Why is the United States Trying to Shut Down Huawei?
It’s long been a proper article of faith among members of the right that the free flow of goods within countries isn’t just brilliant because it expands the global division of labor. There’s also a world peace angle to trade. An open market is the most costless and most peaceful foreign policy mankind has ever devised.
Translated, when a country is open to the plenty of others, the people don’t just gain economically. They’re also quite a bit safer. While nothing in life is a sure thing, openness to foreign production makes it much less likely that foreigners invade the open country. Why kill your customers? Open markets give other countries a rooting interest in the health of the country that is open.
Which brings us to China, and the odd economic contortions we’re witnessing among right-of-center types about it. While conservatives and Republicans properly lamented China’s collectivist policies of the 20th century that resulted in the impoverishment, starvation and murder of tens of millions, nowadays conservatives are more and more paranoid about the shedding of the country’s collectivist past. In modern times the Chinese are increasingly rich, and well fed thanks to greatly enhanced economic freedom. Even better, their economic freedom has materialized in daily raises for American workers who, thanks to feverish Chinese toil, see their paychecks stretch further and further. The CCP is still in control in China, but the country is thankfully no longer communist in a policy sense.
As a result, Americans are realistically safer too. Why would the Chinese want to invade or weaken the very country – the United States – that has been so instrumental in the country’s emergence from desperate poverty?
Just the same, why would the U.S. want to economically weaken or neuter China? To do so would be self-defeating. Apple is the most valuable company in the world. It’s based in the U.S. 20% of iPhone sales happen in China. The economic health of the China is very much rooted in U.S. economic health, and vice versa. The world is a more peaceful place as a result of that which makes the two largest country economies in the world richer. Get it?
All of which brings us to Huawei, the Chinese telecom giant so good at what it does that its products can be found in over 270 countries around the world. For reasons that are hard to fathom, conservatives and Republicans seemingly want to see Huawei put out of business. A recent conservative editorial suggested it was “good news” that “Berlin soon will address the security risk posed by the Chinese telecom giant.” That “giant” would be Huawei.
The editorial went on to quote Keith Krach, U.S. undersecretary of state for economic affairs, as pleased with Germany’s plan to “phase out Huawei as a 5G supplier in Germany.” In Krach’s words, “We are seeing things moving in the right direction in Germany. There is really no future with Huawei.” What’s disappointing is that conservatives who normally turn their noses up to government-planned commercial outcomes are cheering on the Trump administration’s attempt to do just that.
They’re justifying actions that run counter to their historically pro-trade view of the world with excuses about Huawei having ties to the People’s Liberation Army, along with the easily misunderstood line about Chinese companies not being independent of the Chinese Communist Party. Such a rationale isn’t very compelling. Think about it.
For one, U.S. companies are hardly independent of their own political class. If readers doubt this, they need only contemplate what would happen if Apple CEO Tim Cook were to cross President Trump in some kind of major or minor way. What about Boeing? Would it ever get on the wrong side of U.S. politicians in consideration of how valuable the Ex-Im Bank is to the airplane manufacturer? What about banks and investment banks that were saved by TARP and other offenses to common sense in 2008? Apologists for what’s being done to Huawei will claim that it’s beholden to communist politicians, but then Republicans routinely claim that the Democratic Party is increasingly run by socialists, while Dems claim Republicans are xenophobic racists. That being the case, should China cut off U.S. companies’ access to its markets?
For two, it cannot be stressed enough yet again that China is no longer communist. Evidence supporting the previous claim is Huawei’s brilliance as a creator of technology. The mildly sapient know from the 20th century that in countries that are actually communist, there are no dynamic companies to speak of.
After that, are conservatives really in the position to be shunning the 5G technology of Huawei right now? Sorry, but with the U.S. economy presently gasping for air due to panicky politicians on the left and right, no political party would be wise to reject technology that, if it lives up to its billing, will enable the creation of amazing new U.S. companies that will employ Americans by the millions, and that will improve American living standards in ways presently hard to fathom. Huawei has the best 5G technology, so remove the political barriers to it. Period.
To which some will say that there’s no evidence Huawei has the better technology. Ok, but if Huawei’s technology is vastly overrated, why all the hand wringing about Huawei? That there’s so much is a fairly pregnant signal that the technology is not only the best, but also that the Chinese corporation isn’t nearly as close to or controlled by the Chinese state as politicians and pundits want us to believe. We know this because conservatives have long made the correct point that heavily subsidized and politicized businesses are weakened by the subsidies and politics precisely because they blind them to the very market signals that drive progress.
In short, Huawei’s market leadership in the 5G space (among others) is a certain sign that it’s largely independent of always backwards looking politicians. Good. Let’s cease the war on Huawei so that it can meet the needs of American corporations and entrepreneurs, and in doing so, enhance what is already the world’s most dynamic economy.
Really, where did conservatives and/or Republicans ever get the idea that we’re improved the more that our politicians weaken our competitors? And since national security is regularly bruited as the excuse for nascent protectionism, where did they ever get the idea that the latter would make us safer in a foreign policy sense?
Reprinted from RealClearMarkets
John Tamny
John Tamny, research fellow of AIER, is editor of RealClearMarkets.
His book on current ideological trends is: They Are Both Wrong (AIER, 2019)
