Quotulatiousness

August 20, 2025

“All politics is local” … except when it isn’t

Filed under: Economics, Europe, Government, Media, Politics — Tags: , , , , — Nicholas @ 05:00

Lorenzo Warby on a recent study of the vast chasm between what European voters want in areas like crime and immigration and what their elected representatives want:

Economist Laurenz Guenther has performed the very useful exercise of quantifying how unrepresentative the views of European politicians are of their voters on cultural issues, such as crime and immigration. This is not true of economic issues, where the views of politicians tend to be quite representative of their voters.

In the case of economic issues, in some countries the politicians are more pro-market (“right”) then their voters, in others they are more dirigiste (“left”) than their voters, in others still they are very similar to their voters. There is simply no consistent pattern, and the average gap between voters and politicians across European countries on economic issues is fairly small.

With cultural issues, such as crime and immigration, we get a very different pattern. There, politicians are consistently more socially liberal (“left”) than their voters and by a considerable margin. While education levels explain some of this difference, they do not explain very much, as politicians are significantly more socially liberal than even university-educated voters.

Moreover, politicians are unrepresentative even of their own Party members/base on cultural issues and, again, in being much more liberal than their core supporters. There is some factor or factors specific to being a contemporary politician that systematically separates them out from voters on cultural issues yet does not operate with economic issues.

Veteran politician Tip O’Neill famously said that all politics is local. This is particularly true of cultural issues such as crime and immigration, where the effects vary wildly by location. This is much less true of economic issues, which are much more economy-wide in their operation.

There are various features we can identify here. First, executive function(s) — including such features as patience (aka time horizon) — varies between people and is highly heritable. Localities that have lots of people with poor executive function operate very differently from those where it is very much normal for people to have strong executive function.

As the combination of physical robustness and weak executive function predicts criminal behaviour, this has a great deal to do with why crime varies so dramatically by locality. This is especially as crime is very much a power law phenomenon, where a small minority of (overwhelmingly) men commit the vast majority of violent crimes.

Source – Wikimedia Commons.

It also means that people who have spent their lives in social milieus full of people with high executive function can have little or no sense of what happens when one has to deal with weak executive function folk. This is the people unlike me problem that so bedevils contemporary politics and commentary.

August 16, 2025

QotD: Rich anarchists

Filed under: Books, Economics, Politics, Quotations — Tags: , , , — Nicholas @ 01:00

So you talk about mobs and the working classes as if they were the question. You’ve got that eternal idiotic idea that if anarchy came it would come from the poor. Why should it? The poor have been rebels, but they have never been anarchists; they have more interest than anyone else in there being some decent government. The poor man really has a stake in the country. The rich man hasn’t; he can go away to New Guinea in a yacht. The poor have sometimes objected to being governed badly; the rich have always objected to being governed at all. Aristocrats were always anarchists …

G.K. Chesterton, The Man Who Was Thursday, 1908.

August 14, 2025

The “Big Mac Index” is bogus and Purchasing Power Parity (PPP) is wrong

Filed under: Business, Economics — Tags: , , , — Nicholas @ 05:00

I started reading The Economist when I was in college in the early 1980s. I subscribed after I left college, no longer having access to the school library’s copies, and I continued my subscription for about 20 years. Eventually, I gave up on The Economist as their editorial stance shifted further and further leftward. One of the things they ran regularly was their “Big Mac Index” which compared prices of McDonalds’ Big Mac hamburgers across a range of countries to show the Purchasing Power Parity of the respective countries’ currency against the US dollar. I thought it was a neat way to use readily available data in a form that most consumers would be familiar with to illustrate a wider economic fact. But, as Tim Worstall points out here, the index isn’t actually measuring what it claims to be measuring at all:

    Purchasing Power Parity (PPP) constitutes a foundational concept within mainstream international economics, asserting that, over the long term, real exchange rates will naturally adjust to equalize the purchasing power of currencies across nations. This suggests that the cost of an identical basket of goods should, in principle, be uniform globally once currency exchange rates are applied. This notion is frequently popularized through informal measures such as the Big Mac Index. PPP is conceptualized as a specific application of the Law of One Price (LOOP), which posits that, when abstracting from transactional frictions like transportation costs, tariffs, and taxes, any particular commodity traded or purchased should sell for a similar price regardless of its geographical location.

Aaaand, no. The Law of One Price says that a *traded* commodity should be at the same price everywhere, absent transport costs, tariffs and all the rest. Anything that’s not traded this will not be true of. For example, to use an example provided to us:

    For instance, if a Starbucks coffee is considerably more affordable in Tokyo than in Manhattan, Purchasing Power Parity (PPP) would indicate an undervalued Yen.

No, Starbucks coffee is not a tradeable item. Coffee beans are globally traded, yes, and coffee beans are the same price the world over — given transport costs, tariffs and so on. But the coffee bean is pennies on the dollar of a Starbucks coffee.

The use of the Big Mac in The Economist‘s popular version of PPP actually runs entirely the other way around. The note is that a Big Mac is made the same way around the world. But it’s always made of *local* ingredients, not internationally traded ones. Therefore we are not measuring whether tradeable goods are the same price in different places at all — we’re measuring what local goods cost in different places.

    Comparative advantage, whereby nations specialize in their most efficient productions for reciprocal benefit, is a myth. Absolute advantage reigns supreme.

