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Pax Americana

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This is the first post in a series of three, in which I will analyze the major trends that will define the next ten years and their likely impacts on global regions. To put these forecasts into context, I must first describe the narrative through which I view the history of the post-WW2 era (the Oil Age, the Age of Hubris, or as John M. Greer aptly described it, the “age of abundance industrialism” – now on the verge of meeting its Nemesis, the waning of Pax Americana and the demise of global Western hegemony), which is dominated by the concept of “limits to growth” – the 1972 Club of Rome thesis that finite resources and pollution sinks will ensure that business-as-usual economic growth can never continue indefinitely on planet Earth.

A Short History of Abundance Industrialism

Driven by an electro-mechanical revolution powered by a windfall of cheap oil, the world registered its highest GDP growth rates in the 1950-1973 period. The era was defined by self-confidence and a secular “myth of progress”, which reached its apogee with the 1969 moon landings. But the next decade saw the arrival of major discontinuities. American oil production peaked in 1970, and went into decline. Saudi Arabia settled into its role as the world swing producer, enabling it to inflict a severe “oil shock” on Western economies in 1973 to punish them for their support for Israel, to be followed by another in 1979 coinciding with the Islamic Revolution in Iran. The decade also saw milestones such as the publication of Limits to Growth, the ending of hyperbolic growth of the world system, and a new emphasis on conservation and sustainability (which led to significant improvements in fuel efficiency and pollution control – back then, the fruits were all low-hanging, so impressive results were not hard to achieve). Yet the first tentative steps towards sustainability were not to be followed through, as the newly-elected Reagan took office proclaiming “Morning in America!”, with its implicit promise of a return to a past with no future. It was a false dawn.

Thus began the “age of diminished expectations”. In the US, physical production by volume and real working class wages stalled in the 1970′s, and have since been on a plateau (slightly tilted up according to official statistics, slightly tilted down according to unofficial ones). The age of Mammon saw rising inequality, both within and between nations (the sole major exception being China whose ascent to world power began in the late 1970′s). As the American industrial base entered its long atrophy, its economy shifted towards construction, services, and finance, – symbolized by metastasizing suburbia – and made possible by new drilling by the oil majors in remoter areas like Alaska, the Mexican Gulf, and the North Sea, a political-security rapprochement with Saudi Arabia, the IT revolution, and the rise of multinational corporations exploiting globalizing markets and cybernetic technology in a flattening world. Sustainability went out the window; quite literally, as Carter’s solar panels were removed from the White House roof in 1986. Finally, the US harnessed its new role as the focal point of the emerging global neoliberal system to open up their economies to the world, unleashing China’s “surplus armies of labor” and the former USSR’s energy resources in the service of Pax Americana.

overshoot

[Source: Tracking the ecological overshoot of the human economy, PNAS.]

This new era of international neoliberalism and developed country post-industrialism coincided with the genesis of humanity’s ecological overshoot of the carrying capacity of the Earth. Though the first global pollution alarm in the form of the “ozone hole” led to an impressive response involving a global agreement on the withdrawal of CFC production, the reaction to the growing specter of runaway climate change caused by man-made CO2 emissions – which is ultimately a far more serious issue – has been muted right up until 2009′s Copenhagen fiasco and today. Instead, the party continued in full blast throughout the 1990′s, for the US was too busy basking in the glow of the ostensible end-of-history triumph of “Western liberal democracy as the final form of human government”.

These hubristic visions of imminent utopia, of global drive-in democracy, collided with hard reality in the first decade of what was supposed to be a “new American century”. The United States is in a state of severe economic disequilibrium and has been in rapid decline relative to its competitors – a condition reminiscent of the USSR in the 1980′s. The probable decline and fall of the global order of which it is the locus will constitute the defining trend of the next decade.

Shifting Winds: The End of Pax Americana

What is Pax Americana? It is the liberal, internationalist, post-Cold War order, which has extended its reach throughout the whole world barring a few socialist holdovers like Cuba and North Korea. Globalization, rule of law, human rights, liberal democracy, free markets, economic growth – these are its self-defined values, which it considers to be the apex of humanity’s socio-political evolution. Its critics, from Western leftists to Third World nationalists, decry it as an exploitative, ruinous, imperialist, hypocritical, end-of-history theology, with voluminous references to the inconsistent ways in which these values are practiced by their own sponsors, or wielded as weapons against its ideological and geopolitical competitors.

But these arguments will soon become academic. As demonstrated by Robert Ayres, there is a glaring hole at the center of modern macroeconomic theory – accounts of growth neglect the vital role of “useful work” (a function of exergy and technical efficiency), whose contribution far outweighs that of labor and capital combined. Both factors have been flattening in the US in recent years, making further growth unsustainable. Furthermore, studies in systems dynamics indicate that brittle systems, with poor “shock absorbers”, can be subject to so-called “cascade collapse“, in which failures at one node produce a self-amplifying resonance that causes many other nodes to fail. If this is an accurate description of the global System, then a setback in any one sphere – be it economic, financial, geopolitical, etc – could usher in a vicious spiral into anarchic apolarity on the international stage.

Pax Americana and its neoliberal ideological superstructure rests on three pillars: cheap oil, American dollars, and the US Navy. Like the legs of a tripod, they all survive – or fall – together. And today, they are crumbling. Let us examine the forces that will be undermining these pillars in the next decade:

Peak Oil

Contrary to the “doomer” worldview, it is almost certainly possible to sustain an industrial civilization without a drop of oil (though ceteris paribus it will be a materially poorer one, because of oil’s uniquely high EROEI). The problem is that today’s industrial system, especially in the US, is built in such a way – gas-guzzling SUV’s on asphalt roads slithering across endless vistas of soulless suburbia – that cheap oil is indispensable to making the commutes and credit flows, the jet flights and JIT production systems, function. An even bigger problem is that Hubbert’s predictions of a global oil peak are (roughly) on schedule: though delayed by the 1970′s oil shocks, it is likely that either 2008 or 2010 was the all-time peak, and oil production will now decline at an accelerating rate – even without accounting for possible discontinuities like a global credit implosion, a sudden collapse of Ghawar, the spread of revolution to Saudi Arabia, or Iranian mining of the Straits of Hormuz.

oil-production

[Source: World Oil Production Forecast - Update November 2009, Oil Drum. Click to enlarge.]

The US spent prodigious sums to fight a war to open up Iraq’s oil reserves, but today its oil production is no higher than in 2000 (and hopes of massively increasing it are probably unrealistic). Russia has reconsolidated state control over its hydrocarbon deposits, discounting Western recriminations over its “resource nationalism”, and has successfully pushed back against Washington-backed “color revolutions”. Central Asia never proved to be the black gold lode of American geostrategic fantasy, and in any case it has since been closed off again by Russia. Due to their immense capital costs, environmental impact, and low energy-return-on-energy-invested (EROEI), there can be no salvation in tar sands or shale. Nor have there been any efforts at mitigation of the kind recommended in the Hirsch report. Any energy transition will be a very drawn-out process, considering the sheer scale of the infrastructure that will have to be replaced – and using continuously lower-EROEI energy sources!

As such, it can be said with a high degree of certainty that the world will soon experience a severe shortfall in liquid fuels. Because of its high degree of dependence on cheap oil, this will affect the US disproportionately, which will have to make good with demand destruction. The consequences will include major knock-on effects on consumers, who constitute the mainstay of American economic power.

State Insolvency

The geological realities of peak oil (2005-2010), in combination with soaring demand from industrializing Asia, have led to the worst crisis since the Great Depression, with the free-fall only being checked by a dizzying panoply of monetary flooding, fiscal stimulus, and government bailouts. As if this weren’t enough, the US faces rising entitlements costs as the baby boomers start retiring, a bloated military-industrial complex, and increasing commitments to Afghanistan with no timetable in sight (where there are now more US troops than there were at the peak of the Soviet intervention).

us-budget-woes

[The US budget deficit is predicted to permanently remain in the red even under the rosiest assumptions. As of now, it is the more pessimistic scenarios that are being born out - Republican refusals to raise tax rates or cooperate on Medicare; Soviet-like rhetoric about "defense cuts" while real military spending continues rising; etc.]

Now the major reason why the US has been able to afford both guns (the US military) and butter (its double deficits) in the face of deindustrialization was by giving its many foreign investors an atrocious rate of return, which they accepted in return for America’s “alpha” – its reputation as the largest economy, sole superpower, and global financial center, in other words, the “safe haven” par excellence. It also draws immense strength from the US dollar’s role as the global reserve currency, for instance by allowing it to comfortably buy oil at $-denominated prices even when the currency is weak. But with its “imperial overstretch” (see Afghanistan), moribund financial system, and a budget deficit north of 10% of GDP and projected to remain in the red for the foreseeable future – by some measures, US debt and fiscal metrics are worse than those of the PIGS on aggregate – will this American “alpha” survive? Probably not for much longer.

The creeping monetization of US debt will destroy investor confidence that they will ever make a positive return on their US bond investment. The withdrawal of a single major investor, especially if it coincides with a geopolitical shock, could set off a “cascading collapse” as other investors scurry away from US Treasury bonds. This will leave the US incapable of generating the primary surpluses to service its negative net foreign investment position, leading either to a compound debt trap or a classic emerging market-style currency crisis. Ice or fire? Given America’s democratic system and the bipartisan consensus on fiscal profligacy, I would bet on the latter.

Economic Decline

The collapse of what in some respects resembles an informal tributary system, channeling global (i.e. Asian) savings to the American consumer, will sound the death knell for Pax Americana. As Paul Kennedy argued in The Rise and Fall of the Great Powers, military power is ultimately subordinate to the economic base which supports it. The industrial base that won the Second World War and forged the American superpower has been in decline since the 1970′s – though on paper it boasted a high productivity growth rate, it masked a huge decline in the size and complexity of its “industrial ecosystem”. Mundane manufacturing, the automotive industry, and machine building have all experienced rapid decline; the heavily-subsidized aerospace and defense industries constitute the only major exceptions to this trend.

Now as long as globalization, free trade, and stability reigned, this did not portend international decline. Industrial hallowing out simply freed up workers into sectors that were more in demand, like restaurants, construction, services of all kinds, etc; and women gained many more economic opportunities. The US could get its manufactures from abroad, like Spain during its (literal) Golden Age. Furthermore, the transition from manufacturing to consumption and finance is historically not without precedents, being observed in the halcyon days of empires like Holland and Great Britain. After these former empires had established their initial industrial supremacy through mercantile means, they transitioned to free-trade regimes designed to reinforce their economic hegemony – and in so doing “kicked away the ladder” from countries trying to catch up. (The United States itself was one of the world’s most protectionist nations until the Second World War, at the end of which it accounted for half of global industrial output and drastically reduced tariff rates).

However, as pointed out above, the crumbling of two pillars of Pax Americana, cheap oil and the US dollar, makes the survival of today’s comfortable globalization highly unlikely. When the inflows of cheap credit from abroad cease; when oil flows decline due to geological, political, and geopolitical factors – the US will no longer be able to maintain its privileged position as the world’s “market dominant minority“, its overstretched armed forces will no longer have access to the lavish funding of the days of yore, and the neoliberal world order they upheld will come to an end.

Geopolitical Shocks

Facing the twinned specter of peak oil and fiscal insolvency and supported by an atrophied industrial base, Pax Americana could in fairness be described as a “brittle system” under a growing threat of collapse. Though it may yet fade away gradually into the night, to be slowly displaced by the state-centered, neo-Westphalian, mercantile reality of “world without the West“, it is altogether possible that geopolitical shocks will make the transition far more abrupt and chaotic than expected.

Though nothing’s certain, it is possible, likely even, that the biggest shock will emanate from a confrontation between Iran and the US in the Persian Gulf. Since 2005, the hardline IRGC paramilitary / intelligence clan, whose figurehead is Ahmadinejad), has been in the ascendant in Iran. Their power was further reinforced in 2009 when the Supreme Leader Khamenei sided with the IRGC in the aftermath of the abortive “Green Revolution” spearheaded by the waning “moderate” clerical clan (headed by Rafsanjani), in response to Mousavi’s electoral loss. These internal Iranian developments occurred in tandem with the rising tensions with Israel, Saudi Arabia, and the US over Iran’s pursuit of an nuclear bomb, amidst the window of opportunity left open to the Islamic Republic by the US quagmire in Iraq. Iran sees the Bomb as the best guarantor of regime security by allowing it to establish a regional hegemony in the Persian Gulf region.

This is unacceptable to everyone in the region. Israel views an Iranian bomb as an existential threat; Ahmadinejad expresses the opinion of 62% of Iranians when he says the Israel state should be wiped off the map. The Jewish state is now ruled by Benjamin Netanyahu, a man who in 2007 opined: “It’s 1938, and Iran is Germany, and Iran is racing to arm itself with atomic bombs”. Not much room for compromise there. The rulers of Saudi Arabia, beset by Iranian-stoked ferment amongst their Shi’ite population and undermined by the Iran-backed al-Houthi insurrection on their Yemeni border, view the prospect of an Iranian bomb with similar trepidation. Though they will protest in public, they will be quite happy to see an Israeli-American strike on Iran; rumor has it that Saudi officials have given Israel permission to fly over their territory via backdoor diplomatic channels.

The US is hesitant. Striking Iran carries great risks. First, no matter how good and accurate your bombs are – the US has accelerated the development of a bunker-buster capable of penetrating 60m of reinforced concrete – they are only worth their weight if you know precisely where to strike. Iranian nuclear facilities are highly dispersed and concealed, making the extent of US intelligence on them uncertain. Second, Iran can mine the Strait of Hormuz and harass oil tankers with coastal shore batteries, diesel submarines, and merchant raiders. This will put at risk 20% of the global oil supply; even if the blockade proves ineffective, as predicted by most analysts, soaring insurance rates may result in oil prices spiraling into new highs due to unprecedentedly tight supplies. Third, the Islamic Republic has a panoply of retaliatory options at its disposal: a renewed Hezbollah missile barrage against Israel, increased support for Shi’ite insurgencies in the Arabian peninsula, and above all a resurgence of political violence and state instability in Iraq. As mentioned above, hopes have been pinned on Iraq to delay global peak oil by another decade. Yet it has always been a land of unfulfilled potential, its imminent oil production takeoff regularly stymied once per decade – in 1979 with the outbreak of the Iran-Iraq War, in 1991 with the Gulf War, in 2003 with the US invasion. It would not be out of character for its oil production to plummet again in 2012, in the face of renewed internecine warfare, Iranian incursions, and mining of the Strait of Hormuz.

Given all these risks and uncertainties, it is not surprising that the US is pursuing a cautious approach, restraining Israel and pushing for “crippling” sanctions on Iran, targeting its gasoline imports. However, the latter will not achieve much, especially since Russia – which has not received the firm recognition of its sphere of influence over the post-Soviet space that it really wants from Washington – will be able to torpedo any sanctions by allowing Iran to import gasoline through its Central Asian surrogates. Israel may grow impatient and eventually jump the gun without US permission. But Iran will likely consider Israeli and US actions to have been coordinated, and will embark on its “Project Mayhem.” The US may be forced to rush in and respond unprepared to contain the fallout as best it could. Now it is true that alarmist predictions that the US Navy will be crippled by Iranian low-tech swarm attacks are largely unsubstantiated, and there is no question that the US will have no trouble in gaining full air superiority over the obsolete Iranian integrated air defense system. However, defeating Iran’s dispersed retaliatory assets in detail may be a difficult and prolonged undertaking, perhaps even requiring the military occupation of strategic Iranian regions such as Khuzestan and Kish Island.

The US finds itself caught in a Catch-22 situation. Let Iran be, and it develops a nuclear deterrent allowing it to make a bid for regional hegemony – if it is not preempted by an Israeli strike. Attack Iran, and needless to say, anything worse than the most optimistic scenarios (in which the Strait of Hormuz only remains blocked for a few days) will constitute a tremendous physical and psychological shock for Pax Americana, a shock in which all its three pillars come under strain in the form of oil supply disruptions, financial turbulence, and prolonged aeronaval operations.

