Discover more from Learning by Proxy with Vivek Srinivasan
Two front war
America seems to relish in fomenting trouble overseas, could it reach a point where it has one troubles too many?
Let me start with a throwback. In May, I had written that Elon Musk was using the Twitter deal as a smokescreen to sell Tesla shares (at a peak price of >$1000)
To the investors and car companies pouring their monies into battery-driven electric vehicles, you just invested a lot of money to manufacture pagers while the world is moving on to cellular.
My recent understanding of American politics has been that…
When the Republicans are in power they screw up everything within America, on the spectrum from Immigration to Ku Klux Klan. When the Democrats are in power they screw up the rest of the world.
When Obama was president, he engineered the fall of a pro-Russian Ukrainian President. This in turn led to the fall of Crimea and the demand from the Russians for an undertaking to not include Ukraine in NATO. America refused. Chivalry at someone else’s expense is not at all costly.
Let us see what has happened since:
- Almost 50% of the Ukrainian people live as refugees.
- The American Military Industrial Complex has earned a Hundred Billion Dollars
- Germany is going back to coal
- African countries have seen new highs in starvation
- Ruble is at unforeseen highs
- India’s oil import bill has been significantly subsidised
- Russia and China have been pushed closer together than ever before
- The Dollar hegemony has not seen a greater threat since the Second World War
- Zelensky managed to get featured in Vogue!
The American people paid the price quite literally. The politicians are literally incinerating money in Ukraine while it can be used to prop up the pathetic healthcare system that they have in America.
And… here is the kicker. Ukraine finally applied to join NATO and the Americans are dragging their foot on it.
The Wikipedia entry on how this state came to be is quite dense, here is the simple story.
China was in Civil War. Chiang Kai Shek and Mao Zedong were fighting each other. Then the Japanese attacked. In order to repel the Japanese, Mao proposed to join hands with Chiang Kai Shek and accepted to play second fiddle to him. Chiang Kai Shek and his army repelled the Japanese but lost a lot of men in the process. Once the Japanese were repelled, Mao turned on Chiang Kai Shek, who was forced to flee and set himself up on an island off the coast of China which we call Taiwan.
China went forward with the communist structure under Mao while Taiwan was run democratically under the banner of the Republic of China on Taiwan.
China has always contended that Taiwan is a part of its territory. But America loves democracies because they can be easily manipulated. Even so, America signed an agreement in 1980 with China acceding to the ‘One China’ principle. As a result, Taiwan does not have diplomatic connections as a country.
The Act was passed by both chambers of the United States Congress and signed by President Jimmy Carter in 1979 after the breaking of relations between the United States and the Republic of China on Taiwan. Congress rejected the State Department's proposed draft and replaced it with language that has remained in effect since 1979. The Carter Administration signed the Taiwan Relations Act to maintain commercial, cultural, and other relations through the unofficial relations in the form of a nonprofit corporation incorporated under the laws of the District of Columbia – the American Institute in Taiwan (AIT) – without official government representation and without formal diplomatic relations. The Act entered retroactively into force, effective January 1, 1979.
Also, the reason why the last US dignitary to visit Taiwan was in the 1990s - when a democrat was president.
Nancy Pelosi painted herself into an ego corner
She announced that she will go to Taiwan without consultation with the Chinese. The Chinese were pissed. To the Chinese, it is the equivalent of some state leader visiting Kashmir in India. The problem was that going would cause issues, which we will see unfold in the coming days but not going would mean that she got dictated by the Chinese.
As George Carlin described, now the “Bigger Dick foreign policy” was at work.
Russia did not have a lot of direct business engagement with the US, unlike China. Even so, the hurt that it caused in Europe has been reverberating in the US. China is a whole different animal. If the same level of sanctions were to be applied to China, American stores would be empty.
On the one hand, the economists in America harp about the supply side problems causing inflation; on the other hand, their politicians are lobbing Molotov cocktails into the supply side.
Unlike Russia, China will not be able to find an able replacement for American buyers in the short term but in the longer term, it may not be entirely impossible.
So what next?
China was been brave enough to hurt some of its largest companies. Alibaba is a prime example. It is not entirely unwilling to let all the capitalistic precepts go up in flame. By extension, it would not be entirely unwilling to set every economics textbook on fire and decide to reinvent it. This should probably plant more fear in the heart of the Americans than any bullet or missile that China fires at Taiwan. The entire calculus on the American side is predicated on the unassailability of their capitalistic system.
The Chinese are also not impulsive unlike the people in the west. They truly believe revenge is best served cold.
In this context, Lenin’s quote “ There are decades when nothing happens and then there are weeks when decades happen” takes a life of its own.
The automobile industry across the world is in shambles because of chip shortages. Almost all of them come from Taiwan. Almost all the raw materials needed to manufacture the chips come from China. China can cause hurt in many ways with slight tweaks to its policies; leave alone an actual military assault.
Apple has asked suppliers to ensure that shipments from Taiwan to China strictly comply with Chinese customs regulations after a recent visit by senior U.S. lawmaker Nancy Pelosi to Taipei stoked fears of rising trade barriers.
Apple told suppliers on Friday that China has started strictly enforcing a long-standing rule that Taiwanese-made parts and components must be labeled as being made either in “Taiwan, China” or “Chinese Taipei,” sources familiar with the matter told Nikkei Asia, language that indicates the island is part of China.
Without Taiwanese chips, Apple would be a mere services company.
I think nothing will happen in 2022, but something will sooner than later. This is a game of chess and China has the patience to think through 300,000 moves and then play this game.
What the outcome might be would depend on how they position themselves in the coming days.
In the history of the world, no military has ever won a two-front war. If you are being attacked on two sides, you are pretty much finished. Napoleon lost like that, and Hitler lost like that.
For China, this can turn into a two-front war if the pot keeps boiling (border disputes, skirmishes in Ladakh and Arunachal) on the Indian side and they also engage in military or economic warfare on the Taiwanese side.
For the US this can turn into a two-front war if China decides to go after Taiwan. They have already poked themselves in the eyes with Ukraine. If China calms things with India and then goes after Taiwan, this has the potential to destroy the American economy.
Who plays their cards better remains to be seen.