OPINION:
The wars in Ukraine and Iran reveal unsettling lessons.
Our prosperity and capacity to project power and influence abroad increasingly depend on artificial intelligence and semiconductors, designed in America but fabricated in Taiwan and South Korea.
We can prosper and defend our interests only if those two nations are squarely in America’s camp. The loss of either to China or North Korea would give the Axis leverage over Western economies similar to that enjoyed by Iran, which can block shipping through the Strait of Hormuz.
The conflicts in Ukraine and Iran demonstrate the limitations of high-technology defense systems to ward off enemies in an era of cheap and easy-to-make drones.
Interceptor missiles, such as the Patriot, THAAD and AMRAAM, are expensive, and our manufacturing capacity is limited. Iran’s strategy has been to have cheaper drones hit by American interceptors before striking with missiles and to overwhelm the Navy’s capacity to fend off attacks in the strait with a mosquito fleet of small boats and mobile land-based launchers.
Taiwan’s population is only 23 million, compared with Ukraine’s 40 million and Iran’s 92 million. It may not have the cultural sinew of the Ukrainians or the manpower to repel a Chinese invasion without extraordinary stocks of drones and defensive missiles.
Its failure to prevail would put the Taiwan Semiconductor Manufacturing Co.’s foundries in China’s hands and leave America’s economy and defense between a rock and a hard place.
North Korea has the capacity to strike Japan, South Korea and perhaps the U.S. West Coast with nuclear weapons, and it is developing theater tactical nuclear missiles.
The case for industrial policies — not simply tariffs and other import restrictions, but rather rolled-up-the-sleeves Chinese and Japanese-style dirigiste state direction — has never been more compelling.
Presidents Biden and Trump acted, but we simply aren’t moving as fast or as powerfully as we should be.
We must ask whether Congress has the political maturity — with its cultural obsessions on the left and isolationist and limited government impulses on the right — to reorder national spending priorities that such a herculean undertaking would require.
Mr. Biden enjoyed Democratic control of both the House and Senate to push through his industrial policies, but those were made terribly more expensive with the cultural baggage the left imposed: child care, hiring goals for unions and underrepresented groups, and the like.
Winning at semiconductors, rare earth minerals and other vital industries is expensive enough absent those. Can we afford to compete if every industrial policy is crafted like a New York City housing project, with goals for affordable units and other identity politics obsessions?
TSMC’s high-end processors and memory chips made by Samsung Electronics, SK Hynix and Micron Technology are virtually 100% dependent on machinery manufactured by Dutch semiconductor company ASML.
The defense of Western Europe and NATO has never been more vital to American interests.
Since the Obama presidency, U.S. foreign and defense policymakers have discussed refocusing U.S. military resources toward the Pacific to address the growing Chinese challenge to American commitments and interests.
The face-off with Iran has brought to the foreground the folly of that.
Friends in Asia rely too much on Persian Gulf nations for oil, liquefied natural gas, aluminum, hydrogen, helium and sulfur to be ignored.
Iran’s capacity to cut off access to Persian Gulf resources — long in the planning and potentially devastating with a potential North Korean level of nuclear weapon capabilities — made the Israeli-U.S. strikes imperative.
The naive and tepid response of the Europeans, including their reluctance to help convoy ships through the strait, smacks of weakness and cowardice. Similarly, their inability to produce weapons such as air defense systems speaks volumes about their value as allies.
Still, we are stuck with them.
The United States currently spends about 3.4% of gross domestic product on defense. To handle all we need in Europe, the Middle East and the Pacific, we should spend at least 5%. With China’s and Russia’s resources growing, likely more.
We need a much larger navy and larger procurement budgets to support adequate supply chains for weapons such as interceptors and drones.
With federal spending at 23% of GDP, entitlements accounting for about 60% of that, and the federal deficit in the neighborhood of 6% of GDP, Americans must learn to live less well.
The scope of social benefits and corruption financed by federal, state, and local monies — consider Minnesota and Mississippi — indicates that some trade-offs and legitimate savings are possible, but they will hardly be enough.
To be a free society with genuine agency in the world, Americans will have to pay more taxes, work more years — less time wasted in high school and college, raise the Social Security retirement age or both — and rely less on the government for personal economic security.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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