Einar Tangen discusses China's economic development model and whether China can avoid the path of empire
Glenn Diesen interviews Beijing-based analyst Einar Tangen on China's economic trajectory and its contrast with the United States.
Summary
Glenn Diesen interviews Einar Tangen, senior fellow at the Taihe Institute in Beijing and the Center for International Governance Innovation, about China's economic development model and its geopolitical implications. Tangen argues that the United States has followed a series of ideological blueprints — from the Powell Memo to Wolfowitz's doctrine to Elbridge Colby's hemispheric dominance strategy — that have hollowed out American society and driven an increasingly aggressive foreign policy. He contrasts this with China's approach, which he describes as forward-looking, inclusive, and grounded in historical awareness, organized around what he calls "Chinanomics 3.0" — a shift toward high-value manufacturing, automation, and consumer-led growth. Diesen raises the question of whether China, as it accumulates the same three pillars of power that underpinned British and American hegemony — industrial leadership, global connectivity, and financial infrastructure — can resist the historical temptation of empire. Tangen argues that China's historically trained leadership, rejection of ideological export, and collective decision-making process give it structural advantages against that temptation, while acknowledging that hawkish tendencies in China's middle ranks remain a genuine concern.
Key Takeaways
FULL TRANSCRIPT
Introduction and the framing of Chinanomics 3.0
Glenn Diesen: Welcome back. We are joined today by Einar Tangen, a senior fellow at the Taihe Institute in Beijing and also a senior fellow at the Center for International Governance Innovation. Thank you for coming back. I've been reading your articles with great interest, especially the one on Chinanomics 3.0, and I was hoping you could lay out some of that argument — the idea that China's reforms should be viewed as a single strategic vision rather than a collection of separate policies. I was wondering how you assess the economics of China, because as we're all distracted by wars breaking out between large powers, we kind of lose focus on the main driving force, which is economics. And the main freight train moving forward would be China.
Einar Tangen: Well, there's always a problem — there are always headwinds when you become too dominant. People become concerned that you're going to use your power the way that colonial powers did, which was basically to enforce a kind of Hunger Games scenario where you're completely dependent upon them, either through manipulation of countries by creating artificial borders that pitted minorities against majorities, outright theft, use of gunboat diplomacy, and so on. This is one of the reasons I wrote the essay — to try to help people understand that China's view of things is very different from the colonial view. Under the colonial view, you go in, you rape, rob, and take, and you justify it by claiming you're bringing civilization and God to the uncivilized, despite the fact that the countries they were actually "civilizing" had civilizations thousands of years older than those of the West.
The four blueprints shaping American strategy
I want to begin a little bit before we get into Chinanomics 3.0 — that is, where is the United States today? This goes back to about four essays that I've described, which I selected simply because they laid out blueprints that have subsequently been followed.
The first was written by Lewis Powell six months before he joined the US Supreme Court — arguably one of the most powerful individual positions, because once on the court you serve for life and your views are reflected in the cases decided. He wrote a memo to the American Chamber of Commerce — a secret memo — in which he said that because of the defeat in 1964, when Lyndon Johnson was elected president, whom he considered basically a communist, it was time for the industrial families of America to unite and take over government, take over the media, take over universities, take over think tanks, and basically create an oligarchy. If you have any questions about this, go to the Lewis Powell memo and read it yourself — it has footnotes and everything, and you'll see clearly that this was the blueprint for America.
The one part that didn't quite go to plan was this idea of having these blue-blood families continue their rule, because what happened is the generations that followed were not interested in running the companies their forefathers built. So they left it to professionals — accountants, business majors, consultants — who told them what they should be doing and then eventually started running the companies themselves. As a result, what started out as an attempt to establish an oligarchy has in essence become a headless horseman. The professionals have been given very strict orders: maximize shareholder value. And that generally means on a very short-term basis. Why? Because that's how they get their bonus. It's the rat and the cheese — if you maximize value this quarter or this year, you get a big bonus, so of course you do everything you can.