Endgame

In conclusion, given the inherent fragility of the neoliberal world order and the mounting stresses on it in the years ahead, stresses that could be explosively released in a major geopolitical crisis – possible in Iran, though major clashes in other hotspots like the Caucasus or the East China Sea cannot be dismissed – it is unlikely that Pax Americana will survive the decade.

Yet its collapse will not herald a global collapse and a sudden descent into the Olduvai Gorge, for Pax Americana is ultimately just a subsystem of a larger system – that of global industrialism, the System that encompasses virtually the entire world, with the sole exception of hunter-gatherer remnants in the Amazonian fastnesses and a few mystical recluses. The American empire, much like the Soviet one, will retreat from globalist pretensions, while maintaining a continental hegemony. In the meantime, powered by domestic coal and a new kind of resource tributary system – one based on bilateral deals instead of open markets – China will be well on its world-historical “great reconvergence” with the West, making it the preeminent superpower of the age of scarcity industrialism.

The geopolitics of scarcity industrialism are the topic of the next monograph in this series.

(Republished from Sublime Oblivion by permission of author or representative)
 
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There’s been lots of fanfare over China’s GDP overtaking Japan’s in Q2 2010 (coming hard on the heels of a big ruckus over its DF-21 “carrier killing” ballistic missile and rising tensions with the US over North Korea and the South China Sea). The big debate is now whether China will overtake the US as the world’s biggest economy by the 2030′s (as originally argued by Goldman Sachs in their classic Dreaming with BRICs paper), or whether its nomenklatura authoritarianism, centrifugal tendencies and demographic problems will preclude it from ever challenging Pax Americana. My view is that China is underestimated even by many of its proponents: underlying tendencies in world economics and energetics indicate that China’s GDP will overtake America’s before 2020, enabling it to emerge as the last superpower by the 2020′s.

First, there is a major delusion that affects a disturbing amount of the commentary surrounding the size of the American and Chinese economies. Newsflash: nominal GDP and real GDP are different things! China overtook Japan in nominal GDP this quarter, but its real level of output has been the world’s second largest for almost a decade*. The reason China’s nominal, or market exchange rate, GDP is twice lower than its real GDP is because its currency is undervalued relative to the US dollar – simply put, living in China is a lot cheaper than in America. But it’s not an accurate proxy for the actual output of the Chinese economy, which is now at around 2/3 of the US level (IMF)**. The “purchasing power parity” GDP is better suited for gauging a country’s real living standards and economic strength.

Furthermore, many analysts are making the stunningly incompetent, sub-Econ 101 mistake of projecting Chinese’s 10% real growth rates to its nominal GDP. (Needless to say, this is totally absurd; China’s nominal GDP is growing much faster than its real GDP, because as it gets richer its price levels begin to approach those of the developed world). The convenient result of such calculations is to delay China’s sorpasso of the US economy decades into the far future.

Applying linear projections of 10% growth for Chinese GDP and 3% growth for US GDP sees the Middle Kingdom overtaking its superpower rival by 2017. By 2025, China’s economy is 75% bigger than the US.

china-usa-gdp-1

Now one may make the entirely valid observation that linear extrapolation of current trends is bad futurism. I agree. China’s GDP growth will like moderate in the years ahead, as China develops and gets less bang for each investment yuan. On the other hand, there is still plenty of scope for rapid catch-up. China today is where South Korea was in late 1980′s and its trend rate of growth is slightly higher at 10% relative to Korea’s 8% from the 1960′s to the 1980′s. As China gets richer, this growth rate can be expected to ease to 7-8% (Korea in the 1990′s) and 4-5% (Korea in the 2000′s).

The US cannot expect to see anything approaching 3% growth in the next decade. The realistic scenario is 1) a private sector deleveraging as households begin to rein back the debt-income ratios to some semblance of normality and 2) massive yearly budget deficits supporting a permanently weak economy at a 0-1% growth level. Think an American version of Japan’s Lost Decade.

In the graph below, China grows at 10% until 2015, 7% until 2020, and 5% thereafter – roughly replicating South Korea’s trajectory from 1985/1990. The US slugs along at 1% until 2020, then improves to 2%. In this scenario, China sails past the US in 2015 and is 60% larger by 2025.

china-usa-gdp-2

In reality, the world is far more complex than macroeconomics alone can describe. As I argued in Shifting Winds, American hegemony is metastable: though outwardly imposing, an interlinked failure in critical nodes such as energy (e.g. oil shock), finance (e.g. currency flight) and geopolitics (e.g. Iran) can lead to a cascading collapse of the entire system. Few will risk sticking their neck out with such predictions beforehand, but once the collapse becomes visible in our rear-view mirror, it will acquire the tinge of historical inevitability.

The American service-based economy is reliant on cheap and reliable petroleum supplies to keep the office plankton fed and mobile, but is put at critical risk by the imminent peaking of global oil supplies. The financial / credit system relies on trust and belief (“credo”) in future growth to keep functioning as an economic fertilizer, but it is threatened by awning US economic disbalances and the possibility of disruptions in energy supplies. Finally, both the energy and the financial crisis can be triggered by a single geopolitical event, such as a successful Iranian blockade of the Straits of Hormuz (e.g. in retaliation for an Israeli strike against its nuclear facilities).

The risk of cascaded collapse would not exist if Pax Americana faced fewer challenges, or if its foundations were still strong and wholesome. They are most definitely not in our era of permanent deficits, tight oil supplies and imperial overstretch. In the worst case scenario, this collapse could manifest itself in a fall in GDP of up to 30% to a new “steady state” output level.

But at least the US will recover quickly, right? Not likely. Though a US dollar collapse will restore competitivity to some of its older industries, global resource constraints will prevent it from ever fully recovering. Why should increasingly scarce energy sources continue feeding the office plankton of American suburbia, as opposed to Chinese factory cities whose products the entire world wants?

Contrary to popular commentary, China is unlikely to be hurt much by an economic collapse in its prime market. Net exports only account for 7% of China’s GDP, so though exports will decline, so will the imports used to assemble exports, and the overall effect will be modest. Though ebbing US demand for Chinese goods will hurt coastal regions, create unemployment and incite low-level protests, it is unlikely to reach a critical level since China can refocus development efforts on the interior and raising domestic consumption (there are numerous signs that this is already happening).

China’s biggest challenge will be the peaking of its coal production and AGW-induced declines in crop yields within ten to twenty years. Mitigating these developments will require a great deal of capital and ingenuity, things China is fortunate to have in abundance. Ultimately, with 20% of the world’s population but just 7% of its arable land, the Limits to Growth may cap China’s peak GDP at not much more than America’s current level.

On to our third scenario. From 2011, some combination of critical system shocks initiates a cascading collapse of Pax Americana, resulting in a cumulative US GDP decline of 30% from peak (this is similar to Latvia’s collapse in 2007-2009). After that, there is a permanent zastoi – unlike in previous emerging market crises, a significant recovery will be impossible in the new world of neo-mercantilism and energy constraints. China will be able to leap past the US sometime around 2013-15 and grow to more than double its size by 2025 – despite the slowing of China’s own growth due to peak exergy and the natural effects of economic catch-up.

china-usa-gdp-3

What is the probability of each of these scenarios happening? In my opinion, Scenario 1 is pure fantasy. Scenario 2 is what I’d vouch for in “respectable” conversation. Scenario 3 is what I really believe will happen (and what I tend to write about on this blog).

In any case, the general outline is clear: no matter which “prism” you see the world through – be it techno-cornucopian, “realist”, or peakist – it appears that China, by sheer virtue of combining 1.3bn souls with modern technics, is destined to soar past the US to become the leading pole, if not of the world system, then certainly of the Pacific region.

This breakout will be all the more dramatic under the American collapse scenario: wracked by internal decline and preoccupied with internecine politicking, it’s not impossible to imagine the US simply not noticing the ebbing of its influence in East Asia. Of course, there’s a perfect precedent for this: see how post-Maoist China managed to break past the seemingly impregnable Soviet empire that collapsed into anarchic stasis in the early 1990′s.

russia-china-gdp

[Angus Maddison's data adjusted to equalize with IMF 2008 data; note that "former USSR" is a very rough estimate].

* There’s a big debate on the reliability of official Chinese economic statistics. Are Chinese statistics manipulated? by Gao Xu is a recommended rebuttal h/t “in the loop”.

** That is also assuming that the 30% downwards revision to Chinese GDP by the World Bank and IMF a few years ago was well-founded and not undertaken out of political considerations to preserve America’s #1 status. If not, China’s real GDP may already be surging past America’s.

(Republished from Sublime Oblivion by permission of author or representative)
 
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This post is about the future of military technology and war strategy in a world of informatization, resource scarcity, and renewed ideological turbulence. Be forewarned: while some of what I write here corresponds to the conventional wisdom, some is well off the beaten tracks, and some will sound like it’s straight out of a sci-fi dystopia.

The post-Cold War era was, for many, a lovely time. As the Soviet Union imploded, so did the risks of mutual destruction in a global thermonuclear war. At the end of history, the conventional wisdom now regarded rogue states, loose nukes, and transnational terrorists as the main challenges to the brave new world created by globalization. As Thomas P.M. Barnett argued in The Pentagon’s New Map, the primary challenge faced by the US military would no longer consist of planning for a traditional Great Power war with its erstwhile socialist foes, Russia and China. Instead, it would be wiser to focus on policing and “civilizing” the equatorial belt of instability known as the “Gap” – the impoverished, conflicted region stretching roughly from Central America through Africa and the Eurasian Dar al-Islam – in cooperation with fellow stakeholders in stability like Europe, China, India, Russia, and Japan.

However, one of the main assumptions of this blog is that this state of global affairs will not last, if it was ever really valid in the first place. First, many people in the pre-1914 era – an older golden age of globalization and shared international values – also believed that technical progress and increasing interconnectedness had made war obsolete, or at least unbearably damaging if it were to continue for any longer than a few months. They would be disillusioned by the First World War, the genesis of modern total war. Second, the international system today is unstable amidst the shifting winds of change, characterized as it is by a faltering US hegemon beset by challengers such as an expansionist Iran, a resurging Russia, and a robust China intent on returning to its age-old status as the Celestial Empire. Third, peak oil production, probably reached in 2008, is but one of the first harbingers of our Limits to Growth predicament – in the decades to come, the world’s grain belts will begin to dessicate, high-quality energy sources will become depleted, and ever more human effort under the knout of state coercion will have to be requisitioned to sustain industrial civilization against the mounting toll of energetic shortages, climatic disruption, and system instability.

The weak states will fail, while the strong – the US, China, Russia, France, Turkey, Japan, Germany, etc – will bunker down within their new fortress-empires, both physically and psychologically. Facing social pressures, economic decline, and mounting waves of eco-refugees, their philosophers will invent new totalitarian ideologies, defined by a reaction against rationalism. It is not unreasonable to posit that their adherents will take over at least one of the major poles in the future international system, thus creating the specter of the Last War of industrialism. I will look at future war based on these fundamental assumptions: the return of history, the harsh realities of the geopolitics of scarcity industrialism, and the system strains and rising chaos that will form the prelude to global collapse.

Before we start, a few disclaimers. I have no professional or academic knowledge of military affairs, just a sense of curiosity and propensity to look ahead. Hence don’t be surprised if some ideas are totally off the ball to those in the know (though I would like to point out that the two best forecasters of what the next war would be like prior to 1914 happened to be amateurs – Ivan Bloch, a Warsaw financier, and Friedrich Engels, the social theorist). Second, I won’t be making any specific predictions – just a general overlook. Third , I won’t only be considering the low intensity conflicts typical of today, such as the unending war against terrorism or “gunboat” / policing actions like the invasion of Iraq. The prospect of a total war, fought between the leading military-industrial Powers (e.g. the US, China, Russia, etc), is treated as a serious scenario.

Finally, perhaps the most necessary disclaimer is that I do not personally wish for World War Three – although I enjoy perusing weapon system specs and reading historical narratives on the subject as much as the next person, I’m a much bigger fan of All Quiet on the Western Front (Erich Maria Remarque) than of Germany and the Next War (Friedrich Von Bernhardi). And now that that’s gotten out of the way, let’s return to the future…

I have no professional or academic knowledge of military
affairs, just a sense of curiosity and propensity to look ahead. Hence don’t be surprised if
some ideas are totally off the ball to those in the know. Secondly, I won’t be making any
specific predictions – just a general overlook.

The Military Balance, Today and Tomorrow

The primary reality of the current military situation is US military dominance – it is the world’s leading superpower possessing a full panoply of military capabilities unmatched by any other Great Power. In particular, it has 75% of the world’s military naval tonnage (including almost all the aircraft carrier groups and amphibious ready groups) backed up by the most advanced space surveillance system and C4ISR capabilities. As such, US power projection capabilities are second to none. The US Navy is one of the three pillars of the the system of “neoliberal internationalism” supported by Pax Americana (the others are cheap oil and the $), whose strategic value was demonstrated by the takeover of Iraq and its relatively little-exploited oil reserves in a likely futile bid to postpone peak oil.

The US is also at the forefront of the Revolution in Military Affairs (RMA) – a theory of future war placing stress on concepts such as robust networking; deep systems integration; precision strikes; high-bandwidth p2p information sharing; shared battlespace awareness; self-synchronization; space-based surveillance; decentralized C&C; swarming, etc (see Power to the Edge by Alberts and Hayes, 2003). The surveillance, precision, and optimization capabilities unlocked by its interconnectedness and dominance of space give the US military a power multiplier unparalleled by that of any other nation, allowing it to defeat non-networked forces fighting on linear principles with ease.

However, US military power is afflicted by a number of problems and adverse trends – a defense death spiral, an uncertain fiscal future, the development of asymmetric and “assassin’s mace” counters, and challenges from the Chinese industrial powerhouse and a resurgent, energy-rich Russia. Thus I am very skeptical as to the US ability to keep its decisive military lead far beyond 2020.

By that time, the US would have very likely been overtaken by China in terms of real GDP, which would by then possess an extremely potent technical-industrial base. China’s mercantile ambitions in a world of “scarcity industrialism” (characterized by aggressive competition for resources), in tandem with the precipitous decline of American power, will give China the impetus to effect a rapid military “breakout” in an attempt to catch up to and surpass US capabilities. China used the 2000′s to build up a “string of pearls” network of naval bases on its offshore islands and friendly nations like Myanmar, Bangladesh, Sri Lanka, and Pakistan so as to be able to protect its long, vulnerable coast and energy supply routes. It is now in the midst of a massive naval expansion that could see the PLA Navy surpass the USN by number of military vessels within the decade. Furthermore, the conventional wisdom of Chinese technological inferiority is gradually becoming outdated thanks to its efforts in military R&D and industrial espionage. A recent RAND study indicated that China is already be able to establish air superiority over Taiwan in the event of a hot war over the straits, and elements of the PLA believe they will be able to pose a direct military challenge to the US by 2020.

While Russia’s GDP cannot conceivably approach that of the US on any meaningful timescale, Kremlin dreams of economic modernization may yet be realized, and in any case Russia is fully capable of leveraging its energy wealth to reconstitute and modernize its dormant military-industrial potential. As of today, it is implementing a major military reorganization and modernization, most recently displayed by its demonstration of the PAK-FA “Firefox” prototype, the first 5th-generation fighter produced outside the US. Russia’s fundamental energy and food security, as well as its comparative immunity to the malign effects of climate change (it will actually benefit from AGW, at least for moderate rises in temperature) will enable it to achieve the high per capita surpluses necessary to compete effectively with otherwise larger and wealthier blocs.

