Global Race to the Bottom

Who has the least inspiring leadership of them all?

View from China with an Austrian School of Economics Perspective

Later on today Sunday October 23rd, China and the world will allegedly find out if we are to be blessed with five more years of the same. Yesterday the 205 members of the new Central Committee were named. Today they are scheduled to vote to appoint a new Politburo as well as the the new 7-member Politburo Standing Committee. At least in theory, the Standing Committee makes the decisions. Will they all end up being Xi Jinping loyalists?

Unlike the public election theater which the citizens of many other countries enjoy, China’s theater exclusively takes the form of rumors and guesswork. The results for the top political positions (in China’s case, the presidency, the party secretary position, the head of the military commission and the seven members of the Politburo Standing Committee) are however likely determined in a similar fashion – namely, in a dark room somewhere.

As discussed in our previous article on the status quo in October 2022, the state of the economy is perilous. The government is broke and completely dependent on the printing press.

The long delay in setting the exact conference date hints at broad and widespread opposition inside the Party. The fact that apparently former president Hu Jintao was forcibly removed from the Congress hints that he is part of that opposition. But will that opposition be enough? Is the Party capable of correcting itself? Or will it double down and compound its mistakes?

Of course no matter what the result is, China will survive in some form. Jiaozi will continue to be made and somehow the rice paddies will have to be planted. Yet with business confidence levels hovering around 40 year lows, if the result is “more of the same” it is hard to imagine how businesses are going to be willing to invest. Even premier Li Keqiang recently admitted that the central government’s anti-poverty campaign has shifted in reverse, with the never-ending and unpredictable lockdowns leading to widespread impoverishment. Who would invest in an environment where governments can and do shut down companies from one day to the next, and where mission critical employees may not always be able to show up for work because they have been locked up at home?

Leadership in Crisis

Perhaps the most noteworthy aspect of the status quo is the alarming lack of a believable vision. It is human nature to expect this of leaders. Delivering long speeches without touching on the elephant in the room in any meaningful sense it not going to inspire confidence.

In the case of China, that elephant is its seemingly hopeless zero-Covid policy and the economic disaster which it has led to. How does locking down hundreds of millions of people make sense when the alleged cause is a fairly mild virus which is comparable in virulence to the flu? And even if it were twice as virulent, how could that possibly justify putting the Chinese economy on hold for months or years? The cost is so astronomical that it is literally incalculable. Is there some reason to believe that one day the virus with all of its endless variations is going to suddenly disappear from China and leave us alone? And is there some cosmic reason why China is determined to continue on with a quixotic struggle against a virus which is clearly endemic all over the world? If so, then please can someone help us to understand how and when that could conceivably happen?

In lieu of this, businesses are going to be highly reluctant to invest in anything. Even projects related to PCR tests and the accompanying theater are problematic, because all of the provincial governments are broke and payment delays of 6 months or more are the norm.

What about Russia, Europe and the United States?

Let’s take a brief look at some of the other major political blocks. Is the leadership there any more coherent? Do they seem to have a convincing vision of the future, and are they managing their economies competently?

What we find is that while the ‘problems’ are not ever going to be exactly comparable, they do have a number of similarities. And all of them have a leadership problem.

In the case of Russia, at least until earlier this week, the elephant in the room was a lack of credible leadership on the battlefield. Quick victories sell themselves, but everything else requires making your case in the court of public opinion. This certainly applies to wars of attrition. To put it bluntly, people asked to support wars want reassurance that their leadership has a plan to win. Yet amazingly, for the first 7+ months of the war, Russia had no general officially in charge of the entire war effort. Nor did anyone else step forward to articulate the plan of action, leaving the public guessing. At some point, an official in the Kharkov region communicated that Russia would never again cede territory once acquired. Yet a few months later, most of that region was abandoned without a fight. And even today, almost eight months after Russia entered the war, Donetsk is still subject to daily shelling. Not only did no-one seem to be in charge, but it was hard to avoid the impression that most of the fighting was being done by the allied troops from Donetsk and Lugansk, with Russian regular troops only playing a supporting role. As a result, while their opponents hardly seemed particularly competent or in possession of any type of coherent plan, Russian and allied troops were heavily outnumbered on the battlefield. The Russian Ministry of Defense continues to issue daily reports listing vast numbers of enemy soldiers killed and enemy ordinance destroyed, yet there has been virtually no forward movement on the front for months. At the same time, while the Russian political leadership claims to view Ukrainians as brothers, little was said about helping reluctant Ukrainian recruits to escape the meat grinder. This seems extremely cynical to say the least.

In his excellent Edward Slavsquat Substack blog, Riley Waggaman compiled an English-language list of such issues.

A storm of domestic criticism was the unsurprising result of all of this.

