BUILD COALITION

“The way I think about the First Island Chain is what my former collaborator and longtime friend Jim Holmes and I have described as a great wall in reverse, which is that it's not China's great wall, it's our great wall where we have these sentinels lined up from a north to south axis. I think it's this foundation that we're able to thus far maintain a favorable balance of power.”

“Well, I think there's a couple of lessons we can take away from this. One is that the idea of sticking it to the rich is very popular. The other lesson is that it's still really hard to pass and get across the finish line because of all of the particulars involved, because of the way that a tax is structured, and because of how influential the billionaire class is in our society. The third lesson is that because it's so hard, people who want to do this kind of thing need a really broad base of support to push it across the finish line.”

“And the problem with the First Island Chain, and perhaps it's something I should have mentioned earlier, is that what makes the First Island Chain so important is that there really isn't anything left east of the First Island Chain, right? So like, if you compare the strategic geography of Maritime Asia to Europe, Continental Europe has a lot of strategic depth, right? So it runs from Poland, arguably, all the way out to the UK. With the First Island Chain, you fall back east of Japan, and that's it. It's thousands of kilometers of ocean.”

“And we are going through what's been called the terrible 20s, where our military forces through the 2020s and into the early 2030s, will be their oldest and their smallest in recent decades. So we're dipping into this, what's been called a capability or capacity trough, or a bathtub, whatever metaphor we choose to use. And the question for us is sort of how deep and how long that trough is going to be.”

“For the billionaires and also many tech leaders who are not billionaires but who are aspirational, they see this as an existential threat that it really would set precedent of going after the wealth that people have earned and taxing their possessions in a way that really has never been done before. On the other side, that is also part of the motivation for this thing, to really shift the paradigm in how the government taxes wealth and how the government gets people to contribute to society.”

“Well, it was kind of wild. I went to this conference in Orange County a couple of months ago where a bunch of tax advisors and wealth managers were meeting. And one of the sessions they had was basically kind of like how to help your clients reduce their net worth. So suggestions that were like, oh, move your Picasso out of your house in Beverly Hills to your house in Aspen. Or if you were carrying more insurance than you needed on your wife's six-figure diamond necklace that just reduce the insurance policy to what it's actually worth, because that's what you'll be taxed on.”

“I should have clarified that I do think that we ought to include South Korea as an element of the First Island Chain. It's clearly a peninsula. It's surrounded by sea on three sides. I think it ought to be considered to be very much integral to that architecture. But I think you do raise an important point. I think this is an issue that the National Defense Strategy also identifies, which is this problem of simultaneity, which is that, would it be possible that the United States focusing on a Taiwan scenario might create an opportunity for opportunistic aggression by North Korea against South Korea?”

“And so I decided really at the very last minute to not take the LSATs and instead take the GREs to go into grad school for IR, to study on international relations. And so in many ways, learning what I hated helped to reinforce and to understand what I truly loved. And so from that, I continued to do strategic studies, went to a PhD program at the Fletcher School, again, just maintaining my focus on China's military.”

“And the threat that we face, if we were to try to intervene on behalf of Taiwan, is this idea of a reconnaissance strike complex, which is basically a marriage of modern, sophisticated sensors with long-range precision strike systems. And that's, of course, the large family of ballistic and cruise missiles that China could launch from land, from the sea, from the undersea, and from the air. And this complex is designed to sort of go after our way of warfare that we've developed over the past few decades, and that that way of warfare has specific vulnerabilities.”

“Well, I think you summarized it exactly right. And that's why when he does talk about this, he really focuses on his objection to a state-specific wealth tax. And he does frequently say, we ought to have a conversation about a national wealth tax, leaving the door open to the idea of a wealth tax if it was applied evenly across the country.”

“So this would place a 5% tax on the net worth of any billionaires who are California residents as of January 1st of this year. The money would go into a special fund at the state level and would have to be spent on health care services. It's unusual to tax the assets of a person as opposed to their income. So their assets would be their stocks, the jewelry they own, the cars in their garage, the paintings, anything that contributes to their wealth.”

“China is in many ways a cooperative adversary to the extent that the actions that it's taking, particularly its peacetime coercive actions, have really raised awareness of the China challenge down the First Island Chain, whether it's their probing against South Korea in the Yellow Sea or whether it's the coercive actions against the Japanese around the Senkakus or the increasingly regular maritime and aerial exercises in the Sea of Japan and now in the Northwest Pacific on Japan's Eastern facing part of the First Island Chain.”

“This whole idea of the First Island Chain in part started with an important post-war lesson after the Pacific War, which was a lesson of never again. Never let a local power achieve dominance over a key region or a key piece of terrain where that hegemon would be able to acquire the resources and the capabilities to project power to threaten the United States in the Western Hemisphere. Of course, we were thinking at the time, at the end of the Pacific War, about how an isolationist United States essentially allowed the danger to gather in Europe and Asia, that eventually led to a global war.”

“So when my son asked, I don't remember how old he was, eight or whatever, he said for Christmas he wanted a toy aircraft carrier. So my wife went on Amazon, just ordered the first aircraft carrier she saw, toy aircraft carrier. And he got it for Christmas. He opened it up and it was a Lao Ning. And it was made in China. Inside the box was a map of the Nine Dash Line in English, declaring that this was Chinese, the Nansha Military District, and the Lao Ning will defend it.”

“So they started freaking out late last year in advance of this January 1 deadline because the ballot measure says that anyone who was a resident of California on January 1 of this year could be subject to this tax. So at the end of the year, there was a lot of jockeying and there were a few pretty high-profile billionaires who made moves to leave the state to change their official residency. A couple of the founders of Google relocated, Sergey Brin moved to the Nevada side of Lake Tahoe, Larry Page left for Florida, and then also some of the people who were really influential in the world of investing in technology left. David Sachs moved to Texas and Peter Thiel moved to Miami.”

“Meanwhile, some of the most influential unions in the state, the Teachers Union, the Umbrella Group for SEIU, they haven't publicly taken a position. And privately, they're concerned about the idea of a tax that gets locked up in this special box and doesn't fund the programs that most tax dollars do. So there's a lot of different angles of potential concern and that's also why many of the Democratic candidates who are running for governor have expressed some reservations.”