[Rancid]

Are all telephone calls recorded and accessible to the US government?

Officially, no. Officially they would need to go through the courts to get access to anything, and it would have to be made public.


However, we all know that they do things in secret so it's totally possible that they are watching everything. I'm sure the US government is working on AI that could sift through phone data to try and uncover patterns they might be interested in investigating.

[Sivad]

I was thinking, maybe there's a way to make money off this. Create ways to detect this sort of stuff, and give people instructions on how to remove them. With the email encryption, you could even create programs that directly encrypt the text so even if they decrypt the email, the text itself is still encrypted.

I need to think about this....

$$$$

put out an encryption technology the NSA can't crack and you'll have black helicopters above your house before lunch. The state seizes any technology it deems a threat to national security.

The Invention Secrecy Act of 1951 (Pub.L. 82–256, 66 Stat. 3, enacted February 1, 1952, codified at 35 U.S.C. ch. 17) is a body of United States federal law designed to prevent disclosure of new inventions and technologies that, in the opinion of selected federal agencies, present a possible threat to the national security of the United States.

The U.S. government has long sought to control the release of new technologies that might threaten the national defense and economic stability of the country. During World War I, Congress authorized the United States Patent and Trademark Office (PTO) to classify certain defense-related patents. This initial effort lasted only for the duration of that war but was reimposed in October 1941 in anticipation of the U.S. entry into World War II. Patent secrecy orders were initially intended to remain effective for two years, beginning on July 1, 1940, but were later extended for the duration of the war[citation needed].

The Invention Secrecy Act of 1951 made such patent secrecy permanent, though the order to suppress any invention must be renewed each year (except during periods of declared war or national emergency). Under this Act, defense agencies provide the PTO with a classified list of sensitive technologies in the form of the "Patent Security Category Review List" (PSCRL). The decision to classify new inventions under this act is made by "defense agencies" as defined by the President. Generally, these agencies include the Army, Navy, Air Force, National Security Agency (NSA), Department of Energy, and NASA, but even the Justice Department has played this role.

A secrecy order bars the award of a patent, orders that the invention be kept secret, restricts the filing of foreign patents, and specifies procedures to prevent disclosure of ideas contained in the application. The only way an inventor can avoid the risk of such imposed secrecy is to forgo patent protection.

By the end of fiscal year 1991, the number of patent secrecy orders stood at 6,193. Many such orders were imposed on individuals and organizations working without government support. This number shrank for each fiscal year thereafter, until 2002. Since 2002, the number of secrecy orders has grown, with 5,002 secrecy orders in effect at the end of fiscal year 2007.

The types of inventions classified under this Act are themselves secret, but most of the inventions which are now no longer secret but once were secret have been in areas with high military significance, such as cryptography and weapons development. Many inventions relating to power generating have also had their patents denied under this act.

https://en.m.wikipedia.org/wiki/Invention_Secrecy_Act

[Rancid]

put out an encryption technology the NSA can't crack and you'll have black helicopters above your house before lunch. The state seizes any technology it deems a threat to national security.

What would happen first, is the government would offer to buy my technology, and force me into only giving it to them and not the general public. If I refused, then they would send the black helicopters. They would basically give me an offer I could not refuse. I'm sure they would compensate me well. As far as I know, this happens lot with various startups.

Even in this scenario, I could become rich!

[Rugoz]

put out an encryption technology the NSA can't crack and you'll have black helicopters above your house before lunch.

Encryption is safe, the weak points are the certificate authorities, they certify the ownership of public keys.

[Rancid]

I've been thinking about the ban more. I'm certainly leaning more towards the ban should not have been done. I'm thinking, rather than trying to put up barriers, the US should just be trying to innovate faster and widen the gap further.

Further, tech companies should work (I'm sure they are) on ways to detect and prevent malicious shit from happening on the networks.

Impeding a single government (as big and strong as that government may be) isn't really going to solve the situation.

That said, there is the trade war angle on this. I still need to think about this one some more. That is, if the ban is a good thing from the trade perspective.

[Sivad]

The Crypto Wars is an unofficial name for the U.S. and allied governments' attempts to limit the public's and foreign nations' access to cryptography strong enough to resist decryption by national intelligence agencies (especially USA's NSA).