Then there’s that as well. Which is to misunderstand comparative advantage as well. The insight is not about whether Britain makes cloth better than Portugal and then the same again with wine in reverse. Which is indeed absolute advantage. It’s about whether Britain makes cloth better than Britain makes wine, whether Portugal makes wine better than it does cloth. Each should do what they are *least bad at* and then share the increased production making both richer.

It’s also, once we move away from Ricardo, nothing to do with countries either. It’s something that applies to each and every individual. We should all do what we’re least bad at then swap the production. This does produce an interesting result for given how good, *ahem*, my economic writing is take a guess at how skilled I am at other ways of making a living? Quite.

So, you know, not getting PPP, LOOP nor comparative advantage — but still ending up calling for world government and that proper democratic control of the economy. Ah well, at least it’s fashionable even if incorrect.

August 13, 2025

The Dispossessed: State Happens

Filed under: Books, Economics, Politics — Tags: , , , , , — Nicholas @ 02:00

Feral Historian
Published 21 Mar 2025

Ursula K. le Guin’s The Dispossessed is one of the most in-depth examinations of how a large anarchist society might function, addressing both the problems it solves and those it creates for itself. It’s a must-read for anyone interested in the communist-leaning variants of anarchism in particular.

00:00 Intro
01:58 Anarres is not an Island
04:45 Shevek goes to Urras
07:00 Abolition of Property
08:30 Social Pressures and Pravic
12:30 Necessity and Ossification
14:45 Necessity of Conflict
15:45 Shevek’s Wild Ride

This video is in part a companion to this one — Cloak of Anarchy : Gradations of Stat… from a few weeks ago. The original cut of that one had a brief mention of a couple details from The Dispossessed, but it really needed its own video.

August 11, 2025

Smug Canadian boomer autohagiography rightly antagonizes the under-35s

Fortissax had an argument with one of his readers over a smug, self-congratulating meme about how wonderful Canada was in the 1990s and early 2000s:

What we lived through long before Trudeau was the Shattering, the breakdown of Canada’s social cohesion, driven by left-liberalism with communist characteristics applied to race, ethnicity, sex, and gender, and punitive almost exclusively toward visibly White men. My generation, those millennials born on the cusp of Gen Z, saw post-national Canada take shape not in the comfortable suburban rings of the GTA or the posh boroughs of Outremont and Westmount, but in self-segregated, ghettoised enclaves of immigrants whose parents never integrated and were never required to.

Memes like that are dishonest because they feed a false memory. The 2000s were not normal. Wages were stagnant, housing was already an asset bubble, and immigration was still flooding in under a policy that explicitly forbade assimilation. Brian Mulroney had enshrined multiculturalism into law in 1988. Quebec alone resisted, carving out the right to limit immigration under the 1992 Quebec–Canada Accord. After Chrétien, Stephen Harper brought in three million immigrants, primarily from China, India, and the Philippines in that order.

The Don Cherry conservatives of that era were Bush lite. They were rootless, cut off from their history, their identities manufactured from the top down since the days of Lester B. Pearson. They conserved nothing. For Canadian youth, it was the dawn of a civic religion of wokeness, totalitarian self-policing by striver peers, and the quiet coercion of every institution. My memories of that decade are of constant assault — mental, physical, spiritual — from leftists in power, from encroaching foreigners, and from the cowardice of conservatives.

Your 2000s might have been great. For us, they were communist struggle sessions. In 2009 we were pulled from class to watch the inauguration of Barack Obama, a foreign president, as a historic moment for civil rights. Our schools excluded us while granting space to every group under the sun: LGBT safe spaces and cultural clubs for Italians, Jamaicans, Jews, Indians, Indigenous, Balkaners, Greeks, Slavs, Portuguese, Quebecois, Iroquois, Pakistanis — every culture celebrated except our own. Anglo-Quebecers and Anglo-Canadians got nothing but an Irish club, closely monitored for “white supremacy” and “racism” by the HR grandmas of the gyno-gerontocracy of English Montreal. Students self-segregated, sitting at different cafeteria tables and smoking at different bus shelters. At Vanier, Dawson, and John Abbott College, these divisions were institutionalised. I remember walking into the atrium of Dawson, my first post-secondary experience, greeted by a wigger rolling a joint while a Jamaican beatboxed to Soulja Boy.

We became amateur anthropologists out of necessity, forced to navigate a nationwide cosmopolitan experiment from birth. We learned the distinctions between squabbling southeastern Europeans of the former Yugoslavia, and we did not care if Kosovo was Serbia or whether Romanians and Albanians were Slavic, they all acted the same way. We learned the divides within South Asia, the rivalries between Hindutva and Khalistani, the differences between a Punjabi, a Gujarati, a Telugu, a Pakistani, a Hong Konger, a mainlander, and a Taiwanese. We know the shades of Caribbean identity, the factions of the Middle East, and the intricacies of North African identity. We should never have needed to know these things, but we do.

For us, childhood in this cesspit was the seedbed of radicalism. We never knew an era when contact with foreigners was limited to sampling food at Loblaws. All we know is being surrounded by those who hate us, governed by a state that wants to erase us, with no healthcare, no homes, no jobs that are not contested by foreigners, and no money to start families.

