withstand pressures.
As if it isn’t we who built all of China. As if they haven’t just copied all of the inventions of the free world, with none of their own. And as if it isn’t a blunder of their authoritarian system that might have turned an entire generation against their unconditional accommodation.
We honored them with the Blockchain Summit in 2016. We were building bridges, visions, a fourth industrial revolution, yet they turned around and kicked us out. Just like that. They kept the toys, and metaphorically walled them off.
Had they not banned crypto exchanges, we might have been neutral on this matter and might have even talked up China a bit. As it stands, Trump has the full backing of these pages for two main reasons.
First, you can’t separate the profit motive from the innovation. Corporate grey suits can say its all about the blockchain all they want, but all these tools being built and all this innovation is driven by those numbers on those crypto exchanges.
There wouldn’t be a global phenomena if it was all about some registry. The registry is just a way of creating value and that value in this space is measured by the crypto token or asset or currency or whatever you want to call it.
You take out the latter, and you take out the spirit if you like, the drive. So when they banned crypto exchanges, they effectively banned the entire space or at least the more interesting aspects of it.
They gave no hint they were to do so. There was no discussion. Just an iron fist.
That’s fine. As we all know, this space went on to roar and it is flourishing. Their country, their business. We wouldn’t have cared had it not been for the second reason.
The blockchain by itself can be interesting for some use cases, but it is a lot more interesting when combined with other things. In particular, wifi and sensors as well as other technologies.
The idea here is basically you give a piece of hardware some wifi, so it can talk metaphorically. Some sensors, so that it “knows” what’s around. The blockchain, so that it can “think,” although obviously such “thinking” is at a very basic level, and then you give it a token too so that it can exchange value by itself.
All of this is a bit futuristic and the use cases that are usually given are naturally a bit too fantastic, but in manufacturing especially and in automation more generally it can be a considerable advancement.
The problem is all of this manufacturing is happening in China. The phones, the laptops, the machinery and parts, pretty much all the hardware.
So some Chinese kids, for example, have their daddy bring home some computer part. The kid plays with it and so knows what’s inside our laptop, the chips, memory parts and so on. When he grows up he might hang out with others of the same background, and so you have an industry with intimate knowledge of how new tech can be incorporated or old tech can be improved.
That meeting of American knowledge and Chinese manufacturing had the potential of being very exciting had they not kicked us out, as they also have for Facebook, Google, Twitter and even French cheese.
As such, tech manufacturing has to come back home. They can keep clothes manufacturing and all that, no one cares about that. Hardware skills however have to come back so that we can play again with those toys.
You see innovation happens when you have a blending of skills. Nakamoto, for example, didn’t invent anything, he just put together in a way that works whatever had been invented.
So if crypto folks can’t go around throwing money at hardware kids to see what might stick, then we’ll have to grow our own skills.
Now the above is a bit simplified. Obviously there’s some advanced tech manufacturing in America and Europe, but it isn’t very easy to find massive markets in America where you can buy any hardware part.
Those low level skills of today, moreover, can feed into higher level skills of tomorrow, especially in tech which is often seen as mainly software but it all obviously runs on hardware.
Had all this tech manufacturing still been in the west where freedom does still reign, there might have been a lot more innovation.
So it’s not quite a question of who will win, but more of a question of what America wants to do. Do they want to bring back this tech manufacturing, or do they leave it at the mercy of a somewhat authoritarian government which can kick us out at any time?
The answer is obvious where tech is concerned, but also in other manufacturing which with robotics and so on can be done very cheaply.
American companies are sitting on hundreds of billions which they can invest on advanced manufacturing to make their goods just as cheap, if not cheaper.
That however requires a long term view and a bit of an incentive which Trump is arguably providing because globalization for the west and protectionism for the rest is obviously cheating.
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