Quotulatiousness

September 9, 2012

Midway: the turning point of the Pacific War

Filed under: Books, History, Japan, Military, Pacific, USA, WW2 — Tags: , , , , — Nicholas @ 09:33

An interesting sketch of the importance of the 1942 Battle of Midway in the Spectator from Richard Freeman:

For many of us the Battle of Midway is just one more Hollywood spectacular in, to paraphrase Neville Chamberlain, a far-away sea of which we know little. But having recently taken a closer look at the battle I am struck both by what was at stake and what the consequences of the American victory were for the Allies at the time and geopolitics since then.

[. . .]

Because the Americans were the victors at Midway, it is easy to forget how near they came to losing the battle. On the day of the main action they attacked the Japanese carriers from dawn until 10.20 am without inflicting any serious damage. Then, between 10.20 am and 10.25 am, the American planes caught three of the Japanese carriers without adequate fighter protection. All three were completely disabled in just five minutes in what has been called ‘the miracle of Midway’.

[. . .]

Now suppose — and it almost happened — that the Japanese carriers, with their vastly superior fighter planes, had caught the American carriers off guard. The loss of those carriers and the destruction of the Midway airbase would have compelled America to give a much higher priority to the Pacific. A direct consequence of that would have been a slower build-up of American power in, first North Africa, and then Europe.

Shortly after the North African landings, there was the other great turning point of the war: Germany’s surrender at Stalingrad. From then on one of the great questions of the war was where the Russians would meet the Allies. Had America suffered a massive defeat at Midway, the Allies advance in Europe would have been slower. (As it was, D-day strained the Allies to the limit. Even a small reduction in ships, tanks, planes or men would have forced its delay.) In these circumstances it is not inconceivable that the Soviet Union would have taken the whole of Germany

I just finished reading one of the few accounts of the battle from the Japanese perspective, Midway: The Battle That Doomed Japan by Mitsuo Fuchida and Masatake Okumiya. Because I couldn’t remember Fuchida’s co-author’s name, I Google searched on the title of the book, only to find the top item after Fuchida’s Wikipedia entry was this:

The Western accounts of the Japanese side of the battle have heretofore been built around three primary sources: The after-action log of Admiral Nagumo (“The Nagumo Report”); the interviews with Japanese naval officers conducted after the war by the United States Strategic Bombing Survey (“USSBS”); and Mitsuo Fuchida’s book, Midway: The Battle That Doomed Japan, which was published in the United States in 1955. These three sources, augmented by fragmentary survivor accounts, have formed the backbone of the Japanese account for all Western histories up to this point.

Unfortunately, one of these sources — Fuchida’s Midway — is irretrievably flawed. Fuchida’s misstatements, which have lain undetected in the West until very recently, have had manifold negative effects on the veracity of the standard English-language battle accounts. His were not minor errors of omission that can be brushed off or explained away — they were fundamental and willful distortions of the truth that must be corrected. Intriguingly, Fuchida’s account was overturned and discredited in Japan more than twenty-five years ago. Yet in the West, he has remained as important as the day his book was first published.

September 3, 2012

Military-political jockeying in the East China Sea

Filed under: China, Japan, Military — Tags: , , , , — Nicholas @ 10:26

At sp!ked, James Woudhuysen has a long essay on the many tiny islands in the East China Sea (and South China Sea) that may feature in future shooting wars:

Outside East Asia, very few people know where the Senkaku islands are. But inside East Asia, the Senkaku prompt great bitterness between Japan, China and Taiwan. At stake is the national pride of each country, which believes that it alone owns them. At stake also are each country’s hopes that it might find oil or gas nearby, and its desire to sail round them unimpeded. But there is more. The Senkaku, and islands like them, signify how, among all the continents in the world, Asia’s past century has been the most enduringly explosive — and how its next could follow the same pattern.

Two hundred nautical miles (nm) west of the Japanese prefecture of Okinawa, 200 nm east of the province of Fujian in the People’s Republic of China, and just 120 nm north-east of Taiwan, there lies an archipelago of five uninhabited islands, covering just seven square kilometres and covered in jungle. Coming from Tokyo, a team of 25 city officials, surveyors and — inevitably — estate agents circled the islands just this weekend, hoping to reinforce Japan’s control over them. In the past, similar moves by both Japan and China have prompted fury, and not a little diplomatic concern elsewhere.