August 8, 2025

China’s short- to medium-term reaction to Trump’s tariffs

Filed under: China, Economics, Government, USA — Tags: , , — Nicholas @ 03:00

In Reason, Liz Wolfe outlines some of the reasons China has not been suffering under the tariffs President Trump has levied on them over the last few months (unlike, say, Canada):

President Donald Trump and PRC President Xi Jinping at the G20 Japan Summit in Osaka, 29 June, 2019.
Cropped from an official White House photo by Shealah Craighead via Wikimedia Commons.

Total Chinese exports surged in July … but not to us. Compared to July 2024, Chinese exports were up 7.2 percent last month. “Its exports to Southeast Asia and Africa, key regions for reshipment to the United States, rose more than twice as fast as its overall exports”, per The New York Times‘ reading of the data. “China’s exports to the European Union, its main alternative to the American market, were also up very strongly.”

Specifically, “data released Thursday by the customs authorities showed the pickup was driven by strong growth in shipments to the European Union, Southeast Asia, Australia, Hong Kong and other markets, which more than made up for the fourth month of double-digit declines in US purchases”, reports Bloomberg.

Predictably, even the threat of tariffs has been enough to dampen trade. Remember, Washington and Beijing are still operating under a 90-day truce — set to expire on August 12, though it could be extended if a new agreement is reached — that holds off the imposition of higher tariff levels, namely, the tit-for-tat tariff increases that both countries had threatened. The truce also staves off export controls on certain critical rare-earth minerals and items that fall into the technology category. But still, current tariff levels mean a baseline 30 percent tariff on Chinese imports, which has been enough to depress trade.

For those in the Trump administration who are worried about trade deficits in particular, I suppose the good news is that we’ve made progress there: “For the last several decades, China has been selling as much as $4 worth of goods to the United States for each $1 of American goods that it buys”, reports The New York Times. Following China’s admission into the World Trade Organization, the trade deficit rose. Now, “tariffs have begun to reduce the imbalance. The United States announced on Tuesday that its overall trade deficit had narrowed in June to $60.2 billion, the smallest in nearly two years.”

It’s not clear why Trump administration officials, and the president himself, are so worried about trade deficits as something to eliminate for their own sake. We are dependent on Chinese goods to a rather substantial degree, which would pose a problem in the event of war with China (which is why the previous administration focused on improving our semiconductor manufacturing capabilities back in 2022). But you can just as easily make the case that it’s the vast volume of trade between the two countries — the deeply intertwined economies so reliant on each other (despite China’s claims of autarky and, more amusingly, communism) — that are incentivizing continued decent relations.

A few factors are at play that might help to explain why you likely haven’t felt a drastic increase in prices just yet. First, since there’s been a long lead-up to this trade war, many larger importers have stockpiled product over the last few months, so shortages haven’t been felt yet — they’ve just been selling off product they’ve been storing. Second, China has already managed to divert some stages of manufacturing to other countries—namely Vietnam — and some larger companies already have factories up and running in other Southeast Asian countries to avoid the “made in China” or “shipped from China” labeling. Expect more transshipping and manufacturing-locale creativity as a means of throwing customs officials off the scent.

August 4, 2025

The EU still dominates in one key area – over-regulation

At the Foundation for Economic Education, Cláudia Ascensão Nunes identifies the one area that the EU has carved out a unique niche for itself … and it’s global in scope:

EU regulations delenda est

In a world where global power is measured by military strength, technological innovation, or cultural influence, it is striking that the European Union, without housing major tech giants or centers of disruptive innovation, has turned bureaucracy into a tool of global power. It shapes the behavior of global companies, including American big tech firms, which adapt their products to comply with European norms. This phenomenon is known as the “Brussels Effect” and has positioned the EU as the world’s regulatory superpower, fueling growing tensions, particularly with the United States following the re-election of Donald Trump.

The European market comprises 450 million consumers with significant purchasing power, making it an essential destination for global companies. However, access to this attractive market comes with detailed regulations based on the precautionary principle, ostensibly prioritizing consumer and environmental protection, and enforced by an efficient bureaucracy capable of implementing and enforcing rules with precision. This combination encourages companies to align their global operations with European standards, as maintaining different product versions for each region is costly and complex. In practice, this exports European standards worldwide.

American big tech companies such as Apple, Google, and Meta exemplify the impact of the “Brussels Effect,” as they face the requirements of legislations like the Digital Markets Act (DMA) and the Digital Services Act (DSA). These laws have forced companies to overhaul their business models, often at high cost and with significant implications. The DMA, for instance, forced Apple to allow alternative app stores and third-party payment systems on iOS, leading the company to announce, in 2024, global changes to its app policy affecting users even outside Europe, with cost estimates in the billions of dollars to restructure its infrastructure and address revenue losses from the App Store.

Google, under the same regulation, was required to offer alternatives to its search engine on Android and to unbundle services such as YouTube, impacting its global strategy and requiring significant investments in new operating systems and interfaces. The company faced potential fines of up to 10% of its global revenue for non-compliance.

Meanwhile, Meta, under the DSA, was required to invest billions in content moderation systems, a serious imposition that openly seeks to control freedom of expression on a global scale. Operational costs increased by around 20%, according to market analysts. These costly adjustments are ultimately coercive due to the weight of the European market, demonstrating how Brussels shapes corporate behavior on a global scale.

These successive impositions and forced adaptations illustrate precisely Friedrich Hayek’s warning about the dangers of central planning. By replacing spontaneous order with top-down, uniform rules imposed by a technocratic authority, the capacity for local adaptation and respect for market complexity is lost. In this scenario, the European Union increasingly takes on the features of a regulatory Leviathan, a body concentrating disproportionate power in the hands of bureaucrats far removed from citizens, reducing freedom of choice and stifling innovation.

