Caveman Marxists: Frank Dikötter on Whether China Is a Fiery Dragon or a Paper Tiger

>> Donald Trump: Let's say China, China, China, China, I have to have my China. I've been saying China, China, China, China, China, China, China, China, China. People from China, they love me, China.

>> Bill Whalen: It's Friday, May 23, 2025, and welcome back to Goodfellows, a Hoover Institution broadcast examining social, economic, political and geopolitical concerns. I'm Bill Whalen, I'm a Hoover Distinguished Policy Fellow, I'll be your moderator today. And I am honored to be joined by our full fleet of GoodFellows that includes the historian Sir Niall Ferguson.

The grumpy economist John Cochran3, and former presidential national security advisor, Lieutenant General H.R. McMaster, Niall, John and H.R. are all Hoover senior fellows. Gentlemen, we're going to go across the Pacific to the other side of the rim and talk about China today. And joining us, making his Goodfellas debut, an individual who spent considerable time in that corner of the world, Frank Dakota.

Mr. Dakota is a Hoover Institution senior Fellow and chair professor of Humanities at the University of Hong Kong. He's the author of a dozen books that have changed the way the world looks at the history of China, books we've mentioned on past shows. And that's why he's here today, to agree, maybe disagree with how our three Goodfellows view the People's Republic of China, Frank, welcome to Goodfellows.

And I have to ask, as you recently made the move across the ocean to California, what do you miss and what don't you miss about everyday life in Hong Kong?

>> John H. Cochrane: I miss so much about Hong Kong, I was spoiled for 20 years, but I can tell you, to get straight to it, let's not waste any time.

The one thing I missed most is the ability to decide whether I wish to buy Made in China or not. From the cucumber to my hiking cap down to the washing machine, in Hong Kong you can make that choice here in America, you never know.

>> Bill Whalen: Well, Frank, welcome to the USA let me begin the conversation, Frank, in this regard, Donald Trump is an open book.

But he's also, I would contend, a very readable book, in this regard, he's transactional. His policy choices, his worldview invariably come down, the art of the deal, the title of his bestselling book. What about Xi Jinping, Frank, is he an ideologue, is he a realist, as he looks at the world, is his mindset that wicked, sinful capitalism is doomed to fall to communism?

As he looks at Taiwan, Frank, is his thinking one of manifest destiny and reabsorbing a province? Or is he bases calculations on more realpolitik view of America's willingness to fight, what say you, Frank?

>> Frank Dikotter: Well, for starters, he's a dictator, so you don't know much about what he thinks, and that's the key point.

It's not just us, it is number two in that hierarchy and number three, four, five, all the way down. Who knows what a dictator thinks, a dictator lives between wavers, between hubris and paranoia, and keeps his thought very much to himself. But we do know a little bit, we know that he is a Marxist Leninist.

He's a Marxist in the sense that he is firmly committed to the state having all power and controlling the means of production. In other words, he sees the world as divided into two camps, capitalism, which he abhors, and a socialist economy, over which he presides. He's a Leninist in the sense that he believes in a monopoly over power, undivided power, no separation of powers there for you, no freedom of speech, no independent judicial system.

And he's very keen to maintain that system of Marxism, Leninism, and that's the very premise on which he operates.
>> H.R. McMaster: Hey, what I'd like to ask you, Frank, first of all, I would just tell of our viewers, read Frank's five volumes on the party. I mean, make it a project for the summer, it's totally worth it, I've learned so much from you, Frank, and I just wanna ask you to maybe explain to our viewers.

What you told me [LAUGH] years ago, you said, hey, the problem with our understanding about China. Is that people treat secondary sources like their primary sources and primary sources like they're secondary sources. Can you talk about your research, what you accessed, and then how important it is to pay attention to primary sources.

Rather than secondary sources when trying to understand the Chinese Communist Party?
>> Frank Dikotter: Yes, I think this is a really good point about history generally [LAUGH], you should be very careful of books written by other historians. Whereas if you dabble into a primary source, say Anne Frank when I was young, you learn a great deal about what happened during the Second World War right away at a very young age.

And this is very true about the PRC, I spent 20 years in Hong Kong, and that's where all the theories about China come to crash. That's where you encounter realities, Hong Kong, now, it doesn't take a lot of work, it is extraordinary. For instance, if you simply open the pages of the People's Daily to see the extent to which you will encounter Xi Jinping's image, Xi Jinping's sayings.

Articles about Xi Jinping, the cult of personality is splashed over every newspaper and all you need to do is have a look at it. Here's something else you could do, you could actually listen to what the man says rather than rush to the bookshelf. And write the latest book about some China expert of which there are a great deal more than plumbers and electricians from what I can tell.

And what does the man say, well, for instance, in January, he said very clearly, we must uphold the four cardinal principles of the People's Republic of China. The four cardinal principles that were inscribed into the constitution of the party by Deng Xiaoping in 1982, they are everywhere, they're mentioned all the time.

Yet you'll find it very difficult to find a China expert who can tell you what these four principles are, but they're very straightforward. They're about Marxism, they're about Leninism, they're about upholding Marxism, Leninism, Mao Zedong Thought, upholding the socialist way, upholding the dictatorship of the proletariat. Now, of course you can dabble in these primary sources and scoff because they're not real communists, but not really a dictatorship of the proletariat.

They have to pretend this, but if you're going to start second guessing and not listening to what they say, it will get you nowhere, and there's a lot of primary stuff out there.
>> H.R. McMaster: Frank, I think to quote Dr. Evil, some people think that they're the Diet Coke of communism, but what you're saying is they're actually the real Coke of communism.

>> Frank Dikotter: Listen to what they said, read what they write, and you don't have to spend a lot of time.

>> John H. Cochrane: Well, some of us have, have not read what they write. And every time I try to understand what Marxism, Leninism, Stalinism, Mao Dang thought is very good for falling asleep.

So I would encourage you to give us a little sermon on it with the following thought. So Frank and I had a wonderful conversation a while ago where he impressed on me these people actually believe their ideology. And that has opened my mind a bit, I realize, thinking about it, I'm also reading the wonderful Kotkin book on Stalin.

