Quotulatiousness

May 23, 2021

Peter Zeihan’s geographic-based perspective on world history

Filed under: Books, Economics, History — Tags: , , , — Nicholas @ 03:00

In another of the reader-contributed book reviews for Scott Alexander’s Astral Codex Ten, a look at The Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder by Peter Zeihan:

Zeihan’s primary models are influenced by his geographic-based perspective on how our world works. As he puts it in the introduction, “Geopolitics is the study of how place [rivers, mountains, etc.] impacts … everything.” Early chapters discuss what he calls the balance of transport, which is roughly easy transport within a country (for economic development and forming political and cultural ties) and hard transport from outside of it (for defense). These transport issues are inherently tied to geography. What’s the best way to move things? Water-based transportation is extremely cheap. Think 17 cents per container mile vs. $2.40 for semis on an American highway, with a more extreme disparity for other countries, trade between continents, and populations in hard-to-access places. On the defensive side of that equation, geographic features on borders such as deserts, mountains, and oceans get Zeihan’s attention.

He uses ancient Egypt to illustrate a great balance of transport. The reliable water and rich soil of the Nile’s floodplains created near-perfect farming conditions, and the Nile itself allowed easy travel and trade throughout the valley. Combined with impenetrable desert borders, this geography “was one of the few places in the world where there was enough water to survive, and enough security to thrive.” Because of that, the “geography nearly guaranteed that the Egyptians would be on the road to civilization.” He gives us a quick run through Egyptian history to tell a story of that road, beginning with the settlement of the area about eight thousand years ago, consolidation into a single kingdom more than five thousand years ago, and then stagnation as the increasingly centralized government devoted more labor to monument building rather than technological progress, eventually being conquered by seafaring people seeking to rule the Mediterranean.

*****

To escape our pre-civilization/hunter-gatherer days – Zeihan refers to this as “when life sucked” – the mechanism that he identifies is basically a typical economist’s story. Sedentary agriculture as invented by the Egyptians and other ancient cultures became a transformative technology, letting populations grow and devote labor and resources to non-farming purposes. From this, we got specialization, increased production, trade (particularly where there was easy transportation – population centers were always near water) and capital formation in a self-reinforcing cycle. For thousands of years after this transformative technology was introduced, incremental improvements in agriculture and other areas followed, but “a robust, secure, and sustainable food supply” was the base of any civilization.

This cycle accelerated when we harnessed a couple of new packages of technologies over the last six-hundred years. He lumps the source of much progress together with the terms deepwater navigation and industrialization. The first is everything needed to sail the seas, from shipbuilding capabilities to compasses to weapons. Industrialization is exactly what you’re thinking of. He simplifies it as the combination of labor and capital with higher-output energy sources like oil and coal to put productivity on steroids.

Zeihan gives us a story of the Ottoman Empire entering a prolonged decline as deepwater navigation technologies took off in the fourteenth century. These technologies enabled the European powers (first Portugal and Spain, and then England) to capture increasing shares of trade with Asia, dropping prices in Europe and depriving the Ottomans of much of the income to which they had grown accustomed. Most significantly, they turned “the ocean from a death sentence to a sort of giant river.” Trade became global, but it was still mostly among people with nearby water-based transportation.

Industrialization technologies changed that. Steam and coal brought power to mining and transportation, and along with interchangeable parts, improved manufacturing. Chemical breakthroughs led to fertilizers (improving crop yields), and with more transportation options, more land was brought into cultivation. Improvements in cements in the 1820s enabled larger buildings and infrastructure. These technologies continually improved the productivity cycle that began with agriculture.

Zeihan concludes a chapter on America with the “nuts and bolts” of how countries rule the world. “The balance of transport determines wealth and security. Deepwater navigation determines reach. Industrialization determines economic muscle tone. And the three combined shape everything from exposure to durability to economic cycles to outlook.” As we’ll see shortly, he really likes America’s position on all of these factors. But first, we need to understand the other analytical tool that informs Zeihan’s model.

May 18, 2021

QotD: The imaginary problem of having “too much” choice

Filed under: Economics, Liberty, Quotations, USA — Tags: , , , — Nicholas @ 01:00

In the early 20th century critics attacked product variety as being wasteful — a sign that markets were less efficient than central planning. Hence, the Chinese wore Mao suits, Americans got uniformly round automobile headlights and British authorities “rationalized” furniture designs.

A famous scene in the film Moscow on the Hudson has Robin Williams as a Soviet immigrant collapsing at the sight of an American coffee aisle, circa 1984. Imagine what would happen in Starbucks.

A free economy multiplies variety, the better to serve buyers with different tastes and different needs and to give people the chance to experience different goods at different times. Arguing that this plenitude is inefficient went out decades ago. The problem with markets, the detractors now say, is that all these choices make us unhappy.

Virginia Postrel, “I’m Pro-Choice”, Forbes, 2005-03-28.

