Dana Blankenhorn

What Xi Jinping Doesn’t Know

Dictators can do many things.

They can hold territory. They can terrorize people, even kill them.  They can force our bodies into lives of drudgery and poverty.

What they can’t do is whip people into creativity.

Xi Jinping is betting he can. By controlling what people see and hear, by whipping up patriotic fervor, he thinks he can make China a dominant economy. Many western analysts agree.

He’s wrong. They’re wrong.

This has nothing to do with western investment. It lies in the nature of the 21^st century economy. Because money no longer comes out of the ground. It rains down from the clouds. Technology provides added value. That trend is accelerating.

The Strength of Autocracy

The strength of autocracy lies in its ability to deny reality and get people to embrace lies.

Putin is losing in Ukraine, but he’s not losing his mandate. Among those Russians who remain in the country, and who feel free to express an opinion, his support remains strong.

Xi Jinping is losing his economy, but he’s not losing his mandate either. Stocks are falling, real estate is collapsing, manufacturing jobs are running off to East Asia and his best minds are fleeing Hong Kong. But his rule faces no threat.

The Time Is Now

Here is what 45 years of studying business cycles has taught me.

Now is the time to work on your next great startup.

Right now. When the whole world is collapsing around us. When old business models are failing. When everyone is worried about their job, or about to lose it.

Look at the opportunities. I detailed them three years ago. The end of oil. The machine Internet. DNA as a programming language.

These boil down to renewable energy, control systems, and medicine.

Nurture Talent

The biggest threat to America’s cultural and economic dominance is our winner take all system.

We have succeeded because we nurture talent. Talent is what dominates the world economy in a cloud-based world. Talent must be nurtured if it’s to turn potential into reality. There is no limit to how much talent a cloud-based economy can absorb.

Talent needs comfort. Talent needs to focus on itself. Talent needs freedom.

Anyone who studies talent in any sphere will tell you this. So will all talented people. They will say that their parents let them dream, that their schools nurtured their potential, that their first bosses mentored them. They will talk a lot about patience.

You don’t know where talent will come from, or when it will form. You can’t just focus on those who display talent at a young age. Some take time to find their talent. Matt Turner, who will play in goal for the U.S. team in next month’s World Cup, wasn’t drafted after college. In soccer mad countries like Brazil, he wouldn’t have gotten a chance.

This is America’s secret sauce.

The Time to Buy

The time to buy a bear market depends on your time horizon and your risk appetite.

If you’re in your early 30s, for instance, it’s a great time to buy the U.S. stock market. Stocks are at pre-pandemic levels, including some companies that still have great growth prospects. Most of the Cloud Czars fall into this category, as well as cloud applications like Salesforce.

If you’re in your late 60s, like I am, you should probably hold off. You still want to maintain enough cash to get through if things turn south, as the ultra-bears insist that they must. But ultra-bears are wrong. Markets do bottom, and they do go back up. If we’re about to have nuclear winter, cash won’t save you.

Beyond the PC

I’m surprised more people didn’t anticipate this year’s tech wreck.

Once computing mastered video, as it did early in the last decade, there were no obvious new horizons. What resulted was crap without application. Crypto has no application. The metaverse has no application.

Without new files to deal with, this year is featuring a shakeout in how to deal with them. PCs were already being hurt by Chromebooks, which move most workloads to the cloud. PCs even accepted it. Most of my own PC’s files are now cloud-based.

But what I didn’t anticipate (and should have) was the death of writing.

Wall Street Revolt

What’s most distinguishing about the 2022 economy is how capital is taking the hit.

We all know about the bear market in stocks, down over 20% from their peak. Bond investors are also down over 15%. Real estate is rolling over. This is where capital gets its money.

Meanwhile, ordinary Americans are doing OK. It’s true that inflation is outpacing wage gains, but there are wage gains. Jobs remain plentiful. Last year’s stimulus was mainly aimed at firming incomes. More relief is coming from the Inflation Reduction Act.

This has created pure fury on Wall Street. I follow financial Twitter for my job, and the anger is palpable. Investors are predicting the imminent downfall of the whole economy. They’re demanding that the poor pay the penalty for their mistakes with money. They really can’t get their heads around the current situation.

The Tragedy of Herschel Walker

There are many tragic figures in the politics of 2022.

For me the most tragic is Herschel Walker.

Democrats don’t see it this way. More’s the pity. That’s because Walker represents the apotheosis of Jim Crow 2.0, a system of institutional racism that has been making its way across the south since I moved here in 1981.

It’s like this. Give blacks some places. Give them their own places, like Atlanta. Use thinly veiled racism to maintain white discipline and control in the suburbs. Use state policy to ghettoize the places with black majorities and encourage corruption. Meanwhile, take some with exploitable talent and raise them up. Coddle them, make them think they’re as good as white, so they become the new system’s avatars, black faces on a white system.

See, we’re not racist, look at X. Whose idiocy justifies the racists’ instincts.  

Fear Itself, Without You

“The only thing that we have to fear is…fear itself.”

The words of Franklin Roosevelt, almost 90 years ago, remain true today.

Fear is always with us, all the time. Some (like me) react to fear by acting out, by yelling or (even) committing acts of violence. Others react in the opposite way, withdrawing from argument, even from the world.

Fear is a great weapon. Overcoming fear is a superpower. This is a time to test that superpower.

Having lost all rational argument, Republicans have decided on fear as their 2022 platform. Fear doesn’t have to be real to be powerful. Rainbow fentanyl may be no more real than monsters under the bed. What matters is keeping up the scare and getting fearful people to do what the fear merchants want.

Those of a liberal or rational bent don’t react well to fear. We like to think that people are generally good, and they are. But fear is as human as courage and far more common.

Some react to this fear with their own fear, making their friends and neighbors fear the fearful. Others hide in their homes, in their rooms, and close themselves off from the news. Both these reactions are fine with the fear merchants.

There’s another way. It’s a harder way. But it’s the only way.

That is resolution. Ukraine, and Ukrainians, have been demonstrating this all year, in the face of the horrors and atrocities and death from war. In the face of the coming winter their president, the Churchill of our time, said it better from inside the lion’s mouth.

Oil is Crack

Here’s today’s reason for optimism.

Fossil fuel companies are not the “energy industry.” They never were.

They’re miners, seeking fuel. They’re bringing up stuff from the ground that engines then burn.

Solar panel and windmill makers aren’t the “energy industry” either. They’re manufacturers. They make engines that create energy.

Utilities are the energy industry.

The difference between oil companies and the manufacturers of solar panels is the difference between fuel and an engine.

Until recently, man had no choice but to do the energy two-step, burning fuel in engines to create energy. The engines created by renewable energy producers weren’t economically practical.

Now they are. It now costs less to build and run a windmill than a car engine, much less. The gap gets wider all the time. Even when the cost of battery storage is added, harvesting the energy all around us is the cheaper way to do things.

Given both that economic reality and the damage fossil fuels are doing to our climate, it’s clear that oil is the crack cocaine of our time. We need to get off it if we’re to survive as a species. As I wrote three years ago, we’re in the process of doing that.