We noted in an earlier blog item this week that many of the insights of Adam Smith are as pertinent today as they are forgotten. Including his classic shot against mercantilism in The Wealth of Nations that those who invented the notion that the government should protect them from foreign competition in the national interest “and they who first taught it, were by no means such fools as they who believed it.” We were reminded of this quotation when Heatmap insisted that EVs might stink as cars but it’s essential to American security or something that somehow Americans be forced to buy them. Though they dressed up their illogic by saying “Without a strategic plan that marshals both public and private sector investment in support of EV uptake by American consumers, the U.S. will leave itself with critical security vulnerabilities.” Oooh. A strategic plan. Public and private sector investment. EV uptake. Critical security vulnerabilities. Hence such wonders as the French “Manufacture royale de glaces de miroirs” and the ban on superior glass from Venice lest foreign mirrors reduce France to a third-rate power.

Since we subjected you to mercantilist sludge, let us take the liberty of quoting Smith’s passage at some length in the hopes of inspiring people to read old books and rediscover the joys of supple language in service of clear thought. It’s from The Wealth of Nations Chapter III, Part II:

“By such maxims as these, however, nations have been taught that their interest consisted in beggaring all their neighbours. Each nation has been made to look with an invidious eye upon the prosperity of all the nations with which it trades, and to consider their gain as its own loss. Commerce, which ought naturally to be, among nations as among individuals, a bond of union and friendship, has become the most fertile source of discord and animosity. The capricious ambition of kings and ministers has not, during the present and the preceding century, been more fatal to the repose of Europe, than the impertinent jealousy of merchants and manufacturers. The violence and injustice of the rulers of mankind is an ancient evil, for which, I am afraid, the nature of human affairs can scarce admit of a remedy: but the mean rapacity, the monopolizing spirit, of merchants and manufacturers, who neither are, nor ought to be, the rulers of mankind, though it cannot, perhaps, be corrected, may very easily be prevented from disturbing the tranquillity of anybody but themselves. That it was the spirit of monopoly which originally both invented and propagated this doctrine, cannot be doubted and they who first taught it, were by no means such fools as they who believed it.”

We could write at length on the depth of his understanding of human nature and its relationship to geopolitics, in contrast to modern “peace movement” fatuities. But for now it’s enough to shudder at how often fools, from Prime Ministers to voters, do buy into this exploded doctrine, not to mention the idea that linking private with public “investment” were anything but an invitation to subsidy farmers and grifters to plunge with a grunt into the public trough.

Heatmap, for instance, frets that:

“Right now, China rules the global battery ecosystem. Chinese firms lead not only in battery manufacturing, but also in the upstream processing of critical minerals, the production of midstream cathodes and anodes, and the commercialization of next-generation battery technologies. China also controls most of the global processing capacity for graphite, the key material used in battery anodes, and dominates production of the intermediate components that determine battery cost and performance.”

This passage reeks of the conception that a trading partner’s gain is our loss. In fact in the case of China in particular, because its government adheres to mercantilist doctrines in ways that put even Louis XIV to shame (and despite their origins in a feudal polity Marxists should despise), their industries have a massive tendency to produce at a loss on the theory that the state will make it up in volume.

When you take into account the real cost of Chinese manufactures, including compelled or even slave labour that is paid far less than it is worth, the entire Chinese economy is a massive loss-making enterprise that cannot be sustained, but that while it lasts gives us many things at unreasonably low prices though also often unreasonably low quality.

If China must sell us batteries, even at a loss, to delay the inevitable, then we can buy them. We are not left without batteries because China exports them en masse. The entire notion is absurd. We are in fact flooded with them. Go look at yours. Made in China, weren’t they? Especially the discount ones you bought online.

It is true that China often embeds nasty technology in their exports, including the EVs the Canadian government inexplicably wants to welcome en masse to this country. But it is not true that, as Heatmap maintains:

“Without a robust domestic EV market, battery manufacturers lose the scale that makes investment attractive, and production will inevitably move elsewhere. That’s fine for other manufacturing sectors like t-shirts and toys, but unacceptable for technologies with critical national security applications.”

If there is a demand for things with appropriate safety standards from detonation to espionage, some entrepreneur will make them. Especially in the United States, a continental-scale country with the world’s biggest and most dynamic economy. It is absurd to suggest otherwise.

It is also absurd to suggest, as Heatmap does, that the rising quality and falling price of Chinese EVs is bad for Americans. On the contrary, it means they can buy better cars at lower prices than they once could, assuming they want EVs which by and large they don’t. (Again, the security issue is real but it’s what’s in the embedded chips.)

Finally, Heatmap seems not only to want EVs for you whether they’re any good or not. It seems to want communism:

“China understands this. Beijing does not view batteries, EVs, renewable energy infrastructure, and industrial competitiveness as separate issues. It views them as components of a single strategic package. As energy storage, modularity, and transmission become the key enabling technologies of the global economy, the United States must adopt this same holistic approach.”

Then they recoil from their own views, but not far enough:

“This does not mean attempting to replicate China’s economic model or wantonly abandoning domestic fossil fuel production. It simply requires recognizing that batteries are a strategic industry – and that electric vehicles are the primary mechanism through which that industry achieves scale.”

At bottom they are on the cutting edge of 17^th-century thought:

“During the 20th century, policymakers understood that leadership in steel, automobiles, aerospace, semiconductors, and telecommunications had national security implications, and thoughtful policymakers sought to build U.S. advantages in these key sectors. The same logic applies today. The question is no longer whether the future of transportation is electric. Most of the world has already answered that question. The issue before us now is whether the United States intends to build the batteries that will power the next era of economic growth, military capability, and industrial strength or import them from China, with all the vulnerabilities that will entail.”

Bosh. Was Ford or GM a government enterprise? As Will Rogers quipped, by the 1929 Great Crash (stockmarket, not car) the US was the first nation that could go to the poorhouse in an automobile. The Soviet Union with its Ladas never got there. And Washington’s big contribution to steel was to force unionization on the industrial heartland from the 1930s on and create the rust belt by the 1970s.

Speaking of the 1970s, was Microsoft a government enterprise? Or Apple? No. Instead the early pre-Mac Apple II computers allowed buyers to run a simple spreadsheet, Visicalc, that unleashed a tidal wave of entrepreneurship because it let small home businesses keep their books effectively. It wasn’t the Federal Bureau of Computing, it was private-sector rivals from IBM to Microsoft, that had to react and did. Whereas in the Soviet Union, where the state chose strategic industries, the PC was unknown and the end was nigh.

Did the US government create the cellphone? Or did the cellphone help break up obnoxious inefficient public phone monopolies? And what did the space program bring besides Tang?

Now of course “China” doesn’t understand anything. It’s a place. The people who run it, the Politburo of the Chinese Communist Party, certainly hold this view that government should run the economy with its holistic view. But if “Most of the world” has already answered the question of how to drive around, and differently than Americans, consider what has generally happened when the US went one way and the smart set and a bunch of Third World tinpot dictators went the other.

America didn’t become great by being communist, it became great by being free. Including in its trade policy. And by realizing that if an industry is important, it’s because it makes consumers happy and will make money by making products and so you’ll get them.

If it’s just some academic, journalistic or political projectors, do not believe it lest you prove yourselves, a quarter millennium after Smith said it, far greater fools than they are.