Nightcap

  1. The Harpers free speech letter and controversy Tyler Cowen, MR
  2. The Religious Roots of a New Progressive Era Ross Douthat, NYT
  3. America, China, and the Dark Forest Niall Ferguson, Bloomberg
  4. Don’t confuse reality with science fiction Scott Sumner, MoneyIllusion

The View from New Delhi: China’s post-pandemic belligerence

Introduction

In the aftermath of the Covid-19 pandemic, the increasingly belligerent behaviour exhibited by China in South Asia and South East Asia, and China’s imposition of the National Security Law in Hong Kong, it is interesting to see the tone of the English language media on China.

Yet a genuinely comprehensive peek into the Chinese view on crucial political, economic, and geopolitical issues requires a perusal of the Chinese language papers. This is imperative. The Global Times, the mouthpiece of the Communist Party, is important because it covers the views of Chinese academics and strategic analysts who, through their opinion pieces, provide a deep insight into China’s approach towards those aforementioned crucial issues.

From the opinion pieces at the Global Times over the past few months, one thing is evident: that with the US becoming increasingly unpredictable under Trump, China is virtually invincible. There is a growing belief that Beijing is formidable both in the economic and strategic context. Strategic analysts and journalists writing for the English language daily have also tried to drive home the point that Beijing is in a position to take on the US and its allies, and that any attempt to isolate China would not be taken lying down.

Other articles in the Global Times warn against anti-China alliances, and explain why these alliances will not be possible due to the fault lines between the US and other countries. It has also not refrained from using strong language against countries like Australia and Canada by insinuating that they are acting as mere appendages of the US.

Aggressive stance vis-à-vis countries which blamed China for lack of transparency with regard to the outbreak of the pandemic

Beijing has been scathing in its criticism not only of the US, which took a firm stand against China in regards to the suppression of crucial information pertaining to the pandemic, but also Australia, which had the temerity to ask for an enquiry into the origins of the deadly pandemic. The Global Times lashed out and labelled Australia as a mere appendage of the US, even dubbing it a ‘poodle’ and ‘dog of the US’.

It has also warned other countries, especially Australia, of the economic consequences of taking on Beijing. An article titled ‘Australia’s economy cannot withstand Cold War with China’, written by Wang Jiamei, concludes by saying:

‘…..If a new Cold War leads to a China-Australia showdown, Australia will pay an unbearable price. Given Australia’s high dependence on the Chinese economy, an all-around confrontation will have a catastrophic effect on the Australian economy’

China has followed this harsh rhetoric with sanctions on imports of certain Australian commodities, like barley, and suspended the import of beef. China has also issued warnings to students and tourists that ask them to reconsider travelling to Australia.

This was done days after China’s envoy in Australia, Cheng Jingye, in an interview to an Australian media outlet, had warned of strong economic repercussions (the envoy was referring not just to the impact on Australia-China trade, but on Chinese students pursuing education in Australia and tourists visiting Australia) if Australia continued to adopt a strong stance against China on the issue of an enquiry into the origins of the Covid-19 pandemic (Australia reacted very strongly to this threat).

Beijing unsettled by emerging alliances?

One interesting point is that while commentaries and reportage in the Global Times try to send out the message that China’s rise is inexorable and that Beijing is not daunted by emerging alliances and emerging narratives of reducing economic dependence upon China, it seems to be wary of partnerships and alliances which seek to challenge it. The newspaper repeatedly warns India, the UK, Australia, and various EU member states about the perils of strengthening ties with the US. Even in the midst of recent tensions between India and China, Global Times tried to argue that India would never openly ally with the US and if it did so, this would be damaging. An article in the Global Times states:

It won’t be in the interest of India, if it really joins the Five Eye intelligence alliance. The role of a little brother of the US within a certain alliance is not what India really wants.

The article also tries to dissect differences between the US and India over a number of issues, which are not wrong, but the piece forgets that the two countries do not have differences over strategic and economic issues.

Strong language against Canada

It is not just the US, Japan, Australia, EU member states, and India that the English-language daily has recently threatened. The Global Times has also adopted an aggressive posture vis-à-vis Canada. One article, titled China-Canada ties wane further as Ottawa becomes Washington’s puppet over HK’, suggests that Justin Trudeau was in the ‘pole position in the circle of bootlickers pleasing the US’ and castigates him for the measures he has taken after China tightened its control over Hong Kong via the imposition of National Security Law. Steps taken by Trudeau include suspension of the extradition treaty with Hong Kong and a decision to end the export of sensitive military items to the region.

Cracks in the bilateral relationship had begun to emerge between Canada and China after Canada detained the CFO of Huawei, Meng Wanzhou, on a US extradition warrant (at the end of May, a Canadian court had ruled that Wanzhou could be extradited to the US, much to the chagrin of the Chinese), while Beijing in return has detained two Canadians, Michael Kovrig and Michael Spavlor (both were charged with espionage in June 2020). It would be pertinent to point out that Beijing has signaled its displeasure with Canada by reducing imports of Canadian products like pork and canola oil.

