Dan Wang is a research fellow at Stanford’s Hoover Institution and author of Breakneck: China’s Quest to Engineer the Future.
In this week’s conversation, Yascha Mounk and Dan Wang explore the conflict between the United States as a society of lawyers and China as a society of engineers, what this means for their relationship, and why the two countries are more similar than they may first appear.
This transcript has been condensed and lightly edited for clarity.
Yascha Mounk: We are in the seventh round of what is probably going to be a thirty-five-round trade war between the United States and China. Who knows exactly where it’s going to stand or what’s going to happen to that trade war in the few days between when we’re having this conversation and when it’ll likely air. But I think you have a helpful way of thinking about the broader contrast between the United States and China. There are obviously many similarities and many contrasts, but the key contrast you draw is between a society of lawyers and a society of engineers. What do you mean by that, and how can that help us illuminate the political tensions between China and the United States?
Dan Wang: In the first Trump administration, I was living through the third and fourth bouts of the trade war while I was in Beijing. We thought that being in the third or fourth round of a seven- or eight-round fight wasn’t so bad—you could see the end. Now we’re in round seventeen, and who knows where the end is. I’m still struck by my time in Beijing, when it seemed that either side was going to move quickly toward a trade deal, and then either side would walk away. There was a time when Trump walked away, and there was a time when Xi walked away. After Xi walked away, the Trump administration designated Huawei onto the entity list, which really morphed the trade war into much more of a tech war. It’s always dangerous to try to predict what happens, but my sense is that the negotiation talks are not going to produce any sort of durable peace in our lifetime.
Mounk: Yeah, it seems like neither a hot war nor a cold war, but a kind of series of indeterminate skirmishes where each side so far has pulled back from the brink yet also hasn’t really wanted to embrace a trade peace—to stay with the metaphor.
Wang: I think if we were in something like a cold war, perhaps that would be something more desirable. I think the previous Cold War was a complete disaster for all sorts of third countries. The Cold War grew very hot for them. But if we understand the Cold War as not a hot war, first of all, and, second of all, as competition on the level of two systems, then maybe we should hope for something like a cold war, in which we’re competing without hot means through two systems.
I was really struck by the early days of the second Trump administration, when Trump announced really high tariffs on China—tariffs that eventually reached 150% before pulling back pretty substantially. What made Trump pull back pretty substantially and conclude a trade truce with China before concluding one with any putative American allies like Canada, Europe, or Japan? It was because Xi Jinping decided to retaliate pretty severely and limit the exports of rare earth minerals. Without rare earth minerals, as well as their associated magnets, a lot of auto manufacturers in the West, including in Germany and in the U.S., could no longer maintain production.
There were these news headlines saying that a Chicago plant of Ford Motors had to stop production of a line because they could no longer get rare earth minerals. I think the really striking contrast between the U.S. and China is also illuminated by this trade war. The trade war itself is a product of the lawyerly society using these tariffs as well as legalisms to try to constrain China’s rise.
Xi Jinping responded by being an engineer and saying, well, we’re not going to give you some of these products that we alone know how to make. Rare earth magnets are something that China makes about 90% of the world’s supply of. By denying that to the Americans, it has really been able to strangle a lot of the American economy.
Mounk: So tell us about what makes America a lawyerly society. Before we talk more about China, what do you mean by saying that America is a lawyerly society, and what strengths and weaknesses does that give the United States?
Wang: The United States has been ruled by lawyers for a very long time. If we take a look at many of the founding fathers, most of them were lawyers. The Declaration of Independence reads like the start of a legal brief. Among America’s first sixteen presidents, from George Washington to Abraham Lincoln, thirteen of them were lawyers. The lawyerly society has persisted into the present day, especially among the Democratic Party. Among the Democratic nominees for president, every single nominee between 1980 and 2024 went to law school.
Mounk: That’s actually a remarkable stat. It was obvious to me that lawyers play a huge role in American society. That point about the founding fathers didn’t seem surprising. I knew individually about each of the Democratic Party nominees or presidents that they had gone to law school, but the fact that every single one had gone to law school since 1980 is really quite striking.
Wang: I think there is a sense in which Donald Trump is also somewhat a product of the lawyerly society. Trump is not a lawyer. He did not go to law school, but many parts of his governing style seem to be a product of the lawyerly society.