As part of the Snowden leaks, it became widely known that intelligence agencies could bypass encryption of data stored on Android and iOS smartphones by legally ordering Google and Apple to bypass the encryption on specific phones. Around 2014, as a reaction to this, Google and Apple redesigned their encryption so that they did not have the technical ability to bypass it, and it could only be unlocked by knowing the user's password.[33][34]

Various law enforcements officials, including the Obama administration's Attorney General Eric Holder[35] responded with strong condemnation, calling it unacceptable that the state could not access alleged criminals' data even with a warrant. One of the more iconic responses being the chief of detectives for Chicago’s police department stating that "Apple will become the phone of choice for the pedophile".[36] Washington Post posted an editorial insisting that "smartphone users must accept that they cannot be above the law if there is a valid search warrant", and after agreeing that backdoors would be undesirable, suggested implementing a "golden key" backdoor which would unlock the data with a warrant.[37][38]

FBI Director James Comey cited a number of cases to support the need to decrypt smartphones. Interestingly, in none of the presumably carefully handpicked cases did the smartphone have anything to do with the identification or capture of the culprits, and FBI seems to have been unable to find any strong cases supporting the need for smartphone decryption.[39]

Bruce Schneier has labelled the right to smartphone encryption debate Crypto Wars II,[40] while Cory Doctorow called it Crypto Wars redux.[41]

Legislators in the US states of California[42] and New York[43] have proposed bills to outlaw the sale of smartphones with unbreakable encryption. As of February 2016, no bills have been passed.

In February 2016 the FBI obtained a court order demanding that Apple create and electronically sign new software which would enable the FBI to unlock an iPhone 5c it recovered from one of the shooters in the 2015 terrorist attack in San Bernardino, California. Apple has challenged the order. In the end the FBI hired a third party to crack the phone. See FBI–Apple encryption dispute.

In April 2016, Dianne Feinstein and Richard Burr sponsored an overly vague bill that would be likely to criminalise all forms of strong encryption.[44][45][46]

In 2018, the NSA promoted the use of "lightweight encryption", in particular its ciphers Simon and Speck, for Internet of Things devices.[51] However, the attempt to have those ciphers standardized by ISO failed because of severe criticism raised by the board of cryptography experts which provoked fears that the NSA had non-public knowledge of how to break them.[52]

2015 UK call for outlawing non-backdoored cryptography
Edit
Following the 2015 Charlie Hebdo shooting, a terrorism attack, former UK Prime Minister David Cameron called for outlawing non-backdoored cryptography, saying that there should be no "means of communication" which "we cannot read".[53][54] US president Barack Obama sided with Cameron on this.[55]

[skinster]

[Sivad]

Why in the fuck is Wolff spouting liberal propaganda?

[Rancid]

This is the sort of thing you could do on a larger scale, and more often if you had control over a network.

This is the sort of stuff that concerns people more than straight spying.

https://www.cnbc.com/2019/05/26/wolters-kluwer-baltimore-ransomware-attacks-have-big-ripple-effects.html

[skinster]

Fear of competition, not security, motivates Trump ban on China’s Huawei
Seems like the United States doesn’t just make washing machines or pork rinds—it’s in the hostage-taking business, too.

At least that’s what it looks like after President Donald Trump’s Department of Commerce announced that China’s Shenzhen-based tech giant Huawei would be put on the “Entity List,” a ledger of firms legally prohibited from trade with the U.S. based on—well, based on whatever reason the president pulls out of thin air. Pretty smart way to run a global economy. But with such ire thrown a single company’s way, you might be wondering what all the fuss is about. The answer is as predictable as it is simple.

Germany, Britain, and other countries in the European Union were recently considering Huawei-based infrastructure for their 5G wireless networks. Adoption of this technology would represent a communications sea change and a big economic loss for the U.S., so you can guess what happened next. The U.S. begged and pleaded for its allies to freeze the company out over “security concerns,” but those pleas mostly fell on deaf ears due to lack of proof. So it’s no great mystery why the U.S. has acted this way—its traditional partners weren’t doing its bidding, thus a brute-force solution was required.

