Barking Up The Wrong Tree

The week ended on August 15, 2025, interesting news items to look at this week are:

1. Barking Up The Wrong Tree : If you feel the world is getting increasingly chaotic, allow me to quote here a saying of Joseph Campbell, a professor of literature in a small liberal arts college in New York and author of the book “The Hero with a Thousand Faces” which inspire the “Star Wars” saga. Campbell said, “When we talk about settling the world's problems, we're barking up the wrong tree. The world is perfect. It's a mess. It has always been a mess. We're not going to change it. Our job is to straighten out our own lives.” (Fig. 1)

Ironically, China’s statecraft is very much in sync with this philosophy, hence, no military alliances and no interference with internal affairs of other nations. The Chinese core belief is “时势做英雄” (“The times make heroes” - It is a particular crisis, social movement or technological shift that allowed certain individuals to rise to prominence”). The opposite is “英雄做时势” (“Heroes make the times” - The decisive actions of a leader or innovator who changed the world”.) It is exactly at this time in history with sharpened conflicts in Europe, Mid East, South Asia and East Asia that a victory by Global South will prove the former and a victory by Donald Trump will prove the latter. In this week’s blog we will examine the times and heroes with emphasis on numerical data points.

(i) The Wrong Tree of “Full Spectrum Dominance” - The US War Doctrine of “Full Spectrum Dominance” came to prominence after 911 which initially concentrate on US military push for dominance in conventional and asymmetrical warfare. As time progresses, the concept expanded its scope to encompass every facet of psy-war, soft powers, politics, technology, monetary and economic dominance. Yet the more US wants to maintain her crown, the more she feels she is slipping away and the more the world came to realize US is failing. In a final act of desperation, US has taken mano a mano against every country on earth with a tariff war on a false narrative that times during the “McKinley 1890 Tariff Act” were the best of times for the US. History shows both the McKinley 1890 Tariff Act and the subsequent Smoot-Hawley 1930 Tariff Act proved to have done more economic damage than good. Historical facts showed recession will result with full impact lagging two years the relevant tariff legislation. Furthermore full economic recovery was not possible until a world war erupts. (Fig. 2)

I need to emphasize here that I am not a proponent that there is a causal relationship between tariff and recession but rather when economic conditions of a normally open country are so degraded that a high tariff barrier becomes a necessity than the consequence of a tariff barrier will be recession and kinetic war.   

(ii) The Wrong Tree of D-globalization - Whilst the debate on the merits of globalization or d-globalization continued, this section of my blog is an attempt to quantify the relevance of globalization on the US economy. One may then draw one’s own conclusion of how successful will MAGA be and the consequential d-globalization. I will present here a series of slides comparing annual increases in US Household Wealth and Nominal GDP.

(a) A comparison of Annual Increase in US Household Wealth with Nominal GDP for the past 25 Years shows whilst annual increase in nominal GDP were in hundreds of billions, increase in Net Household Wealth were typically 10 times larger in the trillions. (Fig. 3).

How can it be when annual income of a household hoovers around $100,000, the wealth of the household is increasing in the ‘millions.

(b) The Cumulative Picture is even more startling - From 2000 to 2024, cumulative annual net US household wealth grew by US$85 trillion as compared with cumulative increase in Nominal GDP of only $5 trillion. (Fig. 4).

There were two principal reasons involved - in the early part of the 21st Century US began the Internet/Smart Phone/Social Media Revolution and China joining the WTO. US Tech companies were immensely profitable but the sweat labor were conducted in China, hence, wealth increased tremendously in US but sweat (labour and resource activities) were drenched elsewhere.

(c) Towards the end of the first decade of the 21 st Century, economic mismanagement and the relentless money printing had been a drag rather than a stimuli to the US economy. This resulted in a continuous contraction of the private sector real economic activities.  The legacy benefits of US tech advances and global tech dividends has been progressively eaten up by Fiscal Dominance. The latest example is the 15% indulgence fees payable by Nvidia and AMD on chip exports to China. (Fig. 5).

Most analyst are aware that the US economy is in a K-shaped recovery but few would come out and specify that sudden death would come in just 24 months from Liberation Day. Why? What goes around comes around, in encircling the world with tariffs, US also will cut herself off from the benefits of globalization as victims of oppression retaliates. Friends, you have been warned.

2. Times and Heroes - Having subscribed to an understanding that it is “The Times that make Heroes”, I tend not to be alarmed by the coming and going of politicians and avoid second guessing their intentions, tacit and strategies. I am primarily interested in long term macro directions and consistency of a country’s adherence to their stated missions. Life is hard and it is enough to everyday discipline  ourselves into a little bit more loving and compassion. (Fig. 6).

Ecclesiastes 1:9  That which has been is what will be, That which is done is what will be done, And there is nothing new under the sun. 10  Is there anything of which it may be said, "See, this is new"? It has already been in ancient times before us. 11  There is no remembrance of former things, Nor will there be any remembrance of things that are to come By those who will come after.