He believed his ideology, not just in the sense of a interpretation of history and victimhood and so forth, but also cause and effect. He thought our grain is down, collectivized farms, they'll boom, so there's a cause and effect To the ideology there. And looking around, I think our national conservatives, they believe their ideology, that there's a victimhood of China did bad things to us and tariffs will solve it.

The European Greens, they believe fundamentally and we are sinful, we need to decarbonize and cause and effect, electric vehicles will make the weather cooler. So people believe their ideologies, that was a big insight you gave me. But you said things about the economics, so I'd like to understand how that works.

You said that they are still Marxism-Leninism control the means of production, but they don't control the means of production. China is very different from the old Soviet Union. There is a vibrant private sector, semi-private, whatever it is, but there's a market economy. There isn't a five year plan.

>> Frank Dikotter: Well, there isn't.

>> John H. Cochrane: Well, this is what I want you to explain. The other thing I learned from your book, which was a real eye opener was we think of the 1970s as when the top said aha, go be rich. But in fact your book said no, it was happening on the ground level and they scrambled.

They knew they had to allow it or else they would be kicked out of power. So it was not a top down thing, it was in fact the limits, it was sort of a new economic policy, we have to allow this. But is that temporary? Do they want to put back in five year plans and government ownership of everything?

So how do they think cause and effect in ways that can enlighten us, both the strategic question and the economic question? And how does this square, if it's the same thought that produced five year plans in the Soviet Union, how does it produce this very innovative, somewhat private, supremely competitive, still money handing around semi-market economy?

>> Frank Dikotter: Yes, well it is a Marxist economy, whether you like it or not. And they have no desire to call it a capitalist economy or to have a capitalist economy. Take the banks for instance, what is Marxism? Marxism is the state ownership of the means of production. What are the means of production?

It is everything that goes into the production process. It means the land, which in China as you know, belongs to the state. Not a single farmer owns a plot of land, not a single landlord does anything. It is about capital, who owns the capital? 0.5% of all banking assets belong to private banks, 0.5%.

99.5% of all capital is in state banks, okay? So compare that to the United States of America. The raw resources are indirectly or directly controlled by the state, energy is directly or indirectly controlled by the state. There's an enormous clout there. What these people set off to do from the late 1970s onwards is not so much destroy socialism or move from socialism to capitalism, is to make socialism work better.

But that's not really the key point, it's not just about the ability to provide subsidies, it's the ability really to control the population. This is something that we tend to forget. We complained about subsidies, we think that we can't compete because we have too much red tape, because they're better at it.

But in effect, what you have in the People's Republic of China, and you've had it since 1949, is an apartheid system. An apartheid system in which a large proportion of the population, precisely 40% of the workforce, 300 million migrant workers, have zero rights. They're an underclass of people, they don't have access to welfare, to health, to social security, to education for their children.

They can be removed at the beck and call of the state. The state has enormous powers, can crush dissent, can displace entire population.
>> John H. Cochrane: I wanna push you just a little bit before and sorry, Niall, you get your turn next. Every other socialist planned economy on the planet is a disaster.

>> Frank Dikotter: Yes.
>> John H. Cochrane: China is not yet a disaster, are you saying the contradictions of socialism head us inexorably to Cuba, Venezuela, North Korea, East Germany, Soviet Union? And there's a fundamental weakness there that all the China is gonna ignores us, or is it somehow different?
>> Frank Dikotter: The best term for it, I mean, you can shop around, is it a command economy?

Is it mercantilism? The best way of looking at it is to call it a war economy, W-A-R, for your American listeners. So a war economy is when at one point a state decides that must turn factories which produce, let's say washing machines into factories that produce armaments because the as an overriding target which must be met at all cost.

So it will curb rights, human rights, political rights, social rights. This can work as it did for the United States and England during the Second World War. Hayek produced a book called the Road to Serfdom in 1944 to warn governments, in particular the UK against the temptation to continue that war economy.

What you have in the PRC is basically a war economy all along, it never stops. It can control the population, it can transfer people, it can have them work in coal mines for next to nothing, it can harness resources of the state, it can crush the scent. There's no separation of powers there, there are no unions.

>> John H. Cochrane: War economies are stupendously inefficient. It lasts for four years and then if you try to run it permanently that way. So are you saying the Chinese economy is gonna be stuck in a stupendously inefficient state or how is it producing stuff that's cheap, that's technically innovative in ways that war economies don't do?

>> Frank Dikotter: War economies are not stupendously inefficient, they achieved the goal quite well during the Second World War. They can do it very well short term. What happens is that as with all socialist economies, it is incredibly expensive and incredibly wasteful. Which is why the Chinese economy has not been stagnant but in recession since COVID, which is why it has a debt ratio to GDP of 350% and God knows how much hidden debt there is.

Which is why the unemployment is so enormous, probably more than 20% for young people. I mean you can look at the shine, the surface of this economy, you could say, look at these cities, it's absolutely wonderful, look at the bullet trains, isn't that just astonishing? Well, yes, the China rail, the company is $900 billion in debt, $900 billion.

You can applaud for instance, the peer-to-peer system that appeared I think around about 2016, 17, 18, 19. Until, of course, it collapses with that to the tune of $120 billion, which makes the wholeMadoff Ponzi scheme look like a walk in the park. But the bicycle scheme, the bicycle, Go highest scheme was applauded as a great Chinese technological breakthrough, which could only possibly happen in China.

You can just pick up a bike and you can bike around, subscribe to it for next to nothing until that too collapsed in 2018, producing mountains and mountains of bicycles. So this, the waste of it is enormous. Within that waste, uses to say there are achievements. I mean, how could there not be achievements?

Stalin wanted the bomb, Ma wanted the bomb, they got the bomb. Now Huinta always say, wanted the ballpoint pan. And he got the Ballpoint [LAUGH] some 15 years ago. Xi Jinping wants an electric car. He's got it. So the world is now applauding BYD but remember what I just said about unfree labor being used in China?

