The amazing thing about this title is that it has to be said at all. There is only one world, and what happens to everyone else on this planet is going to happen to us too. However the Trump-induced national insanity is such that the European heat wave has made zero impact on the national consciousness. Those Europeans are just too stupid to understand air conditioning the way we do. We’re too good for climate change.
The Europeans have been hit by climate change that is beyond what their world is equipped to handle. It didn’t have to be very many more degrees to have a monumental impact. This isn’t just a matter of personal discomfort. Costs of crop failures are monumental, energy costs are way up, wild fires are burning in unheard-of places, and water levels in rivers are so low that they block commerce and cooling for nuclear power plants. Once nature starts getting out of whack, it hurts everyone. However as the following chart shows, we’re not so far behind.
The results for us will be different, because our national infrastructure is different. We do have more air conditioning, but we are not equipped for the electricity needs to double at precisely the same time that we need vast new power for data centers—which also need water supplies for cooling. We have a large and vulnerable agricultural sector and our own potential for wildfires. We have not been spared because we are smarter. We’ve been lucky enough to get a little more time to prepare, and all we do is pat ourselves on the back.
I have to end by repeating what always needs emphasizing—there is NO NEW NORMAL we can somehow prepare ourselves to handle. If we don’t address climate change things will just continue getting worse—more and more rapidly. There is no alternative to action. By now we have a pretty good idea of what to do, both immediately and going forward.
We need to beat back the giddiness and do the work.
It goes down too easily “America First”. On the face of it, it’s an obvious goal for anyone running the country. But in fact that’s not right. The real objective is the well-being of the country and everyone in it. “America First” doesn’t say that, and the difference is important.
America First has embedded in it the idea that all our problems are because someone else has put himself first in line. So it sells you on what the problems are without even pretending to look at what’s true. And it’s not just a matter for foreign affairs. Any problem you have becomes someone else keeping you from getting what’s yours. It’s a slogan of grievance masquerading as a solution. It doesn’t want you to ask questions. We know who’s evil and we’ll get rid of them. It’s a slogan to hide behind.
Economics can be complicated, but this story doesn’t have to be. Let’s talk about the good old days that Trump says he is bringing back—the postwar decades of the fifties and sixties. What made those times happen? Coming out of World War II we were the most equitable society we had ever been. The difference between CEO’s and working people’s wages was laughable compared with today. The GI Bill made college affordable. Government-funded research and development won the war and established the US predominance that remade the world. That model in one form or another also produced the post-war miracles in Japan, China, and Korea.
What’s the message today about how to reestablish that prosperity? It’s certainly not what worked before. No major government role in education, infrastructure, and forward-looking research. No commitment to democracy. No unions. The solution is simple: the rich and powerful will make you rich, so you just get rid of anything in their way and all will be golden. Don’t look at us–it’s other countries and immigrant parasites stealing everything that’s yours.
The one thing you can say for all that is that it has certainly been great for making them richer. Inequality in America has reached levels far beyond even the “gilded age” of the nineteen century. There’s a reason why we need a new message about prosperity: they’re so rich they can run the country for themselves. The following chart of net worth values show the magnitude of the change. The recent Big Beautiful Bill also fits that picture well.
Elon Musk is worth a trillion dollars. Trump has made on the order of 10 billion for himself and his family since the election. But the broader payoff is for the indefinite future–maybe. After all we’re told the economy is already great, the greatest economy ever.
What about all those people we’re getting rid of? Is it really all about them? We were told they were all murderers and rapists, but that’s not who they’re rounding up–productive families who’ve been here decades. Supposedly that’s still okay, since once we get rid of the immigrants there will be more of the pot for everyone else. It hasn’t worked that way. And there’s a lesson for that also from the good old post-war days. The war didn’t bring all elements of society together, but it did bring some marginal groups—Jews and Italians for example—into the mainstream. That didn’t make things worse for the others, it made things better. Bringing everyone in meant everyone could contribute.
What matters is to grow the pot for everyone, and that’s actually more true now than ever before. Most of the pot is being reinvented before our eyes. We live in a time where winners and losers are decided by companies and technologies coming from nowhere to dominate the world. We’ve lost the real main message—what works for individuals and our country is full opportunity for everyone. We need the best and brightest from everywhere to help reinvent the future. But we can’t work at that one, because we’re too busy spending fortunes on ICE.