August 2, 2025

“[T]he United States is an imperial power … it does not give foreign nations free rides and unearned favours”

Filed under: Economics, Europe, Media, Politics, USA — Tags: , , , , , , — Nicholas @ 04:00

On Substack, eugyppius discusses the European situation in a time of seemingly random and capricious tariffs from the Trump administration:

Europe in 1899, when the continent contained multiple world powers, before the rise of non-European power.

Whenever I talk about things like tariffs, Trump supporters appear in my comments to tell me that Europe has gotten a free ride for long enough and that it is time we learned to pay our way. I find it a little frustrating to read this, because in Europe it does not feel like we are getting a free ride at all. In fact it seems like the opposite: The most common complaint on the populist German right is that our political class refuses to represent our interests and will not stop carrying water for the Americans.

I recognise that I’ll never be able to put this right, but it’s worth trying, because it is important to understand the world as it is. The truth is that the United States is an imperial power. Generally speaking, it does not give foreign nations free rides and it does not hand out unearned favours. There is however a lot of confusion here, because hardly anybody bothers to describe honestly the geopolitical strategy pursued by the United States or the nature of the American empire. Western liberalism cannot conceptualise imperial politics, and while empire generally benefits political elites on both sides of the Atlantic, it is not necessarily or always in the interests of ordinary Americans or ordinary Europeans, which is yet another reason not to talk about it.

The Americans and the British before them expended enormous effort to preempt the emergence of a dominant power on the European Continent that might challenge their successive naval empires. They fought two world wars to stop Germany from becoming just such a power. This great struggle ended in 1945 with Western Europe as a fully subjugated imperial province. Since then, the Americans have coordinated the NATO alliance and guaranteed the security of European countries not out of charity, but because Europe is their provincial possession. As a rule, they have not wanted Europe to assume full responsibility for its own defence, because a world in which America no longer guarantees the security of Europe is a world in which Europe is no longer an American province. It’s that simple.

To fend off the Soviets, the Americans nevertheless rebuilt and rearmed the nations of Western Europe. Everyone involved in this project had to come up with a way to allow the Germans to become a dominant economic power again, without displacing the United States or provoking the hostilities of wary postwar neighbours like France. One solution here was the European Union, which promoted economic interdependency as a counterweight to nationalist concerns. Another solution came at the cultural level, where Germany sought to allay European anxieties over possible Teutonic aggression by developing a national cult of historical guilt for World War II, which steadily blossomed into a full-blown civic religion. This exercise in self-effacement has grown more and not less extreme over time, in part as a response to nervousness about the consequences of German reunification. Many voices on the right like to portray Germans as victims of an externally imposed guilt regime, but the truth is that we did most of this to ourselves. The German left in particular has profited from and encouraged this mindset from the beginning.

German political self-effacement had one unexpected feature, in that it proved to be contagious. Within a generation of 1945, many of the victorious allied powers were striving to develop their own historical guilt cults after the German example, in each case centred around a national original sin like slavery or colonialism. Just as the German political class found it expedient to foreground collective European concerns at the expense of a more narrowly construed German nationalism, so did the broader West develop an overarching obsession with global issues and the plight of the developing world. This has caused the proliferation of a lot of silly people in our political culture, a lot of profoundly stupid organisations, and at least two cancerous ideological systems in the form of climatism and migrationism. We have had a nearly incalculable gift in the form of 80 years of peace, which may yet be offset by the equally incalculable costs of the lunacies this peace has encouraged.

July 29, 2025

EU Commission President Ursula von der Leyen triumphantly announces EU capitulation to Trump’s demands

Filed under: Bureaucracy, Economics, Government, Media, Politics, USA — Tags: , , , , — Nicholas @ 05:00

The EU and the United States are finalizing negotiations on bilateral trade issues that basically give Trump everything he wanted with very little in return for the EU’s concessions. It’s almost as if Trump has some kind of experience in negotiating lopsided agreements, isn’t it? I guess von der Leyen didn’t get Mark Carney’s memo on the importance of keeping your eLbOwS uP:

EU Commission President Ursula von der Leyen “[learning] in real time that weakness and submission do not in fact invite conciliation”

Donald Trump has shown up the European Union. He’s revealed that the world’s largest single market is a paper tiger to be kicked around, with basically no leverage or strength to resist American demands.

All of these supposedly fierce backroom tariff negotiations have yielded an incredibly one-sided deal – really an unparalleled embarrassment. As announced yesterday, the EU promises to invest $600 billion in the U.S. economy and to make $750 billion worth of “strategic purchases” of oil, gas and the like over the next three years. We also promise to buy a bunch of American military equipment. In return for giving the Americans $1.35 trillion, we earn the privilege of a 15% baseline tariff on all of our exports to America and we drop our own tariffs to zero. At least we don’t have to pay the 30% tariffs Trump threatened!

[…]

While von der Leyen was trying weakly to put a happy face on her total failure, Trump gave her what we might call a softer Zelensky treatment. He twisted the knife in the wound, calling out the idiocy of EU wind energy in an extended soliloquy that will surely keep the fact-checkers and the regime deboonkers up late for weeks to come. I transcribe his remarks in full, because the whole moment was wonderful:

    And the other thing I say to Europe, we will not allow a windmill to be built in the United States. They’re killing us. They’re killing the beauty of our scenery, our valleys, our beautiful plains. And I’m not talking about airplanes. I’m talking about beautiful plains, the beautiful areas in the United States. And you look up and you see windmills all over the place. It’s a horrible thing. It’s the most expensive form of energy. It’s no good.