In mid-August, a group of Chinese sailed to the islands in order to uphold Beijing’s claim to them, only to meet with deportation at the hands of Japan. A little later, 150 Japanese nationalists came by in a flotilla and 10 of them swam ashore to raise the Japanese flag. Then, in the latest of a series of tit-for-tat episodes stretching back years, demonstrators in several Chinese cities insisted that Japan get out of the islands. All that’s missing now is that, on top of Tokyo’s rule over what it calls Senkaku and Beijing’s claim over what it calls Diaoyu, is a Taiwanese incursion over what they call the Diaoyutai.

What’s going on? Could all this lead to some kind of fearsome war between Japan, China and Taiwan? And why are there disputes not only in the East China Sea, but also in the South China Sea? There, south-east of Hainan Island (China) and east of Vietnam, China controls the Paracel Islands and resists the complaints of Taiwan and Vietnam about them. There, too, all three parties occupy and are in contention over the myriad Spratly islands, which, lying west of the Philippines and north of Malaysia and Brunei, are also partly controlled and certainly contested by these three nations.

September 2, 2012

The (mostly) forgotten Soviet-Japanese conflict of 1939

Filed under: China, History, Japan, Military, WW2 — Tags: , — Nicholas @ 11:17

Japan’s conduct of the opening stages of World War 2 were literally schizophrenic: the Imperial Japanese Navy viewed their primary opponent as the United States, while the Imperial Japanese Army viewed their primary opponent as the Soviet Union. The army’s fears were based on a little-known but very significant campaign in an undeclared war fought between Japan and the Soviet Union in 1939:

In the summer of 1939, Soviet and Japanese armies clashed on the Manchurian-Mongolian frontier in a little-known conflict with far-reaching consequences. No mere border clash, this undeclared war raged from May to September 1939 embroiling over 100,000 troops and 1,000 tanks and aircraft. Some 30,000-50,000 men were killed and wounded. In the climactic battle, August 20-31, 1939, the Japanese were crushed. This coincided precisely with the conclusion of the German-Soviet Nonaggression Pact (August 23, 1939) — the green light for Hitler’s invasion of Poland and the outbreak of World War II one week later. These events are connected. This conflict also influenced key decisions in Tokyo and Moscow in 1941 that shaped the conduct and ultimately the outcome of the war.

This conflict (called the Nomonhan Incident by Japanese, the Battle of Khalkhin Gol by Russians) was provoked by a notorious Japanese officer named TSUJI Masanobu, ring-leader of a clique in Japan’s Kwantung Army, which occupied Manchuria. On the other side, Georgy Zhukov, who would later lead the Red Army to victory over Nazi Germany, commanded the Soviet forces. In the first large clash in May 1939, a Japanese punitive attack failed and Soviet/Mongolian forces wiped out a 200-man Japanese unit. Infuriated, Kwantung Army escalated the fighting through June and July, launching a large bombing attack deep inside Mongolian territory and attacking across the border in division strength. As successive Japanese assaults were repulsed by the Red Army, the Japanese continually upped the ante, believing they could force Moscow to back down. Stalin, however, outmaneuvered the Japanese and stunned them with a simultaneous military and diplomatic counter strike.

[. . .]

But what if there had been no Nomonhan Incident, or if it had ended differently, say in a stalemate or a Japanese victory? In that case, the Japanese decision to move south might have turned out very differently. A Japan less impressed with Soviet military capability and faced with choosing between war against the Anglo-American powers or joining Germany in finishing off the U.S.S.R., might have viewed the northern course as the best choice.

If Japan had decided to attack northward in 1941, that could well have changed the course of the war, and of history. Many believe that the Soviet Union could not have survived a two-front war in 1941-1942. The Soviet margin of victory in the Battle of Moscow, and at Stalingrad a year later, was excruciatingly thin. A determined Japanese foe in the east might have tipped the balance in Hitler’s favor. Furthermore, if Japan had moved against the Soviet Union in 1941, it could not also have attacked the United States that year. The United States might not have entered the war until a year later, under circumstances in Europe far more unfavorable than the actual grim reality in the winter of 1941. How then would Nazi domination of Europe been broken?