Finally we need to get back to the international part—it’s “America First” after all. To begin with we need to recognize that the rhetoric about the whole world taking advantage of us is manifestly false. Apple is an example of why. We import the hardware and sell it in a combined hardware/software product worth far more than the input. This is hugely profitable but a net negative for the balance of payments. The rest of the world is not predatory in this transaction—we retain the high margin part, and the hardware is an intermediate product we can’t make without destroying the economics of the deal. (TSMC does make chips here, but only a small, lower-tech part of their output.) The balance of payments calculation is hardware-based and doesn’t capture what we earn from trade-enabled business. Even adding in the contribution to balance of payments from services misses most of it. However once you actually try, it’s not hard to show that the Apple example is far from unusual and that our trade relations with the rest of the world are a clear net positive.
It’s possible in the future that some currently outsourced production comes to the US, but the main driver for such cases will be robotics bringing down production costs. Despite all the rhetoric, there’s no change to this picture that will recreate lots of 1950’s jobs. If we want to solve the problems of people left behind in the last decades, we need to get past the blinders of “America First”—and follow the money. To really create jobs we’ll need some of those billionaires’ stratospheric profits. So the situation in the end amounts to something like this:
For the international case too there is a lesson from the good old days. After World War II we put real money into the Marshall Plan for the recovery of Europe. That money paid itself back in spades with the spectacular growth of GDP in the whole Euro-American zone. America First would have left us vastly poorer. The world is different now, but the economic realities are more similar than you might think.
We have to recognize now as we did then that stability has enormous value. Even today we can see how war hurts. Conflicts are prodigiously expensive, and nuclear proliferation risks even worse. The only way out is an international system that works for everyone—American gains far more from a system of rules than it does from turning alliances into protection rackets. We haven’t profited from the freedom to start wars whenever we want. And American’s freedom to declare climate change a hoax and sabotage climate action will hurt everyone—with ourselves as deniers most of all.
We as a country and as a world have a primary interest in stability and making things work. There is no golden age to be found in holding everyone hostage—such a world would be less prosperous, and we have no assurance it would be peaceful or that we will always be on top. Peace and prosperity are the objectives—nothing less.
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.
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.
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.
The UN’s international climate group has revised its set of possible climate change scenarios. They eliminated the most damaging scenario, because of progress in sustainable technologies and because details of the scenario itself seemed unlikely to occur. Trump and other climate deniers have seized upon this change to claim it shows all discussion of climate change is bogus. The following piece was done as a comment to an article in the NY Times.
It seems to me one of the problems with this discussion of scenarios is that people want the scenarios to tell them something different than what the scenarios are trying to do. The scenarios are attempts to model different levels of response to the problem of climate change. There is no default case where we do nothing. For that case the only limit to the temperature is the end year in the study—the temperature would just keep increasing.
The main thing that has happened since the original scenarios is that the world has taken some measures that help: costs of wind and solar solutions have come way down to the point that those make up the majority of new electricity generation worldwide. Electric cars have become cheaper, better, and more prevalent. So it’s not surprising that the current view is somewhat more optimistic.
Where that actually leaves us can never be completely clear. I’m willing to bet the models never considered that the most powerful country in the world would be run by someone trying to sabotage the whole effort. Or that data centers would suddenly demand more power than cities. Or that the Iran war would show everyone the risks of imported oil. There will always be reassessments.
This new set of scenarios should make us appreciate the work that has been done. We can make progress against climate change. But there is much that needs to happen and very strong forces against it. This will never be easy, but it needs to be done.
We’ve been there for more than 75 years, since the end of World War II. We are the power that maintains the world order. As such we’ve overseen a remarkable period of growing global (and our own) prosperity. People from both political parties agree that we are the ones that make things happen. We’re so comfortable with that role we’ve come to believe it is ours by right and permanent.
Recently though our attitudes toward that role have changed. We’ve now decided that since we’re in position to run the world, we ought to be able to keep more of the benefits for ourselves. So instead of maintaining that world order, we’re now in it for everything we can get—confident that the sky is now the limit.