    They’re made in China, almost all of them. When they start to rust and rot in eight years, you can’t really turn them off. You can’t bury them. They won’t let you bury the propellers, you know, the props, because they’re a certain type of fiber that doesn’t go well with the land. That’s what they say. The environmentalists say you can’t bury them because the fiber doesn’t go well with the land. In other words, if you bury it, it will harm our soil.

    The whole thing is a con job. It’s very expensive. And in all fairness, Germany tried it and, wind doesn’t work. You need subsidy for wind and energy should not need subsidy. With energy, you make money. You don’t lose money.

    But more important than that is it ruins the landscape. It kills the birds. They’re noisy. You know, you have a certain place in the Massachusetts area that over the last 20 years had one or two whales wash ashore and over the last short period of time they had 18, okay, because it’s driving them loco, it’s driving them crazy. Now, windmills will not come, it’s not going to happen in the United States, and it’s a very expensive …

    I would love to see, I mean, today I’m playing the best course I think in the world, Turnberry, even though I own it, it’s probably the best course in the world, right? And I look over the horizon and I see nine windmills. It’s like right at the end of the 18. I said, “Isn’t that a shame? What a shame.” You have the same thing all over, all over Europe in particular. You have windmills all over the place.

    Some of the countries prohibit it. But, people ought to know that these windmills are very destructive. They’re environmentally unsound. Just the exact opposite. Because the environmentalists, they’re not really environmentalists, they’re political hacks. These are people that, they almost want to harm the country. But you look at these beautiful landscapes all over all, over the the world. Many countries have gotten smart. They will not allow it. They will not. It’s the worst form of energy, the most expensive form of energy. But, windmills should not be allowed. Okay?

All the while von der Leyen had to sit there, absolutely frozen except for a curiously accelerated rate of blinking, as she learned in real time that weakness and submission do not in fact invite conciliation.

In Spiked, Jacob Reynolds agrees that the deal is a humiliation for the European Union:

So this is the famous “trade superpower”. After months of tough talk, European Commission president Ursula von der Leyen announced a trade deal with Donald Trump this week which is nothing short of total capitulation. The Commission has accepted a 15 per cent baseline US tariff on most EU goods, agreed to purchase $750 billion worth of American gas and procure billions more of US military kit. What did Queen Ursula get in return? Nothing.

“VDL”, as she is known in the Brussels Bubble, tried desperately to spin this as a win. Sitting anxiously next to Trump in Scotland last weekend, she recited impressive-sounding numbers – such as the EU and US’s combined 800million consumers and the EU’s $1.7 trillion trade volume – like a nervous student. Trump cut through the spin by greeting the deal as fantastic for US cars and agriculture. He didn’t need to say much else – indeed, it was clear for all to see that there was only one winner in this deal.

For decades, even critics of the EU had to concede that whatever its many economic and democratic shortcomings, it still possessed enormous leverage when it came to trade. At the very least, it was more than capable of defending EU interests in trade deals. Evidently, this is no longer the case. When even the hapless government of Keir Starmer can negotiate a better trade deal with Trump, the problems with the EU should be clear to see. (Tariffs on most UK goods are just 10 per cent.)

Even the most ardent Europhiles have found it hard to put a positive spin on the deal. Manfred Weber, leader of the European People’s Party (a coalition of Europe’s legacy centre-right parties) described it as “damage control” and better than not reaching a deal at all. Guy Verhofstadt, former prime minister of Belgium and usually the most maniacal of EU fanboys, slammed the deal as not only “badly negotiated”, but also “scandalous” and a “disaster”, with “not one concession from the American side”. Member states, from Ireland to France, have been similarly unenthusiastic. Yet the brutal truth is that the deal reflects how America views the EU – as strategically weak and politically empty.

Trump has taught the EU a harsh lesson in statecraft. The EU has long relied on its neighbours for energy production. It has long underinvested in defence. And now it throttles its biggest industries with green dogma. This left it with little leverage for the negotiations with the US.

Of course, after Mark Carney being elected on a highly dubious platform of being “the right person to deal with Trump”, this is almost inevitable at this stage:

QotD: Thucydides wasn’t articulating a deterministic law of geopolitics – he was writing a tragedy

If you’re 45 and above, you will remember how much fear Japan stoked in the hearts of Wall Street in the 1980s when their economy was booming and their exports sector exploding. There were major concerns that the Japanese economy would leap ahead of the USA’s, and that it would result in Japan discarding its constitutional pacifism in order to spread its wings once more throughout the Pacific.

These concerns were not limited to the fringes, they were real. So real were they that respected geopolitical analysts like George Friedman (later of Stratfor) wrote books like [The Coming War With Japan] The argument was that an upstart like Japan would crash head first into US economic and security interests, sparking another war between the two. This conflict was inevitable because challengers will always seek the crown, and the king will always fight to maintain possession of it.

Suffice it to say that this war did not come to pass. The Japanese threat was vastly overstated, and its economy has been in stagnation-mode for decades now (even though living standards remain very high in relative terms). What may seem inevitable need not be.