What's different between these families and the professionals they hired is that the families actually lived where their factories were, or at least some of them did. They were connected to the community. They might have been good or bad, but they were part of it and had a proprietary interest. But as soon as you bring in professionals, they have absolutely no connection. They can shut down a factory that is profitable simply because they say it would be more profitable if relocated to Mexico or somewhere with less environmental compliance — whatever maximizes short-term value. As a result, you saw the hollowing out of American industry, because the people who would have cared don't care anymore — all they care about is their dividends — and the people in charge don't care because all they care about is their bonus. That system is completely disconnected from the people who actually work for these companies, and you can see it in the disregard and the massive layoffs happening across the board.
The second thing I point to is Wolfowitz's doctrine in 1992. He lays out this American exceptionalist idea that America has to be on top, that we'll brook no opposition from anybody and will do whatever's necessary to enforce our will. It's followed in 1996 by a similar memo, but this one is meant for Netanyahu, who had just come into power. A gentleman called Richard Perle wrote "A Clean Break." In that document, it echoes Wolfowitz's idea that you do not try to work with the world, you don't try to negotiate peace, you impose your values, your peace, and your economic interests on it. But in this case, it was advice to Israel that they did not need to negotiate peace with their neighbors — they needed either to dominate them or destroy them. This has become in essence the blueprint for what you see today. Although somewhat repudiated by Netanyahu at the time, it has in fact become the blueprint.
The last document I point to is one written by Elbridge Colby in 2021. This represented a slightly different approach from Wolfowitz — still in that same realist vein, this idea that it's a horrible world and in order to succeed you just have to be more horrible than everybody else. His idea is that yes, the global dominance thing isn't working, so therefore what we'll go for is hemispheric dominance. We resurrect the Monroe Doctrine. We will take South America. We will claim rights to Canada, Greenland, and so on — complete hemispheric domination — and we will fortify the home base. He also talks about containing China, and his idea of containing China is about controlling oil inflows — exactly what we see today happening with Iran and with Nigeria, and what we saw in Venezuela. But he also has one more card yet to be played, which is to interfere with China's access to the choke points of trade that exist in the world. He specifically mentions the Straits of Malacca, because they feel that if they can control the energy going into China, they can control China's ability to manufacture, and if they can control the choke points where cargo passes through, they can control China's ability to trade.
This is the grand plan we see. And we can see in each one of those cases that they are in fact following the blueprint that has been laid out. Elbridge Colby is currently the Under Secretary of Defense for Policy, so he's actively pushing this. We can see his fingerprints on efforts made in Venezuela — that's hemispheric dominance — and also in interfering with energy and these choke points.
The diverging trajectories of the US and China
So where does that lead us? What I've told people is that the US is going in a certain direction driven by nostalgia — the idea of "make America great again," that we need to return to our past glories. But as they say, you can't swim in the same river twice. Once time passes, so does the water.
On the Chinese side, you've seen an amazing 40 to 45 years of progress. They started out with no real hard money reserves. They were desperately poor. They didn't have large enough resources to export to the rest of the world. They needed food, they needed everything. But somehow they were able to go forward and become the second largest economy in the world — first, if you consider purchasing power parity, which is the idea that economics is really about how you live, not a comparison to how people live in other places.
How did China do this? Since it didn't have cash, it started doing BOTs — build, own, transfer. Somebody goes in, they negotiate: "We will build it, we will own it for a period of time. That period of time will allow us to get all of our money back plus our profit. And once that happens, we turn it back to the government." In those cases, many people got very wealthy, because every time they completed one of these, they took their money and their profit and did another BOT. That was very helpful in establishing infrastructure at a time when they didn't have hard currency reserves, and it started this kind of renaissance.