Conclusion

While Beijing itself is becoming more aggressive and belligerent, it cannot expect other countries to stick to their earlier position on crucial strategic issues. It is somewhat unfair to assume that the Global Times, the mouthpiece for China’s Communist Party, can cover the fact that China is on the defensive. Other countries are now finding common ground in the strategic and economic sphere. While the results may not come overnight, partnerships are likely to concretize and gather momentum, because Beijing seems in no mood to give up on its hegemonic mindset and patronizing approach. Yet, other countries and regional blocs also need to have a clear vision to counter China and divergences over minor issues will not help. It is true that a zero-sum approach vis-à-vis China is not beneficial, but for that to happen Beijing too needs to act responsibly, which seems doubtful given its behavior on a number of issues.

The View from New Delhi: Trump vs. Biden

Introduction

In the run-up to the US elections, presumptive Democrat candidate Joe Biden’s lead over Donald Trump has been steadily rising, and is well over 10%, according to various polls. There are four months to the election, however, and it is too early predict the outcome. Many believe that the mercurial Trump is likely to have an ace up his sleeve, and that his popularity within his core constituency is very much intact. Interestingly, one area where Trump has a lead over Biden is confidence with regard to handling the US economy. Trump also scores over Biden in terms of enthusiasm. The current President is lagging behind Biden in terms of important issues like law enforcement and criminal justice issues, foreign policy, the coronavirus outbreak, race relations, and keeping the country united.

Commentators, strategic analysts, and policymakers the world over are keeping a close watch on the US election. The question on everybody’s mind is whether Biden’s foreign policy will be similar to earlier Democrat Presidents like Clinton and Obama, or distinct given the massive economic and geopolitical changes which have taken place globally. According to Trump’s former National Security Advisor, John Bolton – whose memoirs The Room Where it Happened: A White House Memoir have stirred up controversy and come at the wrong time for Trump – a Biden Presidency would essentially mean ‘another four years’ of Obama’s foreign policy.

It is true that Biden has been part of what is dubbed as the ‘Beltway.’ and would be preferred by US liberals and the class of ‘East Coast Intellectuals’ who are dominant not just in academic circles, but the policy circuit as well, given the fact that he may not be as isolationist as Trump, and is likely to be less abrasive vis-à-vis US allies.

In the changed economic and geopolitical environment, globally, the former Vice President will need to tweak his approach on complex economic and geopolitical issues. We may thus witness a significant departure from the policies of Bill Clinton and Barack Obama, for example, as attitudes towards trade had already begun to change during the Obama presidency.

One strong reiteration of the above point is Biden’s stand on the Trans Pacific Partnership (TPP), which was former President Barack Obama’s brainchild, and an important component of what had been dubbed the ‘Pivot to Asia’ policy, which sought to contain China’s growing role in the Asia-Pacific region. (The Trump Administration has sought to build strategic partnerships in Asia through the ‘Free and Open Indo-Pacific’ narrative.) Biden said that he would only join a ‘re-negotiated TPP’ (one of the first steps which Donald Trump had taken when elected to office was to pull the US out of the TPP).

On China, too, Biden is likely to be more hawkish than Obama, though maybe he is less predictable and abrasive than Trump. Biden has already referred to some anecdotes in Bolton’s memoirs, where the Former NSA highlights the point that Trump, in a meeting with Chinese President Xi Jinping on the sidelines of the G20 Summit in Osaka, lent support to draconian measures against the Uighur minority in Xinjiang

Interestingly, in spite of Trump’s tough stance against China on economic issues, such as the imposition of trade tariffs as well as sanctions against Huawei (only recently, Chinese telecom vendors Huawei and ZTE Corporation were declared ‘national security’ threats), a number of Chinese commentators seem to prefer Trump, mostly because he has a simplistic approach, with US business interests being his primary concern. The US President has also not been very vocal on Human Rights Issues. Apart from this, Trump has given mixed signals vis-à-vis US allies. On the one hand, the Administration has spoken about the US working closely with its allies to take on China, and on the other hand Trump has taken measures which have riled allies. A recent instance being the Trump Administration’s announcement of withdrawing US troops stationed in Germany.

Similarly, Trump’s call for reforming the G7 and including Russia was not taken too kindly by countries like Germany and Canada, who believe that an expanded G7 should consist of democracies.

Trump’s rapport with authoritarian leaders

While Trump’s lack of gravitas in foreign policy has had an adverse impact on relations with US allies, he has got along well with authoritarian rulers like Russian President Vladimir Putin, North Korean dictator Kim Jong-un, and Chinese President Xi Jinping, and even praised them. Trump has not just turned a blind eye to human rights violations in Xinjiang, but looked the other way when it came to the brutal killing of Egyptian journalist Jamal Khashoggi in 2018 (the CIA concluded that the Saudi Crown Prince, Muhammad Bin Salman, with whom Trump shares a close rapport, was involved in the killing of Khashoggi).

