Month: June 2026

Choke Points

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Everyone talks about choke points. The Strait of Hormuz was always there and occasionally mentioned as a theoretical issue–until we blundered into it. Now people talk about choke points, but still as something around the edges. Hormuz affects others but not so much us.

However choke points aren’t just geographic. Rare earths were and still remain choke points that the Chinese can use any time they want something from us. Even the military can’t function without them. The Chinese figured out those choke points and prepared, while we just trusted our future–a cautionary tale. But that’s just the beginning.

Let’s go back to a chart from our piece on trade:

🏆 Top 10 U.S. Companies by Market Capitalization (2026 estimates)

  1. NVIDIA Corporation – approx. $4.5 trillion (currently world’s largest)
  2. Apple Inc. – ~$4.0 trillion
  3. Alphabet Inc. – ~$3.8 trillion
  4. Microsoft Corporation – ~$3.6 trillion
  5. Amazon.com, Inc. – ~$2.5 trillion
  6. Meta Platforms, Inc. – ~$1.4 trillion
  7. Broadcom Inc. – ~$1.7 trillion
  8. Tesla, Inc. – ~$1.3 trillion
  9. Berkshire Hathaway Inc. – ~$1.0 trillion
  10. JPMorgan Chase & Co. – ~$0.6–0.7 trillion (approximate, rounding into the top decade range)

As noted, the top two companies are 100% dependent on hardware from TSMC in Taiwan. The companies do the design work, and TSMC builds it. For Nvidia that’s everything. For Apple there is some manufacturing in the US, but not the more advanced, product-defining chips. So the two most valuable companies in the US can do nothing without Taiwan. And again that’s just the beginning. It also says that the entire AI infrastructure on which we are basing the future of the country and for which we are investing inconceivable sums of money is close to 100% dependent on hardware from Taiwan. Those Nvidia cards from Taiwan are our supposed key advantage to win the AI race with China!

So Taiwan is a monumental choke point now and for the foreseeable future. It’s not simple for China to use it, but even harder for us to stop them. Xi made very clear to Trump that he was not to get in the way of China’s plans for the future of Taiwan—whatever those might be—and Trump immediately backed off on planned US arms sales. For the record we have also depleted our own munitions in the Iran war. And our behavior toward Cuba is hardly a model of respect for independence of an island 100 miles off the coast.

Where does that leave us? We may continue to strut around as if we still owned the world, but China has the keys. The idea that we can shake down the rest of the world because no one can touch us is patently false. We need an orderly world where we can avoid wars and count on stability of choke points. That doesn’t happen by itself; it requires allies and international norms. Otherwise it’s no longer our world, as we want to think God made it.

Effective Democracy

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Let’s start with facts:  we live in a failed democracy that has transitioned to incompetent dictatorship. Given that kind of mess, it is worth going back to first principles to think about effective government.

First of all it should be noted that there is an intrinsic conflict of interests in any national government.  This isn’t complicated; it is basically parallel to what goes on in any corporation between the interests of labor and interests of management.  Near term they are dividing up profits, but longer term both have a common interest in the success of the company.   Successful companies are able to manage the conflict.

In government you have the economic powers-that-be versus the population as a whole.  Both have to benefit for success, but immediate interests are opposed in much the same way.  It should be emphasized that here too exclusive power to one or the other is disastrous. We’re accustomed to hearing one side of that story—uncontrolled spending on government benefits for the population will bankrupt the economic engines of the country. But an exclusive focus on the business side is equally bad and it’s not just a matter of living standards:  business interests are myopic both in terms of time scales and in terms of the environment needed for success.  You won’t have the technologies, or the people, or the physical environment necessary for the economy (and as we’ve seen recently, business people can risk bankrupting the country too!). Government has to speak for the whole picture. Even the patron saint of free enterprise—Adam Smith—was well aware of this issue.  “The government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever.” There is nothing sacred or proven about claims that government should never interfere with the marvelous natural workings of the marketplace—that’s just self-serving propaganda for the “haves” side.

This intrinsic dichotomy is very important for effective government.  Both sides must be present but neither side can win.  That’s one of the reasons we’re in such bad shape right now.  What we have today is business capture of government—exactly what Adam Smith worried about.  To be effective government needs to provide means for functional negotiation and cooperation between both sides.  Those sides don’t map exactly to the Republicans and Democrats, but that’s pretty much what it comes down to.  Bipartisanship is not about being nice; it’s working out fundamental tradeoffs between the two sides.

