2022 was a year full of surprises. Important things didn’t work out 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 like independent Ukraine was toast. Military experts on cable channels said Russia has overwhelming superiority. It would capture Kyiv and occupy the entire country.
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The Biden administration apparently agreed with this sentiment, evacuating the US embassy and offering a plane to rescue President (and former comedian) Volodymyr Zelensky, who at this point uttered the immortal words: “I need ammunition, not transportation.”
The Biden administration adapted to the unexpected reality and provided crucial military and economic aid to Ukraine. This week, Zelensky is visiting Washington voluntarily, not as an exile. And it is Putin who describes his side’s situation in Ukraine as “extremely difficult”.
The lesson is that morality can trump the material. People will prove braver and more resourceful in protecting their freedom and the independence of their nation than the firepower statistics show.
This is another way of saying that nationalism—considered by many in the press and academia as a form of fascism—can be a positive force for human freedom. This is true even for a place that, except for a few months in the chaos after World War I, was a separate nation for just one generation.
Another surprise in 2022 was the fall of China. Not so long ago, sophisticated soothsayers were predicting that its economy would soon be larger than America’s, and that its centralized and decidedly authoritarian experts were leading the way in planning for the future.
So much for that. The Chinese Communist Party’s rigid lockdown to suppress COVID-19 has caused more economic damage than anyone thought possible. This was not the regime’s first unexpected self-harm. That would be her one-child policy of the 1970s, which has now left China with an aging population before it got richer. Maybe this shouldn’t be unexpected.
And perhaps it should come as no surprise that even China’s strict lockdown measures have not been able to stem the spread of the virus, which is carried by people without symptoms and is rarely fatal with the right vaccines, except in elderly people with serious risk factors. Unfortunately, the supposedly effective Chinese used their own inferior vaccine instead of the one developed as part of the Trump administration’s Operation Warp Speed.
It should come as no surprise that China’s prisons have caused enormous economic damage. Similarly, here in the U.S., the strictest restrictions and masking requirements have led to the self-destruction of liberally run institutions like unionized public schools and inner-city public transportation systems.
China’s economic meltdown has destroyed long-standing expectations that it would become even more prosperous and powerful, just as China’s brutal behavior has destroyed the optimistic expectation that international trade ties would make it a responsible, rule-bound and democratic state.
The good news about these failed expectations is that Russia’s unexpected failure to conquer Ukraine may have made China’s leaders more cautious about attacking Taiwan.
The third surprise this year is that the massive trillion-dollar transfers launched by the Trump administration and greatly increased by the Biden Democrats have not restored a low-inflation economy with growth skewed toward low-skills—and low-incomes followed. well into the Trump years until February 2020.
The theory behind these massive infusions is that when demand falls, if you throw enough money out of helicopters (Milton Friedman’s metaphor), the result will be growth. That’s how it worked in the Detroit of my childhood: If you gave consumers more money through subsidies or tax cuts, the demand for cars increased and GM, Ford, and Chrysler recalled all those workers they had laid off a few months earlier. Everything was back in place.
But today’s economy is more complex than Detroit’s mid-century model suggests. As independent economist Arnold Kling argues, an economy is the sum of several patterns of sustainable specialization and trade. The restrictions due to COVID-19 have disrupted hundreds of thousands of these samples, and reconstructing them – or making new ones – requires time and imaginative effort by many companies and individuals.
Thus, the trillions of dollars poured into the economy have left many people without jobs, even as employers search in vain for employees – the so-called “Great Layoff”. Those trillions also set off a runaway inflation that Democrats and the Federal Reserve insisted was transitory, but now appears to be spiraling out of control.
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It turns out that economic damage from pandemic restrictions cannot be repaired in the same way as economic damage from business cycle downturns.
Some surprises, such as weakening Russia and punishing China, are good news. But others, like the current US economic conundrums, leave us confused and most likely unprepared for the surprises of 2023.