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Notes -
US and China slash tariffs as trade war cools
It looks like we will experience a de-escalation of the tariff battle between the US and China.
How does this line up with your personal predictions for how this was going to proceed?
My belief was that both sides would maintain 100+% tariffs but exempt essentially everything that matters. This development shows that I was wrong and I don't understand something about the events that have occurred. Does anybody have any ideas on what I missed?
To establish ground truth facts: All that is left of Liberation Day tariffs on China is minimal 10% “against humanity” tariff, reciprocated by 10% as well. 20% of “Fentanyl tariff” (lol) came in February, and China reciprocated it with asymmetric tariffs which are also in power. So it's somewhat more equal than 10% for 30%. Also, China has not repealed their global export controls on rare earth elements which is in fact terrible as there is no way to quickly ramp up production elsewhere, stockpiles will run out in months, and much of the imagined American revival (eg industrial automation, so robots) requires REEs. Though there's cope.
Chinese imports of ≈$500B add far more to American GDP, maybe on the order of $2T even naively accounted (eg not considering the costs of unmaintained infra if trade were terminated) – they're a large chunk of all consumed goods and inputs to almost all industry, they retail for much higher value, and create a lot of economic activity. Since the gap with the rest of the world is just 20%, China refuses to cover the tariffs on their side and there is, in fact, no ready substitute to most of their products at acceptable volume and shortages would have caused crisis and panic, most businesses opt to pass the price to consumer or just cut margins. So the main effect of this in the short term will be slight reduction in bilateral trade, slightly (because the markup of US distributors is insane) higher prices of everything for Americans, and redistribution of wealth from businesses and consumers towards their state.
I've been wrong with my usual doomerism, predicting that neither side will fold. I mainly overrated Trump's ego strength and isolation from feedback. China kept playing this with surgical game-theoretical precision, consistently demanding respectful and equal treatment and insisting that they will not be intimidated but in principle oppose trade wars as lose-lose scenarios. Trump toadies initially made some smug noises about “isolating the bad actor”; then, when Chinese retaliation succeeded in preventing quick submission of others, particularly emboldening other largest trade partners (EU and Japan), improved ties with ASEAN, and precluded any such isolation – course-corrected, through some opaque drama between courtiers it seems. They started begging for talks (in a bizarre Oriental manner of requesting that Xi calls first, to save Trump face, maintaining the optics of “they need us and our Great American Consumer more than we need their cheap trinkets”), and eventually signaled willingness for equal deescalation that the Chinese side has been expecting. We are here.
What has been learned? First, that indeed, the US just does not have the cards to push China around, much less rally “the world” against it. That trust and respect is easily lost. That even nations highly dependent on the US security umbrella and on trade with the US can refuse to bow, and barter for their own interests:
That the South-East Asia is probably not a viable platform for any “choking” or “Malacca blockade”, like, just look at this statement.
That the EU has sovereignty, that Canada has sovereignty, that… basically, that the US is not a big scary hegemonic superpower it imagines itself to be and sometimes laments the wages of being. It's just a very powerful country, with large but decidedly finite leverage, and that runs well short of getting everyone to play along with American King's unreasonable imagination. The US can not credibly maintain the pressure on a determined adversary the size of China. Now, some half-dead vassals like the UK will make unequal concessions. But that's about it. Others will drive a bargain.
It's been a moderate economic shock for everyone, and a significant loss of credibility for the US.
I never feel like I learn something from your comments anymore. Its always just AI/China is the best, unbeatable, even better than you thought, and not even committing to anything concrete there. Like for example:
In what sense wasnt this already demonstrated by Germany buying russian gas? That seems like a case where wed expect more US influence than any of this tariff debacle.
From my point of view it's that you have degenerated into kanging and chimping from cognitive dissonance, like unfortunately many in the American sphere of influence. It seems Americans simply cannot conceive of having a serious or superior enemy, they grew addicted to safely dunking on premodern peoples in slippers or nations with deep structural disadvantages like Soviets with their planned economy and resource-poor, occupied Japan with 1/3 of their population – even as they sometimes smirk and play the underdog in their ridiculous doomposting. They feel like Main Characters of history, who are destined to win for narrative reasons and therefore can afford arbitrary foolishness in the midgame – at it will amount to is a few extra lines in the moral takeaway in the epilogue. Karl Rove's famous quote is quite apt.
China is not unbeatable, China is not stronger than the (hypothetical at this point) US-aligned alliance of democracies, and they're currently behind in AI. But you cannot see when I say this, because it would legitimate my positions that are less soothing for your ego, and instead you are compelled to default to these whiny complaints that are just a demand to shut up. Were you living in reality, you'd feel more incensed at nonsensical, low-IQ-racist boomer copes that keep undermining your side's negotiating position.
Accordingly I gloat that much harder when you lot suffer setbacks, because I strongly despise delusion and unearned smugness and believe they ought to be punished.
It's a matter of degree. Pressing Germany to move away from Russian energy supply could be easily justified in the world where the US was a credible guarantor of German security, as indeed Russia tried the gas card to dissuade Germany from supporting Ukraine, and now German industry which grew dependent on Russian gas is contracting. True, Germany showed independent (and faulty) decisionmaking then. But this was all in the realm of politics as usual, rules-based international order, and German choice was business as usual too. Now we see a test of naked American authority in Trump's exploitative trade war, in “DO NOT RETALIATE AND YOU WILL BE REWARDED” bullshit. Faceh explicitly says “Honestly I can say I thought there'd be more capitulation by now”, and that's exactly the spirit. This is not normal politics, this is a desperate shit test: will you cave, or will you resist? Are you a country or an imperial vassal? Getting refusals in this condition is decisive, and clearly the US side expected to get fewer of them.
