Politics. It would be a disappointment to college dorm late night kibitzers and smug podcasters were they to discover that the foundational purpose expressed in U.S. Constitution is “to form a more perfect union.” Not a perfect one; not one that would defy all the self-loathing and relativism that emerges from time-to-time; and certainly not one that easily dismisses centuries of injustice.
Just better than everything else.
When the U.S. has wandered away from Gouveneur Morris’ charge, as it did in tragic form in the 19th century, it is economic interests – or the illusion of such – that tends to subvert the rest of the Constitution’s priorities, justice, tranquility, defense, welfare, and liberty.
In the first half of the 19th century, southern slaveholding states argued that there was no way the world could do without King Cotton and the no-cost, enslaved labor on which it depended. In the modern era, the Chinese Communist Party has claimed the U.S.’ addiction to consumption and low prices required ignoring the CCP’s own injustices on which cheap stuff depends, like the enslavement of Uyghurs.
Both were and are wrong.
That argument had begun to erode before a global pandemic. The Departments of Defense and Commerce had, since at least 2018, raised concerns about supply chains, especially for pharmaceuticals, medical devices and supplies. Since COVID gripped the world, low price, it seems, has no contest against security and reliability.
What is left, is the weak-minded argument, formed by the CCP in the wake of the Black Lives Matter protests in early 2020; presented as a diplomatic defense at the Anchorage conference in March 2021; and repeated in brainless fashion last week by Chamath Palihapitiya. The U.S., in their view, should not try to enforce its founding principles abroad when it is unable to do so at home.
It is a defense that may find fertile ground among that portion of the population that has substituted their observational skills for the comfort of group think. Everyone else, contrary to what Mr. Palihapitiya says, can see the U.S. is one of the few nations in the world that people try to break into daily.
For border crossers, legal or otherwise, not perfect but better than everything else is just fine.
Policy. Apologists for tyranny in the service of economic interests is certainly nothing new. J.P. Morgan’s CEO need only peer into the bank’s records to know how comfortable they were financing Europeans quite clearly on the wrong side of history in the 1930s.
What the House of Morgan was slow to discover then, and what Mr. Palihapitiya fails to recognize today, is that economic self-interest is easily pushed aside by national priorities. For that reason, some Members of Congress have gone from decrying President Trump’s border closures with China in February 2020 as racist to advocating for the United State Innovation and Competitiveness Act. (Summary here.)
The bill, with bipartisan support, passed the Senate last spring, but stalled in the House where progressives have argued for spending $250B on something else. With that flank of the party weakened, Speaker Nancy Pelosi revived USICA as a priority.
USICA is chock full of reporting requirements and probably more than a little pork. Nonetheless it can also be seen as a direct response to China’s industrial policy. Areas of focus include expanding medical and biotechnology research, requiring a domestic supply of Personal Protective Equipment and protecting genetic information from distribution to foreign controlled entities.
It also appropriates huge sums of money for research at the Department of Energy, the National Science Foundation and the Department of Defense. These research dollars are in addition to COVID-19 relief appropriations that have swelled the biotech/biopharma pipeline.
The USICA, comes on the heels of H. 6256 which prohibits the import of goods produced by forced labor, including anything manufactured in the Xinjiang province.
Mr. Palihapitiya may be right, “no one cares” about human rights abuses in China. As he will soon discover, however, is that the right people care. Everyone else is just catching up.
Power. The Great Resignation, as the massive and sudden deterioration of the U.S. labor force has been called, is really more like The Great New Venture. Pandemic, U.S. style, put a load of money in a lot of pockets.
While it may be true that some people went through the entire Netflix catalogue in 2020, a whole lot more took their money and, metaphorically, lit out for the west. New business formations in transportation and warehousing are up 63% in Dec. 2021 v. 2019; construction up 25%; manufacturing up 9%; retail trade up 52%; and health care and social assistance up 18%.
Some portion of those new businesses are side gigs. Work from home now makes that possible. For the rest, such a dramatic shift suggests that a whole lot of people have concluded that COVID-19 and its geopolitical fallout provides a unique and generational opportunity.
If, in fact, low price will not alone determine the viability of a product or service; if the playing field globally gets more level; entrepreneurism and innovation start to look a bit less scary, a lot more interesting and potentially very rewarding.
The demands are great and growing. CAH disclosed at JPM22, they were working on nearshoring supplies. ISRG reported on their 4Q 2021 earnings call that they were expanding U.S. manufacturing capacity and raised concerns about supply chain reliability. We are sure to hear more about that in the next few weeks.
Venture dollars have more places to go, leaving us with the hope that silly (yes, I know a lot of people made a lot of money, but we are using a different yardstick here) enterprises like Facebook will recede into irrelevance, taking with it a few annoying billionaires.
Have a great rest of your weekend.
Emily Evans
Managing Director – Health Policy
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