May 14, 2021

Recycling when it makes economic sense? Good. Recycling just because? Not good at all.

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

Tim Worstall explains why a new push to mandate recycling rare earth from consumer electronic devices will be a really, really bad idea … so bad that it’ll waste more resources than are recovered by the recycling effort:

[Indium is] the thing that makes touchscreens work. Lovely stuff. Normally extracted as a byproduct of getting zinc from spharelite. Usual concentrations in the original mineral are 45 to 500 parts per million.

Now, note something important about a by product material like this. If we recycle indium we don’t in fact save any indium from spharelite. Because we mine spharelite for the zinc, the indium is just a bonus when we do. So, we recycle the indium we’re already using. We don’t process out the indium in our spharelite. We just take the same amount of zinc we always did and dump what we don’t want into the gangue, the waste.

So, note what’s happened. We recycle indium and yet we dig up exactly the same amount of indium we always did. We just don’t use what we’ve dug up – we’re not in fact saving that vital resource of indium at all.

[…]

    The number of waste fluorescent lamps arising has been declining since 2013. In 2025, it is estimated there will be 92 tonnes of CRMs in waste fluorescent lamps (Ce: 10 tonnes, Eu: 4 tonnes, La: 13 tonnes, Tb: 4 tonnes and Y: 61 tonnes).

That would be the recovery from all fluorescent lamps in Europe being recycled. In a few – there’s not that much material so therefore only a few plants are needed, meaning considerable geographic spread – plants dotted around.

That’s $50k of cerium, about $100k of europium, $65k of lanthanum, $2.8 million of terbium and $2.2 million of yttrium. To all intents and purposes this is $5 million of material. For which we must have a Europe-wide collection system?

They do realise this is insane which is why they insist that this must be made law. Can’t have people not doing stupid things now, can we?

Just to give another example – not one they mention. As some will know I used to supply rare earths to the global lighting industry. One particular type uses scandium. In a quarter milligram quantity per bulb. Meaning that even with perfect recycling you need to collect 4 million bulbs to gain a kilo of scandium – worth $800.

May 13, 2021

Canada’s (subdued-but-real) class system

Filed under: Cancon, Economics, History — Tags: , , , , , — Nicholas @ 03:00

In The Line, Howard Anglin offers some observations on how Canada’s class system developed and how it can be very roughly delineated:

This comfortably flat image of our social hierarchy, however, belies a more complicated series of gradations that, while clearly marked, are rarely observed and almost never described accurately. Peter C. Newman mapped some of the terrain in his three volumes on The Canadian Establishment, but his account was already dated when he began it in 1975 and it was a work of history rather than social commentary by the time he finished in 1998. [Line editor Jen] Gerson’s own description of the Canadian class system explains why it can be hard for outsiders, and even insiders, to see it: “[W]e manage the cognitive dissonance presented by the haves and have-nots of housing,” she says, “by requiring our rich people to keep quiet. They should wear clothes that are well-cut and well-designed, but not flash. Buy the multi-millionaires car, but paint it in a sedate hue.”

Social sorting is intrinsic to human nature, perhaps even necessary — as the Bard has Ulysses remind us: “Take but degree away … and, hark, what discord follows!” — and it’s here in Canada too, if you look for it. Like the United States, Canadians early on replaced a class system based on titles with one based on the more easily-acquired currency of, well, currency. And, as in America, this immediately created a new opportunity for class to subtly reassert itself.

I used to joke that the only meaningful class division in Canada is whether you use “summer” as a noun or as a verb; lately I’ve developed the Starbucks test. In this analogy, Starbucks is Canada’s middle class, with Tim Hortons and fast food franchise coffee below, and specialty cafes and boutique chains (Matchstick, Phil & Sebastian, Bridgehead) above.

Unlike the crude measure of income, coffee choice better replicates a traditional class system because it carries an implicit sense of social solidarity, cultural assumptions and biases. During the days of the Harper government, Tim Hortons became a symbol to a certain sort of conservative as iconic as the Greek fisherman’s cap is to aging Marxists. The Maple Leaf red cup represented the honest values of rural and suburban working families, in contrast to the globalist elites with their overpriced green Starbucks. Starbucks was sipped at dog parks and served in board rooms; Tim Hortons got the job done on a cold winter morning: it was Don Cherry in a mug.

The Starbucks test is a silly heuristic, but it reveals something about the complex nature of class: an aristocrat may be penniless, and a billionaire may love his Tims. It also puts the middle class back in its traditional place as the uneasy middle-child of the social order.

In the old British system, there was pride in being working class. There was a bond of mutual support that grew out of the shared experience of hard labour and was reinforced by institutions like working men’s clubs, the British Legion, and the trade union movement. The middle-class striver with his airs and pretensions, his flash new car and his evolving accent, was a figure of general mockery, even more to the working men he left behind than to the upper classes he aspired to join. Class was about more than money; it was an identity. And there was nothing that gave you away as middle class more than worrying about being middle class — an anxiety exploited by Nancy Mitford in her tongue-in-cheek guide to “U” and “Non-U” language and behaviour. The Starbucks test reveals something similar, something more reflective of Canada’s reality than the Liberal vision of one big happy middle-class family.

