One of the things I have been thinking about is the tradeoffs being forced upon the world by Beijing and how little we think about these tradeoffs. Let me give you an example from an example and a conversation I had with my Twitter friend @DmitryOpines about trade deal 1/n
@DmitryOpines In the recent trade deal, the Trump administration secured a commitment to increase Chinese imports by over $200 billion over the 2017 base between 2020 and 2021. This commitment was immediately, and somewhat understandably, met with criticism that the Trump administration 2/n
@DmitryOpines Secured no structural changes (not really true in the big picture but true for our limited purposes) and instead settled for a guaranteed purchase. As some noted, the US trying to push free market settled for state guarantee of purchases. Here is the inherent contradiction 3/n
@DmitryOpines And tradeoff: China IS a centralized state run economy. In areas like food, the major international traders are all SOE or near SOEs. China could legally change the rules or laws and simply order the food companies to not buy American. Market forces do not apply in China. 4/n
@DmitryOpines This matters in a negotiation because absent the guaranteed purchase, China could change the law and still refuse to buy America. Technically, Chinese legislation is in compliance with all WTO statutes and there is no hacking for economic purposes and all kinds of other 5/n
@DmitryOpines Activities but here we are. So when you are negotiating, do you opt for the observable and verifiable or the theoretical and the principled? Let's assume the Trump administration went for the purely principled and theoretical obtaining the greatest concessions ever. 6/n
@DmitryOpines They would understandably be criticized in the reverse for yielding to promises China has made before and has no intention of following through on. There is a tough trade off between the principled direction we want them to go and the observable verifiable empirical realities 7/n
@DmitryOpines This idea of tradeoffs has been very little considered but is driving a lot of the considerations across domains. For most developed countries, the problem is how do you balance your most noble instincts and the empirical reality of the thugs you deal with? There simply 8/n
@DmitryOpines aren't easy pat answers for these. In the case of the recent deal, I actually think it balanced the principled tech/IP changes it could get in round 1 with the guaranteed purchases, retaining the hammer when China cheats (which it will). These competing tradeoffs very difficult.