China had a huge labor dividend. People were organized and they started to manufacture, especially at the low end. Subsequently, China started investing more in infrastructure. And now China is in what I call the third phase — they're trying to develop high-value outputs. Why? Because high value carries higher margin. A lot of the business China was doing before, and continues to do, is low margin, meaning they rely on economies of scale. I was shocked when I came here about 23 years ago and went to a factory producing vitamin C. It was the size of six football fields. I said, "Who do you manufacture this amount of vitamin C for?" They said that they and two competitors basically controlled 98% of vitamin C production in the world. They were willing to accept a very low margin on very large amounts. This is how they approached a lot of their businesses.
Today, China is interested in bringing up their economy by investing in higher-end goods, tertiary goods, where they are leading in new technologies — 5G, 6G, electric vehicles, batteries, and the list goes on. Why? Because people working at these companies get more disposable income, and more disposable income allows China to drive a consumer-led economy. That is really where they are today.
The hollowing out of the American middle class
How did China organize these ideas, and why have the last 45 years been kind of cataclysmic for the US? In 1971, roughly 61% of people in the United States were middle class. If you take the same measure in 2024, it's only 40%. Yes, there was an increase in the upper-middle-class category, but it did not offset that 21% decline — not even remotely, only about a third of it. So you saw a decline in America's middle class. And the middle class is the bulwark of American democracy — their ability to say, "I will refrain from my own immediate needs in order to invest in the needs of society, in my children and grandchildren." That is now pretty much gone. People feel so defensive. So many are living paycheck to paycheck. They just don't have that luxury.
So the US is going in one direction, driven by nostalgia. China is going in another direction, driven by a desire for progress — to try to create a better society. But what is that society? Many people ask me. I say it's different from the United States. We believe ideologically that we have the best system — that liberal democratic capitalism is not an answer but the only answer — and therefore it needs to be imposed on the world in order for the world to be peaceful. This has been our mantra for many years. "If you just adopt and do as we say, everything will be fine." But at the same time, countries have realized that the ideology sounds okay, but the reality is that American companies and the government come with a price tag. They're taking goods and services and dominating these economies — sometimes directly through military gunboat diplomacy, sometimes through political interference, sometimes through sheer power of their ability to control financial networks, the movement of money, and dollar hegemony.
China says, "No. We have a different idea. Our idea is that we can grow the pie bigger — not try to figure out who gets the biggest slice, but how the pie gets bigger." The reasons are simple. They say, "If the world pie grows and we are part of the manufacturing end of it, we're going to have bigger markets. Our bigger markets are complementary to these other countries because we want them to succeed. We're helping them build infrastructure not just to get resources out, but also to be able to buy goods. And when those goods are bought, some of them are going to be made in China continuously, but many of them are going to be made in those countries." Now, why would China have an interest in exporting jobs to other countries? Because when people have jobs, they have disposable income, and when they have disposable income, they buy things. That's how China really sees the world.
Wang Huning and the ideological architecture of Chinese development
So ideologically, how does this all work for China? How is it that since Deng, and then Jiang Zemin, and then Hu Jintao, and now Xi Jinping, they have been able to conserve this line?
One of the people I looked at was a gentleman called Wang Huning. He is remarkable in that he was a university professor — he didn't follow the normal course of Chinese government, which is you join the party, you're sent out to some remote village, and then you work your way up. Remember, you'll go there somewhere between 20 and 24 years old, and then between that time and your mid-50s, you have to show the kind of accomplishment necessary to go to the top of this pyramid. It's a brutal process, but it's one they all go through. It's a litmus test of whether somebody is able to govern, because they started at the very bottom and have to quickly go up through the ranks showing their abilities.
Wang Huning is a little bit different. He's on the Standing Committee, the most powerful group in China — one of seven members — but he's purely about planning and ideas. He joined Jiang Zemin as one of his chief advisers, and it's through him that you start to see these policies coalesce. I'm not saying he alone did them — I'm saying he alone has been part of three generations of leadership and has been obviously instrumental given that he's on the Standing Committee as we speak today.
