Michael Pettis's brief review of American Development economic history and lessons for China's current developments. Lots of discomforting thoughts. Of course, also too general and not quantified enough for effective implementation, but then, so's much of political economics, I guess :D
Victor Davis Hanson's essay on the culminating changes of the past few years in America. More discomforting thoughts.
The pending European currency crisis will probably be the trigger of worldwide economic tumult, but whether China or the US goes second is the key question for the rest of us. Arguably the market is already pricing in the European currency collapse, but the order of the subsequent crises will drive how you should prepare. If America goes second, then we simply need to preposition our savings and wait out the American inflation. If China goes second, however, there will be geopolitical disruptions in addition to an American recession, which argues for a different savings allocation.
Showing posts with label multi-polar. Show all posts
Showing posts with label multi-polar. Show all posts
Sunday, February 24, 2013
Thursday, March 31, 2011
Libya and Nation-State Paradigm
Well, the Obama administration sure did dodge a big fat bullet there w/ the Libya crisis. Before the passage of the UN Security Council resolution, the Benghazi people did everybody a favor by declaring independence from the Qaddafi regime. With a nominally state structure, we are now able to negotiate with Benghazi for aid and assistance. The US didn't have to figure out how to deal with a non-state actor.
But the question remains un-resolved. If Benghazi did not declare independence, could the US provide overt assistance such as a publicized shipment of ammunition? Like I said earlier, the CIA could provide covert assistance when Obama signs a presidential finding, but not the Defense Department. The weapon export regulatory regime (ITAR) requires a specific, drawn-out process to make this overt assistance happen. With this drawn out process, Congress would get involved, slowing things down further.
Maybe this Libya adventure will provide the legislative impetus for Congress to start working this problem.
But the question remains un-resolved. If Benghazi did not declare independence, could the US provide overt assistance such as a publicized shipment of ammunition? Like I said earlier, the CIA could provide covert assistance when Obama signs a presidential finding, but not the Defense Department. The weapon export regulatory regime (ITAR) requires a specific, drawn-out process to make this overt assistance happen. With this drawn out process, Congress would get involved, slowing things down further.
Maybe this Libya adventure will provide the legislative impetus for Congress to start working this problem.
Wednesday, February 9, 2011
Book Review: John Reed's Hyperinflation
I wrote this awhile ago. I just started a new job, hence the lack of activities recently. Anyway, here it is.
When I found out that John T Reed was writing a book on Hyperinflation and Deflation, I was really excited. His book, Succeeding, was a true self-help book that focuses on working hard, saving money, and doing the right things. He writes clearly, with a minimum of flowery language, and includes checklists and other tools to help readers implement his advice. His preview articles on this subject promised unconventional advice on coping with currency fluctuations.
I pre-ordered 2 copies, and they arrived right after the release date. The book starts off with a review of the current state, a history of hyperinflation and deflation, and then Reed's financial countermeasures. The book is clear and well-written, with Reed's characteristically critical tone. It is an engaging read.
If you have read Laurence Kotlikoff's The Coming Generational Storm: What You Need to Know about America's Economic Future
, then you are familiar with the scale of the US financial liabilities. [IE, The US owes more in current and future obligations (Medicare/Social Security) than it will ever have the money to pay off.] In fact, Reed cites Generational Storm as a major source in the book. However, if anything, Kotlikoff understates the problem, if that was possible, as Reed made abundantly clear. The only saving grace for the US is that the rest of the world is worse off than the US. Conversely, the US's critical economic position means America will amplify the economic crisis and spread it to the rest of the world. Regardless, the 'flations are coming soon, and all investors need to hedge the 'flations.
Reed's financial countermeasures are definitely unconventional. He explained in great detail his reasonings, and cited multiple sources to back it up. His chapter on precious metals goes against most writings on the subject [of both pro & con], but will help you avoid trouble with future legislation and law enforcement. The current brouhaha over the 1099-Misc. $600 requirement (Obamacare) is just a portent of the negatives of a PM-only strategy. Reed is not avoiding PMs altogether, but is serving as a corrective against the lazy-thinking behind a PM-only strategy. In a 'flationary environment, governments inevitably restrict usage of precious metals instead of currency. Therefore, the prudent investor has to rely on other countermeasures to adequately hedge against the 'flations.
Every prudent investor needs a copy of John Reed's Hyperinflation & Deflation. His book is still timely and will help you survive the 'flations.
------------
I wrote that 4 months ago (Sep'2010). Since then, the economy has improved slightly, making 'flationary concerns less pressing to most of you. However, the fundamentals has not changed. The US Dollar is still unsound. As Reed recently commented, the current debt ceiling debate in Congress is a good opportunity to fix our problems, but that Congress will sadly squander. With the improving stock market, it is a good time for many investors to diversify their recovered portfolio into the other assets Reed recommends. Now is the time. Like the Chinese saying, "Short pain is better than long pain."
For all readers, Fernando Aguirre's The Modern Survival Manual: Surviving the Economic Collapse
is a good complement to Reed's Hyperinflation. Aguirre provides a good ground-level view of an economic collapse, and gives you a good understanding of the interplay of recession, hyperinflation, and deflation. Aguirre offers other good tips on preparing for a 'flationary future. His blogs are good to keep up with.
For readers interested in the academic background on the American debt obligations, Generational Storm, though dated (2005), still offers a good backgrounder. It explains the math, too. Kotlikoff's recent
works
could be good reading, too.
When I found out that John T Reed was writing a book on Hyperinflation and Deflation, I was really excited. His book, Succeeding, was a true self-help book that focuses on working hard, saving money, and doing the right things. He writes clearly, with a minimum of flowery language, and includes checklists and other tools to help readers implement his advice. His preview articles on this subject promised unconventional advice on coping with currency fluctuations.
I pre-ordered 2 copies, and they arrived right after the release date. The book starts off with a review of the current state, a history of hyperinflation and deflation, and then Reed's financial countermeasures. The book is clear and well-written, with Reed's characteristically critical tone. It is an engaging read.
If you have read Laurence Kotlikoff's The Coming Generational Storm: What You Need to Know about America's Economic Future
, then you are familiar with the scale of the US financial liabilities. [IE, The US owes more in current and future obligations (Medicare/Social Security) than it will ever have the money to pay off.] In fact, Reed cites Generational Storm as a major source in the book. However, if anything, Kotlikoff understates the problem, if that was possible, as Reed made abundantly clear. The only saving grace for the US is that the rest of the world is worse off than the US. Conversely, the US's critical economic position means America will amplify the economic crisis and spread it to the rest of the world. Regardless, the 'flations are coming soon, and all investors need to hedge the 'flations.Reed's financial countermeasures are definitely unconventional. He explained in great detail his reasonings, and cited multiple sources to back it up. His chapter on precious metals goes against most writings on the subject [of both pro & con], but will help you avoid trouble with future legislation and law enforcement. The current brouhaha over the 1099-Misc. $600 requirement (Obamacare) is just a portent of the negatives of a PM-only strategy. Reed is not avoiding PMs altogether, but is serving as a corrective against the lazy-thinking behind a PM-only strategy. In a 'flationary environment, governments inevitably restrict usage of precious metals instead of currency. Therefore, the prudent investor has to rely on other countermeasures to adequately hedge against the 'flations.
Every prudent investor needs a copy of John Reed's Hyperinflation & Deflation. His book is still timely and will help you survive the 'flations.
------------
I wrote that 4 months ago (Sep'2010). Since then, the economy has improved slightly, making 'flationary concerns less pressing to most of you. However, the fundamentals has not changed. The US Dollar is still unsound. As Reed recently commented, the current debt ceiling debate in Congress is a good opportunity to fix our problems, but that Congress will sadly squander. With the improving stock market, it is a good time for many investors to diversify their recovered portfolio into the other assets Reed recommends. Now is the time. Like the Chinese saying, "Short pain is better than long pain."
For all readers, Fernando Aguirre's The Modern Survival Manual: Surviving the Economic Collapse
is a good complement to Reed's Hyperinflation. Aguirre provides a good ground-level view of an economic collapse, and gives you a good understanding of the interplay of recession, hyperinflation, and deflation. Aguirre offers other good tips on preparing for a 'flationary future. His blogs are good to keep up with.For readers interested in the academic background on the American debt obligations, Generational Storm
, though dated (2005), still offers a good backgrounder. It explains the math, too. Kotlikoff's recent works could be good reading, too.
Monday, October 11, 2010
Naval Strategy and South China Sea
This article in Asia Times adds to our understanding of nationalist elements in Japan politics. The writer's pro-China bias is so thick that even I could pick it up, but he makes clear the current [and maybe emergent] Japanese strategy: Aggressively patrols the Senkaku Islands as territorial waters, but not crossing the bright line of settling the islands. Japan's strategic concern is in not antagonizing Taiwan on the Diaoyutai issue, which can strengthen the pro-unification camp in Taiwan. [The independence movement in Taiwan is pro-Japan for historical and geo-strategic reasons.] If Taiwan ever reunifies, Japan will settle the Senkakus in a heartbeat.
More broadly, Japan's overtures to Vietnam, and Phillipine's ASEAN rebuke to Sec. Clinton's South Sea remakrs, underscores an interesting anti-colonial dynamic [for lack of a better word] at play in South East Asia. [The Hate Triangle that is North East Asia is well-documented.]
In all ASEAN states [except Singapore and maybe Brunei], there are strong sentiments and biases against both China and America. [A bit of Japan, too, but that's faint compared to the other two.] The Chinese outposts in the South Sea are sore spots to the surrounding countries, but their people don't like the Americans, either. For example, Vietnam would really prefer Russia over the US in balancing China, but Russia cannot do more than sell weapons at present. In fact, Russia wants to refurbish Cam Ranh Bay, but we'll see if it actually happens. Up Country portrays well both the strategic inevitability of a US-Vietnam security alliance, and Vietnamese reluctance to do so.