Tim Worstall explained that the British middle class is still despised by the upper class and hated by the lower class. Not a model for encouraging aspirational working class folks to “move up”.

May 7, 2021

The Nazi Invasion of Canada?! – WW2 – On the Homefront 009

Filed under: Britain, Cancon, Economics, History, Military, USA, WW2 — Tags: , , , , , — Nicholas @ 04:00

World War Two
Published 6 May 2021

What would happen if Nazi Germany invaded Canada? You don’t need to imagine. In 1942, the government of Mackenzie King launched a propaganda effort that simulates Canada falling under Hitler’s yoke. Why? For the war economy of course!

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Hosted by: Anna Deinhard
Written by: Fiona Rachel Fischer and Spartacus Olsson
Director: Astrid Deinhard
Producers: Astrid Deinhard and Spartacus Olsson
Executive Producers: Astrid Deinhard, Indy Neidell, Spartacus Olsson, Bodo Rittenauer
Creative Producer: Maria Kyhle
Post-Production Director: Wieke Kapteijns
Research by: Fiona Rachel Fischer
Edited by: Miki Cackowski
Sound design: Marek Kamiński
Map animations: Miki Cackowski and Eastory (https://www.youtube.com/c/eastory​)

Colorizations by:
Adrien Fillon – https://www.instagram.com/adrien.colo…​
Daniel Weiss

Sources:
IWM Art.IWM PST 18495, CH 27, CH 3231, CH 6831, HU 88386, HU 104482
nationaal archief
Photo Album of F.V. Light (1923-2000)

Soundtracks from the Epidemic Sound:
Howard Harper-Barnes – “London”
Johannes Bornlof – “The Inspector 4”
Howard Harper-Barnes – “Prescient”
Max Anson – “Ancient Saga”
Howard Harper-Barnes – “Sailing for Gold”
Philip Ayers – “Please Hear Me Out”
Jo Wandrini – “Puzzle Of Complexity”
Reynard Seidel – “Deflection”
Rannar Sillard – “March Of The Brave 4”
Phoenix Tail – “At the Front”

Archive by Screenocean/Reuters https://www.screenocean.com​.

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

From the comments:

World War Two
1 day ago
As you can see in the video, the efforts to raise money to pay for the war were extremely high. But when we read about the stuff that was going on in Winnipeg on “If-Day”, we were really surprised — talk about “playing” war! Of course, this top-notch high-effort propaganda had quite the impact on the citizens of Winnipeg, because — let´s be honest — who wouldn´t be frightened by any kind of Nazi invasion? And they did not spare any effort to get the details right, too. What is your impression of If-Day? Have you heard of it before? Please let us know in the comments!

Cheers, Fiona

P.S. If you want to watch the short film starring Donald Duck which Anna mentions in the video, click right here: https://www.youtube.com/watch?v=XNMrMFuk-bo&ab_channel=8thManDVD.com%E2%84%A2CartoonChannel

Scott Alexander reviews David Harvey’s A Brief History Of Neoliberalism

Filed under: Books, Economics, History, USA — Tags: , , , , , , — Nicholas @ 03:00

[Update: In the comments, “gunker” explains that this is another of Scott’s reader-contributed book reviews, not one of his own work. My apologies for the mistake.] After a quick rundown of the conventional explanation for the decline and fall of the comfortable post-WW2 US economy in the 1970s, Scott gives an overall appreciation of Harvey’s arguments:

… This treatment is almost the opposite of the way ABHoN describes events. Telling the story this way makes me feel like Jacques Derrida deconstructing some text to undermine the author and prove that they were arguing against themselves all along.

Harvey is an extreme conflict theorist. The story he wants to tell is the story of bad people destroying the paradise of embedded liberalism in order to line their own pockets and crush their opponents. At his best, he treats this as a thesis to be defended: embedded liberalism switched to neoliberalism not primarily because of sound economic policy, but because rich people forced the switch to “reassert class power”. At his worst, he forgets to argue the point, feeling it so deeply in his bones that it’s hard for him to believe anyone could really disagree. When he’s like this, he doesn’t analyze any of the economics too deeply; sure, rich people said something something economics, to justify their plot to immiserate the working classes, but we don’t believe them and we’re under no obligation to tease apart exactly what economic stuff they were talking about.

