The Chinese commenting on Treasury Secretary Janet Yellen’s improved chopstick skills during her recent visit has taken damning with faint praise to a new level.
To let the cat out of the bag at the top and annoy those predisposed to be annoyed early on: yes, Yellen made a fool of herself and the US by going to China, making demands, not appearing to have anything to horsetrade, and acting as if China should concede because we are entitled white customers. But that does not mean that a case could not have been made regarding one of her pet points, that of Chinese overproduction. The fact that Yellen made no attempt whatsoever to substantiate her position only further undermined weak US credibility, not just in China but among third parties. Even worse, by trying to act as if the China should constrain itself simply the US says so has likely poisoned rational discussion of this issue.
Instead, due to Yellen’s messaging not even rising to the level of “lame,” a lot of commentators are picking up the Chinese argument, that China has invested and innovated, and why should it be punished?
It’s a bit ironic that many of the same people who take this view have also touted Keynes’ bancor as a potential solution to the problem of “How does the world move away from the dollar as reserve currency?” Keynes recognized that countries that ran persistent trade surpluses were financially and geopolitically destabilizing. The ideal state was for countries to run balanced trade, so bancor arrangements required surplus countries to appreciate their currencies and deficit countries to weaken them to achieve parity. Keynes’ bancor envisioned punishments for members that would not curtail their trade surpluses. From Wikipedia:
For chronic creditors, it would include currency appreciation and payment of a minimum of 5 percent interest on excess credits, rising to 10 percent on larger excess credits, to the ICB’s Reserve Fund. Keynes never believed that creditors would actually pay what in effect were fines; rather, he believed they would take the necessary actions … to avoid them.
Now the US can hardly argue from Keynes’ principles now, having been content to run big deficits with China for a very long time. And that’s before getting to another issue which no doubt sticks with China, that we outsourced pollution to them via our manufacturers and/or their suppliers.
Further recall that aside from multinational greed, a motivation for letting China into the WTO even though it did not meet the requirements was the bizarre US belief that they would become more like us (particularly more “democratic”) by virtue of trading with us. So any negotiating position with China is complicated by the fact that we created this mess and were officially happy with it until recently, because it benefitted the right people.
To turn to Yellen’s inept case-making, there really is such a thing as overinvestment. The US has had bouts of it. And critically, if you look at their denouements, investors, lenders, suppliers to and employees of the afflicted industry look like winners until they become losers, In China, if you read our posts, derived from the work on Jonathan Sine, on China’s financailization and its local government financing vehicles, the lenders in the end are overwhelmingly banks and households. And as we explained in comments, based on the analysis of Michael Pettis, the way China dealt with its last big bank crisis (early 2000s) was to dump the costs on households, via markedly negative real returns on savings products. That made them keen to buy what they saw as better stores of value, meaning housing. Therein lies the original sin behind China’s housing bubble.
One example was during the railroad boom of the mid-later 1800s. Lines would often be built along similar city routes. Since railroads has very high capital costs and pretty high fixed costs but low marginal costs, the response to too much capacity was price-cutting, aka “ruinous competition”, which led to many bankruptcies. Yet railroads continued to be built despite that….because new railroads were a hugely popular stock market play, so the builders/promoters could cash out early on, leaving shareholders and lenders holding the bag.
Another was the dot-com era, when young things were able to raise $5 million with a ten page business plan. The result was companies like Pets.com and Boo.com, which went bust. The loss of paper wealth in the dot.bomb collapse was so great that despite the stock market not being seriously leveraged, Greenspan lowered rates into negative real interest rate territory and kept them there for a full nine quarters, unlike the typical Fed practice in recessions of dropping them that far only for a quarter. The seeds of ZIRP were planted then.
Looking abroad, Japan famously build roads and bridges to nowhere in the early 1990s, to try to reflate its economy and preserve employment in its politically-connected construction industry.
To return to Yellen’s China visit, the fact that she could have made a case is proven by the fact that both Telegraph columnist Ambrose Evans-Pritchard and Brad Setser have done so. Yellen has access to all sorts of academic economists, at Treasury, the Fed, friendly think tanks like Brookings, and even McKinsey’s Global Institute. She could easily have gotten relevant data worked up and encouraged some allies to have written op-eds. Even if this would not have cut any ice with China, it would have made the US effort appear more thoughtful and legitimate to third parties. And keep in mind that even though the US is an extreme case, there are plenty of countries, and not just in the EU, that are also overeating Chinese imports.
Since Evans-Pritchard’s article was back in January, I hope he will not take offense at hoisting heavily from it now. From his article China is stealing growth by dumping its vast excess on the world. And note its subhead: “Vast overinvestment is self-destructive – and intolerable for the global economy.”
One cardinal fact governs the world economy today. China produces 31pc of global manufactured goods: it accounts for 13pc of total consumption.
The rest of us must absorb China’s increasing excess capacity. If the country is to meet the Communist Party’s growth target of 5pc over the next decade with the current hyper-investment model, it can do so only by eating further into the industrial core of Europe, America, and India…
Xi Jinping is not reforming the old model. He is reverting to galactic overinvestment in everything from clean-tech, semiconductors, and steel – all tradeable goods that find their way onto global markets – in order to offset the deflating property bubble and to prevent youth unemployment rising further above the political danger threshold of 20pc.
This is intolerable for the world. It is ultimately even more destructive for China itself.
Note that some experts have said the decline in Chinese house prices is worse than it appears, due to the weak level of sales plus some transactions being excluded from the official figures.
Evans-Prichard was alarmed that China, rather than trying to boost consumption at home, is firing up even more manufacturing investment to offset the housing slump and need to dial back investment there. He continues:
Prof [Michael] Pettis says investment is already 42-44pc of GDP. No major country in modern economic history has come close to these levels before. Other Asian tigers peaked in the low-30s before dropping back as they matured.
By the end of next year, China will have built enough solar and battery capacity to quadruple the entire global demand for these products in 2022.
It already has enough EV plant to meet global demand three times over. This surplus supply is hitting foreign markets with tidal wave force and at cut-throat prices. Car exports rose 84pc from January to November.
A story today in the Financial Times corroborates Evans-Pritchard’s claims about EVs. China is making and shipping them to Europe even with dealers having no place to put them. From European ports turned into ‘car parks’ as vehicle imports pile up:
Imported vehicles are piling up at European ports, turning them into “car parks” as automakers and distributors struggle with a slowdown in sales and logistical bottlenecks including the lack of truck drivers.
Port and car industry executives have pointed to a pile-up of Chinese electric cars as one of the leading causes of the problem, with some companies booking shipping delivery slots without ordering onward transportation. In other instances, carmakers in general are struggling to order trucks because of the lack of drivers and equipment to move the vehicles on.
“Car distributors are increasingly using the port’s car parks as a depot. Instead of stocking the cars at the dealers, they are collected at the car terminal,” said the Port of Antwerp-Bruges, whose port at Zeebrugge is Europe’s busiest port for car imports. “All major car ports” were struggling with congestion, the port added, without specifying the origin of the vehicles.
Some car industry executives said Chinese carmakers were not selling their vehicles in Europe as fast as they expected, which was a major contributor to the glut at the region’s ports.
“Chinese EV makers are using ports like car parks,” said one car supply chain manager.
Some Chinese brand EVs had been sitting in European ports for up to 18 months, while some ports had asked importers to provide proof of onward transport, according to industry executives. One car logistics expert said many of the unloaded vehicles were simply staying in the ports until they were sold to distributors or end users.
