Decoupling: The New Form of Western Foolishness

Every era has its own false beliefs that seem true at the time. It's only in hindsight that we realize the immense toll these misconceptions have taken. The mistakes of the past are no secret; they are part of our story. They are laid out in detail, ready to be analyzed. Our history is an open book waiting to be read.

1: The Theory of Surplus Value

Karl Marx's theory states that the worker never receives what he is really worth from his employer. According to Marx, every worker creates surplus value with what he produces— be it a ton of steel or a sack of oats. The accumulated surplus value solidifies into profit in the hands of the employer. Thus, profit is the justification for the exploitation of the working class.

The theory of surplus value formed the basis of communism. It served as the main driver for the forced collectivization of farms and the nationalization of all other enterprises within the Soviet Union's sphere of influence. The surplus value theory declared the entrepreneur a parasite and effectively called for his extermination.

Today, echoes of the surplus value theory persist in demands for higher inheritance taxes on business successors. Social policy makers continue to view business owners not as innovative, hardworking and courageous individuals, but rather as culpable.

This fallacy has outlived Marx.

2: The Domino Theory

This theory was conceived as an antidote to Marxism. It originated with former U.S. President Dwight D. Eisenhower and states that no non-communist country should ever become communist. If so, its neighbors will likely fall like dominoes. So, communism must be nipped in the bud.

This theory was the primary justification for the massive U.S. military intervention in Vietnam. To prevent the Vietnamese domino from toppling, some three million American soldiers were thrown into battle between 1955 and 1975, injuring and killing some three million Vietnamese. 58,000 U.S. soldiers returned home in coffins.

Nevertheless, Vietnam fell to the Communists, but Asia did not fall in line. The domino theory was the basis for one of the most significant foreign policy disasters in US history. The domino theory has since lost significance, but the Vietnam trauma has endured.

3: The Decoupling Theory

Nowadays, the question of communism or capitalism is handled through economic warfare rather than on the battlefield. "Weaponizing the economy" is the new doctrine. This time around, the main adversary is China, a country with deep communist roots – until recently.

In 1973, the U.S. exported $71.4 billion worth of goods to the entire world. Today, on average, the U.S. imports that amount from China every two months. America has become the largest importer of Chinese goods. And China has also become the largest lender to the U.S. because the central bank in Beijing loves U.S. Treasury Bonds.

This era of free trade was launched by conservative U.S. President Richard Nixon and Chinese reformer Deng Xiaoping in 1972. Deng's commitment to free trade went something like this:

The Great Prosperity Surge: Following the U.S.-China economic integration model of different political systems, other nations followed suit. While international trade between nations accounted for only 37 percent of global GDP in 1980, it now accounts for 74 percent. The world has experienced its most significant increase in prosperity during the era of free trade.

Fallacies change like fashion: Now, the world's two largest economies (and satellite states like the Federal Republic of Germany) are to be decoupled. Decoupling— or Olaf Scholz’s "derisking"—is the latest nonsense from Washington, which remains nonsense even if politicians of both parties follow it.

Once, politicians eagerly inaugurated car factories and chemical plants during state visits to China. In Beijing, Western leaders served as de facto export representatives for companies like V.W., BASF, General Motors and IBM. Collaborators in new technology ventures with Chinese firms gained popularity, not suspicion.

Jami Miscik, former CEO of Kissinger Associates, and Peter Orszag, former Capitol Hill staffer and current CEO of the investment bank Lazard, describe the new American geostrategic perspective in Foreign Affairs:

The reason:

Old instruments - such as tariffs, import quotas and export controls - meet new bureaucracy. For example:

• Ursula von der Leyen's "anti-subsidy investigation" against China

• Biden's "White House Council on Supply Chain Resilience"

• The "Cyber Safety Review Board" in the U.S. Department of Homeland Security

Trade is no longer accessible; it is political. The goal is to break up yesterday’s value chains. Chinese chip manufacturers are no longer allowed access to Western telephone networks. In return, no party member or bureaucrat in China can use Apple products. Decoupling is now to take place on a large scale.

After "America First" comes "China First." And David Ricardo's theory of free trade, which dictates production should occur where conditions are most favorable, is disregarded for political reasons.

Trade is now used to promote national security rather than prosperity. Corporate employees have become foot soldiers of geopolitics, even without a draft.

Conclusion: The consequences of decoupling will be felt later - in trade balances, in payrolls, in prices, in growth rates and perhaps even on the battlefield. It was the liberal Frédéric Bastiat, an economist and politician of the early 19th century, who pointed out that protectionism and nationalism often do not prevent war but rather prepare for it:

• Former Israeli Defense Minister Benny Gantz challenges Netanyahu to new elections.

• Boris Pistorius and his new vision for the German Armed Forces.

• The disco ball has been spinning for a century.

The attack on the World Central Kitchen convoy has further fueled protests against Israeli Prime Minister Benjamin Netanyahu. Tens of thousands are calling for new elections - and now Netanyahu's longtime political rival, Benny Gantz, has joined in. He is a former chief of staff of the Israel Defense Forces (IDF) and former defense minister in the Bennett-Lapid cabinet from 2020 to 2022. Gantz is currently a member of the Israeli security cabinet under Netanyahu's leadership, and has proposed September 2024 as a possible election date:

Who is Benny? Gantz ran unsuccessfully against Netanyahu in 2019, serving as defense minister in the Bennett-Lapid cabinet. Today, the former IDF chief of staff is a member of Israel's security cabinet, which was formed under Netanyahu's leadership after the October 7th attack.

