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Why the Economy is Bad for Most People and Getting Worse

2014 October 6
by Ian Welsh

This is the second collation of articles on why our world is what it is, and how we can change it.  Some of these articles are old, as I don’t write as much as I used to about economics because the decision points for avoiding a completely lousy economy are now past.  The last decision points were passed when Barack Obama announced his economics team and refused to try and get rid of or bypass Bernanke to enforce decent policy on the Federal Reserve.

However this economy was decades in the making, and if we do not understand how it happened we will only wind up in a good economy through accident, and having obtained a good economy, will not be able to keep it.  These articles aren’t exhaustive, a better list would include almost 5 centuries of economic history, at least in summary, and certainly deal with the 19th century and early 20th century.

I was heartened that hundreds of people read the articles linked in my compendium on ideology and character  so I dare hope that you will, again, read these pieces.  If you do you will walk away vastly better informed than almost anyone you know, including most formal economists, about why the economy is as it is.

The Decline and Fall of Post-War Liberalism

The Pundits today natter on and on about income inequality, but the fundamental cause of income inequality is almost always how power is distributed in society.  As power goes, so goes income: and wealth.  The last period of broad based equality was the liberal period which started with the Great Depression.  You can locate the end of that era at various points from 1968 to 1980, but 1980 was the point where turning back became vastly difficult, because it was the moment when a new political order was born: an order born on crushing those who were willing and able to fight effectively for their share of income and money.

Why Elites Have Pushed “Free Trade”

Those who are middle aged or beyond remember the relentless march of free trade agreements, the creation of the WTO and endless drumbeat of propaganda about how FREE trade was wonderful, inevitable and going to make us all rich.  It didn’t, and it was never intended to, but understanding fully why it only enriched a few requires understanding the circumstances required for free trade to work; the incentives for free trade; and the power dynamics which make free trade perfect for elites who want to become rich, often by destroying the prosperity of their own countries.  Free trade is about power: and power is about who gets how much.

The Isolation of Elites and the Madness of the Crowd

All societies change and face new challenges.  What matters is how they deal with new circumstances.  America in specific, and most of the developed world in general, are in decline because of simple broken feedback loops: to put it simply, ordinary people live in a world of propaganda and lies; while the rich and the powerful live in a bubble, isolated from the consequences of their decisions on the majority of the population or on the future.

The Bailouts Caused the Lousy “Recovery”

This may be the hardest thing to explain to anyone with a connection to power or money: the bailouts are WHY the world has a lousy economy; not why it isn’t even worse.  If you cannot understand why this is so, if you cannot understand that other options were, and are, available, other than making people who destroyed the world economy even richer and more powerful, then you will never see a good economy ever again.

The Rapid Destruction of Countries

You may have noticed; you probably have noticed, that countries are becoming basket cases faster and faster.  Some are destroyed by war and revolution, others by forced austerity, but however it happens, the end of anything resembling a good economy in places like Greece, or Ukraine, or Italy, or Ireland or through war, in places like Lybia and Syria is sure.  Understand this: what is done to those countries, is being done to yours if you live in the developed world, just at a slower pace.  And one day, you too will be more valuable dead than alive.

Why Countries Can’t Resist Austerity

Many of you will realize that much of the answer to this is related to the article on free trade.  Weakness, national weakness, is built into the world economic system, and done so deliberately.  The austerity of the past six years is just the impoverishment of ordinary people, for the profit of elites, on steroids.  But it is worth examining, in detail why countries can’t or won’t stop it, and what is required for a country to be able to do so.

Why Public Opinion Doesn’t Matter

We live in the remnants of a mass society, but we aren’t one any more though we think we are. In a mass mobilization society with relatively evenly distributed wealth and income and something approaching competitive markets public opinion mattered. If it was not King, well, it was at least a Duke.  Today it matters only at the margins, on decisions where the elites do not have consensus.  Understand this, and understand why, or all your efforts to resist will be for nothing.

The Golden Rule

Money, my friends, is Permission, as Stirling Newberry once explained to me.  It is how we determine who gets to do what.  He who can create money, rules.  This is more subtle than it seems, so read, and weep.

It’s not How Much Money It’s Who We Give It To, and Why

We have almost no significant problems in the world today which we either could not have fixed had we acted soon enough, or that we could not fix or mitigate today, were we to act.  We don’t act because we mis-allocate, on a scale which would put Pyramid building Pharoahs to shame, our social efforts.

Higher Profits Produce a Worse Society

No one ever told you that, I’m sure.  Read, and learn.

The Fall of the USSR

The USSR fell in large part because of constant and radical mis-allocation of resources, because those running the economy did not receive accurate feedback.  Despite the triumphal cries of the West and the managerial class who pretend to be capitalists, a version of this exact problem is at the root of our current decline, and it would serve us well to understand how and why the USSR fell.

What Privatization Does

Of all the ideological bugaboos of our current age, one of the strongest is the idea that private enterprise is always more efficient and better.  It’s not, but that belief is a very profitable one to our elites, and understanding how the engine of privatization works is essential to understanding both our current economic collapse and how the fake bright economies of neo-liberal era, especially the early neo-liberal period of Thatcher and Reagan, were generated.

What Prosperity is and Isn’t

It is, perhaps, odd, to put this article so far down the list, but it’s wonky and important and not very dramatic.  Simply enough, what we define as prosperity isn’t, which is why we are sick, fat and unhappy with rates of depression and mental illness and chronic disease which dwarf those of our forbears despite having so much more stuff.  Fix everything else, and if we insist on continuing to produce that which makes us sick and unhappy, what we have will not be what we need, or want, nor, truly, prosperity worth having.

The Four Principles of Prosperity

Prosperity, at its heart, is an ethical phenomenon, as much as it is anything else. Without the right ethics, the right spirit, it will not last, nor be widespread.  If we want a last prosperity which is actually good for us, we will start by reforming out public ethics.

How to Create a Good Internet Economy

The internet is wonderful, but despite all the cries of progress, progress, it has mostly made a few people rich, created a prosperous class of software engineers who often lose their jobs in their 50s, and at the same time as it has risen, seen the decline of the prosperity of most people in the developed world.  It has not produced the prosperity we would have hoped it would.  Here’s why, and how to fix it.

Concluding Remarks

The above is so far from comprehensive as to make me cry, but it’s a start.  I do hope that you will read it and come away with a far better idea of why the economy sucks for most people, and a clear understanding both that it is intended to, why it is intended to, and how the old, better economy was lost.


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The Ongoing Wildlife Holocaust

2014 October 3
by Ian Welsh

We are in immense amounts of trouble:

The world populations of fish, birds, mammals, amphibians and reptiles fell overall by 52 per cent between 1970 and 2010, far faster than previously thought, the World Wildlife Fund said on Tuesday.
If we survive the next two hundred years, this is another thing our descendents will curse us for, because the genome of other species will be more valuable than gold, oil or any other substance you can think of: design material for the real biotech revolution which is just beginning.
The real risk is not in the higher animals, though, it is in phytoplankton in the sea (also crashing precipitously) and in trees, which are responsible for much of our oxygen cycle.  If we screw those up, well, we’re dead.  And evidence is strong that we are screwing them up.
The second angel poured out his bowl into the sea, and it became blood like that of a dead man; and every living thing in the sea died.
It is not God who will destroy us, of course, but ourselves.  And we will do it because our ideology tells us to do so. Preparatory to series of articles on technology, please take the time to read this collation of articles on ideology, character, why we are destroying ourselves, and how it can change.

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The Role of Character and Ideology in Prosperity

2014 October 2

I will be starting a new series on technology and its effect on society.  Before I do so I want to take readers through some of my previous writing on ideology and character, and how they help form the societies we live in.  Taking the time to read these articles (a short book’s worth), should vastly improve your understanding of the world and the articles to come.  It should be worth your time even if you read the articles when they were published, as at the time they lacked both context and commentary, and were not collated to be read together so that the connections were obvious.

Baseline Predictions for the Next 60 Years

While not an article about ideology, this is an article about where our current ideology and character are going to take us: to the brink of disaster and possibly beyond, while continuing to impoverish and disempower larger and larger segments of the human race.  This might be a slightly optimistic piece: there’s some reason to believe our actions in the world’s oceans could destroy the oxygen cycle, and if so, events will be much, much worse.

What an Ideology Is, and Why We Need a New One

Too many people think ideologies are some airy-fairy nonsense and that they are pragmatic men and women operating on common sense and facts.  Such people are amongst the greatest of all fools: our entire society is based on interlocking ideologies; the primary of which are neo-liberalism, capitalism, human rights and socialism.  It is not obvious, nor was it obvious to most societies that have ever existed, for example, that food should be distributed based on money; nor that ideas could be property.  How we organize things; our particular ideas about markets, their role and who should lead us, are ideological.  If we want to change society, we need to be able to control markets so they aren’t producing a world that makes us sick, unhappy, and, in increasing numbers, dead.

How to Create a Viable Ideology

We may look at current trends and realize that if we don’t reverse them, and reverse them fast, billions will suffer or die; but creating an ideology which can reverse them requires us to understand what makes an ideology viable and powerful.  An ideology which does not create believers willing to die; and to kill, on its behalf, will lose to those that do.  An ideology which cannot prevent people from selling out; from betraying, will definitely lose in the current world, where there is so much money available at the top to simply buy out (for billions) those who create something new, so that something new can be turned into nothing but a monetization scheme.

Our Theory of Human Nature Predicts Our Policies

The ideas of an ideology determine how our society is run, and of those ideas, none is more important than what we think human nature is.

A Theory of Human Nature Suited to Prosperity and Freedom

If we are trying to create a prosperous, free world, our policies must be based in a theory of human nature that is both true enough and which leads to policies which create widespread affluence and human freedom.

Character Is Destiny

Ideology and character are intertwined.  Character determines what we do and what we don’t do, and how we do it.  The character of large numbers of people determines the destinies of nations and of the world itself.  If we want to make the world better (or worse), we must change our own character.  Those who fail to understand how character arises will never change the world except accidentally.

How Everyday Life Creates Our Character

and, as noted, our destiny.  I always laugh at radicals who want more schooling, because schooling is where people learn to sit down, shut up, give the approved answers and do what they’re told.  Working life, as an adult, continues this process of learned powerlessness and acquiescence and even in our consumptive and political lives we continue the trend: choosing from choices offered to us, rather than producing what we actually need.

How Everyday Life Creates Sociopathic Corporate Leaders

Those who lead our corporations control most of our lives, even more than the government, because they set the terms by which we live, die, and can afford the good things in life. Our daily life is prescribed by them, from how we work to what we eat, to what we entertain ourselves with.  We need, therefore, to understand the character traits our leaders are chosen for, and how that choosing works.  If we can’t learn to create and choose better leaders, we will never have a better world.

The Difference Between Ethics and Morals

If we want an ideology that tells us how to create a better world, and people with the character to create that world, we must understand what sort of people they should be.  Key to doing this is the understanding of how they treat other people: the people they know, and more importantly, the people they don’t.

The Fundamental Feedback Loop for a Better World

The shortest article on this list, this is also one of the most important and speaks directly to how money directs behaviour and to matters of choosing our leaders.

Living in a Rich Society

It’s been so long since parts of the West were truly prosperous that people forget what it’s like, and forget that it creates a different type of person than a scarcity society.

Late 19th and Early 20th Century Intellectual Roots

Lived experience creates character, character feeds into ideology. It’s worth looking at how various themes of the Victorian era were created by those who lived through that time and the time that came before.

What Confucius Teaches Those Who Want a Better World

Amongst those who have created powerful ideologies Confucius is in the first rank, Confucianism having been the most important ideology of the most populous and advanced region of the world for most of the last two thousand or more years.  Confucius was very aware of what he was trying to do, had a theory of human nature, and a theory of character and we would be fools not to learn from him.

Concluding Remarks

I hope that those who are interested in creating a better world will read the articles linked above.  What I’ve written amounts to a short book, and the ideas are interrelated.  If you have read a few of my posts, or even read all, but not thought on them or read them with each other in mind, you cannot have the full picture of how these ideas work together, and why the different parts are necessary.

Ideas are often destroyed in practice by those who do not understand the reasons for the various parts and prescriptions and who feel they can pick and choose without that understanding.  Character and ideology and ethics and every day life are all intertwined: you cannot pick one and say “this is supreme”: they create each other.

Nor, of course, is the above a complete intellectual package.  Large chunks are missing.  My next piece will be a review of some key economic articles on why the world is specifically as it is today: why we lost post-war liberalism, why we have austerity and neo-liberalism and so-called free trade.  That piece comes after this one because without understanding our own character and the character of our leaders and how ideology works, we cannot understand our current circumstances.

I will then be moving on to new articles on technology, geography and environment, and their effect on societies though the ages, with an emphasis on those technologies and environments which create prosperity, freedom and egalitarian cultures and why they do.  There is a great trend today, an argument, about changing the tech to improve society, but it will only work if we understand how technology changes society.


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Looks like Scottish Independence is a “No”

2014 September 18
by Ian Welsh

The calls are coming in.

Assuming they are correct, I think this vote is a mistake, and I note that having been given a clean vote to leave and a chance to live their own values, but having given in to fear; for me, at least, Scottish complaints about privatization of the NHS and other cuts to the social state will now ring rather hollow.

However, as with Greece voting to have its economy destroyed by refusing to take a chance on Syriza, people are voting their fear and for the status quo.  Older folks seem to want to just hang on, and are unwilling to take chances for a better future and they can’t really believe that their own elites are intent on impoverishing them, and, effectively, in many cases, killing them. (Because that’s what deliberate austerity policies do.)

The Great Complacency will come to and end; but people aren’t going to like how that happens.  Oh well.


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Scotland, England and Hegemonic States

2014 September 16

When you’re on your way up, everyone wants to join or be your friend.  When you’re on your way down, well, it’s the opposite.

Scotland, with free education and a belief in social welfare that England has lost, is on the edge of voting to leave in a referendum vote. It probably doesn’t hurt that they stand to gain a lot of money from North Sea oil, but the bottom line is “why stay with England?”

The reasons offered by England are essentially “on your own, you’ll be screwed”, with an ugly undertone of “we’ll make sure of it.”  There have been some efforts to offer more money and more independence within the UK framework so they can maintain social spending, but are those offers believable from Cameron, or from Millibrand, who has said that he won’t undo most of the austerity and destruction of social policies (including piecemeal NHS privatization) under the Conservate/Lib-Dem government.

Even if they are, it isn’t credible that some future PM, and by future we mean “less than a decade” will decide that Westminster needs the money more than Scotland.

We see in Spain, the Catalonians are trying to leave as well, with as many as 2 million on the streets.

This is simple enough: under an elite consensus of austerity, why stay?

The best argument for not breaking up the United Kingdom is that local elites won’t really be better: they still want to be part of the EU, they’ll still get on the austerity train, and if they don’t, the various threats by England and other elites will, in fact, materialize, and Scotland will be destroyed so it can’t afford to give benefits to its citizens.  After all, if Scotland leaves, who’s next?

The West, with a few exceptions like Norway and Finland (even Sweden is slipping) just doesn’t offer that bright shiny future to its residents any more. There is no real narrative of “this is just going to keep getting better”. To be sure, you may get a smartphone, but it’s used to tie you to your job 24/7 and spy on you, and your job is shittier than the one your parents had, which was shittier than the one your grandparents had, at least if you’re young.

There’s still a bit of narrative power left in Europe, as we can see by how some Ukrainians so desperately want to join, thinking they’re going to get the deal Poland got. (You’re not, you’re going to be destroyed by the IMF and Europe, with the full collusion of your own oligarchs, who are what you need to deal with first.)  But there isn’t much.  The WTO can’t get new rounds through, and the new, truly terrible bilateral deals which are going through are vastly unpopular, and designed to reduce the bargaining power of workers so that even more money flows to elites.

And so the decline in legitimacy of the West will continue: the narratives are broken because the reality is broken.  Not everyone has got the message yet, and there are still many countries even worse off, but the West, for over 90% of its population, is in decline.

Devolution will only work if the people who devolve don’t assume it’s a solution by itself and stay right on top of their local politicians. Otherwise those pols will turn around and betray them as well.  If those pols don’t betray, assume international elites will want any new counter-examples to the inevitability of austerity crushed, and will make sincere efforts to do so.

Scots who think they can devolve and stay on the British pound are, thus, making a mistake.  Likewise it is unclear to me that they should stay in the EU, after how the EU has treated the PIIGS.  There is no “us” in the EU, only elites with interests: if they perceive it is in their interest for Scotland to prosper (they might, if it can be sold as a poke in England’s eye), then they will. If not, they will have no hesitation in crushing Scotland’s economy.

Best of luck to the Scot… and to the Catalonians.  The West has failed, and must be reborn.  Let us hope independence for smaller states is part of that rebirth.


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Obama’s Speech on War with the Islamic State

2014 September 12
by Ian Welsh

Let’s just quickly point out the obvious: air power only works if you have effective ground troops backing it up, or your enemy is easily dissuaded from war by losses of infrastructure. Otherwise it wrecks great destruction, and does little more.

To put it simply, this strategy will certainly help those fighting the IS, but it won’t make that big a difference, and it isn’t new, it’s what the US has been doing for some time.  Failure to coordinate with Syria is a mistake, and the only people in the region who have significant numbers of troops capable of defeating the IS are Iran and Hezbollah.  Hezbollah is unlikely to move large numbers of troops into Syria out of fear of Israel attacking them, and there is no assurance Obama can give them of that not happening, because America answers to Israel, not Israel to America.

Meanwhile the US is still giving arms to so-called moderates like the FSA, which wind up in the hands of ISIL.  The Peshmerga have proved largely incapable, though they are more willing to fight than the pathetic Iraqi army, and the IS is filling up with ex-Baathists: very capable soldiers.

The alliance is also laughable: Turkey has been funneling weapons to the Syrian opposition for some time and Saudi Arabia is the spiritual home of the form of Wahhabism the IS believes in.  That said, I do believe that the Saudi royal family is soiling themselves over the IS, because their ideology requires them to overthrow the corrupt rulers of Saudi Arabia and conquer Mecca as part of their caliphate.  The Saudi royal family deserves nothing more, this is an exact result of their pushing Wahabbism as the ideology of Jihad for decades.

And so it goes.  Obama hasn’t managed to fight a war yet that didn’t destabilize multiple countries.  I wouldn’t expect this to be any different.


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On Truth and Burning Bridges

2014 September 10
by Ian Welsh

Over the last few years, I burned a lot of bridges: first on private e-mail lists and second on twitter (and a little bit with unwelcome posts here.)

After Obama got into office and made it clear that he was going to ramp up drones (which I knew and could not publish); and that he was going to drive the West into permanent depression (which I knew and wrote repeatedly); and my compatriots, by and large, fell to their knees and lauded him, even in places which later turned on him, I became, not angry, but enraged.

There were three camps on this:

1) Those who knew Obama was going to be a disaster and would not say it, because he was popular and speaking against a popular president who had just bought the Netroots and who most netroots citizens believed in, seemed like a way to lose readership or followers.

2) Those who believed that Obama was the Panglossian choice: this is the best we can get, the best of all possible worlds.  That didn’t mean good, that meant bad, but better than terrible, so suck it up.  Billmon falls into this camp on economic policy (the bailouts were the only politically possible policy and this is the best of all actually possible worlds), and I had a huge blowout with him last year about on twitter.  He’s brilliant, but…

3) Those who believed and many of whom still believe that Obama was just swell; FDR reborn, who would (and has) accomplished more than FDR every did!

We all have our own truths and determining truth is a problem. I thought then that Obama might well be a one term president, and was wrong.  But on the economics I was exactly right; and on foreign policy I was generally right: I knew that foreign policy was going to be a fiasco when he put Hilary Clinton in charge, because the one major area Hilary was to his right on was foreign policy.  (Plus the whole drone thing.  The only major candidate to say he didn’t believe in the war on Terror was Edwards, but when the unions decided not to back him (largely from gutlessness, in my opinion) he was done.)

I also predicted, following Stirling Newberry, that on civil liberties and constitutional issues he would institutionalize Bush.  He was not the anti-Bush people imagined, but Bush’s heir, despite being a Democrat.

I got into blogging to, as the terrible cliche goes, change the world. I did not get into blogging to be a courtier to power, kissing the feet of those in power when I knew they were doing or going to do terrible things.

Add to this significant undiagnosed health problems, and I spent years angry.

I’m not someone who thinks that anger is always bad: often it gets people up off their asses.  In the same way that hating your job means you should change jobs, and being unhappy may be a sign that something is wrong with your situation not with you, and you shouldn’t self medicate (you cannot explain the massive increase in depression and many other mental illnesses over the past century using individual factors, it is clearly a social problem, with social causes).

And so, for years, I cut people dead, and cut myself off from much of my old network (though certainly not all.)  I look back now, calmer, and wonder “were these fights I needed to engage in?”  I think—probably not, and yet, and yet: we lost and too many people just wouldn’t admit and made excuses for terrible policy.

We got a president who is worse on civil liberties than George Bush, who is still destroying countries, whose policies in combination with the Fed have lead to more than 100% of all gains going to the top 10% (and really about the top 3%); with a decrease in wealth and income for the majority of Americans and a ton of Europeans.

Obama may have given Americans a shitty version of universal health care (sort of), but in virtually every other way he is an unmitigated disaster.

And it was obvious way back, or it should have been.  And people didn’t say who knew it; or didn’t know who should have because, let us be frank, they wanted the first African American president, no matter what, even if he was a right authoritarian and they wanted to live in a fantasy land where just electing a Democrat, any Democrat would fix things.

The simple truth is that the baby boomers are done.  Their positive legacy is the improvement of women’s rights and gay rights (African American rights were won by the Silent and the GI generations.)  Their negative legacy is an erosion of every other type of civil liberties that matters, right back to the Magna Carta; the vast erosion of America’s real economic power; the end of American egalitarianism and huge numbers of needless wars and deaths that have made America hated in large parts of the world.

As usual, some of my readers will object to this broad brush, but take it another way: old and middle aged people (Gen Xers too, a noxious generation politically); have had their days at bat, and those of us on the left have failed and failed and failed.

So it’s going to be another generation’s job to fix the huge mess that has been created: politically, economically and environmentally.   That doesn’t mean there’s no job for older folks: but the young people will choose which older folks to learn from, follow and emulate.  The job of those of us who are older, who lost, is to prepare the ground for the next war; the next battles.

If we do so, maybe we can keep the death toll from what is coming as low as a billion people.

Maybe.

So be it.


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Rumors of the Ukrainian Rebels demise

2014 September 9
by Ian Welsh

were exaggerated.  Or rather, the information in the Western press was essentially propaganda.

I think it’s worth acknowledging that I swallowed it, only to be corrected by a number of readers.  The Ukrainian rebels were tougher than I expected, Russian support seems to have been more significant and the Ukrainian military was simply not up to the task.  They couldn’t win the street fighting.

This means that Russia still has a strong negotiating position with regards to Ukraine’s future: their preferred option, of course, is federalization and forbidding NATO expansion into the Ukraine.

Meanwhile we must continue to keep an eye on sanctions.  The risk here is real sanctions being imposed on Russia, Russia retaliating with a gas shut off and an economic collapse in Europe.  Note that the key player here is actually China, who can easily keep Russia afloat if they choose to (China is printing far more money than the Fed was at the height of its unconventional monetary policy.)  The West keeps assuming it is the only game, and that it controls the money spigots: shut them off and they can crush anyone.  That is no longer true.  The question will be “what does China want to keep Russia afloat, or alternately, from the West, to cut them off.”

In my opinion, while China and Russia have some differing interests, those pale compared to their need for each as allies against the West.  The American Foreign Affairs and security establishment has been clear that they want to pivot against China, whom they see (correctly) as the largest threat to American hegemony.  For China to allow the West to crush Russia would be a colossal mistake, especially when the cost of keeping them alive is not that significant a world awash with printed money.

As for Europe, they are being fools and they will pay the price for it.  Satraps of a self-interested and cruel hegemonic power are never treated well, and Europe does not need to be a satrap, yet chooses that path against their own self-interest.

So be it.


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Rumors of my demise

2014 September 8
by Ian Welsh

Sorry for the hiatus, regular posting will resume soon—I was both moving and traveling at the same time.

The End of the Rebels in the Ukraine and the Ukraine’s Future

2014 August 20
by Ian Welsh

We’re down to street fighting in Donetsk.  The Russian leaders resigned in the last two weeks.  The rebels appear to be done, at least in terms of their conventional military phase (of course, I could be wrong depending on how much stomach Ukrainian troops have for house to house fighting).  It seems like that would only change if Russia decided to actually invade, and that seems unlikely (though predicting Putin’s decisions is always difficult.)

The Eastern Ukraine, bottom line, does not have enough support for joining Russia, nor coherent enough borders to avoid the West and Ukraine running an insurgency in it.  Conquering it would leave Russia controlling territory which could turn into a bleeding ulcer if it didn’t join peacefully (unlike Crimea, where the population overwhelmingly wanted to join, and where the geography is highly defensible.)

I’m not sure this is the “right” decision for Russia, because I can’t see that Ukraine won’t become a NATO member rather soon if Russia’s preferred solution, federalization with anti-NATO guarantees does not happen.

However, Russia does still have leverage: there are enough Eastern Ukrainians who will now hate the central government and want to join Russia, and the border is long enough and porous enough, that Russia can easily support an open ended insurgency within Ukraine.

Likewise, Winter is Coming, and the prospect of turning off the gas to the Ukraine and Europe will become much more effective.  Russia may believe that these two factors will enable it to get its minimal demands.  I doubt it, personally, because NATO expansion to Ukraine is something the US wants desperately, but we’ll see.

We move now to Ukraine’s future.

Dismal. Absolutely dismal.

Ukraine will be the second Greece of Europe, and soon.  Pensions slashed by half, gas prices through the roof, crown jewels sold to Westerners, civil servants slashed to the bone.  Its industry is integrated not with Europe, but with Russia, and Russia will move to get rid of its dependency on Ukrainian factories as fast as it can, especially as some of those factories create key defense equipment, and the Ukraine obviously cannot be counted on to supply them in any time of crisis, going forward.

Those factories are not competitive with Western factories, and when energy prices skyrocket, they won’t even be competitive with Russian factories.

Ukraine has some hydrocarbon reserves (though much will be lost with Crimea); it is an agricultural breadbasket, and that’s about all it has going for it.  Again, the economy will be opened by the IMF to the West, and whatever is worth buying, and throws off actual profits or can be downsized and firesaled, will be sold to Westerners.

Ukrainians, including the Western Ukrainians who think that joining the West will solve their problems, are about to find out that Russia’s deals and treatment were far more kind than anything the IMF will do to them.  Eastern Ukrainians, having lost a war, and being FAR more dependent on Russia, will find their economy devastated within a few years.  (This will make them far more willing to resort to violence again, of course.)

The key thing to watch now will be the negotiations between Russia, Ukraine and Europe to see if there are any NATO guarantees.  If not, well, we’ll see what the Russian response is.  Internally the Russian public does not want to attack Ukraine to take Eastern Ukraine, but that could change if an atrocity occurs or is created.  More likely, support for an insurgency, then the Ukraine building a huge wall across its border, and as noted, economic ruin.

This game isn’t over yet.  In a few years Russia may yet wind up with the East, with its citizens practically begging to join.  Not mostly because of anything Russia does, but because of what the IMF does.

Note also that efforts to de-dollarize the world are ongoing by the BRICS in general, and China in particular, and Russia is moving to decouple as much of its economy as it can from the West. In a few years the West will have far fewer levers to pull to hurt Russia.


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