And from the pink paper a week ago, Global glut turns solar panels into garden fencing option:
Solar panels have become so cheap that they are being used to build garden fences in the Netherlands and Germany, as a boom in Chinese production saturates the global market.
The panels capture less sunlight when used as fencing than they do on roofs…
“Why put up a fence when you can just put up a load of solar panels, even if they’re not aligned exactly to the sun?” says Martin Brough, head of climate research at BNP Paribas Exane. “Where the panels themselves are just incredibly cheap, the constraints become the installation costs and the sites . . . you get a bit of a DIY mentality.”…..
Longi Green Energy Technology, one of the world’s biggest panel producers, said recently it had fired thousands of factory workers as the oversupply has sent Chinese manufacturers into retreat….
Alessandro Barin, chief executive of Italy’s FuturaSun, which makes panels in China to sell in Europe, said crates of panels had been sitting unsold in ports and warehouses even after a factory shutdown, when it extended the closure for the lunar new year holiday to three weeks from a normal one-week break.
And remember, the Chinese plan is to increase manufacturing investment and output even higher than its current level.
Back to Evans-Pritchard:
China’s current account surplus is officially 2.2pc of GDP. Brad Setser from the Council on Foreign Relations says the real surplus is twice as high once you drill into the customs data.
Furthermore, China’s foreign exchange reserves exceed the declared $3 trillion. They are closer to $6 trillion. Large sums are being placed abroad through state banks. This suppresses the yuan and gives China an extra edge in global trade….
China’s exports over recent months have been weak in dollar terms but strong in volume terms. Firms are escaping the slump at home by slashing prices to gain global share. Or put another way, the country is exporting its deflation on a grand scale.
The European Central Bank says Chinese export prices have fallen 6pc over the last year in yuan, 12pc in dollars, and 18pc in euros….
China is now in a toxic feedback loop of its own making. The latest PMI surveys show that Chinese firms are cutting prices further as new orders fall….
China risks slipping into a debt-deflation trap where interest costs rise faster than output in money terms, pushing up the debt ratio mechanically via the denominator effect. Chinese local governments already face $850bn of annual debt service costs….
If China sticks to the current strategy there will be two consequences: the arithmetic of excess investment will push China’s debt ratio from 300pc of GDP to 450-500pc within a decade, precipitating a crisis; before that happens there will be a global trade war, also precipitating a crisis.
Evans-Pritchard points out these dynamics are uncomfortably like those leading into the Great Depression, when the US was “the great surplus disruptor.” And that crisis hit creditor countries harder than debtors.
Brad Sester, in a recent tweetstorm, focused more narrowly on the argument about overcapacity, stressing that one needs to look at the question in terms of particular industries:
There is now a bit of pushback against concerns about Chinese overcapacity. That is in part because the notion of overcapacity is itself poorly defined (capacity v domestic demand, v global demand or v the demand needed for decarbonization)
But there is a real issue imo
1/x
— Brad Setser (@Brad_Setser) April 6, 2024
and some look at China's 5m in vehicle exports (mostly passenger cars these days) relative to 25m in domestic sales and say exports aren't that large a share of Chinese vehicle production.
— Brad Setser (@Brad_Setser) April 6, 2024
And it isn't hard to show that China was buying 25m ICE cars a few year back, and likely had the capacity to produce more than 25m. Current sales are 15m — there is clearly a large latent export capacity there
— Brad Setser (@Brad_Setser) April 6, 2024
China's EV export capacity (in a world where exports command a premium v domestic sales and thus firms can switch to exports) is still excessive relative to the domestic political consensus around decarbonization in the US/EU
10/
— Brad Setser (@Brad_Setser) April 6, 2024
That's likely oversupply v global demand — and clearly an oversupply relative to the political reality that both the US and EU are determined to build out their own battery industries (using the tools China used)
12/
— Brad Setser (@Brad_Setser) April 6, 2024
And in solar, where global supply is already more or less Chinese supply (especially for wafers), Chinese capacity exceeds optimistic estimates of demand — and will thus force Chinese suppliers themselves out of the market
14/ pic.twitter.com/akPUzbXAhP
— Brad Setser (@Brad_Setser) April 6, 2024
Again, to return to the key point: even though Yellen didn’t bother making a case, Chinese output in EVs, solar panels and batteries are already bumping up against market demand….yet China seems determined to double down and invest even more in capacity.
And the key point is that even though trade partners suffer first from the influx of underpriced (as in not “cheap” but priced to secure demand and survive in an oversupplied market), in the end the behemoth export nation takes the bigger hit in the end via the scale of forced cuts in production, resulting in write offs, job losses, bankruptcies and hits to banks and other lenders.
So this indeed is a looming problem, even though Yellen’s whinging would persuade you otherwise.
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https://news.cgtn.com/news/2024-04-09/What-the-U-S-really-means-by-overcapacity-1sETwQKdk52/p.html
April 9, 2024
What the U.S. really means by overcapacity
By Radhika Desai
U.S. Treasury Secretary Janet Yellen was recently in China to talk about its “clean energy overcapacity.” What can that possibly mean? At a time when the world needs more and cheaper clean energy equipment to deal with climate change, isn’t China helping the world by making this equipment more widely available at prices more of the world can afford? Surely, that is just what the world needs in 2024.
After all, 2023 broke so many climate records. It was the warmest year on record. There were record-breaking forest fires and floods. It was the hottest northern hemisphere summer. July 2023 was the hottest month on record. Considering these facts, one might think everyone would welcome China’s plentiful and cheap clean energy equipment.
Evidently, not. The U.S. Treasury Secretary Janet Yellen accused China of flooding the world with cheap clean energy exports, distorting global markets and harming workers. What explains this perversity?
The crux of the problem is the U.S.’s stance on climate change. It would be understandable if it supported solutions that were beneficial to it and its people. However, not only does the U.S. seek benefits not for its people but its corporations, it seeks solutions that not only benefit them but also put them in a dominant position.
Yellen kicked off her campaign against Chinese overcapacity at a solar energy plant in Georgia just days before she set foot in Beijing. She alleged that China had previously inflicted overcapacity in steel and aluminium and was now doing this in the clean energy sector, particularly in solar panels, lithium-ion batteries and electric vehicles. “China’s overcapacity distorts global prices and production patterns and hurts American firms and workers,” she stated.
Capacity can only be excessive in relation to demand. When the problem is labelled overcapacity the ‘solution’ is to cut (other nations’) capacity. One could always see it as a problem of restricted demand, to be solved by expanding it. U.S. elites have long approached the crisis of the 1970s as one of over-capacity and sought to deal with the problem by restricting or even reducing industrial capacity in its rivals. It did this to Japan starting in the 1990s. It is currently doing this to Europe, forcing it to deindustrialize, allegedly in order to fight the hyped-up danger that Russia poses. And now, Yellen has brought this effort to China…
Radhika Desai is a professor of political studies at the University of Manitoba in Canada.
This is a data free handwave. Desai could and should do better than this.
But this reflects what I indicated via Yellen not even deigning to support her claims. A merely ideological position invites merely ideological responses.
In this interview with M Hudson and Mick Dunford, lots of data supporting this position are presented, including that for its state of development, investment rates are expected.
The talks are well worth listening (I think I listened twice and should listen again):
part 1: https://www.youtube.com/watch?v=3K1Vku1SDd8&t=0s
part 2: https://www.youtube.com/watch?v=isJR5dS27qA
” In this interview with M Hudson and Mick Dunford, lots of data supporting this position are presented, including that for its state of development, investment rates are expected.
part 1: https://www.youtube.com/watch?v=3K1Vku1SDd8&t=0s
part 2: https://www.youtube.com/watch?v=isJR5dS27qA ”
Thank you so much.