India’s socio-economic and human capital lags China’s by several decades. However, it does enjoy better ties with both Russia and the West, which can be and are translated into military-technical cooperation. Assuming it can stave off stagnation and Malthusian crisis, it may evolve into a potent check on Chinese expansion into the Indian Ocean, especially if allied with Japan and Korea in the east. Speaking of which, Japan is technologically advanced and is acquiring potent naval, space and ABM capabilities under US patronage. However, the aging of its population and its almost total dependence on imported energy and raw materials severely curtail its ability to play an independent role, and its strategic vulnerability means that Japan will be eclipsed as soon as the PLA Navy equalizes with the Japanese Maritime Self-Defense Force.

The European Union can become a major military power, but only if it acquires a common foreign policy and streamlines military procurement and R&D. However, in the long-term meaningful European integration is unlikely to survive under the strain of economic stagnation, energy insecurity, rapid aging, and collapsing welfare states. Brazil will achieve military hegemony in South America and the South Atlantic, but will remain a regional power with few global ambitions.

Finally, the nuclear weapons sphere is dominated by the US and Russia, both of which maintain a robust nuclear triad with thousands of warheads. Although Russia’s capability degraded after the Soviet collapse, it is now being revamped at an accelerating rate (as is the rest of its military). Though it is decisively outmatched by the US and by now probably also China in conventional terms, as long as Russia retains its vast nuclear arsenal, it also retains full strategic immunity from encroachment by China or other resource-hungry Powers (at least as long as the latter do not have access to effective BMD). After the two nuclear superpowers come France, Britain, China, and Israel, each possessing hundreds of warheads and a more limited set of delivery systems. Finally, although formally against nuclear weapons, there exist “virtual nuclear weapons states” like Japan, Germany and Italy that could, if they embarked on crash programs, build up massive, robust nuclear arsenals within a decade.

The Promise and Peril of BMD

Since the 1950′s, nuclear weapons have been the ultimate guarantors against the resumption of Great Power wars. However, this may cease to be the case a decade or two down the line, when effective ballistic missile defense (BMD) systems are developed. When they become effective and universalized across the world’s Great Powers, the utility of MRBM and ICBM forces – and to a lesser extent, of submarine and strategic bomber nuclear forces – will be severely undermined. The deterrence system based on mutually assured destruction (MAD) that arose during the Cold War will come to its demise, and so will the realist checks on international aggression that emerged out of it.

Today, the US has a commanding lead in BMD technologies, with four mature technologies operational or nearly so (though around two dozen other countries are seriously pursuing BMD programs, with Russia, China, Israel, India, and Japan being particularly advanced). Below I summarize each one, before outlining the course of future developments.

Aegis/Standard Missile-3 (SM-3): Proven anti-satellite system, intercepts ballistic missiles during parts of ascent and descent phases, and is already deployed on 18 USN guided-missiles destroyers and cruisers and 2 Japanese Maritime Self-Defense Force warships.

Terminal High Altitude Area Defense (THAAD): Mobile truck-based system capable of ballistic missile interception in the final midcourse descent and in its terminal phase, both endo and exo atmosphere; it has performed successfully in recent tests.

Patriot Advanced Capability-3 (PAC-3): A terminal-phase intercept system (like the Russian SA-10 / S-300), it has been given the baptism of fire during the Gulf War. It performed poorly, but since then 20 years have passed and it is now far more capable. The system has recently been installed in Kuwait, the UAE, Qatar and Oman, along with BMD-capable USN warships in the Persian Gulf, in a message to Iran.

Ground-based Midcourse Defense (GMD): A fixed, silo-based system for the midcourse phase, as implied by the name. It is a mature technology and installations exist in Fort Greely, Alaska and Vanderburg, California – more than enough to contain any ballistic missile threat from North Korea, and by now perhaps even enough to neutralize China’s “minimal” nuclear arsenal. US attempts to expand it to Central Europe have caused major frictions with Russia – not because Russia actually fears it in a military sense, but because it hopes to use it as a bargaining chip with the US elsewhere.

This array of systems gives the US a multi-tiered, overlapping BMD capability. However, there is pressure for developing boost phase intercept capabilities, because midcourse and terminal interception may need to deal with decoys, MIRV, and other countermeasures. One interesting idea is the Airborne Laser (ABL), which is mounted on a modified Boeing-747 airliner. It can be used to shoot down ballistic missiles in boost phase and even satellites in low-earth orbit. It has recently had its first successful test.

Two common objections to BMD are that it is 1) technologically ineffective – along the lines of “you can’t hit a bullet with another bullet”, and 2) far too expensive to be fielded in quantities sufficient to deter anyone but backwards “rogue nations” like North Korea or Iran. Both are invalid.

Calculating an ICBM’s ballistic trajectory is easy, if you understand Newtonian mechanics, so in theory the interceptor missile doesn’t even need an autonomous guidance system to achieve a kill. In principle, a reliable BMD system was possible even from the 1950′s, albeit it was only under Reagan that the US acquired the strategic focus to begin seriously working on it. (The USSR did have a working BMD system from the 1970′s defending Moscow, though the interceptor missile relied on a nuclear blast to ensure reliability). However, following the end of the Cold War the US dropped its “Star Wars” program, and has since focused on ostensibly easier objectives such as guaranteeing itself from attacks by “rogue states” with emerging long-range missile capabilities. In this it has been successful, with each layer of its global BMD system now predicted to have a kill rate of 90%+.

Now about cost. By far the biggest expense, around 90%, is incurred in the construction of the Missile Defense Ground Environment (MDGE) – the sensors, C&C networks, launchers, maintenance depots, supply chains, etc. The missiles themselves are rather cheap, coming in at 10% or less. Therefore, once the MDGE is ready, “thickening” the missile screen is relatively easy and inexpensive. So once the US has established a firm shield against nations like North Korea, it would then, in principle, be able to effect rapid “breakout”, in which it massively increased the numbers of missile interceptors to make itself invulnerable to China or even Russia before they can respond by increasing by increasing their offensive missile forces. (This calculus also applies in reverse: building the Offensive Missile Ground Environment (OMGE), such as airfields for bombers, SSBN’s for SLBM’s, and silos for ICBM’s, is much more expensive than the actual missiles).

This implies that even with today’s BMD technologies, creating a massive, multi-layered missile shield that could render a Russia-sized nuclear arsenal is neither infeasible nor prodigiously expensive for the US. And again, I should emphasize that this is not limited to the US. More than two dozen countries are seriously pursuing missile defense, either directly or as partners. Many of them should start coming online by 2015, and will have proliferated to the extent of making traditional ICBM’s largely obsolete by 2025.

The other two legs of the nuclear tripod, SSBN’s and strategic bombers, will then have to shoulder more of the burden. No wonder that Russia is so desperate to get the advanced Bulava SLBM working, as well as resuming production of the Tu-160 strategic bomber and developing the next-generation PAK DA. The US has much more ambitious goals in mind with the concepts of a “Blackswift” hypersonic global strike bomber… which although repeatedly canceled, refuses to really die. Needless to say, China too is working along similar lines, albeit they yet have major technological hurdles to overcome.

But BMD will continue to evolve too. There’s the rapid developments in laser technology, which are already becoming militarily usable and might become the primary defense system used by warships. Railguns may become operationally deployable by 2020 in the USN. Finally, there are even more exotic concepts such as the Russian “plasma shield“:

[The plasma shield] action is based on focusing beams of electromagnetic energy produced by laser or microwave radiation into the upper layers of the atmosphere… A cloud of highly ionized air arises at the focus of the laser or microwave rays, at an altitude of up to 50 kilometers. Upon entering it, any object – a missile, an airplane, is deflected from its trajectory and disintegrates in response to the fantastic overloads arising due to the abrupt pressure difference… What is fundamental in this case is that the energy aimed by the terrestrial components of the plasma weapon – lasers and antennas – is concentrated not at the target itself but a little ahead of it. Rather than “incinerating” the missile or airplane, it “bumps” it out of trajectory.

This system would have a longer range than the ABL, be much easier to aim, and cost much less per shot. So the following defensive system can be envisioned as 2040 approaches. Pulse lasers mounted on mobile bio-mechanical constructs providing near-perfect point defense powered by space-based solar power and optimally coordinated by an automated ground environment, and further reinforced by an “iron phalanx” of railguns and older GBI missiles to add redundancy.

Now at this point you may be forgiven for thinking that I’m beginning to go crazy, or have read too much sci-fi. But that is inevitable when projecting as much as 30-40 years ahead. I am fairly confident in the earlier predictions that the maturation of BMD technologies will make the ICBM increasingly irrelevant within the next two decades. Obviously, there is no certainty whatsoever over DEW-based missile defense, the plasma shield, or especially the military biomechanical constructs. But neither are they totally out of the pale based on historical experience and the research and technology trends in place today.

The Third RMA

Here is a non-technical, almost philosophical definition of the ongoing Revolution in Military Affairs (Strategy and the RMA From Theory to Policy by Metz & Kievit).

During the “First Wave” of human development, production was primarily agricultural, so war sought to seize and hold territory. During the “Second Wave,” industrial production dominated, so war was often a struggle of attrition where belligerents wore down their enemy’s capacity to feed, clothe, and equip armies. Following this logic, “Third Wave” warfare will seek to erode or destroy the enemy’s means of collecting, processing, storing, and disseminating information. Since the more dependent an enemy is on information the more vulnerable it would be to information warfare, this would seem to have potential as a counter to an advanced, peer threat.

As with most spheres of the human existence – the economic base, the class structure, the status of women, etc – the nature of warfare is intrinsically tied to the environment it is fought in. Back when humanity was one with the biosphere, primitive wars were fought within territorially small spaces for a particular ecological niche and were characterized by incredible levels of per capita violence. In the Malthusian, pre-industrial phase of human civilization, war sought to gain territory because in the absence of long-term industrial growth, controlling land and the taxable peasants it supported were the only means of extracting the wealth to support a ruler’s megalothymia (lavich courts, powerful armies, etc). Industrial warfare was sustained by industrial production, so undercutting its material base while expanding your own lay at the heart of any war-winning grand strategy: blockading Imperial Germany’s access to phosphates, bombing Nazi factories to curb the (late and belated) growth of its total war economy, the US containment strategy of economic pressure on the USSR during the Cold War. However, the principles of the First Wave remained valid – actually conquering territory by putting boots on the ground remained indispensable, whereas industrialism provided the means.

From the 1970′s, the world has been on an exponential runway into the noosphere, embodied in the cyberspace that is overspreading the biosphere, just as the biosphere once overspread the geosphere, the bare rock bones of the Earth. This environment is based on information and its creation, manipulation, and destruction, and it will form the defining environment in which future wars are fought. Below is a summary of the defining features of network-centric warfare.

Contrary to most theoretical writings on the subject, the growing significance of information does not mean that the industrial or territorial phase is diminishing into insignificance. The main reason for the surgical cleanliness with which the US won its wars with Iraq was because of the sheer mismatch between a power at the forefront of RMA exploitation and one still firmly rooted in the older industrial age of centrally-coordinated movement and mass (during the Gulf War, the Iraqi military was cripplied early on by the neutralization of its few C&C nodes) – and US network-centric capabilities continue advancing at a blistering pace. As Lt Gen Harry Raduege of the Defense Information Systems Agency noted:

Net-centric warfare’s effectiveness has greatly improved in 12 years. Desert Storm forces, involving more than 500,000 troops, were supported with 100 Mbit/s of bandwidth. Today, OIF forces, with about 350,000 warfighters, had more than 3,000 Mbit/s of satellite bandwidth, which is 30 times more bandwidth for a force 45 percent smaller. US troops essentially used the same weapon platforms used in Operation Desert Storm with significantly increased effectiveness.

However, a total war between two powers exploiting the RMA will prove to be as much a test of systems resilience as previous total wars – not only of their information systems, but of their industrial systems (their resilience, hardening, dispersion, level of optimization of physical throughput, etc) and their agricultural(-industrial) systems. Furthermore, the coercive means for mobilizing the home front opened up by the emerging possibilities of “cybernetic totalitarianism” (electronic surveillance, universal databases, pattern recognition software, ubiquitous propaganda, sousveillance, ultra high-bandwidth wireless networks, etc) are historically unprecedented in their totality. The total wars fought in the cybernetic age have the potential to be far more total than anything seen before. But more on the social aspects of future war later…

The RMA will continue and possibly accelerate, in particular the network-centric warfare component. To repeat the points made above, this basically involves connecting all components of a modern army so as to improve every component’s situational awareness, optimize decision-making and multiply the effective strength even of small units. This goes in tandem with continuing improvements in precision technology, as striking particularly vulnerable enemy nodes is much more damaging than striking with a bigger tonnage but not aimed at anything in particular. All in all, military forces will become much more robust, resilient and intelligent (thanks to the innate crowd wisdom of a more democratic / dispersed decision-making process). Obviously, as Iraq as early as 1991 showed, traditional conventional “linear” armies that are poorly networked will stand as little chance against a well-supplied networked force as the clumsy feudal armies against the Mongols or the Poles against the Nazis in 1939.

However, there are two counters to a networked force – another good networked force, or rather paradoxically, a technologically retrogade dug-in fighters with just AK’s and RPG’s – as the Chechens showed in 1994-96 and Hezbollah demonstrated in 2006, even relatively small numbers of dedicated fighters armed with old-school weapons can blunt the advance of a modern mechanized force. Indeed, their power can become terminal if they have access to EMP’s or the means of taking out or corrupting networked satellites, drones and other surveillance/information systems. A networked force whose computers no longer work is just another ordinary rifle army, presumably also quite a demoralized one.

As Charles Perrow of the National Defense University noted in May 2003:

Our incipient NCW [network-centric warfare] plans may suffer defeat by [adversaries] using primitive but cagey techniques, inspired by an ideology we can neither match nor understand; or by an enemy who can knock out our vulnerable Global Positioning System or use electromagnetic pulse weapons on a limited scale, removing intelligence as we have construed it and have come to depend upon. Fighting forces accustomed to relying upon downlinks for information and commands would have little to fall back upon.

As such, in the case of absolute war between two technologically advanced blocs, the outcome will be determined by the outcomes between these two elements, the hi-tech NCW / “networked” element and the low-tech 4GW / “guerilla” element. However, these elements will inevitable lose their distinctions. The “guerillas” will themselves become networked, while the “networked” will adopt “guerilla” tactics in search of a new, optimal equilibrium. Those who are slow to find this equilibrium, relying either a) too much on small sized networked forces, which although very robust are vulnerable to attacks on critical nodes which will render them helpless, or b) on very low-tech forces that can be annihilated easily by hi-tech forces, will lose.

Weapons of Network-Centric Warfare

Munitions. Three types of ordinance will increase in importance: EMP’s, precision weapons, and fuel-air bombs. Though military C&C nodes can be (and are) hardened against EMP strikes (though the effectiveness of this hardening hasn’t yet been tested under fire), doing the same for the civilian infrastructure is prohibitively expensive. All it takes is one nuclear explosion high up in the atmosphere, and an entire continent can go black. (Needless to say, this will severely affect the enemy’s military-industrial potential). Precision weapons can be used to destroy key enemy C&C nodes without excessive expenditures of energy and firepower, albeit they are no panacea because of the concurrent trends towards dispersion.

In future wars, soldiers and industry will be digging in to conceal themselves from ever better surveillance and much of the fighting will take place in urban areas; fuel-air bombs, or thermobaric weapons, are near optimal when used against tunnels, bunkers, and enclosed spaces. Using nanotechnology, they will be miniaturized into lighter artillery munitions and grenades, giving even low-level platforms like individual soldiers immense destructive power.

