Quotulatiousness

February 28, 2013

North Korea struggling with loss of faith in the state

Filed under: Asia, China, Government — Tags: , , , , , — Nicholas @ 08:50

Strategy Page on the challenges facing the government as the younger generation grows up:

A major source of information about North Korea is obtained by South Korean intelligence experts interviewing the steady flow of refugees arriving in South Korea (via China and the South Korean embassies in neighboring countries like Thailand). For the last decade, over a thousand of these refugees have arrived each year. In the last few years China and North Korea have increased their efforts to reduce that number, which peaked at 2,900 in 2009 and was 1,500 last year. These determined and desperate people keep coming. Separate interviews are compared and checked against each other to obtain an updated and accurate first-hand view of life in the north. This also helps detect the spies North Korea tries (often with success) getting into the south via the refugee route. While the refugees detail the growing decline in living standards up north, it’s also become clear that there is a very real generational shift in loyalties in the north. The generation who grew up during the 1990s famine (that killed about ten percent of the population and starved most of the rest for years) no longer believe in the North Korean dictatorship. Many who came of age before 1990 still do, but for most everyone under 30 the state is the enemy and self-reliance, and not a benevolent dictatorship, is the only way to survive. The North Korean government has been fighting these attitudes more and more, as this generation of unbelievers grows larger each year. The more astute members of the northern leadership see this as a no-win situation. Eventually most North Koreans will be very hostile to the state and more adept at making money in spite of the government, or simply getting out of the country. Most of the leadership is still afraid of enacting Chinese style economic reforms because they believe a more affluent population would seek revenge for the decades of misrule and tyranny. The Chinese say that didn’t happen in China. The North Koreans point out that, as bad as the Chinese communists were in the 1950s and 60s (killing over 50 million people via starvation, labor camps and execution) that was not as bad (proportionately) as what the North Koreans have suffered. Moreover, the North Korean leaders point out that, historically, Koreans have been a bit more excitable and brutal when aroused by misrule. The Chinese say times have changed but the North Korean leaders are not yet willing to bet their lives on that being the case.

The refugees report that most North Koreans understand that the police state up there is strong enough to suppress any uprising now or in the foreseeable future and that the only real threat to the dictatorship is intervention (openly or via a coup) by China. Refugees also report that it’s common knowledge that hundreds of North Koreans have died of radiation poisoning or been born with birth defects because of the uranium mining and working with nuclear materials. The government has responded by offering large cash bonuses to those who will work in the uranium mines. The refugees report in detail many other ways the Kim government abuses their subjects.

February 4, 2013

Everything is cyclical — Baby Boom to Baby Bust

Filed under: Economics, USA — Tags: , , , , , — Nicholas @ 09:56

In the Wall Street Journal, Jonathan Last looks at the demographic changes on tap for the United States as the fertility rate continues to drop below replacement:

The fertility rate is the number of children an average woman bears over the course of her life. The replacement rate is 2.1. If the average woman has more children than that, population grows. Fewer, and it contracts. Today, America’s total fertility rate is 1.93, according to the latest figures from the Centers for Disease Control and Prevention; it hasn’t been above the replacement rate in a sustained way since the early 1970s.

The nation’s falling fertility rate underlies many of our most difficult problems. Once a country’s fertility rate falls consistently below replacement, its age profile begins to shift. You get more old people than young people. And eventually, as the bloated cohort of old people dies off, population begins to contract. This dual problem — a population that is disproportionately old and shrinking overall — has enormous economic, political and cultural consequences.

For two generations we’ve been lectured about the dangers of overpopulation. But the conventional wisdom on this issue is wrong, twice. First, global population growth is slowing to a halt and will begin to shrink within 60 years. Second, as the work of economists Esther Boserups and Julian Simon demonstrated, growing populations lead to increased innovation and conservation. Think about it: Since 1970, commodity prices have continued to fall and America’s environment has become much cleaner and more sustainable — even though our population has increased by more than 50%. Human ingenuity, it turns out, is the most precious resource.

Low-fertility societies don’t innovate because their incentives for consumption tilt overwhelmingly toward health care. They don’t invest aggressively because, with the average age skewing higher, capital shifts to preserving and extending life and then begins drawing down. They cannot sustain social-security programs because they don’t have enough workers to pay for the retirees. They cannot project power because they lack the money to pay for defense and the military-age manpower to serve in their armed forces.