In these parts, ABHoN‘s modus operandi is to give a vague summary of what happened, then overload it with emotional language. Nobody in ABHoN ever cuts a budget, they savagely slash the budget, or cruelly decimate the budget, or otherwise [dramatic adverb] [dramatic verb] it. Nobody is ever against neoliberal reform — they bravely stand up to neoliberal reform, or valiantly resist neoliberal reform, or whatever. Nobody ever “makes” money, they “extract” it. So you read a superficial narrative of some historical event, with all the adverbs changed to more dramatic adverbs, and then a not-very-convincing discussion of why this was all about re-establishing plutocratic power at the end of it. This is basically an entire literary genre by now, and ABHoN fits squarely within it.

Harvey’s theses, framed uncharitably, are:

1. Embedded liberalism was great and completely sustainable. The global economic system collapsing in 1971 was probably just coincidence or something, and has no relevance to any debate about the relative merit of different economic paradigms.

2. Sure, some people say that the endless recession/stagflation/unemployment/bankruptcy/strikes of the 1970s were bad, but those people are would-be plutocrats trying to seize power and destroy the working class.

3. When cities, countries, etc, ran huge deficits and then couldn’t pay any of the money back, sometimes the banks that loaned them that money were against this. Sometimes they even asked those places to stop running huge deficits as a precondition for getting bailed out. This proves that bankers were plotting against the public and trying to form a dystopian plutocracy.

4. Since we have proven that neoliberalism is a sham with no advantages, we should switch back to embedded liberalism.

Let’s go through these one by one and see whether I’m being unfair.

May 4, 2021

Preparing for the worst (and hoping it won’t happen)

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

I’m generally optimistic about the big picture in any given situation no matter how pessimistic I’m inclined to be on smaller matters and individual details. For this reason, I try not to think too much on just how bad things might get if too many current cultural trends continue as they are. Sarah Hoyt, on the other hand, has some suggestions for getting past any potential social upheavals we may face in the very near future:

If you’re in a major city and I like you, I beg you, with tears in my eyes to get out as soon as you can (and yes, we’re working on it.) Some neighborhoods and places will be safe-ish, but in the US the brunt of the horrific will be in big cities, because that’s what the left thinks MATTERS and where they’ll concentrate their effort.

Forgive me for corporate speak from the nineties, but in this case it applies: their paradigm is broken and they can’t see it because they’ve done everything possible to insulate themselves from input coming from outside the paradigm.

When this happens and the people of the dead paradigm still have some power, the result is kind of like when you fill a container with gasoline, then drop a match in. It’s best to be in the places they think don’t matter.

Other than that: well, you don’t know how interconnected the world supply chains are, until they break. These last two years have been a lesson and no mistake. When I say we’ll unfuck ourselves relatively fast, it doesn’t mean we’ll reverse disastrous globalization in an eye blink. We won’t.

Try to have the things you think you’ll need for five-ten years. That includes newish computers (the silicon crisis is real) perhaps more expensive than you’re used to buying, and raw materials for what you’ll need, from fabric to … I don’t know. Probably not clay. But now might be a bad time to downsize and get rid of that “for company” dish set, depending on your rate of breakage of the everyday one. Lay by paper, too. If we start getting electricity brownouts and blackouts, having stuff you want to keep printed might help.

Food. I don’t need to say it. I think I have maybe enough for a year and a half, though at the end our diet would be mighty strange. But we’re already hearing screams of food supply failure. (I want to get us moved, and start laying in more food. The delays and set backs are driving me nuts.)

And what about the stupid laws proscribing wrong thinkers? For now? Nothing. If you’re hidden and submerged stay that way. Look at it this way: if the people who hid Jews in their attics had come out early to defend them, they too would be in the camps and unable to help. We’re already past the point where “a brave stand” will help. The left knows they’re losing. They can’t understand why, but they know they’re losing, and they’re angry and murderous because of it. And they won’t let go, until it all explodes in their faces. So if you are hidden, stay thus, and get ready to hide people in your metaphorical attic. Because those like me who are exposed, if they have a good bit of luck, just might manage to make it there.

Just prepare, prepare as hard as you can.

You’ll be blindsided. We all will be. Seriously. Books that go through this lie. It’s always more complex and more difficult than you can imagine, and you will be caught off guard.

If you’re lucky, the things you’re caught in won’t kill you.

If we’re all lucky we’ll come out the other side alive and well, most of us. Which is good, because we’ll be needed if we want future generations to grow up under a constitutional republic.

The rest of the world? Foggedaboutit. Not a chance. They’re going to try to crawl back to pre-English enlightenment. Some areas will manage it, too.

For us? I don’t know. There is a chance. Honestly. A chance is all we can ask for.

So, let’s survive and be ready to push the odds. Because the destruction will be everywhere. But the re-building must begin in America.