Need and want a space station, want space exploration, want global positioning, want mass production of satellites, want advanced engine rockets and be denied access to work on an “international” space program by the US, then invest in research and development.
Need and want to be energy self-sufficient, food self-sufficient, to have an advanced healthcare system, an advanced school system, to house 1.4 billion, and on and on, then invest. and invest.
Sorry, China is “investing” not for just for domestic needs but for exports so as to support employment. That has NOTHING TO DO with China’s domestic standard of living aspirations. In fact, the comment about advanced health care system and advanced school system beg the question of WTF do China’s supersized exports have to do with that? China could create lots of jobs and new growth opportunities by throwing the weight of the Party behind those initiatives.
And the idea that a late middle stage developing economy has 42% of GDP as investment is normal or desirable is bollocks. If Desai claims that, she seriously discredits herself.
You fail to see, Yves, that this position is voiced nad supported not just by Desai but also by Hudson and Dunford. We presented our data to support our case. Could you present yours to contest it or support your claim that Chinese investment is excessive?
Thanks for posting this, Yves.
To your comment, I can only say horses for courses. The purpose of this short article, confined to no more than 800 words, is to make the general point. Michael and I covered quite a bit of data in our most recent Geopolitical Economy Hour and if you have other data that does not square with what I say, I welcome you to post and discuss it.
thanks to CA for posting. I thought Yves had posted it. Sorry for mistake: I find the discussion section of this website a little confusing, particularly as I am working off a small laptop screen while I am travelling as opposed to my big one at home….
Radhika Desai, I have always carefully read and filed your terrific essays for ctgn. I thought this essay terrific as usual and corresponding to the extensive data I have on Chinese development. Importantly, Chinese investment policy corresponds to work on development and growth done by Robert Solow.
As for current Chinese investment policy, it is designed to significantly increase potential growth from here, and I am well pleased. Examples of the effectiveness can be found in an instance in looking to agricultural development, which Western economists pay little attention to. Look then to China becoming energy self-sufficient. There is of course more.
I am entirely grateful to you.
I think that the points that Yves and Radhika are making each have their own perspective. I agree with the points that Yves makes — of course China is totally dominating the solar industries that it’s pursuing, and of course there’s a limit here. But Radhika and I were poking fun at Yellen’s silly use of language. ANY exports are “overproduction” in the sense that they are more than is being consumed at home. otherwise, there wouldn’t be any exports. So we each are pointing to different aspects of the same phenomenon. I don’t have any problem wtth that — it’s stereoscopic.
Radhika Desai, just to add a point about trade or current account balance. Among the 10 largest economies, Japan, Germany and Russia along with China have long had positive current account balances. Germany in particular has had a repeatedly large positive current account balance; far larger relative to GDP than China has had.
https://www.imf.org/en/Publications/WEO/weo-database/2023/October/weo-report?c=223,924,132,134,534,536,158,922,112,111,&s=BCA_NGDPD,&sy=2007&ey=2023&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1
October 15, 2023
Current Account Balance as percent of Gross Domestic Product for Brazil, China, France, Germany, India, Indonesia, Japan, Russia, United Kingdom and United States, 2007-2023
Please know that I am always grateful for your essays, always learning from you.
OK, in the long run overcapacity in the production of solar panels will no doubt harm the Chinese economy because it will eventually come up against a lack of appropriate demand.
But at the moment solar energy produces only a small fraction of the energy required to power economies. As far as I can see, the more solar panels that are produced, the merrier. Unless you are worried about the implications of all the waste generated by making those panels — but that will surely exist anyway.
It seems to me that here a legitimate (if perhaps a bit simplistic) economic analysis is bumping up against the survival of human life on the planet, and I’m a bit surprised to see this website tending towards preferring the money to the life.
With all due respect, your position on solar panels is naive. They have a limited life and are a waste nightmare:
https://hbr.org/2021/06/the-dark-side-of-solar-power
In addition, solar-produced electricity is part of strategy to keep current lifestyles going rather than engage in radical conservation. The pretense that we can replace fossil fuel energy with cleaner energy allows consumers to engage in hugely wasteful additional energy consumption like AI and bitcoin mining. Satyajit Das pointed out in his eight-part Energy Destinies series that there has never been a year when energy use has fallen (save IIRC 2020 due to Covid and then it was flattish). And those uses, like EVs, depend on the habitat and environmentally destructive mining of quite a few materials.
So please don’t play holier than thou with me. None of these green energy schemes are free lunches. You should know better.
Who said solar panels are free lunches? Solar panels introduced (at appropriate scale) in rural parts of developing countries provide essential energy for productive uses. They are not the emerging waste stream often suggested at NC. They have a lifetime well over 50 years (while maintaining solar efficiencies of 80%. (Here’s the most recent study: https://onlinelibrary.wiley.com/doi/10.1002/pip.3615. As for waste pollution, automobiles are the biggest waste producer on the planet!
As I said in another comment here, the PV panel surplus misuse is on wealthy nations being frivolous with a technology that is essential to rural, poor nations. China needs to incorporate PV panels into its Belt and Road concept; they will find grateful recipients in the Third World.
“Rural parts of developing countries” is not their main use case.
You do not address the evidence in the post and the comment above, of them often being replaced in <25 years with new models with better subsides, and the evidence of oversupply in Europe, with them being used as fences.
And your 50 year figure looks to be a fabrication. 20 to 30 years is the norm. "Some well-made panels may even last up to 40 years."
https://www.marketwatch.com/guides/solar/how-long-do-solar-panels-last/
see my comment down below(sorry, had to leap to the front while it was fresh to mind)
Jevon’s Paradox is gonna apply, no matter what incentives and nudges are in play, i reckon.
my point down there is that we(as a species) havent even begun to plumb the depths of the demand side….i’d jump at the chance to get some decent panels, offshelf somewhere local.
and the rest of the necessary components, too.
its right now a boutique, PMC-ish operation.
out of reach for such as me.
to be fair, all of the Habitat Houses built around here in the last 15 or so years have had solar panels….and tankless water heaters, minisplits, etc…
otherwise, all thats strictly an elite thing(the local elite/gentry).
i was the first to install a tankless out here…everybody regarded me as nuts, and i had to drive 200 miles to obtain the thing. now, they’re everywhere out here.
the same could be the case for solar(and we’re not even talking about small wind, yet–less footprint, in all senses of the word)
as its always been…since the 70’s…the Big Electric doesnt want to lose its hydraulic despotism.
as for recyclability….idk why that wouldnt be built in from the drawing board…seems silly, to me.
someone should suggest it ti China.
a related, perhaps, anecdote…my fetish for telephone poles for construction.
pine, with creosote(sic) baked into it.
all the old ones get sent to the landfill…where they sit in a giant pile…forever.
because apparently, my methods of construction havent caught on yet,lol.
and because the landfill is forbidden to do anything but store them.
cant burn, chip, bury…
so i used them for various outbuildings…as uprights.
free for the taking, and last forever.
carcinogous, sure…but it aint like im licking them regularly.
they’ll seep into the groundwater wherever they are…at least my way, theyre dispersed.
we should endeavor to figure such problems out.
