Why does it matter?

It's great.

I mean, look, it's this small, you know,

I can't remember the size.

It's like the size of Connecticut and, you know, it's a small, amazing geography.

Very mountainous.

The tallest mountain in East Asia is not Mount Fuji.

It is actually Yushan Jade Mountain in Taiwan.

And then you have these beaches and you've got, you know, this tropical sort of climate that meets some of the biggest urban centers in the world.

You know, roughly 25 million or so people, many of them of Chinese heritage.

So why does it matter?

So it matters because of geography.

It matters because of democracy.

And it matters because of economics, okay?

It matters for us here in the United States.

Geographically, what the Chinese Communist Party views Taiwan rightly, in fact, General MacArthur,

Douglas MacArthur would agree with this assessment.

And in fact, he made a similar assessment all the way back in 1950 after World War II.

He said, if Formosa, which was the old Portuguese name for Taiwan, if it were to fall to a hostile government, it would become a springboard for aggression throughout the region.

And in fact, it had already been that.

The Japanese, Imperial Japan had controlled Taiwan from 1895 all the way for 50 years till the end of World War II.

And they used it as a springboard to move into Southeast Asia, particularly when World War II kicked up.

1940, 41, the Japanese were promoting this idea of a greater East Asian co-prosperity sphere.

I know that's a mouthful, but what it was, it was the Japanese government saying, we're going to dominate Asia.

No one else, we don't want Western colonial powers anywhere near this, but we also don't want those countries to run themselves.

So it was an involuntary invasion of Japan's neighbors.

And they said, well, this is going to be great for everyone.

We're going to be on top.

It's a new empire that we run, but we'll take care of the economics.

We'll take care of the security and so forth.

In fact, what it did was it kicked up massive response, you know, antibodies to this approach.

Millions were killed in China under that period.

There were millions killed throughout Southeast Asia.

And then of course the United States comes into the war after Pearl Harbor in late 1941.

The rest is history.

China's following a similar model to the Japanese model of 1940.

Xi Jinping has even given speeches.

I don't know whether he knows, has a sense of irony about this or not, or whether he's even aware, but he gave a big speech in Shanghai.

One of his Politburo members just last week gave another speech, Zhao Leji, talking about the importance of Asia remaining in control of Asians, by which he means Beijing.

It was Tokyo in 1940.

But it is very similar language to what we heard when the Japanese were promoting a greater East Asia co-prosperity sphere, which was an empire.

So do you mention the size of Taiwan?

Sounds like a speck.

Why is it positionally advantageous?

If you look at the map from the perspective of China and you're looking eastward,

American strategists during the Cold War used to describe it the way that Chinese strategists now describe it, which is the first island chain that prevents Beijing from expeditionary sort of projection of military force.

And so if you look, it's the Aleutian Islands, which are part of Alaska, comes down to the Japanese islands and down to the Ryukyu Islands where Okinawa is, also Japanese islands.

And then right in the middle, you've got Taiwan, and then it continues on to the archipelago of the Philippine Islands.

So you've got basically democracies that hem in Beijing's military ambitions.

And for China to send a bomber or a ship or even a submarine through that first island chain, they have to go through, in essence, a gateway of democracies that are, by and large, allied with the United States.

And so Beijing believes that Taiwan is the linchpin of that first island chain.

If Taiwan were to fall under Chinese control,

Chinese military doctrine, their own manuals, say at that point, we can dominate Japan.

So there's a Chinese Air Force manual for Air Force officers that says, we turn this into an air base.

And even though it's just extending out 150 miles from China's coast, it means that Chinese bomber patrols-

Provide safe passage in a way.

Safe passage for them to, in the words of their own doctrine, inflict a blockade on Japan at will.

Could you say more about that?

What is a blockade against Japan?

It's an act of war.

A blockade means that you're cutting off trade to and from a country by either surrounding it with ships or aircraft or threatening it with missile strikes to say, we can shut down your economy.

We can shut down your food and energy supply.

The lights go out in Japan.

Japan doesn't produce energy, right?

They are wholly dependent on imports other than some of their nuclear plants.

And so China says, we will be able to, we'll basically have so much leverage over Japan, as well as the Philippines to the south, that we kind of have them in our pocket at that point.

And so Taiwan is the key to that geographically.

Now, it's also a great democracy.

If you look at independent sort of assessments of democracies, the Economist Magazine has what's called the Economist Intelligence Unit.

They do rankings, right?