April 25, 2021

QotD: “The Great Satan”

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

As soon as you see the recommendation from Noam Chomsky on the cover of the book, you can pretty much guess where McQuaig is coming from. I refer to the Chomskyan school of thought as American Monist: in short, the only actor on the world stage is America. It is the sole source of evil and depredation. Everyone else is motivated solely by love and concern for humanity, whilst America is, singularly, motivated only by greed, lust for power and a general animus for all things good, sunny and nice. Only America acts; everyone else is acted upon by the Hegemon, and can’t be blamed for the consequences of their actions. America is the Primus Mobilis. And America is bad. So, for example, the notion that an economy-based increased lust for oil is driving foreign policy is solely a characteristic of America; no other nation on earth appears to give a shit about oil. Certainly not France, Russia or China; McQuaig hardly mentions them. While McQuaig is forced to acknowledge that French, Russian and Chinese support for Saddam (and attendant undermining of UN sanctions) was related in some fashion to the oil deals they had each struck with Iraq, she airily dismisses the role that oil plays in their respective foreign policies. So the “oil as the root of all evil” trope is batted away in the space of two sentences when talking about other countries, but more than 300 pages are required to explain how oil and America are mutually catalyzing demon twins. When the rapaciousness of oil companies is discussed, it is almost exclusively American oil companies which are named; hardly ever any of the European, Russian or other oil companies. Because those other oil companies don’t possess the true indicia of evil, you see: they don’t stamp their barrels “Made in the USA”.

Bob Tarantino, “LIB Review: It’s the Crude, Dude”, Let It Bleed, 2005-03-05.

April 21, 2021

Hitler’s Money and How He Stole It – WW2 Special

Filed under: Economics, Germany, History — Tags: , , , , , , — Nicholas @ 04:00

World War Two
Published 20 Apr 2021

On paper, Hitler never made a lot of money. Yet he became one of the wealthiest people of his time. This is how he stole his fortune.

Between 2 Wars: Zeitgeist!
https://www.youtube.com/watch?v=KThHc…​
Hitler Never Gave the Order – So Who Did? – WW2 Special
https://www.youtube.com/watch?v=uQsGU…​
The Nazis: Most Notorious Art Thieves in History – WW2 Special: https://www.youtube.com/watch?v=tXvo-…​
Why the Nazis Weren’t Socialists – “The Good Hitler Years” | BETWEEN 2 WARS I 1937 Part 2 of 2
https://www.youtube.com/watch?v=YHAN-…​

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Follow WW2 day by day on Instagram @ww2_day_by_day – https://www.instagram.com/ww2_day_by_day
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Source list: http://bit.ly/WW2sources
—
Hosted by: Spartacus Olsson
Written by: Joram Appel and Spartacus Olsson
Director: Astrid Deinhard
Producers: Astrid Deinhard and Spartacus Olsson
Executive Producers: Astrid Deinhard, Indy Neidell, Spartacus Olsson, Bodo Rittenauer
Creative Producer: Maria Kyhle
Post-Production Director: Wieke Kapteijns
Research by: Joram Appel
Edited by: Karolina Dołęga
Sound design: Marek Kamiński

Colorizations by:
– Daniel Wiess
– Dememorabilia – https://www.instagram.com/dememorabilia/​
– Klimbim

Sources:
Picture of building appartement on Prinzregentenplatz 16, Munich in 1910. courtesy of Stadtarchiv München, DE-1992-FS-NL-PETT1-2847 https://stadtarchiv.muenchen.de/scope…​
– Bundesarchiv
– National Archives NARA
– Imperial War Museum: IWM Art.IWM PST 4099
– United States Holocaust Memorial Museum
– Narodowe Archiwum Cyfrowe
– Nationaal Archief
– The picture of the Eagle’s Nest in 2020 courtesy of Marcus Hebel from Wikimedia – https://commons.wikimedia.org/wiki/Fi…​
– The picture of the Eagle’s Nest in 2014 courtesy of Nordenfan – from Wikimedia https://commons.wikimedia.org/wiki/Fi…​
– Icons from The Noun Project: barracks by Smalllike, Cook by Alice Design, Farm by Laymik, football field by Mavadee, House by Abhimanyu Bose, Kitchen by RD Design, Library by Adrien Coquet, Housekeeper by Richie Romero, Old Car by Halfazebra Studio, Pool by Loritas Medina, Projector by Ralf Schmitzer, Waiter by chris dawson, Woman by Deemak Daksina, Woman by Wilson Joseph, Woman hat by Xinh Studio, Woman With a Hat by Graphic Enginer

Soundtracks from Epidemic Sound:
– “The Inspector 4” – Johannes Bornlöf
– “London” – Howard Harper-Barnes
– “Other Sides of Glory” – Fabien Tell
– “Rememberance” – Fabien Tell
– “Deviation In Time” – Johannes Bornlof
– “Break Free” – Fabien Tell
– “March Of The Brave 10” – Rannar Sillard – Test
– “Ominous” – Philip Ayers
– “Symphony of the Cold-Blooded” – Christian Andersen
– “Please Hear Me Out” – Philip Ayers

Archive by Screenocean/Reuters https://www.screenocean.com​.

A TimeGhost chronological documentary produced by OnLion Entertainment GmbH.