Naval. As of today, the aircraft carrier appears to be going the way of the battleship of the 20th century. It appears to be a huge liability – it’s size and profile are so big that it is simply going to get saturated by enemy firepower (supercavitating torpedoes, hypersonic anti-ship cruise missiles), no matter it’s defences – the priority will be to avoid being seen. However, the development of all-electric destroyers and cruisers hosting FEL weapons and railguns – especially if they were to be mated with a source of space-based solar power (and assuming said source can be defended) – may mean that the aircraft carrier will remain viable on some level as long as it is protected by its retooled carrier battle group (CVBG). At the very least, it will remain very useful for the kind of gunboat racketeering we are likely to see the Great Powers employ towards militarily-weak, resource-rich nations in the coming age of scarcity industrialism.

Nonetheless, the dominant trend at sea will be towards smaller, lighter, stealthier craft, – increasingly equipped with advanced weapons, optimized for swarm tactics, and preferably submersible. They will be the bane of maritime supply routes, if not the the retooled aircraft carrier battle groups that will be providing fixed point defense (the “iron phalanx”) and power projection capabilities (via VSTOL scramjet drones).

The ekranoplan, a Soviet chimera combining the sea-hovering effects of a hovercraft and the speed of a conventional plane, is likely to make its debut as a new major component in naval warfare. It is very fast, very suitable for transport and can carry a large amount of missiles and other ordnance. Flying low, just about the water, it is largely invulnerable to radar. It will be able to interdict supply routes and launch nuclear-tipped cruise missiles from off the coast of a hostile Power.

Space. Due to the spread of satellite-dependent network-centric warfare, control of space will become ever more important: for communications, surveillance, and electronic spying in low-earth orbit (LEO); comms and navigation constellations like GPS, Glonass, and Galileo in medium-earth orbit (MEO); and Beidou and systems like the US global infrared launch-detection capability in geostationary orbit (GEO).

[Source: Space Security 2007].

Furthermore, it is possible that in the coming decades of resource depletion, space will acquire a new strategic significance because of its potential for space-based solar power (SBSP). The specs indicate that though initial investments will have to be very substantial (though even they can be substantially reduced by constructing a space elevator), the payoffs will be tremendous. Since the Sun shines all the time, space-based solar has both much higher flux and can provide base load power, unlike solar photovoltaics on Earth, the system’s ultimate EROEI will be much higher and may constitute the new energy source to which industrial civilization will try to transition to from its current, unsustainable hydrocarbon dependence. From the National Space Society:

The magnitude of the looming energy and environmental problems is significant enough to warrant consideration of all options, to include revisiting a concept called Space Based Solar Power (SBSP) first invented in the United States almost 40 years ago. The basic idea is very straightforward: place very large solar arrays into continuously and intensely sunlit Earth orbit (1,366 watts/m2), collect gigawatts of electrical energy, electromagnetically beam it to Earth, and receive it on the surface for use either as baseload power via direct connection to the existing electrical grid, conversion into manufactured synthetic hydrocarbon fuels, or as low-intensity broadcast power beamed directly to consumers. A single kilometer-wide band of geosynchronous earth orbit experiences enough solar flux in one year to nearly equal the amount of energy contained within all known recoverable conventional oil reserves on Earth today.

Obviously, this will have great military implications, because armies and navies will be transitioning from fossil fuels to electrical sustenance, because of hydrocarbon depletion, better electric battery technology, and the new emphasis on DEW weapon systems. The energy received by the SBSP installations can be converted to microwave radiation and transmitted down to any military antennas within range.

However, the concurrent proliferation of Earth-based anti-satellite capabilities (blinding by lasers, DEW weapons, etc) will make space denial, in most cases, much easier than space control. The BMD technologies I talked about are essential elements of space denial, since Powers possessing them are capable of blasting satellites out of LEO (the US, Russia, and China have demonstrated the capability) – and with them go the best reconaissance, MASINT, and SIGINT. Furthermore, once you destroy a few satellites, there could be a runaway effect called an ablation cascade which could rapidly clog up the lower-Earth orbits and close it off to human exploitation for a few centuries. Reconaissance would shift towards UAV’s and perhaps more exotic inventions like tiny robotic insects and “nanodust” (not making this up, take a look at DARPA’s plans, the Pentagon’s mad science division that gave us the Internet).

(For now, higher orbits remain safe, such as where GPS resides, though they remain vulnerable to jamming. If successful, the satellite becomes useless. One idea suggested by George Friedman is to construct heavily-defended “Battle Stars” in geosynchronous orbit and move C&C into deep space so that during a war they can continue to direct military forces down below even if (especially if) other satellites and communication networks are incapacitated or destroyed by kinetic kill vehicles, pulsed lasers, EMP’s, particle beam weapons, and whatever other forms of anti-satellite weapons are developed).

There are other exotic avenues of exploration such as wars for the lunar surface, Lagrange points, and over geoengineering projects in space such as a solar sunshade. I do not foresee these becoming overly relevant to military strategy until 2050.

Air Force. The fighter will be displaced by UAV’s, as it limits the range of manoeuvres it can do, and besides, a computer with the appropriate software will execute any operation much better than a human (g forces aren’t an issue with unmanned vehicles). By the 2020′s, we will see the first serious hypersonic scramjet drone prototypes, which will be far more capable of penetrating the thickening air defense shields which will by then be proliferating around the world. Though they will have direct control links, they will also contain autonomous AI programs in case their connection with the human controlled is destroyed or interrupted.

AWACS aircraft will remain essential, providing massively boosted radar coverage and stealth to the friendly aircraft around it. In the case of a big war by the 2040′s, air forces are likely to be made up of: 1) a core of hypersonic strategic bomber drones with advanced armaments including nuclear weapons, 2) a few legacy 5th generation fighters, 3) many cheap, lightly-armed reconaissance UAV’s, and 4) commercial airliners converted to serve as ABL’s, AWACS, and military transports.

Army. Tanks will probably survive in a similar form to today, but they will become smaller, lighter, stealthier, more modular and will lose their human presence. Their overall utility is going to decline in the face of advances in RPG’s; see Chechnya-Russia or Hezbollah-Israel, where small units operating from urban or entrenched positions were surprising successful at checking armored forces.

The biggest changes will occur at the level of the individual soldier. Below is an illustration of US plans for a Future Force Warrior.

They are going to feature: advanced sensors to keep the body comfortable and at homeostasis; helmets showing real-time maps with positions of goodies and baddies (battlespace awareness), excellent networking capabilities, and firearms integration (so you can shoot around corners or over a ditch without exposing your head); an exoskeleton that increases speed and multiplies your strength; advanced body armor and camouflage. In sum, future warriors will experience what is call “augmented reality” and become cyborgs, making them very effective individual weapons platforms. Their “vision” of the battlefield will converge to that of today’s shoot-em-up video gamer, with the major exception that losing HP will have bad, real-life consequences.

The assault rifle will likely remain the standard infantry weapon, because the prospects of developing effective infantry-level laser or “beam” weapons are unrealistic for the foreseeable future. I recommend something along the lines of the innovative Heckler & Koch G11, which uses caseless ammunition, or the FN 2000, which is a pleasure to handle. The lethality of munitions will increase thanks to the likely development of “smart bullets” and munitions of enhanced explosive power (see above).

Medical technology will become much more advanced, including even the regeneration of spinal tissue, which would heal otherwise disabling wounds. This will cause the casualty : KIA ratio to increase further, since so many wounded would be able to rejoin the action.

Finally, one more interesting military development that we may see within twenty years, once 1) bioengineering advances, 2) the costs of DNA sequencing slip further down the Carlson Curve, and 3) artificial womb-like environments are developed (slated to become realizable within the next five years), it may become possible to build bio-mechanical constructs that combine robot endurance and controllability, with biological flexibility and resilience. Cutting edge research is already incorporating the biological features of many lifeforms, which have been optimized for whatever their tasks by evolutionary eons, for commercial exploitation. The military will surely follow suit.

Cybernetic Reprimitivization

What will the numbers be like? Historically, the number of troops in armies has generally increased. This has usually been accompanied by a) increases in state resources and control and b) newer technologies that give a premium effect when diluted amongst the many rather than concentrated amongst a few (e.g. having lots of gunpowder-using units is better than a few elite, cold-steel cavalry units).

For instance, medieval armies were smaller than classical armies, because knights became key actors during the medieval period and as is well known equipping them cost a fortune. On the other hand, improvements in tactics and gunpowder weapons made heavy cavalry no longer economical and it became a better use of resources to equip more with arquebuses than less with warhorses and heavy armor. For all the talk of the death of the nation-state, the flat world, rise of the multinational corporation, etc, the fact remains that historically the state has never been stronger. Some of the European welfare states take more than 50% of GDP in taxes. This is a level that was before only reached during wartime, e.g. the US in WW2. And before the twentieth century even during warfare this percentage fell well short. So, if even today in peacetime and a liberal world order, some states can milk half of a country’s GDP, what can they achieve in conditions of total war?

Some commentators talk about the huge spiral in weapons costs, which will supposedly make total war far too expensive and lead to economic collapse very soon. Firstly, the exact same arguments were made even in the prelude to WW1. Then, few people realized the sheer productive power of a modern industrial complex turned over completely to military purposes. Secondly, with standardization; mass production levels and economies of scale; and optimization between hi-tech and numbers (see above), weapons and networking costs are going to come down a lot, by an order of magnitude.

Other commentators have voiced the opinion that since the US and other advanced industrial nations have in fact become deindustrialized or “hallowed” out, they will not be able to support big production volumes. However, the extent of this deindustrialization should not be exaggerated. US industrial output by physical volume today is no smaller than it was in 1970, the apogee of its industrial phase; it’s just that since then, the main focus of its development has shifted towards services and technological improvements. Much fewer people now work in manufacturing in the developed nations, but this is primarily because labor has been substituted by capital, not because they are producing less. That is actually a positive development from the point of view of waging total war. Less people in the factories equals more people available for service of a more directly military nature, not necessarily in the frontline but also in logistics, transport, construction, etc. In this respect the US is actually in a better position than, say, China. Even better of in this respect are the most capital-intensive nations, like Japan and Germany (though in practice they are weak because they are unable to guarantee their energy supplies).

Now about how the Armed Forces themselves will change. Basically, everything will be about the optimization between quantity and quality. Today, in the US and many other countries, the premium is on quality, since they only expect quick wars against technologically inferior forces like Iraqis or Chechens or Palestinians, and where big losses are politically unacceptable. However, in a total war, even the best networked forces will suffer attritition and rapid annihilation if the systems they rely on are disabled; after that, how do you continue to fight?

This means that future wars will not necessarily be, as imagined by most commentators, affairs involving small, high-tech elite warriors, as was the case in medieval Europe’s focus on knights. To the contrary, they may more resemble a cybernetic “people’s war“, characterized by the networking of hi-tech and guerrilla forces and tactics, strict political control, and cybernetic planning to optimize the resource flows and output of a mobilized war economy.

Women will play much bigger roles. They are physically, on average, perhaps 40-50% weaker than men, so in the age of cold steel they would have been of limited use on a battlefield (plus traditional social mores stood against their active involvement). Today, however, they account for around 10% of the personnel of many of the most advanced armies (albeit mostly in support roles). In WW2, there were around 2 support personnel for every fighter in the US Army in the European theatre. Obviously, there is no reason women cannot be of use in that sphere. They can also participate in the new realm of information war – intelligence analysis, planning, cyberwar, etc.

Another thing is that the premium of physical strength itself is in decline. Equipment is continuously getting lighter. Exoskeletons will make the issue immaterial. Although physically weaker, women are probably no worse and perhaps better than men at aiming and shooting, if Soviet female snipers in WW2 are anything to go by. As such, the next total war will probably see the mass mobilization of women, including for front-line duty. Of course, there remain entrenched social attitudes and men’s proclivity to protecting women. Hence, battalions and lower are unlikely to go mixed. Involving women in such a way will not, of course, guarantee victory; but states which effectively exploit womanpower as well as manpower will somewhat increase their chances of winning.

As noted above, production in a future total war is going to be massive and on a scale dwarfing that seen in the WW2 (when industrial output by volume was about three to four times lower than even today). However, the industrial base is going to become much more vulnerable to hostile disruption and destruction. Massed attacks of hypersonic global nuclear bombers may be able to evade missile defences and drop their deadly nuclear payloads on major industrial concentrations. Ekranoplans can fly close to the enemy coastline and launch cruise missiles at harbors. Likewise, missile defence may not be fully effective against SLBMs.

It is a myth that nuclear war will lead to the extinction of the human race or even the collapse of civilization.

A good civil defense system (blast shelters underneath municipal buildings, grain stockpiles, urban metro systems, widespread EMP hardening, widespread distribution of Geiger counters & potassium iodide pills, prewar planning, dispersed machine tool stockpiles, air raid / missile strike warning sirens, etc) will vastly improve the survivability of a population and enhance the speed and scope of its postwar recovery. A good example of a prepared society is modern Switzerland, which has a nuclear shelter in almost every building, and to a lesser extent the late Soviet Union. In conjunction with an advanced ABM and SAM system, a society with a good civil defense system is probably capable of surviving, and fighting, a prolonged nuclear total war.

In WW2, bombing significantly disrupted Germany’s war production, both by outright destruction and by forcing production to move to underground, dispersed factories. In modern total war, both sides will thus force the other to curtail their war production. Tragically, the distinction between civilians and military will become even more blurred than in WW2. Perhaps it will vanish altogether.

In the prelude to war, special ops will be carried out on enemy territory. WMD may be smuggled into the nation’s major cities and political centers, so as to execute decapitating strikes at the outset of hostilities. Terrorism will whip up an atmosphere of panic and divert attention from real intentions. In general espionage activities and “maskirovka” will play a more important role than in previous conflicts. War will be waged on many fronts – not only conventional and strategic, but informational, psychotronic, assymetric (involving use of WMD), etc.

One of the most intriguing prospects is climate war. By the 2020′s, the nations of the world will realize that there is no way they can prevent runaway climate change through global emissions reductions, and so geoengineering research will be massively stepped up. Many insights as to how the change the weather and climate will be gained, and it will doubtlessly be adaptable to military purposes. Artificial droughts; regional dimming; triggering of submarine slides (causing tsunamis) and catastrophic release of ocean methane hydrates; geo-techtonic disasters; … all these and more may be exploited. From the book Unrestricted Warfare (see here for html excerpts) by PLA colonels Qiao Liang and Wang Xiangsui:

Ecological war refers to a new type of non-military warfare in which modern technology is employed to influence the natural state of rivers, oceans, the crust of the earth, the polar ice sheets, the air circulating in the atmosphere, and the ozone layer. By methods such as causing earthquakes and altering precipitation patterns, the atmospheric temperature, the composition of the atmosphere, sea level height, and sunshine patterns, the earth’s physical environment is damaged or an alternate local ecology is created. Perhaps before very long, a man-made El Nino or La Nina effect will become yet another kind of superweapon in the hands of certain nations and/or non-state organizations. It is more likely that a non-state organization will become the prime initiator of ecological war, because of its terrorist nature, because it feels it has no responsibility to the people or to the society at large, and because non-state organizations have consistently demonstrated that they unwilling to play by the rules of the game. Moreover, since the global ecological environment will frequently be on the borderline of catastrophe as nations strive for the most rapid development possible, there is a real danger that the slightest increase or decrease in any variable would be enough to touch off an ecological holocaust.

Finally, there’s also chemical and biological warfare. Their effectiveness is very uncertain, since they have not been widely used in anger (especially in recent decades). Chemical munitions have historically been mostly ineffective, mostly just a psychological weapon, though the most recent generations, novichok nerve agents delived by “binary munitions”, are an unknown quantity.

Potentially far more devastating than chemical weapons, maybe even nuclear weapons, are biological weapons. And you no longer even need a large state-funded efforts like Biopreparat to create lethal biological agents; according to Paul Boutin, just a DNA synthesizer and a few spare millions $ will do. Since bioweapons have the annoying quality that they can eventually “blow back” onto your populations and armies, it is thought that the main threat would come from millennarian terrorist movements. At the moment the world is every bit as vulnerable to biowar / bioterror / bioerror, as it is to a new flu pandemic. Not surprisingly, the main state-backed biowar efforts no longer relate to weaponization, but to biodefense.

