Weakened Russia, China
In 2022, important things didn’t work out as many had expected on just about every point on the political spectrum. Prime example: Ukraine. When Vladimir Putin’s Russian troops invaded on Feb. 24, it looked like an independent Ukraine was toast. Military experts on cable channels said Russia had overwhelming superiority. It would take Kyiv and occupy the whole country.
The Biden administration evidently shared this view, evacuating the U.S. Embassy and offering a plane to rescue the president (and former comedian) Volodymyr Zelenskyy, who at this point uttered the immortal words, “I need ammunition, not a ride.”
The Biden administration, to its credit, adjusted to the unexpected reality and provided Ukraine with vital military and economic aid. Recently Zelenskyy visited Washington voluntarily, not as an exile. And it is Putin who is describing his side’s position in Ukraine as “extremely difficult.”
The lesson is that morale can trump materiel. People will prove braver and more resourceful when protecting their freedom and their nation’s independence than firepower statistics suggest.
That is another way of saying that nationalism—regarded by many in the press and academia as a form of fascism—can be a positive force for human freedom. This is true even in a place that has been a separate nation, except for a few months in postWorld War I chaos, for only a single generation.
A second surprise of 2022 has been the decline of China. It wasn’t so long ago that sophisticated soothsayers predicted its economy would soon be larger than America’s and that its centralized and admittedly authoritarian experts were showing the way to plan for the future.
So much for that. The Chinese Communist Party’s rigid lockdown to suppress covid-19 has done more economic damage than just about anyone deemed possible.
This was not the regime’s first unexpected infliction of self-harm. That would be its 1970s one-child policy, which has left China now with a population that has become elderly before it got rich. Maybe this shouldn’t have been unexpected.
And maybe it shouldn’t have been unexpected that even China’s stringent lockdowns couldn’t prevent the spread of a virus transmissible by asymptomatic persons and that, with appropriate vaccines, is seldom fatal except among elderly people with serious risk factors. Unfortunately, the supposedly efficient Chinese used their own inferior vaccine rather than one developed under the Trump administration’s Operation Warp Speed.
It shouldn’t have been unexpected that China’s lockdowns wreaked enormous economic damage. Here in the U.S., similarly, the harshest lockdowns and masking requirements inflicted self-harm on liberal-run institutions such as unionized public schools and central-city mass transit systems.
China’s economic crash has destroyed the longheld expectation that it would grow ever more prosperous and powerful, just as China’s truculent behavior destroyed the optimistic expectation that its international trade ties would make it a responsible, rules-bound and democratic nation.
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.
A third surprise this year is that massive transfers of trillions of dollars, initiated by the Trump administration and vastly increased by Biden Democrats, have not restored the low-inflation economy with growth tilted toward the low-skill. Low-income was chugging along nicely in the Trump years until February 2020.
The theory behind these enormous infusions is that when demand is down, if you throw enough money out of helicopters (Milton Friedman’s metaphor), growth will result. That’s how it worked in the Detroit of my childhood years: You gave consumers more money through subsidies or tax cuts, and demand for cars rose, and GM, Ford and Chrysler recalled all those workers they’d laid off a few months before. Everything was back in place.
But today’s economy is more complicated than the Detroit mid-century model suggests. As maverick economist Arnold Kling argues, the economy is the sum of multiple patterns of sustainable specialization and trade. Covid-19 restrictions disrupted hundreds of thousands of these patterns, and reconstructing them—or constructing new ones—takes time and imaginative effort by many firms and individuals.
So the trillions of dollars injected into the economy have left many people out of jobs, even while employers vainly seek employees: the socalled Great Resignation. These trillions also sparked skyrocketing inflation, which Democrats and the Federal Reserve insisted was transitory but now looks to be out of control.
Economic damage from pandemic restrictions, it turns out, can’t be repaired the same way as economic damage from downward thrusts in the business cycle.
Some surprises, such as the weakening of Russia and the chastening of China, are good news. But others, like America’s current economic conundrums, leave us puzzled and most likely unprepared for the surprises of 2023.