Mounk: Well, this is where I was a little bit skeptical earlier. When you were saying the trade war is a product in part of that lawyerly society, I think as a general diagnosis of what America is like, that seems to me quite right. But isn’t a lot of Trumpism and populism, a rebellion against the lawyerly society? Isn’t the way to understand the current administration, in many ways, about the will to break with many of the democratic norms and regular procedures that make it impossible for a properly elected non-lawyer president to do what he really wants and what he claims represents the will of the people? Isn’t what we’re living through, in many ways, precisely a rebellion against the lawyerly society?
Wang: Here’s the theory of the case that Trump is a product rather than a rebellion against the lawyerly society. You cannot understand the business career of Donald Trump without seeing that lawsuits are absolutely central to his career. This man has sued absolutely everyone. He sued his former business partners, his political opponents, and his former lawyers.
He, as president, sued The New York Times for $15 billion, which a judge quickly tossed. This is a man who has been with lawyers throughout his entire life, and he understands the law very well. There is something in his governing style in which he is flinging accusations left and right, trying to intimidate people, and trying to establish guilt in the court of public opinion as a way to make people seem unfit.
The issue with the lawyerly society is that the drawback of the lawyerly society is that lawyers are mostly focused on obstruction. They stop everything, good or bad. What you do not have are stupid ideas like the one-child policy. What you also do not have is functioning infrastructure almost anywhere in the United States because it simply cannot build many important things.
A virtue of the lawyerly society is that it guarantees a degree of pluralism and due process, and these are correct and important. But a virtue and a benefit, both at the same time, is that the lawyerly society works very well for the rich. There is no better country in the world where it is great to be super rich. If you are super rich in China, the Communist Party will probably cut you down at some point.
If you are super rich in Europe, you face very high tax rates and all sorts of issues there. In America, the country works very well for the super rich. If you are rich in New York City, you do not really have to deal with high housing costs. You buy one of these units in one of the skinny skyscrapers that overlook Central Park. You do not take the subway to work. That is quite fine.
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In the United States, you can easily transmute your wealth into political influence in some way. This again describes Donald Trump relatively well. This is someone who understands the law. He is able to take advantage of and abuse the system in many ways. There are many ways in which Donald Trump is wrecking political as well as judicial norms. But I would say he is more a product than a rebellion against the society.
Mounk: All right, we will come back to this discussion. Tell us about the other half of that contrast. If America is a lawyerly society and that really helps to explain how the country works, you are saying China is a society of engineers. How is that true, and what does that tell us about China?
Wang: Let’s look again at the elites. China is a country I call the engineering state because, at various points, the entirety of the Standing Committee of the Politburo have had degrees in engineering, and this is engineering of a very Soviet sort. In 2002, in the Hu Jintao era, every single member of the Standing Committee had degrees in subjects that included hydraulic engineering, geology, electrical engineering, thermal engineering, and others.
The issue with engineers is that they tend to treat the physical environment as purely an engineering exercise. China has really distinguished itself over the last few decades in being able to build a lot, whether that is highways, bridges, hyperscalers, homes, coal, solar, wind, or nuclear—you name it, China has been able to build it. You can go through some of the countryside as well as the big cities in China and see exactly how much they have been able to build.
They also treat the economy as an engineering exercise. I was living in China in 2021 when Xi Jinping, off the hubris of feeling like he controlled zero COVID, decided to initiate what he thought would be a controlled demolition of the real estate sector based on the leverage rates of state-owned developers. He also decided to punish many tech companies, including people like Jack Ma and sectors like online education as well as video games. The problem with China is that, fundamentally, the Communist Party also sees itself as engineers of the soul.
They engage in extensive social engineering as well. I write a lot about the one-child policy as well as zero COVID, in which the number is right there in the name. There is no ambiguity about what one child or zero COVID really means. They engineer the environment, the economy, as well as society.
Mounk: I want to return to understanding the United States through this lens and China through this lens, but to push on this analogy a little bit with a couple of objections. The first is this: is this really about a different way in which those two societies are shaped, or is it about different stages of development? You go back to the United States in the 1930s, and it was also true that the founding fathers had all been lawyers. It was also true that many of the presidents during that period were trained as lawyers. It was also true that, relative to every country in the world, America had a huge number of lawyers per capita. But America was able to build, and it did build.