Were any of these issues ever addressed publicly? Not being on site, one should always be cautious about passing judgment, but to our knowledge few were. That said, in the past few days, the Russian government has apparently done something to address the battlefield leadership issue: it has finally appointed a general vested with overall command authority for the war, General Sergei Surovikin (Серге́й Сурови́кин). Earlier this week he gave Russian Television an interview which actually projected both competence and humility. So there IS that. It’s just a start, but these days it often seems that any leadership at all is hard to come by.

On the other hand, in terms of management of the economy, Russia seems to be doing passably well. Unlike the disastrous situation in China, Europe and the United States, the Russian economy has apparently turned the corner. Exports are booming, unemployment is low and inflation is dropping. The ruble’s status as the world’s strongest currency also helps to make that case.

As for Europe, it’s hard to know where to start. Prices are exploding. Many companies are closing and/or laying off staff. The euro and pound have fallen by 20% or more against the US dollar. Multiple European officials have stated that Europe is at war with Russia, yet no plan to end the war has been enunciated.

On average once every several weeks a new package of “anti-Russian” sanctions is announced. The most recent one apparently involved sanctioning toilet paper. Since Russia seems to be doing fine, and Europe by contrast rather poorly, it is hard to escape the impression that what the EU is doing is sanctioning itself, not Russia. As with China’s doubling down on its zero-Covid policy, the EU seems equally determined to double and triple down on these destructive policies.

Perhaps unsurprisingly, communicating how these policies might somehow make sense or how they might lead to a bright future does not seem to be on the agenda. Instead the preferred solution seems to be censorship and repression.

Rediscovering forgotten wisdom

After abandoning their commitment to freedom of assembly and the right to bodily autonomy over the past two years, most European countries now seem to have also abandoned the concept of freedom of speech, with massive fines, police harassment and/or jail terms for Europeans who publicly make statements disparaging towards any protected group or deemed supportive of Russia. Accounts are being frozen and assets are being confiscated without any due process, leaving one to conclude that respect for property rights is also a thing of the past. A few examples:

• A man in the UK was arrested for a social media post which caused someone “anxiety”.  

• A man in Zürich, Switzerland was fined 15,200 Swiss francs for declaring publicly that the Bible lists homosexuality as a sin.

• Austria set a fine of up to 50,000 euros for sharing Russian media online.

• Billions of euros in assets belonging to Russians have been seized. Countless Russians, even those not specifically sanctioned, have had their bank accounts frozen.

• Czech authorities have charged 40 people with the crime of expressing public support for Russia. Those found guilty face up to 3 years in jail.

• In Germany and the UK, journalists deemed supportive of Russia (Alina Lipp, Graham Phillips) have had their accounts frozen and/or assets seized.

• Dissident Australian journalist Julian Assange has been imprisoned for years in the UK without trial.

• In August 2022 dissident German journalist Oliver Janich was arrested by 30 armed police at his home in the Philippines thanks to pressure from the German government. He has been imprisoned without trial or even any charges for over two months now and is threatened with deportation back to Germany - despite the fact that the Philippines have no extradition treaty with Germany.

• And as reported by the Bild newspaper, German police raided the home of a Russian resident they accused of expressing public support for Russia and publicly dancing to the tune of a traditional Russian folk song Kalinka. A computer and three cell phones were seized.

Instead of freedom of assembly, freedom of speech, equal rights for all, respect for the law and property rights – and, not to be forgotten, la dolce vita – the new core European values are Russophobia, carbon neutrality, “diversity” and “inclusion”, though notably this inclusion does not seem to include Russians or anyone connected with Russia. On the ground these new values translate into the destruction of the European automotive and agricultural industries, a fetish for wind mills, the firing of the Russian conductor of the Munich Philharmonic Orchestra, preferential treatment for illegal immigrants over locals, state-supported pride parades, education in gay sex for young children, and children of all ages being encouraged to change their gender.

It is a poor exchange.

No public debate on the virtues of these new European values ever took place. Nor was there any discussion of the jettisoning of the old ones. Instead, the primary political message remains: “Peace talks are not an option. We must win the war on the battlefield, and no sacrifice is too high to defeat Russia. Likewise, no sacrifice is too high to combat climate change. The future is going to be terrible – we may have to freeze and endure our economy being destroyed – but we have to stay the course no matter what.”

If there is any vision for the future on offer besides this, it is not being widely broadcast.

It is hard to imagine a message inspiring any LESS confidence than this.

While the situation in United States is clearly nowhere near as bleak as that in Europe, confidence in government remains at a low ebb. According to a July 2022 survey published by Statista, only 23% of Americans had a “great deal” or a “lot of” confidence in the president. As in Europe, inflation is rampant. Many of the shelves are empty. Markets are falling.

And as in Europe, the ruling regime seems to see censorship and repression as key components of its control concept. Free speech on social media and elsewhere remains radically curtailed, with self-censorship the new normal. All the while saying “white lives matter” remains taboo and hundreds of political prisoners remain imprisoned under harsh conditions almost two years after allowing themselves to be lured into the US Capitol building by FBI agents on January 6th, 2021.