What are his ideas? His idea is to marry both East and West. He's interesting because he went to America and spent about six months there traveling. It was a bit like the gentleman from France who came to America just after the revolutionary period and wrote a seminal book on the US and its attitudes. I think if you're interested, you should read America Against America by Wang Huning. In it he's complimentary about many aspects of the United States, but he also sees some problems — this idea that greed is good and that the magic of the markets can somehow solve everything.
He came up with the idea that American modernity, as expressed by a number of US intellectuals, was not what China wanted in terms of modernity — meaning the definition of the future and the direction you're going in. He saw development as very important, but development without dependence. He wanted growth and national resilience, so that China would not be dependent on others. This is not about de-risking — it's simply about making sure, for instance, that food security is guaranteed, because people have to eat. You have to take care of the necessities of people's lives and they cannot be dependent on the whims or will of other nations.
In terms of modernization, he wanted modernization without fragmentation. This is one of the issues he saw in America — a tremendous amount of fragmentation, where those who have were getting more and those who didn't were getting less. He saw a lot of political polarization and had a sense that this was not going to end well if it continued. So he's very concerned about how you pull a country together. His magic elixir is values — that once a country starts getting to a certain stage, you have to improve the life of people, and that has to be an accomplishment in itself. It's not just about more money. You have to have enough for your essentials, enough to enjoy life, but you don't need excess above that. It's not that he's saying there should be no rich people — he's just saying that everybody needs to enjoy society, not just a privileged few.
If you come to China and ever have questions about it, please go to China first before you make a judgment, and I think you'll be quite surprised. I have many visitors who come here and always say, "This is not the way I expected it. I'm surprised. I've been misled. The people here are very nice, very kind, very generous. I can walk around at 4:00 a.m. I can leave my backpack on my bike and come back the next day and it would still be there. Kids leave their laptops in classrooms when they go to lunch." That is just a very different level of security. And for the Chinese government, you have to provide a secure environment or you have failed the first test of government. You have to provide opportunity, and you have to provide fairness.
Wang Huning is really instrumental in terms of laying out the plan. You can see what he's done in the big speeches made by three successive leaders who have all been part of this overall planning. For instance, the four initiatives — the security initiative, the economic development initiative, the global governance initiative, the civilization initiative — each one was released two years apart. It was all part of a long-term plan: get people used to this idea, educate them on it, then go to the next piece. Why? Because it takes time to sell ideas. You don't throw a whole bunch of ideas at once at a large group of people. So every two years they launch another part of the puzzle that allows people within China and those listening outside to understand the general direction they're going.
China's manufacturing strategy and the Belt and Road Initiative
Now, in terms of their economics, China has a number of things they're doing. First, they don't want to give up the manufacturing they have, but they know that to be competitive, especially in the low-margin areas, they need to cut costs. Electricity in China is among the lowest in the world, and electricity is a big part of everything — it's 15% to 25% of the cost of a loaf of bread when you start adding up fertilizer, machine inputs, plastics, logistics, and so on. Unless you have an adequate supply of very inexpensive power, you're not going to be able to produce efficiently.
Above and beyond that, they're using the digital revolution to drive it — automating their factories, automating logistics, so that from the moment an order is received to the moment it is delivered, and even in after-market services, there is heavy dependence on automation. China installs more than half of the world's robots every year and has been doing that for many years, while also developing the robots themselves. All you need to do is look at the 2025 New Year gala, watched by about 80% of China. The robots were kind of shaky little things — interesting, cute, but they didn't really look like they'd do much. Then a year later, they're doing backflips, synchronizing dancing, and they look extremely capable. That was all in one year.