This is not without precedent. The 2018 trade ban against Chinese telecom outfit ZTE was a “Sputnik moment” for Chinese tech. Trump showed then he had no interest in playing by any set of rules but his own, and the punitive tactics against that company showed the rest of the industry it had to prepare for a similar assault. By stockpiling components and dedicating more resources to building operating systems and chipware of their own, Huawei and others took steps to protect themselves from the inevitable. Recent moves singling out Huawei show the prudence of such strategy—and not just at an enterprise level. National policy to safeguard domestic companies has proven quite wise, given the current hostile climate.

To say nothing of what this does to U.S. tech’s credibility. By following Trump’s lead, Google has shown its true colors. Many lamented the company’s exit from the Chinese mainland, wondering what possible reason there would be to keep a transnational colossus like Google from operating. Well, now we know—the second the U.S. government asked it to enact an explicitly political demand, it did so without hesitation.

Imagine if the Chinese tech industry had totally relied on Google software and applications, and an order like this one came down from on high. The U.S. could hold the entire country’s smartphones hostage for as long as it liked. This takes on a new level of irony when you remember the U.S. case against Huawei hinges on unproven claims the company is beholden to the Chinese government. After recent events, it’s tempting to think, “Oh, like Google?”

And I’m only half-joking there. This belligerent move gives us an opportunity to re-evaluate the supposedly benevolent nature of U.S. tech. Saturated by a media storm slandering their competitors, it’s easy to forget U.S. internet behemoths do the bidding of their government on a regular basis. Facebook conspired with the National Security Agency for its PRISM surveillance program, and Amazon built a computing cloud for the Central Intelligence Agency. Google joined PRISM around the same time as Facebook, but its relationship with intel-gathering agencies goes even deeper; it is the product of CIA and NSA research grants. So it’s abundantly clear a Google or Facebook given free rein to operate would be something of a “fox in the henhouse”—albeit one that keeps its hunger in check long enough to build a customer base among the chickens.

But that’s not the only wrinkle in this story. As these companies move into new markets, they sap burgeoning domestic rivals of their innovative oomph. They leverage economies of scale to dominate and drive out smaller “underdogs,” becoming synonymous with the services they provide. In so doing, they grow into gargantuan hyper-monopolies, wielding a level of influence previously only held by large countries. Ultimately, they answer to their home nations—in this case, the United States—functioning as “soft power” organs while claiming nominal autonomy. This is imperialism for the 21st century, the kind of mechanism for worldwide consolidation of capital Vladimir Lenin observed when he wrote his seminal text over 100 years ago.

There’s no telling what the technological landscape might look like without this corporate oligarchy in the driver’s seat. Rather than the “Big Four” U.S.-based companies dictating what everyone else does—backed by the economic and military might of the planet’s only superpower—we could see more equal partnerships sprout up among all countries, inside and outside the developed world. China has shown it’s possible to build independent industry and scrape one’s way out of a colonial destiny. What might a Nigeria, Bolivia, or Pakistan do in similar circumstances? What kinds of new developments would we see in a tech ecosystem not under the thumb of Google, Amazon, Apple, and Facebook?

Labor is just one area where an alternate state of affairs holds appeal. At present, with their concentrated resources and power, these companies can siphon top workers from across the globe, leading to an international “brain drain” that dries up home countries’ talent pools. This leaves those domestic sectors in the lurch, as U.S. megacorps have “kicked away the ladder” they used to climb to the top.

We see echoes of this phenomenon in the trade “grievances” the U.S. has brought against China; a topic for another time. But no matter how you look at it, this regime of coercion and control denies former colonial subjects their chance to rise up and become strong, sovereign nations. You’d be forgiven for thinking this practice reproduces those old exploitative relations—but of course, the innocent, freedom-loving United States government would never do such a thing.

Just like all other measures taken against Huawei—and China in a broader sense—this is an attempt to choke out a competitor and maintain U.S. hegemony through the foreseeable future. It happened to Japan in the 1980s, and the playbook has changed little in the intervening years. The difference between then and now is China was watching and learning. There won’t be a present-day Plaza Accords, where China buckles to pressure and concedes key planks of the system that has had unprecedented success. And these strong-arm tactics won’t work, either; fair negotiations don’t happen when one party has a gun to the other’s head.

China already knows what it’s like to suffer under the yoke of a colonial master. No matter what the U.S. or anyone else tries, it won’t do so again.
https://www.peoplesworld.org/article/fe ... as-huawei/

[Political Interest]

delete

[Patrickov]

@skinster, I don't freaking care whether Trump's motivation is really about security, as long as the point itself stands.