“The error in Western thinking was to view CCP officials as civilised counterparts”

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

In Quillette, Aaron Sarin traces the last twenty years of successful diplomacy, industrial espionage, and ever-increasing CCP media influence in China’s relationships with western nations:

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.

By the end of 2020, China’s relationships with the US and Australia had reached their lowest point in living memory, while Sino-British relations weren’t far behind. Yet the European Commission chose this moment to sign a major new investment treaty with Beijing. The deal appeared to have been rushed to completion just before Joe Biden’s inauguration, as if to avoid the fuss that a new American administration would be sure to make. Indeed, incoming National Security Adviser Jake Sullivan felt sore enough to send a pointed tweet: “The Biden-Harris administration would welcome early consultations with our European partners on our common concerns about China’s economic practices.”

The truth is that Brussels has been drifting further and further from Washington ever since the election of Donald Trump, and there are few signs the winds will change now that Biden has taken office. In 2017, Merkel said that Europe could no longer rely on America. By 2020, it seemed truer to say that Europe would rely on China from now on. Indeed, diplomats like Emmanuel Bonne (Macron’s foreign policy adviser) have been most enthusiastic about “France’s readiness to step up strategic communication with China.” In his gushing deference, Bonne can sometimes sound like a man with a gun to his head: “France respects China’s sovereignty, appreciates the sensitivity of Hong Kong-related issues, and has no intention of interfering in Hong Kong affairs.” There are times when the language of neutrality reveals with painful clarity that a side has been chosen.

Brussels officials talk of “strategic autonomy,” of course. They hope to carve out a path to self-sufficiency while at the same time enjoying mutually beneficial relationships with partners like Beijing. The problem is that mutually beneficial relationships are not possible with predators. As successive American administrations have found, those who maintain close connections with the Communist Party will eventually suffer large-scale intellectual property theft and the loss of millions of manufacturing jobs.

Brussels can hardly expect that Beijing will respect this new agreement. Recall the various promises that were made regarding Hong Kong: all of them were broken. Party officials may have signed a legal document recognising the city’s special administrative status, but this was purely for show. In 2017, having apparently now ascended to a position above the law, they declared that the document had “no practical significance.” Remember how Barack Obama was given firm assurance that Beijing would never militarize the South China Sea? There were handshakes and smiles all round, and then Beijing proceeded to militarize the South China Sea.

Indeed, some of the commitments included as part of the new deal echo those made 20 years ago, when China first joined the World Trade Organisation. It was agreed in 2001 that prices in every sector would be determined by market forces; that state-owned enterprises would begin operating free of state influence; that international norms regarding intellectual property would be respected; and so on. After two decades, we can see that the Communist Party has kept not one of its promises.

The error in Western thinking was to view CCP officials as civilised counterparts. We failed to see that we were dealing with a pack of thugs and grifters — men for whom the rule of law is neither reality nor ideal, but façade. This lesson has now been learned in some quarters, but clearly not in the upper echelons of the European Union. This new investment deal even includes a reference to “commitments on forced labour,” which is little short of an insult when we consider the hundreds of thousands of Uyghurs who have been made to toil all day till dusk in the cotton fields of Xinjiang. The truth is that the EU has been fooled. There will be no “win-win situation.” Not when dealing with the Communist Party, which has always viewed geopolitics as a zero-sum game. In the words of Bilahari Kausikan, once Singapore’s top diplomat, “only the irredeemably corrupt or the terminally naïve take seriously Beijing’s rhetoric about a ‘community of common destiny.'”

April 18, 2021

QotD: Two centuries on, Ricardo still right

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

One of David Ricardo’s foundational assertions was the law of one price. That tradeable goods will cost the same, when their transport costs are included, in different places. The insight being that if they weren’t then people would buy in one, sell in the other, thereby equalising prices. A reasonable corollary to this idea is that exchange rates should move based upon purchasing parity or interest rate parity. The second is because people can move their money, just like anything else, to arbitrage between prices – here, the interest rate. The other because, well, that’s what arbitrage will do, equalise those PPP exchange rates. Not wholly, not perfectly, but roughly enough.

Tim Worstall, “Ricardo Still Right 201 Years Later”, Continental Telegraph, 2018-11-01.

April 17, 2021

Considering the costs and benefits of extreme specialization

Filed under: Economics — Tags: , , , , — Nicholas @ 03:00

In the latest post on Matt Gurney’s Code 47 Substack blog, he considers the trade-off between population density and the range of specialization that can be supported at various densities:

“Model A Ford in front of Gilmore’s historic Shell gas station” by Corvair Owner is licensed under CC BY-SA 2.0

I wish I remembered where I read this. It was a book I was blowing through for a university paper; only one chapter was really of interest to me when I was trawling for footnotes but I stumbled upon an interesting section that talked about services and specialization in a modern economy. The author offered a simple explanation of service specialization that I’ve never forgotten. Imagine a village with 100 people, the author said. Now imagine what services are available there. There’s probably a gas station, and maybe you can get a few services done to your car there, too. Basic repairs. Tire rotations. Oil changes. Things like that. There’s probably also a convenience store, and the store might also have a place to send or receive mail, or maybe even to rent a movie. (Back when that was a thing we did.) You might have a coffee shop of some kind, maybe a diner. But that’s marginal. You almost certainly don’t have a school, full post office, bank branch or medical centre of any kind. Not in a village of 100 people.