Update: Kelly McParland on the plight of some older workers: “If they’d never worked at all, and gotten by on social assistance, they might still have a financial lifeline.”

It would be cruel (and maybe unfair) to say they made their own beds, but it remains the fact that a great deal of the trouble they face results from the refusal to brook a more prudent approach to public finances for so many years. Programs that were unaffordable were pushed through time and again, paid for by more and more borrowing. When crises developed, the borrowing increased while spending was only rarely curtailed. The curse of deficit financing is its snowball effect: annual shortfalls pile up, pushing up the carrying costs, creating a self-perpetuating ever-expanding spending crisis. When a recession inevitably arrives, there are no reserves to deal with it, and even more borrowing ensues.

After so many decades of pretending it could go on forever, without there being a reckoning, the generation that created it is discovering how wrong they were. Not only is it destroying the retirement dreams of so many near-seniors, it’s preparing a poisoned legacy to hand to the next generation, and perhaps the one after that, unless they recognize the need for greater discipline and finally accept the pain that will necessary to put the process back on a sustainable track.

Canada is fortunate that it faced up to its debt crisis 15 years ago and is still benefiting from that fact, but the public memory is short and there will always be pressure to turn a blind eye to debt, and legislate for today. No wonder people get more conservative as they get older. They understand the price that has to be paid for putting costs off to tomorrow.

November 24, 2012

Japan’s demographic time-bomb has detonated

Filed under: Economics, History, Japan — Tags: , , — Nicholas @ 11:58

Remember the Japan of the 1970s and 1980s? The world-spanning colossus of economic might? The nation that had Wall Street wetting its collective pants with every bold move?

That was then. This is now:

Less than a quarter-century ago, Japan was the economic envy of the world. In 1989, Tokyo-listed shares represented nearly half the planet’s equity value, while the land beneath the city’s royal palace was worth more than all of California. American nightly news anchors practically misted up when they had to report that Rockefeller Center was turning Japanese.

Two lost decades and massive property- and stock-bubble explosions later, Japan is a one-word cautionary tale. Caught in economic and demographic atrophy — and stewarded by countless false-start prime ministers — the country has become a hub for zombie banks, a generation of disenchanted youth, and fading brands such as Sony, Sharp, and Panasonic.

Last year, for the first time, sales of adult diapers in Japan exceeded those for babies.

October 16, 2012

Early Baby Boomers had it much easier than those who followed

Filed under: Cancon, Economics, USA — Tags: , , , , , — Nicholas @ 10:44

Depending on where you draw the demographic line, I’m either a (very) late Baby Boomer or an early arrival from the next generation. I “get” the anger that some younger folks feel about the BB’s, because I came along too late to benefit in the same way that the early boomers did:

But, have baby-boomers really enjoyed a cozy ride through life? The truly lucky were their parents, who worked in the post-Second World War “Golden Age” of low unemployment, rapidly rising real wages, rising house prices, and expanding public and private pension plans.

The postwar boom was petering out by the late 1970s and early 1980s, just as many baby boomers were entering the job market. The 1980s and 1990s were marked by two severe recessions, and by an increase in jobs which often did not provide steady wages or a decent pension.

The unemployment rate for the baby-boomers, then mainly in their early thirties (age 30-34), was more than 10 per cent from 1983 to 1985, and over 8 per cent for the boomers in their late thirties during the recession years of 1992 to 1994.

Many baby-boomers never managed to find the secure and well-paid jobs characteristic of the 1960s and 1970s that lay the basis for a decent retirement. A recent study by former Statscan assistant chief statistician Michael Wolfson found that one-in-four middle-income baby boomers face at least a 25 per cent fall in their standard of living in retirement. (He looked at persons born between 1945 and 1970, and earning between $35,000 and $80,000 per year.)

The proportion of all persons age 65 to 70 who are still working bottomed out at 11 per cent in 2000 and is now 24 per cent, and about one half of persons aged 60 to 65 are still working today.

In my entire career, I’ve worked for only one company that provided a pension plan — and I was laid off before my contributions vested anyway. I don’t expect to ever voluntarily retire: I won’t be able to afford it. And I’m far from alone in that.