Allowing foreign "competition" on your home soil when your own country is fully capable of getting things done, is more or less allowing a foreign power to control your economy, which some will think as treason. This might be acceptable for other countries because they are so rotten that intervention is necessary, but advocating this against the United States, whose society is more capable to self-correct (aside from gun issue maybe) than most other countries' societies, sounds ridiculous and dangerous to me.

[Rancid]

I was thinking, couldn't the US (and other western nations) just reciprocate on China's policy related to foreign business?

China requires that 51% of ownership of any foreign company be owned by the Chinese and/or government. Basically, they are called "joint ventures".

Couldn't the US/EU/UK just require the same of any Chinese company doing business in the US? I know Huawei & ZTE have offices/subsidiaries in the US.

This way you can steal their IP right back. If everyone is playing dirty, it's ok then... right? Just like Lance Armstrong cheating because everyone else was cheating.

Then again, I think most of the work in these subsidiaries is around marketing and sales, and not so much technology development.

[Patrickov]

I was thinking, couldn't the US (and other western nations) just reciprocate on China's policy related to foreign business?

China requires that 51% of ownership of any foreign company be owned by the Chinese and/or government. Basically, they are called "joint ventures".

Couldn't the US/EU/UK just require the same of any Chinese company doing business in the US? I know Huawei & ZTE have offices/subsidiaries in the US.

This way you can steal their IP right back. If everyone is playing dirty, it's ok then... right? Just like Lance Armstrong cheating because everyone else was cheating.

Then again, I think most of the work in these subsidiaries is around marketing and sales, and not so much technology development.

Now this is something I don't think Trumpists (or Sandersians alike) are capable of

[Rancid]

Now this is something I don't think Trumpists (or Sandersians alike) are capable of

Fair enough, you're right. Ideology will get in the way.

Additional thought. All of this is a VERY good thing for India. I'm already seeing various tech companies looking at doing technology design and parts manufacturing in India. I'd imagine this is a way for companies to mitigate the risks of future trade spats between US - China. If I were a tech company, I would certainly look at spreading around my design and manufacturing capabilities. Too much concentration in China is looking like a bad business move these days.

At this point, it seems like the only reason to have a presence in China is specifically to address the Chinese market and nothing else. I suspect this is how many private companies will line up their strategies.

One example of this is Google. They are expanding chip design in India.
https://www.theverge.com/2019/2/11/18220436/google-pixel-ai-chips-team-division-bengaluru-india-hiring

[Patrickov]

Fair enough, you're right. Ideology will get in the way.

Additional thought. All of this is a VERY good thing for India. I'm already seeing various tech companies looking at doing technology design and parts manufacturing in India. I'd imagine this is a way for companies to mitigate the risks of future trade spats between US - China. If I were a tech company, I would certainly look at spreading around my design and manufacturing capabilities. Too much concentration in China is looking like a bad business move these days.

One example of this is Google. They are expanding chip design in India.
https://www.theverge.com/2019/2/11/18220436/google-pixel-ai-chips-team-division-bengaluru-india-hiring

Sorry, what I thought was just that US politicians were not intelligent enough to think of that, not that their ideology (really?) would block their mind.

India... well, it's a pity but with its population going to overtake China very soon (indeed if counting Pakistan and Bangladesh they have already done the feat!) maybe south Asian countries would really be the ultimate winner. Guess what, I seem to be on the losing side all my life.

[Rancid]

Sorry, what I thought was just that US politicians were not intelligent enough to think of that, not that their ideology (really?) would block their mind.

Yea, I don't know. I would have think about this more.


Thinking out loud. Republicans would say this isn't free-market enough. Then again, they seem to be supporting tariffs. Democrats would just oppose any republican idea, and tout the a free market is the best situation (while saying socialized health care is important too). I'd have to think about this.

Either way, it won't happen. For whatever reason.

[Rancid]

I think yo are right though, just about any non-China country will see some benefit of this, as companies will want to shift at least some design and production away from China.

[Rancid]

@Patrickov

Was thinking about this some more.