The next several years will see marked increase in tension between the USA and China, as the former completes its long awaited “Pivot to East Asia”. So anxious are the Americans to pivot that they have been threatening to “walk away” from Ukraine if they cannot hammer down a peace deal in the very near future. This indicates just how serious a threat they view China’s ascent to be to its economic and security interests. If they are willing to sacrifice more in Ukraine than originally intended, the implication is that China’s rise is a grave concern, and that a clash between the two looks very likely … some would argue that it is inevitable, appealing to a relatively new IR concept called the “Thucydides Trap“.

Andrew Latham explains the concept to us, arguing that Thucydides is misunderstood, making conflict between rising powers and hegemons not necessarily inevitable:

    The so-called Thucydides Trap has become a staple of foreign policy commentary over the past decade or so, regularly invoked to frame the escalating rivalry between the United States and China.

    Coined by political scientist Graham Allison — first in a 2012 Financial Times article and later developed in his 2017 book Destined for Warthe phrase refers to a line from the ancient Greek historian Thucydides, who wrote in his History of the Peloponnesian War, “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.”

Distortion:

    At first glance, this provides a compelling and conveniently packaged analogy: Rising powers provoke anxiety in established ones, leading to conflict. In today’s context, the implication seems clear – China’s rise is bound to provoke a collision with the United States, just as Athens once did with Sparta.

    But this framing risks flattening the complexity of Thucydides’ work and distorting its deeper philosophical message. Thucydides wasn’t articulating a deterministic law of geopolitics. He was writing a tragedy.

This essay might be an exercise in historical sperging, but I think it has value:

    Thucydides fought in the Peloponnesian War on the Athenian side. His world was steeped in the sensibilities of Greek tragedy, and his historical narrative carries that imprint throughout. His work is not a treatise on structural inevitability but an exploration of how human frailty, political misjudgment and moral decay can combine to unleash catastrophe.

    That tragic sensibility matters. Where modern analysts often search for predictive patterns and system-level explanations, Thucydides drew attention to the role of choice, perception and emotion.

    His history is filled with the corrosive effects of fear, the seductions of ambition, the failures of leadership and the tragic unraveling of judgment. This is a study in hubris and nemesis, not structural determinism.

    Much of this is lost when the phrase “Thucydides Trap” is elevated into a kind of quasi-law of international politics. It becomes shorthand for inevitability: power rises, fear responds, war follows.

Therefore, more of a psychological study of characters rather than structural determinism.

Giving credit to Allison:

    Even Allison, to his credit, never claimed the “trap” was inescapable. His core argument was that war is likely but not inevitable when a rising power challenges a dominant one. In fact, much of Allison’s writing serves as a warning to break from the pattern, not to resign oneself to it.

Misuse:

    In that sense, the “Thucydides Trap” has been misused by commentators and policymakers alike. Some treat it as confirmation that war is baked into the structure of power transitions — an excuse to raise defense budgets or to talk tough with Beijing — when in fact, it ought to provoke reflection and restraint.

    To read Thucydides carefully is to see that the Peloponnesian War was not solely about a shifting balance of power. It was also about pride, misjudgment and the failure to lead wisely.

    Consider his famous observation, “Ignorance is bold and knowledge reserved”. This isn’t a structural insight — it’s a human one. It’s aimed squarely at those who mistake impulse for strategy and swagger for strength.

    Or take his chilling formulation, “The strong do what they will and the weak suffer what they must”. That’s not an endorsement of realpolitik. It’s a tragic lament on what happens when power becomes unaccountable and justice is cast aside.

and

    In today’s context, invoking the Thucydides Trap as a justification for confrontation with China may do more harm than good. It reinforces the notion that conflict is already on the rails and cannot be stopped.

    But if there is a lesson in The History of the Peloponnesian War, it is not that war is inevitable but that it becomes likely when the space for prudence and reflection collapses under the weight of fear and pride.

    Thucydides offers not a theory of international politics but a warning — an admonition to leaders who, gripped by their own narratives, drive their nations over a cliff.

Latham does have a point, but events have a momentum all their own, and they are often hard to stop. Inevitabilities do exist, such as Israel and Hezbollah entering into conflict with one another in 2022 after their 2006 war saw the latter come out with a tactical victory. Barring a black swan event, the USA and China are headed for a collision. The question is: in what form?

Niccolo Soldo, “Saturday Commentary and Review #188 (Easter Monday Edition)”, Fisted by Foucault, 2025-04-21.

July 28, 2025

The AI threat to the laptop classes

Filed under: Business, Economics, Media, Politics, Technology, USA — Tags: , , , — Nicholas @ 05:00

Warren at Coyote Blog responds to a recent Gato Malo post on the way artificial intelligence (however described) will continue to disrupt the workplace especially as it begins to threaten the “laptop class” workers:

I agree with Gato that AI has a huge potential to disrupt current work patterns, in the same way that the industrial revolution did. The 19th century disruptions were severe, and many people suffered as their experience and skill set no longer matched the new economy. But eventually everyone, from the poorest to the rich, were better off for letting the industrial revolution run its course.

But in the 19th century, the disrupted were essentially powerless. What happens this time around, though, when the disrupted are the ruling elite themselves? These potentially disrupted professions include lawyers and doctors who already have shown themselves very willing to organize to block innovation, squash competition, and protect their high pay. Just look at the history of the attempts by Congress to reduce Medicare reimbursements to doctors. And that was minor compared to the potential AI disruption. Let me give you another example of the powerful resisting a technological change that should have disrupted their businesses.