It now turns out there is unfree labor used in BYD factories in Brazil also. How long does it last? How long will it ride? How long an average American car will last 13 years. How long will an average Chinese car last? We don't know. In fact, you should go to Russia, find out how it works, because they have a lot of Chinese cars there.

>> John H. Cochrane: So you're saying, paper tongue. You're saying, like people worrying about Japan was gonna overtake us. Japan was actually a reasonable economy when it stopped growing. But you're saying, China is going to stop and run into the inherent contradictions of socialism pretty darn soon.
>> Frank Dikotter: I wouldn't want to predict the future, but Japan had a pretty damn good working economy.

When you talk about a Japanese recession, I wish we could have a Japanese economy.
>> John H. Cochrane: It didn't overtake the U.S.
>> Frank Dikotter: No, it did not. And China never will. Not with this present system. It had three engines of growth. Investment in infrastructure, where they pour zillions upon zillions into infrastructure to the extent that you have empty trains, empty airports, empty railways, empty cities standing there.

So you can't do that forever, never mind local government debt. Then the second engine of growth is real estate, which is basically a Ponzi scheme that has going on for so long that even that bubble had to burst. Normally, in a socialist economy, you can control all of that.

You can constantly postpone the crisis and the day of reckoning. No enterprise has to go bankrupt in the People's Republic of China can always be rescued. But that bubble did burst in 2020 with Evergrande and others. So what you've got is one engine remaining which is manufactured and exports.

So precisely as the world wishes to somehow become less entangled with the PRC, the People's Republic doubles down and wishes to export even more.
>> Niall Ferguson: One can be skeptical about the economic achievement, of course, Frank, and find all kinds of structural problems. Still, if one goes Back to the 1990s, the Chinese economy is 7% the size of the US economy on a current dollar basis.

Now it's more like 70%. That's an undeniable achievement. But I don't want to talk about that because I actually don't think that's the interesting thing. For me, the interesting thing is what do they do with this power? They've acquired a greater manufacturing capability than the United States. It's now roughly two times the manufacturing value added of the United States.
20 years ago we had two times what they had. What do they do with that? My big question for you, Frank, has nothing to do with GDP and how many bicycles were left in a heap at the end of the cycle scheme. It's do they go to war over Taiwan?

Because authoritarian regimes over the last hundred years have this way, as I suppose you've noticed too of going to war, particularly if the economic and social contradictions become unsustainable. Is that what we should be worried about and talking about?
>> Bill Whalen: Yes, Niall, can you actually add to your theory what your theory is and what's going to happen with China and Taiwan?

You've been pretty specific about this.
>> Niall Ferguson: Well, regular viewers know that I think we're in Cold War II and we've been in it since about 2018. And just as Berlin and Cuba were crucial places in Cold War 1, Taiwan is the crucial place in Cold War II. They think it's theirs.

We kind of acknowledge that it is have done since 1972 and it just happens to be where all the most sophisticated semiconductors get manufactured for Nvidia and therefore for all the big tech companies. And so my hypothesis is at some point very soon the Chinese are going to take advantage of their enormous military build up which is a part of their manufacturing boom, and take that island, take over Taiwan.

That's the big question that I want to hear Frank's answer to because Frank knows much more about China than any of us, Frank?
>> Frank Dikotter: No, I don't. And this is the key point, you see, this is why you shouldn't call me a China expert again. I'm referring to the proverbial plumber.

I'd rather be a plumber. There are too many China experts who seem to know everything. But the point is we know very little. We know very little about what they really do about the real economy. What are the figures? They're all being manipulated. Their economy the last five years have been probably the numbers have been inflated by about 3%.

>> Niall Ferguson: But, Frank, you say, listen to what they say, and I listen to what Xi Jinping says. I just read the article that he published at the time of his visit to Moscow, and it very explicitly references Taiwan and restates his intention to assert Beijing's authority over it.

So the question really is based on your historical understanding of the CCP and of the PRC, is it likely that they take the kind of risk that we just saw Putin take over Ukraine? That's what I really want to figure out.
>> Frank Dikotter: First of all, we're not in World War II, when in Cold War I, that thinking has never changed.

The public declarations about taking over Taiwan go back to probably 1949. Deng Xiaoping, even before he came back to Power in 1979, said, we will not hesitate to use military force to take Taiwan back. Hu Yao Bang, who was seen to be the great reformer in the 1980s himself declared openly, we may not even wait and take Taiwan back.

There have been endless missile crisis. The first one, the first bombing of an island that belongs to Taiwan, started, of course, in 1957 under good old Chairman Mao. So this has been going on for a very long time. They are determined to take Taiwan. There's absolutely no doubt about it.

So there are two separate issues. One is that you must arm Taiwan to the teeth. And the reason for that is very simple. You do not know what they will do. You do not know whether it is huff and puff or bluster. You do not know what a dictator who teeters between hubris and paranoia might decide to do one day.

So your only defense is to prepare for the worst and hope for the best. So that's one issue. But the other issue is their actual capabilities. And here I'm a little bit worried because, of course, you should never underestimate your opponent. But it is also a strategic mistake to overestimate your opponent.

And there is very clearly a cognitive war going on here. Where day in, day out, the propaganda machine from the PRC tells us about this weapon and that weapon and how determined it is and how powerful it is and how it will never hesitate and how it could take Taiwan from one day to the next.

That is called cognitive warfare. And it is designed to instill into you and all others a sense of resignation. The idea that somehow, well, if they're so determined and they're so powerful, why should we meddle? It is designed to have potential allies of Taiwan walk away from the Taiwan scenario.

That's the purpose of that cognitive warfare. The last great military breakthrough. Read the South China Morning Post, breakthrough every day. A shoddy paper that has become. It's called, I believe, the Drone Mothership. That's the latest I read, I think, about three days ago. It's a massive sort of floating soapbox which accompanies a whole fleet of drones.

What is it? It's a drawing. It's a drawing and it's an AI generated drawing. It doesn't even exist. But this goes on time and again. What about that stealth fighter, the G20? Maybe HR can tell us how many people have actually seen, how much footage do we have of a J20 actually firing a missile?