However we have found there’s a hitch. We attacked a medium-sized country—Iran–to put them in their place, and we didn’t win. Not only that, an even more minor power—Ukraine—has shown itself more capable of defending our allies than we are. We still have more bombs and aircraft carriers than anyone else, but somehow that doesn’t do the job anymore. And the problem is getting worse. We’ve been so preoccupied with China, we haven’t noticed that the problem is not just that.
With nuclear proliferation, computer-controlled drones, and rapidly evolving AI the past pecking order no longer holds. Instead the future looks considerably more chaotic—with murky and changing notions of international strength and weakness and risks of conflict from both overconfidence and paranoia. When we tell everybody our new story—that powerful countries should be able to do anything they want to everybody else (because that’s the way it ought to be)—it not always so clear which side of the story is us. And lowering the threshold to war isn’t necessarily such a great idea either.
Whether we want to admit it or not, we were pretty stupid in the Iran war. We ignored obvious issues when we attacked, and we were so overconfident that we didn’t do even the most basic job of preparing for the fight. We didn’t win. But that’s not the end of it. Our changed notion of international roles was equally stupid and blind. We gave up on the idea of international order just when we actually need it, when we can no longer count on always ruling the roost.
Neither problem has a simple solution. We’re going to come out of the Iran war worse off than when we started. It’s hard even to guess what we’ll have to give up. For the world order things are different. We have proven that a reasonable world order can benefit everyone (at least generally). We don’t have to be able to shakedown everyone else. We just have to participate in recreating and inventing conditions for international success. That must now include addressing climate change, for example, in addition to preventing war. The job is not simple but the choice itself is: we can either help to create a livable world or suffer in nuclear-armed chaos.
One of the biggest problems with politics in this country is assumed connections that simply don’t exist. DOGE and the closing of USAID and other government programs were money in the bank for the Trump base (instead it went to tax cuts for the rich). Getting rid of immigrants would leave more of the pot of gold for everyone else (but growing the pot is the big issue and immigrants are contributors). The reason we can’t have free public college here is that the Europeans didn’t contribute enough to NATO (though the Republican Party has consistently blocked any such public services). And of course the big one—making rich people richer will trickle down to everyone else (which has never happened anywhere—they just get more power to help them keep it).
You have to be really careful with anyone’s tacitly-assumed connections. Even if they existed in the past, there’s no guarantee they’re going to continue as before. The particular case I want to talk about is the assumed link between national power (military and corporate) and population well-being. For most of the 20th century that link was real. That’s Trump’s factory economy with good jobs and the corporate might that won two world wars. But that’s not the reality today–manufacturing is 8% of GDP, unions cover 10% of workers, and many service sectors are low-wage and dead-end. It’s going to be even less the reality going forward. The AI world is simply not going to supply that kind of employment-linked prosperity—there will be good jobs but not so many of them for a good long while. Experts spill ink arguing about the impact of AI, but the desperation of new college graduates (and current students) is the real world.
Many people have compared AI to the industrial revolution of the nineteenth century. Britain at the time was the most powerful and prosperous country that had ever existed. It was a world of fabulous wealth and horrendous destitution, both domestically and in its empire. Eventually the world was able to adapt to the new reality, but that took a whole century of well-documented horrors. Economies can’t adapt overnight. The private sector will not miraculously solve the problem. The only way is for government to create the link that is broken. (Note there is another side of this picture–we are all increasingly dependent on a relatively limited group who make the difference for rest of us. There is no alternative to spending money on education and research and also restoring our standing for the best and brightest from everywhere.)
Despite all the propaganda to the contrary, government needs a bigger role in employment. This isn’t charity. Government needs to finance work that needs to be done but won’t get done by the private sector alone. An obvious case is climate change, which will require monumental transformations well beyond the cost of the new equipment. (In this country we have the dubious distinction of currently paying for a huge, debt-financed, fossil-fuel-powered datacenter expansion–that will end up being reworked in short order for a cheaper sustainable successor that meets the actual needs of the 21st century.) There are also many other parts of the public sector that have been starved for years–for example in healthcare and education. All of that sounds like a recovery plan from a depression—how to put people to work–but there’s a big difference: we have the money. As with the industrial revolution the problem is not a shortage of work or a shortage of money—it’s making the link. This time we need to do it.
