Eudaimonia and Co
Dec 2
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Today’s little essay is going to be a bit shorter than usual, because — how are you? — I’m feeling sick as a dog. I want to continue discussing a topic that’s emerging as one of crucial importance: the new contest for worldwide economic dominance, and how America, surprisingly, after years of decline, is now firmly at its forefront.
Don’t take my word for it, though. Take…Emmanuel Macron’s. He recently arrived in DC, for a state visit — where heads of state reaffirm that their nations are friends and so forth, amidst glitzy official dinners. And this one was marked by what the press — much of it in Europe — are calling a “trade row.” Over what? What’s Macron so, well, burned up about? I say that in a funny way, not a mean one, and I’ll explain why, but first let him say it best.
In unusually blunt criticism ahead of his meeting with Biden, Macron warned that the Inflation Reduction Act could “fragment the West,” contending that the U.S. effort to provide billions in aid to its homegrown industry “create such differences between the U.S. and Europe.
That really is unusually blunt talk. It’s not something that heads of states say lightly — unless they’re Donald Trump, and want it — to speak about “fragmenting the West.” Read some more of his comments:
The choices of the past few months, in particular the IRA, are choices that will fragment the west,” Macron said at the French embassy in Washington on Wednesday evening. “We need to co-ordinate and re-synchronise our policy agendas.” Earlier on Wednesday at a closed-door lunch held at Congress with executives and lawmakers, Macron called the IRA “super-aggressive for our companies,” according to a person who attended the event. “Perhaps this law will solve your problems but it will make mine worse,” the French president said, adding that many jobs would be destroyed.
What’s Macron so burned up about? The Inflation Reduction Act — but not really that, per se. He’s worried that America has a vision. A plan. A Big One. And a Good One.
That plan is about becoming a net exporter again — of stuff the world desperately needs, from microchips, which are the beginning, to clean energy and manufacturing. Now, this doesn’t get covered much, or nearly enough, in America — but believe me when I tell you that it’s a Big Deal. Emanuel Macron wouldn’t be burned up if it wasn’t, and he’s speaking on behalf of all of Europe more or less, which is quaking in its boots, because America — for the first time in a very long time — is back. And now Europe is going to have to keep up, too.
Let me explain all that. Macron’s not really burned up. He’s not really scared. He’s…concerned, surprised, and probably a little bit shocked. You can practically hear the Gallic outrage in his voice. Quelle horreur. L’Etats Unis?! He’s saying what he needs to say, in diplomatic-speak, even if it’s “unusually blunt,” to send a signal. We hear you, and we get you. We understand that things just changed. And we know that we’re going to need to up the ante now, too.
Macron’s shocked, a little bit — like the rest of Europe — that America’s got a) a Grand Vision consisting of b) a Big Plan to c) revive it’s moribund economy after decades of stagnation and decline and d) take the whole world economy into the 21st century by way of e) major, major investment. That’s a lot, so take it slowly and consider each point carefully.
This is really different. You see, the last time that America had anything resembling this — a strategy, vision, plan — was perhaps during the New Deal. That led to the dominance of the 1950s — when America was a net exporter, supplying things it became famous for around the globe, from cars to appliances. That was America’s Golden Age — and sure, it’s right to point out that it didn’t include everyone. We’re just speaking about economics here — not culture and society, per se. During this Golden Age, America built the world’s most formidable not just industries — but middle and working class. It became a superpower like this: by being a net exporter of what the world was hungry for.
But that age ended in 1971. That was when America began to import more than it exported. And from there, things only got harder for that once vaunted middle and working class. By the 80s and 90s, factories and mills and plants began to shutter their doors. By the 2000s, nothing much was made in America — not even iPhones. And as the trade deficit ballooned, the fortunes of the average American shrank, and then imploded — because of course their lives, towns, communities, futures…they were dependent on making stuff the world needed.
But the idea by then was explicitly that America shouldn’t make stuff. America, legions of consultants said, only had to “design” stuff. Hence, “designed in California.” But made in…China, India, wherever. The consultants said this because the economists theorized it. And in their rarefied, perfect world of abstractions and theorems, maybe, you could “design” your way to worldwide economic dominance. But in the real world? People needed jobs, communities needed a heartbeat, towns needed employment, not just Walmarts and Amazon mega-warehouses. The theory was perfect — until it met ugly reality, where the truth was that an economy that just “designed” stuff was also one of rampant inequality, a middle and working class becoming one giant underclass, as all those good jobs making things became weird, underpaid, no-future forms of “service work,” from “gigs” to “side hustles” and whatnot. The theory was an absolute disaster for America — it led to three to four solid decades of stagnation, and that produced, right on cue, a fascist wave, in the form of Trumpism, as fury, rage, and despair swept the land.
