Drift

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Richard Haass, President of the Council on Foreign Relations, had some thoughts on how the US should interact with today’s People’s Republic of China.  Among other things, he wants three key areas of disagreement to be accepted and…managed.  (I’ll leave aside his blithe, and erroneous, assertion that the “trade war” between the PRC and us is our doing and not the PRC’s.)

The most realistic option for the future is to focus on managing the two countries’ major disagreements. This approach has worked for four decades when it comes to Taiwan.

No, that’s a demonstration of the utter failure of “managing the two countries'” disputes.  That approached has contributed to the Republic of China’s expulsion from the UN Security Council and from the UN altogether.  It has contributed to the PRC’s threats and political near-dominance of the RoC.

Management is also likely to be the best approach for the South China Sea. As with Taiwan, “final status” issues are best left vague.

And by extension, the supposed optimal approach to the PRC’s harassment of Japan and Japanese islands in the East China Sea as the PRC pushes to seize that water.  Again, no.  All “management” has done so far in the South China Sea is lead to acceding to the PRC’s seizure of islands owned by the nations rimming the Sea, or owned in disagreement only with others of the rim.  All “management” has done so far is lead to acceding to PRC militarization of the islands it has seized from those nations and to routine harassment of shipping passing through international waters around those seized islands and aircraft overflying them.

In other domains, the US will simply have to accept China for what it is. China will continue to maintain a large (if somewhat reduced) state role in the economy and a closed political structure.

Again, no.  The PRC as it is, is a nation that routinely steals other nations’ companies’ proprietary information, that demands “sharing” of technology and other proprietary intellectual property as a condition of doing business inside the PRC, and that demands those companies install “back doors” to allow the PRC government ready access to those same tech and IP materials.  All “management” does here is meekly accept the PRC’s economic dishonesty.

Hass’ proposals amount to drift into surrender.  This is unacceptable.

Decisions

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In a Wall Street Journal article Monday, Google’s MFWIC, Sundar Pichai, defended his decision to support the People’s Republic of China with a Google “search” engine that’s carefully compliant with PRC censorship requirements.

What interests me this time, though, is this bit:

Mr Pichai…played down the idea that the Project Maven decision was made only based on employee feedback. He said Google has also listened to experts in ethics and artificial intelligence.

Project Maven is a DoD program intended to develop artificial intelligence for American national defense purposes—including, yes, an improved ability to kill our enemies when they attack us.

Pichai’s rationalization of his decision to turn his back on our national defense doesn’t matter. Our enemies are developing AI and will use it against us. Pichai’s decision only potentiates those enemies’ relative capabilities.

Don’t be evil.  That used to be Google’s motto.  How is it evil to help our country defend itself?  How is it not evil to help our enemies, even if without AI support (other than “search” AIs)?

Now the corporate motto, handed down from parent Alphabet, is Do the right thing.  How is refusing to help our nation defend itself a right thing?  How is helping our enemies a right thing?

Sundar Pichai knows the answers to these questions full well.

Pharma and Drug Prices

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The Trump administration has proposed a rule that would require companies advertising drugs to provide the list prices of those drugs in their advertising—including their television advertising.  Big Pharma is opposed, and wants instead to be left to voluntarily provide pricing information by having links in their advertising that would guide folks to a separate Web site.

I sympathize with Big Pharma on this. Government regulation already is out of hand; the Trump administration is reducing that, and this is an unnecessary addition.

There is an alternative.

The FDA could compile a list of drug list prices; region-by-region retail prices at places like Walgreens, CVS, Walmart, amazon (note that this is not an exhaustive list of retailers); and the tier within which each drug sits.  This list then could be made available on the FDA’s Web site home page above the fold.

This more central source, in addition to encouraging competition among drug companies, would encourage more competition among retailers.

Income Taxes and Retirement Savings

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Professor Benjamin Harris (Kellogg School of Management) made a case for redoing our 401(k) retirement savings system.  He had several good points, too: the tax break today compared to the taxes due on withdrawal during retirement’s usually lower tax rate is irrelevant to those whose current income is low enough to go untaxed or not taxed much.  Contributions are tax deductions vs tax credits equal to a portion of contributions.  The whole system is complex from a tax-figuring perspective (what are the tax brackets in play for a particular saver, what taxes will be in play when the saver retires, how will investments perform in the interim).

Overlooked, though, is a larger alternative, even if it is a more difficult alternative to achieve.  It’s far from impossible to achieve; this year’s tax reform and cuts represent a major step in this direction.

The whole complexity of the tax question, along with most of the tax question itself, would disappear with a low, flat income tax rate.

Discrimination

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The discrimination suit against Harvard is underway, and the first day produced some interesting claims.

William Fitzsimmons, Harvard’s admissions dean since 1986, defended the policy [of favoring some applicants over others on the basis of race] by saying the letters to white students in more rural states help the school recruit from areas where students may be less aware of Harvard.

This is nonsense. If student awareness were the goal, instead of sending letters to favored individuals, Harvard would advertise, would communicate with the junior high schools and high schools of those rural areas.

Race is never the reason a student is admitted or rejected from Harvard, he [William Lee, a WilmerHale partner representing Harvard] said, adding the school considers race as one of many factors, in line with Supreme Court precedents.

This is disingenuous at best. If race is never a reason, it wouldn’t be missed if it were eliminated from consideration.

In addition, there is a clear designed-in disparate impact at work here, but since it’s not an impact against a favored group of Americans, it’s not discussed.