Phillippines has been pissed off about the American evacuation of Clark Air Base in 1991. Its intelligentsia are suspicious of America over its support of Marcos regime. Indonesia has regional aspirations, colonial baggage, past military dictatorships, and an Islamic identity, all of which build the above bias as well.
All this is to say that the US may have no "entry point" into a Battle of the South Sea. While the US has a freedom of navigation concern, the combatants (China + one more) will not want its help in resolving the battle. The most likely scenario is where the US Navy escorts neutral convoys together with Singapore and Japan, a la the Tanker War'84-88. The escort scenario will require several squadrons of FFGs, which the US Navy is retiring soon.
Most of the popular South Sea scenarios envision the US taking a combatant role against China's southern fleet, which in turn feeds into the general support for more destroyers and aircraft carriers. However, the political emphasis on the higher end of the Navy is unbalancing it for meeting the full spectrum of requirements. The combatant scenario is but one of the possible futures of the South Sea. Another equally likely future is the above escort scenario. Convoy escort is generally the duty of frigates, but we are coming up against a frigate gap. The current difficulties of the Littoral Combat Ships program means it may be cut short. It will take time to start up a replacement frigate program. So there may be a long gap between the retirement of the last Perry and the introduction of the next frigate, in the near future. If the South Sea Battle falls during this gap, the US Navy will have to commit our Aegis destroyer squadrons [which are national strategic assets for missile defense] for convoy duty, which is a much lower strategic priority. So the USN is on the trajectory toward a disastrous South Sea.
[The LCS as currently configured is completely incapable of convoy air defense, and only possibly capable of the convoy ASW, pending its ASW module.]
Another question we need to answer is the strategic priority of the South Sea itself. With the opening of the Northwest Passage, the South Sea is no longer the petrol lifeline of Japan. Australia, another ally, does not depend on the South Sea for petroleum. Other than the possibility of oil, and the general global commerce, why should the US care about the South Sea?
The popular South Sea combatant scenarios may be the manifestations of a US Navy in search of a strategic purpose. The continuing focus on a "near peer competitor", aka China, is unbalancing the US Navy from its other strategic priorities, as I outlined above. We need some sanity over this piece of ocean, at least in the US. That the ASEAN states go crazy over the submerged atolls there does not mean it will start World War III. The most important role for the US is to contain the conflict, and compartmentalize its effects from the rest of the world. With a robust convoy escort capability, we can minimize the harm of a shooting war on global commerce, and avoid foreign entanglements. The Senkaku flare up reminds us all that there are no easy territorial disputes left in the world. All of the remaining territorial disputes have no clear title holders; every claimant has a legitimate claim to the title. The rest of the world should not suffer from these petty title fights.
More broadly, Japan's overtures to Vietnam, and Phillipine's ASEAN rebuke to Sec. Clinton's South Sea remakrs, underscores an interesting anti-colonial dynamic [for lack of a better word] at play in South East Asia. [The Hate Triangle that is North East Asia is well-documented.]
In all ASEAN states [except Singapore and maybe Brunei], there are strong sentiments and biases against both China and America. [A bit of Japan, too, but that's faint compared to the other two.] The Chinese outposts in the South Sea are sore spots to the surrounding countries, but their people don't like the Americans, either. For example, Vietnam would really prefer Russia over the US in balancing China, but Russia cannot do more than sell weapons at present. In fact, Russia wants to refurbish Cam Ranh Bay, but we'll see if it actually happens. Up Country portrays well both the strategic inevitability of a US-Vietnam security alliance, and Vietnamese reluctance to do so.
Phillippines has been pissed off about the American evacuation of Clark Air Base in 1991. Its intelligentsia are suspicious of America over its support of Marcos regime. Indonesia has regional aspirations, colonial baggage, past military dictatorships, and an Islamic identity, all of which build the above bias as well.
All this is to say that the US may have no "entry point" into a Battle of the South Sea. While the US has a freedom of navigation concern, the combatants (China + one more) will not want its help in resolving the battle. The most likely scenario is where the US Navy escorts neutral convoys together with Singapore and Japan, a la the Tanker War'84-88. The escort scenario will require several squadrons of FFGs, which the US Navy is retiring soon.
Most of the popular South Sea scenarios envision the US taking a combatant role against China's southern fleet, which in turn feeds into the general support for more destroyers and aircraft carriers. However, the political emphasis on the higher end of the Navy is unbalancing it for meeting the full spectrum of requirements. The combatant scenario is but one of the possible futures of the South Sea. Another equally likely future is the above escort scenario. Convoy escort is generally the duty of frigates, but we are coming up against a frigate gap. The current difficulties of the Littoral Combat Ships program means it may be cut short. It will take time to start up a replacement frigate program. So there may be a long gap between the retirement of the last Perry and the introduction of the next frigate, in the near future. If the South Sea Battle falls during this gap, the US Navy will have to commit our Aegis destroyer squadrons [which are national strategic assets for missile defense] for convoy duty, which is a much lower strategic priority. So the USN is on the trajectory toward a disastrous South Sea.
[The LCS as currently configured is completely incapable of convoy air defense, and only possibly capable of the convoy ASW, pending its ASW module.]
Another question we need to answer is the strategic priority of the South Sea itself. With the opening of the Northwest Passage, the South Sea is no longer the petrol lifeline of Japan. Australia, another ally, does not depend on the South Sea for petroleum. Other than the possibility of oil, and the general global commerce, why should the US care about the South Sea?
The popular South Sea combatant scenarios may be the manifestations of a US Navy in search of a strategic purpose. The continuing focus on a "near peer competitor", aka China, is unbalancing the US Navy from its other strategic priorities, as I outlined above. We need some sanity over this piece of ocean, at least in the US. That the ASEAN states go crazy over the submerged atolls there does not mean it will start World War III. The most important role for the US is to contain the conflict, and compartmentalize its effects from the rest of the world. With a robust convoy escort capability, we can minimize the harm of a shooting war on global commerce, and avoid foreign entanglements. The Senkaku flare up reminds us all that there are no easy territorial disputes left in the world. All of the remaining territorial disputes have no clear title holders; every claimant has a legitimate claim to the title. The rest of the world should not suffer from these petty title fights.
Friday, October 1, 2010
Senkaku/Diaoyutai, and Reflections on Maritime Low-Intensity Warfare
Watching the Senkaku dispute, one is reminded of the passion people feel toward land, especially a piece of land that most people have never seen and almost uninhabitable. That people can feel so passionate of land speaks ill toward conflicts like the Israeli-Palestinian struggle.
What is the next step? In the Hobbesian world of international relations, possession is 90% of the game. Japan had erected markers and a lighthouse on Diaoyutai, but has no permanent presence on the islands. Therefore, the first actor to "settle" the islands will resolve the dispute in his favor.
Indeed, as NightWatch reports, Japan is considering stationing troops.
I thought China might deploy the PLA to garrison the islands much like it did in the south china sea, but this article suggests that China may not have the will to escalate.
A unilateral occupation of any island [of the 4 "habitable" ones] will trigger a military race to settle the other 3 islands. The second mover will also embargo the opposing garrisons to "freeze" the situation, pending diplomatic resolution. Both sides will try to re-supply their marines on shore. A naval confrontation is inevitable in this scenario. Due to the distance, neither side is capable of enforcing an aerial embargo for long, so aerial resupply will keep the garrisons at survival level.
[If Japan moves first, Taiwan will face political pressure to deploy as well. Such a three-way race risks driving Taiwan away from Japan, which may be one of the few current constraints holding Japan back.]
In this scenario of unilateral settlements, a military confrontation at sea will quickly reach a new local equilibrium, absent political wills for war. If domestic pressures increase, the political leadership may seek points through this escalation.
One further point on this military confrontation: To enforce the naval embargo against resupply, ramming will be the predominant tactic. As I mentioned previously, ocean-going tugboats are incredibly relevant on the maritime low-intensity battlefield. If a combatant is too fragile for ramming, its only resort will be warning shots, which is a very risky escalation on the force continuum, depending on gunnery skills and sea state. Whereas the physical force of a tugship enables safe resolution against non-cooperative vessels. While Galrahn has expounded on the necessity of including and elevating VBSS teams and naval infantry in the planning/doctrine & force structure of naval strategy, tugs and ramming represent the other leg of the low-intensity naval dyad. Indeed, a ramming touched off the current crisis, and the Japan Coast Guard cutters frequently resorted to ramming to enforce its claims over the Senkaku Islands. Both tugs & VBSS teams will depend on a mothership that is sorely lacking in the US Navy.
Given the prominence of nationalist groups in both Japan and China, a non-government actor may try to settle the islands. Japanese and Taiwanese civilian groups had attempted to resolve the sovereignty dispute through settlement. Japan Coast Guard were able to arrest and deport Taiwanese settlers in the past. Japanese settlers did not have the logistic support to stay long term. There is no fresh water on the islands nor much wildlife, making the logistic requirements unaffordable to most NGOs. The current diplomatic crisis may raise sufficient funds for such an expedition, though.
If a Taiwanese group undertakes a deployment, its primary obstacle will be Japanese eviction. The settlers will have to employ non-lethal measures to successfully resist eviction. For example, net launchers can trap RHIBs and swimmers in the surf zone, preventing Coast Guard officers from landing. Once on land, sticky foam and nets can immobilize the officers. Thus secured, the settlers can send the officers back out to sea on their RHIBs, for an intercept and recovery by their own cutters. The settlers may deploy an ADS-like device without contending with human-safety concerns, but fuel for power generation will be the primary constraint on its operation. Same goes for other direct energy systems.