Visioning Future War

Another way of imaging future war. Linear, infantry wars fought with rifle armies resembled checkers – relatively simple, one-dimensional, almost intuitive. The “combined arms” / 3rd-generation warfare that saw its apogee in WW2 and Cold War planning for WW3 on the plains of Germany resembled chess – one had to know how to use exploit time and space effectively with a variety of different units (infantry, mechanized, armored, air) to effect critical breakthroughts, encircle enemy units to enable for defeat in detail, and to know how to defend in depth. All of these are of course major elements in chess.

Future iWar is going to be like the Chinese game go – which despite the relative uniformity of platforms / pieces, is in practice far, far more complex than chess (computers aren’t advanced enough to “brute force” win in the game of go, unlike in chess, due to the sheer number of possibilities; skill is based on pattern recognition). It is characterized by extreme dispersion and inter-meshing of allied and enemy forces; strong point defences (see “iron phalanx”) with tenuous lines holding them together that are vulnerable to concerted assault; extreme mobility; and catastrophic bouts of attrition when large groups are surrounded and captured (equivalent to asymmetric attacks that disable large networks). No “King” that you have to defend at all costs because of the networked aspects; each unit is its own platform.

Responses to Criticisms

1. But we are in the era of globalization, spreading democracy, and world peace!

This won’t last due to the coming collapse of Pax Americana (the current global order founded on cheap oil, globalization, international rule of law, etc, and guaranteed by the US military / NATO), which will usher in the age of scarcity industrialism / the world without the West (characterized by economic statism, Realpolitik, resource nationalism, mercantile trade relations, etc).

Though on paper Russia’s military spending is only 4% of US GDP, in reality hidden subsidies, “structural militarization”, black budgets, etc, indicate that more like 15-20% of its techno-industrial potential is geared towards defense (20% of manufacturing output are armaments, 75% of Russian R&D has defense applications). In the US, real military spending is closer to 10% rather than the headline 5%. The figure is probably similar for China.

2. Given how much you talk about peak oil and collapse, what makes you think all these cool military technologies will ever be developed?

However, there are still plenty of unconventional gas reserves (coal seam gas, shale gas) and coal that will be able to sustain industrial civilization for another generation. (Of course by the 2030-50 period there will appear incredible stresses on the system if 1) climate change is bad and geoengineering is not attempted or is unsuccessful, and / or 2) if global industrial civilization had not managed to transition to a non-hydrocarbons dependent development regime). So whereas the US global empire will soon go, the global industrial system still has a substantial life ahead of it.

This time period, c.2010-2030/2050, will be characterized by an apolar, anarchic international system based on Realpolitik and resource nationalism. The three most powerful blocs are going to be the China-East Asia bloc, the America-Atlanticist bloc, and the Russia-Eurasian bloc. In times of stress and international competition, resources are diverted to the military sector and the military-industrial complex, including R&D. Since armed forces are the coercive foundations upon which any state is kept together and preserved, they are going to get preferential resources from the state they serve up until the very end of said state. This will be occuring in tandem with the continuation of the explosion in computer power, electronic networks, AI, biotechnology, nanotechnology, and robotics.

BTW, the process of ramping up the share of productive resources dedicated to the military sector has been rising at the global level since around 2000, bringing to an end the post-Cold War “peace dividend”. Despite commitments in Iraq and Afghanistan, the US has accelerated the development of BMD under Bush; after 20 years of declining military spending as a percentage of GDP to free up resources for economic development, Chinese military spending began to grow faster than GDP; and Russia has revamped military spending from its post-Soviet nadir, is reforming its army and beginning fifth-generation rearmament, and plans to resurrect high-volume military production from 2011.

3. The range of technological, doctrinal, and social changes you describe as regards a total war is so radical that I cannot imagine it happening.

The citizen, soldier, and general of 1914 could have no way of knowing that in another half-century, the world of frontal infantry advances and quick, clean campaigns would be transformed into battles of industrial production, mass mobilization, “total war”, combined arms tactics, Blitzkrieg (infiltration-envelopment-annihilation), defense in depth, strategic bombers, ICBM and SSBN forces, etc.

Likewise, the early Cold War era strategist would have had to be very imaginative to envision nuclear planning losing its primacy, with the focus shifting from planning for massive tank battles on the Central European Plain, to today’s world of precision-guided munitions, stealth aircraft, the RMA, 4GW, and cyberwar or iWar.

The appearance of limits to growth, together with continuing developments in informatics and military technology, will lead to equally drastic changes in the nature of future war in the next few decades.

4. I’m a bit confused on the chronology, this essay is rather rambling. Can you please clarify?

Yes, I agree it’s rambling. Sorry, lots of ideas, not enough time or discipline. I’ll try to clarify and summarize in chronological order.

2010′s: Just as the US is in the midst of developing next-generation weaponry (scramjets, laser BMD) and finalizing the foundations for its global BMD system, the collapse of Pax Americana, economic crisis, and political instability will bring much of its military-industrial activities into dormancy (as happened in 1990′s Russia). Russia and China continue their military modernizations uninterrupted, reaching the US fifth-generation level of 2005-2010 by 2020. In particular, China will have then acquired a real blue water navy, which will by then be larger and newer than the US Navy. Many middle-rank Great Powers acquire advanced, assymetric, “area denial” weaponry (anti-ship missiles, supercavitating torpedoes, silent diesel submarines, UAV’s, drones). With the global US empire now a shell of its former self, nuclear proliferation will increase.

2020′s: The US will have more or less stabilized from its fall by now, and will resume where it left off in the early 2010′s. Drawing on R&D work it did not have the opportunity to previously actualize for lack of funds, it will resume upgrading its now downsized military forces (Future Force Warrior, all-electric ships, scramjets, laser ABM shields, railguns). However, by now China will be a real peer competitor and increasingly ascendant, even in qualitative terms. The spread of neo-colonialism and resource wars will intensify, the globalized world of yesteryear having dissolved into apolar anarchy and regional blocs centered around Great Powers (e.g. China, the US, Russia, France, Turkey, Brazil, Germany, India). Due to the stagnation of its military-industrial complex, Russia gets “locked in” to the fifth-generation paradigm and does not advance much farther than perfections of what were essentially late-Soviet systems, like the S-500, PAK FA, Borei, and T-90; adequate for dominating the Near Abroad, but no longer enough to go toe-to-toe with China or the US. By this time, both China and the US will have fully brought online mature ABM technologies based on kinetic interception. There are moves to move some C&C functions into deep space, black projects are launched in geowar and psychotronic warfare, and serious research begins on biomechanical, nanotechnological, and autonomous AI applications to military affairs.

2030′s: The increasing power and prevalence of cybernetic technology will enable unprecedented levels of wartime mobilization. The efforts initiated in the 2020′s are beginning to pay off, with the development of very powerful laser ABM systems that drastically reduce the value of nuclear arsenals (by now, only massed swarm attacks of hypersonic bombers have a chance), as well as the perfection of the Future Force Warrior, etc. Perhaps by this time military forces will be transitioning from reliance on hydrocarbons to space-based solar power and electric batteries: certainly China will be capable of an industrial-scale buildup in space, and the US-Atlanticist bloc too if it has the political will. Developments in biodefense will massively decrease the time needed to prepare vaccines against biological agents. The results of the exotic research projects of the 2020′s will begin to be implemented, for instance, biomechanical constructs to serve as resilient, versatile and autonomous platforms for energy and kinetic weapons; “nanodust” sensors; new technologies for waging ecological warfare; enhanced “smart”, EMP, and fuel-air munitions. These may shift the advantage back to the offensive.

2040′s: Probably the make or break decade. By now either humanity has managed to avert collapse (through technological singularity or some kind of “ecotechnic transition“), or it will be approaching collapse with no salvation in sight. Perhaps collapse will be preceded or accompanied by a last war of industrial civilization. One in which the weapons, doctrines, and social constructs of future war will be exploited for the first and last time.

(Republished from Sublime Oblivion by permission of author or representative)
 
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A year ago I predicted that there will be a “decoupling from the unwinding“, as “emerging markets” by and large ride out the temporary shocks of declining Western demand for their exports (China) and the interruption of Western credit intermediation (Russia) before resuming growth. This is one aspect of the trends leading to the imminent demise of Pax Americana, which will be replaced by “the age of scarcity industrialism” / “a world without the West“. We are now entering this Empire’s endgame.

After briefly stalling in early 2009, China’s economy roared back to life on the back of massive credit loosening to build (or overbuild) infrastructure and industrial capacity. Though not the most efficient use of resources, it did have the advantage of 1) maintaining growth, 2) forestalling the social unrest that would rise up if it wasn’t, and 3) at least Chinese investments went into building up their real economy (amongst other things, it became the world’s largest producer of wind turbines and photovoltaic panels in 2009), instead of the pork and oligarch welfare programs more characteristic of the US “stimulus”. And though Russia’s GDP contracted by 7.9% in 2009 – far higher than expected by most commentators, largely thanks to the dependence its big corporations acquired on continuous flows of intermediated Western credit – it began to slowly recover from mid-2009, industrial output is now rising at a fast clip, and investment banks are predicting growth of 4-6% for 2010. The other two BRIC’s, Brazil and India, didn’t have too many problems at all since they had neither a big credit nor trade dependence on the submerging Western markets.

In the long-term, I argued that the brunt of the crisis would fall on the “submerging” Anglo-Saxon markets, thanks to their “charades over “quantitative easing” (translation: printing money), transfer of toxic “assets” onto the public account”, and unsustainable fiscal stimuli. Today, the American political system is for all practical purposes broken. Republicans won’t agree to tax increases, Democrats won’t agree to cutting entitlement programs. The legislative process is reverting to that of the 17th century Polish-Lithuanian Commonwealth, when a single veto could (and did) prevent anything being agreed on in their Sejm, or parliament. (Hint: the ultimate consequences weren’t good for Poland).

The inflated hopes and expectations accompanying Obama’s accession to power were indeed, just as I suggested on his election, “greatly constrained by financial and institutional realities”. He is a weakling President, alternating between meaningless populist rhetoric and pandering to the Wall Street oligarchs; scorned by the left as Bush II with gloss, and condemned by the right as a foreign Marxist Islamofascist: his policies and outreaches failing at home and abroad, rejected in his own heartlands, these outcomes are engendered by and in large part made inevitable by his hopelessly pollyannish belief in his own messianic powers of compromise and persuasion.

If you think things look bad now, with the budget deficit at 10% of GDP for 2009 and a similar figure projected for 2010, don’t look at what awaits us in a few more years. The fiscal pressure is only going to increase as the baby boomers start retiring, and as long as the US remains a populist democracy the public will not allow it to cut entitlements (at least until China and the world’s oil exporters force it on them). For instance, the Congressional Budget Office believes that the US will never again run a balanced budget, and you can guess its consequences for American global power. Furthermore, this doesn’t take into account that 1) the vast majority of prior budget forecasts have been optimistic and 2) this assumes that none of the potential breaking-points that could doom Pax Americana (which I’ve identified as imperial overstretch, geopolitical shocks, and oil-credit perturbations caused by peak oil) come to pass.

As shown above, the US has had an almost continous budget deficit since the start of its “age of diminished expectations” in the 1970′s, funded by investors willing to buy up its Treasuries, accepting low returns in exchange for America’s perceived status as a “safe haven” (so-called “American alpha”). Yet with the American empire crumbling at the margins and their own most optimistic forecasts predicting a structural deficit into the foreseeable future, will investors continue buying up Treasuries – or will they turn to more promising emerging markets? Could it even be possible that the US is already in its imperial endgame, as argued by John Michael Greer?

A different reality pertains within the Washington DC beltway. Where states that fail to balance their budgets get their bond ratings cut and, in some cases, are having trouble finding buyers for their debt at less than usurious interest rates, the federal government seems to be able to defy the normal behavior of bond markets with impunity. Despite soaring deficits, not to mention a growing disinclination on the part of foreign governments to keep on financing the same, every new issuance of US treasury bills somehow finds buyers in such abundance that interest rates stay remarkably low. A few weeks ago, Tom Whipple of ASPO became the latest in a tolerably large number of perceptive observers who have pointed out that this makes sense only if the US government is surreptitiously buying its own debt.

The process works something like this. The Federal Reserve, which is not actually a government agency but a consortium of large banks working under a Federal charter, has the statutory right to mint money in the US. These days, that can be done by a few keystrokes on a computer, and another few keystrokes can transfer that money to any bank in the nation. Some of those banks use the money to buy up US treasury bills, probably by way of subsidiaries chartered in the Cayman Islands and the like, and these same off-book subsidiaries then stash the T-bills and keep them off the books. The money thus laundered finally arrives at the US treasury, where it gets spent.

It may be a bit more complex than that. Those huge sums of money voted by Congress to bail out the financial system may well have been diverted into this process – that would certainly explain why the Department of the Treasury and the Federal Reserve Bank of New York have stonewalled every attempt to trace exactly where all that money went. Friendly foreign governments may also have a hand in the process. One way or another, though, those of my readers who remember the financial engineering that got Enron its fifteen minutes of fame may find all this uncomfortably familiar – and it is. The world’s largest economy has become, in effect, the United States of Enron.

And it’s not only tree-hugging Druids that are raising the alarm. Niall Ferguson, court historian for Pax Americana, is also tolling the bell for its imminent demise on the pages of the Financial Times (A Greek crisis is coming to America).

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect. …

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941. …

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). [AK: Yes, Britain is screwed. So is Japan]. Then came Ireland, Spain and Greece (9 per cent). [AK: The PIIGS (Portugal, Italy, Ireland, Greece, Spain are screwed too, especially Greece and Spain at this point]. And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.

Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.

But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $15,000bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months. [AK: This refers to the dreaded "debt compound trap", in which the real costs of servicing debt spiral out of control and the only way out is restructuring (partial / negotiated default) or "monetization" of the debt (inflation). PS. The "debt trap" is essentially what brought down the regime of Louis XVI in 1789].

The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. [AK: Ha!] But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”

The US is a weakened skier and is now hurtling towards a rock-strewn double black for which it is not prepared in any way, shape, or form. But at least for now, its position looks stable – after all, it grew at an annualized 5.7% in Q4, 2009 (half due to inventories buildup). The same cannot be said of Greece and the Eurozone, which seem to be approaching a major crisis in mid-2010.

Afflicted with a dysfunctional political system and chronically unable to balance its budget (sound familiar?), yet without the manifold benefits of “American alpha”, Greece is facing a looming default propelled by a 13%-of-GDP budget deficit (even granting full benefit of the doubt to Greece’s dodgy statistics service), public debt at 113% of GDP (well above the 60% limit imposed by Maastricht), and draconian austerity plans that are politically unrealizable.

If Greece were to impose the draconian pay cuts under way in Ireland (5pc for lower state workers, rising to 20pc for bosses), it would deepen depression and cause tax revenues to collapse further. It is already too late for such crude policies. Greece is past the tipping point of a compound debt spiral. …

Remember, Athens holds the whip hand over Brussels, not the other way round. Greek exit from EMU would be dangerous. Quite apart from the instant contagion effects across Club Med and Eastern Europe, it would puncture the aura of manifest destiny that has driven EU integration for half a century. …

No doubt, EU institutions will rustle up a rescue. RBS says action by the European Central Bank may be “days away”. While the ECB may not bail out states, it may buy Greek bonds in the open market. EU states may club together to keep Greece afloat with loans for a while. That solves nothing. It increases Greece’s debt, drawing out the agony. What Greece needs – unless it leaves EMU – is a permanent subsidy from the North. Spain and Portugal will need help too.

The danger point for Greece will come when the Pfennig drops in Berlin that EMU divergence between North and South has widened to such a point that the system will break up unless: either Germany tolerates inflation of 4pc or 5pc to prevent Club Med tipping into debt deflation; or it pays welfare transfers to the South (not loans) equal to East German subsidies after reunification.