Recycling should be intrinsic. Which I suspect requires us to discard the whole concept of monetary profit. We have been relying on consumerism to digest everything, which it just cannot do. If “everything is food” as India reminds us, then we have to give up on the whole idea that time is money because some things take centuries to be recycled. And they are horrendously toxic. If we discover and use a bunch of miracle bacteria to do our digesting for us, we are then gonna be faced with a new level of toxicity because those elemental poisons will be everywhere, dispersed. No doubt this is being addressed somewhere, right? In the meantime we might start thinking about ecology as nutrition: Do we want our grandchildren to actually eat that garbage? And I also suspect that China is looking at this problem as well because without a viable solution, both over production and over consumption will choke and die. There will be nothing left to invest in. I looks like the only way to go forward is with a concept like ‘profit reclamation’ in order to recycle money into recycling. That sounds coherent.
You’re talking about bacteria eating oil, right?
There’s also the bacteria (or pieces of it?) they put in plants to kill the insects that come round. That’s another instance, right?
Could you unpack the profit reclamation thing in sort of an outline? Thanks.
As it stands today there is no widespread incentive to clean up pollution and it is hit and miss. Whereas production inChina and India is going exponential. There will soon be not just a planet inundated by slag and poison but also literally running out of resources. In order to balance resources and production the entire world needs to have quotas for both. Controlled production is number one. supplying the essentials to maintain the welfare of everyone. Incentivize good applied science. The price on the cleanup we need to achieve that makes it a more valuable occupation and industry than the sloppy production of material goods we currently incentivize. Do not allow profits to be made by our current race to the bottom competition. We can do it all by fiat. Which incentivizes new technology which is clean and meets best use and best science requirements. Allow corporations and labor to make profits and good wages to both reinvest in more of the same and have spending power to keep the ecology-economy running. It is a question of both strict regulation and incentive. Since the environment is a matrix of lots of smaller, speciated niches we will need boots on the ground with local expertise everywhere. Including the oceans. The nice thing is that this new economy can keep people employed and resources in balance for centuries to come. And it is completely doable. If we get rid of our current profit incentive structure.
I also think it’s a good idea to have a continuous open forum to discuss how things are going. One thing that disappointed me about the failure of the communist ideal was that in the USSR pollution was almost ignored in the rush to militarize during the Cold War. At the end of the Cold War the West had acknowledged its own pollution and was looking for ways to fix it but in the former socialist republics there seemed to be no incentive to do so. Lucky for us now, the whole world is focused on this.
Thanks! I agree with all of it.
To turn healthcare institutions and real goods production enterprises into first and foremost money earners for investors is probably one of the whackiest things civilization has come up with. That money represents some of the most gut busting labor on the planet. It’s so valuable it should be reclaimed, and redirected…somewhere else!! Healthcare reform would change the most on the surface I think with your suggested reforms.
Some may think the above wouldn’t be a transformative enough vehicle to get people motivated. I disagree. Like you say, resources WILL DWINDLE. And, when they do, hospitals for instance will have to know the science of how-to-make-do. I don’t know of any book that explains how the many Covid vaccines across the planet are different. That book I’d buy, and ideally Part II would explain all our various blood cells. Yeah, I took A&P twice but I still need a nice slim volume that covers these items.
If China can put up 2 new hospitals in 3 weeks, you’d think they’d weigh in on something like the origin of ebola events popping up wherever, but I suppose if they did put something in print germane no one’ll tell the west about it. Perhaps though they haven’t gotten as far as Jonathan Latham maybe has? It looks as though I’ll be jotting down thoughts in this reply mainly on the periphery of the big changes we humans should undertake…bear with me, I guess I’m sort of peanut gallery.
Yep, sorry to digress, but for the mandates you go over…I begin thinking about No Hack treaties between nations. Large programs could determine (by now) who to ask to do whatever progressive job (no ultimatums though). In terms of how close the prospective people are to the job site, if their aptitudes and interests jive, etc. So, for that you have to have means to prevent big money from inserting false stats derived from their favorite private versions of chatgtp or whatever. The No Hack treaties I think would pretty much follow Richard Stallman’s old advice…assuming it could guide us at least closer to a less vulnerable internet.
I have no problem with fiat, but sometimes I think large amounts should have physical representations with some actual value, like that platinum coin idea noised about so much [but I also need an outline to help explain to me exactly how these writers conceive it would function]. I’ve also often thought that a world wide BRICS should eventually go back to moving funds by actually physically carting the representations to wherever. Via trimarans with foils?
I hope you’ll pardon me for going off on tangents. Dealing with a heavy physical malady, and I can no longer get a smoke…that would help return my thinking to a structure that’s pertinent [that’s what happens when you overdo it; the option’s gone]. A lot of these ideas of mine I think I would like to see knocked down if reason ultimately would end up inclined to do so. They sit in my mind like essential solutions, but the world is so big that there are developments coming at us from all directions (like the myriad ones Yves hits us up with)…ones that may demand newer solutions, and ones whose solutions may not jive with reforms I’ve been assuming might help us make the Rooseveltian transition [of course one that won’t require a war in the background].
In general I think Vandana Shiva’s suggestions for what work energy should be devoted to in our world agree with the directions you outline. Once again I thank you for the ones you offer!. I will be returning to them.
Yesterday I spoke with someone who owns a solar installation company in rural US and I asked about the longevity of the panels he uses, which come from China. He said something similar to your comment – the lifespan was about 25 years according to him (he hasn’t been in business installing these types of panels for 25 years yet, so I guess we’ll find out if it’s longer or shorter than that), but the panels aren’t useless at that point – they still run at 80% capacity or so after that period of time, according to this guy whose business it is to know. Perhaps someone with more technical knowledge of how this works can speak better than me, but it seems like rather than trashing the whole panel, one could just by a smaller replacement panel a couple decades in to replace the lost capacity of the larger one, so the waste would be less than many current estimates if that could be done. But maybe there’s some technical reason it can’t, I really don’t know.
Per Yves snippet above, yes it costs more to recycle than throw a panel into a landfill, but that holds true for just about everything. If we are smart (and we haven’t shown ourselves to be good at societal long term thinking yet), at some point we will start paying the higher cost to recycle, whether certain companies like it or not.
Side note: I spoke to the guy I mentioned while watching the eclipse yesterday, and he had an app that monitored his customers’ energy generation continually on a graph. I was pretty cool to see the line go straight to zero as the sun got covered up, and then back up again.
In the immortal words of the formerly living artist formerly known as Prince, as delivered by Michael Keaton… let’s go crazy.
Too many China articles all at once for me to keep track if this is the article where Ms. Smith brought up the dangers of overproduction leading to deflation, so sorry sorry in advance.
Cost to recycle one solar panel, from above – $20-$30 greenback dollars. Cost to make new $1-$2.
China aiming to overproduce solar panels, which are made out of finite dwindling resources.
Peak energy conversion operational life of a solar panel – fuzzy, can we say 20-50 years? And still good enough to power, say, a well pump or refrigerator after that, mebbe?
Can anyone with intelligence (looking at you Grumpy Engineer), conceive of a possible future in which cost to produce will be about even with cost to recycle? And who do you think we should lay odds on possessing such arcana? Maybe the nations that have been eating a steady diet of our (I say our, broad strokes, guilty as charged, off with his head) plastic and electronic waste?
Maybe Laodan, or CA, can chime in – is this Socialism, with Chinese Characteristics? Or just another internet crackpot high on paint fumes?
an aside: 25-years’ longevity, depending on the weather. / ;)
Fort Bend Co. neighbors want to know whether solar panel farm’s hailstorm damage leaked chemicals
https://abc13.com/fighting-jays-solar-farm-guy-texas-fort-bend-county-tx-hailstorm/14559628/
we get lotsa hail, so ive considered this.