China continues to advance. They want to develop new technology, but they're also willing to share it. This goes into the Belt and Road Initiative. In 2013 they launched the idea; in 2015 it really started. Since 2015, they've put about 1.4 trillion dollars into it, mostly about infrastructure — ports, bridges, and so on. This year, Xi Jinping said, "It's time. We've got the basic structure. Now it's time to color in." What does that mean? It means that along with all these ports and bridges, you have to have real economic development — economic development zones, factories. You've got the port, you might as well use it to sell things. You don't want to just export resources. You have to climb the value chain to get more value out for your country. That produces jobs. Jobs produce income, grow the local economy, grow the international economy. This is what I was talking about in terms of growing the pie.
As part of that, China has said, "We're willing to share technology and co-develop technology with you." That is extremely attractive to nations. I talk to a lot of ambassadors here in China, and I ask them if they have something similar from the US. They say, "No. US pharma might put a factory in our country because it's cheaper, but everything else is proprietary — the idea is that we buy it from them." In China, they say, "We can do a joint venture and you're going to participate not only in owning the intellectual property but also in benefiting from it." China believes this is a good way of establishing firm ties to these countries and helping them grow their economies. A rising tide floats all ships.
So in essence, that's why I wrote that article on Chinanomics 3.0 — to express where these two major powers are, the very different approaches they take: one nostalgic, one forward-looking; one inclusive, one exclusive. And then, as I was saying, here's what will probably happen. At this juncture, the politics are not going to be mended easily. You're not going to see the US shift towards China or China shift towards the US. Both are locked into their trajectories, and we've seen the consequences of that.
So what bridges are available to try to keep the world from disintegrating totally? I do believe it's economics and, to a certain degree, culture — human interaction. Lately I've been telling people I'm happy to discuss the politics, but I don't think it's going to change many people's minds. But I do think that in economics and people-to-people diplomacy, there is hope. Look at the United States right now — they're having the World Cup. For many people, especially post-COVID, they had very funny ideas about Europeans and people from other places. And then all of a sudden they see them and they're all enjoying the football — or as we call it in the US, soccer — and they suddenly think, "These guys are great. They're nice." I think we need more of that. This suspicion and lack of trust in the world, driven by governments and their propaganda, unfortunately infects the people and they start believing that those people are not like us.
The US imports 4.3 trillion dollars a year — about a quarter of everything it consumes. We're not going to replace that. We're not going to build factories to do that. If we did, the goods would be so expensive we'd have less disposable income than we have now. And right now, a lot of people just don't have enough. So I think hopefully at some point they realize that, but I'm not betting on the politics. I'm really betting on the economics.
Karl Polanyi and the question of whether China can resist empire
Glenn Diesen: When you talk about how the economy should serve society, I can't help but think about Karl Polanyi. He wrote some of the best literature on this after the Second World War. He was making the point that after the Industrial Revolution, the key challenge in capitalism was that if you only left everything to the market, it would essentially decouple from society and society would simply become an appendage — wherever market efficiency goes, society has to adjust. And it was exactly this inability to manage the force of capitalism in a responsible way that gave rise to radical alternatives. He was pointing to Hitler, Stalin.
It feels like that's the direction we went. We were supposed to have nations with economies — here's our society, let's organize the economy in a way that serves society. But instead, by having this neoliberal economics where the market cannot be interfered with — which has become almost a religion — we gradually became economies with a nation. The United States has especially stood out. A lot of red flags should have gone up. For example, after the period of globalization, when they saw a lot of jobs being exported and had all these cities and towns in middle America dying out, instead of asking how we can improve society to make this better for everyone, you had articles popping up in newspapers saying the solution is U-Hauls — you're not adjusting to the market, get out of there. Depopulate the area. When I read those articles, I thought, this is what Karl Polanyi was writing about. You allow society to be ravaged because it's not serving the economy in the proper way. His point was that if you just go for economic efficiency, at some point you build up the oligarchy, you dismantle society, and the consequences will come.