Before we blame Greece for making a hash of the euro, let us not forget how we got here. EMU lured Club Med into a trap. Interest rates were too low for Greece, Portugal, Spain, and Ireland, causing them all to be engulfed in a destructive property and wage boom. The ECB was complicit. It breached its inflation and M3 money target repeatedly in order to nurse Germany through slump. ECB rates were 2pc until December 2005. This was poison for overheating Southern states.

And according to Stratfor:

The crisis is rooted in Europe’s greatest success: the Maastricht Treaty and the monetary union the treaty spawned epitomized by the euro. Everyone participating in the euro won by merging their currencies. Germany received full, direct and currency-risk-free access to the markets of all its euro partners. In the years since, Germany’s brutal efficiency has permitted its exports to increase steadily both as a share of total European consumption and as a share of European exports to the wider world. Conversely, the eurozone’s smaller and/or poorer members gained access to Germany’s low interest rates and high credit rating. And the last bit is what spawned the current problem.

Greece now has the following choices:

1) Balance the budget. To do this Greece would have to cut its government spending by as much as half, resulting in sky-rocketing unemployment (20%+) and severe social unrest. Greeks are volatile, not like disciplined Germans or apathetic Latvians.

2) Leave the EMU. And print a New Drachma to inflate away its debt into oblivion, as was once typical for the Med nations. But then it would lose its geopolitical anchor in Europe and lose access to any further foreign investor money. According to Willem Buiter, this isn’t too likely.

Would a eurozone national government faced either with the looming threat of default or with the reality of a default be incentivised to leave the eurozone? Consider the example of a hypothetical country called Hellas. It could not redenominate its existing stock of euro-denominated obligations in its new currency, let’s call it the New Drachma. That itself would constitute a further act of default. If the New Drachma depreciated sharply against the euro, in both nominal and real terms, following the exit of Hellas from the eurozone, the real value of the government debt-to-GDP ratio would rise. In addition, any new funding through the issuance of New Drachma-denominated sovereign bonds would be subject to an exchange rate risk premium, and these bonds would have to be sold in markets that are less deep and liquid that the market for euro-denominated Hellas debt used to be. So the sovereign eurozone quitter and all who sail in her would be clobbered as regards borrowing costs both on the outstanding stock and on the new flows.

A sharp depreciation of the nominal exchange rate of the New Drachma vis-a-vis the euro would for a short period improve the competitive position of the nation because, with domestic costs and prices sticky in nominal New Drachma terms, a nominal depreciation is also a real depreciation. Nominal rigidities are, however, less important for eurozone economies than for the UK, and much less important than in the US. Real rigidities are what characterises mythical Hellas, as it does real-world Greece, Italy, Spain, Portugal and Ireland. The real benefits from a nominal exchange rate depreciation would be eroded after a year – within two years at most – before you could say cyclical recovery. The New Drachma would be a little currency in a big global financial market system – not an instrument to be used to gain competitive advantage or to respond efficiently to asymmetric shocks, but a source of extraneous noise, excess volatility and persistent misalignments, rather like sterling.

A eurozone member state faced with the prospect of sovereign default, or just having suffered the indignity of sovereign default, would be immensely relieved to be a member of the eurozone. The last thing it would want to do is give up the financial shelter provided by membership in the eurozone to try and emulate Iceland, New Zealand or the UK.

3) Old-school default. And be shunned by the rest of Europe. Though threatening to blow up the bomb is to Greece’s advantage, since this will shift the burden to…

Europe – or precisely, Germany – having to make their choice.

1) Let them burn. Germany is getting impatient of being used as Europe’s cash cow for the past 60 years, and may simply tell Greece to deal with it herself. This will likely lead to spiraling debt service costs, fiscal-social-political breakdown, and heightened borrowing costs for the other PIIGS, maybe even a “cascading collapse” of Europe’s entire southern periphery (in the most extreme case, even Belgium and France would be threatened). This would finish off the EU as a meaningful institution, and with it will go the main vehice through which Germany and France wield power at a global level.

2) Berlin bails out Greece. Involves a different set of problems. A straight-out bailout will invite moral hazard and political dissatisfaction amongst the German electorate, who have had their wages constrained for years while the PIIGS wallowed in their bubbles. But all in all, preferable to the above scenario, or the prospect of a spreading crisis of confidence also forcing Germany to bail out Italy, Spain, or even France, all of whom have far bigger borrowing needs (and for which even Germany doesn’t have the resources). Therefore, Germany will probably lead an EU bailout of Greece (even though there is no formal mechanism for doing so) – but in exchange, it will want major political concessions.

But the days of no-strings-attached financial assistance from Germany are over. If Germany is going to do this, there will no longer be anything “implied” or “assumed” about German control of the European Central Bank and the eurozone. The control will become reality, and that control will have consequences. For all intents and purposes, Germany will run the fiscal policies of peripheral member states that have proved they are not up to the task of doing so on their own. To accept anything less intrusive would end with Germany becoming responsible for bailing out everyone.

Granted, at the moment the EU is stalling, not making any commitments; not surprising, given the cluttered and unwieldy talking shop that it is. But as Greece’s bond auctions (almost certainly) fail over the next few months to meet its soaring debt financing commitments, and as it falls into its debt compound trap, the fiscally secure nations – that is, primarily Germany – will realize the dangers of allowing the contagion to spread. And Germany in particular will see a chance to regain the sphere of influence over Mitteleuropa denied it since the Second World War.

Either way, in 2010 the EU institutions are going to be sidelined in favor of more workable, bilateral relations – especially between the Franco-German core and the weakening peripheries. The way will be opened for the return of Great Power politics to the European continent.

Looking further ahead, within a year the US will again enter a state of crisis. Based on Obama’s low popularity at the end of his first year (is he going to set a time record for failed Presidency?) and his loss of Massachusetts (!) to the Republicans, the political gridlock will only harden. As I forecast last September, “the feds will face challenges from the far-left (new Huey Long’s, anarchism, etc) and the far-right (demands for more state rights, anti-tax movements, “American reactionary patriots”, etc)” – though right now, the far-right movements appear to be the more powerful emerging faction (see the grassroots appeal of the reactionary, back-to-the-18th-century Tea Partiers, who in an electoral contest would now garner 17% of the vote – is the US finally going to see a powerful 3rd party?). PS. American corporations can now legally buy themselves political parties.

Second, in addition to the political problem, there will be a renewed economic and credit problem as the Second Wave of the Housing Crisis engulfs the nation because of rising defaults from adjustable-rate mortgages, many of which will be coming due by 2011.

And this brings us to a third problem, a renewed banking crisis. But this time, instead of withdrawing from emerging markets to the “safe haven” of the US, the banks will instead invest more into promising emerging markets (e.g. the BRIC’s) and commodity speculation (see peak oil), while divulging their US holdings and triggering capital flight. This will compount the political and economic problems, as America’s “rootless cosmopolitans” / financial and their political flunkies come under fire from both the far-left and right-wing producerist reactionaries.

Then there’s the fourth problem – peak oil. World oil production capacity may have peaked in 2010, and projections indicate that 2012 will see an accelerating downslide. This time there will be a both severe credit contraction, far exceeding the one in 2008-2009 (because this time capital will be fleeing the US) and soaring oil prices. The American consumer will live through a far more severe retrenchment than in 2007-2009, starting in 2011. The entailing fall in consumption will further reinforce the banking crisis, the wider economic crisis, and the political crisis. By this point, the “Tea Party”-Republican candidate may be well ahead of Obama, who by this point is utterly discredited.

Now what should Obama do? Note that by this time the Iran crisis will be coming to a head. Sanctions will have failed (China and Russia will see no reason to cooperate seriously). Israel will be getting extremely restless, since it treats the Iranian nuclear bomb as an existential threat. And Obama may well come to view a decisive resolution of the Iran issue as the only road still left open to him to claw back domestic and international legitimacy. However, Iran likely has the capability to block the Strait of Hormuz to oil tankers for several weeks using mines and anti-ship missiles. 20% of the world’s oil shipments pass through those narrow Straits. Needless to say, in a world entering the downslope of Hubbert’s peak, any disruption to global oil supplies will have tremendous, chaotic repercussions – economic, financial, political, and geopolitical – that we have no way of predicting in advance.

In conclusion, Pax Americana is going to face a series of severe crises in the next three to five years (and not only its lynchpin, the US). The European crisis, linked to the Med credit bubbles, is leading to the slow unraveling of the EU’s legitimacy in favor of its core states, France and especially Germany. It will come to a head in the next few months. Japan is facing an irredeemable fiscal and debt crisis, which will explode in the next few years: eventually, it will likely bandwagon with China (leveraging its technological base to gain favorable access to China’s markets and labor force) and ditch its post-1990 turn towards neoliberalism, which was never suited for the Japanese mentality anyway, in favor of Asian socialism.

Finally, the US itself will face a panoply of challenges – fiscal profligacy (stemming from its belief that it can have both guns & butter on a shrinking industrial base), imperial overstretch (Afghanistan, Iraq), political dysfunction, a new housing, credit, and economic crisis, soaring energy prices (disastrous for suburbia), and geopolitical challenges (Iran, China, Russia). It can deal with any one of them, but I can see no way how it would be able to deal with all of them coming within a few years of each other. The consequences?

Namely, there will be a partial collapse of legitimacy in the government; the feds will face challenges from the far-left (new Huey Long’s, anarchism, etc) and the far-right (demands for more state rights, anti-tax movements, “American reactionary patriots”, etc); fertility will collapse from the current replacement-level rates to around 1.3-1.7, as welfare shrinks and the utility of having children for the very poor, currently the most fecund social group, drops; crime will increase, etc. Yet within a decade a new social order will gradually emerge, probably fiscally and socially conservative and more authoritarian than the current one, and with it a new equilibrium will slowly, painfully come into being.

However, the US will almost certainly remain a Great Power. I certainly do not see it collapsing into separate states or regions, as dreamt of by the likes of Igor Panarin or Gerald Celente. In some ways, by casting aside its global imperial shell, it will actually become stronger – it will no longer be weighed down by the burden of global empire, and can focus on other activities the more effectively, such as reconstructing its industrial base and reinforcing its neo-colonial sphere around North America, the Carribbean, and perhaps Central America / Venezuela. Whatever form America’s new political economy takes (something resembling Putinism?, or maybe Chavismo?), it will likely be far better suited for the coming age of scarcity industrialism (characterized by economic statism, Realpolitik, and mercantile trade relations), than the crumbling colossus that is today’s Pax Americana.

(Republished from Sublime Oblivion by permission of author or representative)
 
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4. Freedom from fear, the only real freedom.

Political scientists try to rank countries based on their levels of “freedom”, frequently arbitrarily defined and applied (Freedom House, Economist Democracy Index, Polity IV, etc). Yet despite the inconsistencies and difficulties with quantifying something as abstract and intangible as freedom across cultural and civilization borders, for all but the most committed postmodernists, it nonetheless seems safe to say that North Korea, say, is less “free” than the US – for example, in that in the former there is no prospect of me publicizing this text.

That said, this does not mean that the US is necessarily free either, or more specifically, that the majority of its citizens are free. Yes, it has many blowhard radio “pundits” and angry blogger people, but they mostly vent their feelings in favor of the status quo, the System (and those who don’t usually post anonymously anyway).

But there are plenty of examples of people who are too afraid of giving their 2 cents. Some people I know were paranoid about me even replying to a Facebook contact from the Bay Area National Anarchists* on the theory the FBI might be watching them. American journalists too afraid to report anything contrary to the bipartisan party line (though the culture war certainly gives a good illusion of diversity, albeit on ultimately inconsequential matters). Employees, especially unconnected foreigners, who are too afraid of the sack or consequences for their career to stand up to managerial tyranny, corruption, and incompetence – I know plenty of such cases.

But ultimately these fears are all false, a false consciousness foisted upon us by the System. As long as one remains free in the spirit, nothing that happens on the material plane – not even imprisonment in a North Korean gulag, let alone the termination of 80-hour / week office slavery and associated perks like alternating your living arrangements between a McMansion coffin (suburbia), a Machine coffin (the SUV), and a Mammon coffin (Wal-Mart) – really matters.

Because one’s freedom from fear is the only real freedom.

Our world, our Brave New World, a world in which sparkling baubles have become the highest value, is far more effective at concealing this truth than anything dreamt up by totalitarians or inventors of totalitarian dystopias. For when the flesh is imprisoned and beaten, spiritual freedom is most appreciated. Slavery really is freedom.

* The contact was unsolicited and I don’t agree with most of their platform.

 

5. The problem is not with the American Empire, but its self-denial

Empires existed throughout history and are a natural product of human social organization. As such even the most brutal and oppressive empires can be treated with respect.

The problem with American empire (and the late Soviet empire) lay in their denial of their own imperial power; they both cloaked their imperialism in the language of universalism (democracy, liberalism, socialism, etc). Thus their conquests were not only material; they were profoundly spiritual.

Arguably, the American empire is the most postmodern one to have ever existed (challenged only, perhaps, by the EU – but the EU is more of an “impire” than an empire).

I believe it is this spiritual assault on the global community is what is the root cause of the ressentiment towards the US today, rather than its empire per se. America should relinquish the language of universalism and rule the world with an iron fist; the peoples of the world will recognize their true master, and will kneel before it.

6. Socialism Now! – if you want to live

Limits to growth are reality. Business as usual will bury us under an avalanche of resource depletion (peak oil, plummeting EROEI, mineral shortages, etc) and pollution overload (global warming, topsoil erosion, fisheries depletion, desertification, inundation, etc), as we overshoot the planet’s carrying capacity and trigger a Malthusian dieoff. No technological silver bullet or free market voodoo is going to save us.

Coercive reduction of material throughput is now probably the only escape from industrial civilization’s predicament*.

Is having lots of glittering lights and increasing your CO2 emissions really the road to happiness?

Cuba is the world’s only sustainable society, qualifying as a developed nation in terms of its HDI (human development index) and possessing an ecological footprint per capita that, if extended to all 7bn humans, the Earth could, just about, accommodate.

Green Communism is the future.

* The pampered Greenpeace activists and “Earth Day” sheeple – most of whom no doubt have an ecological footprint well above the per capita level of sustainability – are so pathetic. The actions are purely symbolic and contribute next to zero in solving problems; just a way of assuaging their guilt by pretending to solve these problems.

(Republished from Sublime Oblivion by permission of author or representative)
 
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Smil, Vaclav – Global Catastrophes and Trends (2008)
Category: futurism, climate change, geopolitics, catastrophes; Rating: 5/5
Summary: Google Books

Vaclav Smil, an energy theorist and language connoisseur, brings his talents to bear on this idiosyncratic, incisive and balanced book on the global future. From the outset, he outlines his skepticism in universal theories of history and attempts at quantifying current trends to make point forecasts (e.g. predictions that nuclear power would make energy too cheap to meter in the halcyon days of the industry). Instead, he emphasizes the role played by the sheer complexity of human systems and their discontinuities – for instance, who could have imagined that a generation after the death of Mao, China would be the workshop of the world helping underwrite US military dominance?

Having established “How (Not) to Look Ahead”, Smil introduces his method – analyzing key variables categorized by a) unpredictable events – “catastrophes”, b) powerful trends (the effects of globalization, global demography, the energy transition), and c) the shifting balance of power between the Great Power (the marginalization of Japan, an unstable Islam, Russia’s partial resurgence, the uncertain rise of China and an increasingly faltering United States). It is one a method I highly favor and I agree with most of the arguments he makes in his book, albeit there are a few major exceptions.

Fatal Discontinuities

First, he classifies the catastrophes or “fatal discontinuities” into: 1) known catastrophic risks (asteroid strikes, earthquakes, super-eruptions), 2) plausible catastrophic risks (nuclear war, pandemic) and 3) speculative risks (“grey goo” or takeover by machines). [There is another classification of existential risks by Nick Bostrom].