When TV first was being rolled out, the industry coalesced around a network of local broadcast stations, many of whom became affiliates of a network like NBC or CBS. Why this model? Mainly it was driven by technology — the farthest a TV signal could reasonably be broadcast was about 50-75 miles. Thus everyone by necessity got their TV through three or four TV stations in their metropolitan area, each its own small business.

Now fast forward to today. There are multiple ways to broadcast a TV signal nationwide — there are several satellite options and many streaming internet approaches. So now when we watch DirecTV or Youtube TV, we just watch the national NBC or ABC feed, right? Nope. Federal law requires that whatever service you use MUST serve up NBC, for example, via the local affiliate. That is why your streaming TV service harasses you when you travel, because it is worried about violating the law by showing you the Phoenix CBS affiliate when you are staying overnight in Atlanta (gasp).

This is hugely costly. In order to be able to provide NBC among its stations, Youtube TV must gather the feeds from 235 different stations. In the Internet streaming era this is costly but in the satellite era it was insane. DirecTV, with its limited bandwidth, had to simultaneously broadcast 235 stations, most showing identical content, just to legally provide you with NBC. So why this crazy, expensive, insane effort? I am sure you have guessed — pound for pound local TV stations are among the most powerful lobbyists in the country. First, they have money and a massive incentive to defend their local geographic monopoly — Car dealers and alcohol distributors are much the same, which is why every potential innovation is resisted in those markets. But TV stations have one extra card to play — nearly every Congressman in the House likely depends on the three or four TV stations in one major metropolitan area for a huge part of their publicity and coverage. No politician is going to screw with that. At the end of the day, local stations did not get disrupted, they actually became more valuable with this government-enforced distribution of their product.

This is a small example of the fight that is coming in AI. Congressmen will couch their arguments in fear-charged terminology as if their real fear is some Terminator-like AI apocalypse. But the real concern will be from the influential elite who are being disrupted. What would have happened to the Industrial Revolution if the hand-loom weavers were the children of the nobility? Would the government have allowed the revolution to proceed? We are about to find out.

On a cheerier note (if you’re an AI), here’s Ted Gioia‘s most recent concerns about AI getting more evil as it gets more capable:

I hate to be the bearer of bad news, but AI doesn’t make ethical decisions like a human being. And none of the reasons why people avoid evil apply to AI.

Okay, I’m no software guru. But I did spend years studying moral philosophy at Oxford. That gave me useful tools in understanding how people choose good over evil.

And this is relevant expertise in the current moment.

So let’s look at the eight main reasons why people resist evil impulses. These cover a wide range — from fear of going to jail to religious faith to Darwinian natural selection.

You will see that none of them apply to AI.

Do you see what this means? You and I have plenty of reasons to choose good over evil. But an AI bot is like the honey badger in a famous meme — and just don’t care.

So sci-fi writers have good reason to fear AI. And so do we. The moral compass that drives human behavior has no influence over a bot. As it gets smarter, it will increasingly resemble a Bond villain. That’s what we should expect.

Anyone who tries to forecast the future of AI must take this into account. I certainly do.

And even though I’d like to think that I’m a fearless predictor, I must admit that what I see playing out over the next few years is very, very very troubling.

Here’s my hypothesis: Let’s call it Ted’s Unruly Rules of Robotics:

  1. Smart machines will have an inherent tendency to evil—because human moral or legal or religious or evolutionary tendencies to goodness don’t apply to them.
  2. The only way to stop this is through human intervention.
  3. But as the machines get smarter, this intervention will increasingly fail.

July 26, 2025

QotD: The accumulated friction of bureaucratic growth

Bureaucracies all succumb very quickly to some kind of “Malthusian progression”. I’m not sure what to call it, I suck at naming stuff (please take your shot in the comments), but you all know what I mean: A bureaucracy’s tasks increase arithmetically, but the amount of effort each task requires increases geometrically.

[…] In the early Republic, raising a legion was as simple as a patrician calling his clients to service, or the Senate issuing a conscription decree. One task: the summoning of free men, with their own equipment, and there you go — Legio I Hypothetica.

By the late Empire, though, all those freeholds had been turned into slave-worked Latifundia, so the effort of raising a legion increased enormously. Now the bureaucracy had to go out and hire freemen (if it could even find them), equip them at State expense, train them (again at State expense), and so on. In itself, the number of tasks isn’t that large — we’ve identified three — and they only increase at the rate of n+1.

But the effort each task requires increases to the power of n, such that if you could somehow express the effort expended in physical terms — joules or kilowatts or whatever — you’d see that the creation of Legio I Hypothetica under Scipio Africanus took 10 kilowatts, while raising the same legion under Diocletian took 10,000,000.

This isn’t (just) corruption. Sure, everyone at every level of the Imperial Bureaucracy was getting his beak wet, that goes without saying, but it’s the nature of bureaucracy itself that’s most to blame.

Severian, “Collapse II”, Founding Questions, 2021-12-09.

July 24, 2025

The vicious competition for Indian civil service jobs

Once upon a time in most of the Anglosphere, the advantage of civil service jobs was that they were nearly impossible to get fired from and had a relatively good pension at the end of a long career. Private sector jobs were far less permanent, but paid more, had better benefits, and more prestige. Over the last fifty years, little of that is still true — civil servants still have fantastic job security, but they’re also better paid, have better benefits, and for many there are opportunities to retire and get re-hired back into a similar position with even higher pay while collecting a generous pension. The private sector no longer pays better nor offers significantly better benefits, so lots of people look to get into the civil service who once would have shunned positions like that.