When the Empire State Building went up, the speed with which it was built was incredible. At some points, one floor went up per day. Some of that seems to be about how developed a society is. If you are still relatively poor, if you have a lot of space that has not yet been occupied, if the value and worth of existing property are much less, if your processes have not yet become Byzantine over many decades and centuries of people trying to defend their property, then you value the creation of new things more than the maintenance of everything that exists. Once societies are very rich, once existing property is worth an incredible amount of money, and once incumbent interests have had many decades to seek rent and put procedural roadblocks into further development, it becomes harder and harder.
There is a very clear contrast between America eighty or one hundred years ago and today, which is not explained by the idea that America somehow was not a society of lawyers then. It is explained by the fact that the economy has matured in positive but also in negative ways since that time. The question is, might China not face some of those same problems? When you look at the huge dam projects that China built, those were obviously disruptive to many people. They also created a lot of economic value. That was easier to do at a time when the villages that were displaced were very poor and perhaps both more open to the opportunities that would bring and less powerful in trying to defend themselves against those changes.
If a government now wanted to put in place a policy that was similarly disruptive to the residents of Shanghai or Beijing or even another second- or third-tier city, it would be much harder to do, both because of the actual economic dislocation and because the people who would be impacted by that would have more power that they can exercise, even in a non-democratic regime, in various ways. So is this actually about China versus the U.S., or is this about societies at a very rapid pace of development, as America was in the 1920s and 1930s and as China is today, versus societies that have been affluent for much longer and therefore start to atrophy in many ways?
Wang: I think there is certainly a lot to this Mancur Olson case of interest groups really slowing everything down. The first thing I will acknowledge is that the United States was a proto-engineering state itself. I trace this history from the middle of the nineteenth century to the middle of the twentieth century, in which the political elites, who were indeed all lawyers, realized that they had this vast territory with immigrants flowing through, and the political elites decided to build a lot of infrastructure throughout the country. There were canal systems, train systems, and cities like Chicago and Manhattan built skyscrapers that the world had not seen before. In the twentieth century, there were giant projects like the Hoover Dam, the Manhattan Project, the Apollo missions, and the interstate highway system.
What happened next was that, throughout the 1960s, people rebelled against the proto-American engineering state. People were tired of Robert Moses ramming highways through dense New York neighborhoods. People realized that the Department of Agriculture was spraying DDT everywhere, as well as other pesticides that hurt much of the ecology. People were also tired of rule by technocrats in the Pentagon who got America into gigantic land wars in Asia. People reacted against the American engineering state.
The character of lawyers themselves substantially changed. One hundred years ago, most lawyers were working for places like Wall Street. They were creative deal-making types working for the robber barons, trying to raise bonds for railroads or use eminent domain to remove people from land. Even in the New Deal, when America was building a great deal, FDR’s cabinet was full of lawyers. Things shifted throughout the 1960s and 1970s, when people reacted against the engineering state, and the lawyers turned into people more like litigators and regulators. This movement was led by Ralph Nader and other student leaders who did everything they could to constrain the government.
If you look at some of Ralph Nader’s rhetoric, it converges with Ronald Reagan’s rhetoric, saying that government is the problem, not the solution. They said, “sue the bastards,” referring to the government, not to companies. That is the history I trace of how the lawyerly society in its modern incarnation took shape. Lawyers shifted from being creative dealmakers into litigators interested in stopping power.
China will not have similar problems because China has no lawyerly tradition to draw from. The law has never been a major practice in China. In the Confucian schema, you have civil servants, the military, and merchants at the bottom. Where are the lawyers in all of this? They are nowhere to be found.
Mounk: You do have a tradition of Chinese legalism as a philosophical tradition that was, in some complicated ways, a counterpoint to Confucianism. It is the minor key of Chinese history, but it is a minor key that pervades Chinese history.
Wang: Some people would argue that it is actually a major key, and that Confucianism, Buddhism, and Taoism are much more the minor key. My sense of China’s history is that there has not been the development of a major liberal tradition, mostly because the emperor captured the entire intelligentsia through the exam system. If you wanted to get anywhere in court, you had to take these exams, and you did not get very far in court by advocating for constraints on state power.
There was no liberal tradition that emerged in China to say, maybe the emperor should respect the aristocrats or the merchants, because everyone was interested in maximizing the discretion of the court rather than maximizing the discretion of the individual. Given that China has less of this liberal tradition to draw on, they are still building a lot. You mentioned dams—China built the Three Gorges Dam mostly throughout the 1990s and early 2000s. Earlier this summer, they announced another dam that will be three times larger than the Three Gorges Dam, which will be high up in the Himalayas in Tibet.