September 6, 2012

Gentrification of Brixton

Filed under: Britain, History — Tags: , , , — Nicholas @ 08:30

The Economist looks at the demographic and social changes underway in Brixton:

A good deal has changed in Brixton, a south London district, since Eta Rodney bought her Victorian terraced house in 1980. Then many of her neighbours were, like her, Jamaican. West Indians had settled in Brixton since 1948, when some arrived on the Empire Windrush. Today many of Mrs Rodney’s black neighbours are selling up and moving out of the area, making way for predominantly white newcomers. Britain’s historic black centre is being transformed — but in an odd way.

The Afro-Caribbean population of Lambeth, the borough where Brixton is located, is estimated to have fallen by 8% since 2001 even as the borough’s overall population has risen by 9%. Interracial mixing explains only part of this: the main reason is black flight. Afro-Caribbeans have dispersed from other parts of central London too, such as Hackney and Hammersmith and Fulham. They move to escape crime, buy bigger houses and get their children into better schools — the familiar reasons people of all races head for suburbia. In the South East outside London, Afro-Caribbean numbers have jumped, albeit from a low base.

[. . .]

Mrs Rodney feels both pressures. Her husband would like to retire to Jamaica. She prefers Streatham, further south in London, where she could buy a palace for the money gentrifiers are keen to pay for her house, with its original cornicing and marble fireplaces. The former council house she bought under the Conservative Party’s right-to-buy scheme—“I love Mrs Thatcher, God bless her soul”—would today fetch at least 20 times what she paid.

Of course, for many of us, the name Brixton has a very Clash-y context:

August 29, 2012

South Korea’s slow move to a smaller, more professional military

Filed under: Asia, History, Military — Tags: , , , , — Nicholas @ 09:33

With a belligerent and unpredictable neighbour directly to the north, South Korea still maintains a large conscript military force. The government hopes to transition over time to a significantly smaller volunteer structure:

Six years ago the plan was to reduce troop strength 26 percent (from 680,000 to 500,000) by 2020. Then politics and North Korean aggression kept halting the reductions. Meanwhile it became clear that the birth rate was going lower, not increasing and within a decade there would be a lot fewer young men to conscript. At the same time the booming economy was producing more money, and technology, for more effective weapons and equipment that can replace soldiers. Another key element was that conscription was increasingly unpopular. The current crop of conscripts had parents who were born after the Korean war (1950-53), and only the grandparents (a rapidly shrinking group) remember why the draft is still necessary. Most of todays’ voters want to get rid of the draft. But when it comes time to actually make cuts, North Korea manages to change the subject.

Then came 2010, a year in which North Korea sank a South Korean corvette (which they denied, but the torpedo fragments recovered were definitely North Korean) and shelled a South Korea island (the northerners bragged about that). Since then, there has been more opposition to reducing military strength. But conscription is still unpopular and there are simply not enough young men to maintain current strength.

Meanwhile politicians are responding to public opinion and shrinking conscription service. It now varies from 21-24 months depending on the service. More conscripts can now serve in the police or social welfare organizations (for 26-36 months). Eventually, South Korea would like to have an all-volunteer force. But that won’t be affordable until the armed forces are down to only a few hundred thousand.

The Korean peninsula is one of the last remaining outposts of the Cold War. The sinking of the ROKS Cheonan is the most obvious sign that the two sides are still not at peace (the Korean War didn’t really end … it’s merely resting). Occasional shellings and attempted infiltration by North Korean special forces are frequent enough that they don’t get much international coverage. North Korea frequently accuses the South of similar kinds of provocation.

August 22, 2012

Kicking the Baby Boomers while they’re down

Filed under: Media, Technology, USA — Tags: , , — Nicholas @ 09:49

P.J. O’Rourke laments the America that was, before the Baby Boomers came along and ruined everything:

The United States has set itself on a course of willful self-diminishment. Seventy-four years ago the perfect American was Superman, who happened to have been, like many of our forefathers, an undocumented alien. If Superman arrived today — assuming he could get past the INS and Homeland Security — he would be faster than the postal service, more powerful than a New York Times blogger, and able to ascend tall buildings in a single elevator.