(in fact, i’m only drinking beer right now because i got caught in a rather exciting storm a bit ago out here at the bar–had quarter sized hail in it, and nw wind of around 50, so it blew it into the bar itself,lol.)
i save my plants from such outbursts by hanging chicken wire over the big raised beds…as well as strategically placed fruit trees and pines and whatnot…surely a method like that could be employed to let in light, but exclude the main force of the hail.
(this is why i’m more cotton to small wind power…we’re always windy.)
Discussed this with a solar surplus agent (I have been developing a side solar-related business). Problem is not the panel, it’s the the electrical wiring, which generally is not designed for extreme heat and degrades in the real world, plus weather, means that the 25 year lifespan is not real world.
that, too, can be overcome …with a little thinking…and…umm..cracker engineering.
i figger its UV that degrades the wires(here, at least)…and perhaps to a lesser extent, heat within conduit.
i vent my exposed conduit(where its exposed by necessity/expediency/lack of jack)
same way i vent the composting toilet, with a (in this case short) standpipe, with 2 90 degree fittings, to where it points down.
put same kind of inlet down lower, and bobs yer uncle, and the conduit will have airflow.
(i have no codes out here, i admit)
78 million tons (over 34 years from 2016 to 2050 per the report) is less than 6% of the mass of material removed from one iron mine in Minnesota since 1895:
https://en.wikipedia.org/wiki/Hull%E2%80%93Rust%E2%80%93Mahoning_Open_Pit_Iron_Mine
The US generates 5 billion tons of industrial waste per year:
https://www.downtoearth.org.in/news/waste/north-america-discarded-over-5-billion-kg-of-industrial-waste-in-2018-and-most-of-it-went-to-landfills-89070
I’m not saying landfilling is the best method for disposal of solar panels, but it is interesting to give some perspective as to the size of the problem in relation to other material/waste streams.
This is shifting the grounds of the argument. The original argument was that overproducing solar panels is hunky dory because oh so useful. I raised the issue of waste because not only will there be quite a lot but it also includes toxic components. IMHO the promotion of green energy is substantially trying to preserve current lifestyles regardless of environmental cost, as opposed to getting businesses and citizens to go on an energy diet.
I was not discussing iron mining and don’t see its relevance to considering the many ignored costs of green energy products.
And battery toxicity, and batteries are considered essential with intermittent power sources like solar, are yet another big and generally ignored issue with green energy enthusiasm.
For even more context, the United States produces 130 millions tons of coal ash per year:
https://www.epa.gov/coalash/coal-ash-basics
And contains many of the same toxins, which are far more easily leached from ash than from solar panels:
https://en.wikipedia.org/wiki/Health_effects_of_coal_ash
Again, I’m not arguing landfilling solar panels is the best solution for their disposal, or that their impacts should be ignored. I’m however asking for a weighing of the relative impacts and risks compared to current technologies and other environmental footprints. I’d argue “overproduction” of solar panels will solve far more problems than they cause in this context.
More from someone who writes extensively on the subject:
https://www.sustainabilitybynumbers.com/p/renewables-waste
This is yet more straw manning.
I said we need to engage in radical conservation. You keep falsely depicting me as a fossil fuel advocate.
Satyajit Das demonstrated in his extensively documented eight post series, Energy Destinies, that the predictable effect of any green tech would simply be higher energy consumption. Do we see anyone trying to stop energy hogs Bitcoin and AI? No, instead some of the players in those industries are making a point of locating so as to take advantage of low-cost and/or cleaner energy (such as Bitcoin miners setting up shop in Iceland), so that no/negative societal value activites are stepping to the head of the line. I keep saying we need to deal aggressively with the consumption side, and you keep talking over me with unrelated green tech virtue talking points.
You are doubling down on violation of site Policies. I suggest you stand down. I have low tolerance for bad faith, which is what you are engaging in here (shifting the grounds of argument and straw manning).
At some point added solar output induces need for storage (intermittency suggests over capacity, to store for “dry” periods), that is a huge amounts of batteries. Wind turbines as well will induce “need” for more storage.
How many Lake Meade’s worth of batteries needed for a green grid with a specified “availability” to meet specific demand?
With respect to Sec Treasury trip to China I am sad.
Yelling and Biding – Seems appropriate.
Neither produces wanted results. I for one would be glad to buy an inexpensive Chinese vehicle
“And remember, the Chinese plan is to increase manufacturing investment and output even higher than its current level…”
And consider what all the saber rattling over Taiwan nudges them to do.
Is there really an oversupply of solar (PV) panels? Or is the Netherlands/Germany simply wealthy enough to misuse the panels. There are people in Africa, Asia, Central America that would likely put the panels to an appropriate use pumping water, providing cell phone access, or simply providing electricity for night reading in community schools to educate the non-literate.
“Is there really an oversupply of solar (PV) panels? Or is the Netherlands/Germany simply wealthy enough to misuse the panels. There are people in Africa, Asia, Central America that would likely put the panels to an appropriate use pumping water, providing cell phone access, or simply providing electricity for night reading in community schools to educate the non-literate.”
Perfect response, from the perspective of peoples in developing countries and regions through the world.
Um, “providing electricity for night reading“?
Solar panels don’t work at night. To state the obvious, they require sunlight. To use solar energy at night requires some sort of energy storage system, and those are expensive. Recent mandates that newer renewable energy system be accompanied by batteries make them significantly more expensive (and environmentally damaging) than systems without.
Of course, if all you’re doing with your battery system is running a few cell phones and LED lamps (which only consume a few watts each), then you can get by with something pretty small and cheap. But if you’re trying to run the heat pump on the back of your house during a cold winter night (which can consume 3000 watts in milder weather and 15000 watts if the “emergency heat” kicks on), then the battery system can get very large and costly. And it presents a significant fire risk if there’s a short-circuit or some other fire nearby.
aye. mom got a heat pump last year to replace her old furnace/central air.
complained all winter about how it wasnt 80 degrees inside,lol.
i installed a minisplit system a few years ago on our house.
got it on amazon.
cools like a dream…but it only really heats up the spot it blows on…and the colder it gets outside, the less it heats.
so we have woodstoves.
i dont know that i would rely on a heatpump in like minnesota, or alberta.
on a similar note…the last edition of mother earth news has rudimentary(and cheap) plans for a gas digester.
i wanted to build one of those for our toilet…but was not confident enough with my gas-handling skillset…so settled on a composting toilet(like arizona uses on its trails)
lotsa methane(“natural gas” is a marketing term) is lost to the air from every toilet in the world.
we should endeavor to intercept it, burn it and replace what we can of the fossil kind.
I’d love to get a decent small set up just to run my well. The wattage is not a problem, they run fairly efficiently but the juice to get them started is a big hit so you have to way over scale it.
We all need to make do with less of everything. We are on a trajectory to go back to Little Home on the Prairie standards of living.
This idea that we can raise the third world to first world standards will accelerate the arrival of worst outcomes. The first world needs to conserve bigly, not that that will happen.
Yves, here you are hitting the nail squarely on the head.
Yellen’s culinary excursion to China wasn’t simply about trade war sabre-rattling in hopes of ginning-up a smidge of anti-China election leverage for Genocide-Joe against Fratricide-Don and Suicide-Bob.
Yellen’s posturing was evidence-free because it seemed to also be cheerleading for the Magical Thinking that the production and consumption of BEV Cars, Solar Panels, and Batteries are going to solve anthropogenic climate change. Utter nonsense.