My understanding is that there's one photo on the Weibo website run by the People's Liberation Army. I mean, the Shandong aircraft carrier propelled by eight oil boilers. Does it ever move away from coastal airfields? I think not, because it cannot take any planes in choppy weather. What about the submarines?

Well, there's this huge effort to create this image of a stable, powerful empire, militarily. And of course, also economically that goes back to this whole tariff of war, as if China couldn't be bothered and will sit through it strong and confident. But it is not, it is not.

>> H.R. McMaster: Frank, I think this is a really important point. And the cognitive warfare goes beyond just sort of bolstering this image of invincibility and power and futility and resisting it. There are signs of weakness in the PLA. Of course, as a military officer, you're kind of trained not to underestimate your enemy, but as you mentioned, there's a big cost in overestimating your enemy.

And the other signs I think of real trouble in the PLA are a lot of these purges that have happened of senior military officers, which seems there are two schools of thought on this, Frank. And I know of course, you're very humble and reasoned about this because you know so much.

You say that we can't predict these things, but do you think these weaknesses that you see in the PLA senior leadership, or evidence of corruption? Do you think this means that Xi Jinping is in a strong position because he's exerting his authority? Or do you think that it's showing some cracks in Xi Jinping's leadership?

>> Frank Dikotter: I think it's a hugely important question and ultimately it comes down to everything. It comes down to what we know about the economy, what we know about fentanyl, what we know about the army. And the question is the following. How good is the center able to control local governments?

That's what it boils down to. So the broad history in a nutshell is quite straightforward. Good old chairman Mao builds up a powerful centralized state during the 50s and 60s, which he then proceeds to undermine for all sorts of reasons. Most of all, his fear that he might be undermined by others.

And the cultural revolution pretty much destroys the organization of the Communist Party of China, which then has to be rebuilt for decades, starting with Deng Xiaoping, Jiang Zemin and others. So now Xi Jinping has at his disposal a much more powerful centralized state. But can the writ from Beijing go all the way down to a local government?

Can he command a county, a province, to actually follow the edicts from Beijing? On for instance, stopping fentanyl production or taking care of the environment and tackling pollution or respecting whatever feeble rights there are for migrant workers or get the army back in shape? Can he do that?

I think the answer is no, he cannot. No, he cannot. I think the reality is that since COVID 2020, his grip on the population at large and local governments is slipping. And the constant purges in the army, the last one was He Weidong, which ironically means protect the East Weidong.

This number two in command of the army, that's pretty high up. Well, that shows you that he is deeply worried.
>> Niall Ferguson: But Stalin purged his military elite too. Stalin in many ways looked as if he was running the Soviet Union into the ground. And it turned out that the Soviet Union was better able to mobilize forces in a large conventional war than Nazi Germany.

So I kind of wonder here if it's a good idea to talk down China's capability, especially if you want us to arm Taiwan to the teeth. I mean, you're giving us lots of reasons not to bother doing that. I think I'd rather overestimate China and deter China than underestimate China and then have a 1941 moment, which after all, is what the US military worries about.

I mean, you're telling us a pretty negative story about the state of China's capability. But at the Office of Net Assessment briefed some Hoover Fellows earlier this year when it still existed. And told us that China was catching up at a formidable rate in almost every domain of military capability.

If the US military thinks that maybe they're overestimating it. But it certainly seems like a good reason to bolster Taiwan's defenses, which we haven't really done, certainly not to a sufficient extent. But can I ask a totally different question before we get completely bogged down in the present?

It's a historical question about something you mentioned a minute ago, and that's the Cultural Revolution. Because I think to understand Xi Jinping and his entire generation of Chinese leaders, you need to understand the impact that that event had on them. Now, you've written what I think is the best book on the subject.

I'm not sure how many Americans really get what the Cultural Revolution did to Xi Jinping in particular, but perhaps also to his generation more broadly. Can you talk a bit about that?
>> Frank Dikotter: I can, but not without mentioning that when Stalin went into Finland, it didn't go all that well after all these purges.

And that tiny little country called Finland put up a pretty damn good fight. And Stalin was taken aback to the extent, of course, that Adolf Hitler thought, look, this is a paper tiger that we have in the Soviet Union. And he made that fatal mistake. And American equipment did a lot for the Soviet Union in the in World War II, but please go ahead.

But anyway, let's not get back to the Second World War. Again, I wish to say that there is no contradiction between arming Taiwan to the teeth because it's an extraordinarily unpredictable situation in which people can make massive mistakes. And the attempt to have not just a more accurate understanding of what is happening with the military, but not go for the cognitive warfare in which they portray themselves to be far stronger than they really are, which will result in people just walking away from it.

Anyway, back to the Cultural Revolution. In a nutshell, what is it? It sounds like a very confusing period. But in a nutshell, it's Chairman Mao who is responsible for having initiated the deaths through famine and violence of well over 45 million people. A chairman was seen to be responsible for that disaster during the great leap forward from 1958 to 1962.

And he is worried that he will undergo the same fate as Stalin, namely that there will be not destalinization, but denotification, and he will be a victim. So what he does with the Cultural Revolution is that he allows, at first, students to attack their teachers, but gradually just about any ordinary person to take to task any party official all the way to the very top.

He calls it bombard the headquarters. What he wants is that ordinary people ferret out any possible real imagined enemy of Mao Zedong and his project. So the result is that people like Xi Zhong Xun, the father of Xi Jinping, who is a very highly placed official in the party hierarchy, and others get attacked, get criticized, get occasionally interrogated, paraded in front of other people, tortured in some cases to death, as was the case with Liu Shaoqi, number number two.

So in effect, Mao is using the people to purge the party. So the party members who manage to survive, like Deng Xiaoping, like Xi Jinping, like pretty much all of them, they are determined to never make that same mistake again. They are determined never to allow ordinary people to have a voice.

And that's what happened in Tiananmen Square, 1989. A display of sheer steel determination to crush ordinary people and not let them have a say. So Xi Jinping is somebody who's profoundly anti-democratic.
>> John H. Cochrane: I wanna follow up on the deterrence question cuz I hope we're still deterring. If we wanna deter, we know China wants to take over Taiwan, so-

>> Frank Dikotter: Absolutely.
>> John H. Cochrane: The question is what's their strategic calculation and what is their calculation about the military success of it? But also I wanna probe the economic element of deterrence cuz on the military question since we're seem to be after three years we got tired of Ukraine and are seem to be happy to give Crimea to Putin.

