The Policy Lens

Tag: china

  • The Golden Dome: America’s Most Ambitious Military Venture Since the Manhattan Project

    THAAD loaded with the Patriot missile system

    Nearly forty years after Ronald Reagan’s “Star Wars” dream promised to protect the United States from nuclear hellfire, the idea has returned, bigger, flashier, and far less clear. President Donald Trump’s new “Golden Dome” initiative, aims to create an Israeli Iron Dome-style missile defence system which would protect the continental U.S. from drones, hypersonic missiles, and intercontinental strikes. The name is gaudy, which is in character for this administration, but the ambition is not as absurd as some push it to be, the true danger is in its obscurity.

    To understand the stakes, we must know what the “Golden Dome” really is. It includes things that already exist, such as the Patriot batteries, THAAD, along with others. On top of that it includes things that have been in the works for years now, such as enhanced missile detection & interception tools.

    Multi-Layered Defence System

    However, there are new pieces to this puzzle. Just as Trump has revived old Neo-Conservative ambitions, he continues to echo Ronald Reagan and George H. W. Bush’s vision for a Strategic Defensive Initiative system, that are orbital weapons that would destroy incoming ballistic and hypersonic missiles during their boost phase, long before they can come close to their target.

    With the scope now clear, we can understand how it will be one of the most ambitious (and expensive) projects to date. It could lead to major changes in American military strategy. Critics claim that it is another pyre for tax-payer funds. However its supporters, which are often non-MAGA, claim that something like this is long overdue.

    Now President Trump’s plan is named after Israel’s Iron Dome, but are they truly similar? The answer is a resounding no. The Israeli Iron dome protects a small country against small missiles sent over by Hamas or by Palestine Islamic Jihad, not a vast country facing hypersonic missiles by China.

    Israeli Iron Dome in Usage

    Now let us leave the hypothetical, how would this actually be done? America’s Department of War says it has a rough sketch, but is yet to release any details. What is known is that the Golden Dome would not be a single system, but a complex network of technologies.

    The cheapest option for the supposed Golden Dome is one focused on drones, cruise missiles, and planes; this alone would still cost $250 billion. The most lavish idea is designed to block threats of almost all kinds, including the ICBMs used by North Korea. This could amount to almost $3.6 trillion, according to the American Enterprise Institute.

    The involvement in space would drive much of the cost. Even a basic orbital system would have to be enormous, since interceptors can’t always be positioned over the right regions. The only way to compensate for that is to have sheer quantity.

    But is this a Good Idea?

    Critics claim the Golden Dome is an unrealistic and economically destabilizing proposal which revives the failure of Reagan’s “Star Wars” program. They claim that the system’s $175 billion estimate is vastly understated, given that similar space-based interceptor projects cost well over $500 billion. The U.S. already possesses limited defense systems that they argue is more suitable for the much more likely small-scale threats, and a nationwide shield against intercontinental missiles is technologically impossible within three years.

    Beyond the cost and practicality, critics also say the plan risks undermining nuclear deterrence by giving rivals like Russia and China another reason to expand their arsenals, which could trigger a fresh arms race.

    Defense Intelligence Agency’s assessment of current and future missile threats to the U.S.

    However, proponents see it much differently. They argue that the Golden Dome represents a necessary evolution in U.S. defense strategy amid rapidly advancing missile and drone technologies. They contend that existing systems like THAAD and Aegis were designed for limited threats from the time where the biggest aggressor to the U.S. was loosely banded terrorist organizations and insurgents grabbing onto the last stockpile of weapons they had. These were not in the emerging era of hypersonic and long-range precision strikes from adversaries such as China, Russia, and North Korea. Supporters also claim that investing in a comprehensive, layered missile defense network would not only deter attacks but also drive more innovation in defense industries. To them, “Golden Dome” is less of a reckless gamble than a long-overdue modernization incentive which would ensures the U.S. can meet future threats.

    Our Take

    The Golden Dome is undeniably an impressive idea on paper, but it has that all too common risk of turning into an overbuilt symbol of security instead of the promised long term defense solution. In a situation where the lowest estimates already stretch into the hundreds of billions, without even considering the systems staggering maintenance expenses, it is just very hard to justify a nationwide system when the credible threats could be addressed with much less. We believe that a realistic approach should focus on protecting major metropolitan and strategic areas rather than the whole country at once. The best course of action is concentrating these advanced systems around population centers, military bases, and infrastructure hubs, this would be far cheaper, faster to build, and far more likely to work as intended. For now, the Golden Dome seems less like a shield for America and more like a flashy symbol of power meant to project strength, rather than truly ensure it.

  • Solar Success Story or Cautionary Tale? Both.

