China’s Last Moonshot

China’s ghost cities are like a mocking glimpse of the Chinese century we were told to expect, and for which we are still waiting.

By Aaron Sarin at Quillette.

"Our rockets can find Halley’s Comet and reach Venus.
But our fridges don’t work.
~Mikhail Gorbachev 

In the hills of northeast China, the “State Guest Mansions” sit empty and silent, like the well-preserved ruins of some lost civilisation. There are 260 of these mansions, huge but tediously uniform, each of them close to completion. The project was abandoned a couple of years after launch in 2010. Now local farmers plough the surrounding land. Cattle roam the villas, along with the occasional feral dog. Inside, urban explorers climb through the open jambs and fly their drones down marble hallways, creating creepy home movies.

Similar sights can be seen all over the country, of course, in China’s famed “ghost cities” (or sometimes “ghost districts”). The skyscrapers in Tianjin’s Binhai New Area may rise no higher than in any other major city, but the silence and emptiness of the surrounding neighbourhood makes the buildings feel truly enormous: looming, forbidding, watchful. In his 2024 book Vampire State, Ian Williams describes a “ghostly conurbation” on the other side of the country, near Dongguan, that boasts the world’s largest shopping mall:

Cavernous dusty halls, layer upon layer of meandering marble-lined walkways beside the shells of hundreds of shops, but not a soul to be seen. Wires hung from ceilings like an infestation of snakes. An artificial river wound through the complex, its water stagnant and dark green.

These vast monuments to state folly provide an apt picture of the Chinese economy: the speed and scale, the single-minded vigour, and then the waste left behind. The latter feature is partly due to China’s modern problem (communists with their central planning) and partly due to China’s ancient problem (a kowtowing mandarin culture that rewards impressive visible display over efficiency).

The rot spreads far beyond the ghost-city phenomenon. Georgetown professor Ning Leng carried out research in fifteen cities across China. She found that local governments had prioritised the building of expensive wastewater treatment plants over the construction of underground sewage pipes and drainage systems. They had focused on big treatment facilities because these looked more impressive to their bosses in Beijing. Without a vital subterranean root system of pipes and drainage, the treatment plants were operating far below capacity, and pollution was pumping into rivers and lakes.

And so on, and so on. China’s vaunted high-speed rail network piled up a trillion dollars in debt; most lines now run at a loss. In 2024, 90.6 percent of the country’s regional airports had fewer than one flight per day on average. Something similar is even happening in the wake of China’s protracted real-estate downturn, as the CCP tries to rescue the Chinese economy by pouring billions into a small handful of strategic industries—AI, robotics, chips, green energy.

This bold strategy is the Communist Party’s last great moonshot (itself actually the name of a major Chinese AI startup). The fear is that if Beijing can’t dominate in these industries then it will become technologically dependent on foreign powers. The hope is that high-tech sectors can replace the fallen giant of real estate and together constitute a new driver for the Chinese economy, while simultaneously enabling Beijing to “seize the commanding heights of technological competition and future development,” leapfrogging Washington into the position of global hegemon."

Poland's GDP took off when they adopted economic freedom

Tweet from Alex Stapp.  

 

When Schools Try to Cover Up Their Failures

Social promotion and efforts to ban standardized tests are ways of shielding adults from accountability

By Jason L. Riley. Excerpts:

"Among 13-year-olds in nearly every demographic group, test scores in math and reading were flat (since 2022). And most youngsters continue to lack proficiency in both subjects."

there is "pressure on teachers to pass students regardless of classroom performance or even attendance"

"The result is a school system full of children unable to perform academically at even the most basic level."

"many teachers said that they were discouraged or forbidden by their principals from flunking students, or that they have given out failing grades that were overridden. Others said failing students was permitted if justified, but the administrative burden to rationalize failure, even for students who did not show up to school, is onerous or impossible.”"

"An Education Department study in 2024 found that 1 in 4 young adults are functionally illiterate, even though more than half received high-school diplomas."

