Economist Stephen Roach

Democracy & Technology Blog Quoting my Old Nemesis Stephen Roach

Original at Gilder Press

My world is turning upside down. As a supply side conservative, I find myself quoting my old nemesis Stephen Roach on economics and Communist dictator Xi Jinping on technology.

Formerly Chief Economist at Morgan Stanley, and occasional fount of useful analysis despite his Keynesian training, Roach has now joined the faculty at the Yale School of Management. From this prestigious perch, he issues a valuable warning against the China decoupling mania that has been adopted across the country. You can read his thoughts here.

Roach makes an excellent economic case. A further problem for me is that China not only made my Life After Google a best seller, but also is adopting its key recommendations at the very highest level. Central to my agenda is a new blockchain architecture for internet security and a new gold–inspired digital currency with blockchain stability.

In a major address in October to the CCP’s Central Committee, Premier Xi Jinping called on the country and the party to “seize the opportunity” of blockchain technology.

Having recently watched my favorites Jack Ma of Alibaba and Peter Ma of Tencent be abruptly displaced from the companies they led, I know that everything in China must ultimately answer to Communist party rule.

The Chinese blockchain will have to be transparent to the Communists. But blockchain are intrinsically transparent. With their distributed architecture, where content is secured by replication through every node, blockchains are the ultimate heterarchy or peer—to—peer technology. It creates security not by centralizing data and hiding it but by distributing and publishing it. Blockchain intrinsically give individuals power, identity, and immutable attestation against top—down regimes.

Make Way for a new Blockchain Platform

This week on April 25 came the launch of China’s national blockchain platform, the Blockchain Service Network (BSN). This is a software and networking regime that will enable developers to plug in and code blockchain applications, both permissioned and exclusive such as Hyperledger (from an IBM consortium), and permission–less, such as EOS and Ethereum.

Significant was the specific embrace of EOS and Ethereum, two of the major Western blockchains, with smart contracts and native currencies. Both these systems spring from fervent libertarian and individualist philosophies.

From their new stock exchanges and pullulating online businesses, Chinese enterprise everywhere lives with such contradictions. But US contradictions are no less extreme, as we take a hammer and sickle to our economy on the basis of wildly exaggerated estimates of millions of potential deaths from COVID–19.

Never has there been so fateful and costly a policy adopted by a democratic nation on the basis of so false and egregiously mistaken forecast.

Meanwhile, this new blockchain platform for the Chinese internet promises to project China ahead of the US for the first time in online applications. It can become a new security architecture for the internet.

In his October speech, Xi called for the creation of “Blockchain—plus,” a software platform and “development kit” for launching new applications for personal advancement, education, employment, food and medicinal safety. It took the Chinese six months to launch it.

China is forging ahead with what is described as a “grand strategy to lead a global monetary and digital transformation of the world economy.”

This week, China announced a sophisticated testing environment for its proposed new central bank digital currency. This venture aims to replace the RMB and other currencies around the globe with new digital systems. It follows the inspiration of longtime Chinese Central Bank statesman Zhao Xiaochuan, an advocate of internet banking who challenged the world’s central bankers in 2009 to develop a new global currency like Keynes’s “bancor” with ties to gold.

Today’s Prophecy

While the democratic United States adopts primitive dictatorial and socialist policies to combat the Chinese virus, China is mostly over the epidemic and is moving toward more advanced financial and Internet architectures based on blockchain.

Unless we get our act together soon, we could be confronting a major crisis for liberty and capitalism.

Patriotic Americans should face the reality that much of the investment opportunity for the US is moving overseas. China may be a treacherous investment arena, but selective allocations in Asia and Israel will prosper in the coming era.

George Gilder

Senior Fellow and Co-Founder of Discovery Institute
George Gilder is Chairman of Gilder Publishing LLC, located in Great Barrington, Massachusetts. A co-founder of Discovery Institute, Mr. Gilder is a Senior Fellow of the Center on Wealth & Poverty, and also directs Discovery's Technology and Democracy Project. His latest book, Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy (2018), Gilder waves goodbye to today's Internet.  In a rocketing journey into the very near-future, he argues that Silicon Valley, long dominated by a few giants, faces a “great unbundling,” which will disperse computer power and commerce and transform the economy and the Internet.