That is precisely what we have lost–structurally.  There are three immediately obvious issues.  The first is the primary system.  Since primaries are partisan, candidates are chosen exclusively based on appeal to one side or the other.  That guarantees extreme positions and more importantly disenfranchises the center of the voting population.  A second example is the way partisan power is used to control legislation offered in Congress.  In the House the so-called Hastert rule only allows on the floor measures that are supported by a majority of Republicans.  In the Senate the majority leader Mitch McConnell routinely blocked anything he disagreed with—regardless of overall support.  Both rules disenfranchise the center and make the country effectively ungovernable except in extremes—so whiplashing policies are a matter of course.  Finally there is the Supreme Court: lifetime appointments plus limitless power give a huge incentive for partisan appointees.

All of this is bad news and good.  The bad news is that it isn’t clear when we’ll be in a position to fix any of it. The good news is that there are significant items that really aren’t so hard to fix.  For primaries, there are a number of possible variants, including non-partisan primaries with rank choice voting.  For the Congress, you don’t need to change the constitution to change the rules.  And there are many proposals to fix the terrible mistake that is the Supreme Court—an undemocratically-chosen body with lifetime appointments and no constraints on its power.   With a decent Supreme Court we should be able to fix gerrymandering, for example.  That is a math problem we chose to turn into a political mess.

Bipartisan cooperation is fundamental, and we can stop going out of our way to make it hard.  That way we can make the tradeoffs for the country to be governable.  Then we can move on to two other necessary and straightforward matters:  direct election of the President (the current system is grossly inequitable and invites fraud) and adding the few extra Senate seats needed to compensate the ill-represented largest states. Such measures won’t solve everything (not control of media for example), but we can make things quite a lot better.  We can make our democracy work.

It’s not so complicated–if we ever get a chance to do it.

The Fight to the Death

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We should be explicit about the path we’re on.  We are engaged in a winner-takes-all fight for AI supremacy.  The operative assumption is that whoever wins will rule the world, because that country will control a version of AI so powerful that it can improve itself to be invincible.  Whoever wins will liquidate all opposition, so there can be no challenge to its power.  That’s the story, true or not. We’ve got to win.

There are many consequences to this.  To start with, no effective regulation of AI is possible, because it is impossible to say what constraints on AI development would get in the way of the fight to the death.  In particular some of the most obviously risky issues—such as autonomous military decision making—are the most untouchable. This the worst kind of arms race, where it’s not just a matter of parity.  Only victory is good enough. There are no effective limits to the amount of money it can take.

But even that is just the beginning.  Once you’re in a fight-to-the-death, any form of international cooperation becomes extraneous.  You can’t think too seriously about common interests when everyone is a mortal enemy.  That mindset is all too easy in any case, since common interests are always a hard sell (even for climate change). So we fall back on the world view we now get everyday—whoever has power deserves what he can get. With the Iran war we’ve gone a step farther, asserting that (with the closing of the Strait of Hormuz) we have absolute freedom to inflict damage on the rest of the world whenever we perceive gain for ourselves.

That this view is acceptable without much pushback is a matter of ultimate hubris.  It’s all okay, because we’re going to win.  In fact we’re not actually much interested in how international competition works or what it will really take to win.  We’ve been on top for so long that we’re entitled.  God will make us win.  That’s not an exaggeration of where we are. 

There’s a lot that we don’t know about the end to this story.  The future is never clear.  But there is one thing that is definitely true—we’re stumbling our way into real danger.  The risks are everywhere. For technology we’re certainly not necessarily on top—even today China is a serious competitor—and we’re burning bridges to the future by killing research investments and attacking all foreigners as parasites. Even for AI we’re a long way from the finish line, and it’s unclear whose paths will get there first. More generally we’re in a wildly unstable arms race with many new technologies, proliferating nuclear weapons, and no good way even to know who is ahead. Yet we’re using war as if it’s a regular element of national policy.

The only workable way to forestall conflict is viable common interest.  You don’t have war or countries laid waste if all parties recognize there’s a lot to lose.  (You can still have homicidal maniacs, but shared prosperity helps keep them out.)  The world needs order, starting with recognition that interdependence, economic and otherwise, is not going away.   So we had better fix it.  Start with economic issues—trade, climate change, AI—and then do something about war.  A fight to the death ends with just that, and who knows how many—both here and abroad—could pay.