In the midst of the pandemic, and India’s escalating tensions with China, the US President also suspended non-immigrant work visas, including H1Bs (in recent years, Indians have received well over two-thirds of the total H1B visas which have been issued) until the end of the year. Biden, on the other hand, has been an ardent advocate for closer economic ties with India. The former Vice President had also backed the Indo-US Nuclear deal in 2008 (Biden was then a Senator), and during his visit to India in 2013 he also spoke in favour of a greater role for India in Asia, and the need for both countries to work closely towards this goal.

What has irked many in India, however, is Biden’s criticism of the CAA (Citizenship Amendment Act), NRC (National Register of Citizens), and his support for the restoration of liberties in Kashmir on Biden’s campaign website. It would be important to note that not just Democrats, but even many Republicans, have criticised the increasing religious polarization in India in recent years, and a US government report also underscored the need for religious pluralism in India, highlighting cases of discrimination against minorities. Many right-thinking Indians, too, have been emphasizing on the point that India can not progress without social cohesion and warned against the perils of religious polarization and social divisions.

Conclusion

No US administration can afford to be soft on China any longer, and neither can India with its rising clout be ignored. The US under Biden is likely to cement ties with countries like India and Vietnam while ensuring that allies like Germany, France, and Australia are kept in good humor. What could change is the simplistic approach of Trump, where even links with allies are driven by short term economic gains. It is important to realize that US-India relations are driven by mutual interests, not just individual chemistry between leaders.

The Three T’s in a post-coronavirus world

As countries look to recover from the economic setback caused by the coronavirus pandemic, the three t’s – trade, travel, and technology – are likely to play an important role in getting the global economy back on the rails.

Trade

Even in the midst of the pandemic, countries have been in talks regarding Free Trade Agreements (FTA’s). The UK is seeking to sign an FTA with not just the US but also Japan, so as to buttress the bilateral economic relationship and get entry into the 11-member Comprehensive Partnership for Trans Pacific Partnership (CPTPP). Vietnam’s national assembly also ratified an FTA with the European Union known as EUVFTA (European Union Vietnam Free Trade Agreement) on June 8, 2020. According to the FTA, the EU will lift 85% of its tariffs on Vietnamese exports, while the remaining tariffs will be removed over a period of 7 years. Vietnam on the other hand will lift nearly half (49%) of its import duties on EU goods, while the rest of the tariffs will be removed over a period of 10 years.

The CPTPP is also likely to expand in the near future. Japan is seeking to get Thailand, Taiwan, Indonesia, and the Philippines on board. Tokyo’s aim is to reduce dependence on China by creating an alternative set of supply chains through multilateral networks.

Technology

In recent weeks, there has also been a growing debate with regard to creating new technologies, so that the dependency upon Chinese technologies is reduced. One important step in this direction is the UK’s suggestion for creating an organisation, called D10, which consists of the original G7 countries plus India, South Korea, and Australia. The aim of the D10 is to provide alternative technologies so that dependence upon Chinese technologies is reduced.

At London Tech Week, a report titled “Future Tech Trade Strategy” was given by British Trade Secretary Elizabeth Russ. Russ spoke about a new £8 million initiative which would enable British companies to expand tech ties with Asia-Pacific countries, especially Japan and Singapore. British companies will also be assisted by tech experts stationed in its high commissions and embassies in these countries.

Travel

In recent days, the resumption of international air travel has also also been an important matter of discussion. Three members within the 11-member CPTPP – Japan, New Zealand, and Australia – have already been in talks for resuming air connectivity. Japan is also likely to ease its entry ban from countries like Vietnam and Thailand where Covid-19 cases have reduced.

Singapore, another member of the CPTPP, is also in talks with South Korea, Malaysia, and New Zealand for resumption of air connectivity. (Singapore Airlines and Silk Air have been flying passengers from select destinations in Australia and New Zealand to Singapore’s Changi Airport throughout the pandemic.)

China, too, has been seeking to revive air travel. While China has recently set up a travel corridor with South Korea, it has also signed an agreement with Singapore for reciprocal travel for essential purposes – business and official. Initially, this arrangement will be for 6 provinces – Shanghai, Tianjin, Chongqing, Guangdong, Jiangsu, and Zhejiang (travellers will need to apply for a visa in advance, and get tested for the corona virus both before departing for China and after arriving there).

Vietnam, which removed its lockdown at the end of April and resumed domestic flights, is also reviving international travel with a few select countries, such as South Korea (South Korean students can enter the ASEAN country through a special permit).

The EU is seeking to resume air connectivity with non-EU countries by the 1st week of July (the EU has already opened travel within EU member states), and it is likely that air connectivity with countries considered low risk will also resume shortly.

The resumption of travel will of course be undertaken on a step-by-step basis. Japan, for instance, has indicated that it will open its air connectivity with other countries in stages; first for businessmen, then students, and finally tourists. What is fascinating to observe is that the narrative with regard to the three t’s is not being set by the West, it is being set by Asian countries. Even within Asia, it is not just a China-driven narrative. Japan is playing an important role and, from within ASEAN, it is not just Singapore but Vietnam as well which has emerged as an important stakeholder.

