Jonathan Derbyshire: Technology is the latest front to have opened in the incipient trade war between the US and China. Last week, US officials demanded that Beijing end state support for its high-tech industries. Meanwhile, the US Treasury is considering new restrictions on Chinese inward investment.
It is clear, writes Rana Foroohar in her column this week, that the Chinese and American tech industries are going to go their own ways in the coming years. This raises the question of which country is best placed to win the race to lead the world in technological innovation. China might earn a short-term advantage, thanks to the support and direction that the Communist party gives to leading tech firms. But the long-term effect of centralised control on technological innovation is unlikely to be beneficial.
That is why, Rana argues, policymakers in the US should be worrying less about emulating the Chinese command-and-control model in high tech industries and thinking more about how to foster innovation by reining in the “Faangs” — Facebook, Apple, Amazon, Netflix and Google. The quasi-monopoly power these companies enjoy threatens the kind of decentralised system in which genuine innovation can flourish.
Last week’s German budget, unveiled by the new finance minister, Olaf Scholz, is designed to ensure that the government runs a fiscal surplus between 2019 and 2022. This may satisfy the Ordo-liberal fetish for surpluses, but, argues Wolfgang Münchau, it will exacerbate already significant imbalances across the eurozone as a whole. It is time, Wolfgang suggests, for Germany’s neighbours to remind it of its responsibilities and for Berlin to treat economic policy as a matter of common concern.
Unemployment in the US is below 4 per cent and the economy is accelerating. Growth in Europe and Japan is also strong — at least by post-crisis standards. So, asks Lawrence Summers, does that mean the thesis of “secular stagnation” (or prolonged sluggish growth caused by insufficient demand) has turned out to be false? No, Larry argues. What we are seeing is fairly ordinary growth by historic standards achieved by extraordinary means. Unconventional monetary policy, for example, is a short-term palliative, not a long-term solution to the problem of anaemic demand.
Kanye or can’t he?
Since he posted an image of himself wearing a hat emblazoned with the Trump campaign slogan “Make America great again”, the rapper Kanye West has made a succession of controversial online utterances that have attracted opprobrium from erstwhile fans and approval from the president of the United States himself. Donald Trump, writes India Ross, recognises a kindred spirit — one who understands that controversialism is a powerful marketing tool.