I still love that Jake Sullivan talk where he admits that the whole free market bullshit they've been promoting can't actually compete with what China is doing. It's an absolutely incredible read, Sullivan claims that the American economy lacks public investment, as it did after World War II. And that China is actively using this tool.

last few decades revealed cracks in those foundations. A shifting global economy left many working Americans and their communities behind.

The People’s Republic of China continued to subsidize at a massive scale both traditional industrial sectors, like steel, as well as key industries of the future, like clean energy, digital infrastructure, and advanced biotechnologies. America didn’t just lose manufacturing—we eroded our competitiveness in critical technologies that would define the future.

He also opined that the market is far from being able to regulate everything, and "in the name of overly simplified market efficiency, entire supply chains of strategic goods, along with the industries and jobs that produced them, were moved abroad."

Another problem he identified is the growth of the financial sector to the detriment of the industrial and infrastructure sectors, which is why many industries "atrophied" and industrial capacities "seriously suffered."

Finally, he admitted that colonization and westernization of countries through globalization has failed:

Much of the international economic policy of the last few decades had relied upon the premise that economic integration would make nations more responsible and open, and that the global order would be more peaceful and cooperative—that bringing countries into the rules-based order would incentivize them to adhere to its rules.

Sullivan cited China as an example:

By the time President Biden came into office, we had to contend with the reality that a large non-market economy had been integrated into the international economic order in a way that posed considerable challenges.

The People’s Republic of China continued to subsidize at a massive scale both traditional industrial sectors, like steel, as well as key industries of the future, like clean energy, digital infrastructure, and advanced biotechnologies. America didn’t just lose manufacturing—we eroded our competitiveness in critical technologies that would define the future.

In his opinion, all this has led to dangerous consequences for the US led hegemony:

And ignoring economic dependencies that had built up over the decades of liberalization had become really perilous—from energy uncertainty in Europe to supply-chain vulnerabilities in medical equipment, semiconductors, and critical minerals. These were the kinds of dependencies that could be exploited for economic or geopolitical leverage.

Today, the United States produces only 4 percent of the lithium, 13 percent of the cobalt, 0 percent of the nickel, and 0 percent of the graphite required to meet current demand for electric vehicles. Meanwhile, more than 80 percent of critical minerals are processed by one country, China.

America now manufactures only around 10 percent of the world’s semiconductors, and production—in general and especially when it comes to the most advanced chips—is geographically concentrated elsewhere.

At the same time, according to him, the United States does not intend to isolate itself from China.

Our export controls will remain narrowly focused on technology that could tilt the military balance. We are simply ensuring that U.S. and allied technology is not used against us. We are not cutting off trade.

And then there's another talk he gave this year.

We also saw something that really stood out, which is that the PRC believed the United States was in terminal decline — that our industrial base had been hollowed out, that our commitment to our allies and partners had been undercut, that the United States was struggling to manage a once-in-a-century pandemic, and that many in Beijing were openly proclaiming that “the East was rising and the West was falling.”

We’ve all heard how Russian GDP is the size of Italy, that Russia is a gas station with nukes, and so on. When the war started, there were countless predictions regarding Russian economy collapsing, and Russia running out of ammunition.

It was a huge surprise for a lot of people in the west when none of these things happened, and it turned out that Russian economy was able to survive the economic war with the west while continuing to produce weapons and ammunition.

What’s more is that now we see that it’s the west that has find ways to ramp up industrial production to keep the war going.

This is a great illustration of why it’s so misguided to use GDP as a general measure for the strength of the economy. What actually matters is productive activity of the country.

The notion of using GDP as a measure has been promoted by neoliberal ideologues who claim that the type of the economy doesn’t matter. The reality is that majority of the GDP in western economies comes from ephemeral things such as law practice, service industry, lobby groups, and so on.

Some of the sectors of the economy are even explicitly harmful to society. A great example of that is the health insurance industry in US. On paper, this is increasing the GDP because it employs a ton of people working in this sector, but in practice it just makes people living in US more poor and lowers their quality of life.

So, what does the actual productive economy in US look like?

We can look at steel production volumes to get an idea of the size of the productive industry in US.

According to official data, US produced 6.8 million metric tons of steel in June this year https://www.trade.gov/data-visualization/us-steel-executive-summary

Meanwhile, Russia produced 5.8 million metric tons https://www.statista.com/statistics/1079878/russia-steel-production-volume/

All of a sudden we can see why the west has trouble keeping up. US is the most industrialized western economy, but turns out it’s steel production is only slightly higher than in Russia. And it’s important to keep in mind that Russia has a much smaller population, so per capita production is far higher than in US.

And then there’s China where 90 million metric tons of steel is produced in a month https://www.reuters.com/markets/asia/china-june-crude-steel-output-up-04-yy-stats-bureau-2023-07-17/

China’s productive industry is a whole order of magnitude larger than US. This shows just how absurd the notion that US could ever have a direct conflict with China is.