Conclusion

In a post-corona world there are likely to be a number of changes, with geopolitical and economic dynamics in Asia likely to witness a significant shift.

What is also interesting to note is that travel and technology – two of the three t’s – were broadly thought of as key ‘soft power’ tools prior to the Covid-19 pandemic. Post the pandemic, there will be a strong ‘hard Power’ component to these two t’s. While in the context of travel, each country will be cautious with regard to opening up air travel, and stick to linkages with countries that have managed to control the corona virus; as far as technology is concerned, due to the rising tensions with China, the creation of alternative technologies is likely to be viewed as a security requirement (trade, the third t, had already acquired a strong strategic component even before the outbreak of the pandemic).

Nightcap

  1. Essential essay on Sino-American relations since Nixon Orville Schell, The Wire China
  2. Does capitalist democracy have a problem with public health? Blake Smith, Age of Revolutions
  3. Is birthright citizenship the foundation of American democracy? Nathan Perl-Rosenthal, Nation
  4. Nobody tell Joakim about this (our bookless future) Mark Bauerlein, Claremont Review of Books

Nightcap

  1. Erdoğan and Turkey’s missing 30 million Selim Koru, War on the Rocks
  2. The rise of extreme politics in a federation Daniele, Piolatto, & Sas, VoxEU
  3. China hasn’t lost Europe just yet Michito Tsuruoka, Diplomat
  4. What is “God” even supposed to mean? Ed Simon, LARB

What will a post-pandemic British foreign policy look like?

Introduction

The United Kingdom’s post-corona foreign policy is likely to be driven by some crucial economic factors. On the one hand, it will continue to work closely with countries like the United States, Japan, Australia, and India to reduce its dependence upon China. On the other hand, the UK cannot totally bank on the US for achieving its economic goals, given the unpredictability of US President Donald Trump.

The UK needs to look at new Free Trade Agreements (FTA’s) and also be part of multilateral arrangements, such as the Trans Pacific Partnership, which will enable it to diversify its supply chains.

Important upcoming economic decisions

Given the changing environment of the post-corona world, London now has an eye on enhancing self-sufficiency and reducing reliance on China.

The Boris Johnson government has set up a committee — ‘Project Defend’ — which seeks to study the UK’s economic dependence with hostile countries (with a specific thrust on China), especially for sensitive imports. Based on the findings of Project Defend’s report, for example, the UK will work towards the relocation of pharmaceutical companies. While changing supply chains overnight may not be an easy task, the Boris Johnson Administration has made an important decision.

The UK’s recent decision on Huawei

The Boris Johnson Administration has also recently decided to reduce Huawei’s participation in the 5G network to zero by 2023. In January 2020, Boris Johnson had given a go ahead to Huawei’s participation in the ‘non-core’ element of the 5G network, with important restrictions, as well as a 35% market share cap. This decision drew flak from a section of Conservative Party politicians, who for long have been arguing that the UK needs to be cautious with regard to close economic ties with China, since this has serious security implications. The Trump administration had also expressed its displeasure with the Boris Johnson administration. The US President and senior officials in his administration have publicly expressed their unhappiness, saying that this decision could have an impact on security cooperation between both countries.

In the aftermath of the coronavirus pandemic, ties between the UK and China have gone downhill (senior officials of the Johnson administration have criticized China for suppressing information with regard to the outbreak of the pandemic), and Johnson’s decision was driven by two factors: 1) increasing pressure from Conservative MP’s who had threatened to vote against the government’s decision, and 2) the fact, that the UK is keen to go ahead with an FTA with the US (there have been differences between the US and UK, however, on the issue of the FTA, with the US urging the UK to make a choice between China and the US).

Apart from this, the recent US sanctions imposed on Huawei have also played a role in Johnson’s decision of reducing Huawei’s participation by 2023 (the Trump administration has made it compulsory for foreign manufacturers using U.S. chipmaking equipment to obtain a license before being able to sell chips to Huawei).

D10 network

Interestingly, the UK has also proposed that a group of 10 countries, dubbed as D10, joins hands to provide an alternative to Huawei’s 5G network and other technologies with the aim of reducing dependence upon China. The proposed grouping would consist of the US, Italy, Japan, the UK, South Korea, India, Germany, France, Canada, and Australia.

The UK has thus taken the lead in providing an alternative to the now bipolar status quo. Significantly, Trump has also stated that he is keen to expand the G7 and include not only India and South Korea but Russia as well.

UK also keen to play an important role in the TPP

While on the one hand the UK is trying to reduce its dependence upon China by joining hands with the US and like-minded countries, on the other the UK is also seeking membership within the Comprehensive and Progressive Agreement for Trans Pacific Partnership (TPP), which consists of 11 members (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam).

While the idea of the TPP was proposed by former US President Barack Obama, the first decision taken by Trump after his electoral triumph in 2016 was to withdraw from the agreement. Japan has been playing an important role in the TPP, and efforts are being made to expand its membership so that democratic dependence on China is still further reduced.

