2022 was a year full of surprises. Important things were not going the way many people expected, at almost every point on the political spectrum.
Prime example: Ukraine. When Vladimir Putin’s Russian troops invaded on February 24, it looked as if an independent Ukraine had been launched. Military experts on cable channels said Russia has overwhelming superiority. She would take Kyiv and occupy the whole country.
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The Biden administration apparently shared this view, evacuating the US embassy and offering a plane to rescue President (and former comedian) Volodymyr Zelenskyy, who at that point uttered the immortal words: “I need ammo, not a ride. “
The Biden administration has to be given credit for adapting to the unexpected reality and providing vital military and economic assistance to Ukraine. Zelenskyy visits Washington this week voluntarily, not as exiles. And it is Putin who describes his side’s situation in Ukraine as “extremely difficult”.
The lesson is that morality can trump material. The people will prove braver and more resourceful in protecting their freedom and their nation’s independence than firepower statistics suggest.
That’s another way of saying that nationalism – seen by many in the press and academia as a form of fascism – can be a positive force for human liberty. This is true even in a place that, apart from a few months of post-World War I chaos, has only been a separate nation for a single generation.
A second surprise of 2022 was the decline of China. Not long ago, sophisticated soothsayers predicted that its economy would soon be larger than America’s, and that its centralized and admittedly authoritarian experts pointed the way for future planning.
So much for that. The Chinese Communist Party’s strict lockdown to suppress COVID-19 has done more economic damage than anyone thought possible. This was not the regime’s first unexpected self-harm. That would be the one-child policy of the 1970s, which China has now left with a population that has aged before it got rich. Maybe that shouldn’t have been unexpected.
And perhaps it shouldn’t have been unexpected that even China’s strict lockdown measures have failed to prevent the spread of a virus that is transmissible by asymptomatic individuals and rarely fatal with appropriate vaccines, except in the elderly with serious risk factors. Unfortunately, the supposedly efficient Chinese used their own inferior vaccine and not one developed as part of the Trump administration’s Operation Warp Speed.
It shouldn’t have been unexpected that China’s lockdowns have wreaked tremendous economic damage. Here in the US, too, the toughest lockdowns and mask requirements inflicted self-harm on liberal-run institutions like unionized public schools and downtown mass transit systems.
China’s economic crash has shattered long-held expectations that it would grow ever wealthier and more powerful, just as China’s unruly behavior has shattered optimistic expectations that its international trading relationships would make it a responsible, rule-bound, and democratic nation.
The good news about these failed expectations is that Russia’s unexpected failure to seize Ukraine may have made Chinese leaders more wary of attacking Taiwan.
A third surprise this year is that massive trillion-dollar transfers initiated by the Trump administration and massively boosted by the Biden Democrats have failed to restore the low-inflation economy, with growth biased toward the low-skilled is — and the low-income ones chugged along nicely in the Trump years through February 2020.
The theory behind these huge infusions is that if demand falls, if you throw enough money out of helicopters (Milton Friedman’s metaphor), growth will result. Here’s how it worked in Detroit when I was a kid: if you gave consumers more money through subsidies or tax cuts, demand for cars went up, and GM, Ford, and Chrysler called back all the workers they laid off a few months earlier. Everything was back in place.
But today’s economy is more complicated than Detroit’s mid-century model suggests. As the idiosyncratic economist Arnold Kling argues, the economy is the sum of multiple patterns of sustained specialization and trade. The COVID-19 restrictions have disrupted hundreds of thousands of these patterns, and recreating them—or constructing new ones—takes time and imaginative efforts from many companies and individuals.
So the trillions of dollars that have been pumped into the economy have put many people out of work despite employers’ vain searches for employees – the so-called “Great Resignation”. Those trillions also triggered skyrocketing inflation that Democrats and the Federal Reserve say is temporary but now seems out of control.
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It turns out that economic damage from pandemic restrictions cannot be repaired in the same way economic damage from downturns in the business cycle can be repaired.
Some surprises, like the weakening of Russia and the caning of China, are good news. But others, like America’s current economic mysteries, leave us confused and most likely unprepared for the surprises of 2023.
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