Will the US actually go fight a war 5,000 miles away over a country that we actually say is part of China? I think there's some ability is one thing, but will is another. I like your military part of, well, Taiwan should be armed to the teeth and also trained to the teeth.

It's not just a question of weapons, it's their ability and ability to use them because that's prepositioned. We know they'll fight back. It's not clear that we will. But there's a great inconsistency between what you said about economics that things are falling apart internally. So, well, what we'll do is we'll have this huge manufacturing thing and we'll sell it around the world.

Of course, if they invade Taiwan and if the rest of the world is with us, that gets turned off instantly. And that strikes me as if they can put those two and two together, the greatest possible deterrence. Of course what that relies on is not just us turning off China trade the minute they invade Taiwan.

It's the rest of the world being willing to go along with us to say no, we don't care who makes them. We will buy your $15,000 BYD cars, not $100,000 US cars, thank you very much. So we need our allies on that. But if that strikes me as one where we might have a little more will than for actual fighting and one where the Chinese might shrink, but they have to add the two and two together that their own economic plan of immense manufacturing saving us would fall apart if they invaded Taiwan.

Do they understand that, and is that a reasonable path towards deterrence?
>> Frank Dikotter: I'm sure they do. And even just the blockade of Taiwan would be a self blockade and 60% of China's oil is imported. Massive amounts of coal is important. Energy depends still to about 50% on coal with Weber forced labor working in coal mines and aluminum smelters for your BYD cars, by the way.

>> John H. Cochrane: Well, and Australian coal as well.
>> Frank Dikotter: Yes, so, but the point I'm trying to make is that they depend enormously on imports and not just exports. So a blockade of Taiwan would be very difficult to sustain without massive economic pain to themselves. The point really is that we just don't know a particular decision might seem to be not just irrational, but suicidal.

But there's no lack of dictators who have made such decisions.
>> John H. Cochrane: That's why I was asking you about their sort of cause and effect thinking. Mao thought that the Great Leap Forward was gonna be wonderful industrial policy. We pass the US in steel, every farmer will make steel.

He just had the cause and effect wrong there. So it's important to know what their cause and effect thinking is.
>> Frank Dikotter: And the key point is also that at the end of the Great Leap Forward, by 1962, tens of millions of people had been worked, starved, beaten to death, and it didn't really matter all that much.

In other words, war economies, communist societies are willing to bear an enormous amount of pain.
>> Bill Whalen: I can shift gears, gentlemen, though. HR traveled to China with President Trump when he was the president's national security advisor. And I think we would agree it'd be a very Trumpy thing to do a summit with Xi at some point in the second term.

I'd be curious, Frank, as to where you think Xi would optically wanna do this, if he'd wanna host in Beijing, would he be willing to go to Mar-a-Lago or the nation's capital? But here's my question to the panel. If these two got together and Trump, in Trump fashion, wanted to do a deal, what's on the table in terms of talking about a deal?

Is it fentanyl, which HR has just written about, Niall, is it Taiwan, John? Is it issues with manufacturing at Apple and others leaving China? Niall, why don't you start this, what do you think would be on the table?
>> Niall Ferguson: Well, first of all, I don't think it's happening at Mar-a-Lago, because that was last time.

And we've just seen in the game of tariff chicken that China had escalation, dominance and. Scott Beston had to stand the President down, defer the reciprocal tariffs, go to Switzerland and negotiate a kind of tariff truce, if not a full end to the trade war. So I would imagine if it's going to happen, that it happens in Beijing and I could see Trump going for that, as he does have a kinda secret Nixon fantasy life.

Trump in Beijing would rhyme with Nixon in China, the question is how broad would the range of the discussions be, would it include Taiwan? Would it include semiconductors? The administration, as I've been saying all along this year, has a huge tension within it between those who are dealmakers, and perhaps that would include the President.

And those who are really quite hawkish on China and regard tariffs as just one of a whole range of instruments we need to use to contain the Chinese challenge. And I think if you were on the more hawkish side, you'll a little despondent, see Mike Waltz leave the position of national security advisor and Alex Wong as number two.

You're hoping Marco Rubio will stick to his guns as a Secretary of State and maintain a hawkish posture. But I think there is a tension, and anybody in the administration who takes the China threat seriously will be concerned that an open-ended negotiation between Xi and Trump might lead to a concession on Taiwan.

After all, we know from another national security advisor, John Bolton, in his memoir that Trump doesn't regard Taiwan as something worth fighting for. So I could see a negotiation going in all kinds of directions that would greatly worry those who are more hawkish on the issue.
>> John H. Cochrane: Well, I would think first it would be fun on a personal level [COUGH] Xi Jinping likes to make people kowtow to him, and Trump likes to try to humiliate his opponents.

That's his way of the big handshake, what he did to Zelensky, and that's his way of negotiating, so it would be very amusing theater to see how these two would try to one-up each other. But I think the negotiations would go badly [LAUGH], first of all, it's important to understand what really is in your own interest and what is not in these negotiations.

So I think it is in our interest to deter the invasion or blockade of Taiwan, though I think that's actually something we should be a little clear about. If we don't care about Crimea, why do we care about Taiwan? But I think that's in our interest, don't blockade Taiwan.

Do we care about China not manufacturing ingredients that go to Mexico that turn into fentanyl? Is this a cause-and-effect solution to the fentanyl crisis in the US? Now, on one end, that gives China an easy out, if you're asking for things that really aren't in your interest and don't matter, they can say, sure, here you go.

And get a lot of whatever they, we get Taiwan, and we'll promise to do something on fentanyl. So don't ask for dumb stuff, similarly bilateral trade deficit, does the bilateral trade deficit really matter? I'm sure we're gonna go in and say, you have to buy American X, Y, and Z, they can say, sure, and then you trade away staff you're not asking for things that are really in your own interest.