Now. Macron isn’t a fool. He knows that the theory that a nation should never make stuff is laughable. He knows it because France never bought it. France is still out there, making plenty of things — and plenty of those things are world renowned. From wine to food to cheese to luxury goods like watches and handbags — that’s a legacy that dates back to the Sun King, and France, being France, built it’s entire economy on that notion to this day. It never stopped making stuff — and neither did Europe in general. Germany? Famed for it’s industrial base. Italy? It makes the world’s luxury goods, from furniture to clothes.
Europe makes stuff, and that’s one reason why European middle and working classes did far, far better than American ones. Still employed, still paid relatively well, they had more to give over to the public purse, to fund those generous social contract Europe became famous for — cutting edge healthcare, high speed rail, public media, for all.
So Macron’s emphatically no stranger to the idea that a nation has to have a vision, a plan, and then invest in it, to have a future. Europe never bought into America’s laissez-faire delusion, the idea that “free markets” — meaning a bunch of dudes at hedge funds who’ve never made a damned thing in their lives, except maybe a woman or three miserable — should decide what an entire economy does. That’s always going to result in a race to the bottom, and Europe’s understood that for decades, which is precisely why…
It invests heavily in all the industries that not just power its economies, but make it famous. French food and wine? Governed by an incredibly sophisticated and complex system of regulations and investments, that say things like “only real Champagne can be made here, this kind of cheese here, and we’ll support and protect farmers to do it.” The same is true in Germany, which offers its famous “Mittelstand” — small and medium sized companies that supply the giants like Audi and so forth — plenty of support and incentives and guidance. The same is true in Italy, which would be hardly making all those Balenciaga sunglasses and handbags that the average Instagrammer used to lust for seeing them on Kim K, until the whole brand imploded in a bizarre scandal even Tucker Carlson’s raging about. Europe invests heavily in all that stuff. Balenciaga — he was a couturier famous for ultra modern shapes, after the war — and the reason his “house,” or “brand” is still alive, is that in Europe, such things are protected and invested in. You can’t just, for example, fire people, like the Cheesy Billionaire did at Twitter, and Europe’s renowned brands are very, very carefully managed, with plenty of government say-so about who gets to buy and control what and why.
Europe’s always understood that a nation needs a plan, a vision, an agenda, and investment in it. It knows that from its own examples — and it knows it, too, from the examples of nations who roared ahead in our lifetimes, like China and South Korea and Singapore and Taiwan. Far from being laissez-faire exemplars, they literally sat down and crafted and planned and strategized their ways out of poverty. Taiwan and Singapore planned to supply the world microchips. China, to become its factory floor. South Korea, to make its TVs and washing machines and so forth.
Macron knows all that. Intimately, at a visceral level. He was a banker before he was France’s head of state, and in France, that means negotiating between business and government, being basically the agent who says, “this guy right here? He’s going to do a good job managing a brand that matters to the whole country and it’s future. This guy? He’s not good at it.” In America, that relationship’s always been totally different. It’s just about profit — not character, or some level of good for workers, communities, the economy, some level of long-term thinking about the future. Macron knows it because he used to do it.
What’s worrying him now is the fact that, well, it’s shocking that America’s the one who’s pulling ahead. You see, Europe’s plan for worldwide economic leadership…it isn’t very good. It’s about…doing what Europe is…now. That’s basically supplying the world’s luxury goods — from food to wine to cars to handbags and clothes and so on. That’d be fine, except for the little fact that the planet is dying because we’re running out of its resources. LOL — in the context of a dying planet, being the world’s number one supplier of needless luxuries is a pretty poor strategy.
Because, of course, the world is already finding itself in the bitter, shocking position of running out of necessities. Rivers are running dry, and droughts have gone worldwide. Entire nations like Pakistan are taken offline by mega-weather — and it’s the fourth largest supplier of cotton and leather and a major supplier of wheat, which is why prices for everyday goods are still rising.