[We focus on a Taiwanese group because of logistics, and because Chinese billionaires are unlikely to fund this endeavor without government clearance.]
A Japanese civilian group faces eviction risks from the Coast Guard as well. In the current environment, PRC will respond to a civilian escalation with a proxy civilian deployment [ie, a state-sponsored NGO.] To maintain the status quo, where Japn enjoys de facto sovereignty over Diaoyu with its cutter patrols, the Japanese government has an incentive to head off a low-intensity escalation by evicting Japanese settlers. In addition, a Japanese civilian escalation risks a Taiwanese response as well, which is against Japanese interests as stated above. Therefore, a Japanese NGO needs to invest in non-lethal measures to oppose landings.
An NGO can survive on the islands with reverse osmosis water purifiers and mussel/shellfish harvests. It is not impossible, but requires significant preparation and training.
At the moment, neither Japan nor PRC wishes to escalate the dispute. However, ignored domestic pressures can become rogue NGO actions. A successful NGO operation/settlement can force the governments into escalation, reaching the new local equilibrium of a naval embargo. A Solomonic resolution could divide each island into two, half to Japan and the other half China, with a Green Line going down the middle of each island. However, a settlement operation can preclude that division. We could end up with an Ying-Yang-esque division, with a Japanese Diaoyu Dao and a Chinese Taisho Jima. That would be an amusing ending to this 130 year old dispute.
PS (3OCT10): Edited title and added links and tags.
What is the next step? In the Hobbesian world of international relations, possession is 90% of the game. Japan had erected markers and a lighthouse on Diaoyutai, but has no permanent presence on the islands. Therefore, the first actor to "settle" the islands will resolve the dispute in his favor.
Indeed, as NightWatch reports, Japan is considering stationing troops.
I thought China might deploy the PLA to garrison the islands much like it did in the south china sea, but this article suggests that China may not have the will to escalate.
A unilateral occupation of any island [of the 4 "habitable" ones] will trigger a military race to settle the other 3 islands. The second mover will also embargo the opposing garrisons to "freeze" the situation, pending diplomatic resolution. Both sides will try to re-supply their marines on shore. A naval confrontation is inevitable in this scenario. Due to the distance, neither side is capable of enforcing an aerial embargo for long, so aerial resupply will keep the garrisons at survival level.
[If Japan moves first, Taiwan will face political pressure to deploy as well. Such a three-way race risks driving Taiwan away from Japan, which may be one of the few current constraints holding Japan back.]
In this scenario of unilateral settlements, a military confrontation at sea will quickly reach a new local equilibrium, absent political wills for war. If domestic pressures increase, the political leadership may seek points through this escalation.
One further point on this military confrontation: To enforce the naval embargo against resupply, ramming will be the predominant tactic. As I mentioned previously, ocean-going tugboats are incredibly relevant on the maritime low-intensity battlefield. If a combatant is too fragile for ramming, its only resort will be warning shots, which is a very risky escalation on the force continuum, depending on gunnery skills and sea state. Whereas the physical force of a tugship enables safe resolution against non-cooperative vessels. While Galrahn has expounded on the necessity of including and elevating VBSS teams and naval infantry in the planning/doctrine & force structure of naval strategy, tugs and ramming represent the other leg of the low-intensity naval dyad. Indeed, a ramming touched off the current crisis, and the Japan Coast Guard cutters frequently resorted to ramming to enforce its claims over the Senkaku Islands. Both tugs & VBSS teams will depend on a mothership that is sorely lacking in the US Navy.
Given the prominence of nationalist groups in both Japan and China, a non-government actor may try to settle the islands. Japanese and Taiwanese civilian groups had attempted to resolve the sovereignty dispute through settlement. Japan Coast Guard were able to arrest and deport Taiwanese settlers in the past. Japanese settlers did not have the logistic support to stay long term. There is no fresh water on the islands nor much wildlife, making the logistic requirements unaffordable to most NGOs. The current diplomatic crisis may raise sufficient funds for such an expedition, though.
If a Taiwanese group undertakes a deployment, its primary obstacle will be Japanese eviction. The settlers will have to employ non-lethal measures to successfully resist eviction. For example, net launchers can trap RHIBs and swimmers in the surf zone, preventing Coast Guard officers from landing. Once on land, sticky foam and nets can immobilize the officers. Thus secured, the settlers can send the officers back out to sea on their RHIBs, for an intercept and recovery by their own cutters. The settlers may deploy an ADS-like device without contending with human-safety concerns, but fuel for power generation will be the primary constraint on its operation. Same goes for other direct energy systems.
[We focus on a Taiwanese group because of logistics, and because Chinese billionaires are unlikely to fund this endeavor without government clearance.]
A Japanese civilian group faces eviction risks from the Coast Guard as well. In the current environment, PRC will respond to a civilian escalation with a proxy civilian deployment [ie, a state-sponsored NGO.] To maintain the status quo, where Japn enjoys de facto sovereignty over Diaoyu with its cutter patrols, the Japanese government has an incentive to head off a low-intensity escalation by evicting Japanese settlers. In addition, a Japanese civilian escalation risks a Taiwanese response as well, which is against Japanese interests as stated above. Therefore, a Japanese NGO needs to invest in non-lethal measures to oppose landings.
An NGO can survive on the islands with reverse osmosis water purifiers and mussel/shellfish harvests. It is not impossible, but requires significant preparation and training.
At the moment, neither Japan nor PRC wishes to escalate the dispute. However, ignored domestic pressures can become rogue NGO actions. A successful NGO operation/settlement can force the governments into escalation, reaching the new local equilibrium of a naval embargo. A Solomonic resolution could divide each island into two, half to Japan and the other half China, with a Green Line going down the middle of each island. However, a settlement operation can preclude that division. We could end up with an Ying-Yang-esque division, with a Japanese Diaoyu Dao and a Chinese Taisho Jima. That would be an amusing ending to this 130 year old dispute.
PS (3OCT10): Edited title and added links and tags.
Thursday, July 22, 2010
Ideas on Military Personnel Costs
These days, everybody is talking about military personnel costs, from Sec Bob Gates to the blogosphere. Recently, Bryan McGrath put forward two ideas on controlling retirement costs.
Commenter milprof passed along a paraphrase from the defense leadership: "Plan to take it out of force structure because it sure won't be coming out of pay and benefits". Indeed, we need to think critically about force structure, which directly relates to the personnel cost issue. As a primer for the discussion, I've found Dr. Cindy Williams's defense series to be illuminating. Holding the Line
is a great book on alternative force structure and a discussion on the ideas. Filling the Ranks
is another great book on incentives and personnel policy.
I've touched on this topic before.
Here are a few more proposals. The way to control medical cost is to make the military responsible. If the brass has to make the budget choice between retiree medical care and weapon acquisition, perhaps they will be more sensible.
A couple of quick examples: Sit-ups are known to cause lower spinal injury and later disabilities, yet it is still the standard in the Army. With budgetary incentives the brass would be in a greater hurry to change that. Hearing loss: passing through Al Asad Air Base (Marine) in '07, I saw the junior Marines frequently worked without hearing protection on the flightlines. In the army infantry only used earplugs on the rifle range. Electronic ear muffs have been a proven technology for 20+ years, yet only the start of OIF did the military purchase Peltor and other muffs in significant quantities.
Soldier care is an empty slogan until we hold the brass budgetarily accountable.
Retirement benefits: With so many military retirees working in the federal government, we need to start "means-testing" military retiree benefits. For example, if you're drawing retirement and GS salary at the same time, you will lose retirement dollar for dollar until (a) you're getting total GS-13 lvl 1 pay or (b) only 50% of retirement pay [not counting GS], whichever is higher. And maybe we do the same to federal contractor employees, too.
Moreover, if we do away with the 20-year vesting, and start giving retirement at 10-yr mark [but who would have to wait until 62 or 65 to start drawing retirement], then many more people will opt to retire earlier, thus ending up saving Gov't money. [The present value of that 15-20 years of retirement pay (48 to 65) may worth more than the retirement pay of that 2nd replacement soldier.]
So there are plenty of ways to lower the personnel cost. The only worry is that the various Associations will not be courageous and farsighted enough to take this problem head on, and that Congress will wait until the last minute [when we're broke already] to start slashing programs willy-nilly.
Commenter milprof passed along a paraphrase from the defense leadership: "Plan to take it out of force structure because it sure won't be coming out of pay and benefits". Indeed, we need to think critically about force structure, which directly relates to the personnel cost issue. As a primer for the discussion, I've found Dr. Cindy Williams's defense series to be illuminating. Holding the Line
is a great book on alternative force structure and a discussion on the ideas. Filling the Ranks is another great book on incentives and personnel policy.I've touched on this topic before.
Here are a few more proposals. The way to control medical cost is to make the military responsible. If the brass has to make the budget choice between retiree medical care and weapon acquisition, perhaps they will be more sensible.
A couple of quick examples: Sit-ups are known to cause lower spinal injury and later disabilities, yet it is still the standard in the Army. With budgetary incentives the brass would be in a greater hurry to change that. Hearing loss: passing through Al Asad Air Base (Marine) in '07, I saw the junior Marines frequently worked without hearing protection on the flightlines. In the army infantry only used earplugs on the rifle range. Electronic ear muffs have been a proven technology for 20+ years, yet only the start of OIF did the military purchase Peltor and other muffs in significant quantities.
Soldier care is an empty slogan until we hold the brass budgetarily accountable.
Retirement benefits: With so many military retirees working in the federal government, we need to start "means-testing" military retiree benefits. For example, if you're drawing retirement and GS salary at the same time, you will lose retirement dollar for dollar until (a) you're getting total GS-13 lvl 1 pay or (b) only 50% of retirement pay [not counting GS], whichever is higher. And maybe we do the same to federal contractor employees, too.