The likelihood of world-changing natural disasters occurring is vanishingly small. Though floods and earthquakes killing up to 100,000′s of people happen about once or twice per decade, their global effects are very limited. An asteroid capable of terminating industrial civilization will need to have a diameter of about 2km+ (by darkening the sky with micro-particles and destroying the ozone layer), but the chances of such asteroids striking the Earth decrease exponentially with greater size. In any case the majority of large Near-Earth Objects have already been identified and identified as safe. Predicting super-eruptions is much harder, though again based on the geological record the chances of an unprecedented catastrophe are minimal – which would have to be on the scale of the Toba, Sumatra event 72,000 years ago, which ejected 2,000km3 of ejecta and reduced the world human population to 10,000. An example of a modern threat is a super-eruption of Yellowstone, which is about due though we’d have to be extremely unlucky to have it blow up during our lifetimes. Another possibility are submarine landslides forming tsunamis, such as at La Palma, the Canary Islands, where a 500km3 slide would create a mega-tsunami with repeated walls of water up to 25m striking Florida.

The second category includes pandemics and mega-wars. During the last generation, the onslaught against disease stalled and went into partial reverse, with a growing list of contagious diseases (the most significant of which is HIV / AIDS), failures in eradication (e.g. polio) and antibiotic resistance (multi-drug resistant TB – which now finished off many AIDS sufferers). There also remains the specter of an influenza pandemi c, which will be deeply disruptive and potentially highly virulent. Though a repeat of 1957 or 1968, or the current swine flu for that matter, aren’t going to have much effect, the consequences of the return of a Spanish Flu-like pandemic (1918) will be devastating. Arising out of the natural disease reservoir of South China, the flu can spread more rapidly (air transport, globalization, greater urban populations) and a mortality profile hard on the younger cohorts (15-30 years) will have devastating effects on aging European societies. Globalization will shut down as countries close borders, with highly disruptive effects on national economies. However, we are much better prepared for handling a pandemic today than in 1918 due to better nutrition and technological advances such as mechanical respirators, antibiotics for treating secondary infections, antivirals, and math models for optimizing quarantines and vaccinations.

Just as another pandemic is almost certain to happen, so there will continue to be violent conflict, terrorism, genocides, perhaps even another large-scale democide or mega-war with tens to hundreds of millions of casualties – despite that the incidence of violent conflict fell by 40% since the early 1990′s and the agreed reductions in the US and Russian nuclear arsenals. Some may be transformational and fundamentally change the course of world history (Smil identifies the Taiping Rebellion, the American Civil War, WW1 and WW2 as transformational). The risk remains of an accidental nuclear war between the US and Russia killings hundreds of millions, or the rise of an revisionist, expansionist power unleashing WW3. The potential deaths accruing to war are several OM’s (orders of magnitude) higher than for all natural catastrophes.

Smil points out that terrorism is 1) nothing new, having gone through four “waves” – a) Russia’s narodnaya volya assassinations, b) decolonization, c) PLO, IRA, Basque ETA, and Western left-wing groups favoring bombings and aircraft hijackings, and d) modern Islamic terrorism beginning with the Iranian Revolution / Hezbollah, later extending to the Palestinian intifada and al-Qaeda, at the symbolic start of a new century (1400) by the Islamic calendar, 2) has rarely been effective with a few exceptions like 9/11 (and even there its value lay mostly in symbolism – [the spirit of terrorism], disproportionate public fear and official overreaction), for the chances of dying from terrorism are extremely low. Since producing mass casualties is extremely difficult, terrorists have to settle for “mass disruption” instead of “mass destruction”.

His final category of fatal discontinuity are “imaginable surprises”, such as annihilation of the Earth by exotic particle experiments, unforeseen climatic shifts (e.g. a drastic cooling), grey goo eating the biosphere within a few days, etc. He correctly doesn’t put much stock into these sci-fi scenarios.

Unfolding Trends

Smil makes some general observations about trend analysis. First, they tend to follow a pattern of incremental engineering process (cheaper, more efficient) and gradual diffusion, yet are sometimes marked by profound discontinuities, e.g. fertility transitions, the continuing failure to control nuclear fusion. Surprises can occur because a) long-term trends aren’t recognized in time, such as the Soviet Union’s post-1965 stagnation, b) can’t predict which trends will become embedded in society, and which ones will veer off course, c) their unknowable effects on human society (e.g. will the oil peak be moderated by a smooth transition to gas or renewables, or does it herald the end of industrial civilization?). With that said, Smil now focuses on three things: 1) the coming energy transition, 2) Great Power dynamics and 3) the future of globalization.

Smil now moves into his forte – global energy systems. The first point he makes is that the basis of today’s industrial system was formed a long time ago and that improvements since then paled in significance. “The most important concatenation of these fundamental advances took place between 1867 and 1914″, when engineers realized electricity generation, steam and water turbines, internal combustion engines, inexpensive steel, aluminium, explosives, synthetic fertilizers, electronic components, thus laying the “technical foundations of the twentieth century” [much like men like Marx, Bismarck and Garibaldi laid its ideological foundations]. A second Golden Age occurred in the 1930′s and 1940′s, which saw “the introduction of gas turbines, nuclear fission, electronic computing, semiconductors, key plastics, insecticides and herbicides”.

This technological base requires huge, uninterrupted supplies of energy for its existence. The sources of energy remain constant for long periods due to the difficulty of substitution, which involves discarding old infrastructures and building anew. As a share of world total primary energy supply (TPES), coal went from 95% in 1900 (excluding phytomass), to just 28% in 2005, while crude oil rose from 4% in 1900 to 27% in 1950 and 46% in 1975, but dropped to 36% by 2005. Natural gas expanded significantly since the mid-century, reaching 24% of global TPES by 2005. All together, fossil fuels supplied 88% of global TPES in 2005, compared to 93% in 1975. Despite all the talk about environmentalism and energy security, there has been no walk; ours is still a predominantly fossil-fuel based civilization.

In the future, Smil foresees that a) there will be no oil peak, b) coal is unlimited except by concerns over climate change and c) gas will rise in importance because of its relatively low carbon per unit of energy ratio and advances in LNG technology.

Though I am in qualified agreement with b) and c), Smil ridiculing of the oil peakists in a) is singularly unconvincing. He claims the Hubbert model is “simplistic” in that it is “based on rigidly predetermined reserves” and ignores “innovative advances or price shifts”. The first point is flat out wrong. It applies to Hubbert’s first model, but in his later work he devised a method that did away with the need for guesstimates of URR (ultimately recoverable reserves) – and which gives pretty much the same results, indicating that the effects of technology and higher prices are limited. Taking the case of the US, despite the discovery of oil off Alaska and the Gulf, despite there having been more exploration in the country than in the rest of the world combined, despite the periods of high prices during 1973-1986 and 2002-2008, despite its light regulatory environment and access to cheap credit – American oil production has declined relentlessly since the early 1970′s. Quite simply, the evidence indicates that the power of depletion will eventually defeat ever greater and smarter extraction attempts. Read one of these overviews from 2007 or 2009 for a more indepth explanation of peak oil.

However, I agree with Smil that the transition to other non-fossil fuel sources will be a drawn out process, considering that most of the “prime movers” in our society are oil-based (the steam turbines that generate 70% of global electricity output, the gasoline-fueled internal combustion engine, the diesel engine, the gas turbine, and the induction electric motor). [I would note that these difficulties are going to be aggravated by peak oil].

Addition difficulties include a) the scale of the shift, b) lower energy density of replacement fuels, c) substantially lower power density of renewable energy extraction, d) intermittence of renewable flows and e) uneven distribution of renewable resource extraction.

1) Global civilization uses fossil energy at a rate of 12 TW, a twenty-fold increase from the late 1890′s (total world TPES is around 13 TW). Only solar power has a significantly larger than current TPES is solar flux at 122 PW, which is 4 OM greater; otherwise, wind (<10 TW), ocean waves (<5 TW), and today energy / geothermal (<1 TW). Though Earth’s net primary productivity (NPP) / terrestrial photosynthesis yields solid fuels (biomass) at the range of 55-60 TW, exploiting it will further degrade vital ecosystemic services, and besides humanity already appropriates 30-40% of global NPP as food, feed, fiber and fuel (with wood and crop residue accounting for 10% of current TPES).

2) Coal and oil are far more energy-dense than wood and in general biomass cultivation will take up 4-5 OM more space than conventional oil / gas infrastructure. “In order to energize the existing residential, industrial and transportation infrastructures inherited from the fossil-fueled era, a solar-based society would have to concentrate diffuse flows to bridge power density gaps of 2-3 OM”. As an example, even using Brazilian ethanol from sugar cane to replace all current gasoline, diesel and kerosene used in transport would require the subjugation of 1/3 of the world’s cultivated lands – or all agricultural land in the tropics. Corn ethanol has half the power density of sugar cane ethanol. Large-scale adoption will have catastrophic impacts on food self-sufficiency.

[source]

3) Renewables don’t satisfy base load power requirements of an industrial society. Load factors are 75%+ for coal-powered power stations or 90%+ for nuclear power stations, whereas wind power is just 20-25%.

4) Renewable flows are also unevenly distributed, just like 60%+ of easy hydrocarbons are locked up in the Persian Gulf Zagros Basin. Jakarta has as little sun as Edmonton (shared with equatorial zone). Many areas are either too still or too windy, i.e. will be heavily damaged by hurricanes.

5) Costs won’t necessarily decline. To the contrary, protovoltaic silicon prices have more doubled; prices of steel, aluminium, plastics, etc, for wind turbines also drastically increased due to the underlying rise in oil prices.

Smil reiterates some pretty standard arguments on nuclear and hydrogen. The nuclear industry expanded quickly until the 1970′s, but stalled at that point because it previously hadn’t included costs like state-subsidized nuclear R&D, decommissioning costs and waste disposal (and later negative PR like Chernobyl). Hydrogen is not a realistic option barring the mass spread of cheap solar power. Concludes that this energy transition will be fundamentally different from previous one, which was driven by declining resource availability (deforestation), higher quality of fossil fuels (energy density, easier storage, more flexibility) and lower cost of coal and hydrocarbons. According to Smil, none of these factors apply to the fossil economy – though he expresses some concern over its contribution to climate change.

Having outlined his idea of the main trend of the next fifty years, Smil turns to a standard analysis of the shifting balance of international power between the US, China, Japan, Russia, Islam, and Europe. He cautions against subscribing to the conventional wisdom, pointing out that a) the Soviet collapse and Japan’s post-1980′s stagnation were largely unforeseen, b) the tendency of the US to surprise, going from decline / deindustrialization in the 1980′s to a vigorous “new economy” in the 1990′s before becoming fiscally and militarily overstretched in the 2000′s.

Geopolitical Trends

Smil does not believe Europe holds out much promise, unlike some delusional commentators. It is in long-term, centennial economic decline relative to the rest of the world and its economies are mired in inefficiency, unemployment and bureaucracy, and are less technologically dynamic than Japan or the US. Both Britain and Spain face separatist challenges and are economic basketcases. France is over-regulated dirigisme and has problems with integrating its 10% Muslim population (remember the burning banlieues?), but is at least demographically healthy – unlike Italy and Germany, which are rapidly aging and about to depopulate rapidly with very negative economic effects (they might be in a fertility trap, in which ever smaller generations need to pay higher tax burdens which limits their reproductive freedom). In particular, Italy is sinking back into corruption and Mafia influence, its artisanal manufacturing is being destroyed by Chinese competition and there remain huge gaps between the Nord and Mezzogiorno. He reiterates Mark Steyn’s Eurabia theory arguments (crudely summarized as lots of under-reported young, fertility, fanatical Muslims simmering in ghettoes), which has a number of holes in it. Finally, the EU structure itself is disconnected from national electorates and reality in general, and has no inspiring sense of mission; further expansion will just weaken it further. [Agreed with most things - I believe the EU by 2020 will be a much less significant institution and European nations will be tottering, preoccupied with trying to solve their own internal problems].

After a period of euphoric hubris in the 1980′s, when it seemed Japan would be number one, the country crashed into a long, ongoing period of stagnation marked by crippling deflation, the fall of the Nikkei from a peak at 39,000 in December 1989 to below 10,000, and the appearance of the NEET generation (not in employment, education or training). Though it remains rich, well-off and technologically advanced, there is a moral anomie as long-term jobs vanished and fertility plunged to around 1.2 children per woman. Smil is pessimistic on Japan due to a) its ingrained conservatism [though would the recent electoral win by the Democratic Party of Japan later be regarded in the same vein as the Meiji reforms?], b) the continued hostility of neighbors reinforces its security dependence on the US, especially to counter challenges from China and North Korea, and c) the start of depopulation in 2005, retirement wave in 2010′s as the 1950′s baby boomers retire, and the prospective massive aging of the population (medium age 50 by 2025, more 80+ than 0-14 year olds by 2050). Japanese culture does not accept immigrants and it will not be saved by robots.

The author sees Islam being in a fractured state (secular / spiritual, Sunni / Shia / others, etc) in a difficult relationship with modernity, fighting the same internal civil war that charactered early modern Christianity. His short exegesis of the Koran finds that there is support for many interpretations of just how restrictive Islam has to be, and this forms an ideological battleground between the extremists and moderates. Signs of this backwardness include the Iranian fatwa against Rushdie, the prevalence of bizarre conspiracy theories on the Arab street, and Islamic countries accounting for just 2% of the world’s scientific publications. [To this we can add the Mohammed cartoons controversy and the 2003 UN Arab development report that produced the astonishing statistic that more books are translated into Spanish per year than have been translated into Arabic in all history]. There are several inequalities within the ummah (e.g. oil-rich Saudi Arabia and Pakistan) and internal instability, in part cased by the demographic explosion [usually in water-stressed environments, I'd add] which results in youth bulges – young men with no job prospects who are susceptible to joining violent groupings. Even as the region simmers, the outside world will be forced to take an interest due to its stranglehold over the world’s oil supplies (the five Persian Gulf nations produced about 1/3 of the world’s oil in 2005, and this figure is projected to rise substantially).

It is evident he knows his stuff when talking about Russia, or at least is well-read on it. Contrary to most analysts, he believes it is resurgent in a real way, even though its longer-term prospects are uncertain. He lists its strengths as being an energy superpower (especially with respect to gas) with a big intellectual capacity and a formidable military that is being rearmed with newer-generation weapons. However, he foresees significant challenges in the form of its cyclical, hydrocarbons-based economy [as confirmed by the 2008 crisis, though the deeper problem is dependence on foreign credit], its unstable democracy, the Islamist insurgence in the Caucasus, and above all its negative demographic trends [I've written a lot about this, just search the site].

China is gradually returning to its old position of global economic predominance, its growth helped by Deng Xiaoping’s economic liberalization, FDI, the one-child policy, a cheap, disciplined and relatively skilled labor force, mass urbanization and migration to the coasts, and a certain degree of innovation (state-funded research facilities, as well as flouting of IP and large-scale industrial espionage). It is “a Communist government guaranteeing a docile work force that labors without rights and often in military camp conditions in Western-financed factories so that multi-national companies can expand their profits, increase Western trade deficits, and shrink non-Asian manufacturing”. It is economically mercantile, seeking resources around the world and if current growth trends continue, China could match US military spending by 2020. However, there are substantial problems with a) the population (severe 118:100 male-female imbalance, rapid aging and undeveloped pension system), b) the economy (huge rural-urban inequality, high taxes on peasantry and violent expropriations by business-state symbiosis), c) the environment (deforestation and soil erosion from Maoist era, little arable land per capita that is shrinking from salinization, desertification and urban expansion, needs more food but irrigation is constrained by water shortages and crops are already very intensively fertilized, falling water tables and toxic rivers, very poor air quality and now leading CO2 emitter), and d) cultural mediocrity (not as much soft power as the US).