I expect you'll dismiss what I say as just another smug American chauvinist...but watching you express with great confidence that the geniuses at the US state department were about to crush the Chinese upstarts a few years ago, to joining the ranks of the resident Chinamaxxers should be enough to give anyone whiplash. If anything, it should make readers update their priors about trusting anyone with grand geopolitical narratives.
The US State department isn't staffed by geniuses who can shape the world to their liking. Nor is the CCP. And even if you took US IMO team and forced them to study geopolitics rather than
theoretical physicistsfinance, their ability to influence the world would be minimal. The NWO-deep state-Masonic brotherhood conspiracy theorists believe manipulate world events to their benefit doesn't exist, simply because the world is too hideously complex a system for someone of any intellect or means to meaningfully manipulate. I don't seriously believe that anyone can predict what will happen or who the paper tiger is.Is China an unstoppable manufacturing behemoth about to steamroll the US navy on their way to Taiwan, or an aging and shrinking nation who imploded their property sector with loads of debt? Is America the global hegemon with the best military, largest concentration of talent and strongest economy in the world, or a sclerotic, internally-divided shitshow? Probably...all of the above? Who can say whether China's population bomb represents a hard cap to their ascension, or whether they can dominate every STEM and manufacturing field to a degree that dwarfs the rest of the world before they lose their dynamism? Or whether China does a Pearl Harbor next October and Americans of all stripes rally around the flag, erasing the problem of partisanship?
The uncertainty is part of the fun, I suppose. But I'm fairly confident that nobody can make meaningful predictions about what will happen consistently. And I'm certain that whatever happens, some asshole on TheMotte will write a novella about how fucking stupid Trump/Xi Jinping were for doing X when any retard could see that Y was the obvious course of action. Hindsight bias is a helluva drug.
All of these criticisms can be leveled at the Chinese as well - you've never heard them rant about 5,000 years of civilization? The century of humiliation making them temporarily embarrassed hegemons, from which they will inevitably recover? And you think that a world where China is hegemon won't see shit like Trump's exploitative trade war on the regular? Look at how they act in the SCS, or fish the hell out of South American countries EEZ. Look at where the Thomas and Sabina shoals are on a map and tell me what business they have ramming Filipino ships. Look at the wolf warrior diplomacy bullshit they pulled before realizing how ugly pulling back the veil made them look. Now scale that up to hegemon-level.
Not to mention I'm fairly confident I've seen you mock Americans hyping the 'Chinese threat' and making them out to be more competent than they actually are as a motivation for more defense spending.
I've burned plenty of incense. It hasn't gotten me anywhere, and I've seen how miserable the people are who walk far enough down that path. Boomers gonna boom boom boom my friend.
I think the US Deep State was capable of winning this, just like Russia was capable of winning in Ukraine, in theory, if we were to ignore the actual level of Russian governance and corruption and ability to prosecute the war rationally. I knew of that one and so didn't expect Russia to win, and overestimated the US mainly because I did not account for the immense capacity for self-sabotage.
I think they have enough talented people to do this, it's just those people have lost in internal politics.
Manipulating the world is made much easier when you own major causal factors of that world. It doesn't take 200 IQ, though intelligence helps not to manipulate yourself into the ditch. All of great power politics is such manipulation. Suppressing competitors, strengthening allies, capturing international institutions, and yes, it's done by networks of high-agency people, not by vague sentiment of the electorate. Sorry, that's just what we can observe happening.
Nothing is set in stone; despite triumphalist propaganda directed at the public, I think the USG is aware of the problems by now and still has major cards like monopoly in crucial technology (ASML is a de facto American company), global reserve currency and, most of all, global goodwill, everyone anxious to go back to normal. Trump has improved his standing in the Middle East with a single speech. Americans are losing time but they can undo the self-inflicted damage with a few more such pivots, apologize for tone-deaf Greenland-posting, revitalize their alliance networks, actually reindustrialize, implement very liberal issuance of citizenship to all Chinese talent and brain-drain the nation – and that's not all. Maybe the AGI God plan will work out too – after all, the attack on Huawei and broader semiconductor supply chain was a resounding success of the sort I expected, it did delay China by years. Maybe Starship makes Brillant Pebbles a reality and forces China to disarm and sign unequal treaties… The US Hegemony is very much a viable project, except some Americans are in the way.
I recognize that my median prognosis has changed in a way that seems discrediting, but it's basically down to high-noise human factors on the US side.
They do have a strong belief in their civilizational superiority, and this chauvinism and smugness is another reason I was bearish on them. But in assessment of their current relative position they tend to be humble. “Building a world-class navy by 2035” is a typical Chinese goal. “Becoming a moderately prosperous society by 2020”. In 2018, Xi said:
This does not look as hubristic as American Main Character Syndrome to me.
China has never held more than tenuous regional hegemony, I think this framing is not reflective of their ambitions and self-perception.
Yes. It's a stupid trade war and it's highly likely that no Tsinghua graduate will be so stupid. That aside, China has an official policy of not pursuing global hegemony. This certainly has no teeth, but Americans don't even have an equivalent toothless commitment.
I've been right about that, Americans do hype up the Chinese military threat excessively, and they don't even build military that'd be useful in countering that threat, it's nearly entirely a grift. $1 trillion will go to more nebulous next-generation prototypes and battling the tyranny of distance in distant bases, not to a buildup of autonomous platforms that can compete in the SCS. Again, assuming Americans keep self-sabotaging.
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