Hoover Weekend Review: America’s economic and foreign policy challenges

 

Saturday, December 4, 2021 In this edition of the Hoover Weekend Review, fellows analyze America’s economic and foreign policy challenges. John Cochrane explains how the American economy has reached high rates of inflation; Michael McFaul argues that forging closer security ties with Ukraine will help deter Russian aggression; and Matt Pottinger describes how China is beating the United States in the war over big data collection. Inflation Explainer By John Cochrane via the Grumpy Economist John Cochrane explains that the federal government’s response to the COVID-19 pandemic is responsible for current inflation rates of over 6 percent in the US economy. He writes that the government—in sending trillions in stimulus aid to the American people and businesses over the last year and a half, combined with the Federal Reserve keeping interest rates near zero—has enabled demand for goods and services to vastly outstrip existing supply. Cochrane says that inflation can be stabilized by reducing government spending and easing supply constraints, such as regulations that forbid the stacking of empty containers at ports and thus contribute to the current supply-chain backlog. The Best Response to Russia’s Threats Is a Closer Relationship with Ukraine By Michael McFaul via Washington Post Michael McFaul argues that at the center of the Biden administration’s policy in countering Russia should be forging a stable and predictable relationship with Ukraine. To this end, McFaul writes that the United States should engage in multilateral diplomacy to end the war Russia has waged on the Donbas region, develop a comprehensive set of sanctions against Moscow that would be deployed in the case of new aggression, and deepen military ties with Kyiv that would allow Ukraine to defend itself more capably from aerial and naval attacks. In this effort, McFaul also calls on the Biden administration to help Ukraine strengthen its democracy and spur economic growth, as well as to provide Marshall Plan–style relief for the eastern part of that country. The Most Powerful Data Broker in the World Is Winning the War Against the US By Matt Pottinger and David Feith via New York Times Matt Pottinger and David Feith write that data is the 21st-century oil, and thus the key resource to fueling engines of economic growth and national strength. The sources of data are human beings, including their health records, their online habits, and flow of their businesses’ supply chains. Pottinger and Feith explain that the Communist Party of China has become the world’s largest data retailer by closing off the outflow of information about Chinese individuals and businesses from the rest of the world while acquiring data globally through surreptitious means, through the purchase of foreign companies, and by enforcing compliance on any commercial entity with access to China’s markets. Pottinger and Feith advocate that the United States and its democratic allies develop a robust strategy to address this national security challenge, which they believe should include unwinding current information outflows to China and restricting future ones.

The Hoover Weekend Review compiles the week’s most compelling analysis and commentary from the Institution’s fellows and affiliated scholars. The Hoover Institution was established one hundred years ago by Herbert Hoover at his alma mater Stanford University. From its initial charge to collect materials documenting the experience of war and the pursuit of peace, the institution stands today as the world’s preeminent archive and policy research center dedicated to freedom, private enterprise, and effective, limited government. Copyright © 2021 by the Board of Trustees of Leland Stanford Junior University, Hoover Institution, Stanford University