Declaring new elections requires a majority of 61 out of 120 Knesset members. In the last election in December 2022, Netanyahu's right-wing Likud party won 32 seats, and his term would officially last until the end of October 2026.

The advantage for Gantz: According to current polls, Gantz's National Union would emerge as the popular party by a significant margin in new elections, while the Likud party's popularity has suffered dramatically.

The opposition's hope: New elections could strengthen international support for Israel and reduce the divide within society between the liberal milieu and right-wing nationalist groups. Gantz's hope for new elections:

Meanwhile, in the evening, Netanyahu's office announced that Israel will expand the delivery of aid to the Gaza Strip. This is to be made possible via the Erez border crossing and the port of Ashdod. The announcement went on to say that the war cabinet had authorized the Israeli government to increase humanitarian aid immediately.

The aim was - literally - to avoid a humanitarian crisis, ensure the continuation of the fighting and achieve the war's objectives. The announcement was made a few hours after a telephone call between US President Biden and Netanyahu. Biden had called for measurable steps to be taken against the suffering of the people in the Gaza Strip and apparently also threatened to change US policy.

The "self-denial" of social democracy: A group of scholars led by historian and longtime Social Democrat (SPD) Heinrich August Winkler has sent a letter of concern to the SPD leadership, sharply criticizing the party's stance on the war in Ukraine:

Contradiction: Thomas Geisel, former SPD mayor of Düsseldorf, who is now running for the European Parliament as a member of Sahra Wagenknecht's Alliance (BSW), criticizes the letter by stating:

Geisel believes the party's economic policies no longer resemble those of Karl Schiller, Helmut Schmidt and Willy Brandt:

Bad image: For a long time, the Bundeswehr was considered an outsider in Germany. Too old, too small, too expensive, too insignificant. This image has changed since Russia's attack on Ukraine, but not its condition. Defense Minister Boris Pistorius now wants to change this.

A combat-ready Bundeswehr guided by the principles of scalability, agility, digitalization and openness to innovation," reads the announcement of the newly presented "Basic Structure of the Armed Forces". The reform is reflected in the following points:

#1 "Four instead of three branches of the armed forces": Besides the Army, Navy and Air Force, the Cyber and Information Space will form a branch of the armed forces. This branch will be designed to meet the demands of modern warfare.

#2 "Reorganization of operational command": All agreements will be consolidated into a new centralized command structure. The goal is to make decisions faster.

#3 "Focus on Defense": In bureaucratic language, it sounds something like this: "The armed forces will be consistently relieved of tasks that civilian employees can just as well perform." This is intended to refocus the entire Bundeswehr on its original function: defense in case of emergency.

#4 "Signal of renewal": By eliminating duplicate structures and excessive interfaces, the aim is to create speed and clarity for emergencies. Or, as Pistorius calls it:

Bad news: New electric car registrations fell sharply in March.

Compared to the same month last year, about 29 percent fewer new electric cars were registered in March, according to the Federal Motor Transport Authority's monthly report. At twelve percent, the share of electric vehicles in total new registrations was about four percentage points lower than in March 2023.

The reasons: Since the German government abolished the purchase incentive for electric cars last December, the number of new registrations has steadily declined. Many are still waiting in vain for the promised expansion of the charging infrastructure.

For years, there has been a debate about the pros and cons of genetic engineering. I've discussed the issue with proponents, including the current and former CEOs of Bayer AG. And in the latest Pioneer Podcast, Alexander Hissting, executive director of the association Food without Genetic Engineering, shares his perspective on the matter.

Clarification: What's going on in our fields? Are cabbage, corn and potatoes genetically modified? Hissting provides insight:

Inquiry: Can the use of genetic engineering to increase crop yields and possibly combat famine?

In the debate over genetic engineering, the name glyphosate often comes up - an herbicide. Proponents of the substance say it's used to make plants more resistant in order to provide more food for the world. Hissting disagrees:

Are you interested in a little refresher on genetic engineering in German? Tune into the latest episode of the Pioneer Podcast.

Let's Dance: Glittering, timeless, and a beacon of escapism. Where the disco ball turns, the dance floor beckons. The film Saturday Night Fever, featuring the music of the Bee Gees and starring John Travolta, immortalized this phenomenon on the big screen.

Decadence: The disco ball was invented in the roaring twenties in Germany, a time when the emperor had fled and Hitler hadn't arrived on the main stage. It was an era of carefree bohemians and decadence, with people flocking to the variety shows and dance halls of the vibrant city of Berlin.

Inventor Paul Baatz: The owner of the Berlin ballroom "Resi" is credited with inventing the disco ball. Always seeking ways to enhance the night's magic, he pioneered the concept of covering a foam ball with hundreds of small mirrors. These mirrors bathed the dance floor in a mesmerizing sea of light reflections, captivating his guests.

But then the war shook the world, and it seemed like the era of dancing had come to an end. However, with the rise of the disco era in the 1970s, the glitter ball made a triumphant comeback. Entertainer Ilja Richter solidified its presence in the 1970s TV landscape with his show Disco: “Lights out. Spotlight on.”

While Ilja Richter has retired and two out of three Bee Gees are no longer with us, the disco ball endures. From the ballrooms of the 1920s to the neon-lit discos of the 1970s, and now to the modern techno clubs, the disco ball has been spinning for a century.

Wishing you a wonderful start to your day. Stay informed. Stay with me.

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