I think India in particular does stand to gain a bit more than say the rest of Southeast Asia. Here's the thing, the appeal of China isn't just that it's a low cost labor market. In fact, over the last 10 years or so, the labor cost advantage in China has diminished greatly. The other big appeal of China is that they actually do have a highly skilled work force. If I recall right, the Apple CEO made this point some time ago. "We're not in China because it's cheap but because they have the right skills".

The only other countries that I know in the region that has a significant high skilled labor force are India and Malaysia. I think Southeast asia will certainly gain as well from the lower skilled low cost side, but India and maybe Malaysia will win from the higher skilled labor side.

[skinster]

The US war on China’s economic model
The growing hostility of Western governments to China is more about the interests of Western investors than legitimate security fears

The United States stations 320,000 troops in the vicinity of China [1], maintains a continuous B-52 bomber presence in the region, including over waters claimed by the East Asian giant, [2] and has sent its “most advanced warfighting platforms to the region, including multi-mission ballistic missile defense-capable ships, submarines, and intelligence, surveillance and reconnaissance aircraft.” [3] The 2018 US National Defense Strategy lists China first among the United States’s “five central external threats” including “Russia, North Korea, Iran, and terrorist groups with global reach.” [4] The secretary of state, Mike Pompeo, has called China the “great threat for the U.S. in the long term.” [5] According to The Washington Post’s Bob Woodward, the Trump administration considers China “the real enemy.” [6]

What has China done to make successive US administrations see it as a major external threat and the real enemy? The answer is that China has developed a state-led economic model that limits the profit-making opportunities of US investors and challenges their control of high-technology sectors, including artificial intelligence (AI) and robotics, essential to US military supremacy. Washington is engaged in a multi-faceted war “to prevent Beijing from advancing with plans … to become a global leader in 10 broad areas of technology, including information technology, aerospace and electric vehicles.” [7] Washington aims to “hobble China’s plans to develop advanced technology” [8] and to “force China to allow American companies to sell their goods and operate freely” in China, under conditions conducive to maintaining US economic and military supremacy. [9]

For its part, China seeks to alter a global economic system in which it is allowed only “to produce T-shirts” while the United States produces high-tech, according to Yang Weimin, a senior economic adviser to China’s president Xi Jinping. [10] Xi is “determined that China master its own microchips, operating systems and other core technologies” [11] in order to become “technologically self-reliant.” [12] But self-reliance in industries like aerospace, telecommunications, robotics, and AI means removing China, a large market, from the ambit of US high-tech firms. [13] Moreover, since Western military supremacy has always relied on Western technological superiority, Chinese efforts to challenge the Western monopoly on high-tech translates directly into an effort to challenge Washington’s ability to use the Pentagon as an instrument for obtaining investment and trade advantages for US investors.

China’s economic model
China’s economic model is often called “state capitalist” or “market socialist.” Both terms refer to two important elements of the Chinese model: the presence of markets, for materials, products and labor, and a role for the state, through industrial planning and ownership of enterprises. [14]

The “mainstay of the economy” [15] is China’s over 100,000 state owned enterprises. [16] The state has a strong presence in the commanding heights of the economy. “Key sectors such as banking are…dominated by state-controlled companies.” [17] State-owned enterprises “account for about 96% of China’s telecom industry, 92% of power and 74% of autos.” [18] Beijing “is the biggest shareholder in the country’s 150 biggest companies.” [19] The combined profit of state-owned “China Petroleum & Chemical and China Mobile in 2009 alone was greater than all the profit of China’s 500 largest private firms.” [20]

Industrial planning is carried out by the National Development and Reform Commission. The commission uses various means to incubate Chinese industry in key sectors [21] and drafts plans “to give preferential treatment” to Chinese firms in strategic areas. [22]

Beijing is counting on state owned firms “to become global leaders in semiconductors, electric vehicles, robotics and other high-technology sectors and is funding them through subsidies and financing from state banks.” [23] The planning commission also guides the development of steel, photovoltaics, high-speed trains, and other critical industries. [24]

Beijing has closed sectors it considers strategic or vital to national security to foreign ownership. These include “finance, defense, energy, telecommunications, railways and ports” [25] as well as steel. All steel industry firms are state-owned and all are financed by state-owned banks. [26] In total, “China … has restricted or closed off 63 sectors of its own economy to foreign investors, such as stem-cell research, satellites, exploration and exploitation of numerous minerals and media, as well as humanities and social-sciences research institutes.” [27]