When you itemize out all the services you can get, it’s probably about five or maybe 10 — gas pumped, tires changed, oil changed, basic engine repairs, store clerk, movie rental, mail sent and received. Maybe someone to pour you a cup of coffee and get you a sandwich — but only maybe. The point isn’t to be precise in our list or count, but just to contemplate the relationship between the population and the number and type of available services.

Now scale that village up 10 fold, the author said. Now it’s a town of 1,000. The number of services explodes. You still have everything you did before. But now you’ve also got specialized shops, restaurants, a bank or two (and all the services they provide), probably a house of worship, medical services of various kinds (including eye care, dentistry, etc), personal-care services, better access to home and lawn care, various repair and maintenance service, technical services, a post office … the list goes on. You also start to see competition and the efficiency that brings — our village of 100 would have a gas station and a convenience store (quite possibly at the same location!). But our town of 1,000 would have a few of each. You’d get more services, and start to see prices dropping for the commonly available offerings.

You get the idea — the more you scale up a population, the more specialized services that are available and the more accessible they become. And this includes not just categories of service, but also increasing degrees of specialization. Our village of 100 probably has no full-time doctor. Our town of 1,000 probably has a family physician. But after we bump things up to 10,000, 100,000 and then a million people, we’re getting not just doctors, but highly trained, specialized physicians, surgeons and diagnosticians. Our town of 1,000 has a dentist, but our city of a million has dental surgeons who’ve specialized in repairing specific kinds of trauma and injury.

Anyway. I don’t remember what book this was from. But I do remember this short section. I think about it a lot. We Canadians of 2021 are, for the most part, hyper-specialized. I’ve written columns about this before, including this one from 2019, which I’m going to quote liberally below:

    Human history is, in one simplified viewing, the story of specialization. As our technology advanced, a smaller and smaller share of the labour pool was required just to keep everyone alive. Perhaps the easiest way to summarize this is to note that 150 years ago, even in the most advanced industrial countries, something close to 50 per cent of the population was directly engaged in agriculture — half the people tilled fields so the other half could eat. Today, in both Canada and the United States, it’s closer to two per cent — one person’s efforts feed 49 others. Those 49 can pursue any of the thousands of specialized jobs that allow our technological civilization to exist. … Those 49 people are our artists and doctors and scientists and teachers. Human advancement depends on this — a civilization that’s scrambling to feed itself doesn’t build particle colliders or invent new neonatal surgeries and cancer-stopping wonderdrugs.

I stand by those remarks. But I’ve been pondering them of late with a different perspective. I’ve spent much of this week talking with doctors and medical experts in Ontario, where the third wave of COVID-19 is threatening to overwhelm the health-care system, with tragic results. And one recurring theme that comes up in these conversations is how this disaster is going to take place almost entirely out of public view. There won’t be any general mobilizations or widespread damage. People are going to die, behind closed doors or tent flaps, and other people will be forever scarred by their inability to save those people. But for most of us — those who aren’t sick, or highly specialized medical professionals — life is going to be something reasonably close to normal.

April 15, 2021

QotD: The “evil” of profits

Filed under: Business, Economics, Germany, Government, Quotations, Russia, USA — Tags: , , , , — Nicholas @ 01:00

The slogan into which the Nazis condensed their economic philosophy, viz., Gemeinnutz geht vor Eigennutz (i.e., the commonweal ranks above private profit), is likewise the idea underlying the American New Deal and the Soviet management of economic affairs. It implies that profit-seeking business harms the vital interests of the immense majority, and that it is the sacred duty of popular government to prevent the emergence of profits by public control of production and distribution.

Ludwig von Mises, Planned Chaos, 1947.

April 12, 2021

“War Communism” in the Soviet Union, 1917-1921

Filed under: Economics, History, Russia, WW1 — Tags: , , , , , — Nicholas @ 03:00

J.W. Rich outlines the economic and humanitarian disaster of Soviet “War Communism” that eventually forced Lenin to bring back some limited elements of capitalism to save the country:

In 1917, the Bolsheviks seized power in Moscow after the deposition of the democratic provisional government which had replaced the Tsar. However, the Bolsheviks’ hold on power was far from secure. There was little affection anywhere for the Tsar, but there was no agreement on what form of government should replace the monarchy. Bolshevism had been on the rise for years, but ideas of democracy and liberalism were gaining popularity as well. Shortly after the 1917 revolution, the Russian Civil War broke out between the Reds, the Bolsheviks, and the Whites, a coalition of anti-Bolsheviks that were generally democratic.