It is the over-production of human beings, and the selfish desire of each one of us to live a Borrell’s Garden consumer-lifestyle enabled by all of this industrial capacity, that is about to overtake us. Wars, be they trade or homicidal ones, aren’t going to crack that nut.
Resource wars of extinction might, as could other Jackpot adjacent dystopic outcomes.
And that is the optimistic outcome…
“This idea that we can raise the third world to first world standards will accelerate the arrival of worst outcomes.”
damned straight, hon.
but planned obsolescence is part of the bidness model….as well as rent seeking/hydraulic despotism.
but how we gonna nationalise the natural monopolies with the systems we have?
welp…with people like me…and building outwards from my dirt road.
slow and steady.
nowhere near fast enough…nor comprehensive enough…but its what they’ve left us with.
tankless waterheaters are common out here…because, at least a lil bit, i made a big stink about it, 20 some years ago.
and hardheads ruminated about it sufficiently to change their minds, and figger out how to obtain such products.
evangelism:101.
I worked at a school of public health two decades ago, and when I raised issues about energy consumption -remember “Peal Oil?”- and sustainably I was labeled a crank. My argument was not original but a distillation of what I’d read in the energy and limits to growth areas. I would tell other public health academics that we had three choices: 1) develop technological “efficiency” fixes so that “smart growth” could occur. 2) Conserve energy, as in turn down the thermostat and other such measures to use less energy. 3) Reduce institutional complexity -the Little House on there Prairie option. I would tell anyone who would listen that option 1 was a fantasy, option 2 was necessary but inadequate, and option three was our future, one way or another. Fortunately, I’m now retired and merely commenting on NC because my position was anathema in public health -and even more so in medicine.
The Biden administration is proving over and over that the US dodged a bullet when they elected Trump in 2016 and that over the last thirty years the Democratic Party has actively filled its entire top elected delegation and advisers with the incompetent and the deluded.
Only the blind or ill informed could believe that these are the adults in the room, the best and the brightest, or that our Capitol is a shining city on the hill.
The GOP isn’t far behind, but these guys are just as incompetent at covering their derrières as they are at their jobs.
What kind of message can Yellen deliver that means anything to the Chinese? She may say whatever sounds “diplomatic” or “thoughtful” and then they get a look at statements like this:
“As the Commander of US Southern Command, General Laura Richardson, explained in disarmingly candid fashion at the Atlantic Council in Jan 2023, the main goal of the US government and military (and, of course, the corporate and financial interests they serve), is to tap Latin America’s abundant natural resources, including rare earth elements, lithium, gold, oil, natural gas, light sweet crude, abundant food crops, and fresh water, while depriving China and Russia of access to those same resources.”
https://www.nakedcapitalism.com/2024/04/argentina-announces-new-us-base-in-patagonia-while-ecuador-violates-one-of-oldest-rules-of-international-law.html
“What kind of message can Yellen deliver that means anything to the Chinese?”
Devastating comment.
After all, from April 2011 when the Chinese were excluded from participation in what were supposed to be International Space Station programs and America quickly began a pivot to the Pacific that quickly became programs to contain China and led to repeated threats against China, the Chinese had to understand that manufacturing was an existential necessity.
TBF, I don’t know if Yellen really had much of a good hand to play. At her absolute diplomatic best, all she could probably do is politely restate things the Chinese are already aware of. So I guess it is her / Biden’s fault to even request the meeting if there was little to gain and it could only go downhill from there.
I’m just an internet rando and far from an expert so I don’t know if I have much else to add. From my understanding, the real root of the problem isn’t economic, but that China is an extremely low-trust society in ways. Until there’s a deep cultural shift, families are going to continue engaging in militant saving.
At that point, the only options are some mix of expanding investment (over-capacity), limits to aggregate savings (depressive), or actively sacrificing & devaluing capital (politically risky). Short of a transformational movement in Chinese society, there probably is no real solution, just a grinding slog by the Chinese government to balance methods and ride the tiger.
Perhaps I did not make the point clearly enough in the post, but she clearly was not going to get very far with China. But at least she could have put on a much better show for the sake of third parties, particularly regarding overproduction, where even some Global Majority countries would quietly be sympathetic since they are also facing manufacturing crowding-out.
Where does the overcapacity starting and where out-competing is ending?
In Simplicius’s las post there is a clip with an automated car factory (likely EV cars). The prices I read are $10K and that is not underselling.
https://simplicius76.substack.com/p/yellen-dispatched-to-beg-china-for
The ability to eat everyone else’s lunch, due to inovation and competition is not necessarily bad, from a consumer perspective.
The Chinese are also building lots of batteries, because they replace them in charging stations, rather than wait to have them charged.
It is nice of Yellen to not complain that China has an overcapacity in making missiles and ships…
It does not matter if the origins look virtuous. As indicated above, the US was in a similar position in the Roaring Twenties….
There are limits to how much product foreign markets will accept (politically and practically, as in at prices that don’t result in the producer operating at a loss). China at its already enormous output size, is still targeting 5% growth, now largely on the back of manufacturing, as in manufacturing growth in aggregate will implicitly be even higher than 5%.
“China is an extremely low-trust society in ways…”
https://twitter.com/RnaudBertrand/status/1777241101294031125
Arnaud Bertrand @RnaudBertrand
I look forward to this survey every year – the Edelman Trust Barometer – because I find it’s so revealing of what’s happening in the world.
Trust is the glue that binds societies together…
https://pbs.twimg.com/media/GKn_q23aoAAKjp1?format=jpg&name=medium
3:44 AM · Apr 8, 2024
Good point, and I have heard people in China are very optimistic about the government so I did want to hedge a bit.
I’m not Chinese and I could be flat-out wrong too, but I think there is a subtlety. Even if the Chinese public trusts the government and adjacent institutions to guide society in the right direction, that’s partly because they limit their expectations in certain ways.
To get back to the excess savings issue, a typical liberal economist would just say the obvious thing to do is create a strong national safety net. That should remove some of the need families feel to save, and then you can even do certain taxes to discourage excess saving further.
Yet those are precisely the things the current Chinese government (and AFAIK every single dynasty in the history of the empire) avoids, even dismantling many social programs that existed under Mao. Maybe there’s some deeper or cynical power-play behind it. But I think there’s also a possibility that Chinese culture has always seen that kind of social support as strictly a family or village matter, and many wouldn’t trust public institutions with those programs even if they tried.
“I have heard people in China are very optimistic about the government so I did want to hedge a bit.”
Interesting, sensitive comment about which I will think. This is a way in which we try to characterize another culture.
Thank you.
Right, and that’s what makes it tricky. There are obviously a lot of crude, crazy stereotypes about China, that it’s some sort of alien dystopia where people aren’t just trying to live their best lives like the rest of us.
But at the same time, it is a different culture, and while I don’t know it first-hand, I’ve read and heard personally from several different angles that it can be a shockingly dog-eat-dog society.
Just to make sure I wasn’t making stuff up though, I looked into it a bit more, and it looks like the government is trying to build up and extend the social safety net. So maybe that will help in time.
But short of triggering a depression, until the average Chinese household is convinced they don’t need to stash away nearly so much income, the government is figuratively just trying to channel a flooding river. And whatever doesn’t flow into domestic manufacturing will have to find other outlets (the real estate bubble, the BRI, other foreign investment, etc.)
I had never heard of the Edelman Trust Barometer before and found the site interesting, particularly the video of their presentation at Davos. To me it seems that the entire project is in service to the Davos Crowd, to include the pronouncement that across the 28 countries surveyed, Business is the most trusted of the sections surveyed.
I don’t believe that, personally. But I bet the Davos Crowd believes it 100%.
It is revealing, CA, but I’m not sure that it actually reveals anything useful to anyone other than to, for want of a better description, the “1%” and their primary concerns about how much the public trusts them and their desires to maintain their idea of what the Status Quo should be and that only they are the best equipped to solve the Trust Issue.
To my way of thinking, they are the trust problem, so in that sense, it is revealing.
—–
Hopefully the above statement makes some sense. :)
Good post – thanks!
I would have gone easier on Yellen if I had known this but decades of watching Yellen side with Wall St and against the interests of American people has prejudice my opinion. I still doubt Yellen’s abilities in constructively dealing with this situation. I’m expecting a program which will allow wealthy Americans and corporations to benefit from this; average Americans get screwed buying these products at higher prices and middleman Wall St / PE pocket the difference.
There’s always war if overcapacity is the issue.
There’s always war if overcapacity is the issue.
Worked before, for certain values of the word ‘worked.’ The UK and European nations were economically flattened post-WWII, the US became hegemon.
Problem is, the US thinks it will work for the US again, thus it’s continually ramping up divisions, conflicts, and wars everywhere e.g. Ukraine, Taiwan, Middle East. It can’t work, because neoliberalism has hollowed out almost all industrial, military, and executive capability the US once had and now it’s just a husk of a country.
As for China and its industrial ‘overcapacity’, one is reminded of the old Sorceror’s Apprentice tale — the Disney version with the US as Mickey Mouse
Very good explanation on how overproduction can hurt an economy. And yes, from what I’ve read, China vastly overproduced on housing in recent decades. But from what I understand, unlike the US, China does think past the next round of quarterly profits. They make mistakes like everybody, but it’s possible they haven’t shown all their cards yet.
I am not an economist, and I don’t have the demographic figures at my fingertips, so the following may be overly simplistic thinking. But it occurred to me a few decades ago that the US was being extremely shortsighted by sending so much manufacturing capacity to China as rust belts widened in the US. At first, that industrial capacity went mainly to exports and China at the time had a much higher rural population. Ramping up manufacturing caused people to move to the cities, just as occurred during the Western industrial revolution, which is what drove all that urban housing construction. At this point China has developed its own middle class, which largely didn’t exist 30-40 years ago. A middle class with money that can now buy things they couldn’t earlier. So couldn’t China little by little keep its industrial capacity at a fairly high but stable level overall, but rather than exporting to the “Golden Billion” as they have been, simply start selling to a billion of their own people instead? That would really put the hurt on all of us depending on cheap crap from China to keep our own economies running. Constantly lower prices in real dollars is what has kept US wages down for decades now, especially when compared to increases in productivity.
If China sells more domestically, and less overseas, forcing other countries into some sort of autarchy rather than the “free trade” bonanza that’s been going on for decades, which has greatly increased the wealth gap to the detriment of millions, would that really be so bad? And maybe the West would wind up needing all those excess solar panels after all, to power the industries they’ll need to rebuild.
im with you in rockland, lyman.
aside from my consumerist other comments, thats what i wondered, too.
perhaps the chinese are playing by different rules than we are used to/programmed to accept.
and yeah, ive been yelling about clintonists finishing the reagan revolution for a long, long time, too…for all the good its done(cassandra in a coalmine)
They do indeed:
https://en.wikipedia.org/wiki/Hukou
More of the same in US international relations. Are US officials so ensconced in their ivory-towers and circular-logic group-think, they are that clueless? Is it just a classic case of the hubris of a declining hegemon? A bit of subconscious bias and racism expecting “autocratic” China to “kowtow” to the “freedom and democracy”-loving Anglo-Americans? After all the US is the “indispensable, exceptional nation”.
It is a shame, but no surprise that genuine trade issues cannot be sorted out bilaterally and rationally among the world’s top two economies. The US blows it once again
Great post. Clear and understandable. Two ideas crossed my mind when reading:
China dumping excess capacity at cut rates on the rest of the world reminds me of the old price wars between competing grocery stores or gas stations in the US cities decades ago. For consumers it seemed great… at first. Then not so much as either competition dwindled by driving a competitor out of business followed by big price increases at the winning competitor, or both competitors lost.
Also, I wonder whether China is doubling down to save the CCP’s control of the government or to benefit the country long term. It sounds like the govt has a tiger by the tail.
As for Yellen, when did the West’s leaders become so lost in their own bubble? Good to know she is at least mastering the use of chopsticks.
Or not so long ago. Lidl and Aldi had a grocery war just before the pandemic–spurred by the arrival of the German chain Lidl in the US. For awhile you could buy a gallon of milk for a dollar and a dozen eggs for pennies.
Then there is the US’ own agricultural surplus with cheese piling up in warehouses and grain in elevators in order to please politically powerful farm states.
So it’s not just China.
Now a more recent American trend–monopoly and collusion–seems to have tamped down all those competiitive animal spirits in the food sector. Prices at the two German grocery competitors have jumped just as much as at other stores but from a lower base.
At any rate I agree that the above is interesting even to non economic me.
I keep speculating that the neo-colonial control apparatus was to get IMF to push “lesser” nations to prioritize cash crops while USA would be the grain farm of the world.
Meant that if someone got uppity and started talking about autonomy, they would find themselves in a massive currency deficit before getting their own grain farms up and running.
From there it would just a hop skip to a “popular” uprising and status quo ante.
This is central to Hudson’s Super Imperialism and The Destiny of Civilization
A little off-topic, but indulge me a bit because I’m attempting to understand Yellen and Biden’s attitudes towards other countries.
They treat other countries like they treat Americans, with contempt, threatens,and hectoring. All while Americans have been voicing legitimate concerns about the direction of their country for decades. Even after Trump was elected, there was no introspection as to how that had happen.
We see the same with regard to foreign policy – countries are invaded, sanctioned, brow beat. But those days are over.
So now at a time when diplomacy, and skilled foreign policy is absolutely necessary it seems as if this is a skill set which has been systemically rooted out and eliminated in the Executive Branch, Department of State, the national security agencies.
How do we get it back?
If the US was a company, place in receivership, fire all levels of management, bring in a new (young) team.
The unipolar moment ate America’s diplomatic and strategic brains.
The US, exceptionalist nation that it knows it is, follows the “Treasure of the Sierra Madre” line: “We don’t need no stinkin’ badges,” leading to a complete atrophy of negotiating skills, particularly when the US actors, e.g., Yellen, Blinken, Pompeo, etc., appear more concerned with winning bureaucratic infighting in the Shining City on the Hill (actually in the swamp).
jumped to end of comments while its in me head:
“Again, to return to the key point: even though Yellen didn’t bother making a case, Chinese output in EVs, solar panels and batteries are already bumping up against market demand….yet China seems determined to double down and invest even more in capacity.”
define “market demand”.
if more or less decent chinese ev panels were at ….say…tractor supply…or even wally whirled…and for a decent price…i’d be there with bells on.
stickem inna closet if need be….just like i do olive oil and coffee.
i really dont think we’ve explored the demand side of solar/wind power….out here, anyways, its a status symbol, like good teeth.
i’d like to the the 2 barrios in town bloom with those things.
and trailerhouses in the wilderness(like my library)
if they can come up with a plugnplay system…with components like charge controllers and inverters for cheap, too…we’d all get off the grid out here in the hinterlands
Now why would they do that when they can continue to bill you for it?
Again and again i wonder if the Amish has the right idea…
re: “One example was during the railroad boom of the mid-later 1800s.”
