Dear Friends,
It seems to me the height of absurdity to concentrate the manufacture of antibiotics in one nation, let alone compound it by concentrating that production in an expansionist empire. The susceptibility of that crucial supply to natural disaster is increased as the area it is manufactured decreases. Moreover, that an expansionist empire has seized the monopoly on it’s fabrication, gives that expansionist empire an ace. How do you go to war with the people that make your antibiotics? That, in and of itself is suicidally stupid, but as it turns out, China is the world’s pharmaceutical supplier as well! Got High Blood Pressure? No soup for you! Along with everything else made there… If, God forbid, a real disaster, far more destructive than coronavirus were to hit China, the world would be out of luck.
China is the world’s factory because of it’s political stability and the laissez faire regulatory environment. In China, it is easy to start a business, get a loan to buy plant or equipment and the tax system is conducive to capital use. It is, however, difficult to go to church, have an opinion or defend yourself… but that is a different topic for a different blog. The cost of labor has also been historically low. Now, these are great things for an economy, but add in the government requires foreign businesses, as a condition of doing business in China, hand over their Intellectual Property, (IP), then passed to their Chinese competitors, that is a winning hand. An entrepreneur will not hand over IP they created, but a corporate psychopath CEO will gut the company he runs for an extra buck, all day long.
The ironic thing is… the only reason China has been able to become the manufacturer for the world, is because of the US hegemony since WWII. According to Peter Zeihan, the US cobbled up a coalition to fight the Cold War, by bribing it together. Part of the bribe was that the US would protect the sea lanes, and allow everyone access to everyone else’s goods, products, services and natural resources. Upending the prior paradigm of colonial nations vying for natural resources against each other… usually at gunpoint. This new system has allowed China to get past the First Island Chain that has historically enclosed China. That is why China seeks to control the South China Sea as a national lake, and then most of the First Island Chain… to plan for the post US paradigm.
Wuhan Coronavirus has shown us the danger of concentrating the world’s manufacturing in one place. If it had been an asteroid that hit Wuhan we wouldn’t be talking about temporary disruptions in supply chains. It is common sense not to concentrate manufacturing of anything crucial in one place. How many people are saved every day by antibiotics? We will never know, but we do know they save billions, if not trillions of dollars in hospital stays. If that supply was cut off for a few months, let alone forever, the toll on humanity, and economically would be profound. To a lesser degree, the Rare Earth minerals are only mined and processed in China, along with so much else… that if China were devastated today, the world would be shunted back half a century or more, technologically.
The argument China is ruled by an expansionist one party state becomes redundant. The answer is not to vilify China, they have acted in their own self interest, their rulers have no obligation to act in the world’s. Not by their world view. The first thing to do is recognize the predicament we are in. The second is to formulate a plan to get out… then take action. The central part of that plan should be to claw back some manufacturing, of at least crucial products like antibiotics, back to the West. To do that, Western leaders need to cut regulations, so plants can be built or even restarted, stop keeping zombie corporations alive, apply law equally no matter which party has political favor, put restrictions on transferring IP, etc… Start making things in the US, Russia and Europe again.
Sincerely,
John Pepin