That project will displace fewer people because fewer people live there, but they are very much still building. I expect that the composition of the Chinese elite will not change substantially to be educated at law schools anytime soon, and they will continue to build because they truly value building.
Mounk: Tell us a little about how this engineering state has built the country. Generally educated people, and listeners to my podcast in particular, will be aware of the huge industrial progress in China—the astonishing progress in infrastructure and the speed with which China has gone from having no high-speed rail to having the majority of all the high-speed rail lines in the world.
As someone who has both lived in China and traveled widely there, tell us how that has really shaped modern China.
Wang: Let me start with a story. In the summer of 2021, when I was sweltering in Shanghai, I decided to gather two friends to go with me on a bike ride. We went to the southwestern province of Guizhou, which is relatively inaccessible. It is quite poor—China’s fourth poorest province—far away from the prosperous coasts. Over five days of cycling through the Chinese countryside, I saw that Guizhou has much better-developed levels of infrastructure than almost anywhere in the United States and arguably most parts of Europe as well.
Guizhou–again, China’s fourth poorest province–has about fifteen airports. It has forty-five of the world’s tallest bridges. It has high-speed rail. I was thinking that New York State or California, two of America’s richest states, basically do not have very functional infrastructure at all. This is where I return to my schema that the lawyerly society works really well if you are among the American super rich but does not work very well if you are among the working or middle class.
I understand China, as the engineering state, to be one that is going to build a great deal of infrastructure. It has determined that the public interest lies in simply having more infrastructure—and perhaps it is right. I do not think that the biggest thing residents of Guizhou want is yet another bridge or an airport they might never be able to afford to fly from. But the Leninist system of China says, we know what is best for you, and we are going to give you a lot of infrastructure, good and hard. That is one of the distinguishing features of China: it has built a vast amount of infrastructure of every sort.
China built its first highway in 1993. Eighteen years later, it built an America’s worth of highways. Nine years after that, it built another America’s worth of highways. In terms of energy deployment, China is on track to deploy about 500 gigawatts of solar this year. The U.S. is on track to deploy about 50, an order of magnitude difference. In nuclear energy as well, China is building, building, building, and that remains a distinguishing feature.
Mounk: I have traveled much less in China than you have, but it is astonishing to see how developed these high-speed railway lines are, not just between major cities like Shanghai and Nanjing or Shanghai and Beijing on the same line, but also in somewhat smaller cities like Yiwu, which are connected by the same kind of high-speed rail line. These cities also have giant stations and very frequent trains. That probably does a lot for ordinary people. These trains are relatively cheap, and they are widely used.
When I had Peter Hessler on the podcast, he talked in his book about how long it would have taken to go from the town in which he taught in the 1990s in Sichuan to the next regional capital. It would have been basically a day’s journey using a mixture of boats and trains. Now, you can get there in an hour or an hour and a half, and that is surely a genuine benefit to people there. Of course, the question is when you start hitting diminishing returns or when you run out of road. At some point, you have built high-speed rail between all of the first-tier cities, second-tier cities, third-tier cities, and most of the fourth-tier cities. Continuing to do so eventually no longer makes sense.
You can then go into the business of maintaining all of this amazing infrastructure, and that itself is a heroic task if you have built that much of it. Still, it feels like that is a toolbox that is more useful to a particular stage of economic development than to a later stage of development. Once you have connected every town with a high-speed railway line, you have to think about other ways to sustain economic growth.
Wang: Yes, I think they are slowing down, and there is a realization that they should not build so much. At a first approximation, they would say something like, are we building too much high-speed rail? What we are doing is lifting the third-tier cities into second-tier cities, and once they have high-speed rail, that will happen. If you say they are building a bridge to nowhere, they respond, two nowheres will become two somewheres once we have this bridge.
There is something to that logic, but I absolutely agree that they are going to be hitting diminishing returns. They probably hit diminishing returns five years ago, and yet they continue to build. That is a problem, but the other part of the engineering state is manufacturing success. We can look beyond public works and see how much China has built in terms of goods of every sort.
Right now, China is making about one-third of global manufactured products, and that share is set to rise over the next few years. China is a leader in electric vehicles, and its electric vehicles are better and cheaper than their European, Japanese, or American counterparts. China is also a leader in clean technology and in industrial robotics. It is going from strength to strength, patching up its weaknesses in semiconductors, while the United States and Europe seem to be deindustrializing, in part due to China. The engineering state is very good at making all sorts of products that people want.