    China’s 21st-century solar panel rise to the top presents one of the most fascinating paradoxes in modern economic policy. Between 2006 and 2022, the Chinese government’s intervention transformed the country from a negligible contender to 70% of global solar manufacturing. Yet the same policies which created this dominance also led to a $20 billion of corporate debt. This created massive market distortions that continue to ripple throughout the global economy today.

    Industrial Policy, in which the government actively supports specific industries through subsidies, has become a major topic in D.C. as policymakers debate things such as the CHIPS act (a subsidy for microchip production). However when these government interventions go for rapid, unsustainable growth, they often create or worsen the problems they set out to solve.

    China’s solar strategy began with the 2006 “Renewable Energy Law of the People’s Republic of China,” which set goals to make renewable energy the national priority for energy development and establish the PRC as a major area for high-tech advancements. According to the CCP, they went about this by implementing guaranteed electricity purchases at government prices, bidding for projects competitively, mandated grid connections, a national development fund, favorable loans and tax breaks, and binding renewable energy targets with national planning.

    However the real transformation came through unprecedented government backing starting in 2010. Chinese manufacturers received subsidized land, below-market level loans from state banks, and direct cash subsidies. China invested a whopping $50 billion in solar manufacturing capacity since 2011 according to the IEA.

    The results were extremely impressive, according to Yale, solar panel prices plummeted 85% between 2010-2020, mostly due to China. This made solar energy costs competitive with fossil fuels for the first time in history. CCP backed companies like JinkoSolar, Trina Solar, and LONGi became global leaders, not just in manufacturing but also in innovation. Chinese solar exports reached an insane 18.9 billion USD in 2022, and the Atlantic Council claims, Chinese policies accelerated global solar position by years, potentially saving the world trillions in climate damages.

    But this is where the success story becomes tricky. The same policies that created this solar leadership came back to bite them. By 2018, Chinese solar manufacturers had accumulated over $20 billion in debt, with debt increasing 50% from 2020 to 2023, according to the Coalition for a Prosperous America. The National Development and Reform Commission (NDRC), which oversaw solar policy often ignored actual economic efficiency and prioritized closeness to the CCP, which ended up creating what economists call “zombie companies”, firms that survived only through government life support.

    As a quick and severe response, the United States put on tariffs as high as 3500% on Chinese solar panels, saying that the massive subsidies gave way for unfair competition. The European Union did that as well, setting up its own trade barriers, albeit much lower. The University of Michigan found that although these tariffs protected jobs, they increased solar costs by ~30%.

    What makes China’s solar experience so important to learn from is that it shows both the great and destructive results of government subsidies. Unlike major failures like the Brazilian computer market disaster in the 80s, the Chinese approach built major innovation in the solar field and built actual global competition.

    The Chinese solar story gives us a two major lessons for future American industrial policy. First, performance based investing can successfully build competitive industries, but they only truly succeed when used with clear, long-term success graphs. Second, massive subsides without clear accountability measures will harm everyone and never succeed.

    The solar industry shows that the most important policy question isn’t whether to intervene in markets, but how to intervene sensibly. Success and failure can come from the same policies, only separated by the quality of their design & implementation.

  • Tariff Power & Hidden Costs: Why the Youth Are Paying for America’s Trade Wars

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    Tariffs are one of the oldest tools in American economic policy, made to protect domestic industries. However in practice, they are often less about economic protection and more about political signaling, built to stir up nationalist sentiments and show a strict stance on trade.

    Every administration, from Washington’s to Trump’s, has used tariffs to influence trade. But when their goals are to preserve American jobs, they often ignore the long term economic damages they cause: higher consumer prices, retaliatory tariffs, and global supply chain disruption.

    The second Trump administrations tariffs on China were made as a hardline defense against intellectual property theft, cyber spying on American corporations, and the massive US-China trade imbalance. However, studies from the The Peterson Institute for International Economics (PIIE) showed that the average American household would have to pay $1,200 more every year due to the tariffs on Mexico and China. Tariffs on steel and aluminum made goods much more expensive, a $3,000 increase on car manufacturing on average, construction materials rose around 6% increasing infrastructure project costs.

    The main agency responsible for the implementation and structure policies is the Office of the United States Trade Representative (USTR). Meant to negotiate trade deals, it typically operates without transparency or accountability. Tariffs are set in law with minimal input from Congress, often hidden beneath technical legalese. What makes tariffs especially unique and dangerous is that they are the only major form of taxation the Executive Branch can put in place without any Congressional approval.

    That’s why the United States needs a Trade Accountability Act. This act would require all new tariffs to pass a diligent cost-benefit analysis, demand annual reporting to Congress and the public, and create a bipartisan trade oversight commission. This commission could veto tariffs that harm more Americans than they help.