The UK faces numerous challenges and while it does need to reshape its economic relationship with China, London recognizes that this cannot be done overnight, so enhancing FTAs and joining the TPP are important steps in geopolitical context.

From a purely strategic perspective, the UK-US relationship has been important and with Johnson and Trump at the helm, and increasing convergence on attitudes vis-à-vis China, this is likely to get further strengthened (though of course there will be differences on both economic and geopolitical issues). The idea of the D10 grouping mooted by the UK has also sent a clear message that in spite of numerous economic challenges, the UK is keen to emerge as an important player, in its own right, in the post-corona world order.

Expect a new, decentralized narrative in the post-Coronavirus world

Introduction

Many analysts have argued that the US and China will continue to be the two most important global players in a post-corona world, but they will not be the sole drivers of the narrative with regard to economic and geopolitical issues. While the US has become insular under Trump and has failed to foster a spirit of international cooperation even during the midst of the coronavirus pandemic, China’s suppression of crucial information with regard to the coronavirus has been criticized by a number of countries – not just the US.

During the midst of the coronavirus pandemic itself, many countries have risen to the occasion not just in terms of dealing with the pandemic, but also providing assistance to other countries. This includes the Asian countries of South Korea, Taiwan and Vietnam, and Western countries like Germany and France, which have both risen to the occasion by speaking up for removal of sanctions against Iran, and also providing financial assistance.

Increasing importance of South Korea, Taiwan, and Vietnam

If one were to look at the instance of Asia, countries like South Korea, Taiwan, and even Vietnam, which has been successful in controlling the virus, are likely to enhance their stature globally, and will become even more relevant in the economic and strategic sense not just in Asia, but on the global stage.

All three countries have provided medical assistance to a number of countries, including the US. Taiwan and Washington have also joined hands to carry out research and to develop a vaccine for finding a cure for the virus.

The success of South Korea and Taiwan blunts the narrative about authoritarian governments being in a position to control the epidemic better, an argument which Beijing has been trying to push. The success of Vietnam has shown that resources are helpful, but not necessary, for handling situations like pandemics. Even with meagre resources, the ASEAN nation has restricted the number of cases and not recorded a single death so far. This has been attributed to the timely response by the country’s leadership. Vietnam has also been able to relax the lockdown and open certain businesses.

India too has been able to contain the spread of the virus and has provided aid and assistance to a number of countries in spite of a paucity of responses.

In a post-corona world, China is not likely to drive the Asian narrative.

Western narrative: Not driven by the US

In the West, while Trump has been criticised for his handling of the coronavirus, Germany has been relatively successful in containing the outbreak of the virus compared to other EU member states. What is interesting is that while Germany has publicly criticised China it has not taken the US stand on a number of issues.

First, along with the UK and France, Germany provided medical assistance to Iran via the Special Purpose Vehicle (SPV), which had been set up to circumvent sanctions imposed against Iran (the medical assistance reached Iran on March 31, 2020).

Second, when Trump reduced US funding to the World Health Organisation (WHO), Merkel spoke in favor of greater international cooperation, and support to WHO at this point of time, while also indirectly criticizing the step taken by Trump. Even in the past, Merkel has been at variance with Trump on numerous issues including the US approach to Iran and Trump’s approach towards globalization.

Emmanuel Macron too has been critical of China, but not necessarily echoing the US line. Both leaders have also been emphasizing the need for revival of the European Union (EU) and making it relevant.

Conclusion

In a post-corona world, a number of changes are likely to occur in the world order. First, if smaller countries have been successful in dealing with the pandemic their stature will rise, and they will benefit both in economic terms as well as geopolitical clout.

Second, the belief that a democratic system is incapable of dealing with a crisis like the coronavirus has also been challenged.

Third, the international world order will have numerous layers, and the influence of both Washington and Beijing on the narrative are likely to reduce with new players likely to speak up on crucial economic, environmental, and strategic issues. While trade and travel may be restricted, there is a possibility of greater ‘international cooperation’ and a new narrative which does not emanate merely from Washington or Beijing, but collectively from a number of countries.

Finally, cooperation will not be restricted merely to regional blocs or geography. In a number of instances, medical aid and assistance has been extended by one country to another far flung country. The new world order promises to be an interesting one, though it will be complex.

Nightcap

  1. China’s race to find aliens first Ross Anderson, Atlantic
  2. What happens if China makes first contact? Abhijnan Rej, Diplomat
  3. Is coronavirus a preview of alien life reaching earth? Jeffrey Kluger, Time
  4. A beautiful photo essay of some old, abandoned airplanes Zero Anthropology

China versus the Communists; American civil liberties

I don’t know about you but I’ve come across my fair share of anti-Asian bigotry over the past few weeks. This is not a good trend.

Here is my public service announcement for the week: China is not the Communist Party. Billions of Chinese citizens are lorded over by a Communist Party. Singapore, Hawaii, California, Taiwan (see this great article), Sydney, Malaysia, Hong Kong, and Jakarta have all managed to avoid repressing data and silencing scientists.

You’re welcome.