We’re in a new era now — genuinely so. The industrial age is ending, and the new contest for global economic leadership is about a) providing stuff the world needs b) the most fundamental stuff, like water, food, energy, medicine c) at civilizational scale, meaning mega-scale, in d) green, clean ways, e) not just because they’re morally just, but because they’re cheaper and way, way less risky.
What’s shocking to Macron is that America’s now at the forefront on this race. If Bidenomics fulfills its promise, then America will be the one supplying the world with things like clean energy and closed-loop manufacturing and next-generation agriculture, steel, and cement. Microchips are just a beginning. And if you can supply a world whose basic systems are snapping like twigs with all that? It’ll beat a path to your door for decades. You’ll have companies so big that they’ll make Google look small.
Biden’s setting up a new age of American economic dominance. Yes, really. Macron’s shocked, because nobody much expected this. From America. Ever. A plan, a vision, an agenda. A good one. A serious one. And then, even more out of left field, one backed up with real waves of investment, in stuff like actual factories.
This story’s so unexpected, so shocking, that even America media barely understands how to cover it, because, well, when you’ve been writing about factories closing, because nobody has a plan, for decades…how do you even begin to tell the story of the very opposite? So this story isn’t being told to Americans the way it should be, and yet, you can see from Macron’s comments, his shock and outrage, which are a bit of a posture, and yet also very real — not meant in an unfriendly way, but just as a thing, as in “America? America’s doing this? What…what the??!!” — that the story that America’s positioning itself for a new era of economic dominance is very real.
So what Macron’s trying to do isn’t stop it, or fight it. He’s saying to Biden that, hey, this worries us. Biden grins, because he understands, too, on some level, that right now, America’s plan for the 21st century is, well, way better than Europe’s. America’s: make the world’s post-industrial necessities, in a clean, green way, and become a net exporter again. Europe: provide the world’s luxuries…to a dwindling pool of super-rich Chinese and Russians and hedge-funders in Manhattan. Which one do you think’s a better bet?
It’s obvious which one is. So Macron’s trying to open up some negotiations. Hey, if you’re going to subsidize all this stuff — then maybe European companies should be considered too. Not a bad idea. Maybe they should — and maybe Europe should return the favor. He’s pleading, in diplomatic-speak, listen, Joe, just go slow, OK — we need some time to match all this and come up with a game plan of our own. Don’t totally leave us in the dust. We’re friends, right?
He’s correct to do that, because America’s new plan for global economic dominance is actually proceeding at light speed. The first chip factory? It’s having it’s inaugural tool-in ceremony next week. Biden’s visiting to break the ceremonial champagne bottle. Ironically, that’s the only part of it that’ll be…French. I kid, but in a serious way.
You wouldn’t know it from reading American news, but Bidenomics is happening. It’s real. The chip factories are coming online now. And next up — it’ll take maybe a decade — is all the stuff above, rebuilding the world post-industrially, supplying all the basics in a clean, green way. Big. Serious. Excellent.
Macron is quaking a bit because there he is, shocked, and then shocked again. Shocked that America has a vision, a plan, an agenda. And then re-shocked, because it’s already happening, right before his eyes. Faster than anyone, really, envisioned. Those chip factories were practically just announced. And already the first one’s spinning up? You can see why Macron’s in a daze. America’s flexing its economic muscles, and delivering a one-two knockout punch in the first round. Hence, Macron’s like, “Jesus! Joe! I thought you were just…talking. Mon ami!! Arrêtez-vous! Slow down, dude. It’s already…happening? This fast? Mon dieu, what is Europe going to do? What’s our plan? How are we going to stay competitive with this new, mean, focused, turbo-charged America?”
All of that’s a good thing. And Macron knows that part, too. Now a contest is kicking off. Europe has to match America, at least, or fall behind. Smaller nations, like Canada, for example, have to find their own niches of post-industrial competitive advantage — maybe in a particular field of green manufacturing or so forth. The Netherlands, for example, is becoming a leader in post-industrial agriculture.
The contest for a post-industrial civilizational economy? It’s a good one. A necessary one, because we don’t go on much longer in this way: dwindling basics at skyrocketing prices. This needed to happen now. And, amazingly enough to everyone, from Emmanuel Macron to New York pundits to the DC establishment, it is. We should all give Bidenomics credit for that. Macron is. He understands that the world just changed. Europe’s going to have to get ahead of the curve, if it wants to stay relevant and competitive. The rest of us should pay attention — and applaud — too.
Umair
December 2022
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