China also relies heavily on joint venture arrangements to acquire Western technology and know-how. This idea was initially introduced to China by General Motors, which proposed a joint venture in 1978 with the Chinese car industry. GM’s idea was to trade off its technology and know-how for access to a vast market and low-wage labor. [28]

Chinese leaders saw joint ventures as a way “to propel its industries up the value chain into more sophisticated sectors and the country into rich-nation ranks.” [29] Technology acquired from Western partnerships diffused into the Chinese economy, allowing Chinese firms to become competitors of the Western companies. [30] For example, Chinese rail companies used technology acquired through joint ventures with Japanese and European firms to become giants in high-speed rail. [31]

China seeks to achieve self-sufficiency in high-tech by 2025 under a plan called Made in China 2025. The idea is to vault into the top ranks of high-tech, matching and eventually overtaking the West. Xi has complained that Chinese “technology still generally lags that of developed countries” and that China must “catch up and overtake” the West in “core technological fields.” [32] To help achieve this goal, Beijing plans to “spend billions in the coming years to make the country the world’s leader in A.I,” [33] among other areas.

China’s economic model is not new. According to the economist, Chang Ha-joon:

“In a way, what it is doing is actually not that different from what the more advanced countries were doing in the late 19th century and early 20th century. Many countries, including Japan and Germany, like China today, were using state-owned enterprises to develop their strategic industries. You can say that China is going through what all the other economically advanced countries have been through, and examples range from the U.S. in the mid-19th century to South Korea in the 1970s and 80s.”[34]

US objections
Countries which dominated the globe economically, politically, and militarily have always been the great champions of free trade. The United States had no use for free trade until it became the dominant economic power in the wake of the Second World War. Until the end of WWII, US tariffs were among the world’s highest. Emerging from the war as the planet’s strongest economic power, the United States did all it could to impose free trade, free markets and US free enterprise on as much of the world as it could, and wasn’t shy about using economic warfare, the CIA, and military force to accomplish its goal.

Today, Washington objects strenuously to the Chinese economic model, to the point that it’s willing to use economic warfare, military intimidation, and perhaps even outright war (see below) to impede it. Access to Chinese markets and low-wage labor is highly valued by the US state, but Washington resents access being made contingent on joint venture arrangements which allow US technology to be absorbed by Chinese businesses. The United States demands that US investors be freed from such conditions, that US corporations be granted unfettered access to all Chinese markets, and that US firms be allowed to compete with Chinese enterprises on equal terms, without favor for Chinese companies. There are two reasons Washington makes these demands: to maximize the profit-making opportunities available to US investors in China and to prevent Beijing from building ‘national champions’ able to compete with US corporations. [35]

The US economic elite has for years expressed its grievances over China’s state owned enterprises. It complains that it is “denied lucrative government business, which goes instead to the state champions.” [36] US business people grouse that “In the past few years, China has significantly increased the government’s role in the economy, pumping up the state sector and crowding out private and foreign businesses.” [37] And they lament that the “heavily protected and subsidized Chinese state-owned enterprises … are pounding U.S. companies not just in China but in competition globally.” [38] In response to these grievances, Washington is pushing for “reducing the role of state-owned firms in China’s economy.” [39]

Made in China 2025 is a significant irritant to Washington. Peter Navarro, US president Donald Trump’s trade adviser, denounces it as “economic aggression” because it “threatens the U.S. technology sector.” [40] US vice-president Mike Pence calls it Beijing’s master plan to bring “90% of the world’s most advanced industries” under the control of the Chinese Communist Party. [41] An emblematic US media description of the Chinese plan is: “Made in China 2025 is Beijing’s plan to dominate global markets in a wide range of high-tech products. China’s strategy is to give large government subsidies to state-owned companies and supplement their research with technology” acquired from Chinese partnerships with, or purchase of, US firms. [42] The description contains within it a diagnosis and implied US treatment plan: Compel Beijing to a) end subsidies to state-owned enterprises; b) lift joint venture conditions which allow Chinese firms to acquire US technology; and c) prevent Chinese companies from buying Western firms as a means of acquiring Western technology.