"many of today’s high-school grads function at or below a middle-school level of education. Eliminating standardized tests wouldn’t change that reality"

"it isn’t expensive to teach children reading and arithmetic, something that was done competently for many decades on budgets much smaller than what educators have at their disposal today." 

"empirical studies have shown that smaller class sizes have minimal effect on student learning. Countries that consistently outperform the U.S. on international tests, including Japan and South Korea, have larger classes on average. So do many high-performing charter schools."

"the best-performing students in the U.S. tend to be of South Asian and East Asian heritage. They are among the groups least likely to be taught by someone who looks like them." 

Have market forces eroded Apple's monopsony power for chips?

To see how monopsony works graphically, see the Wikipedia article. Monopsony means one buyer (whereas monopoly means one seller). Similar to what happens in monopoly where the price is higher than in competition and the quantity produced is lower, in monopsony less is produced and sellers get a lower price because the one buyer has market power.

And that is something that Apple has been accused of. See Apple Is America’s Semiconductor Problem. Excerpt:

"Apple’s sheer size as a buyer puts this into perspective. In 2022, Apple bought $67 billion of semiconductor chips, a full 11% of the global market for chips across all industries. Apple buys a far larger share of smartphone and computer semiconductors, given that it accounts for half of global smartphones sales and earns 85% of all smartphones profits. Apple’s supply agreements with U.S. mobile operators demand that Apple products get the deepest subsidies and the largest share of sales."

But the recent increase in demand for chips for AI purposes means that there are many more buyers and it looks like Apple's influence is decreasing. See Apple to Raise Prices Due to Memory Chip Crunch, Tim Cook Says: The CEO tells the Journal in an exclusive interview that soaring costs make price increases ‘unavoidable’ by Rolfe Winkler of The WSJ. Excerpts:

"Apple plans to raise prices on its products to offset the surging costs of memory and storage chips, Chief Executive Tim Cook said"

"“There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” said Cook. “We definitely need memory pricing and supply to return to reasonable levels for consumer products. That’s the bottom line.”" (there is less supply for Apple)

"Memory companies are building more factories: Morgan Stanley forecasts that production capacity for DRAM wafers, the silicon discs on which chips are patterned, will grow 30% by 2027. Yet as suppliers prioritize the specialized AI memory, wafers for consumer tech will fall up to 15% short of demand, Morgan Stanley estimates." (so if there is more demand now with more buyers more will be produced meaning the monopsony power is being reduced)

"Companies that make PCs, game consoles, smartphones and more have raised prices"

"Morgan Stanley estimates a 15% bump for prices of smartphones and PCs in the U.S. this year."

"It is unclear how Apple could match, let alone beat, the deal terms that AI hyperscalers are offering to lock up supply. Those companies are signing three-to-five year agreements with huge cash prepayments that Apple is unlikely willing to match"

"Historically it has used its heft to wring the lowest prices out of suppliers, playing them off each other and leaving them little profit. As AI companies have stormed into the market, suddenly Apple has to wait in line." 

This last passage shows that Apple had some monopsony power that is decreasing since they used to be able to play suppliers off each other with little profit (meaning a low price as monopsony predicts) but now they have to wait in line because there are more buyers they have to compete with. 

‘Communion’ Review: The Veep’s Progress

JD Vance recounts his conversion to Catholicism and explains what he calls a ‘Christian approach to economics.’

By Barton Swaim. He reviewed the book Communion: Finding My Way Back to Faith.

"You might have thought the esteem in which he holds working folk, together with his disdain for elites who presume to know what other people need, would have led Mr. Vance to appreciate laissez-faire economics, presuming as it does that ordinary people generally know how to use their own resources more wisely than faraway eggheads. And maybe he almost did plump for free markets at one time. Early in the book, in a passage I’m tempted to think he forgot to cut, he makes the point that religious questions often involve hidden complexities. Mr. Vance draws a comparison with minimum-wage laws, which, he notes, seem like a great idea but “could do more harm than good” by dissuading employers from hiring more workers. His lesson: “The complexity counsels some humility in the face of difficult questions.”