That isn’t a trivial problem, but it’s worth understanding it as THE economic challenge of our era. The wealth growing out of the new AI economy has to benefit societies overall. In this it’s worth recognizing that the companies we’re talking about are not in cut-throat price competition with each other–if anything our problem today is too much consolidation and sector monopoly behavior. Tech companies operate with profit margins that would have been unthinkable in competitive industries. Google’s operating margin runs over 25%. Apple’s over 30%. Microsoft’s over 40%. But we do need to be careful to make taxation work effectively, and we need to avoid an international race to the bottom. I’m not going to attempt to solve all of that here. But I will note that the prevalence of stock buybacks is an indication that companies have more money than they know what to do with, and also that some kind of equity participation by the government in business is consistent with the value of the infrastructure provided. Fitting this wealth distribution into international trade rules isn’t simple, but we’ve done that sort of thing before–with labor standards and environmental regulations.
To end here I’d like to take the international part a step farther. There are many reasons why the world today needs new forms of cooperation–including tough problems like nuclear proliferation and war. This economic issue is everyone’s problem, and (as opposed to many other issues) it can be rationally addressed. It would also be stabilizing for the welfare of national populations. So if we can make progress with this one, perhaps it is also a step towards the rest. We need to do it.
Suppose the Iran war somehow reaches a conclusion, and we have a good, rational, democratically-elected regime in Tehran. What would be a first act of such a regime? In today’s world they’d need to start a nuclear weapons program as an absolute requirement to maintain sovereignty.
And what would happen after that? The clear answer to that question shows what is really on the table. Trump would decide. His Board of Peace is no sideshow–Trump wants to run the world. That may sound great to a US audience, but only until the story collapses. We can see what that means now.
Trump is not worried that the world he has called into being is really chaotic and dangerous. Since he is THE universal genius, he’ll just take care of it. But in the Iran war we see how little grasp he has on reality. The two-day surgical intervention is out of control in all directions. We’re not always going to be in charge and not always even going to know where our actions will lead. Who knows where we’ll be after a Presidential version of Trump’s six bankruptcies.
The only way we know to control major wars is a system for international governance where war is to the greatest extent possible off the table. Competing spheres of influence don’t work. International governance isn’t easy either, but we’re all lucky to have lived through such a period. For all the flaws it mostly worked for peace. We’re now in an era where many players now think they need nuclear weapons, and the restraints on acts of war are weakening. Thus far no one has used those weapons, but it’s hard to avoid the feeling we’re getting closer to the brink.
There are other factors too. Computer-controlled drones have clearly changed the rules for warfare in ways we are only beginning to understand. They have already overturned traditional measures of military strength in both Ukraine and Iran. They’re cheap, readily available, and we can’t even protect our own radar systems from them. AI is another destabilizer at an even earlier stage of understanding. Uncertainty and volitily in national assessments of strength or weakness risk wars of overconfidence or paranoia–with weapons of horrendous power. More than ever we need to restore a framework for stability.
There are really only two ways to do that: stability is either imposed by dictatorial fiat or assembled by common effort. The first is Trmp’s vision, but it simply doesn’t match reality. The second is something we have to make work. For that everyone needs a stake in the game. There is a base of common interest from both climate change and the obvious risks for war, but the common effort takes more than that–a commitment to international well-being. Obama was able to do something of the sort with the unanimity he achieved around climate change, but it was unstable. There was too much to be gained in the short term by cheating, and once cheating became respectable, it was hard to fight. Now we’ve got Trump’s sabotage instead.
That doesn’t say the effort was wrong or naive, just hard. Reality won’t wait, and the risks are only increasing. It’s worth noting that there are other success stories for cooperation among nations. The US itself is one–individual states had to decide (with some difficulty) to give up sovereignty for the union to succeed. The EU–despite its bad press–is another one, with prosperity after centuries of bitter wars. Shared prosperity can work, but it requires national governments to make sure benefits reach their populations. In addition here in the US people need to realize that an international order isn’t selling out our national self-interest—in fact we’re doing that today as an unreliable partner in any enterprise.
At some point climate change will become too serious to pretend away. However, as has been noted many times, by then it may well be too late. Similarly for war. We don’t have a choice. We have to recognize what is at stake now. We can’t let Trump’s ego wreck the one marvelous world we’ve been granted.
on the outside 