Rep. Mike Gallagher's Embrace of Authoritarianism Ignores That Money Is Fungible
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Historians to this day promote the fiction that when the Arab members of OPEC placed an oil embargo on the U.S., their actions kept oil from reaching the United States. Actually, they did no such thing. Oil is fungible. Applied to any presumed embargo, oil that wouldn’t reach us from Arab nations would reach us from other countries. Oil is broadly the same wherever it’s extracted (fungible), at which point the Arab nations never ceased selling us their oil in the first place. They continued to export to us, albeit via intermediaries not based in the U.S.

The fungible nature of oil is something Rep. Mike Gallagher would be wise to contemplate. A greater understanding of this economic truism might cause him to wisely turn the temperature down with regard to his anti-China bombast.

Gallagher, as many readers know, is convinced that the Chinese Communist Party (CCP) is different; that quite unlike government bureaucrats in every other nation in the history of the world, the members of the CCP (presumably for being Chinese?) are capable of operating world-leading businesses that will rapidly place their broadly free and dynamic stateside competitors in the rear-view mirror. Really, what else could Gallagher mean when he asserts that TikTok is controlled by the CCP in the same sentence in which he asserts that TikTok is soon to be the most dominant media company in the U.S.? And it’s not just TikTok. Supposedly Huawei answers to the CCP, which would make it the first government-controlled business in the history of the world to have its wildly competitive products circulating in over 270 countries. But I digress.

In a recent opinion piece for the Washington Post, the frequently at 11 Gallagher asserted that “Millions of Americans have become financial backers of the CCP without knowing it.” Gallagher adds that “Their savings are funding companies that build weapons for China’s People’s Liberation Army as well as companies involved in the ongoing genocide in Xinjiang.” Of course, what Gallagher leaves out is that short of the world shutting down economically in total, the capital born of production will always and everywhere seek returns. Mike Gallagher, meet fungible.

In perhaps understanding fungible better, Gallagher might quickly realize that if it’s not American pensions funding all manner of good (and bad) activity in China, other wealth in search of returns surely will. Dollars in particular liquefy much of the world’s commerce precisely because they’re trusted, so if it’s not intrepid investment of an American origin flowing to China, flow to China investment will. Likely in dollars. This is basic economics.  

All of which raises a question not asked by Gallagher: are individuals, companies and nations more or less likely to pursue war and other harmful gestures against those directing capital to them? Hopefully the question answers itself for readers, along with Gallagher.

In Gallagher’s case, he’s not just eager to keep American savings out of China. No, it’s more than that. Gallagher wants control. His aforementioned op-ed from the Post was chock full of lines like “notification requirement for investments,” “we should not allow investments that support China’s military modernization” (see fungible, again), “we must address all capital outflows to China.” Get it? Big government control overseen by Gallagher.

Stated rather simply, Gallagher is building his political career around making China the enemy (it’s funny how actual, profit-motivated capitalists like Coca-Cola, McDonald’s and Nike feel differently, as do the Chinese people who buy their goods so feverishly), and China’s the enemy because it’s authoritarian, among other things. Which means Gallagher aims to fight what he deems authoritarianism with authoritarianism. Ironic?

John Tamny is editor of RealClearMarkets, President of the Parkview Institute, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors ( His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution.

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