Mounk: It used to be that China was the manufacturing center for cheap goods around the world, and it is still able to compete on price for many goods to a considerable degree. In part, that is because, despite the overall size of the Chinese economy and the fact that there are now many affluent Chinese, there is still a huge portion of the population that does not make much money by global standards. But China has really moved up the value chain and is now competing in very specialized, high-skill manufacturing—not just in headline industries like electric vehicles, but in all kinds of different industries.
A place like Germany, which used to pride itself on being the export world champion, is now facing competition on quality and on the ability to deliver very specialized, intricate goods, not just in the car sector but in many other branches of industry as well. Do you think that is a recipe for ongoing economic growth and affluence? Is there space in the world economic system for a large country like China to remain specialized in those kinds of manufacturing goods? Or does China have to change its internal economic model, encourage much more consumption, and move further into the provision of global services and other areas in order to sustain its economic growth over time?
Wang: Another part of my case that China is an engineering state is that it has been profoundly uninterested in getting more into consumption. There is greater lip service to the idea that consumption should be more important, but China is simply not spending enough or doing enough redistribution throughout its economy. I am really struck that this country–ruled by a Communist Party that celebrates the birthdays of Karl Marx, sings “The Internationale,” and has all the pageantry of a beautiful communist state–seems to me to be one of the most right-wing regimes in the world.
If I look at China and the degree to which it is really valuing manufacturing as well as keeping out immigrants, this seems to me to be 1950s Eisenhower America. China’s transfer payments are really low. According to the OECD figures that I scrounged up, about 30% of Europe’s economy is spent on redistribution, about 20% of America’s economy is spent on redistribution, and in China that figure is 10%. It has a pretty threadbare social welfare net.
This is a country that arrests union organizers, tries to disrupt Marxist reading groups, and has very traditional gender norms. At a first approximation, it looks like the most right-wing big country in the world. There is something quite striking about how focused it is on production and not very much on consumption. Economists have been calling for a long time for China to rebalance, but it does not look like Xi Jinping is interested, because they are really motivated to produce more goods.
They have a manufacturing target that says manufacturing should stay relatively stable in the economy as a share, not like the United States or even Germany, in which the share of manufacturing has declined over the last few years. China will not achieve that because of natural economic forces, but at least they pay lip service to the idea that manufacturing ought to be really important. I think a lot about the Communist Party understanding the failures of China over the past two centuries, in which it was subject to the predation of European imperialist forces and then the fascist invasion by Japan, as China was weak because it had almost no science and technology. That is a very reasonable idea to believe, and the Communist Party really, really believes it.
Every country in the world would like to say, yeah, we like technology, we want to be a high-tech leader, but the Communist Party means it and believes it more than any other entity. They are willing to invest a lot into semiconductor projects that fail. They have relatively strong risk tolerance. Even when there are a lot of frauds, they do not throw up their hands and say, let’s give up on technology pursuit. They still really, really want this. I am quite nervous about the future fate of Germany, Europe in general, as well as the United States. Can I make a case that Europe is really screwed here? Are you interested?
Mounk: Yes, I am always interested in pessimistic takes about the continent of my birth, and sadly, I fear that I am going to agree with your analysis. Go ahead.
Wang: I spent quite a lot of the summer traveling throughout Europe. My wife is from Austria, so we spent a little time in Austria and Switzerland, and we spent the majority of two months in Denmark. Denmark is a country that is supposed to have done very well in the European Union, and indeed it has.
Mounk: Mostly thanks to American overconsumers and the extent to which weight-loss drugs have floated the Danish economy.
Wang: Yes, we can thank McDonald’s for that. But I think there is a pessimistic case even on that. When I was living in Copenhagen, I was really struck one day when I was checking the news and saw that the share price of Novo Nordisk had fallen by 30%. They fired the CEO. What happened there? It turns out that it was in substantial part because of competition from American biotech firms. Eli Lilly has really out-competed a lot of Novo Nordisk. Novo Nordisk also had its own missteps.
As I spent two months over the summer in Europe, it still felt super complacent to me. On the one hand, they are going to be deindustrialized by the Chinese. Already, the German industrial sector has been substantially shrinking. Some of the estimates I have seen suggest that Europe’s energy costs are roughly five times higher than China’s energy costs. It is obvious now that European manufactured exports to China have been declining, and Germany would not be in a technical recession if it were still able to export as much to China.