They have found consistently that Taiwan is the most democratic, liberal democratic state in all of Asia.

And it actually ranks higher than the United States, okay?

So they know what they're doing.

They've built something pretty special.

I have to ask, sorry, I won't be able to let this go.

Based on what does it rank more highly than the United States?

Freedom of speech, rule of law, equality of access to run for government.

Taiwan's legislature is 40% women compared to I think about 27, 28% of our Congress are women in the United States.

Many of the top cities governed by female mayors, they've twice elected a woman as president of Taiwan.

In terms of freedom of the press,

I mean, it'd be worth taking a close look at these EIU, sort of what their methodology was.

But they're not the only ones.

There are others as well who say Taiwan is really a true liberal democracy in the classical sense of the word liberal.

It has really shed its authoritarian past.

If that were to fall because it was coercively annexed by Beijing, that would have huge ramifications for the region and knock-on effects for the world.

Why is that?

I'm curious if you could say more about that because I have to admit, growing up with my dad yelling at the TV about politics,

I just basically tuned it out.

I decided to be sort of selectively ignorant about this, which I regret on some level.

But I think to myself, okay, they are this sort of ideological paragon of democracy in the region.

I understand the positional advantage of, say, Beijing having control of Taiwan, as you just described.

The geographic element.

Exactly.

But if Taiwan falls ideologically, what are the ripple effects of that?

I think what you have at that point is a state of emergency in all of the other democracies of the region where they are now facing an existential threat, military threat, and states of emergency aren't good for democracies.

I mean, look at what happened to us just during the lockdowns during COVID-19.

Imagine you're in a situation where these countries are having to rapidly militarize in order to try to deter China from now being able to threaten them with blockades.

And it's pretty clear that Beijing has much bigger ambitions than just Taiwan.

The other part is that if Taiwan right now is a beacon for a lot of Chinese people on the mainland,

Chinese people who visited Taiwan generally come away with a pretty positive impression.

And it's almost like they're visiting this Alice in Wonderland alternative future where people enjoy free speech.

They can go vote for their leaders.

And yet they're speaking the same language.

They share a lot of the same heritage.

You can actually see freedom of religion in Taiwan in ways that are spectacular.

You have traditional Chinese religions, different strains of Buddhism and Taoism, ancestor worship, Christianity, Catholic and Protestant.

It's all there and it is unfettered.

It is unmolested by-

And for people who don't have the history, a lot of that got cleaned out of mainland for a host of different reasons.

The Chinese government demands that it oversee any religious activity in China and in ways that are, to put it mildly, that distort the doctrine and in effect demote God to below the Communist Party.

Okay, so we have the geographic importance.

We've got the ideological component.

Is there anything else you would add to that?

The economy.

Look, Taiwan, this amazing small country, produces 92% of the advanced semiconductors in the world.

92%.

That's wild.

I know.

We're talking about CPUs, central processing units that go into your phone, to GPUs, which are the chips like NVIDIA is famous for making that are really central to everything from self-driving cars to other AI sorts of applications.

Taiwan doesn't design all those chips.

American companies are sort of in the lead in design, but they actually produce them.

They're the best company in the world as a fab, you know, a contract fab, meaning that they fabricate the chips based on the instructions and blueprints that they're provided by American and Korean and Japanese and other companies.

And there you have it, TSMC,

Taiwan Semiconductor Manufacturing Corp, which was founded by Morris Chang.

I've met him.

He's an incredible figure who, you know, was at Texas Instruments way back during our silicon sort of revolution and went on to build a superior company.

It's one of the best run, most valuable companies in the world.

Beijing, if Beijing were to even blockade Taiwan, that is to say, not attack it, not bomb it, but prevent ships from coming and going and flights from coming and going,

Taiwan Semiconductor Manufacturing Corp would begin to die very quickly, necrosis.

You can think of a firm like theirs, those plants, as being a lot like a human brain.

It needs a constant supply of oxygen and nutrients in the form of everything from software updates to recalibrating after an earthquake.

There was just a huge earthquake.

Condolences to the people of Taiwan, but there are also lots of little earthquakes that take place there.

You have to recalibrate the equipment.

You have to buy equipment from the Dutch, chemicals from the Japanese, key equipment and designs from Israelis and Americans.

If that stops, the whole thing starts to calcify in ways that are very hard to reverse.

So we will be in a, some would argue we would be in a Great Depression, even with just a blockade of Taiwan.

We'd be facing a global Great Depression.

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