So let's be clear about really what our own interest is in negotiations like that.
>> H.R. McMaster: Well, there be a lot that's the same, right? What Xi Jinping would want is he would want the same kind of images that China wanted to portray to its own people when Lord McCartney visited the Xing dynasty in 1790.

And they put up big billboards with Chinese characters saying he's come to pay homage to the emperor, and so he wants these images of supplication and deference. And it will be a theater designed to communicate that message to the world so he can bludgeon other countries with it.

But what he'll want that's more substantive is for Trump to accede to some kind of a G2 arrangement where the United States grants a sphere of influence to China. Say, dominance over the Indo-Pacific region in exchange for his acknowledgment of our primacy in the Western Hemisphere. To do that, what he'll do is try to manipulate history, and I'd love to ask Frank about this because I've heard it happen.

He gives this warped view of history that emphasizes China's victimization during the century of humiliation and then portrays the Chinese Communist Party as the savior of the Chinese people. And then, of course, he highlights the brutality of Japanese occupation, certainly, and creates this sorta sense of a great aggrievement to try to generate some sympathy for China and the Chinese Communist Party with Donald Trump.

And so, President Trump is not a student of history, so it was important for us to really talk to him about how Xi Jinping would try to manipulate the past to influence Trump's understanding of the present. And I think that's not gonna change and what he'll try to do is use kind of Trump's impulse toward retrenchment and try to reinforce that with this idea that, hey, we can get along well, we can prevent World War III if you just grant us this sphere of influence that is due us.

Because, we're a big country here in Asia and you're there all the way across on the other side of the Pacific.
>> Frank Dikotter: Yeah, very much agree with all of it, Trump goes to Beijing, anyone goes to Beijing, you pay tribute to the emperor, and when I say emperor, I'm not really joking.

When we talk about the century of humiliation, the 19th century, the biggest expanding empire is not the British one, certainly not the Dutch one. It's the Qing Empire, the Chinese one, and the borders of the Qing Empire, when it collapsed in 1911, are the ones that have been maintained by the People's Republic of China.

So it is, in effect, an empire that has not yet decolonized, that's the geopolitics of it. Now, when it comes to trade, what are you going to achieve? There are two issues one is what China can do, and then there is what China would do, now can it curb the production of fentanyl?

I already said I doubt it very much, there were debates years ago about how China should restrain North Korea, can it do that? Obviously not, in fact, what China can do is quite limited, and then there's what it wants to do. When it comes to negotiations, it will always make promises and pledges, history books to be written about the number of promises and pledges that have been broken.

It will stall, it will break a pledge, it will modify its conditions, it will have you come back to the negotiation table, it will drag it out, it will tire you until the day you give up or think, there's another deal to be made. And then the same scenario repeats itself, it's a soap opera.

>> H.R. McMaster: Or until you accept the status quo as the new normal, absolutely right, Frank, these dialogues that you have with the Chinese Communist Party are a complete waste of time I mean.
>> Frank Dikotter: Exactly.
>> H.R. McMaster: And there were people say, well, there's no harm ever in talking, yeah, I guess there really is a harm in talking.

Because what it does is it allows them to string you along with these false promises that they don't intend to keep at all, so the fentanyl piece that Bill mentioned was this report. That I was asked to give Xi Jinping on fentanyl cooperation, but also law enforcement cooperation broadly.

And, and, you know, the establishment of these police stations in the United States, right? To intimidate Chinese American citizens, and of course, none of that changed. We combated it, we began to compete against it, but if anybody watched 60 Minutes a couple of weeks ago, there's still this, this to coerce American citizens on our soil.

>> Frank Dikotter: And speaking of interest, trying at least to limit Chinese espionage in the United States, that's something that really is strongly in our interest. And the less time we spend in negotiations, distracted with other things that are sort of for show, the more you might make some progress on that, the promises issue being, of course, a difficult one.

>> Niall Ferguson: Frank, Xi Jinping is not immortal, I don't think he looks to be in particularly great shape. Who comes next? What comes next? Is there any way of imagining a change of direction? There's no succession plan, clearly, and that creates risks of its own, doesn't it?
>> John H. Cochrane: If I could add to that, Xi Jinping was remarkable, there was a tradition, not really a constitution, but we don't have a single dictator for life.

There's a sort of a plan of regular rotation of chairman, and Xi Jinping took that back. I would imagine there's a lot of old guys in China who are still rankling about, wait, wait, wait, what do you mean? You get it for life, are we going to go back to a system with a little bit more scheduled transitions on the top?

>> Bill Whalen: And if I can build on this, as Niall and John have both mentioned, the man, Frank, is it worth watching The Death of Stalin?
>> Speaker 1: Stalin's dead.
>> Speaker 2: He's dead.
>> Speaker 3: Stalin is dead.
>> Bill Whalen: Which rather satirically shows the absolute mess that was dealing with Stalin.
>> Speaker 4: The answer to that one is yes.

>> Speaker 5: Yes. When I said no problem, what I meant was, no problem.
>> Frank Dikotter: Yes, I, I thought it was, I mean, I'm a great fan of Steve Buscemi, but I thought it was probably less amusing, maybe because I'm a historian and I didn't laugh as much as others.

>> Donald Trump: But yes, definitely, The Death of Stalin, the paranoia around it, like Stalin and others, Xi Jinping spends his day keeping tabs on the people around him. Number two, three, four, five, six and seven lives in fear of a coup, a stab in the back, a plot, a bullet that's been rigged, an accident.

The man lives in fear all day long, not to mention his health. What can he eat? What can he drink? He won't approach him without going through a metal detector, so that's the life of Xi Jinping. Does he have time to pay attention to anything else? I doubt it very much, I doubt that they'll be able to place a medium sized country on the map, that's what I think.

He's a caveman Marxist, as Stalin said, a MA, by the way. Now what's a succession plan? There isn't one, it's all a sort of struggle for survival. All these counterfactual approaches to history are fascinating in that you simply don't know. Somebody you will have underestimated for a very long time might very well be the one who takes the mantle.