On the other hand, Europe’s leading firms are going to be out-competed by American biotech, software, and financial services firms. Right now, a lot of the European equity market is supported by the fact that rich Chinese are buying French handbags, which does not seem like a durable long-term success. Europe does not have much of a software sector, and its financial sector is also going to be ravaged by American competition, which is simply much more efficient.
As the economy weakens, I do not expect politics to improve. It looks like in every major country now, the right-populist parties are outpolling the ruling incumbent parties. Last year, the FPÖ, the right-wing party in Austria, already won a plurality. There are always a few cases in which these right-wing parties win pluralities but are unable to form coalition governments. I wonder if, as the economy weakens, politics will probably not get better. That is my pessimistic case for Europe, Yascha. Am I wrong?
Mounk: I fear that you are right. Just to underline it with a few facts and observations, I may have said in this podcast before that Nvidia, the now-largest U.S. company, is worth more in terms of stock market capitalization than the entire German stock market. One American company is now the size of all German public corporations put together, which is really astonishing. The largest tech company in Germany is called SAP. It was founded in 1968, and the only times I encounter SAP are when I have to file my expenses to Johns Hopkins University or in other contexts where there are legacy software systems that have been difficult to replace and transition away from. That is the great hope of software in Germany.
I participated recently in the launch in France of a program called Project France 2050, which is organized, ironically, by the Ministry of the Plan that used to make the French five-year plans after World War II. It is called the Ministry of the Plan—that is its name—and I think it has a longer name that involves strategy or something similar. But the word plan is in the name of this entity. They conducted an opinion poll that was very interesting, showing that most French people did not expect huge changes. When they were asked about the various ways in which the country might change fundamentally, they tended to say that it was unlikely.
However, when asked whether things were going to be better or worse—whether the economy, the ability to find a job, equality, or democracy were going to be better—most respondents thought those things would be somewhat worse. The vision that Europeans have is of a future that is kind of like today, just worse. It is like today, except a little less good. I actually think that future does not exist.
Europe either manages to reinvent itself and recognize that it needs to be a first-rate player in the world—perhaps not in every dimension, but in many—that it needs to compete in manufacturing with China or in services with the United States, or ideally with both, and that it must play a role in the technologies of the future, not just electric cars, but also artificial intelligence, in which Europe currently plays no significant role at all. Or Europe will crash in a way that is much worse than even those pessimistic respondents to that poll imagined.
I think Europe’s future is bifurcated. There is a small chance of Europe managing to reinvent itself, understand the gravity of the situation, and make fundamental reforms. Or the decline may be much more steep and rapid than even those pessimistic respondents to that poll assumed.
Wang: Something that strikes me about Europe is that they are constantly talking about how this is now a wake-up call for Europe. I see a dozen wake-up calls a day before breakfast for Europeans, and they do not seem to reform themselves substantially. Russia’s invasion of Ukraine was supposed to be a wake-up call for Europe. Donald Trump’s threats against Greenland were supposed to be a wake-up call. China’s denial of rare earth magnets to German automakers was yet another one.
The more wake-up calls you have, and the more you declare something to be a wake-up call, the more drowsy it makes people because they are tired of that kind of rhetoric. What I do not quite understand is this: I start my book by saying that Chinese and Americans are the most alike people in the world. I have plenty of Americans who tell me, after working in Chinese factories or traveling there, that they feel much more comfortable with the Chinese than with Europeans. Europeans are almost a different species from the Chinese and American cultures, which really prize hustle.
They are entrepreneurial and pragmatic people—both the Americans and the Chinese—and both have a get-it-done energy. They both have a love of the technological sublime, and they are both great powers that feel a sense of superiority and believe that smaller countries simply have to listen to them. What that produces is a lot of shortcuts that both countries take, but those shortcuts are part of the hustle energy.
Americans have a saying that private entrepreneurs really want to make donuts, while countries at the level of governments are craving raw geopolitical power, and they will get it by hook or by crook. That kind of energy is missing in Europe. Many people in Europe do not even seem interested in making money anymore. Salaries are low, taxes are high, and nobody wants to make donuts anymore.
When I look at the EU, they seem to be waffling. If Donald Trump raises tariffs on them, Ursula von der Leyen’s response is, okay, how much? There is no sense of power among Europeans. So how do you actually achieve a wake-up call when all of the previous ones have failed to rouse you?