The New York Times has reported that the US trade representative Robert Lighthizer “wants China to reduce subsidies and other aid to Chinese firms competing internationally in advanced technology” [43] and that one US “demand is for China to halt its subsidies for its ‘Made in China 2025’ program aimed at giving its companies a foothold in aircraft, robotics and other areas of advanced manufacturing.” [44]

“Beijing believes in state-driven research to help state-owned industries,” observes The Wall Street Journal, “while the U.S. depends on the private sector, along with a healthy dose of government-funded basic research.” [45] That’s not entirely true. The privately-owned Chinese telecom equipment maker, Huawei, spent “$13 billion last year … developing its own technologies, outpacing Intel Corp. and spending almost as much as Google parent Alphabet Inc.” [46] And corporate America’s reliance on government-funded R&D is far greater than usually acknowledged.

Washington started investing heavily in R&D after the allegedly innovation-stifling Soviet economy allowed the USSR to beat the United States into space, and then chalk up a series of other firsts: the first animal in orbit, first human in orbit, first woman in orbit, first spacewalk, first moon impact, first image of the far side of the moon, first unmanned lunar soft landing, first space rover, first space station and first interplanetary probe. Beat by the Russians, the United States was galvanized to take a leaf from the Soviet book. Just as the Soviets were doing, Washington would use public funds to power research into innovations. This would be done through the Defense Advanced Research Projects Agency. The DARPA would channel public money to scientists and engineers for military, space and other research. Many of the innovations to come out of the DARPA pipeline would eventually make their way to private investors, who would use them for private profit. [47] In this way, private investors were spared the trouble of risking their own capital, as free enterprise mythology would have us believe they do. In this myth, far-seeing and bold capitalists reap handsome profits as a reward for risking their capital on research that might never pay-off. Except this is not how it works. It is far better for investors to invest their capital in ventures with less risk and quicker returns, while allowing the public to shoulder the burden of funding R&D with its many risks and uncertainties. Using their wealth, influence and connections, investors have successfully pressed politicians into putting this pleasing arrangement in place. Free enterprise reality, then, is based on the sucker system: Risk is “socialized” (i.e., borne by the public, the suckers) while benefits are “privatized” (by investors who have manipulated politicians into shifting to the public the burden of funding R&D.)

A study by Block and Keller [48] found that between 1971 and 2006, 77 out of R&D Magazine’s top 88 innovations had been fully funded by the US government. Summarizing research by economist Mariana Mazzucato, former Guardian columnist Seumas Milne pointed out that the

[a]lgorithms that underpinned Google’s success were funded by the public sector. The technology in the Apple iPhone was invented in the public sector. In both the US and Britain it was the state, not big pharma, that funded most groundbreaking ‘new molecular entity’ drugs, with the private sector then developing slight variations. And in Finland, it was the public sector that funded the early development of Nokia – and made a return on its investment. [49]

Nuclear power, satellite and rocket technology, the internet and self-driving cars are other examples of innovations that were produced with public money, and have since been used for private profit. When he was US president, Barack Obama acknowledged the nature of the swindle in his 2011 State of the Nation Address. “Our free-enterprise system,” began the president, “is what drives innovation.” However, he immediately contradicted himself by saying, “But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need.”

Today, the United States “is spending roughly $1 billion to $2 billion annually, much of it federal funds, to build the first ‘exascale’ supercomputer—capable of a quintillion calculations a second, which is at least 100 times faster than today’s champion. Such a machine would help in everything from designing futuristic weapons to investigating brain science.” [50] The US government is also “boosting spending in semiconductor research, an area of intense Chinese interest.” [51] Meanwhile, the White House’s Office of Science and Technology Policy is funding research on “quantum mechanics to eventually make computers and communications operate at speeds and efficiency well beyond anything possible today.” [52] And on top of these public R&D expenditures, the DARPA continues to fund advanced research, including on A.I. [53] Simultaneously, Washington is demanding that China halt its own R&D spending in the same areas.

All of this points to a number of important facts. (1) The United States kick-started innovation in its own economy by emulating the Soviet model of state-directed research because free enterprise was not up to the task. (2) Rather than emulate the Soviet model for public benefit, the United States channels public money into R&D for private profit. (3) US high technology supremacy relies significantly on public funding, yet (or rather because of this) Washington demands that China forbear from its own public funding of innovation research. Washington will only tolerate public funding of basic research that benefits US investors.