[. . .]

America has had plenty of reasons to abdicate the crown of accomplishment and marry the Wallis Simpson of homely domestic concerns. Received wisdom tells us that, in the matter of great works and vast mechanisms, all is vanity. The Nurek Dam probably endangers some species of Nurek newt and will one day come crashing down in a manner that will make the aftermath of Japan’s Fukushima tsunami look like an overwatered lawn. And we have better things to spend our country’s money on, like putting a Starbucks on every city block. But I suspect there’s a sadder reason for America’s post-eminence in things tremendous, overwhelming, and awesome.

My sad generation of baby boomers can be blamed. We were born into an America where material needs were fulfilled to a degree unprecedented in history. We were a demographic benison, cherished and taught to be self-cherishing. We were cosseted by a lush economy and spoiled by a society grown permissive in its fatigue with the strictures of depression and war. The child being father to the man, and necessity being the mother of invention, we wound up as the orphans of effort and ingenuity. And pleased to be so. Sixty-six years of us would be enough to take the starch out of any nation.

The baby boom was skeptical about America’s inventive triumphalism. We took a lot of it for granted: light bulb, telephone, television, telegraph, phonograph, photographic film, skyscraper, airplane, air conditioning, movies. Many of our country’s creations seemed boring and square: cotton gin, combine harvester, cash register, electric stove, dishwasher, can opener, clothes hanger, paper bag, toilet paper roll, ear muffs, mass-produced automobiles. Some we regarded as sinister: revolver, repeating rifle, machine gun, atomic bomb, electric chair, assembly line. And, ouch, those Salk vaccine polio shots hurt.

The Soviet Union’s 1957 launch of Sputnik caused a blip in chauvinistic tech enthusiasm among those of us who were in grade school at the time. But then we learned that the math and science excellence being urged upon us meant more long division and multiplying fractions.

H/T to Jon, my former virtual landlord, for the link.

August 13, 2012

Did China peak in 2008?

Filed under: China, Economics, Environment — Tags: , , , , , , — Nicholas @ 07:53

Walter Russell Mead wonders if the Chinese economy actually hit its peak in 2008 and will not be able to get back to that level of performance:

According to The Diplomat, the long term outlook is even more depressing. China will have to confront a series of structural challenges if it is to continue to achieve the kind of dynamic growth that lifted the country from economic backwater to emerging great power in just three decades.

The most obvious challenge is demographics. A RAND study observed that the proportion of the Chinese population of working age peaked in 2011 and began slowing this year. The share of the elderly population is rising. Healthcare and pension costs will soar as a result. So will labor costs. Investment and savings will diminish. In short, China may face the prospect, unknown in human history, of growing old before it gets rich.

The environment presents another dilemma. Like many rapidly industrializing economies, China sacrificed environmental protection at the altar of economic growth. But the effects of this approach have taken a toll: already, argues The Diplomat, ”Water and air pollution today cause 750,000 premature deaths and around 8 percent of GDP.” And as Via Meadia recently pointed out, the political costs of this approach are starting to mount as well. An outbreak of NIMBYism has forced many local officials to cancel major industrial projects as ordinary Chinese citizens demand an end to environmentally unsound development.

Of greater concern is that China has backed away from market reforms in the last decade and embraced a version of “state capitalism” that emphasizes the state far more than it does capitalism. But as state-run entities have become more powerful, their political backers — and financial beneficiaries — have an even greater stake in blocking attempts at reform.

H/T to Jon, my former virtual landlord, for the link.

June 8, 2012

A Gen-X lament: “none of these “experts” … even agree on when we were born”

Filed under: Media, Randomness — Tags: , , — Nicholas @ 09:46

By any reckoning, I just missed being in Gen-X, as the earliest date anyone seems to use is 1961 (so my sister is a Gen X’er, but I’m a very-very-very-late boomer, apparently). In spite of that, most of my friends seem to identify much more with Gen X than the plutocratic fat cats of the early Baby Boom generation. Kathy Shaidle explains the three biggest myths about Generation X:

… the term “Generation X” was popularized by our contemporary Douglas Coupland’s titular 1991 novel. (And Coupland swiped his title from the name of Billy Idol’s old pop-punk band; my fellow ex-punk Kinsella should know that, too.)

There are lots of things “great minds” got wrong about Generation X since they started writing and worrying about them. (I mean, us.)

After Coupland’s novel — about over-educated, underemployed pop culture addicts who’ve formed an ad hoc “family” of friends – swept the planet, countless “consultants” (including, briefly, Coupland himself) started marketing themselves as experts on my demographic.

These consultants made a whole lot of money, keynote-speaking to job-for-life CEOs about why we Gen-Xer’s were all so broke and unemployed.

And the most irritating (and yeah, ironic) thing is, none of these “experts” (“X-perts”?) even agree on when we were born.

[. . .]

The takeaway for pundits and other “experts” is:

“Generation X” isn’t synonymous with “young people today.”

I’m gonna be 50 soon. Dammit.

[. . .]

Like the Y2K “experts” who came after them, all those demographic gurus and futurists who got rich theorizing about Generation X ended up looking pretty foolish. (But never had to give their money back.)

When we Gen-Xers were trying to get our first jobs out of college or high school, we did indeed contend with an economy burdened by a triple-feature of double digit horrors: inflation, unemployment and interest rates were all way over 10%.

We blamed those damn yuppie Baby Boomers. They’d beaten us to all the good jobs and were never gonna give them up.

(In the same way hippies had used up all the safe-ish drugs and free sex, and left us with crack and AIDS.)

May 2, 2012

Demographics as destiny: China’s coming population bust

Filed under: China, Economics, India, USA — Tags: , , — Nicholas @ 08:00

Ramesh Ponnuru hits many of the same points that Mark Steyn has been making for the last several years, only he’s cut out all the jokes:

Today’s most important population trend is falling birthrates. The world’s total fertility rate — the number of children the average woman will bear over her lifetime — has dropped to 2.6 today from 4.9 in 1960. Half of the people in the world live in countries where the fertility rate is below what demographers reckon is the replacement level of 2.1, and are thus in shrinking societies.

[. . .]

As Eberstadt points out, we can make predictions about the next 20 years with reasonable accuracy. The U.S.’s traditional allies in western Europe and Japan will have less weight in the world. Already the median age in western Europe is higher than that of the U.S.’s oldest state: Florida. That median age is rising 1.5 days every week. Japan had only 40 percent as many births in 2007 as it had in 1947.

These countries will have smaller workforces, lower savings rates and higher government debt as a result of their aging. They will probably lose dynamism, as well.

[. . .]

The Census Bureau predicts that China’s population will peak in 2026, just 14 years from now. Its labor force will shrink, and its over-65 population will more than double over the next 20 years, from 115 million to 240 million. It will age very rapidly. Only Japan has aged faster — and Japan had the great advantage of growing rich before it grew old. By 2030, China will have a slightly higher proportion of the population that is elderly than western Europe does today — and western Europe, recall, has a higher median age than Florida.

H/T to Jon, my former virtual landlord, for the link.

January 31, 2012

Andrew Coyne on the sudden appearance of Stephen Harper’s “hidden agenda”

Filed under: Cancon, Economics, Government, Politics — Tags: , , , , — Nicholas @ 12:19

We’ve been waiting for it to appear since the 1990′s, so it’s about time that it finally put in a cameo:

At last, the hidden agenda, and not a moment too soon. Vague, indirect and overseas as it was, Stephen Harper’s Davos speech was perilously close to a vision statement, of a kind the prime minister has seldom made until now, and will henceforth have to make often.

It would be nice if he had shared with us his concerns about the ageing of the population, and the threat it poses to our long-run social and economic health, sometime before the last election, rather than joining in the all-party consensus that there was nothing wrong with Canada that could not be fixed with more and richer promises to the elderly.

[. . .]

How serious is the cost side of this conundrum? The president of the C. D. Howe Institute, Bill Robson, has projected the “net unfunded liability” implied by this unprecedented demographic shift — that is, promises to pay benefits out of public funds for which we have made no provision in taxes, “net” of any savings from having fewer children about — at about $2.8-trillion. With a T, ladies and gentlemen: about 160% of GDP. (That’s in addition to the $800-billion unfunded liability in the Canada Pension Plan and its Quebec counterpart — yes, they are pulling in enough each year to meet their current obligations, but that does not mean they are “fully funded,” the prime minister’s claims to the contrary — to say nothing of the $600-billion national debt.)

January 1, 2012

Gordon Chang still bearish on China

Filed under: China, Economics, Politics — Tags: , , , — Nicholas @ 10:54

He predicted the fall of the Communist China within a decade — back in 2001 — but he isn’t worried that his prediction hasn’t come true yet:

Why has China as we know it survived? First and foremost, the Chinese central government has managed to avoid adhering to many of its obligations made when it joined the WTO in 2001 to open its economy and play by the rules, and the international community maintained a generally tolerant attitude toward this noncompliant behavior. As a result, Beijing has been able to protect much of its home market from foreign competitors while ramping up exports.

[. . .]

Don’t believe any of this. China outperformed other countries because it was in a three-decade upward supercycle, principally for three reasons. First, there were Deng Xiaoping’s transformational “reform and opening up” policies, first implemented in the late 1970s. Second, Deng’s era of change coincided with the end of the Cold War, which brought about the elimination of political barriers to international commerce. Third, all of this took place while China was benefiting from its “demographic dividend,” an extraordinary bulge in the workforce.

Yet China’s “sweet spot” is over because, in recent years, the conditions that created it either disappeared or will soon. First, the Communist Party has turned its back on Deng’s progressive policies. Hu Jintao, the current leader, is presiding over an era marked by, on balance, the reversal of reform. There has been, especially since 2008, a partial renationalization of the economy and a marked narrowing of opportunities for foreign business. For example, Beijing blocked acquisitions by foreigners, erected new barriers like the “indigenous innovation” rules, and harassed market-leading companies like Google. Strengthening “national champion” state enterprises at the expense of others, Hu has abandoned the economic paradigm that made his country successful.

Second, the global boom of the last two decades ended in 2008 when markets around the world crashed. The tumultuous events of that year brought to a close an unusually benign period during which countries attempted to integrate China into the international system and therefore tolerated its mercantilist policies. Now, however, every nation wants to export more and, in an era of protectionism or of managed trade, China will not be able to export its way to prosperity like it did during the Asian financial crisis in the late 1990s. China is more dependent on international commerce than almost any other nation, so trade friction — or even declining global demand — will hurt it more than others. The country, for instance, could be the biggest victim of the eurozone crisis.

Third, China, which during its reform era had one of the best demographic profiles of any nation, will soon have one of the worst. The Chinese workforce will level off in about 2013, perhaps 2014, according to both Chinese and foreign demographers, but the effect is already being felt as wages rise, a trend that will eventually make the country’s factories uncompetitive. China, strangely enough, is running out of people to move to cities, work in factories, and power its economy. Demography may not be destiny, but it will now create high barriers for growth.

H/T to Chris Myrick for the link.

October 28, 2011

Malthus provides “cover” for racism

Filed under: History, Media — Tags: , , , , , , — Nicholas @ 09:02

Tim Black explores why Thomas Malthus’ ideas have never been more popular than they are today:

Lisping, reclusive and reviled by the working class of his day, the Reverend Thomas Malthus (1766-1834) — the man behind the idea that the ‘lower orders of society’ breed too quickly — would probably be surprised by his current popularity. Because that’s what he is today: popular. Commentators, activists and academics positively fall over themselves in the rush to say, ‘you know what, that Malthus had a point. There are too many people and, what’s more, they are consuming far too much.’

Earlier this summer, a columnist for Time magazine was in no doubt as to the pastor’s relevance. The global population is ‘ever larger, ever hungrier’, he noted, ‘food prices are near historic highs’ and ‘every report of drought or flooding raises fears of global shortages’. ‘Taking a look around us today’, he continued, ‘it would be easy to conclude that Malthus was prescient’. Writing in the British weekly, the New Statesman, wildlife lover Sir David Attenborough was similarly convinced: ‘The fundamental truth that Malthus proclaimed remains the truth: there cannot be more people on this Earth than can be fed.’ Not to be outdone, the liberal-left’s favourite broadsheet, the Guardian, also suggested that Malthus may have been right after all: ‘[His] arguments were part of the inspiration for Charles Darwin’s theory of evolution, and they have validity in the natural world. On the savannah, in the rainforests, and across the tundra, animal populations explode when times are good, and crash when food reserves are exhausted. Is homo sapiens an exception?’ The melancholy tone whispered its answer in the negative. Writing in the New York Times, Paul Krugman was less coy: ‘Malthus was right!’ shouted the headline.