Jacques has been subtly prodding me to write an essay complaining about the loss of civil liberties in the United States due to coronavirus (“every true libertarian is doing it”), but I just can’t muster up the willpower. I realize that civil liberties will be attacked by governments. Covid-19 is a crisis, after all, but I don’t think the attempts so far are unjustified. Hear me out:

There is a global pandemic and the virus causing all of the mayhem is one we know little about. It’s a deadly virus. It’s highly contagious. Governments have attempted to protect lives. They’ve done a terrible job, and factions are trying to use the crisis to push their agendas.

Predictable, but what about the pandemic? I don’t want to get the plague. I don’t want my small children or my wife to get the plague. And I certainly don’t want to be responsible for passing the plague on to family members who are most susceptible to the virus (my children’s grandparents).

The backlash against government stabs in the dark have already begun. Small businesses and many, many workers have been screwed. If the trade-off, though, is between small businesses/lower wage workers going broke or my family members dying unnecessarily, bye Felicia.

In politics, sometimes it’s good to play offense and sometimes it’s better to play defense. Libertarians can play offense here and there, such as when the economy is roaring, or when wars are unjustified. In a crisis like this, though, it’s best to wait and see what happens. It’s best to play defense and wait for a good place to counterattack. It’s bad enough that crackpots and racist frat boys claim the mantle of Libertarian (we wouldn’t want to be intolerant, after all), but when our leading lights start downplaying this plague before anybody really knows what’s going on, it just gives liberty a bad name.

Nightcap

  1. Between Scylla and Charybdis Mark Helprin, National Review
  2. Protest and pandemic at sea Irfan Khawaja, Policy of Truth
  3. Scottish nationalism and free banking George Selgin, Alt-M
  4. What to do about China Samuel Gregg, Law & Liberty

The view from New Delhi: Pakistan and the coronavirus

Introduction

The number of cases arising out of coronavirus in Pakistan continues to rise steadily. As of April 14, 2020, there were well over 5,000 cases (5,716) and deaths due to the virus totaled 96. China is providing assistance to Pakistan in dealing with the virus, and apart from medical assistance in the form of materials (including ventilators, masks, test kits, protective clothes), a team of medical experts reached Pakistan on March 28 for a period of two weeks. The team of Chinese medical experts argued for the extension of the lockdown in Pakistan (especially the province of Punjab, which has been hardest hit by the epidemic), arguing that one of the factors which helped China in controlling the further spread of the outbreak was the lockdown.

While the Chinese delegation laid great emphasis on extending the lockdown, and greater ‘social distancing’, one of the major challenges for the Pakistan PM, Imran Khan, has been the state of Pakistan’s economy. It is for this reason that he was reluctant to go in for a lockdown, but eventually pressure from opposition parties (the province of Sindh went for a lockdown even before the Federal Government) and, more importantly according to some, from the Army was what finally compelled Khan to go in for the lockdown.

On April 12, in an appeal on social media to the international community, the United Nations Secretary General, and the world’s international financial institutions, Khan appealed for ‘debt relief’ to developing countries.

Khan also pointed to the fact that the challenges faced by developing and developed countries were markedly different. Said the Pakistan PM:

While in the developed world, the main dilemma is containing with the coronavirus through lockdowns and then dealing with the economic impact, in the developing world, apart from containing the virus and dealing with the economic crisis, our biggest worry now is people dying of hunger.

He also pointed to the need for an initiative with a thrust on ‘Global Debt Relief’, one where all stakeholders are brought on board for coming up with a well-thought out economic and health response to the pandemic.

Welfare measures by the government

As the number of cases has been rising continuously, Khan has warned people to take the necessary precautions, saying that the country’s hospitals may not be able to cope with the rising number of cases. The Pakistan PM – who had earlier announced a stimulus package (to the tune of Rupees 1.2 Trillion Pakistan) to provide relief to labourers, businessmen, as well as the middle class – also stated that the government would start distributing cash to poor families through a program: ‘Ehsas Emergency Cash Program’. According to this program, Rs. 144 billion (Pakistani) would be distributed amongst 12 million low income families.

Chinese Assistance

While Chinese assistance to Pakistan has been drawing attention, with both countries laying emphasis on the point that the bilateral relationship is an all weather one and that the ‘Pakistan-China All-weather Strategic Cooperative Partnership’ has grown under the leadership of Chinese President Xi Jinping and Khan. Pakistan Foreign Minister, Shah Mehmood Qureshi, while receiving the team of Chinese medical doctors which arrived in Pakistan on March 28 stated:

Chinese have once again shown to the world that they are friends of Pakistan. They care for us. We stand with each other in difficult times. This is a unique relationship and such testing times tell us how close we are to each other.

China on more than one occasion has thanked Pakistan for the assistance, which it had provided when the coronavirus outbreak had begun and has assured full support to Pakistan. Pakistan’s President, Arif Alvi, had also undertaken a trip to China in March, in order to show solidarity with it’s ‘all weather’ ally (he was the first head of state to visit China after the outbreak of the deadly epidemic). Alvi’s China visit took place days before the lockdown was initiated in Pakistan, and a number of MOU’s were signed between both sides to counter the deadly epidemic. While Pakistan wanted to extend its solidarity with China, something which was acknowledged by Beijing, it also got assurance regarding its own fight against the coronavirus.