But I had a question for you about how optimistic you are that China can avoid the lure of empire — not go down the same path as America. Political realists often tend to see that power will impact intentions. My favorite political economist is Friedrich List, who in the first half of the 19th century made the point that the British were able to build an empire standing on three legs: they dominated technology and industry; they controlled all of the world's oceans, the physical connectivity of the world; and last, the financial connectivity — the main banks and currency. List was making the point that with the American system in the early 19th century, the United States had a completely different system. It stood on the same three legs, but it would pursue freedom and sovereignty. He contrasted it with the British — the Americans were pursuing their manufacturing base, developing ports and roads, developing a national bank. This would be the anti-hegemonic force.
When you read it today, it sounds a bit like the way we often talk about China. But by 1898 — you could put a date on it almost, when the Americans won the war against the Spaniards — you saw that they acquired all these colonial possessions, suddenly controlling the Pacific was an objective, suddenly they had to dominate foreign markets, and this meant territorial acquisitions. All of the same three legs that had been for anti-hegemony gradually became instruments of hegemony, especially after World War II when the US had to control all the seas, dominate the tech industries, and monopolize world currencies and development banks. So the US had become, in my opinion, a complete copy of the British Empire.
The reason I ask now is because China is also pursuing what I would argue are the same three legs of the American system — and the British before them. It has the first leg, industrial and technological leadership. It has the Belt and Road Initiative connecting the world. And the last leg, the financial aspect — developing national banks, currency, payment systems. Again, if it's anti-hegemonic, but if the distribution of power impacts intentions, what happens after hegemony? Because the examples you gave — Clean Break, Wolfowitz — it's not an accident that they popped up in the 1990s immediately after the Soviet Union was gone, which was the balance. When America was unbalanced, suddenly all these ideas of dominating the world for the benefit of all humanity appeared. That sounds like a joke today, but in the '90s most people subscribed to it.
So my core question is: how do you see China's ability to resist the appeal of empire? The Mearsheimer argument would be that this would be the ultimate security — if you dominate the world, you're completely safe. As you suggested, empire corrupts, and good governance at home becomes a dream. So empire is not a good path for China, but it has a big appeal. How can China essentially resist it?
Einar Tangen: I think it's absolutely topical. The funny thing about it is I moved to China in 2005 because I said, "If there's a renaissance in my lifetime, it'll be here." I've not been disappointed. But I also had the opportunity — I was chairman of my state's international trade council and had the chance to meet some fairly high people in the government. And I said to one of them, "You seem to be on the right track in terms of your economics and things like that. Your system is different, but it seems to suit you. There are rough edges, but I do see China rising." This was in 2006, 2007, 2008. But I said, "I hope you'll study history to the extent of — because it's not just Great Britain. You go back over all of these empires, it was always the same. They started out with trade, and then all of a sudden they became a force to get trade, and then of course it becomes justified with either God or gold or whatever comes to hand. I hope you don't become like us."
Why China's system may be structurally resistant to empire
Now, there are a couple of things about China which are noteworthy. First, as I said, the US is driven by nostalgia. You would think that China is in part driven by nostalgia too, because they talk about "rejuvenation" — reinvigorating their economy. But that's not nostalgia necessarily. What it means is a recognition that we have to do new things in order to advance. And it's all about history. If I talk to somebody in the government at a fairly high level, they are classically trained in the sense that they know all the poets, the literature, the history. They are continually going to what they call the party school — they have to take mandatory courses every year. As part of that, they are taught about their history. They are not only taught it, but they're fully cognizant of the power of history, especially as you get into higher levels. And they use that as a guide to the future.
For instance, in dealing with Donald Trump, they understand he's transactional. They thought long and hard about how to handle him, and they found examples of people like him in their history. That makes them a little bit unique, because as a history professor, you know you're less likely to repeat the same mistakes of history if you actually study it and learn from it. So I think they continue to learn from that, and as long as they're willing to teach that and it remains central to their understanding of the world, I think they'll do well.