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 28, 2012

A possible solution to Pakistan’s Taliban problem

Filed under: Asia, Military, USA — Tags: , , , , — Nicholas @ 08:11

Strategy Page on recent developments in Pakistan over domestic terror groups and the Afghani Taliban:

There are currently 150,000 troops in the Pakistani tribal territories, and nearly 40,000 surrounding North Waziristan (an area of 4,700 square kilometers, with 365,000 people). North Waziristan has been surrounded since late 2009, but Pakistani generals have refused to go in and take down this terrorist refuge. Politicians have been under growing pressure from the West, especially the United States to do something about the continued terror attacks by what the Pakistanis call “bad Taliban”. These are mostly Pakistani Taliban who wants to establish a religious dictatorship in Pakistan. The Afghan Taliban, who wants to establish a similar government in Afghanistan are considered “good Taliban” (along with the minority of Pakistani Taliban who don’t want to overthrow the government.)

In the last two years, the Pakistani Taliban have also caused hundreds of casualties among pro-government tribesmen throughout the tribal territories, and it’s no secret that the army hires tribesmen and puts them in dangerous situations to minimize army casualties. The army cannot afford to lose the support of the loyal tribes up there. All this has put pressure on the army to eliminate the refuge the killers can flee to in North Waziristan. Several times, because of the demands of Pakistani and American politicians, the Pakistani generals have said they will consider advancing into North Waziristan. But it hasn’t happened yet. The most likely outcome to all this is a very special army operation in North Waziristan, one that will avoid doing too much damage to their terrorist friends, and just go after a few towns known to be terrorist (who attack Pakistan) hangouts. In other words, the army will put on a show, and hope that the intended audience (the United States) approves. Bad reviews will be bad news indeed. Then there’s the fact that there will be a lot of advance publicity for this operation, including details (in the Pakistani media) of which Pakistani brigade will go where, giving the terrorist groups plenty of time to get out of the way. This has happened before, and could happen again.

The bottom line is that the Pakistani military is not likely to attack its longtime and loyal terrorist allies (especially Haqqani Network) in North Waziristan, at least not as long as the elected politicians have no control over selecting the senior military leaders. The Pakistani military is a self-selected aristocracy that extorts a large chunk of the national wealth to sustain itself. More Pakistanis are looking at the military this way, especially in light how well serving and retired generals (and lower ranking officers) live. But the military has the firepower and few civilians are eager to take the troops on.

The Pakistani generals deny that there is any agreement with the Americans to shut down terrorist operations in North Waziristan in return for NATO action against Pakistani Taliban hiding out in Afghanistan. Nevertheless, in the last week, American air power appears to have done just that, killing several senior Pakistani Taliban leaders in their Afghan hideouts. Now the Americans are waiting for their Pakistani counterparts to do something in North Waziristan. This is one reason civilians in North Waziristan are fleeing their homes. They know how such deals work; you do a big favor for someone and there has to be payback. It’s the code of honor and must be observed. But maybe not. Officially, Pakistan opposes the American UAV patrols over North Waziristan and the hundreds of missile attacks on terrorists below. Pakistani politicians openly decry these attacks as violations of Pakistani sovereignty, while privately supporting these operations that kill Islamic terrorists the Pakistani security forces will not or cannot get to. It’s all a convenient hypocrisy.

August 21, 2012

The 21st century equivalent to the enclosure movement

Filed under: Africa, Americas, Asia, Government, Liberty — Tags: , , , , — Nicholas @ 10:07

Joseph R. Stromberg reviews The Land Grabbers: The New Fight over Who Owns the Earth, by Fred Pearce.