It’s apparently much worse in India:

In India, government jobs pay far more than equivalent jobs in the private sector — so much so that the entire labor market and educational system have become grossly distorted by rent-seeking to obtain these jobs. Teachers in the public sector, for example, are paid at least five times more than in the private sector. It’s not just the salary. When accounting for lifetime tenure, generous perks, and potentially remunerative possibilities for corruption, a government job’s total value can be up to 10 times that of an equivalent private sector job. (See also here.)

As a result, it’s not uncommon for thousands of people to apply for every government job — a ratio far higher than in the private sector. In one famous example, 2.3 million people submitted applications for 368 “office boy” positions in Uttar Pradesh.

The consequences of this intense competition for government jobs are severe. First, as Karthik Muralildharan argues, the Indian government can’t afford to pay for all the workers it needs. India has all the laws of, say, the United States, but about one-fifth the number of government workers per capita, leading to low state capacity.

But there is a second problem which may be even more serious. Competition to obtain government jobs wastes tremendous amounts of resources and distorts the labor and educational market.

If jobs were allocated randomly, applications would be like lottery tickets, with few social costs. Government jobs, however, are often allocated by exam performance. Thus, obtaining a government job requires an “investment” in exam preparation. Many young people spend years out of the workforce studying for exams that, for nearly all of them, will yield nothing. In Tamil Nadu alone, between one to two million people apply annually for government jobs, but far fewer than 1% are hired. Despite the long odds, the rewards are so large that applicants leave the workforce to compete. Kunal Mangal estimates that around 80% of the unemployed in Tamil Nadu are studying for government exams.

Classical rent-seeking logic predicts full dissipation: if a prize is worth a certain amount, rational individuals will collectively spend resources up to that amount attempting to win it. When the prize is a government job, the “spending” is not cash, but years of a young person’s productive life. Mangal calculates that the total opportunity cost (time out of the workforce) that job applicants “spend” in Tamil Nadu is worth more than the combined lifetime salaries of the available jobs (recall that jobs are worth more than salaries, so this is consistent with theory). Simply put, for every ₹100 the government spends on salaries, Indian society burns ₹168 in a collective effort of rent-seeking just to decide who gets them.

The winners are happy but the loss to Indian society — of unemployed young, educated workers who do nothing but study for government exams — is in the billions. Indeed, India spends about 3.86% of GDP on state salaries (27% of state revenues times 14.3% of GDP). If we take Mangal’s numbers from Tamil Nadu, a conservative (multiplier of 1 instead of 1.68) back-of-the-envelope estimate suggests that India could be wasting on the order of 1.4% of GDP annually on rent-seeking. (Multiply 3.86% of GDP by 15 (30 years at 5% discount) to get lifetime value, and take 0.025 as annual worker turnover.) Take this with a grain of salt, but regardless, the number is large.

July 23, 2025

Javier Milei is delivering “a man-made miracle” for Argentina

Niall Ferguson‘s thread on the social media site formerly known as Twitter, thanks to the Thread Reader App:

While the world fixates on Donald Trump’s populist cocktail of reciprocal tariffs and big, beautiful deficits, @JMilei is delivering a man-made miracle that should gladden the heart of every classical economist and quicken the pulse of all political libertarians.

@JMilei has brought monthly inflation down from 13% to 2%. The economy is now growing at an annual rate of 7%. Investors no longer shun Argentine bonds and stocks — indeed, they were among the best investments you could have made over the past two years. After a brief upward jump, the poverty rate has fallen from 42%, when Milei was elected, to 31%

These are astonishing feats. And they have ramifications that go far beyond South America. Free-market economics and political libertarianism are sometimes dismissed as a fad of the “neoliberal” 1980s, long ago superseded by the new populisms of the left and the right. Not so. The world has never seen a government more radically libertarian than @JMilei. But the amazing thing is not that it is working economically. The true miracle is that Milei’s shock therapy is working politically.

With his leather jacket and late ’60s mop top, @JMilei is part–rock star, part–mad professor, dancing, singing, and screaming his catch phrase: ¡Viva la libertad, carajo! — “Long live liberty, damn it!” It’s as if Joe Cocker had gone onstage at Woodstock and sung “I’ll Get By with a Little Help from My Friedman”. Never in the history of democracy has a tribune of the people won power this way.

July 21, 2025

Was Juan Perón a Fascist? The Cold War Origins of Peronism – W2W 037

TimeGhost History
Published 20 Jul 2025

Was Juan Perón really a fascist, a socialist, or something entirely different? In this episode of War 2 War, we explore the rise of Peronism in post–World War II Argentina and how Perón tried to position his country between the superpowers of the Cold War.

Through labour reforms, nationalist rhetoric, media control, and brutal repression of dissent, Juan and Eva Perón created a powerful populist regime that borrowed ideas from both fascism and socialism, while claiming to reject both. From Argentina’s “Third Way” to its complicated ties with the US, USSR, and even Nazi fugitives, we examine the ideology, contradictions, and legacy of Peronist rule.

Was Peronism a unique form of authoritarian populism, or just another face of fascism?

Join us as we uncover the foundations of Argentina’s Cold War identity and the true political nature of Juan Perón.
(more…)

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