But two things are, I think, reasonably well established. First, like all dictatorships, China is a democracy because every dictatorship wishes to project itself as a democracy. So in principle, it would take one decision by one man to allow everybody at every level to vote. There is a People's Congress, people do vote at every level, except they have to vote for the people on the list.

And God forbid that you propose yourself without being on that list, you'll end up in jail. So in principle, it could become a democracy from one day to the next. In practice, all of these leaders are deep, deep into corruption, have family members who own billions. This is like the Mafia, you run Chicago, I'll do New York.

That's what it is, it's a Mafia running the place. Does the Mafia going to become democratic? Maybe, maybe, but I would give him a good push, I wouldn't wait.
>> Bill Whalen: Right, well, gentlemen, we're gonna leave it there. Frank, we kept you on extra-long, but it was a great conversation, we could have kept you on for another hour, I think.

This topic's not going away, so please, by all means come back and let me add it's an honor to have you at Hoover and join our formidable stable of historians, Frank. So, thanks very much for being part of Hoover's life.
>> H.R. McMaster: Thanks, Frank.
>> Niall Ferguson: Thank you, Frank.
>> Frank Dikotter: Thank you, it's been a pleasure.

>> Bill Whalen: So, gentlemen, since we went along with Frank, we're not gonna do a B block today, instead, we're gonna move straight to the lightning round. [SOUND] Lightning round. Gentlemen, our first topic, the Trump administration has said it will halt Harvard University's ability to enroll international students and sponsor international scholars, a move that impacts about one quarter of Harvard's student body.

Harvard, in response, filing for a temporary restraining order to block the Department of Homeland Security from carrying out said move. Before I get your answer, gentlemen, I beg you, I beseech you, Condoleezza Rice is coming on our show this summer, you're gonna have a long conversation about universities.

So, in the spirit of the lightning round, just quickly off the top of your head, your response to this story, Niall?
>> Niall Ferguson: Well, I was a professor at Harvard for 12 years, I wrote not so long ago Harvard brought this upon itself. But I think that the Trump administration is overreaching, they had a case, a pretty good case, that racial discrimination had been going on at Harvard, they should have focused on that case.

I think by firing so many bazookas at the university, they've created a unity that wasn't there before. Heaven knows, even the disgruntled former president Larry Summers is rallying around the Veritas flag. So, my sense is there's a little bit of James II vs Oxford going on here. James II took on Oxford back in the 1680s and Oxford won.

So, remember, presidents, you get four years, universities, they tend to last for centuries. So, although this is going really, really badly for Harvard, I would say the administration has probably overreached and will lose in court at least one of the cases.
>> Bill Whalen: John, your quick take.
>> John H. Cochrane: To be effective, you wanna do things to all universities, not just Harvard.

So, publicized war on Harvard might be good for ratings, but I'm not quite sure what it does. Taking international students is a wonderful export that the United States does. One of our great industries is large universities, it's not clear why you would want to hamper those exports, unless that's just one thing you can do to be mean to Harvard.

And I think the more significant news was the lawsuit they have against Harvard. But everyone else is guilty for racial discrimination in faculty hiring, where it was just plastered all over the websites. We are violating the Civil Rights Act, look at our racial quotas. I think that was a more effective one and one that I would hope they would continue and generalize to other universities.

>> Bill Whalen: HR?
>> H.R. McMaster: I think it's a terrible idea, I mean, I think about the impact on individuals. And these are people who, many of them coming from developing economies, had this great dream of going to the United States for university and going to Harvard, which they had in their mind as kind of the ultimate academic experience.

And now that all those hopes are dashed, and that's terrible, and I worry about the. Reputational damage to the United States. There are real issues with Harvard University. But as my colleagues here have said, focus on those issues. Don't do damage to innocent bystanders here.
>> Bill Whalen: Okay, moving on gentlemen.

The National Football League owners earlier this week gave permission of their players to play flag football in the 2028 Summer Olympics in Los Angeles. Niall, do we even bother asking you if you think this is an Olympic sport?
>> Niall Ferguson: It's clearly not.
>> Bill Whalen: Okay, let's take this a different direction.

Can the three of you name one Olympic sport you would like to eliminate? I think I know where Niall is on this patellus, Niall.
>> Niall Ferguson: [LAUGH] Lord. I mean, just eliminate all the ones that the ancient Greeks didn't do and then the thing will be over sooner.
>> John H. Cochrane: There's a whole bunch that 19th century Brits did that are just maintained.

The only reason anyone does them is because they're Olympic sports like Lusions and things like that.
>> Bill Whalen: The Aussie used to do tug of war. HR, one sport that you'd get rid of?
>> H.R. McMaster: Well, I think they already got rid of it, the breakdancing sport.
>> Bill Whalen: There it is.

>> H.R. McMaster: I think it's already gone. I think it's already gone.
>> John H. Cochrane: We need to bring sail plane competitions back to the Olympics. It was gonna happen in 1939 and then some terrible things happened in Europe and we didn't do it.
>> Bill Whalen: Okay, item number three. It's graduation season and Forbes magazine has produced a list of worst paying college majors.

These all pay about 40 to $42,000 a year. The list includes foreign languages, general social sciences, performing arts, anthropology, early childhood education. Did any of you three consider a different major at one point in your college years, John?
>> John H. Cochrane: Well, I started off in aeronautical engineering and moved to physics and only turned to my real major, economics in graduate school.

So yeah, it's good to look around. I think this is interesting. Maybe where economics has had some damage, there was a finding that going to college raises your wages. So we subsidized college, but it's not clear that general social sciences and performing arts raises your wages. So we're now in a situation where we've over subsidized a lot of fairly unproductive degrees with all sorts of unpleasant economic and social consequences.

>> Bill Whalen: HR, did you make any lateral moves once you got to West Point?
>> H.R. McMaster: I didn't have a choice, right? When I went to West Point, you got a Bachelor of Science in engineering whether you wanted one or not. And then you could do a concentration in another field and I chose international relations.

But it's a really solid, broad based curriculum at West Point. I mean, I think that hasn't changed, but they have a choice now and can choose a major. So I had to suffer through, I mean, I don't know how many semesters of calculus. And they didn't really care about your self esteem back then, Bill.