The Land Grabbers is a wonderful primer on the newest manifestations of an ancient form of plunder: the seizure of other people’s resources and destruction of their livelihoods. The author, Fred Pearce, is a well-established British environmental journalist. Here he surveys the ongoing alienation of allegedly “unused” or “underused” land in Africa, Latin America, East Asia, Russia, Ukraine, Georgia, Australia, and elsewhere at the hands of international corporations, both private and state-owned. Politicians in the affected countries are key partners in operations that resemble the late-19th-century scramble for control of Africa. The land grabs aim at enriching privileged companies and their political allies, usually at the expense of those already on the land. States, companies, and their frequent close friend, the World Bank, see no reason to respect sitting owners and resource users, whatever their rights under customary law and (sometimes) postcolonial statutes. Pastoral nomads get even less respect. In Tanzania, for example, governments and safari capitalists have reduced the traditional grazing lands of the Maasai herdsmen to a fraction of what they were. And in Ethiopia, the government’s “villagization” policy, Pearce writes, resettles peasant farmers “in the manner of Stalin, Mao, and Pol Pot,” clearing the way for deals with foreign capital.

Where agriculture is concerned, the effort goes forth under an ideology that claims that only industrial-scale farming, modeled on subsidized American agribusiness, can feed the world. The ideologues in question include John Beddington, chief UK government scientist; Paul Collier, former research head at the World Bank; and Richard Ferguson of the investment company Renaissance Capital, who hopes to see “industrial-sized farms of a million hectares.” To realize that vision, smallholders, hunters, gatherers, and pastoralists must get out of the way and submit themselves to wage-labor, wherever they find it. The ideology goes hand in hand with the form of globalization that relies on the power of the United States and some associated countries to dictate the contours of world trade. While the U.S. has toppled states seen as hostile to American business interests (as in Guatemala in 1954), today’s methods are often more subtle. They include USAID programs, American domination of World Bank policies, and a web of treaty obligations, especially international investment agreements.

Pearce is an environmentalist, but his book is not especially ideological. He’s more interested in presenting data. Wherever possible he has figures for acreage (or hectares) and tells us who did what to whom and where. He also faults wealthy environmental idealists and NGOs, noting that their parks and preserves can displace local people and their property, just like commercial hunting preserves, sugar plantations, logging operations, and the rest can.

August 15, 2012

India’s next aircraft carrier delayed (again)

Filed under: India, Military, Russia — Tags: , — Nicholas @ 09:02

The Indian navy will have to carry on with an ancient aircraft carrier for a few more years because the INS Vikrant is being further delayed:

India announced that its first locally designed and built aircraft carrier, INS Vikrant will be at least three years late. This was not unexpected. The latest delay was caused, in large part, because the Indian firm hired to build a complex portion of the engine, the gearbox, proved incapable of the task and a foreign company had to be brought in.

There have been many other problems. While construction began three years ago, it was soon delayed because Russia was late in supplying the high-grade steel needed for the hull. Last December 30, the Vikrant was floated out its dry dock. Vikrant was not supposed to leave dry dock yet but the dock was needed for another project. Construction will go on, with pipes, conduits, and other fittings installed. Later this year, Vikrant will return to another dry dock to have its engines and other major equipment installed, although some of that equipment will be late because of problems with suppliers.

While waiting for the Vikrant to be ready, India will have to extend the service life of the already aged INS Viraat, which began life as HMS Hermes in the Royal Navy before being transferred to Indian service in 1987. She is the oldest aircraft carrier in active service in any navy.

Image from Wikipedia.

August 14, 2012

O’Neill: London outdid Beijing in politicizing the Olympics

Filed under: Britain, China, Sports — Tags: , , , — Nicholas @ 08:22

Brendan O’Neill says that the London Olympics were far more politicized than the Beijing games in 2008:

From the flurry of fanboy commentary that followed Danny Boyle’s am-dram opening ceremony to the insistence that the Games represented the coming to fruition of the post-Diana dream of a new, less stuffy Britain, the urge to politicise the Games has been intense. That the political classes have sought so shamelessly to usher in ‘another kind of Britain’ on the back of the Games speaks volumes about their desperate need for a new national narrative, and their disillusionment with the democratic route to social overhaul.

Normally we frown upon elites that heap their political obsessions on to mass sporting events. We think of Hitler turning the Berlin Games into an advert for Aryan superiority (a vision shot down by Jesse Owens) or of the Beijing opening ceremony’s thousands of fantastically coordinated drummers and boastful history lesson, described by one British hack last week as ‘crypto-fascist’. And yet, Britain’s ostensibly liberal observers thought nothing of turning 2012 into an advert for their own allegedly superior way of life and thinking.