Moreover, if we do away with the 20-year vesting, and start giving retirement at 10-yr mark [but who would have to wait until 62 or 65 to start drawing retirement], then many more people will opt to retire earlier, thus ending up saving Gov't money. [The present value of that 15-20 years of retirement pay (48 to 65) may worth more than the retirement pay of that 2nd replacement soldier.]
So there are plenty of ways to lower the personnel cost. The only worry is that the various Associations will not be courageous and farsighted enough to take this problem head on, and that Congress will wait until the last minute [when we're broke already] to start slashing programs willy-nilly.
Tuesday, June 1, 2010
Mirage Followup: Pakistani Prospects
Anonymous questioned my analysis on the prospects of Pakistan getting the 62 Mirage 2000s from United Arab Emirates. Rumor says that UAE wants to swap the Mirages in exchange for new-built Rafaels from Dassault. I said that Pakistan is not likely to be a recipient of these planes. Anonymous disagrees, because Pakistan is the largest operator of Mirage IIIs and Vs in the world today, thus a long-term relationship with Dassault and in need of replacements. In addition, Pakistan is looking for advanced systems to arm its future JF-17s, such as RC-400 radars and MICA missiles.
Yes, Anon, Pakistan would absolutely love to have 62 Mirage 2Ks. However, as an analyst, we always need to separate wishful thinking from analysis based on facts. I will be upfront myself and admit my personal bias to see a Taiwanese Air Force strong enough to deter the PLA Nanjing military district. Even taking that into account, though, Taiwan still remains the most likely candidate for these Mirage 2Ks, eventually.
The most important factor to understand here, is the business imperative of the Dassault corporation. Dassault has been searching for an export customer for the Rafale. Without an export customer, Dassault will have to shutter the Rafale production line, at least temporarily. Having to restart the production line would raise the Rafale unit cost dramatically, further hurting its export prospects. Despite all the hype of the armed UAVs, the end of the Rafale may mean the end of high-performance fighter airplanes for Dassault [either manned or unmanned], with the attendant loss of the engineers and the craftsmen. Without the human capital, it will take Dassault a generation to rebuild its in-house capability to design and build airplanes capable of high-Angle-of-Attack maneuvers. Therefore, getting a Rafale export, and thus keeping the line warm, is synonymous with Dassault surviving in the fighter business.
Therefore, Dassault absolutely does not want to endanger its Rafale sales prospects. According to Wiki, the Rafale is in the running in India. Brazil has also supposedly chosen the Rafale. With this stock of Mirage 2Ks, Dassault may now offer the Mirages as temporary stand-ins to India and Brazil, while they waited on the Rafales.
With the business consideration, Dassault is unlikely to offer Mirages to Pakistan, at least for now. Dassault needs India's MMRCA order. A sale to Pakistan right now will shut Dassault out of the Indian market. Pakistan may get Mirages later, after MMRCA award, but by then, JF-17 production will be in full-swing in Pakistan. A Mirage 2K acqusition will be competing for funding against a more indigenous JF-17 production program. Egypt is also discussing a co-production deal with Pakistan for the JF-17s, which elevates the political importance of the JF-17 program. If JF-17 is fighting for funding against Mirage 2Ks, JF-17 will probably come out ahead. Pakistan may well buy RC-400s and MICAs, but that does not translate into Mirages.
Based on the business case, Dassault is unlikely to offer the UAE Mirages to Pakistan. Based on the timing and politics, Pakistan is unlikely to seek Mirages. Therefore, Pakistan is not a prospect for the UAE Mirages.
Yes, Anon, Pakistan would absolutely love to have 62 Mirage 2Ks. However, as an analyst, we always need to separate wishful thinking from analysis based on facts. I will be upfront myself and admit my personal bias to see a Taiwanese Air Force strong enough to deter the PLA Nanjing military district. Even taking that into account, though, Taiwan still remains the most likely candidate for these Mirage 2Ks, eventually.
The most important factor to understand here, is the business imperative of the Dassault corporation. Dassault has been searching for an export customer for the Rafale. Without an export customer, Dassault will have to shutter the Rafale production line, at least temporarily. Having to restart the production line would raise the Rafale unit cost dramatically, further hurting its export prospects. Despite all the hype of the armed UAVs, the end of the Rafale may mean the end of high-performance fighter airplanes for Dassault [either manned or unmanned], with the attendant loss of the engineers and the craftsmen. Without the human capital, it will take Dassault a generation to rebuild its in-house capability to design and build airplanes capable of high-Angle-of-Attack maneuvers. Therefore, getting a Rafale export, and thus keeping the line warm, is synonymous with Dassault surviving in the fighter business.
Therefore, Dassault absolutely does not want to endanger its Rafale sales prospects. According to Wiki, the Rafale is in the running in India. Brazil has also supposedly chosen the Rafale. With this stock of Mirage 2Ks, Dassault may now offer the Mirages as temporary stand-ins to India and Brazil, while they waited on the Rafales.
With the business consideration, Dassault is unlikely to offer Mirages to Pakistan, at least for now. Dassault needs India's MMRCA order. A sale to Pakistan right now will shut Dassault out of the Indian market. Pakistan may get Mirages later, after MMRCA award, but by then, JF-17 production will be in full-swing in Pakistan. A Mirage 2K acqusition will be competing for funding against a more indigenous JF-17 production program. Egypt is also discussing a co-production deal with Pakistan for the JF-17s, which elevates the political importance of the JF-17 program. If JF-17 is fighting for funding against Mirage 2Ks, JF-17 will probably come out ahead. Pakistan may well buy RC-400s and MICAs, but that does not translate into Mirages.
Based on the business case, Dassault is unlikely to offer the UAE Mirages to Pakistan. Based on the timing and politics, Pakistan is unlikely to seek Mirages. Therefore, Pakistan is not a prospect for the UAE Mirages.
Thursday, December 24, 2009
Russia: Climbing the Export Tree?
Galrahn at Information Dissemination analyzes more news on the Russian Mistral LHD purchase and talk about the Russian shipbuilding industry and why it is importing French shipbuilding technology. He also talks about the US Senate reaction to this pending purchase.
I have earlier talked about the Mistral purchase as reviving the historic Franco-Russian relationship. Galrahn's discussions reminds me that France may be actively pursuing this geo-political realignment as well. France is betting on Russia becoming the next China.
For all the abuses of the Soviet era, it has left Russia with a relatively well-educated work force familiar with modern manufacturing technology. Although Russian quality control was deplorable, its heavy industries sustained the mighty Red Army for decades. Even today Russian metallurgy is still state of the art. Compared to India and Brazil, Russia is probably best prepared to take on China in mass manufacturing. Moreover, China itself is trying to climb the export tree and leaving the export manufacturing business behind. If France injects capital and technology into Russia, it stands to profit from Russia's re-industrialization and China's de-exportation.
At the same time, France is trying to balance a multipolar world. From France's perspective, an economically ascendant Russia is a nice counter against China. Russia is a potential ally who shares France's distrust of both the US and China. With the communist party still popular in both countries, they share a social affinity as well.
Therefore France hopes to re-industrialize Russia, starting with its ship-building sector. They may be working on a Korean model, where the heavy industries spin off into the light manufacturing industries. There are certainly many challenges, not the least of which is Russia's demographic collapse. But the time is right for a geo-economic/political partnership between France and Russia.
Saturday, August 29, 2009
Clarifications on Russia and Western Europe
An anonymous commenter responded to my thoughts on the Mistral order. He objected to my analysis because
I think Russia's present security preoccupations are NATO expansion towards
Russia's Near Abroad. Islam is a very minor threat to Russia, and entire
point of the SCO is to manage Sino-Russian interests without butting heads.
I responded:
Yes, Russians are pre-occupied with NATO expansion. However, as Defense
Secretary Gates has said, there's the war you're preparing for, and there's the
war that you're actually fighting.Yes, NATO is expanding. However, that does not
pose a security threat, per se, to Russia. Rather, it is more over spheres of
influence, prestige, and control.In addition, NATO expansion is driven, in large part, by former Warsaw
countries such as Poland and Czech. If you think about intentions, these Central
European countries are more hostile toward Russia than, say, England and France
are. England and France may object to Russian internal politics on humanitarian
grounds, but that could change if Russia becomes more Westernized. Poles and
Czechs, on the other hand, will forever hold Russians in suspicion.So geostrategically, England and France may be rekindling their strategic
relationship with Russia. Here I am thinking on historical timescales of
decades. Historians in the 22nd Century may well mark this Mistral order as the
start of the trend.Ref SCO and China: For all the pomp and circumstance surrounding the SCO,
Russia is deeply worried about China due to the demographics. With the sporadic
anti-Chinese riots and actions in Moscow, and the de-facto Chinese colonization
of Russian Far East, China is Russia's biggest security risk at this moment.As Russia is fighting its Muslim minorities right now, Islamic insurgency is
Russia's biggest security task. The war you're fighting today, like I said.
Thursday, June 25, 2009
Shipbuilding Plan B: In Case USNavy Screws Up
Galrahn of Information Dissemination has a great Strategy-and-Concept-of-Operations proposal to meet our policy objectives in the littoral zone (0 to 25 nm away from the coastline). In it, he built upon CDR Hendrix's Influence Squadron idea to engage the human terrain of the littoral zone. The littoral zone is full of fishing boats, pirates, and shipping. Galrahn's litoral strike squadrons deliver sailors and Marines to interact with the population at sea, whereas the current Navy policy is to stay away from all boat traffic.
