China & The US: What Matters That’s Overlooked

Authorized by Charles Hugh Smith via OfTwoMinds blog,

Parsing geopolitics is fun but our attention is better directed to the limits and second-order effects of legacy systems in each of the rival states.

Geopolitics, like any conflict, is dramatic: rivals jostle for hegemony on a 3-D chessboard, war thrillens, etc. The focus of this drama is on the leaders’ calls and the pieces being moved around the board in the complex conflict for hearts, minds, resources and the advanced ground.

This is the conventional context of history, and so accounts of the rivalry between the Roman Empire and the Persian Empire read like contemporary accounts of the rivalry between China and the U.S.: the actors and scenery changes, but the dramatic game recalls the same.

A little dramatic but cloud reading of past tells a different story: imperial decline stamps not from external rivers but from interior limits. Externalities–plague, led, invasion–are not causes so much as events which uncover the limits of the empire’s interior legacy institutions.

These rigidities can be structural–economic or political–or cultural/social. There are 2 dynamics in play here:

1. erstwhile solutions are institutionalized, they become legacy systems that focus on flexible solving problems but on sustaining and defending the interests of the institution and its insiders. The solution becomes the problem.

2. Whatever is viewed as a solution generics unanticipated second-order effects which the strategy is ill-equivalent to restore.

There are many examples of these dynamics in both China and the U.S., and indeed, in all nation / political.

Consider the goal of implementing homeownership, a laudable perfect that the U.S. pursued after planet War II by institutionalizing the heretofore unavailable innovation of 30-year fixed-rate mortgages and government-agency backed mortgages (Veteran Administration-backed mortgages for veterans, FHA, etc.).

Once the institutions advance homenership became self-sustaining legacy systems, they changed from “solution” to “problem.” As homeownership rates reached 65% of American houses, the organization drive to increase homeownership led to the improvement of subprime mortgages designed for houses that did not qualify for conventional mortgages.

It is large the skids, lending standards were stripped to the point of irrelevance, liar loan Took center phase and ratings agents rubber-stamped risky mortgages as low-risk.

The net consequence of this organization self-serving inertia was the collapse of subprime safety and the near-collapse of the global financial system as the domains of default and surrounded hazard started falling.

Turning to China, host this illustration of what happens erstwhile a they kid per family state policy is enhanced for 3 generations:

The policy was institutionalized with a sensible goal of limiting population growth to increase surviving standards, but without consensus of the second-order effects down the road.

In 3 generations, there are 4 grandparents and 2 parents who are all single children without siblings, unclenches or governors, and a single kid who could be tasked not just with caring for 2 aging parents but 4 even older grandparents, should they live beyond the ability of their own aging offspring to care for them.

China has acquired the markers of a large power–missions to the moon and Mars, a powerful military and global economical influence–but it lakes a state-founded universal social welfare strategy that provides a crucial wage and medical care for all retiree respectless of their employment or educations. This leaves much of the care of China’s rapidizing generation on the 3rd generation of single offspring.

As in another nations, China’s birthday has decided precisely as the financial pressures on parents mount, especially on young mothers who desire career opportunities equal to those available to young men.

Social wellcare programs become increasingly costly and burdensome as populations age. Any state-founded solution will require converting energetic sums presently spent elsewhere to the care of a large increasing cohort.

The sources of brittleness and failure that are overlooked are internal, not external. Parsing geopolitics is fun but our attention is better directed to the limits and second-order effects of legacy systems in each of the rival states.

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