The tone was set by Labour MP and historian Tristram Hunt, who described Boyle’s opening ceremony as the ‘march past’ — that is, victory parade — of his side in the Culture Wars. The ceremony was proof, said Hunt, that ‘the left took victory in the Culture Wars’, and moreover that a New Britain was being born: if the Queen’s Jubilee celebrated a ‘staid and nostalgic national identity’, this ceremony ‘offered an attractively contradictory, complicated, and above all creative conception of these Isles of Wonder’.

There has since been a concerted effort to turn the ‘bonkers’ opening ceremony into a new national narrative. Somewhat defensively, the Guardian’s Jonathan Freedland insists that it is ‘not just Guardian types’ who are exalting in the new political vision provided by both the ceremony and the multicultural message of the Games that followed — the whole nation is, apparently, recognising that ‘we have glimpsed another kind of Britain’, and that we should ‘love the country we have become — informal, mixed, quirky — rather than the one we used to be… reactionary’.

August 13, 2012

After five years, the Great Recession still shows little sign of ending

Filed under: China, Economics, Europe, USA — Tags: , , — Nicholas @ 09:02

For your daily dose of doom, here’s Ambrose Evans-Pritchard at the Telegraph:

The world remains in barely contained slump. Industrial output is still below earlier peaks in Germany (-2), US (-3), Canada (-8) France (-9), Sweden (-10), Britain (-11), Belgium (-12), Japan (-15), Hungary (-15) Italy (-17), Spain (-22), Greece (-27), according to St Louis Fed data. By that gauge this is proving more intractable than the Great Depression.

[. . .]

The original trigger for the Great Recession has since faded into insignificance. America’s house price bubble — modest by European or Chinese standards — has by now entirely deflated. Warren Buffett is betting on a rebound. Fannie and Freddie are making money again.

Five years on it is clear that subprime was merely the first bubble to pop, a symptom not a cause. Europe had its own parallel follies. Britons were extracting almost 5pc of GDP each year in home equity by the end. Spain built 800,00 homes in 2007 for a market of 250,000. Iceland ran amok, so did Latvia and Hungary. The credit debacle was global. If there was an epicentre, it was Europe’s €35 trillion banking nexus.

[. . .]

A study by Stephen Cecchetti at the Bank for International Settlements concludes that debt turns “bad” at roughly 85pc of GDP for public debt, 85pc for household debt, and 90pc corporate debt. If all three break the limit together, the system loses its shock absorbers.

“Debt is a two-edged sword. Used wisely and in moderation, it clearly improves welfare. Used imprudently and in excess, the result can be disaster,” he said.

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.

August 12, 2012

China’s economic situation in Keynesian and Austrian terms

Filed under: China, Economics — Tags: , , , , — Nicholas @ 09:27

Tyler Cowen in the New York Times:

Keynesian economics holds that aggregate demand — the sum of all consumption, investment, government spending and net exports — drives stability, and that government can and should help in difficult times. But the Austrian perspective, developed by the Austrian economists Ludwig von Mises and Friedrich A. Hayek, and championed today by many libertarians and conservatives, emphasizes how government policy often makes things worse, not better.

Economists of all stripes agree that China may be in for a spill. John Maynard Keynes emphasized back in the 1930s the dangers of speculative bubbles, and China certainly seems to have had one in its property market.

[. . .]

The Austrian perspective introduces some scarier considerations. China has been investing 40 percent to 50 percent of its national income. But it is hard to invest so much money wisely, particularly in an environment of economic favoritism. And this rate of investment is artificially high to begin with.

Beijing is often accused of manipulating the value of its currency, the renminbi, to subsidize its manufacturing. The government also funnels domestic savings into the national banking system and grants subsidies to politically favored businesses, and it seems obsessed with building infrastructure. All of this tips the economy in very particular directions.

The Austrian approach raises the possibility that there is no way for China to make good on enough of its oversubsidized investments. At first, they create lots of jobs and revenue, but as the business cycle proceeds, new marginal investments become less valuable and more prone to allocation by corruption. The giddy booms of earlier times wear off, and suddenly not every decision seems wise. The combination can lead to an economic crackup — not because aggregate demand is too low, but because the economy has been producing the wrong mix of goods and services.

