this has rewired my brain

In 1990, heterodox economist Alice Amsden clarified the stakes of the East Asia experience. Asia’s economies, she argued, had broken with the US model of mass production and mass consumption, that is, Fordism. Instead, for “late developers” like those of East Asia, the problem was

not that of too little effective demand but of too much, as different income groups and social classes struggle over the distribution of a puny pie. . . . What [governments] must raise is more foreign exchange, savings and public revenues; for these, and not effective demand, are the constraints on increasing the pie’s absolute size.

Chinese economic thinking has largely adhered to these principles, including a long-standing fear of domestic inflation alongside the long-standing belief that, rather than redistribution and balance, the key is to grow “the pie”—and the pie grows when technology improves. Today China prioritizes innovation under the noscript of “high-quality productive forces” (xinzhi shengchanli), entailing clean technology, electric vehicles, semiconductors, and artificial intelligence—targets of the Biden tariffs—that rely as much as possible on domestic supply chains. The strategy claimed a major victory this week, when the Chinese startup DeepSeek shocked the world with an AI model that outperformed OpenAI and Meta’s own models but at a fraction of the cost (the announcement also cost the US’s five major tech stocks about $750 billion in market value). China’s government is aware that moving further into capital-intensive industries means cutting bait on cheaper, labor-intensive ones such as clothes and toys. Still, Xi has emphasized to officials that the economy must first “establish the new before breaking the old” (xianli houpo).

At the same time, Xi’s China is wary of the threat of “Japanification.” The credit bubble that helped drive Japan’s runaway growth in the ’80s, and which so irked Trump, finally popped in 1990, and Japan’s own foreign investment contributed to the Asian financial crisis in 1997. Today Japan is in the midst of its fourth “lost decade” (ushinawareta yonjūnen) of sluggish growth and population decline. This is the specter now hanging over China, which for all its impressive performance, remains nowhere near as rich per capita as ’90s Japan.

The 2000s were a golden age of US–China integration, an optimism symbolized by the extravagant 2008 Olympic games in Beijing, which were overseen by an ascendant Xi Jinping. Still, these years also saw signs of discontent toward globalization, even before Xi’s and Trump’s rise to power. In the US, labor unions had opposed China’s entry into the WTO, marching in protest during the 1999 Seattle meetings. Economists estimate the US lost about two million manufacturing jobs in the first years after the “China Shock.” Meanwhile, fearing competition from US firms, China’s provincial leaders used interventionist measures to bolster local industries, technically breaking the rules of the WTO.

As early as 2007, Chinese policymakers, wary of stoking international tensions, began talking about “rebalancing” toward domestic consumption. Efforts were expedited after the 2008 US subprime mortgage crisis, when, like the US, the Chinese government rushed a bailout package, worth about 4 trillion RMB, or nearly $600 billion. Here China followed the path of Japan once more, as loose money led to a real estate bubble. From 2011 to 2021, about a quarter of the nation’s GDP comprised transactions in property construction, absorbing roughly half the country’s savings.

The bubble burst during the first year of the pandemic. Sensing danger, Beijing announced the “three red lines” policy, under which, in order to access more credit, companies must control their ratio of debt to cash, equity, and assets. Crossing all three thresholds was the Evergrande Group, the world’s highest-valued developer. At its peak the company was worth over $40 billion, but with liabilities of more than over $270 billion. It was also a former business partner of Donald Trump, with failed plans to build a massive skyscraper in Guangzhou. Cut off from government support, Evergrande collapsed in fall 2021 and was ordered last year to liquidate.

China has thus already been burned by pivoting too hastily to domestic consumption, only to be rewarded with a crisis that has saddled the country with trillions of dollars in losses. Many fear China is already in the same trap of overleveraged paralysis (“balance sheet recession”) as its neighbors. If anything, it is precisely because of the catastrophe of pro-consumption policy that Xi has turned back to the classic East Asia model. Both he and Trump are doubling down on the decades-old political views that first gave rise to the Asia-Pacific trade wars. Neither appears likely to change course soon.

(...) Within the tradition of social theory, however, Fordism’s significance lay in its high wages, famously $5 per day starting in 1914 (equivalent to about $20 per hour today). Rather than class beneficence, Antonio Gramsci argued, Fordist wages were part of a system of labor discipline and a means to reduce worker turnover, thereby boosting profits. They had the added benefit of aiding mass consumption—even Ford workers, it was said, could afford Ford cars—dovetailing with the emergent Keynesian dictum that boosting effective demand would soften the inequalities of industrial capitalism and keep the whole machine chugging along.

(...) By the 1970s, capitalist East Asia had presented a challenge to this Fordist-Keynesian orthodoxy of mass consumption. Today, China draws the ire of mainstream economists for much the same reason. Curiously, however, China’s comparative advantage also marks a kind of return to Ford’s prized vertical integration. The sprawling integrated factory went out of style starting in the ’70s, outwitted by Japan’s “Toyota system” and its lean, just-in-time supply chains. Yet today China boasts the world’s best-integrated production systems, reinforced by recent mandates to “indigenize” and insulate value chains from foreign tariffs.

(...) China itself has quietly built an “alternative trade architecture,” according to the Financial Times, in which 40 percent of its exports now go to countries with whom it shares bilateral free trade agreements, excluding the US and EU, mostly across Asia, but also Australia, Canada, and South America. Nobody can predict what happens next. But if current trends continue, we are living through a collision of economic trajectories, positioned on either side of the Pacific, set in motion forty years ago: Xi Jinping’s attachment to export-driven industrialization, pitted against Trump’s decades-long fixation on protectionist tariffs. This contradiction is the terrain on which much of the world must now maneuver.

https://www.nplusonemag.com/online-only/online-only/back-to-the-80s/

That’s after an email last night from OMB director Russell Vought, who Trump had just made CFPB Acting Director, stopped most agency work, including “supervisory activities that ensure companies are complying with the law,” the outlet writes.

https://www.theverge.com/news/609153/the-cfpbs-headquarters-are-closing

On the same day Jeff Bezos sat in the front row of the inauguration (that Amazon helped finance), his retail giant sent nine letters pressing the Trump administration to let the company block votes on initiatives from its own shareholders. These include proposals to disclose more information about Amazon’s treatment of warehouse workers, handling of private medical data, lobbying activities, artificial intelligence–related energy use, and employee pay gaps.

UnitedHealth also called in some favors. A day after Amazon’s move, UnitedHealth asked Donald Trump’s Securities and Exchange Commission (SEC) to allow it to block votes on shareholder proposals requiring the company to 1) audit previous customer denial claims to see if they were inaccurate and 2) disclose “how often prior authorization requirements or denials of coverage lead to delay or abandonment of medical treatment.” UnitedHealth has among the highest claim denial rates in the country.

We reported that during Trump’s first term, his regulators passed rules that made it more difficult for shareholders to force votes on their proposals. The Biden administration pushed back. Now Trump’s SEC chair nominee is Paul Atkins, who has criticized what he calls the “abusive use of the shareholder proposal process.” Because of the timing of Amazon and UnitedHealth’s letters, regulatory decisions about their shareholder resolutions will be made by Trump’s officials — not Joe Biden’s.

Last September, House Republicans passed the Prioritizing Economic Growth Over Woke Policies Act, which aimed to give companies limitless power to exclude shareholder proposals. The legislation also would have limited the SEC’s power to require public companies to report on issues considered unrelated to their financial health.

https://jacobin.com/2025/02/amazon-bezos-unitedhealth-trump-sec/