Commenting on his China visit, Alvi said:

China trip was very beneficial to show support & counter propaganda. We also need to get technical help from them for biggest health crisis Pakistan is going to face. Their experience is unique. Six hours of exhaustive meetings took place. Signed many MOUs for #iFightCorona.

Assistance from other quarters

While it is true that Beijing has been quick to provide logical assistance to Pakistan, China’s financial assistance would not have been sufficient for Pakistan to provide much-needed relief to the not-so-privileged in Pakistan. In this context, the International Monetary Fund has acceded to Pakistan’s request of $1.4 billion (under the Rapid Finance Instrument for fighting the coronavirus) according to sources. This amount would help Pakistan to increase it’s foreign exchange reserves as well as provide budgetary support at a time when the country faces a serious economic slowdown. The World Bank and Asian Development Bank (ADB) have also provided Pakistan aid – to the tune of $1 billion and $1.5 billion, respectively. The Pakistan PM had referred to the assistance provided by international financial institutions in his social media recording on Sunday.

It would be pertinent to point out that Pakistan is already working with the IMF on a three year program called the Extended Fund Facility Program (EFF). The organization had sanctioned $6 billion and, according to analysts and rating agencies, it is the reform program of the IMF, which had played a key role in Pakistan being able to stabilize its economy (in December 2019, Moody’s Investors Services had raised Pakistan’s credit rating to ‘stable’ from negative). Pakistan has reiterated its commitment to the EFF (due to the current crisis, the IMF will be unable to release the third trance, $450 million, of the $6 billion total loan).

Not only has the assistance from IMF, ADB, and World Bank come as a major relief for Pakistan as it battles the coronavirus, Islamabad will also be heaving a sigh of relief after the review of Pakistan’s greylisting by the  FATF (Financial Action Task Force) has been pushed from June to August/September 2020. Pakistan, which was put on the watchdog’s greylist in 2018, was given 27 points to comply with, and it has only been given two extensions after failing to convince FATF on 13 of the 27 points (Beijing has been extending support to Pakistan). While Islamabad was supposed to submit its progress in April 2020, it has now got time till July 2020 to address the points it needs to comply with. In the long run, it will need to address the points raised by FATF if it wants access to international financial institutions and needs to carry out transactions without any problem.

Imran Khan’s dilemma with regard to the lockdown

In the last few months, Pakistan’s economy was beginning to show some signs of a revival, and this was acknowledged by international agencies and a number of countries who had begun to show interest in investing in the country. There is no doubt whatsoever that the coronavirus has come as a sudden setback. With the number of cases steadily rising, Khan’s challenges are only going to increase and the dilemma for the Khan administration will be the length of time of the lockdown. Businesses have been opposed to the lockdown and sooner or later are likely to pressure Khan to lift lockdown orders (a decision has already been taken to open some companies, which supply to brands like Puma and Nike, with only essential employees, while taking key precautions such as ensuring regular disinfection), as well as a more comprehensive package which Khan’s government may not be able to provide. Opposition parties, the Pakistan army (which has not been on the same page as Khan on a number of issues, including the handling of the coronavirus), and China, upon whom Pakistan is dependent, have of course been backing the lockdown. Given the lack of medical facilities, there may not be any other option but to lockdown.

Conclusion

In the midst of all these challenges, there is some relief for Pakistan:

First, while Islamabad may publicly hail China for its assistance, the assistance from multilateral bodies like the IMF, World Bank, and ADB has been what’s helped Pakistan deal with the coronavirus crisis. The assistance provided by these institutions also raises the point of whether the obituary of ‘internationalism’ and ‘multilateralism’ and the relevance of international institutions, with all their flaws, was rather premature.

Second, the delay in the FATF gives Pakistan some more time, though it will have to address the remaining points and can not be evasive in the long run. Turning a blind eye to the activities of terror groups and their financing is not likely to benefit Pakistan in any way.

Islamabad’s task is cut out however, and it remains to be seen how the government deals with the multiple problems arising out of the coronavirus (Pakistan’s growth forecast for 2020 has been reduced from 2.6% to 0.8% for the current fiscal year). In the short run, it may be able to weather the storm, albeit with great difficulty, but in the longer run it is in for some serious problems. Pakistan’s government would however be relieved with the above two developments at this point of time.

Damned Models and Cutting off the Chinese

I have a good eye for what ought to be there but isn’t. Don’t congratulate me; it’s a natural talent. I am retired so, I usually spend hours listening to the radio, reading newspapers and, watching television and, (Oops) on the internet. Nowadays, I do more of the same.

Today’s lecture is going to be a little longer than usual, on the one hand. On the other hand, there will not be a test. Bear with me; it’s going to be worth it (if I say so myself).