Lots of earlier discussion of the problems in China’s economy here.

The (long awaited) growth in Indian manufacturing

Filed under: Business, Germany, History, India, Technology — Tags: , , , , , — Nicholas @ 08:59

The Economist on the relatively slow development of India’s manufacturing sector:

If India is to become “the next China” — a manufacturing powerhouse — it is taking its time about it. “We have to industrialise India, and as rapidly as possible,” said the country’s first prime minister, Jawaharlal Nehru, in 1951. Politicians have tried everything since, including Soviet-style planning. But India seems to prefer growing crops and selling services to making things you can drop on your foot.

Manufacturing is still just 15% of output (see chart), far below Asian norms. India needs a big manufacturing base. No major country has grown rich without one and nothing else is likely to absorb the labour of the 250m youngsters set to reach working age in the next 15 years. But it can seem a remote prospect. In July power cuts plunged an area in which over 600m people live into darkness, reminding investors that India’s infrastructure is not wholly reliable. And workers boiled over at a car factory run by Maruti Suzuki. Almost 100 people were injured and the plant was torched. The charred body of a human-resources chief was found in the ashes.

Yet not all is farce and tragedy. Take Pune in west India, a booming industrial hub that has won the steely hearts of Germany’s car firms. Inside a $700m Volkswagen plant on the city’s outskirts, laser-wielding robots test car frames’ dimensions and a giant conveyor belt slips by, with sprung-wood surfaces to protect workers’ knees. It is “probably the cheapest factory we have worldwide”, says John Chacko, VW’s boss in India. In time it could become an export hub. Nearby, in the distance it takes a Polo to get to 60mph, is a plant owned by Mercedes-Benz.

The initial demand for a domestic manufacturing base was more political than economic: it would serve to reinforce the newly won independence of India by showing that India could make its own goods rather than importing from the UK or other major manufacturing nations. It was also economic, in that it would provide relatively high-paying jobs for India’s rapidly urbanizing population.

Ironically, now that the manufacturing sector seems to be on the upswing, the one thing it isn’t going to do for India is provide lots and lots of jobs: as with the rest of the world, manufacturing “things” is being done with fewer workers every year (even when the total output increases, fewer workers are needed to produce that output).

Relative poverty is not a very useful measurement

Filed under: China, Economics — Tags: , — Nicholas @ 08:37

At the Adam Smith Institute blog, Tim Worstall explains why measuring relative poverty isn’t helpful:

Here actually is the problem with using relative poverty as a measure:

    Compared to the 1960s, China today has higher income inequality, but also incomparably lower levels of material poverty. By Brady’s definition, China was less impoverished in the near-starvation years of the 1960s than it is as an economic superpower today. According to the OECD, during the last three decades the share of Chinese living in absolute poverty dramatically declined from eight in ten to one in ten (Garroway and de Laiglesia 2011). During the same period, relative poverty, measured exactly as Brady measures it, roughly doubled. Although inequality and relative poverty are not irrelevant for measuring the well-being of a society, we should be apprehensive about a measure of poverty that is incapable of detecting the largest decline in material poverty in human history.

As pointed out, a measure of poverty that not just ignores, but actually gets the sign wrong on, the largest reduction in poverty in the history of our species is of limited value.

[. . .]

Which leads us to something of a conclusion: it’s fine to consider the distribution of incomes within a society. But we do it rather too much with the constant political obsession over relative poverty. We need to be paying a lot more attention to absolute standards of living: most especially how these change over time. Most specifically I’m thinking about the effects attempts to reduce relative poverty might affect our ability to increase absolute standards of living in the future.

August 6, 2012

India’s blackouts are a sign that reform is desperately needed

Filed under: Economics, India — Tags: , , , , — Nicholas @ 10:20

The Economist on the massive blackouts in India recently:

FOR an aspiring economic superpower, there can be few more chastening events than electricity cuts as massive as those that struck northern and eastern India this week. An area (including the capital, Delhi) in which more than 600m people live faced blackouts over two days. Infrastructure, from traffic lights to trains, stopped working. Hospitals, sanitation plants and offices ground to a halt. Airports and factories had to rely on backup generators, often fuelled by truckloads of diesel.