Similar to how censorship works in China, posts and videos in the US can be deleted or shadow-banned both directly by the platforms themselves, as well in response to instructions from the US federal government. The US regime’s press secretary Jan Psaki admitted this in a press conference on July 15, 2021. The same applies to cancellations (i.e. person-specific bans), as Joseph Mercola, Alex Berenson and countless others have discovered. That the Biden regime’s “disinformation governance board” was allegedly canned earlier this year, seems to have had no impact on the ground. Efforts by some states to curtail online censorship by social media platforms seem to have had limited effect at best, with Paypal having no qualms about announcing that it would fine its customers up to $2,500 per incident for saying things not to the liking of its management.

According to a recent investigation by Fox News, the US government is now issuing book bans, having noted that Amazon now no longer sells books by the Russian philosopher Alexander Dugin. Apparently the First Amendment to the Constitution no longer applies to content deemed by the government to be ‘misinformation’.

In its favor, the United States does have some states pushing back against the various agendas, but as mentioned earlier, states are not always able to compensate for the chilling effect of policies pushed down from Washington. And unlike Europe, the US does have one mainstream media outlet, Fox News, which on frequent occasion pushes back against the current regime’s never-ending evisceration of legal norms and constitutional protections.

Also similar to Europe, silencing journalists seems to have a high priority in the US, with several recent astronomical judgments after Soviet-style show trials against Alex Jones openly advertised as a warning against the dissemination of anything which could possibly be deemed ‘misinformation’.  In the most recent judgment, Alex Jones was sentenced to pay an absurd $965 million dollars in compensation for 7 minutes of statements in one broadcast.

At the same time, the cultural war between left and right continues to grow in intensity, with the government sponsoring Drag Queen storytelling hours for kids along with the teaching of Critical Race Theory, while many parents express their vehement objections. As in Europe, these policies are all set by the bureaucratic state without any public debate.

Drag Queen Story Hour in the United States

Why is all this a promising way forward for society? At least from Uncle Joe, no answer seems forthcoming. Needless to say, censorship and repression are no replacements for leadership.

China’s Zero-Speech Policy

Meanwhile back in China, the government’s censorship regime continues to aspire to ever new levels of absurdity. One might call it a “zero-speech” policy with regard to public expression of opinion.

It is primarily characterized by a very long list of words and terms banned from use in chat groups and on public platforms, including the name of the big kahuna himself, as well as his various nicknames. Naming the imaginary pandemic is also forbidden. Instead, the “masking problem” (“口罩问题”) is used as a euphemism. Moreover, not only is the use of all these terms banned, but none of this is ever officially communicated. Apparently you are just supposed to know. For Chinese speakers, Wang Zhian did a handy episode explaining all of this. Only state-run media outlets are allowed to use these terms. How is a modern industrial society supposed to be able to function with such extreme low tolerance for public discussion of any topic upon which the government has expressed an opinion? It seems like the inevitable result will be the shifting of ever higher percentages of the public debate to foreign platforms such as Youtube or Twitter.

While censorship of opinions in the West by Western “Big Tech” companies is increasingly severe, their censorship policies vis-à-vis Chinese language content are relatively light, with news programs such as the one by former CCTV presenter Wang Zhian quickly garnering hundreds of thousands of followers on Youtube.

If trends towards ever harsher censorship continue in the West, perhaps one day we may see the inverse phenomenon, with dissident Western social media platforms forced to resort to Hong Kong-based platforms to avoid censorship at home.

Yet even on domestic platforms, the government’s censorship engine is fairly ineffective. News items tend to get transmitted from person to person, and these billions of private interactions every day are hard to monitor. By the time the censors allocate a high priority to censoring a particular piece of information or video, usually millions have already seen it. Since China still lacks the mythical social credit system the Western media have been promoting for years, there is very little downside for those sharing information. Typically, the worst punishment one can expect for repeated sharing of censored news is a temporary ban on sharing for 1-2 weeks, similar to what Facebook does though shorter in duration.

Our forensic analysis of the social credit system myth:

The ‘China Dystopia’ Psyop – Social Credit System in China or in the West?

To our knowledge, no government leader has ever even attempted to deliver a justification for its “Zero-Speech” policy. Or for its Zero-Covid policy, for that matter. In a word, no leadership.

In view of the feeble international competition, perhaps China will somehow manage to muddle through with its abstruse policies for a bit longer. That said, there is no other country capable of bailing out China. China will have to bail out itself, and printing zillions of new RMB each month is not going to accomplish this.

Moreover, when doom and gloom strikes, we should never forget one of Ayn Rand’s key insights: You can chose to ignore reality, but you can’t choose to ignore the consequences of reality. On a large enough scale, fatally flawed policies lead countries to hit the wall. The impact can often be salutary.