To carry the human payload into contact with the population, Galrahn depends on the Littoral Combat Ships (LCS) and a notional class of patrol boats. An LCS will act as the command element for its subordinate patrol boats, as well as providing aviation support of helicopters and UAVs. The patrol boats will board and inspect suspect vessels, render assistance as necessary, and gather human intelligence.
The proposal is well thought out and implementable, but the LCS is its weak point. Many people want to kill the LCS to build more DDG-51s or a better armed frigate. What if Congress cut off the LCS project in a few years? What is our shipbuilding Plan B to keep up presence and numbers? As G pointed out in his USNI piece, the US Navy will hit a Warship Gap by the year of 2025 if the US Navy does not come up with a plan to fix shipbuilding.
There are several options for our Shipbuilding Plan B. One possibility is build our 21st Century Spruance Class Destroyer. The Spruance Class was a highly successful ship type because the Navy built it in enough numbers to meet its presence needs. It also had plenty of room inside for future upgrades and technology experiments. By sticking with a minimal weapon system suite, the Navy kept the price tag affordable. Later on, the Navy used the Spruance hull to build the world-famous AEGIS Cruisers.
It turns out that we have a reverse-Spruance class in service right now: the Arleigh Burke Class Destroyers (DDG-51). At $1.5 billion per ship, the Burke is one of the most expensive warship in the world. Maybe we should start planning for a reverse-Spruance. More than 40% of the Burke price tag comes from the electronics and weapons. If we strip off the radars and don't install the Mk 41, we can buy a DD-51 for about $700 million.
Such a Spruanced-Burke will keep the shipyards in business. Its manufacturing cost and process is well known, so we minimize budget and production surprises. After we take out the weapons, we regain all that upgrade room we've lost over the past 20 years. We will have room to park those LCS modules and launch/recover UxVs. Or more helicopters.
We can also update the hull with new technology. For example, we can incorporate LCS's crew automation technology to drive down DD-51's crew requirement. We can incorporate some electric drive systems to increase the power reserve available for later upgrades. (Without the SPY-1, there will be plenty of power). If in the future, we face a higher end threat, we can always upgrade our DD-51 with more missiles and combat systems.
The specific configuration of DD-51 (hangar, sonar tail, boat ramp, etc) will depend on a more detailed requirement analysis and cost-tradeoff. We can even have multiple variants of DD-51. But this will work well as a Plan B. In effect, an Frigate in a Destroyer's body.
To carry the human payload into contact with the population, Galrahn depends on the Littoral Combat Ships (LCS) and a notional class of patrol boats. An LCS will act as the command element for its subordinate patrol boats, as well as providing aviation support of helicopters and UAVs. The patrol boats will board and inspect suspect vessels, render assistance as necessary, and gather human intelligence.
The proposal is well thought out and implementable, but the LCS is its weak point. Many people want to kill the LCS to build more DDG-51s or a better armed frigate. What if Congress cut off the LCS project in a few years? What is our shipbuilding Plan B to keep up presence and numbers? As G pointed out in his USNI piece, the US Navy will hit a Warship Gap by the year of 2025 if the US Navy does not come up with a plan to fix shipbuilding.
There are several options for our Shipbuilding Plan B. One possibility is build our 21st Century Spruance Class Destroyer. The Spruance Class was a highly successful ship type because the Navy built it in enough numbers to meet its presence needs. It also had plenty of room inside for future upgrades and technology experiments. By sticking with a minimal weapon system suite, the Navy kept the price tag affordable. Later on, the Navy used the Spruance hull to build the world-famous AEGIS Cruisers.
It turns out that we have a reverse-Spruance class in service right now: the Arleigh Burke Class Destroyers (DDG-51). At $1.5 billion per ship, the Burke is one of the most expensive warship in the world. Maybe we should start planning for a reverse-Spruance. More than 40% of the Burke price tag comes from the electronics and weapons. If we strip off the radars and don't install the Mk 41, we can buy a DD-51 for about $700 million.
Such a Spruanced-Burke will keep the shipyards in business. Its manufacturing cost and process is well known, so we minimize budget and production surprises. After we take out the weapons, we regain all that upgrade room we've lost over the past 20 years. We will have room to park those LCS modules and launch/recover UxVs. Or more helicopters.
We can also update the hull with new technology. For example, we can incorporate LCS's crew automation technology to drive down DD-51's crew requirement. We can incorporate some electric drive systems to increase the power reserve available for later upgrades. (Without the SPY-1, there will be plenty of power). If in the future, we face a higher end threat, we can always upgrade our DD-51 with more missiles and combat systems.
The specific configuration of DD-51 (hangar, sonar tail, boat ramp, etc) will depend on a more detailed requirement analysis and cost-tradeoff. We can even have multiple variants of DD-51. But this will work well as a Plan B. In effect, an Frigate in a Destroyer's body.
Friday, June 12, 2009
The Post-Recession Geopolitics, Trade, and Global Guerrillas
Galrahn of Information Dissemination posted a great speech by Stephen Carmel, VP of Maersk. Mr. Carmel talked about how interconnected we have become as a world, and how mundane activities in Bolivia and Africa, for example, have global, economic, and strategic repercussions.
For example, he mentioned that the electric/hybrid car is all the rage in the United States, right now, which is a good thing [Oil and all that.] Electric cars use lots of lithium batteries. 40% of the world's lithium supply comes from Bolivia, and much of the rest in other Latin America countries. Bolivia's president does not like the United States much. He is also facing economic and political unrest in Bolivia. In comes the mining industry. Because the government there is not very effective and plagued by corruption, the mining companies pay bribes and fund private security, company town's utilities, etc. Essentially, the mining companies maintain stability at the mines by exporting instability to the rest of the country, in the form of bribes, prostitution, alcohol problems (of transient miners), resentment of non-accountability, etc.
We then will re-ignite a Maoist movement in the country against foreign domination. We will try to prop up the government there, because lithium is now strategically important to the United States. It will be Banana Republics all over again.
Another big point he made is the bottlenecks in our global supply system. In addition to the physical bottlenecks like the Malacca Strait and Hormuz Strait, there's also the capacity bottlenecks of Ports of Los Angeles and Hong Kong and railroad systems, the information bottlenecks of the undersea fiber optic cables, network-node bottlenecks of our power grids, etc. The Just-In-Time philosophy of capacity over-utilization has taken out the slack in our global economic system. This tautness made our system vulnerable to Global Guerrilla attacks, and magnifies the effect of the attacks on our economies.
The speech is long, and full of interesting reflections. It's a must read for anyone thinking about the future.
For example, he mentioned that the electric/hybrid car is all the rage in the United States, right now, which is a good thing [Oil and all that.] Electric cars use lots of lithium batteries. 40% of the world's lithium supply comes from Bolivia, and much of the rest in other Latin America countries. Bolivia's president does not like the United States much. He is also facing economic and political unrest in Bolivia. In comes the mining industry. Because the government there is not very effective and plagued by corruption, the mining companies pay bribes and fund private security, company town's utilities, etc. Essentially, the mining companies maintain stability at the mines by exporting instability to the rest of the country, in the form of bribes, prostitution, alcohol problems (of transient miners), resentment of non-accountability, etc.
We then will re-ignite a Maoist movement in the country against foreign domination. We will try to prop up the government there, because lithium is now strategically important to the United States. It will be Banana Republics all over again.
Another big point he made is the bottlenecks in our global supply system. In addition to the physical bottlenecks like the Malacca Strait and Hormuz Strait, there's also the capacity bottlenecks of Ports of Los Angeles and Hong Kong and railroad systems, the information bottlenecks of the undersea fiber optic cables, network-node bottlenecks of our power grids, etc. The Just-In-Time philosophy of capacity over-utilization has taken out the slack in our global economic system. This tautness made our system vulnerable to Global Guerrilla attacks, and magnifies the effect of the attacks on our economies.
The speech is long, and full of interesting reflections. It's a must read for anyone thinking about the future.
Friday, June 5, 2009
China, India, Brides, and War
Kenneth Anderson wrote an interesting post on Volokh Conspiracy about Surplus Males in China and Libertarian thoughts. The comments were very interesting as well and covered most of the common angles.
One of the commenters brought up the burgeoning mail-order bride industry in China, specifically touring Cambodia and other Southeast Asia countries. His remarks got me thinking about the geopolitical implications of this development.
As many of you know, Southeast Asia has a complex attitude toward China. Vietnam, for example, drove out many ethnic Chinese as “boat people” in the late ‘70s and early ‘80s. Indonesia and Malaysia periodically have anti-Chinese riots. Vietnam and the Phillipines have claims against China on the Spratly Islands. Yet Indonesia is cooperating with China in the defense industry, and Burma is using China to balance against Thailand and India.
As China and India both have a surplus male population (explored in Bare Branches), both are experiencing social stress as men compete for mates. Entrepreneurs are pushing the mail-order bride industry in both countries, with a large target demographic.
I believe that bride importing countries generally provoke resentment among the bride exporting populations, due to increased competition for mates in the exporting populations. I don’t have evidence to back up this claim.
However, this sentiment can easily become coupled to local nativist sentiments in the Southeast Asian states. Thailand and Myanmar have cross-border insurgencies and drug trade problems. Vietnam has disputed territories with Laos and Cambodia. Indonesia has ethnic separatist movements. The region has suffered economically over the past 20 years, from competition with the Chinese and Indian export economies and from the currency crises. These are all factors that can lead to war.
China and India both possess nuclear weapons and thus are unlikely to directly confront each other. However, the Southeast Asian states have many flash points and have been balancing against each other. If a crisis were to erupt, demagogues will drag anti-Chinese and anti-Indian sentiments to the surface. India and China will get dragged into such a crisis because of the complex bilateral defense relationships in the region, and because of domestic responses to the nativist sentiment in the crisis countries. The conflict can quickly widen across the penninsulas. Such a conflict will be difficult to resolve, because the belligerents can easily claim seemingly legitimate causii belli in this environment.