This example spurs me to thank whichever member of the commentariat recommended Railroaded: The Transcontinentals and the Making of Modern America by Richard White. Yves’ example is but one of dozens in this fascinating history of grifters, shysters, conmen, and politicians who were insanely greedy, avaricious, and narcissistic. The US government was always on the hook to bail out investors which leads me to wonder how the Chinese government will manage the long-term impacts of overproduction since the government, not the private sector, funded excessive production.
“…whichever member of the commentariat recommended…”
It was mentioned in this comment back on the first day of February but that commenter might have been tipped off by this earlier comment in September, 2017. Credit where credit is due.
Indeed! Thanks for digging this up. h/t lyman alpha blob & Vatch for the recommendation.
In the UK the railway mania was preceded by a similar explosion of canal building.
thanks Yves, well crafted article.
Given that solar panel electricity is a bit of boondoggle, i.e. relies on a combination of subsidies and preferences, the size of the global market depends on those subsidies and preferences. China may have reasons to be optimistic about the market development: trends in support of solar energy in the collective West, domestic trends, and still unused, potential in support of solar energy in undeveloped countries.
I was surprised how much lower electricity consumption in Sahel, Mali, Burkina Faso, Niger and Chad, is lower than in the coastal Africa (which, in turn, is not a huge electricity consumer per capita). Without extra research, I guess that this area relies on small diesel generators and the fuel delivered by truck from the distant coasts over crappy roads. In the same time, sun shine is abundant, barring occasional sandstorm. After training local people, the installation and maintenance should cost less than in developed countries, while fuel is expensive and the rhythm of personal and economic activity probably is well synchronized with the sun light. Heating of homes and work places is probably not needed. If it works, it can spread across rural areas of Africa.
Of course, at night those who do not sleep could still use electricity from diesel generators or batteries
I was more amused with threats concerning trading with Russia. Without very serious security concerns, China could be persuaded to compromise and sanction this and that, surely not as much as the West would like (especially from others, for themselves, they often thread lightly when economic interest require, most of all, USA itself). But what it would take to reduce serious security concerns of China? I think that ELIMINATING them is not possible, but REDUCING should be easy, except for mad Atlanticism that sways over foreign policies.
My boring joke for today: Romans quipped divide et impera, divide them and subjugate one by one. Neocon idea is: (a) create lots of adversaries (b) escalate against all of them at the same time (c) get clobbered. A precise reversal of the ancient wisdom (however cynical).
“Looking abroad, Japan famously build roads and bridges to nowhere in the early 1990s, to try to reflate its economy and preserve employment in its politically-connected construction industry.”
I remember the Economist saying this. Japan once had the worst road network of any industrialized country.
Come back now in 2024 and all of these bridges and roads to nowhere have all magically joined up, giving one of the best road networks I have ever seen.
BTW I remember the US in the 60s when it was also full of bridges and interstates to nowhere.
Sorry but you have this wrong. You seem to forget I worked in a senior role on the Japanese side of a top Japanese bank and heard skeptical grumbling about it back in the day.
The bridges to nowhere were enormously large structures. There was no prospect of adequate then-current use, or with Japanese depopulation, meaningful future use either. They were understood in Japan to be a more respectable version of Keynesian ditch-digging (digging ditches, filling them up, and redigging them to provide employment). Now if you regard them as just that, then I actually do see that as a reasonable thing to do given how bad the Japanese long depression was, but please do not pretend that their usage was anywhere remotely in line with their size and cost
Just during the middle of the lost decade in Japan I heard some of the Japanese complaining about all the extra expenditures on bridges and roads to nowhere, based on the “expert” economists advice from the USA.
You now what blow my mind west talking how they are fighting against climate at the same time they say to china how dare you make too many solar panel at a cheap price. We should have war level production to fight climate change.I dont even read anymore about climate change because i know humanity is too corrupt to fight it and alot of scientist are very ignorant about politicians so in many case they back neoliberals. Germany is very good case with the greens that these guys are very ignorant people and dangerous to the world peace
We’re not going to solve climate change by making more stuff.
Yellen should keep her gob shut after having also: “emphasized that companies, including those in the PRC [People’s Republic of China], must not provide material support for Russia’s war against Ukraine, including support to the Russian defense industrial base, and the significant consequences if they do so”
Sorry Yves, you are out of date. You may have lived in Japan then, but I have been coming here continuously since 1979 and lived here for the last 14 years. You are possibly referring to a few bridges connecting to fairly unpopulated islands.
Take a look at a current map for heaven’s sake. Which highways lead nowhere?The vast majority of the bridges, viaducts, tunnels built back then are now part of the network of motorways that connect all areas of the country except Okinawa and Hokkaido. The delivery network is unmatched anywhere. Its why only gaijin lug suitcases around in the shinkansen. We locals send everything ahead and its there when we arrive. Fresh fish in the supermarket every morning everywhere.
This is aside from the point.
You may like the convenience but the investment was not cost or use justified. It was and is excessive relative to need. And as readers in the West regularly lament, rail is vastly preferable from an environmental perspective to cars.
This is from 2012:
https://www.bbc.com/news/world-asia-19893379
With a declining population, the usage levels will not improve.
A more recent piece:
https://www.ft.com/content/e4044976-1812-11ea-9ee4-11f260415385
Similarly, as Hubert Horan explained in his ginormous Uber series, Uber could have both cheap prices and good availability because investors were paying for an uneconomical level of drivers to be on the road. Uber was paying on average 41% of the ride cost.
Your and others perceived utility does not prove that the spending was justified in terms of economic benefits, beyond the raw stimulus value of that much expenditure.
Tokyo is a city with small parks surrounded by a concrete jungle!
Most probably Yellen wen to china to buy a BYD sea gull for $9000.00, not obtainable in the US, because the US doesnt believe in the “free market”…
The US doesn’t believe in free anything. Not even freedom.
I’m curious what a definition of “radical conservation” is.
What does it look like in practice?
Is it for example a straight reduction in energy use across the board. Say 30%?
Or does it have a sliding scale based on current use.
Is it for all countries or just the higher use ones?
Just trying to understand its meaning.
China currently consumes about 85% of its cars domestically.
https://pbs.twimg.com/media/GKy4iuGWoAAvHt0?format=jpg&name=small
Exports are growing in this critical industry as Chinese cars have been able to deliver much cheaper cars of comparable quality, but most of what CHina makes domestically is consumed domestically.
I would argue that in that regard, Yellen’s overcapacity arguments are not defensible.
The “right people” could still make a trade relationship with China (and others around the world) work for them, which is why I don’t believe all the war mongering is in the service of capitalism.
Rather, US capitalism itself is so debased and removed from the activities that ostensibly produce corporate profits that no capitalist elite are paying any attention to the destructive impacts that essentially neoconservative/ cold war liberal foreign policy people– who have been removed and sheltered from basic material questions for an even longer period of time– are having on the economic prospects of even the wealthy.
American foreign policy and American elite finance are both taking place in two distant yet separate and distinct simulacra far from the remains of real trade, living off deficits and (in particular) the low-no interest private credit expansion that low interest rates enabled.
Much of this private credit creation never reaches the real economy at all, except when the beneficiaries of unproductive asset inflation chase after the goods and services elite American finance no longer has any interest in providing, increasing inflation for everyone else.
Those with no access to this credit driven simulation factory are going to take it from both ends until the whole fantasy economy collapses in ruin.
In other words, it has long been apparent that the America capitalist elite is not interested in manufacturing. They are no longer interested in trade either. They don’t need it.