Given the encomia that are currently coming the way of Malthus you may well wonder what exactly it was that he was meant to be right about. To find the answer to this it is worth actually taking a look at the work, first published in 1798, on which his supposed prescience is based: An Essay on the Principle of Population. It makes for surprising reading.

June 29, 2011

The real reason for the Greek bailout

Filed under: Economics, Europe, Government — Tags: , , , , , — Nicholas @ 15:03

Eric S. Raymond explains why all the politicians and apparatchiks of the world’s bureaucracies are lining up to pump for a Greek bailout:

Lost in the eye-glazing babble about maturity extensions, haircuts, and which acronymic organization is going to funnel the money into place is the real magnitude of the stakes here. It’s not just the Greeks’ opera-bouffé parody of the modern redistributionist state that is circling the structural-insolvency drain; what really terrifies our political class is the prospect that, very soon, the investors simply won’t buy government bonds anymore — and massive borrowing through bond issues is the only thing keeping the redistributionist state afloat.

As I have documented many times on this blog, the entitlement-spending commitments of the U.S. Federal government, most U.S. state governments, most European governments, and indeed most national governments everywhere exceed the capacity of their economies to generate wealth. And demographic trends are making the imbalance worse over time, not better.

This is why raising taxes won’t help. The amount of private wealth available to be taxed is insufficient, even if taxation could be raised to 100% without suppressing all economic activity. In practice, raising taxes leads to increases in spending which more than consume the increased revenue (by a ratio of 1.17:1 in the U.S. since the 1940s).

[. . .]

That is the assumption that is now under threat. Greece must be bailed out in order to preserve the illusion that the borrowing can continue indefinitely, that the bill will somehow never come due. When the political class speaks of “contagion”, what they’re really worried about isn’t the solvency of German banks holding Greek paper, it’s a general flight of investors from the sovereign-debt markets.

January 25, 2011

Russian army still suffering from Soviet hangover

Filed under: History, Military — Tags: , , , , — Nicholas @ 07:47

Strategy Page reports on the troubles the Russian army is still experiencing twenty years after the fall of the Soviet Union:

Russian efforts to reform and upgrade its armed forces have, so far, failed. The basic problem is that few Russian men are willing to join, even at good pay rates. Efforts to recruit women and foreigners have not made up for this. The Russian military has an image problem that just won’t go away. This resulted in the period of service for conscripts being lowered to one year (from two) in 2008. That was partly to placate the growing number of parents who were encouraging, and assisting, their kids in avoiding military service.

But there are other problems. The latest crop of draftees are those born after the Soviet Union dissolved. That was when the birth rate went south. Not so much because the Soviet Union was gone, but more because of the economic collapse (caused by decades of communist misrule) that precipitated the collapse of the communist government. The number of available draftees went from 1.5 million a year in the early 1990s, to 800,000 today. Less than half those potential conscripts are showing up, and many have criminal records (or tendencies) that help sustain the abuse of new recruits that has made military service so unsavory. With conscripts in for only a year, rather than two, the military is forced to take a lot of marginal (sickly, overweight, bad attitudes, drug users) recruits in order to keep the military and Ministry of Interior units up to strength. But this means that even elite airborne and commando units are using a lot of conscripts. Most of these young guys take a year to master the skills needed to be useful, and then they are discharged. Few choose to remain in uniform and become a career soldiers. That’s primarily because the Russian armed forces is seen as a crippled institution, and one not likely to get better any time soon. With so many of the troops now one year conscripts, an increasing number of the best officers and NCOs get tired of coping with all the alcoholics, drug users and petty criminals that are taken in just to make quotas. With the exodus of the best leaders, and growing number of ill-trained and unreliable conscripts, the Russian military is more of a mirage than an effective combat (or even police) organization.

Older Posts »
« « The genomic treasure trove of Quebec| Margaret Wente: Harper has found the “sweet spot” in Canadian politics » »

Powered by WordPress