Therefore, the bare branches in China and India may indirectly destabilize Southeast Asia. We need to recognize this and increase our crisis response capability in the region.
One of the commenters brought up the burgeoning mail-order bride industry in China, specifically touring Cambodia and other Southeast Asia countries. His remarks got me thinking about the geopolitical implications of this development.
As many of you know, Southeast Asia has a complex attitude toward China. Vietnam, for example, drove out many ethnic Chinese as “boat people” in the late ‘70s and early ‘80s. Indonesia and Malaysia periodically have anti-Chinese riots. Vietnam and the Phillipines have claims against China on the Spratly Islands. Yet Indonesia is cooperating with China in the defense industry, and Burma is using China to balance against Thailand and India.
As China and India both have a surplus male population (explored in Bare Branches), both are experiencing social stress as men compete for mates. Entrepreneurs are pushing the mail-order bride industry in both countries, with a large target demographic.
I believe that bride importing countries generally provoke resentment among the bride exporting populations, due to increased competition for mates in the exporting populations. I don’t have evidence to back up this claim.
However, this sentiment can easily become coupled to local nativist sentiments in the Southeast Asian states. Thailand and Myanmar have cross-border insurgencies and drug trade problems. Vietnam has disputed territories with Laos and Cambodia. Indonesia has ethnic separatist movements. The region has suffered economically over the past 20 years, from competition with the Chinese and Indian export economies and from the currency crises. These are all factors that can lead to war.
China and India both possess nuclear weapons and thus are unlikely to directly confront each other. However, the Southeast Asian states have many flash points and have been balancing against each other. If a crisis were to erupt, demagogues will drag anti-Chinese and anti-Indian sentiments to the surface. India and China will get dragged into such a crisis because of the complex bilateral defense relationships in the region, and because of domestic responses to the nativist sentiment in the crisis countries. The conflict can quickly widen across the penninsulas. Such a conflict will be difficult to resolve, because the belligerents can easily claim seemingly legitimate causii belli in this environment.
Therefore, the bare branches in China and India may indirectly destabilize Southeast Asia. We need to recognize this and increase our crisis response capability in the region.
Monday, March 2, 2009
Mexico: DoD Leads the Way, Again
It is sad that the media has continued to spread the misconception that Mexico's ongoing civil war is all the fault of the American gun industry. Hello! Why aren't we taking the Mexican border police to task for not clamping down on the gun smuggling?! Is it America's fault that Mexican customs agents are slacking off?
In other news, Dr. Gates said, over the weekend, that the US military will start helping Mexico in fighting its civil war.
It is sad to see that the Obama administration has not learned anything about the post-Cold War world we live in. He spouted some rhetoric about using America's "soft power" to meet our challenges. Yet, with the Second most dangerous threat to American security, [first is Pakistan], Obama has reacted instinctively with the Defense Department, again. "Hope and Change" in the case of US foreign policy is now, "Hope the Military Can Change".
The only "soft power" Obama has done with regard to Mexico is a call to Congress to re-enact the Assault Weapon Ban, a cause for the Brady Campaign. Rahm Emanuel said, "You never want a serious crisis to go to waste." Indeed.
Hat tip to Galrahn for noting this.
PS: updated the tags to include Obama, 30APR2009
In other news, Dr. Gates said, over the weekend, that the US military will start helping Mexico in fighting its civil war.
It is sad to see that the Obama administration has not learned anything about the post-Cold War world we live in. He spouted some rhetoric about using America's "soft power" to meet our challenges. Yet, with the Second most dangerous threat to American security, [first is Pakistan], Obama has reacted instinctively with the Defense Department, again. "Hope and Change" in the case of US foreign policy is now, "Hope the Military Can Change".
The only "soft power" Obama has done with regard to Mexico is a call to Congress to re-enact the Assault Weapon Ban, a cause for the Brady Campaign. Rahm Emanuel said, "You never want a serious crisis to go to waste." Indeed.
Hat tip to Galrahn for noting this.
PS: updated the tags to include Obama, 30APR2009
Wednesday, January 21, 2009
Paradigm Shift: The US Foreign and Security Policies in Flux
This is something I've been meaning to talk about for awhile now. I will just sketch out my idea for now.
The US foreign and security policies/strategies are at a historical moment right now, the moment of paradigm shift. The paradigm is this: Nation-State Centric versus Nation-Tribe Centric.
Failures of Nation-State Centric Paradigm
US policies used to be, and still nominally is, Nation-State centric. Everything the United States does has to be channeled through states and official governments. For example, we know that terrorists reside in, say, Sudan. However, we can't just go in and grab them. We have to petition the Sudanese government for extradition, even though the Sudanese government does not have that much control over the terrorists. Once the terrorists get the wind of an impending extradition, they can use bribes and their contacts in the government to get out of Sudan. And there's nothing we can do about it [except the CIA].
Or, another example, the Iraqi Oil-For-Food program. Right after Gulf War I, we embargoed Iraq's trade. Officially, Iraq was not getting anything through the UN embargo. Unofficially, smugglers moved oil out of Iraq and food/medicine into Iraq. Saddam Hussein and his people were getting a handsome cut of the smuggling trade. But he chose not to give the food and medicine to his people, because he knew that the suffering of his people made great TV. And it did. The UN started the Oil-For-Food program. Iraq now could export as much oil as necessary to feed its people. However, Iraq never came close to its export quota. Saddam chose to sell less oil than he could so that his people would continue to suffer privation. Critical medicine remained short in Iraqi hospitals. On the black market, however, Saddam continued selling oil to line his coffer and buy some weapons.
Because of our Nation-State centric paradigm, the United States (and the UN) could not go into Iraq and run the Oil-For-Food program directly. We had to wait for Iraq to sell however much oil it wants to. Give Iraq the food and medicine. And watch the Iraqi government divert food/medicine shipments away from its people, and into the black market. We also ccould do little to stop Iraq's black market oil export, because Saddam was exporting his oil to countries like Syria and Turkey, our putative allies. We had to depend on the grace of the Syrian and Turkish governments to police their own black market activities.
Iraq and Afghanistan
Nation-State paradigm is the main reason our strategies in Iraq and Afghanistan were not working for much of the 21st Century thus far. The paradigm dictates that our policies have to go through the state governments of Iraq and Afghanistan. So for the longest time, we waited for the Iraqi national government to dither about its constitution, then waited some more as they stood up the ministries and carved up patronages. We knew, in the back of our minds, that the Iraqi parties don't have much representation on the ground. That the Iraqi parties were antagonizing the more popularly based insurgencies. However, we could not go against the Iraqi government. If the governing coalition refused to bring more Sunnis into the government, then the most we could do is talk some more.
However, it is also Iraq that has spurred the paradigm shift that we are undergoing. Sometime in early 2006, the US military came to a concensus that we needed to ignore the national parliament and start engaging the local insurgents politically. In the Anbar province, we started negotiating with the sheiks ourselves. We paid the "Sons of Iraq" to provide local security. We paid the sheiks to clean the streets and dig ditches. We dragged the mayors and police chiefs with us to meet the sheiks, sometimes. And everything flowed from that Anbar Awakening.
The difference here is a bottom-up approach versus top-down in imposing security. Before the Awakening, we were recruiting Iraqi soldiers and policemen from a national perspective. We looked at the overall number and depended on the Iraqi ministries to recruit. If the recruiting drive missed, say Fallujah, there was nothing we could do. We gave the ministries Iraqi and US money, and if the ministry bureaucracy does not apportion funds equitably, the most we could do is complain.
In the bottom-up approach, we by-passed the ministries and engage the local level directly. If the recruiting drive missed Fallujah, we could work with the local dignitaries to put security on the street. Americans could hire Fallujan rent-a-cops if there are not enough Fallujan cops.
Because we are in the midst of this paradigm shift, we do not have a clear policy and strategy. The US State Department had always depended on the Host Nation bureaucracy to execute US aid and assistance. Today DoState is trying to stand up Provincial Reconstruction Teams on an ad hoc basis without clear direction. It cannot find enough people to staff these Teams, even though they are a national priority.
Many commentators have commented negatively on the various Awakening movements. They noted the improvements in local security, but always worried that we are undercutting the authority of the Iraqi central government; that we are embracing former Baathists; that we are setting up local warlords. Their concerns generally stem from the Nation-State centric paradigm: if Iraq does not have a strong central government, then the government cannot impose security on its people. Our original policy and strategy was to stand up the central government, able to guarantee internal security, which would allow the US to stand down in Iraq. The Awakenings conflicted with that policy by setting up alternate centers of power. However, the central government had not been able to impose security. The Shiite insurgency and the Sunni insurgency were signs that the Iraqi people did not accept a central government staffed by Iraqi expatriates. We had to grow the local centers of power, co-opting them and steering them in a peaceful direction, thus pressuring the central government to accede to local demands. In embracing the Awakening, the US military adopted a bottom-up tactic when the national policy and strategy remained top-down. The result is strategic confusion, as planners try to reconcile policy with tactic.
The same thing is happening in Afghanistan, tho more slowly. We rushed to set up the central government and the army, without much focus on the local government nor police. The warlords carved up the country and controlled the provinces as they like. Karzai could count on their nominal support, but they always kept high their own interests and those of their constituents. Afghanistan has a more severe problem than Iraq because there are many more factions in Afghanistan, with more regional sponsors. With the "Awakening"-approach, we're again trying to apply bottom-up tactics without seriously reviewing our top-down policy. People like those at Abu Muqawama say that we don't have a clear strategy for Afghanistan. Of course we wouldn't if our tactics and policy conflict with each other.