Through the course of the civil war, the Bolsheviks gained more power and control over increasingly large amounts of Russia. With this control, they began to implement their Marxist economic ideas into reality. On January 28, 1918, it was decreed that all factories should be directed by state-appointed managers. In effect, this amounted to a near-complete nationalization of industry. In one fell swoop, the vast majority of the production of Russia’s consumer goods was now under the purview and direction of the state.

On May 9, 1918, a grain monopoly was announced over grain production in the country. All grain harvested across the country was now the property of the state. This was extended even further when a general food levy was announced in January 1919. Any and all food was now the property of the state. In addition, local farm authorities were no longer allowed to set the levy based on harvest estimates. In essence, the state would take however much it wanted from the peasants without any concern if they had enough food to feed themselves and their families.

It was at this point that large-scale forced rationing was introduced. Money was made worthless overnight as ration cards were mandated to the entire population. No longer could you buy whatever you wished with the money you had. The goods allocated for you were predetermined on your ration card.

By late 1920, going into 1921, the Russian Civil War was all but over. The Whites had been soundly defeated by the Reds, giving the Bolsheviks control of nearly the entirety of the country. However, despite the victory in the Civil War, the economy at home was beginning to fall apart. Industrial production was at 20% of pre-war levels by 1920. As a result of this lagging production, there were few goods in the cities available. This resulted in a flight from the cities to the countryside. From 1918 to 1920, eight million people emigrated from the cities to the villages, where there was better hope of finding food or some goods. In Moscow and Petrograd, the population declined by 58.2%

The agricultural situation was not much better. Sheldon Richman records that from 1909-1913, gross agricultural output averaged 69 million tons. By 1921, it was just 31 million. From 1909-1913, sown area was over 224 million acres. In 1921, only 158 million acres were sown. This lack of food resulted in a mass loss of population. From 1917 to 1922, the entire population declined by 16 million, not counting immigration and deaths from the civil war.

War Communism was now fully implemented and the Marxist aspirations of Lenin and the Bolsheviks were now fulfilled. For the people that had to live under War Communism, however, the conditions had become intolerable. In February 1921, labor strikes began to emerge all over Russia. With the end of the civil war and living standards continuing to fall, resistance to the Bolsheviks began to spread throughout the country. Moscow was the first city to strike, with other large cities, such as Petrograd, following. The protestors demanded an end to War Communism and a restoration of private enterprise and civil liberties, such as the freedom of speech and assembly.

The protests escalated when the Kronstadt Naval Base mutinied against the government. Once a bastion of Bolshevik support and fervor, the sailors joined with the laborers in demanding reform and change. A force led by Trotsky was dispatched to deal with the mutiny, but Lenin knew that change was needed. The writing was on the wall for War Communism.

QotD: Four lessons on free trade

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

Here are the main points of the Bank of Canada’s lessons in free trade. It starts off with a bang. “Trade is dominating the news these days. With the barrage of headlines and the talk about protectionism and tariffs, it’s easy to forget that much of our economic growth and prosperity comes from international trade.”

Below are the lessons, taken almost entirely verbatim from the bank’s online lesson (except where I’ve provided a bit of additional description). It’s a terrific lesson and all within a mere 1,400 words and a short video.

Lesson 1: All parties reap the rewards of free trade.

Specialization means focusing on what each country produces most efficiently and trading for the rest. And because specialization is more efficient, it creates more wealth than if each country tried to do it all on its own. International trade is no different from domestic specialization and internal trade — few of us grow our own food or do our own dry cleaning. Instead, we specialize and trade. The lesson includes a short cartoon video featuring “Mark and Lucy” — aimed at kids but worth a presidential view — that explains the concepts of comparative advantage and opportunity costs.

Lesson 2: Trade protectionism makes everyone worse off.

While freer trade — in both exports and imports — makes us better off, the opposite is also true. Barriers to free trade, such as tariffs, have a negative impact on our economic well being.

Lesson 3: The pie isn’t divided equally.

Freer trade has raised incomes across the global economy, but it has not benefited everyone. Countries engaged in free trade are better off overall, but some sectors and communities within countries have suffered. Governments have used policies such as ongoing learning and retraining programs to help affected workers adjust. This a better approach than shrinking the pie through trade protection. That would be worse for everyone.

Lesson 4: Trade deficits and surpluses are not a scorecard.

It’s important to debunk the myth that cheap imports are the cause of all the pain and that a trade deficit with another country is a bad thing. Looking at trade balances between a country and its trade partners, we should expect to see surpluses with some and deficits with others. This is specialization in action.

Terence Corcoran, “Amazing! Canada has one government department that actually comprehends free trade!”, Financial Post, 2018-10-04.

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