Second, they don't push ideology. We do. And part of it is that we push ideology as a defensive measure — why have we done all these terrible things? Well, we're actually doing it for the right reason, for the greater good. Every omelet requires breaking eggs. But I think that has become hollow. China doesn't do that. They don't say you should follow our example. They say, "Sure, if you think we have something to offer from the way we've developed and it works in your country, feel free. We don't have any intellectual property claims on it. You do what is necessary." Their idea about sovereignty is that every country — because it's a complex mosaic of cultures, history, different people, different languages — has to have its own path. It's not a cookie-cutter, not one size fits all. If you're not looking to push your ideology on people, that means you have no reason to run in there with your warships and beat them bloody so that they do the right thing.
The last part is that China's system so far has a professional class of bureaucrats that leads up to leadership. I'm not a big fan of bureaucracies — they need to be watched very carefully. But those who come through the bureaucracy, as I said, start when they're 22 to 24, and by 54 it's going to be decided whether they continue or basically retire. On the way up it's brutal — it's a pyramid. They start out with millions and you end up with seven and then 25 and so on. There's not a lot of room at the top. That means those who come up are generally extremely capable.
But in any kind of system, you have to acknowledge that the stronger the leader, the weaker the government in some respects — new ideas find it harder to express themselves when you have a very strong and dominant government. These are things the Chinese government is well aware of, along with questions of transition and all of these things. They're thinking about these things and not putting their head in the sand.
This is a long-winded way of saying that China has a system that on average produces better people who are more interested in serving the people than most of the nations I know of. Think about how America prepares its leaders. You could be unemployed, unemployable, and you run for dog catcher, then mayor, then the Senate, then you're president. It sounds like a great story — you obviously had a Clinton who rose from very humble beginnings to be president. But were they really prepared? In Clinton's case, better prepared than most because he had been a governor. But Obama — despite the fact that I think he's a very moral, very good guy and a great speaker — never really ran anything before he became president, and that became a problem for him. He was not prepared to be president. The irony is he'd be a great president today because he has the experience. He understands how the bureaucracy works and how it befuddled him, especially on military matters. When you're sitting in the Oval Office every day and people with big stars on their chest and lots of degrees — very smart people — come in and basically brainwash you over a period of time about the security threats facing America, you believe them because you don't have an independent frame of reference. Especially somebody who was a community organizer, then a state senator, then went to the US Congress, and then became president. That didn't necessarily prepare him for the most complex position in America.
Whereas in China, if you're going to reach that position, you have been through the wringer many, many times. You know exactly how China works. You know how its systems work. You know the limits and benefits of the bureaucracy. And contrary to what some think, Xi Jinping isn't going to nominate everybody who will be in power in the future. It is a collective decision-making process. There is lobbying amongst the people there, but you cannot be a jerk and be elevated because no one likes you if you're a jerk.
I mean, Ted Cruz — everybody who's ever met Ted Cruz dislikes him. They say, "Oh yeah, he's a smart guy, but he's just not very likable." In China, there's no way he would ever be in the situation he's in — both because he doesn't have the experience to do what he's doing, and as we saw with his interview with Tucker Carlson, he's not well-informed. He didn't know there are 90 million people in Iran. He just says, "I'd love to attack it. I'm the senator for Israel." Things like that. I can't even imagine somebody in China saying even a tenth of the things he's saying and being in any position of power.
The danger of middle-rank hawkishness in China
So they have a different system. There are limits to it. But at the same time, there's always that constant warning — that's the power of human nature. And what I see sometimes today, not at the top end but in the middle end, is people who had nothing to do with China's successes. They didn't go through the hard parts, the Cultural Revolution, things like that. They somehow take on the mantle of China's successes very personally, and they become in many cases very hawkish — saying, "We need to teach everybody a lesson. We're strong. You have to know who China is." That kind of talk worries me. But as I said, the people at the top who continually rise do not generally reflect these views. They tend to be very historically based and very certain that a good future does not involve conflict, as China continues to try to tamp down all the nonsense going on in the world started by other nations.