Paradigm Shift Implications
So it is clear that we are struggling our way through this paradigm shift. Eventually we will have to update our policy to account for bottom-up, non-state approaches. But as the world is full of nationalist feelings and semi-functioning state bureaucracies, we will have a hybrid policy for years to come. We will start with bottom-up, Nation-Tribe approaches toward failed states and semi-failed states (which have nominal state governments).
[In a sense CIA has always practiced a version of this Nation-Tribe approach. However, their shenanigans in the 50s soured the taste of bottom-up paradigm for everyone. A major part of the reluctance to engage in nation-tribe paradigm stems from that historical lesson.]
The Nation-Tribe paradigm is dangerous on the international stage because it directly threatens the governments of the Non-Aligned Movement, namely China, India, and thugs like Mugabe. If the Tibet question comes up for the United States, for example, the nation-state paradigm says, it's an internal problem for China, tho we will protest human rights abuses. The nation-tribe paradigm, on the other hand, can say something like this: We support Tibetan self-determination, and will actively support a process that can lead to Tibetan independence. That is an unlikely outcome of the paradigm, as we need to balance other interests, but that would be foremost on the mind of Chinese leaders as they oppose our paradigm shift. India shares many US strategic goals, but they too have many separatist movements and will oppose a Nation-Tribe paradigm.
A Nation-Tribe paradigm, tho, can lead to a powerful outcome in dealing with humanitarian crisis [edited: crises] like Zimbabwe. For example, we can de-recognize the Mugabe regime as it does not represent all of Zimbabwe. We will carve out a sanctuary on Zimbabwe territory, by force if necessary, internationally preferrably, where the MDC is in charge. We will then provide humanitarian assistance and set out to make the sanctuary self-sufficient in food production. If the MDC decides to raise an army and invade Mugabe territory, we would not intervene. If Mugabe attacks the sanctuary, we will defend. The policy goal is humane governance in Zimbabwe, with the sanctuary as the example and training ground on local governance.
[Yes, this is similar to the Kurdistan model we set up after Gulf War I.]
As we move further into the 21st Century, failed states will proliferate. As John Robb commented, Mexico is sinking inexorably into failed state territory and becoming the US's numero uno security challenge. The nation-tribe paradigm will be essential in dealing with the 21st Century Mexico, as the nation-state pradigm failed in dealing with the 20th Century Mexico. If Iraq is where the US military learned the tactics of bottom-up security, and Afghanistan will be [hopefully] where the US military learns the strategy of bottom-up security/governance, then Mexico will be where the US federal government learns to formulate and execute bottom-up policy in pursuit of US interests. Or we will get to practice COIN tactics on our own soil. Let us hope that we learn fast enough.
Edited to Add: One useful way to think about this shift is on the question of sovereignty: We used to be on the "Theory of Sovereignty", that we assumed every government had full sovereignty, even if reality conflicts with that claim. Now we will operate on "the Test of Sovereignty", where we only acknowledge your sovereignty after you have demonstrated it credibly. To use a dated example, we will acknowledge Indonesia's sovereignty over East Timor only if Indonesia can exercise its sovereign powers over East Timor.
Thanks to Joe for the link.
The US foreign and security policies/strategies are at a historical moment right now, the moment of paradigm shift. The paradigm is this: Nation-State Centric versus Nation-Tribe Centric.
Failures of Nation-State Centric Paradigm
US policies used to be, and still nominally is, Nation-State centric. Everything the United States does has to be channeled through states and official governments. For example, we know that terrorists reside in, say, Sudan. However, we can't just go in and grab them. We have to petition the Sudanese government for extradition, even though the Sudanese government does not have that much control over the terrorists. Once the terrorists get the wind of an impending extradition, they can use bribes and their contacts in the government to get out of Sudan. And there's nothing we can do about it [except the CIA].
Or, another example, the Iraqi Oil-For-Food program. Right after Gulf War I, we embargoed Iraq's trade. Officially, Iraq was not getting anything through the UN embargo. Unofficially, smugglers moved oil out of Iraq and food/medicine into Iraq. Saddam Hussein and his people were getting a handsome cut of the smuggling trade. But he chose not to give the food and medicine to his people, because he knew that the suffering of his people made great TV. And it did. The UN started the Oil-For-Food program. Iraq now could export as much oil as necessary to feed its people. However, Iraq never came close to its export quota. Saddam chose to sell less oil than he could so that his people would continue to suffer privation. Critical medicine remained short in Iraqi hospitals. On the black market, however, Saddam continued selling oil to line his coffer and buy some weapons.
Because of our Nation-State centric paradigm, the United States (and the UN) could not go into Iraq and run the Oil-For-Food program directly. We had to wait for Iraq to sell however much oil it wants to. Give Iraq the food and medicine. And watch the Iraqi government divert food/medicine shipments away from its people, and into the black market. We also ccould do little to stop Iraq's black market oil export, because Saddam was exporting his oil to countries like Syria and Turkey, our putative allies. We had to depend on the grace of the Syrian and Turkish governments to police their own black market activities.
Iraq and Afghanistan
Nation-State paradigm is the main reason our strategies in Iraq and Afghanistan were not working for much of the 21st Century thus far. The paradigm dictates that our policies have to go through the state governments of Iraq and Afghanistan. So for the longest time, we waited for the Iraqi national government to dither about its constitution, then waited some more as they stood up the ministries and carved up patronages. We knew, in the back of our minds, that the Iraqi parties don't have much representation on the ground. That the Iraqi parties were antagonizing the more popularly based insurgencies. However, we could not go against the Iraqi government. If the governing coalition refused to bring more Sunnis into the government, then the most we could do is talk some more.
However, it is also Iraq that has spurred the paradigm shift that we are undergoing. Sometime in early 2006, the US military came to a concensus that we needed to ignore the national parliament and start engaging the local insurgents politically. In the Anbar province, we started negotiating with the sheiks ourselves. We paid the "Sons of Iraq" to provide local security. We paid the sheiks to clean the streets and dig ditches. We dragged the mayors and police chiefs with us to meet the sheiks, sometimes. And everything flowed from that Anbar Awakening.
The difference here is a bottom-up approach versus top-down in imposing security. Before the Awakening, we were recruiting Iraqi soldiers and policemen from a national perspective. We looked at the overall number and depended on the Iraqi ministries to recruit. If the recruiting drive missed, say Fallujah, there was nothing we could do. We gave the ministries Iraqi and US money, and if the ministry bureaucracy does not apportion funds equitably, the most we could do is complain.
In the bottom-up approach, we by-passed the ministries and engage the local level directly. If the recruiting drive missed Fallujah, we could work with the local dignitaries to put security on the street. Americans could hire Fallujan rent-a-cops if there are not enough Fallujan cops.
Because we are in the midst of this paradigm shift, we do not have a clear policy and strategy. The US State Department had always depended on the Host Nation bureaucracy to execute US aid and assistance. Today DoState is trying to stand up Provincial Reconstruction Teams on an ad hoc basis without clear direction. It cannot find enough people to staff these Teams, even though they are a national priority.
Many commentators have commented negatively on the various Awakening movements. They noted the improvements in local security, but always worried that we are undercutting the authority of the Iraqi central government; that we are embracing former Baathists; that we are setting up local warlords. Their concerns generally stem from the Nation-State centric paradigm: if Iraq does not have a strong central government, then the government cannot impose security on its people. Our original policy and strategy was to stand up the central government, able to guarantee internal security, which would allow the US to stand down in Iraq. The Awakenings conflicted with that policy by setting up alternate centers of power. However, the central government had not been able to impose security. The Shiite insurgency and the Sunni insurgency were signs that the Iraqi people did not accept a central government staffed by Iraqi expatriates. We had to grow the local centers of power, co-opting them and steering them in a peaceful direction, thus pressuring the central government to accede to local demands. In embracing the Awakening, the US military adopted a bottom-up tactic when the national policy and strategy remained top-down. The result is strategic confusion, as planners try to reconcile policy with tactic.
The same thing is happening in Afghanistan, tho more slowly. We rushed to set up the central government and the army, without much focus on the local government nor police. The warlords carved up the country and controlled the provinces as they like. Karzai could count on their nominal support, but they always kept high their own interests and those of their constituents. Afghanistan has a more severe problem than Iraq because there are many more factions in Afghanistan, with more regional sponsors. With the "Awakening"-approach, we're again trying to apply bottom-up tactics without seriously reviewing our top-down policy. People like those at Abu Muqawama say that we don't have a clear strategy for Afghanistan. Of course we wouldn't if our tactics and policy conflict with each other.
Paradigm Shift Implications
So it is clear that we are struggling our way through this paradigm shift. Eventually we will have to update our policy to account for bottom-up, non-state approaches. But as the world is full of nationalist feelings and semi-functioning state bureaucracies, we will have a hybrid policy for years to come. We will start with bottom-up, Nation-Tribe approaches toward failed states and semi-failed states (which have nominal state governments).
[In a sense CIA has always practiced a version of this Nation-Tribe approach. However, their shenanigans in the 50s soured the taste of bottom-up paradigm for everyone. A major part of the reluctance to engage in nation-tribe paradigm stems from that historical lesson.]
The Nation-Tribe paradigm is dangerous on the international stage because it directly threatens the governments of the Non-Aligned Movement, namely China, India, and thugs like Mugabe. If the Tibet question comes up for the United States, for example, the nation-state paradigm says, it's an internal problem for China, tho we will protest human rights abuses. The nation-tribe paradigm, on the other hand, can say something like this: We support Tibetan self-determination, and will actively support a process that can lead to Tibetan independence. That is an unlikely outcome of the paradigm, as we need to balance other interests, but that would be foremost on the mind of Chinese leaders as they oppose our paradigm shift. India shares many US strategic goals, but they too have many separatist movements and will oppose a Nation-Tribe paradigm.