The first thing that’s missing from the endless and frankly a little sickening commentary on the C-virus epidemic is a good explanation of what’s a “model.” I mean the kind of models that are being blamed a little bit everywhere and especially in the conservative media for seemingly wildly inflated predictions (of infections, of deaths, of anything connected to this illness). Just from listening to talk radio, I think that some, or many, believe that with “computer models,” computers actually do the thinking instead of people. It’s not so.

The second thing missing is a clear description of the downside of national economic self-sufficency that appears so tempting now that we are extra-sensitive to both the comparative incompetence of our China-based suppliers, and to the possible ill-will of the Chinese Communist authorities.

First, first: a model is logically pretty much the same thing as we do when we say, ” On the one hand, on the other hand.” That’s as in, “One the on hand, If have saved $20, I will buy a nice cake; on the other hand, if I manage to save $200, I will look for a good used bike.”

The problems are: 1 that we have only so many hands; if we had one hundred each, and remembered each, we could produce mental models that cover more possibilities; 2 that we are not agile at combining possibilities, like this: “If the third hand and the fortieth hand are combined with the fifty-first then, this will happen.”

Models – designed by humans working slowly – can be entered into computers with many values and many combinations of values to tell us what would (WOULD) happen if… That’s all, folks.

Don’t blame the models, don’t blame those who build the models, in this capacity, rather, blame those who don’t do the needful to explain to decision-makers what actual models do and don’t do. (It’s true that they are often the same as those who actually construct the models but in a different role.)

Also, blame American universities and colleges that should have been in the business of teaching this stuff to all students since the late sixties and that have only done it for a tiny elite minority. A big missed opportunity. Even high school students could learn, I believe.

Second undiscussed issue. Under normal circumstances, self-sufficiency has a certain intuitive appeal: Let’s not count on others because they might fail, or fail us and, at any rate, distance makes the best linkages vulnerable. Now that we worry about running out of essential medical supplies made in China, now that we fear a shortage of the raw materials that go into our medical drugs, our intuition seems broadly vindicated. It did not help that a highly placed Chinese Communist official actually threatened the US aloud, about a month ago, with withholding medications. (I am guessing he is not going to have a happy retirement.)

Much about our intuition is correct, of course. As I never tire of stating (wittily, if you ask me), we should not count on steel deliveries from China to build the naval ships we would use in a war with China. The steel deliveries might be too late.

That’s on the one hand. On the other hand, there is a downside to national self-sufficiency. It violates the general principle that specialization makes for efficiency. Just imagine that you had to grow all your own grain, harvest it, mill it, raise your own cattle, slaughter it, butcher it, skin it, preserve the meat, treat the skins (and cut and sew clothes out of them). You would do a bad job of some of these tasks, at least, possibly of all. You would have much less to consume than is true now. You would be poor.

And that’s the downside: National self sufficiency is a sure path to poverty. I am not speaking of small differences but of big ones. I remember clearly when the cheapest hammer at the hardware store cost $20, five years later, the cheapest hammer cost only $5. What happened in between was expanded imports from China. (Don’t even begin to talk about quality; the difference among the cheapest items of a kind is largely illusory anyway, or much exaggerated.) And if you think this is a special case, ask your self if the Canadians – who love bananas – should grow their own in the name of self-sufficiency.* (For an expanded view of international trade, see my series of articulated short essays beginning here: “Protectionism; Free Trade, Step-by-Step.”)

Here again, American colleges and universities deserve strong blame. First, many don’t even require a course in economics to graduate. One of the best undergraduates I have known personally, an honors students who is now very successful in her career, never heard a single lecture on anything pertaining to economics. Second, economics professors, by and large, do a piss-poor job of teaching international trade. Across 25 years of teaching in a business school, I have met a fair number of good MBA students who had taken three courses in international trade and still did not see the possible downside of self-sufficiency. So, this simple idea is not widespread among the educated populace. It’s not well anchored enough in the opinion media for many to push back intelligently against the wave of demands that the US minimize its dependency on what we obtain from abroad in general. (A national policy designed to induce American companies to source in Vietnam, for example, rather than in China is a different and defensible proposition.)

So, here you have it: Models are not to blame, confusion about them is; economic self-sufficiency is the road to poverty though it might be worth it. Knowing these two things does not prevent us from taking action collectively. It makes for more rational action in these irrational times.

* Those of you who received a decent education in economics might wonder here if I have just dealt improperly with the topic of Comparative Advantage. I haven’t, I have not even begun.

Nightcap

  1. The Gospel in a time of social distancing Casey Cep, New Yorker
  2. China’s misplaced pandemic propaganda Minxin Pei, Japan Times
  3. City of globalists David Corbin, Modern Age
  4. Edmund Burke and the American constitution Ofir Haivry, American Affairs

Nightcap

  1. Rand Paul tests positive for coronavirus Bresnahan & Ferris, Politico
  2. The urgent lessons of World War I Brian Frydenborg, Modern War Institute
  3. Underestimating China Scott Sumner, MoneyIllusion
  4. Albania was not a True Communist country during the Cold War Griselda Qosja, Jacobin