If you are any sort of human being at all, your reaction to the news that Israel found a way to booby-trap some 1200 pagers and then sell them to Hizbullah and then remotely detonated them all at once was, at first, amazement at the skill and talent involved in pulling off such an operation, and then, lots and lots of laughter at the deserved comeuppance of terrorists who habitually murder women and children.

But then, you may have had a third reaction. Namely, asking yourself: don't we make all our stuff in China? And isn't China, you know, not our friend?

We talk a lot about industrial policy around here. It's one thing to note that most harbor cranes are made in China, which sounds like a lot high-value-added manufacturing jobs that the US used to have and no longer does. It's another thing to know that these cranes are operated electronically, from a remote location…in the manufacturer's Chinese headquarters.

Chinese devices and components are found in sectors like energy, telecommunications, and transportation systems. Chinese-made network devices like switches and security cameras are increasingly present in U.S. networks despite bans, growing by 40% from 2023 to 2024, according to research by cybersecurity firm Forescout.

Despite sanctions, hundreds of Chinese companies remain embedded in U.S. defense supply chains, including in critical technology areas like semiconductors, biotechnology, and hypersonics, according to a report by the American Security Project, and counterfeit parts from China have been found in U.S. military systems like aircraft and submarines.

According to a report by the U.S.-China Economic and Security Review Commission, we have so little transparency into our supply chain that it's hard to even evaluate the problem.

The report, which is very good, does have recommendations for Congress. As relates to sabotage, the report recommends requiring suppliers in critical sectors to confidentially disclose all tiers of their contractors to identify potential vulnerabilities. It also suggests developing due diligence programs for small businesses participating in DoD innovation programs to ensure supply chain integrity and prevent investments by Chinese entities that could compromise suppliers' intellectual property or limit their ability to participate in federal acquisition programs. Additionally, the report recommends releasing a comprehensive public report on the utilization of commercial off-the-shelf procurement of inputs, components, and products from China in major weapons systems, critical infrastructure, and other key sectors. While we should bear in mind not burdening small businesses participating in innovation programs with red tape, all of these are good suggestions.

The NDAA for FY2024 does include some provisions to address this issue. It establishes emergency acquisition authority to replenish defense stockpiles and requires the DoD to launch pilot programs for analyzing supply chains of key weapons systems. The NDAA also directs DoD to assess vulnerabilities related to critical minerals sourced from China and improve supply chain visibility.

Jim Banks' SHIELD Act (Securing Holistic Integrity in Electronics, Logistics, and Data) would establish an Office of Economic and Security Preparedness and Resilience within the White House, tasked with setting priorities for resilient U.S. supply chains. It would require the new office to conduct regular assessments of critical supply chains and develop strategies to address vulnerabilities.

So it's not like we weren't warned. We haven't found any bills addressing pagers, though…

Policy News You Need To Know

#BreakthroughTech — Undoubtedly the most important non-pager-related news of the day: Neuralink, Elon Musk's brain-chip startup, has recently announced a significant development for their experimental device called Blindsight. The Blindsight device is designed to restore vision to people who have lost their sight. While specific details are limited, the device likely functions by implanting a microelectrode array directly into the visual cortex of the brain and activating neurons based on input from an external camera to produce visual images. Elon Musk has made several claims about Blindsight's potential, namely that initially, the vision will be low resolution, comparable to "Atari graphics," but that eventually, it could potentially provide vision better than natural sight. Neuralink has announced that it has received the FDA's "breakthrough device" designation for Blindsight. The FDA Breakthrough Device Designation is a program designed to expedite the development and review of certain medical devices that have the potential to provide more effective treatment or diagnosis of life-threatening or irreversibly debilitating conditions. The FDA touts the program as granting benefits such as "interactive and timely communication with the FDA." Shouldn't every interaction between citizens and government bodies be "interactive and timely"? We suppose this is better than the alternative. It's important to note that while this designation can speed up the development and review process, it does not guarantee FDA approval or clearance. Devices must still meet the FDA's standards for safety and effectiveness to receive market authorization. In any case, it's astonishing that the brightest minds are working on technology that could literally restore sight to the blind, and we hope the government does as little as possible to impede it.

#SpaceX — Totally unrelated to the above, and certainly having absolutely nothing to do with punishing Elon Musk for having the gall to endorse the wrong Presidential candidate in the upcoming election, the FAA has just announced that it is proposing $633,009 in civil penalties against SpaceX "for allegedly failing to follow its license requirements during two launches in 2023." Whatever that means. The alleged violations are of a picayune nature, they consist of minor procedural deviations like using a different control room or propellant farm. “Safety drives everything we do at the FAA," the press release crows, incredibly. Every intelligent citizen, no matter their political views or views on the tradeoffs between innovation and safety, should recoil at that: nothing should be the single priority of any administration. Public policy always, always involves tradeoffs, and anyone who tells you otherwise is either an idiot, a dangerous ideologue, or a con artist. Nobody in either of those categories has any business working in government.

#TaxPolicy — The less said about President Trump's recent promise, while in New York, to bring back SALT, one of the centerpieces of TCJA, if elected, the better, probably. But we can't resist quoting the Tax Foundation's Erica York, here: "Trump's tax cut promises now surpass $8.5 trillion over a decade: TCJA permanence minus SALT = -$5.3 trillion; Exempt tips, Social Security, OT = -$2.9 trillion (or more); Lower the corporate rate to 15% = -$440 billion." Ah, Presidential elections.

#Ethics — Pretty funny: "A new bill to ban senators and their spouses from buying individual stocks that Sen. Tammy Baldwin (D-Wis.) touts in a new ad wouldn’t apply to her own partner (a wealth adviser at Morgan Stanley) because the couple is not married." Via Politico's Daniel Lippman

#Trade — Interesting debate from the left-wing journal Democracy on tariffs. Matt Yglesias took the "anti" side and we appreciated his case for free trade from an egalitarian perspective.

#Immigration — The CBP has released the border numbers for August. The headline? A CIS analysis puts it best: CBP has already encountered more removable aliens in FY 2024 than in any year prior to the Biden-Harris administration — and DHS can’t handle the strain.