A Nation-Tribe paradigm, tho, can lead to a powerful outcome in dealing with humanitarian crisis [edited: crises] like Zimbabwe. For example, we can de-recognize the Mugabe regime as it does not represent all of Zimbabwe. We will carve out a sanctuary on Zimbabwe territory, by force if necessary, internationally preferrably, where the MDC is in charge. We will then provide humanitarian assistance and set out to make the sanctuary self-sufficient in food production. If the MDC decides to raise an army and invade Mugabe territory, we would not intervene. If Mugabe attacks the sanctuary, we will defend. The policy goal is humane governance in Zimbabwe, with the sanctuary as the example and training ground on local governance.
[Yes, this is similar to the Kurdistan model we set up after Gulf War I.]
As we move further into the 21st Century, failed states will proliferate. As John Robb commented, Mexico is sinking inexorably into failed state territory and becoming the US's numero uno security challenge. The nation-tribe paradigm will be essential in dealing with the 21st Century Mexico, as the nation-state pradigm failed in dealing with the 20th Century Mexico. If Iraq is where the US military learned the tactics of bottom-up security, and Afghanistan will be [hopefully] where the US military learns the strategy of bottom-up security/governance, then Mexico will be where the US federal government learns to formulate and execute bottom-up policy in pursuit of US interests. Or we will get to practice COIN tactics on our own soil. Let us hope that we learn fast enough.
Edited to Add: One useful way to think about this shift is on the question of sovereignty: We used to be on the "Theory of Sovereignty", that we assumed every government had full sovereignty, even if reality conflicts with that claim. Now we will operate on "the Test of Sovereignty", where we only acknowledge your sovereignty after you have demonstrated it credibly. To use a dated example, we will acknowledge Indonesia's sovereignty over East Timor only if Indonesia can exercise its sovereign powers over East Timor.
Thanks to Joe for the link.
Wednesday, November 19, 2008
The Recession and Neo-Fascism/Et-al-isms
David Brooks at New York Times had an interesting article up today on the "Formerly Middle Class". His main thesis is that, as these formerly middle class people lose their jobs and their middle class symbols, they will become angry, pessimistic, and vulnerable to extremist messages.
This column reminded me of Today's ISMS: Socialism, Capitalism, Fascism, Communism, and Libertarianism by Ebenstein. In it, Ebenstein said of Fascism that its footsoldiers are of the Lower Middle Class, because they have worked the hardest to move themselves out of the lower class. So they embrace the social conventions and traditions. At the same time, because they are lower on the economic scale, they are more vulnerable to losing their status. Therefore they are more militant against economic redistribution schemes. Fascism exploits their vulnerabilities against Communism, even though both are more similar than different in practice.
With this in mind, we can look at a post-Great-Recession World 10 years from now: In China, India, Brazil, and Russia, (and East Europe), we can expect to see a rise in Nationalistic Fascist groups in their respective countries. They will militate against their traditional enemies: Japan/Korea, Pakistan, Germany/Europe, Paraguay(?), et al. And the United States will be the Public Enemy # Uno in many of those places as well.
As the "Emerging Markets" slide back into 3rd World-ness, we can also expect a re-surgence in Communist philosophies. Both Communism and Fascism are products of the turbulent economic times of the last turn of the century. It seems that the more things change, the more they stay the same.
I may have to order that nuclear fall-out shelter I've been thinking about. With a possibly Islamic-ruled Pakistan and Nationalistic Fascist India facing each other, the Doomsday Clock is edging toward armageddon.
This column reminded me of Today's ISMS: Socialism, Capitalism, Fascism, Communism, and Libertarianism by Ebenstein. In it, Ebenstein said of Fascism that its footsoldiers are of the Lower Middle Class, because they have worked the hardest to move themselves out of the lower class. So they embrace the social conventions and traditions. At the same time, because they are lower on the economic scale, they are more vulnerable to losing their status. Therefore they are more militant against economic redistribution schemes. Fascism exploits their vulnerabilities against Communism, even though both are more similar than different in practice.
With this in mind, we can look at a post-Great-Recession World 10 years from now: In China, India, Brazil, and Russia, (and East Europe), we can expect to see a rise in Nationalistic Fascist groups in their respective countries. They will militate against their traditional enemies: Japan/Korea, Pakistan, Germany/Europe, Paraguay(?), et al. And the United States will be the Public Enemy # Uno in many of those places as well.
As the "Emerging Markets" slide back into 3rd World-ness, we can also expect a re-surgence in Communist philosophies. Both Communism and Fascism are products of the turbulent economic times of the last turn of the century. It seems that the more things change, the more they stay the same.
I may have to order that nuclear fall-out shelter I've been thinking about. With a possibly Islamic-ruled Pakistan and Nationalistic Fascist India facing each other, the Doomsday Clock is edging toward armageddon.
Tuesday, June 17, 2008
"Rise" of Asia
NPR today had a book review on the "Rise" of Asia in a multipolar world. The story has the usual platitudes about how the future will be an economically prosperous Asia. The reviewer even praised the "Invididual entrepreneurship without interference from the state" in India. Hello?! India has a lot of "individual entrepreneurship"? Which land has a more vibrant small business scene, India or China? Which one suffers more from bureaucratic redtape in business formation?
But the point of this post today is not about correcting the details of this NPR story. Rather, I want to raise a point on the American public consciousness about Asia.
It appears that most commentators on the "Rise" of Asia forecast the following: China/India/et al becomes ever richer. One day, their GDP exceeds that of the US. Voila, Asia is now a superpower. Warfare/conflict does not enter the narrative except a worry that the American Gung Ho nutjobs will screw it up by fighting the Chinese in the Taiwan Strait.
These commentators generally downplay the economic risks during the "Rise". China and India both faces significant recession risks in the near term. How they, and we the US, deal with their economic downturn will significantly define their future trajectory and our relationships.
When the economy is booming, as it is right now in Asia, everybody is happy, and they have few disputes with the US. People become angry when their heightened expectations do not pan out, as in a recession, and that is when war starts.
China and India's rising demand for oil is driving up the marginal price for oil now. As oil becomes more expensive, their governments will have to decrease their oil subsidies to the consumers, or increase taxation. An oil-driven inflation will easily cause unrest among the urban poor, leading toward widespread social disruption. Anecdotal evidence suggest that inflation is already higher this year in China than last year, though official inflation figures will not be available before year end. India's new car culture is also vulnerable to the rising oil.
The current energy crisis is also driving up food prices. The agricultural revolution that cured India's famine was fueled by fertilizers. As fertilizer prices have gone up across the world (petroleum is a key input to the aritificial fertilizers), food prices have gone up as well. India and China have stopped exporting rice due to expected shortage.
Beyond the current energy crisis, economic growth has also driven up the real estate in China (not sure about India). The real estate prices in Shanghai and Beijing are reminiscent of pre-recession Japan. In such a speculative environment, there will inevitably be a real estate price crash. We are the living proof of that today.
Even now, manufacturers are moving away from China in search of ever cheaper labor.
All this is to say, we should stop thinking about the "Rise" of Asia, or managing the rise of China and India into the multi-polar world. Instead, we need to start working on plans to manage the coming Chinese and Indian Depressions and/or Stagflations. The coming Asian economic crisis will define the 21st Century, just as the Great Depression defined the 20th Century and the rise of the United States as a Superpower.
But the point of this post today is not about correcting the details of this NPR story. Rather, I want to raise a point on the American public consciousness about Asia.
It appears that most commentators on the "Rise" of Asia forecast the following: China/India/et al becomes ever richer. One day, their GDP exceeds that of the US. Voila, Asia is now a superpower. Warfare/conflict does not enter the narrative except a worry that the American Gung Ho nutjobs will screw it up by fighting the Chinese in the Taiwan Strait.
These commentators generally downplay the economic risks during the "Rise". China and India both faces significant recession risks in the near term. How they, and we the US, deal with their economic downturn will significantly define their future trajectory and our relationships.
When the economy is booming, as it is right now in Asia, everybody is happy, and they have few disputes with the US. People become angry when their heightened expectations do not pan out, as in a recession, and that is when war starts.
China and India's rising demand for oil is driving up the marginal price for oil now. As oil becomes more expensive, their governments will have to decrease their oil subsidies to the consumers, or increase taxation. An oil-driven inflation will easily cause unrest among the urban poor, leading toward widespread social disruption. Anecdotal evidence suggest that inflation is already higher this year in China than last year, though official inflation figures will not be available before year end. India's new car culture is also vulnerable to the rising oil.
The current energy crisis is also driving up food prices. The agricultural revolution that cured India's famine was fueled by fertilizers. As fertilizer prices have gone up across the world (petroleum is a key input to the aritificial fertilizers), food prices have gone up as well. India and China have stopped exporting rice due to expected shortage.
Beyond the current energy crisis, economic growth has also driven up the real estate in China (not sure about India). The real estate prices in Shanghai and Beijing are reminiscent of pre-recession Japan. In such a speculative environment, there will inevitably be a real estate price crash. We are the living proof of that today.
Even now, manufacturers are moving away from China in search of ever cheaper labor.
All this is to say, we should stop thinking about the "Rise" of Asia, or managing the rise of China and India into the multi-polar world. Instead, we need to start working on plans to manage the coming Chinese and Indian Depressions and/or Stagflations. The coming Asian economic crisis will define the 21st Century, just as the Great Depression defined the 20th Century and the rise of the United States as a Superpower.
Subscribe to:
Posts (Atom)
Posts