The impact on India’s economy goes far beyond lost output. The blackout will badly damage the country’s reputation, and highlights the rotten infrastructure that is hobbling its efforts to catch up with China.

[. . .]

At one end, not enough cheap coal is being dug up and gasfields are sputtering. At the other, the national transmission grid needs investment. Meanwhile the “last mile” distribution companies, largely state-owned, that buy power and deliver it to homes and firms, are financial zombies. Much of their power is pinched or given away free. Local politicians put pressure on them to keep tariffs low, which leads to huge losses. Squeezed between a shortage of fuel and end-customers who are nearly bust, those private generating firms are now cutting back on vital long-term investment in new plants.

[. . .]

The solution is to cut graft, tackle vested interests and allow markets to work better. The coal monopoly needs to be broken up and local distribution firms privatised. Yet despite the looming crisis, for a decade the government has shirked doing what is clearly necessary, just as it has failed to implement key tax reforms, cut public borrowing or open the retail sector to competition. It has allowed corruption and red tape to damage other vital industries, such as telecoms.

August 4, 2012

The tribal and political divisions of Afghanistan

Filed under: Asia, Military, Politics — Tags: , , , , , — Nicholas @ 09:31

A brief primer from Strategy Page on the volatile mix of tribal rivalries that makes Afghanistan such a difficult place to conduct business (or military operations):

The war against the Taliban is increasingly just another chapter in the centuries old conflict between the Pushtun and non-Pushtun tribes of Afghanistan. President Karzai and his allies are from Pushtun tribes that have long been rivals to the tribes that form the core of Taliban leadership and manpower. All this is made worse by the fact that the non-Pushtun Afghans (Tajiks, Hazara and Uzbek), who comprise 60 percent of the population, do not want to lose the increased power (more in proportion to their size of the population) they obtained once democracy was installed in 2002. While Pushtuns are 40 percent of the population, Tajiks are 24 percent, Hazara ten percent, Uzbek 9 percent and various other non-Pushtun minorities the rest. This struggle between Pushtuns and the rest has defined Afghanistan since its creation three centuries ago. The Pushtun are not happy with the recent revisions that gave the majority more power. For Pushtuns, that is just not right. The Taliban are seen as major players in the fight to right this wrong, and for many Pushtuns that makes up for a lot of the evil the Taliban does.

This tribal animosity played a role in the American reaction to Pakistan closing its border to NATO truck traffic last November. The U.S. played hardball with the Pakistanis and shifted truck traffic to the more expensive northern route. This was great for the non-Pushtuns up north, who got a lot more lucrative trucking business. It was a disaster for the mainly Pushtun trucking companies in the south, and the Taliban who extorted “protection money” from the truckers to avoid being attacked. Aware of all that, NATO traffic is not returning to its pre-November levels, and may be reduced still more if the Taliban become more troublesome because their cash flow has increased.

[. . .]

Afghanistan is different to the extent that it has a more violent (than the norm) tribal culture and heavy resistance to anti-corruption efforts. Most Afghans who reach a leadership position consider corruption (demanding bribes and stealing government funds) a right and stealing something of an obligation to make his family/clan/tribe stronger and better able to survive. Many Afghans have noted that countries with less corruption are more prosperous and peaceful, but this anti-corruption faction is still a minority. Corruption continues to be a major problem in Afghanistan and it will get worse when most foreign troops leave in 2014. At that point, the anti-corruption activists will be at more personal risk, as will auditors and other monitors of how foreign aid is spent.

Many (if not most) Pushtuns, and nearly all non-Pushtuns, are hostile to the Taliban and their alien radical Islamic ways. Aside from the lifestyle restrictions, Afghans don’t like the Taliban demand that Afghans put religion before tribal and family obligations and, worst of all, strive for Islamic world conquest. Most Afghans see the Taliban as a bunch of intolerant fanatics who like to execute (often by beheading or bombs) those who oppose them. The Taliban leadership has been aware of these attitudes for years and has tried to restrain its frontline fighters. But this has been difficult, as Pushtun teenagers with guns are prone to bullying less well-armed civilians, especially if they are from another tribe. Ancient cultural habits are hard to break.

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