Explaining US hostility to China
Understanding the economic and political organization of the United States helps understand why Washington is antagonistic to China’s economic model. The following explains the US political elite’s hostility, currently expressed in the declaration of China as the United States’ top external threat; in the US-instigated trade war against China; in the blocking of Chinese purchases of US companies; and in the exclusion of, or threat to exclude, such Chinese corporations as Huawei and ZTE from Western markets.

The US political elite is interlocked with the community of major US investors. US administrations, the US senate, and the top strata of the US bureaucracy, are mainly staffed by wealthy individuals whose wealth derives from investment income. Additionally, organized business groups and major corporations exert significant influence on the political elite through lobbying, via the funding of policy formation think-tanks, and by ownership of the mass media. In their 2014 study of over 1,700 US policy issues, the political scientists Martin Gilens and Benjamin I. Page demonstrated that “economic elites and organized groups representing business interests have substantial impacts on government policy, while average citizens and mass-based interest groups have little or no independent influence.” [54] Accordingly, US foreign policy defines external threats as threats to the interests of US “economic elites and organized groups representing business interests”—the very same community which dominates the formulation of public policy.

The US National Defense Strategy does not define China as a threat to the United States but as threat to US interests. Unlike the United States, which has a significant military presence in the air, sea and land around China, the East Asian giant does not have a military presence in the Western hemisphere, and is not currently capable of projecting force into it. China does not therefore constitute a military threat to the United States. What, then, are the US interests that China’s threatens? Consistent with the interlocked nature of the US political and economic elites, US interests refer to the profit-making interests of US investors.

China’s economic model threatens the profit-making interests of US economic elites and organized business groups in the following ways.

• State-owned enterprises are closed to US investors and compete against US investment.
• Protected sectors deny US investors profit-making opportunities.
• Joint venture requirements limit US investment and are used to acquire technology to develop enterprises which become capable of competing with US firms.
• State incubation of national champions develops competitors to US investment.
• Made in China 2025 locks US investment out of Chinese high-tech markets, competes against US high-tech investment globally, allows China to contest US military supremacy, and undermines US capabilities to use force to obtain trade and investment opportunities under favorable conditions.

China’s economic model also threatens US (investor) interests by offering an exemplar for other countries to follow, which, if followed, would reduce US profit-making opportunities even more significantly. The Chinese model has had undoubted success in lifting China from poverty. In 1984, three-quarters of the Chinese population still lived in extreme poverty. By 2018, extreme poverty had fallen to less than one percent. [55] And China is poised to challenge the West’s technological supremacy. These extraordinary accomplishments were not the product of Beijing following Washington’s economic advice; they are “due to planning in a socialist market, not conventional capitalism,” observes Robert C. Allen, a specialist in economic development. [55] Even The Wall Street Journal acknowledges that China’s “rapid economic development” is due to “state enterprises operating under an industrial plan.” [57] Washington cannot allow such a model to take hold and spread, for if it does, the profit-making opportunities on which US investors depend will shrink. US free enterprise, from Washington’s point of view, must be welcomed everywhere—and the division of the world between exploiting countries and exploited ones must continue ad infinitum.

Time and again, underdeveloped countries have implemented economic models at the core of which have been state-owned enterprises and industrial planning. In almost every case, Washington has used sanctions, the CIA, or the Pentagon, or all three, to put a stop to this threat to the profit-making interests of the United States’s ‘substantial’ citizens. Today, the US elite is agreed that China must be ‘contained’, even if there is no agreement on how. The think-tank, the RAND Corporation, funded by the US government, US corporations, and US investors, has even contemplated open war as a solution, in a 2016 study titled War with China: Thinking Through the Unthinkable. [58]

The words of Norman Bethune, a Canadian surgeon who served in Mao’s Eighth Route Army, come to mind.

“Behind all stands that terrible, implacable God of Business and Blood, whose name is Profit. Money, like an insatiable Molloch, demands its interest, its return, and will stop at nothing, not even the murder of millions, to satisfy its greed. Behind the army stands the militarists. Behind the militarists stands finance capital, and the capitalists. Brothers in blood; companions in crime.” [59]
https://gowans.blog/2018/12/30/the-us-w ... mic-model/