History Does Not Have to Repeat Itself

Everyone from the President to the local barber has a consistent, universal opinion that China is stealing our intellectual property and using that technology in violation of patent law.  They have targeted key industries for insourcing (outsourcing for others) that they know make other nations dependent on them for commerce, and more importantly current and future war materials. 

The Chinese are masters at the long game, where one sets themselves up for long-term success, even if it means short-term sacrifices.  In totalitarian societies short-term actions are always viewed as shared sacrifices for the “greater good,” but often the burden falls to those lacking power.  Our corporations and society are geared to a short term focus where quarterly reporting drives management actions.  Shareholders need to expect a longer-term view of profits and voice these concerns to management.

Leading up to World War II there were plenty of signs that Adolph Hitler was playing games with England and much of Europe.  While the British worked on appeasement, Hitler and Nazi Germany worked on building a war machine.  In those days wars were fought with soldiers, spies, bullets, guns, tanks, and other machines of war.  Many believe that the best and most advanced technologies in use were the Enigma Machine, radar, and early rocketry.

Today is a very different era with technology playing a front-line role in any war.  Cyber-attacks, EMP’s, power grid interruption, hypersonic missiles, satellites, suicide drones, ICBMs with multiple warheads, laser weapons, rail guns, and tactical nuclear weapons are all shared concerns.  It is a different world, with very different capabilities, technologies, and challenges.  Today a country that steals your technology endangers your sovereignty and the world.  Reliance on adversaries for key technological components on any product is illogical and not in our national interest, but it will take a massive effort to move key technologies back to the U.S.

We only need to observe the War in Ukraine to realize that future ground wars will likely take on some aspect of guerilla warfare.  In this world soldiers can die or be made so fearful or uncomfortable that there is no safety.  The use of drones of all sizes and shapes, bombs and bomblets, coupled with satellite communication and surveillance, seems to leave no one safe anytime, anywhere.  The War in Ukraine has also shown that corporations can be forced to shutter or abandon assets once war is declared.  Since the beginning of the Ukraine War AMD, Intel, Apple, Google, Amazon, Cisco, Dell, HP, IBM, SAP, Oracle, have all been forced to walk away from doing business in Russia.  Shareholders have had no real voice in these decisions other than to vote through proxies or sell their stocks.

Key questions for us center around national security and the willingness of our corporations to settle for short-term profits, while sacrificing long-term gains and corporate stability.  In essence, which companies are playing a “short game” and turning a blind eye to national security for profit.  This is not misplaced nationalism, it is a serious question of survival of our Constitutional way of life, patriotism. 

It does not have to be this way unless we continue to lose our self-sufficiency.  Of major importance is a balance within corporate profits, where we begin to reduce our dependence on China and refocus on growing our corporations with markets in the free world.  Europe, Australia, Africa, and Asia (outside of China and North Korea) are all areas where growth does not threaten our sovereignty.

The list of companies that played the short-term profit game at the start of World War II is well known, and although those responsible have died out, many of the companies are still around and are now repeating history.  Corporations, management, shareholders, and customers have a way of forgetting and forgiving misdeeds over time, even those that are as egregious as the Holocaust.

We are ardent capitalist, but we are also patriots and believe that Country must come before profit, always.  All the talk about worldwide supply chains, global economies, outsourcing, and self-sufficiency needs to be viewed through a lens that is anything but rose colored.  Without this balance between national importance and short-term profit, there is no long-game for us or any other nation.  The current energy situation in Europe should serve as a warning to us all, and closer to home we must demand that our strategic oil reserves not be used for political purposes.

Anyone who has ever read a history book knows that the history of the world is not long periods of peace interrupted by occasional wars.  The history of the world is constant conflict at some level, in some region, with occasional brief periods of peace.  We must hope that there will be no war with any other nation on the horizon, but to avoid those conflicts we need to be Patriotic in our business dealings, not focus on just short-term profit.

How dependent are our corporate profits on Chinese revenues or profit?

Technology is the most important industry and where most vulnerabilities exist.  We must remember that all business done in China is done with the Chinese Communist Party (CCP) regardless of the name over the door.  These companies have sales to China, as a percent of total worldwide sales, of approximately: