The horizon is not so far as we can see, but as far as we can imagine

Month: April 2022 Page 1 of 3

Open Thread

Use to discuss topics unrelated to recent posts. (No Ukraine.)

The Possible Dire Consequences of NATO & Ukrainian Escalation

So, UK foreign secretary Trus has said that the war in Ukraine must continue until Russia is forced out of Ukraine entirely, including Crimea.

Meanwhile, the UK is shipping weapons to Ukraine that are capable of striking Russian cities.

As a moral matter, of course, the Ukraine has the right to strike Russia, same as so many countries have the right to assassinate American leaders and bomb American weddings in which “high value targets” might be involved.

But let’s consider the state of the war. Putin calls it a special military operation. Reserves have not been called up, and a great deal of care is being taken in the use of force. Unlike in Iraq, Russia has not taken out power, sewage, water systems, most roads, or rail. It has not unleashed level bombers for massive bombing of Ukrainian cities.

Russia has also not called up its reserves. Putin appears to think that would be unpopular. Russia has millions of men in its reserves. It could call up two million men and not exhaust them. They’re not the best troops, but they would swamp Ukraine.

Now, if Ukraine hits Russian cities, however fair that is, what will happen to Russian public and elite opinion? Imagine Iraq somehow managed to hit New York and cause real damage in the 2000s (if you want a scenario: perhaps they could have smuggled bombs into the harbor on cargo ships).

How would Americans have reacted?

That’s how Russians will react. Add in some atrocity propaganda (and there are plenty of videos of Ukrainian soldiers doing horrible things, they aren’t saints) and Putin will easily have all the backing he needs to go to total non-nuclear war. In fact, even if he doesn’t want to escalate, it would be difficult to avoid.

This would mean, as a start, bombing every road and rail crossing leaving the Ukraine that Russia or Belarus doesn’t control, so more weapons can’t get into Ukraine. It would likely mean removing all power and water from western Ukrainian cities and forcing most of the remaining population in those areas to flee: 20+ million people. And it would mean taking major cities, which Russia will have the manpower to do.

Further, the idea that any Russian government would ever give up Crimea is insanity (that Russia would fight a war to keep Sevastopol is why I was able, in 2008, to predict the next war would be over Crimea).

This idea that NATO has that it can safely fight Russia to the last Ukrainian, without any chance of war-spillover is insane. Likewise, China CANNOT afford to let Russia be broken up. If it is, then China can almost trivially be blockaded and forced into subjugation. They need Russian oil, gas, coal, minerals, and food and without them they cannot survive a confrontation with the West. It is literally impossible.

What China sees is that the US wants to fight wars where they aren’t at risk. If there’s a war in Asia against China, without using nukes, China has little ability to hit the US mainland, while the US can hit China. Yes, Taiwan, South Korea, and Japan (if they’re stupid enough to join in) get devastated, but the US laughs as the damage is done overseas.

I strongly suspect the Chinese now see this as the US plan for them. The US has stated it wants to place hypersonic missiles in the first island chain off China, which includes Taiwan, the same sort of movement of weapons which contributed to Russia’s demands before the Ukraine war (the US is a year or two from hypersonic, but the placement of other missiles and ABM close to Russia has been protested by Russia for years), and recently there has even been talk of putting US troops in Taiwan as a trip wire similar to the one in South Korea.

This means China needs a conventional deterrent; they need missiles that can hit the continental US, and they need to increase their navy to the point where it can fight the US navy in international waters and win. Remember that China’s ship-building capacity is VASTLY larger than that of the US.

The US and UK, both of whom think that Russia and China can’t hurt them, are pushing this war in ways that are very dangerous. This is a bet, in fact, that Russia and Putin are entirely “rational”, despite the rhetoric and won’t risk escalation. But Putin is reputed to have spent hours watching the video of Gaddafi being sodomized by a bayonet before being killed, and the CCP knows that “regime change” is what the US wants for China.

Regime change in China will leave a lot of CCP members, and especially leaders, dead.

This is an existential issue for China and Russia. If they lose to America, their leaders are overthrown. Russia will be dismembered (this is what multiple NATO leaders have said they want), and China will be relegated to permanent 2nd tier status at best. Many of the leaders will die, and many of those will die ugly.

This is understandable for the US. They have a wasting asset: China, given enough time, will inevitably have a larger military, since it has the larger economy, and they are catching up in technology. The US Navy has been shrinking for decades and the US has lost the ability to build ships: they have had to cancel recent designs because on testing, they suck. The US’s ability to build planes is also in doubt: the F-35 was a massive mess and is far too expensive.

Since the US also judges that any escalation short of nuclear won’t hit them, except economically, and will hurt their enemies and their satrapies worse (making Europe weaker economically and stronger militarily is a win for the US), they have a great deal of incentive to escalate as much as possible, and just make sure it doesn’t go nuclear.

This isn’t in anyone else’s interest, but Europe is consumed with fear of Russia, and Western European leaders have accepted the narrative of Eastern Europe and the USA about Russia as a completely rogue power which must be destroyed, because it can never be trusted.

Meanwhile, the US’s ability to control foreign countries outside of Europe is dropping fast. Three of the four Gulf States (creations of the UK and kept in existence by the US) refused to side with NATO in the UN. Saudi Arabia has basically told the US to fuck itself. The Solomon Islands signed a military pact with China which spawned threats from Australia and the US of military action if a base is built because apparently the right to make military alliances and do what you want in your own territory is available only to would be American allies.

India has not gone along with sanctions and Malaysia is wavering.

US hegemony is breaking. Western hegemony is breaking. As alarmed and scared as Chinese and Russian elites are, American and Western elites are furious: absolutely livid that anyone dare challenge them, or that the days of their hegemony may soon be over. Right now, calculating that the costs of wars to stay in charge will not primarily be born by them, they are willing to escalate recklessly.

Since passions are up, I note that this is not a moral analysis about who is good or bad. There was certainly moral justification for going to war against the USSR at various points, but we didn’t and we avoided escalating beyond certain levels because we knew that war with them was unthinkable.

War with Russia is still unthinkable. War with China is abominable.

Our time is done. We sold our patrimony to the Chinese from the 90s thru the 10s, so that our elites could break our working class and get richer than if they had to pay 1st world wages and costs. That’s the truth. Our elites thought they were international elites, not national elites, and they were wrong. The Chinese knew they were a national elite, and, in effect, bribed our elites to give away the most important sources of their real power: having the largest industry, and having a huge tech lead.

Our elites gave it all away, for a few trillion dollars, and China paid happily. Our elites now see that their only chance to retain power is to use the waning asset of military supremacy. First they need to take out Russia, then they can choke China out.

This is an incredibly dangerous thing to do. Even if it doesn’t blow into nuclear war, it can easily blow into hot war. American allies in Asia, I would suggest, would be well advised to decouple militarily. This especially goes for Japan: build your own nukes and conventional deterrent and sit this one out. China can’t reach the US mainland yet, but it can reach you.

On top of all of this extraordinarily dangerous nonsense is the opportunity cost: we should be spending trillions on preparing for climate change and ecological collapse, not playing war games. NATO and Russia, over the last 10 years should have been disarming near mutual borders, not rushing troops, missiles and planes to the borders.

We are acting insane, chimpanzees trying to maintain dominance, locally or globally. And we are going to pay for it, even if we avoid nuclear war, with hundreds of millions, probably billions, of unnecessary deaths.



Poland Refuses To Pay For Russian Gas In Rubles, Russia Cuts Them Off

Well, well.

But, so far it looks like Germany will just buy extra (paying in rubles) and ship it to Poland. Me, if I were Putin, I’d refuse to sell Germany more than its usual amount (what is contracted for) and see how long it takes Poland to break. Granted it’s not winter, but so far as I can see Europe can’t switch off Russian natural gas in less than about two years, though perhaps a few countries could (and pay more, since the Russians sell for less than anyone else will.) Natural gas prices (as of this writing) are up about 10% on the news, though it doesn’t mean much.

I remain convinced that sanctions will do far more harm to Europe than to Russia.

Meanwhile, Malaysia has said they will sell Russia semiconductors. They aren’t as good as Taiwanese ones, but they’ll be good enough for now, and China is crashing semiconductor tech anyway, for its own reasons. In a decade, the West and its allies won’t have much of a gap in semis compared to the rest of the world, if any.

Update: seems the news Malaysia would sell semis is probably not correct.


The Bottom Line On Ukraine As An Example Of Decision Analysis

I could write a lot of words on this, but let’s keep it simple.

First: Russia keeps taking land.

Second: Putin has far more reserves he can commit than Ukraine does.

Third: this means that the decision about whether to win or lose is Putin’s.

Which do you think he’ll choose.

Oh, there’s considerations around acceptable costs and a possible guerilla war later, but this it the essence of the invasion.

This is a fairly basic but important style of analysis. Ask yourself:

1) Who makes the decision?

2) Do they have sufficient resources and power to enforce their decision?

3) What do they think the right thing to do is? (This isn’t always about self interest, though it often is.)

4) What decision are they likely to make?

You can add bits to this, like “does anyone have a veto?” but this is the essence of it.

This is why I have said for years that nothing would be done about climate change till too late, because the people who have the power to make the decision don’t think it affects them, and do think that the status quo is good for them, so they aren’t going to do anything.

Most reasonably reliable analysis comes down to simple heuristics like this one. Complicated heuristics for social decision making rarely work.


What Economics Gets Wrong (Almost Everything)

Economics as a discipline is nearly worthless. What it teaches mostly isn’t true.

  • Decreasing price does not always increase demand and increasing price sometimes increases demand (aka. the law of supply and demand isn’t a law.)
  • People do not optimize utility (by any definition that is not circular).
  • People are not rational.
  • The market is not rational.
  • The market does not discount the future well at all.
  • Competitive markets are created by government, and destroyed by private actors.
  • Markets do not and never have properly priced externalities and never will do so while humans remain human. The only way to price externalities properly is thru government or custom (government in drag.)
  • Profit or loss in any enterprise in a modern economy is a social choice, entirely based on government and social decisions and mostly unrelated to fundamentals like energy in and energy out.
  • Railroads are far more efficient, energy wise than roads, but govt. subsidizes roads.
  • The vast majority of profit is based on market position and sustained profit is almost always based on having an unfair advantage that makes the market less competitive and therefore not have the virtues of competitive markets.
  • Genuine competitive markets don’t exist, and no businessman wants them to because they drive profits to almost zero.
  • The best economies the world ever saw went out of their way to keep wages and prices high, not to reduce them.
  • Any concentration of market power that is not regulated or broken up will engage in practices intended to buy/undermine government and destroy wages.
  • Higher CEO pay is correlated with lower company performance.
  • You cannot have a good economy for long without keeping the rich poor, weak and under your thumb. It is impossible.
  • Monetary efficiency between countries is bad. It should be hard to move large amounts money in and out of another currency or country.
  • Financial market efficiency is generally bad, and effectiveness and shock pads should be optimized for rather than financial efficiency.
  • Countries should, if it is possible, make or grow everything important inside their own borders and not trade for it.
  • People perform better when happy, healthy and at least moderately autonomous. The literature on this is so abundant it is silly. Bosses are authoritarian assholes because they like being authoritarian assholes who micro-manage employees. It’s what Bezos gets out of being Bezos.
  • Private money creation concentrated in a few hands is destructive to the economy, democracy and freedom (authority: Thomas Jefferson). It is also anti-competitive market, since you can’t compete with people who create money out of thin air.
  • Moderate levels of inflation are good, not bad, if they include assets, because they take away the control of people who won the past so they don’t control the present and the future.
  • Taxes should be low on ordinary people and high on anyone rich, including wealth and estate taxes. No one should be rich because their parents were.
  • People who lend money should lose that money if the person who they loaned it to can’t afford to repay it. The function of lending is “I know how to pick people who will use the money well.” If you can’t do that you deserve to lose the money, and govt shouldn’t collect it for you
  • bankruptcy should be easy, fast and leave people whole. Economically crippled people are not in the interest of society as a whole.
  • A UBI’s main function is allowing people to do what they want to do, and forcing bosses to make jobs good, not shitty.
  • Pensions should simply be handled by government or a general UBI.
  • Comparative advantage is a terrible strategy for improving your economy.
  • Free trade is garbage for most countries.
  • Raising the minimum wage is not correlated with increased unemployment
  • The unemployment rate measures supply driven wage push inflation pressure, not how many peole can’t get a job.
  • Initial capital for capitalism was primarily acquired by theft, first of European commons, then of non-European land, people and resources.

Essentially everything Economics teaches is wrong. If and when their prescriptions for action are followed, disaster ensues. With almost no exceptions every country which ever developed did so by not doing what economists say to do.

Economics also has a morally corrosive affect on those who study it.  People mostly don’t free ride or otherwise act according to the maxims of economics: but people who have studied economics do.

Because economics is wrong and harmful about almost everything, and because economists do not say “please don’t follow our advice”, Economics should probably be banned and all Economics faculties shut down.







Week-end Wrap – Political Economy – April 24, 2022

by Tony Wikrent

Strategic Political Economy

The Godless Empire: Evil Cannot Create Anything New, Only Corrupt What Good Created

[The Reading Junkie, via Mike Norman Economics 4-18-2022]

Analysts in Washington study a culture and find its most primal, barbaric roots, and create a cartoonish caricature of it. With that caricature as a false god, that whole society is turned into a death cult, the perfect, self-destructing weapon against Washington’s rivals. The suicidal nature of Washington’s pawns is deliberate. After Russia is destroyed, there would be no use for a Ukraine anymore, so it is actually better for Ukraine to be destroyed in the process too…. The West loves “blood harvests” and projects that idea onto other cultures like Iraq, Libya, and Ukraine, but it originated on our own shores. Look at modern movies and shows like 300 and Vikings. Why do our filmmakers dream so much of mass killings, rapes, and blood gods? Why do they love depicting barbarians raping and massacring weak and pathetic Christians? It’s weird.

TW: This is why it is a tragedy that contemporary scholars of civic republicanism such as Pettit sand Rawls are misleading people by defining civic republicanism as “freedom from domination.” What makes civic republicanism a superior philosophy of political economy and governance is its insistence on promoting the human capacity to “do good,” by striving toward perfection.

Samuel Scolnicov, “An Image of Perfection: The Good and the Rational in Plato’s Material Universe” (Revue de Philosophie Ancienne, Vol. 10, No. 1, 1992)

Matt J. Rossano, Seeking Perfection: A Dialogue About the Mind, the Soul, and What it Means to be Human (Routledge, 2015)

This idea is, of course, reflected in the Preamble of the USA Constitution (“a more perfect union”) , but the philosophical importance of its inclusion is today all but forgotten. 

[Twitter, via Naked Capitalism Water Cooler 4-20-2022]


The Taliban Were Afghanistan’s Real Modernizers 

[Palladium, via Naked Capitalism 4-22-2022]

Carter Malkasian’s The American War in Afghanistan: A History is the first history to adequately capture this story. Malkasian deployed as a civilian officer in Kunar and Helmand provinces in the aughts, and then returned to Afghanistan as an advisor to General Joseph Dunford in 2013, and stayed at Dunford’s side through his tenure on the Joint Chiefs of Staff. Malkasian speaks Pashto fluently, traveled widely across Afghanistan conducting interviews, and participated in the Trump era negotiations with the Taliban.

Malkasian’s account of American error builds on these personal experiences. His catalog of American mistakes and miscalculations is long….

Most accounts of the conflict are one-sided portrayals of the American experience in Afghanistan. Malkasian’s fluency in Pashto allows The American War in Afghanistan to escape the limitations of the genre. Entire chapters are built on Afghan sources that other histories of the war ignore. From their perspective, the U.S. war in Afghanistan was not really American at all. Over the last two decades, it was Afghans, not Americans, who have done the majority of the killing, bleeding, and dying. The war in Afghanistan was first and foremost a civil war. Any account of the Taliban’s victory must start with what each side of this civil war was fighting for.

Mexico nationalises lithium in populist president’s push to extend state control 

[FT, via Naked Capitalism 4-212-2022]

[India Inside Out, via Naked Capitalism 4-23-2022] Rohan Venkat.

[FT, via Naked Capitalism 4-22-2022]

Open Thread

Use comments to discuss topics unrelated to recent posts.

How Big Is The Chinese Economy Compared to The West?

I recently came across these charts, of the biggest trade partner of each country, from 1990 and 2020.

To simplify: China is now more dominant in trade than the US at the height of its recent power. (Also of interest is the change in the UK and Japan’s position, though the collapse of Japan is overstated: it’s not , but it’s still a big trade power.

Let’s put the 2020 chart in numbers, bearing in mind that doing it in US dollars will overstate the relative size of the US.

For imports (from Wikipedia):

So, China is the primary trade partner of far more countries than the US. It exports more than the US, and imports less. These numbers understate the situation, though, since they are “goods and services.”

French Economist Jacques Sapir recently did an economic comparison by adjusting GDP numbers (not trade) as follows. First, change them for purchasing power parity (PPP), which is to say you can buy more with the same amount of money in China or Russia than in the US or Germany. Then adjust for the service sector being overvalued, so you’re left with manufacturing and the primary sector (digging things up and refining them) as the primary drivers.

Do this and Russia’s economy is 5% to 6% of the world economy, and much larger than Germany’s. China is about 30%, and the EU + US are about 30%.

Now I don’t entirely endorse this, there are some useful things in “services” like parts of the tech industry (much is worthless though, serving ads better does not increase a country’s actual economic strength. It might sap it.)

But it puts the situation in better perspective than using raw GDP.

Really there are three primary drivers of actual economic power: manufacuturing, resources and technology. Everything else either exists to service those 3 areas, or is nice and maybe even important to social stability (law, entertainment) but not primary.

China is the world’s primary manufacturing power. Russia is a powerhouse for resource exctraction. Russia is a leader in some types of military technology and not far behind in many others, and China is rapidly closing on the West in terms of tech and is even ahead in many areas (5G, for example, or hi speed trains, civilian use of drones, and so on.)

China also has something the US doesn’t have: a belief in technology. Robots and drones are common, technology is viewed as good, not bad and a threat. The Chinese believe in the future in a way that the west hasn’t since the 50s.

On top of all of this China is the world’s largest developer of nations: if you want ports, roads, train stations, hospitals, schools, smart cities or anything else, China will build them for you. They’ll finance them, and some exceptions aside they offer good loan rates because usually they’re more interested in good trade relations and getting your food/oil/minerals than they are about making a profit off building the infrastructure. In addition, Chinese construction companies building overseas infrastructure means those industries don’t have to downsize: they build China, now there isn’t enough work, so they’re off in Africa and South America.

To summarize then: China is:

  1. the number 1 trade partner of more nations than anyone else, and more than the US had in 1990.
  2. the world’s largest manufacturing nation
  3. Technologically near even with the West, and in some places ahead.
  4. The nation that helps the most other nations develop.
  5. When you adjust for PPP and service sector crap, a larger economy than the US. With Russia, a larger economy than the US and the EU combined.

And this is the nation we want to enter into a Cold War with? We shipped them so much of our industry that they now have more than we do, and after doing that we decide it’s time to pick a fight?

One thing is true of post-industrialization great politics: industry, access to resources and tech are what determine power. Since there is no longer a situation where the West has technology that is vastly ahead of everyone else’s, it really comes down to industry + resources.

And with Russia locked in and South America and Africa tending to prefer it, China is ahead or secure in both of those those categories.

If we wanted to keep our supremacy, we had to not ship China our industry and our tech so we could make some of our elites even richer. The Chinese accurately sized up our elite’s weaknesses and exploited them to the hilt. They thought they were “international” elites and it didn’t matter where the manufacturing was done, or who had the technology. The Chinese, however, were a national elite, and they knew it did.

I’m not sure this was exactly a bad thing. The West, in the unipolar moment (and heck, before) vastly misused its power, over and over again. Maybe a two-polar world will be better, if it isn’t, at least all power won’t be centralized in America with a few satrapies getting a voice and maybe that will be better for many countries and billions of people.



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