That bit appears in Chapter 2. By Chapter 11, “A Dismal Science,” Mr. Vance has cast humility aside. Straw men populate the book’s later chapters, particularly on economic questions. He equates the free-market outlook with amoral indifference to anything apart from abstract economic-growth numbers. Reciting stories of people trampling one another to buy new tech products on Black Friday, Mr. Vance observes that “from the view of classical economics, they’re doing something far more ‘productive’ than reading a book or spending time with their children.”

Having several years ago read Leo XIII’s 1891 encyclical “Rerum novarum,” in which the pope sought to enunciate an economic outlook that avoided both socialism and capitalism, Mr. Vance attempts to express his own “Christian approach to economics,” which amounts to little more than the prescription that economic actors should exercise kindness, mercy and generosity. Employers, Mr. Vance accordingly thinks, should pay workers a fair or living wage. He doesn’t say who would define “fair” and “living”—Labor Department bureaucrats?

In one passage of egregious sloppiness, Mr. Vance quotes a paper by Vanessa Brown Calder, formerly of the Cato Institute, in which she explains the perverse effects of mandatory parental-leave benefits. “A review of states and countries with government-mandated paid leave programs indicates they harm young women,” Ms. Calder writes. “This is because parental leave policies are associated with an increase in leave-taking and childbearing, which leads to lost labor or increased health care costs for companies.” Mr. Vance fulminates: “Never have I read a purer distillation of our worship at the altar of commerce.” If he had read the paper more carefully, or even the next sentence, he would have noticed Ms. Calder’s argument: that mandated parental-leave laws discourage companies from hiring women at all, and that a host of other reforms would give them the freedom to start families without encouraging firms to penalize them."

When Food-Stamp Fraud Crosses State Lines

Since 2024, Michigan has paid more than $4 million in food-stamp funding to people with out-of-state addresses

Letter to The WSJ. 

"The Journal’s editorial board is right to celebrate the decline in food-stamp enrollment due to work requirements and efforts to combat fraud ("The Food Stamp Rolls Decline—Hurray,” Review & Outlook, June 8). To put a finer point on the fraud that the Trump administration is trying to root out, consider what my organization recently discovered in Michigan.

We found that since 2024 Michigan has paid more than $4 million in food-stamp funding to people with out-of-state addresses. That’s despite a law requiring that program recipients live in-state. The problem has grown worse each year. Out-of-state payments rose from $1.6 million in 2024 to $1.9 million in 2025. The number of out-of-state recipients is on track to rise from nearly 3,200 last year to 3,700 this year.

Under Democratic Gov. Gretchen Whitmer, Michigan has refused to share food-stamp data with the Trump administration. When will states like Michigan finally get serious about protecting taxpayers from waste, fraud and abuse?

Jarrett Skorup

Mackinac Center" 

Who Wants to Be a Trillionaire? The SpaceX IPO is a credit to Elon Musk and American capitalism

WSJ editorial. Excerpts:

"The company raised $75 billion in its public debut, nearly three times more than the previous largest IPO (Saudi Aramco in 2019). It will need that money and multiples more to achieve Mr. Musk’s ambition of colonizing Mars and mining asteroids."

"Mr. Musk’s wealth largely consists of shares in SpaceX and Tesla."

"Mr. Musk’s wealth is a tribute to U.S. entrepreneurship and innovation, which are byproducts of its free-market system."

"Mr. Musk, an immigrant from South Africa, launched the rocket company in 2002 with money he made from his PayPal startup."

"NASA awarded SpaceX a contract to supply the International Space Station. SpaceX later developed reusable rockets that greatly reduce launch costs"

"Its success, which came through trial and failure, has ended U.S. reliance on Russia to transport astronauts to the space station and launch American satellites."

"In 2015 SpaceX launched Starlink, an internet satellite company that has helped Ukraine resist Russia’s invasion and dissidents living under authoritarian regimes like Iran to communicate."

"SpaceX has created thousands of jobs in working-class communities"

"Its workers . . . receive stock options, which has allowed them to share in the company’s success." 

"the IPO has made millionaires of 4,400 SpaceX current and former employees"