So yes, there is that constant danger, and if you ignore it, you're really in trouble. We see across Europe — Alternative für Deutschland, the AFD, right-wing parties with essentially fascistic tendencies rising on populist programs. Are their leaders capable of governing? Have they ever done any governing? No. They'll make promises to get into power but will have no idea how to keep them. You can see that with Milei in Argentina, and across the board including Donald Trump. He has no idea how to follow through on all the promises he made. In fact, he's now at the position where he is actually going in the opposite direction of everything he's promised. Healthcare is more expensive. Prices are up. Gasoline is up. The forever wars continue. And he's paying no attention to bringing real jobs back to America. That whole thing has failed.
So that's the danger. But then, how does China react to that? Do they think, "We're superior"? I think adopting an air of superiority is the greatest weakness. I know very few people who are truly confident who act superior. People who are trying to convince you they're superior, I always suspect have self-worth issues — they're trying to cover up their inadequacies by convincing you that they're strong. If you're truly strong, you rely on your arguments, you give examples, you do things. You don't just talk about it.
Technology, automation, and the challenge of preparing societies for the future
I do think the Chinese have a much longer shelf life in terms of how they deal with things, but the future is unknown. The only thing we know for certain is there's going to be more change. And when those changes come, you have to have a system that's dynamic enough to respond. I think China's is responding to the dynamics of the world economy and the direction in terms of both society and politics, as opposed to the US, where nostalgia stands in the way of confronting not only internal realities of a failing society but also these massive debts that no one is talking about paying back. By the end of this year, we'll be well over 40 trillion dollars and no one seems to be batting an eye except a few people on ideological lines who continue to vote for the very things they say they're against.
We're in the midst of a period of change not only politically because of the US and China, but also in terms of technology. The digital revolution is as great in my mind as the Industrial Revolution in terms of how it affects regular people. There have to be new ideas about how to accommodate that, how to train people so that they can be part of this new economy, and how the economy is going to work. Do we have some new system where we employ people three and a half days a week but run a seven-day-a-week economy? You have three shifts and all the services are available regardless of when you go to sleep or wake. You're spreading out your economic activity.
Less and less is going to be necessary to provide the essentials of people's needs. Food — assuming there's enough arable land — can be done with a fraction of the number of people as before. In China, you still have around 30% of people involved in agriculture. In the US, it's less than 2% — highly automated. The labor freed from that can be spread to elsewhere, but they have to be trained. You have to start thinking about what they can do and then showing them how to do it.
There are many areas where this is essential. If I print a building and don't need masons and all of these types of tradespeople, what do we do with them? I think China is being very forward-looking. They don't talk a lot about it, but they've been investing more and diverting more people into areas where there are going to be future opportunities. They're making sure they have college graduates, but they're also overhauling the academic programs so that these people are more in tune with the market and, once they graduate, do have good job prospects.
Government is responsible not only for creating safety but for preparing people to be productive parts of society. Not interchangeable, but simply trying to match people and their interests and abilities to areas where they can have a fulfilling life. That's just as important. It's not just about extra income — it's about going back to work and seeing value in what you do, and others seeing that value, and that value transforming into payment.
Governments that are able to adjust and provide for their people and their future do very well. It's not about giving people stuff — that's not productive, you're just transferring. If there's enough wealth to transfer, fine, and in some cases all you can do is transfer. If someone is quadriplegic, they can't work or they need extra assistance. Yes, it's going to be a little bit of a drag on society, but you can't just abandon them.
Glenn Diesen: I think that's a key challenge for all societies now moving forward — the creative destruction from the new economics emerging. Anyway, I wanted to thank you for coming on so early on the weekend. I very much appreciate it.
Einar Tangen: Thank you. All the best to you.