Mounk: How would you rate the United States compared to Europe? You are talking about the fact that America has a more entrepreneurial spirit, that people still want to make donuts and all those things. At the same time, some of the problems you identify are present in the United States as well. America has been deindustrializing, not as deeply as Europe, but to a significant extent. Part of the problem of the society of lawyers, as you pointed out, is the impossibility of building high-speed rail. You have a nice contrast between high-speed rail in California—or the lack of it—and high-speed rail in China in the book.
There are many dimensions on which it would be possible to be similarly pessimistic about the United States. Some of the biggest and most inventive companies in the world remain in the United States. It is striking that over the last thirty or so years, Europe’s share of global GDP has declined significantly, while America’s share has gone down only slightly. It has managed to keep its place in the global economy to an astonishing degree. America today retains something like sixty percent or more of the world’s stock market capitalization.
Is America still before the fall, unable to retain its incredibly privileged position in the world economy? Or does America, unlike Europe, have genuine strengths that will allow it to remain economically successful in a very different mode from China for a long time?
Wang: It is very difficult to say, but I am much more optimistic about the United States, at least relative to Europe, and I think still relative to China. The first issue is that the United States has deindustrialized more than Europe, not less, as you suggest. About 11% of America’s GDP is involved in manufacturing.
If we look at a highly industrialized country like Germany, it is closer to 20%, and obviously Germany is different. Europe has, I think, better manufacturing success than the United States. The U.S. manufacturing sector has been very weak. If we look at these apex manufacturers like Intel, Boeing, or the Detroit automakers and Tesla, all of them have run into substantial problems not actually related much to China.
Its defense industrial base has also substantially rusted. They cannot build any rail. The high-speed rail in California should be recognized as a national humiliation. It should really be either canceled or completed—ideally by the Chinese—because it should not be dragged out for much longer. But the case for being somewhat optimistic or hopeful about America is that the entrepreneurs, as the kids say in Silicon Valley, where I am speaking to you from, still have a choice. They are interested in making donuts. Nvidia is worth over four trillion dollars. There are a handful of companies worth over three trillion dollars.
We can debate how much these valuations really matter. I am a little skeptical of them—they are simply a financial fiction—but that is still significant. The entrepreneurial class in America still looks transcendent and much more powerful than its European counterparts. It was actually spending quite a lot of time in Europe that made me a little more hopeful about Donald Trump as well.
Let me say clearly that I am disappointed, shocked, and stressed out by most of the actions that Donald Trump has imposed throughout his second administration: attacks on the judiciary, ICE raids, and the terror he is spreading among less-fortunate Americans. I am stressed out by all of these things. But it was walking through Copenhagen, which feels so stable, that made me a little more hopeful about Trump.
In Copenhagen, very little changes. As I spent more time there, I thought that Donald Trump is the wrong answer to every question, but he is able to raise questions that perhaps should be asked. What should be done with parts of the American economy, parts of the American government, and parts of higher education in America? He is always the wrong answer to these questions, but at least these questions are being asked in a way that Europeans are not very interested in asking.
Mounk: From a perspective that is between the continents, how do you see the American debate about abundance? I assume that you agree, as I do, with the broad premise that we need to build a lot more things—that the answer to many of our social, economic, and political problems is to have more housing available, better infrastructure, and all those things. That would create more economic opportunity and help address problems like the rising costs of housing, which now take away so much of America’s putative affluence.
Do you think that America is going to be able to put in place an abundant society? Do you think that the society of lawyers will be able to learn some of the lessons of the Chinese engineering state, or are you pessimistic about America’s prospects in this regard?
Wang: Generally, my disposition is to be a gloomy pessimist, but given that I am speaking to you now from Silicon Valley, I want to self-identify as a bright and sunny optimist from California. On abundance, I want to be optimistic. To put my cards on the table, I am a partisan for abundance. I spoke at the Abundance Conference last month, and I want to be hopeful that we are able to figure out abundance.
To me, abundance has two clear pillars. The first is speaking mostly to the left, to say that the American left needs to be much more focused on the supply side rather than just subsidizing demand whenever prices rise. The second is that abundance is interested in building state capacity, such that California High-Speed Rail is able to build rather than remain mired in the desert. That seems to me to be a clear and strong political program: California and New York, as well as other blue states, should not simply tolerate the emigration of their people into red states because they cannot afford to build.