So they would section you after a test and they would re-section you from section 1 to 13. And if you were in section 13, seat 12, we called that the ejection seat [LAUGH] because your GPA probably was not gonna allow you to pass that course.
>> Bill Whalen: All right, Mr Niall.

>> Niall Ferguson: I never considered reading anything other than history. Perhaps I should have done. I sometimes think that the Scottish and English systems directed me away from mathematics prematurely when it had been a strong subject. And I would have been better off if I'd been able to somehow do a double major in history and mathematics.

But that didn't exist. I don't think it does to this day. But most historians would benefit from being more numerate. And most people who are good at mathematics would benefit from knowing more history.
>> H.R. McMaster: I don't wanna know any more math than they forced me to learn at West Point [LAUGH].

>> John H. Cochrane: There's only one time in your life you can learn math. You can read history when you get old, but there's only one time in your life when you learn math. And everybody's education should include calculus, differential equations, linear algebra, statistics, probability. Little bit of complex analysis is really good for you.

>> H.R. McMaster: I got all that.
>> John H. Cochrane: Universe runs by differential equations. And once you see that, you'll never.
>> H.R. McMaster: But John, I don't remember any of it. I mean, I took it all. I don't remember any of it. That squiggly line that's got like a little number at the top.

I don't even know what that is.
>> John H. Cochrane: How do you calculate where a tank shell goes?
>> Bill Whalen: Niall could have cornered the market on being a math historian.
>> Niall Ferguson: Yeah, it certainly wasn't very competitive.
>> Bill Whalen: Well, that would have sold books.
>> Niall Ferguson: I should say that in the new University of Austin, we very deliberately make the undergraduate program a mix of classical books and humanities and hard math so that they have the kind of skills that John just referenced.

Sure, they may forgotten them all by the time they're in their 60s. But HR, there was a time when it was quite good that you knew something about the physics and math of ballistics.
>> John H. Cochrane: You at least know what's out there. You know what it is you don't know.

And that's actually very important.
>> H.R. McMaster: That is good. It is good to know you don't know, absolutely.
>> Bill Whalen: And our final item. A Pew Research Center survey recently found that 30 of Americans consult astrology, horoscopes, tarot cards, or fortune tellers at least once a year. But they do so for fun, not to make life decisions.

Are any of you are surprised or did your fortune tellers already tell you about this, John?
>> John H. Cochrane: Not surprised. And I think actually more people are making decisions on that basis than you might think. But of course, listening to the experts these days doesn't necessarily get you any better knowledge than the fortune tellers.

>> Bill Whalen: Okay, HR is there a magic 8 ball somewhere in that office or?
>> H.R. McMaster: No, no, I think this trend is like, it's derivative of this kind of sense of loneliness of some people. I've just talked to your friends or maybe the lack of spirituality. Anyway, I just think it's kind of silly and might be connected to kind of this revival of a lot of writing about loneliness and how people are disconnected from a sense of community.

>> Niall Ferguson: One of the more interesting predictions that Henry Kissinger made late in his life was that as artificial intelligence proliferated and more and more things went on around us that we didn't really comprehend, superstition and magical thinking would make a comeback. The percentage you just quoted, Bill, surprises me because it's relatively low, and I would guess it's probably fairly stable over time.

There was always an astrology column in the newspaper when I was growing up as a kid, and I always thought it bizarre that such a thing should exist in the 20th century and the fact that it still exists in the 21st century probably shouldn't surprise us. We have a great propensity for magical thinking, partly because we didn't do enough math, John?

Really, really good math. They would understand a bit better how the universe works and they would realize.
>> H.R. McMaster: Enough with them.
>> John H. Cochrane: Math is taught too abstractly. Math, applied math. You should take a physics one class where we see how the math moves things around and explains. I don't think it's any higher than it's been.
And you wanna see magical thinking. There's magical thinking all over the place and not just you may. But if you're raised by a physicist as I was, you're just told all the time, the laws of nature basically have this covered.
>> Niall Ferguson: And yeah, you can look at the stars, but what you actually need to understand is astrophysics not astrology.

>> H.R. McMaster: I'll tell you, physics was okay with for me. So was thermal fluid dynamics, but man, I mean, calculus, probability, statistics, all that stuff was just. It was just unintelligible to me. So anyway, enough with the math, guys.
>> Bill Whalen: Speaking of magical thinking, John, we owe you because our B block was gonna be the big beautiful Bill.

We were gonna have a conversation about taxes and spending, and if that's what magical thinking, I don't know what it is.
>> John H. Cochrane: [LAUGH] The big beautiful mess?
>> Bill Whalen: Big beautiful mess. All right, gentlemen, we'll leave it there. And I'm gonna miss your smiling faces because we're not doing a show until about midway through June.

Our guest is going to be Rick Caruso. For those not familiar with Mr Caruso, he's a very prominent developer in Southern California. He ran for mayor of Los Angeles in 2022. He may run again, we'll see. But we're gonna have a conversation about what exactly bedevils the City of Angels.

If, like San Francisco, it's in a doom loop. And it's a very good conversation because LA is in a very bad spot. By the way, the world is coming its way in 2028 for the Olympics, which we talked about recently. So, you don't wanna miss that and the surest way not to miss it is to subscribe to our show on whatever platform you're currently watching or listening to us.

You can also get to us through the Hoover Daily Report, which you subscribe to. You get that through hoover.org comes through inbox weekdays. It means that every time Niall, John, or HR in the news, it'll show up in the Daily Report. I'd add, by the way, that Niall, John and HR are prolific writers.

John has the excellent Grumpy Economist blog. Niall writes for a Free Press. HR just started a subset column, so you wanna catch them there. And our three good fellows are also regulars on X. They all have Twitter accounts as well, so you can get them there. On behalf of the GoodFellows, Sir Niall Ferguson, John Cochrane, HR McMaster.

I hope you enjoyed the conversation and we will see you soon. Till then, take care. Thanks again for listening.
>> Presenter: If you enjoyed this show, and are interested in watching more content featuring HR McMaster, watch Battlegrounds also available at hoover.org.