There is something very strange that I do not understand—how the Democrats cannot grasp the fact that the more people emigrate, the less political power they will have. Liberals and the left should be interested in building greater state power. Now, can the lawyerly society actually overcome this? That is going to be a challenge because, as I state, the Democrats are the more lawyerly party. They are the party where the law school students tend to go.
The level of cultural change I am interested in is to shift more law students away from the problems of the 1960s. I was a fellow at Yale Law School and saw this up close. Students there are still mostly interested in solving the problems of the 1960s. People regularly invoke the name of Robert Moses to resist building almost anything at all. Many are still deeply invested in the idea that social-impact legislation is the highest form of practice.
I think we should think instead about building capacities within government rather than trying to tear down government once more. What I am interested in is changing the culture of the lawyerly elites to say that it is good to build, that it is great to build political power, rather than to continue litigating the problems of the 1960s instead of solving the problems of the 2020s.
Mounk: There is one thing that I find really striking about China today, and I have been trying to understand it. I have asked many people about it and have never had a fully satisfactory answer. China is now influential in many realms, but the area in which it continues to lack is soft power, particularly cultural influence around the world. Chinese cuisine is very popular—and I love Chinese cuisine, by the way. There is a lot of Sichuan food around the world. There is not very much Yunnanese food, but there are excellent culinary traditions in Yunnan. There are reserves of Chinese dishes that foreigners could come to discover and love.
For example, I am trying to learn Chinese, and I find it difficult to find Chinese shows that I personally enjoy watching. There is very little good content in terms of an average sitcom or drama that one could watch without feeling that it is a slog. Japan and South Korea have had major cultural moments with anime, films, and television shows, but China has not had that in the same way.
I am struck by the fact that most highly-educated people in the West would struggle to name more than three or four living Chinese people who are actually living and working in China. They can name Xi Jinping, perhaps Ai Weiwei, and maybe one or two athletes—but that is about it.
Do you share that diagnosis? Do you think that is about to change? Is it simply that China’s wealth is so recent that it has not had time to develop that soft power yet? Or are there more fundamental reasons for why China lacks that soft power, perhaps in part related to how a non-democratic regime constrains creativity?
Wang: I think that, unfortunately, the answer is very simple, and I fully agree with your diagnosis. One of the most controversial claims I have been making for years is that China is a puny underperformer in terms of the creation of a global culture. I think it is a puny underperformer because it is the engineering state.
What are some of these cultural products? Cuisine, I think, is not a recent cultural creation. But what are some cultural products that China has actually produced over the last few years or decades? People might be able to name The Three-Body Problem. Perhaps people might claim TikTok, although TikTok is mostly not showing Chinese content to its users. Maybe a few art-house movies, maybe Yao Ming and basketball—but that is about it. Relative to Japan and South Korea, I think that is exactly the right comparison. Out of Japan, you have anime, manga, the Sony Walkman, the Game Boy, and Mario. Out of South Korea, you have K-pop, Squid Game, Parasite, and all sorts of great movies.
The simple answer is that the engineers cannot take a joke. Engineers are not very fun people to talk to at parties. They do not even want to talk to you most of the time. I remember being struck last year when a comedian in Shanghai made a joke involving a military slogan. In response, China closed almost all comedy clubs in Shanghai for several months. That is the sort of thing that happens in an engineering state. Engineers are censorious people. They censor whatever they cannot understand.
I think that is the chief reason that China, even with people who are incredibly creative, has not become a global cultural powerhouse. Chinese youths have amazing memes. Chinese people are very funny. I come from Yunnan, and I am a partisan for the southwest of China, where I think people from Sichuan and Yunnan really do like to sit around over tea and make jokes. I think we are the funniest region of China, and I am always very sad that all of these creative talents are suppressed and strangled by the engineers.
I also wish that Yunnan food could become globally popular, but the challenge is that Yunnan cuisine really prizes fresh ingredients like mushrooms. It is hard to find even great Yunnan cuisine in Beijing and Shanghai, to say nothing of London or Amsterdam. I wish that Yunnan cuisine could be exported. I actually had great Yunnan food in Cupertino last week. Let us make Yunnan cuisine more global. I am all for that.
In the rest of this conversation, Yascha and Dan discuss the role of artificial intelligence, how moving to Canada as a boy impacted Dan’s life, and why so many people in China still choose to emigrate. This part of the conversation is reserved for paying subscribers…