India is nowhere near as powerful as China, and the same factors limiting the latter militate against India. It’s GDP is twice smaller; though its Gini index of income inequality is better (35 versus 45), this is a product of its underdevelopment, besides its deep social stratification / de facto caste system persists; malnutrition, immunization rates and adult illiteracy are all much worse in India; China has 3x the electricity-generating capacity and 17x the container port capacity. Though democratic, it is likewise deeply corrupt, bureaucratic and ecologically degraded. It faces a nuclear-armed Pakistan and the prospect of tens of millions of Bangladeshi refugees spilling over once their country sinks under the rising seas.

Smil is an all-round pessimist, believing the United States may go the way of the Roman Empire. According to him, its woes include increasing economic and foreign policy challenges [see Shifting Winds], uncontrolled Hispanic immigration that threatens its long-term territorial integrity and Protestant “work ethic” values, and perennial budget deficits (in particular the structural nature of the current account deficit, formed due to its reliance on oil imports to sustain the suburban arrangements and the collapse of its domestic industrial base – mundane manufacturing, the auto industry, and now even aerospace and the food industry. It has a poor education system (see results of PISA international standardized tests), retiring baby boomers about to cash in on state obligations and their savings, obesity and a general cultural decline. However, the possibility of open discussion of these failings is a persistent American strength.

He then proceeds to make the argument that “US leadership is in its twilight phase” and that the “coming transition will be unprecedented” due to the global nature of its hegemony. He plausibly affirms that no nation is strong enough to replace the US as the sole superpower, meaning that there will probably be more chaos, instability and wars. Smil predicts that in sum the world will regret its passing.

Smil concludes with an analysis of globalization, making the points that it is an ongoing historical process originating in the 16th C and blossoming from the 1950′s with the arrival of the tanker revolution, now blossoming in the intricate production chains and JIT system exemplified by Wal-Mart’s relation with China. There is a stabilizing force, interdependence, which expands the economic scope of every globalized nation far beyond the limited autarkies of history, but at the same time makes them ever more vulnerable to disruption of these links; the destabilizing force is the growing inequality between nations (e.g. failed states), though a caveat is that when calculated by population there is an improvement mainly thanks to China (but nullified when taking into account the intra-national growth of inequality – which increase since 1970 in all the major countries like the US [35 to 47], Japan [25 to 37], China [25 to 50], Russia [25 to 40]. There is now no global “middle class”, according to Smil, which makes the system unstable. [Here I disagree - East-Central Europe, Latin America and even China fit the bill here].

Environmental Change & Conclusion

This next long section is a detailed analysis of the likely course and effects of global warming. Most of the stuff is pretty basic and I’ve already summarized in my reviews of Six Degrees (Mark Lynas) and The Last Generation (Fred Pearce).

His most interesting discussions are of human influence of the nitrogen cycle (which they’ve affected to a far greater degree than the carbon cycle) and the spread of antibiotic resistance. “Losses of nitrogen from synthetic fertilizers and manures, nitrogen added through biofixation by leguminous crops and nitrogen oxides released from combustion of fossil fuels are now adding about as much reactive nitrogen (c.159 Mt N/year) to the biosphere as natural biofixation and lighting does” (in contrast human interference in carbon cycle through land use changes and fossil fuel burning amounts to 10% of annual photosynthetic fixation of the element and sulfur is equal to 1/3. This leads to mass leaching, eutrophication, growth of algae and phytoplankton, and the subsequent decomposition deoxygenates water and kills bottom-dwelling aquatic species. The worst hypoxic zones are the Gulf of Mexico, the lagoon of the Great Barrier Reef, the Baltic Sea, the Black Sea, the Mediterranean, and the North Sea. Nitrogen oxides formed during combustion contribute to photochemical smog in urban areas around the world and acid rain. It’s use will increase as Asia demands higher crop yields and Africa needs to stop its increasing nutrient mining.

The other worrying trend he discusses at length is the rise of antibiotic resistance on the part of pathogens, as peniccilin and its descendants become increasingly less effective. This is inevitable, but is much facilitated by widespread self-medication, over-prescription and poor sanitation in hospitals. If these negative trends continue, influenza deaths will sky-rocket due to the inability to treat bacterial pneumonia, and treating tuberculosis and typhoid fever will become very difficult. A nightmare scenario can arise if this is accompanied by increasing malnutrition and AIDS, which make people far more susceptible to these secondary diseases.

In the last chapter, “Dealing with Risk and Uncertainty”, Smil sums up and embellishes his ideas, asserts the necessity of properly quantifying risks, cautions on the fallacies of linear extrapolation of current trends, and notes that even during a collapse there are silver linings, using the construction of the basilica of Santa Sabina in Rome (422-483) during the waning years of the Roman Empire (ended in 476) as an example.

In conclusion, this is a very good and entertaining book. There are some East European-style grammatical mistakes and perhaps a bit too much personal boasting, but otherwise it provides a realistic appraisal of the real potential catastrophes facing humanity (i.e. big wars and pandemics, not terrorism, earthquakes or “grey goo”) and the dominant trends of the next fifty years (geopolitical flux / non-polarity, climate change & pollution, the energy transition). He approaches the subject very rigorously-scientifically so one gets a good perspective of possible futures, my only major disagreements with him being on his disbelief in the oil peak theory and paying too little attention to the social and geopolitical ramifications of climate change (he doesn’t really consider the catastrophic possibilities, sticking to the middle-of-the-road consensual IPCC forecasts).

(Republished from Sublime Oblivion by permission of author or representative)
 
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Every once in a while, there occurs a major shift in the international arena. The First World War and its consequences were the seminal change of the last century, collapsing ancient empires and ushering in a new era of ethno-nationalist clashes, political radicalism and emerging powers challenging the established order of Versailles, forces that were fully unleashed in the aftermath of the Great Depression. From the middle of the Second World War, it became clear that the new world order would be defined by a bipolar competition between the USSR and the US. The next major shift occurred with the oil shocks of the 1970′s, when growth throughout the industrialized world, capitalist and socialist alike, declined, and they were beset with increasing social problems, while the beginning of the rise of China and the economic re-emergence of Western Europe and Japan heralded a new, globalizing multipolarity that was confirmed by the end of the Cold War and the collapse of the USSR.

The next two decades saw the triumph of “Western liberal democracy as the final form of government” and the spread of the neoliberal consensus, all underwritten by American military dominance and the new resources unlocked by the opening of formerly autarkic economies. Generally speaking, this was a rather peaceful and prosperous time. Though wars continued and there was the occasional genocide in Rwanda or Darfur, the overall incidence of violence declined sharply in all categories, the sole exception being terrorism. Similarly, the opening up of world trade sharply increased consumer power in the US and Europe as China’s reserve armies of labor set about producing cheap goods, a process lubricated by cheap oil, gargantuan freighters and developments in supply-chain management. And though its flowers still bloom and the politicians smile and exude the air that nothing’s much amiss, the winds of time are shifting, the sun is already setting on this world, and darkness is about to creep in.

Quite literally. The cheap oil that underpins industrial civilization is ending, as the world approaches peak oil production – the point when about half of recoverable reserves have been taken out of the ground. The remaining half lies in remoter places and will be much harder to extract, especially taking into account that the resources for doing so will be significantly more limited due to the collapse of the world credit system, a system that should have died a free-market death in late 2008, but which limps on, zombie-like, sustained by governments whose solvency now hangs by a thread only maintained by investors still naive enough to believe in their credibility.

This is because the defining feature of this crisis is not so much even the collapse of world industrial output and trade, which was by itself unprecedented in its magnitude this century except by the Great Depression, but the sheer burden of bad debts and fiscal obligations accumulated by governments in the developed world, especially in the Anglo-Saxon world. First, they are running unprecedented peacetime budgets – both as a consequence of their disastrous pro-cyclical spending during the fat years, and to fund the stimuluses with which they hope to get their economies out of the rut. Second, they printed lots of money under the euphemism of “quantitative easing”. Third, they carried over private losses and bad debts onto the public account – socialism for the rich, capitalism for the rest.

In the next few years, according to commentators like Willem Buiter, these reckless policies are going to lead to classic emerging-market currency crises in the Anglosphere, or “submerging markets” as he calls them. This is not surprising. Taking the United States as the most significant and typical example, to run the kind of deficits projected – 13% of GDP this year, over 10% again in 2010, and red into the rest of Obama’s term even under the rosiest projections – requires a very credible commitment to returning to a balanced budget within a limited timeframe.

First, this requires a rapid economic recovery. However, all the monetary and fiscal tools for accomplishing this have already been used at and beyond their limits. In the 1980′s, once the task of breaking inflation was accomplished, interest rates were eased back and the economy recovered rapidly. Today, interest rates have already been cut to minimal levels and the economy seems to have bottomed, but even so it remains extremely feeble, with the real unemployment rate (“U-6″) currently at 16.8% and rising. Recovery is likely to be slow as households begin to pay off their debts instead of increasing consumption, the linchpin of the US economy. If it is politically feasible (uncertain) and should there be high inflation brought on by the recent monetary splurge and once-again soaring oil prices (almost certain), interest rates will have to be raised, which risks short-circuiting a feeble recovery.

Second, even during the mis-named “Bush boom” growth was large jobless and inequality-enhancing, with half coming from distribution (the “Wal-Mart effect) and the other half from better productivity from financial services!, as measured by the number of transactions undertaken. These are not going to be repeated, the first because rising energy prices are increasingly making the JIT distribution model untenable, the second because the financial system, outside of a few well-connected insiders like Goldman Sachs and JPMorgan, now lives on government guarantees.

Third, the next years are going to see rising demands for social spending as younger Americans make themselves heard, whose worldviews are relatively more socialist and European-like. The rising number of retiring baby boomers will necessitate far more Social Security, Medicare and Medicaid spending, out of funds that will simply not be there because the cookie jars were looted a long time ago. Then there’s the whole chimera about greencollar jobs. In principle, as a convinced peakist with serious concerns about the consequences of anthropogenic global warming, I support subsidizing green industries like renewable energy and hybrid automobiles. But these are luxuries only a more prudent economy could afford, like China. In the US, it will result in very few jobs being created and will constitute further drains on its fiscal credibility – and hence the means of sustaining this very program. More spending on healthcare? The sector is already horrifically bloated, and should if anything be reduced and rationalized.

So in conclusion, the US faces years of relative stagnation, and no credible way of paying back its metastasizing public debt. As long as investors stick it out and rates remain low, this remains a sustainable, albeit unsatisfactory, state of affairs. The reason the US Treasury rates fell so low and the country even tipped over into deflation was that the global equity collapse had investors fleeing to the perceived haven of last resort – US Treasury bonds. Yet as I pointed out in Decoupling from the Unwinding, one of the effects of this crisis will be to decisively sever the links between the West and the Rest (emerging markets). In a few more years, investors will realize that whereas China has real long-term growth prospects, they are unlikely to ever see positive returns on their US bond investments, as the US gradually monetizes its debt. They will jump ship, resulting in rising rates on US debt and making it increasingly unaffordable to service. Unless they inflate it away, of course. Would you like to die by ice or fire?

Let’s whimsically set the date for this collapse for August 2012. The liberal international order, Pax Americana, will collapse with it. However, there will be numerous signs of its slow demise well beforehand, which will be reflected in geopolitical events.

The focal point is the Middle East, that great intersection of energy, power, instability and hatred. Iran is continuing in its efforts to build a nuclear bomb to consolidate the new Persian empire. It is currently strong, demographically, but destined to get weaker as the younger, sub-replacement level generations become adults. The regime is also increasingly ideologically insecure. The nation is currently at around where the Soviet Union was in the early-1980′s on its belief matrix – the egalitarian, totalitarian ideals of the Islamic Revolution are now a distant memory, clouded over by the drugs, lasciviousness, and Westernization now typical of its larger cities. Part of the population yearns for the West, disillusioned with their own society and skeptical of the clear evidence of clerical corruption. Yet the most influential clerical elites have retrenched around the hardline Ahmadinejad and the Islamic Revolutionary Guard Corps (IRCG), who want to return to a future of austere Islamic government. Thus there is currently a revival of radicalism in the Islamic Republic, less potent than in the 1980′s, yet now married to its greater technological capabilities. This revival is almost certainly destined to be short-lived, but has the potential to go out with a bang.

This possibility must be considered especially seriously given that Israel is now ruled by Benjamin Netanyahu, a man who in 2007 opined: “It’s 1938, and Iran is Germany, and Iran is racing to arm itself with atomic bombs”. It is likely that were it not for US restraint, the Israelis would have long since bombed Iranian nuclear and military facilities. They have received permission from Saudi Arabia, via backdoor diplomatic channels, to fly over their territory to do so. This is unsurprising, because the Gulf monarchies face a significant challenge from Iran, which foments Shi’ite unrest in Bahrain and parts of Saudi Arabia, and is suspected of funding a Shi’ite insurgency in northwest Yemen that threatens to spill over the borders. Though moderate Arab rulers pay lip service to Islamism, they certainly have no intention of allowing it to infringe on their political power. Iran’s other lever is its control of Hezbollah, an impressively disciplined organization that managed to (arguably) win a war against Israel in 2006. Though they do not pose an existential threat to Israel, they can create an serious political and strategic problem through massed rocket attacks, to counter which Israel is now assembling a multi-layered, world-class ABM system.

If Iran gets the bomb, it will unleash a Middle Eastern arms race, in which Saudi Arabia, Egypt and Turkey will feel compelled to build up arsenals of their own. Iran will become much more confident about sponsoring Shi’ite separatism and drawing Iraq closer into its fold. In the endgame, the US cannot allow this challenge to its hegemony in the oil-rich Middle East to go unanswered, in particular the dependence of the Gulf States and now Iraq on its military tutelage, no matter the cost of meeting the call. It will strike Iran, or give Israel the go-ahead, well before Iran comes close to testing its bomb.

The pressure will be ratcheted up gradually. If talks scheduled for 1st October 2009 fail to achieve any Iranian compromises on its nuclear program, as usual, then the US will probably activate what it calls “crippling” sanctions on Iran with the connivance of Britain and France, especially targeting the 40% of gasoline it imports. In practice, this is unlikely to achieve much, especially since Russia – having received no firm guarantees from Washington recognizing its desired sphere of influence over the post-Soviet space – will likely help Iran shrug off sanctions by allowing Iran to satisfy its shortages through imports from Russia’s Caspian ports.

This talk of Russia’s role brings us to another point. The US is currently in a profound strategic dilemma, having to choose three areas in which to exert its strength – in particular its limited manpower: a) Afghanistan / Pakistan and the “war on terror”, b) blocking the arrival of a new Persian Empire with nukes and c) containing a resurgent Russia possibly intent on rebuilding its own old empire.

The recent American successes in Iraq have generally stabilized the country, though smaller-scale violence lingers on and might well flare up again should pressure be loosened up. This necessitates that the bulk of US military manpower remains locked up in Iraq, which gives nations like Russia, which desires to reverse its post-1991 geopolitical losses, a “window of opportunity” to make its challenge. And although the US presence in Iraq is winding down, it is simultaneously becoming pressured by requirements elsewhere – as of today, counting contractors, there are more Americans fighting in Afghanistan today than the Soviets deployed at their peak. (A common counter-argument is that of the 120,000 armed US personnel stationed there, some 68,000 are contractors who mainly do things like fixing electrical lines or washing pots and pans; however, the comparison remains valid because these would be the functional equivalent of Soviet “Class C” divisions mostly concerned with logistical issues).

The Afghanistan quagmire will likely be seen by future historians as an American strategic blunder of the first magnitude. First, it developed as a simple reaction to al-Qaeda’s use of Afghanistan as a base to plot out the 9/11 attacks, yet apart from that, the expansionist Taleban were a much bigger problem for Iran and Russia than for the US (even as the US oil corporation Unocal, with the backing of the CIA, was negotiating with the Taleban over the construction of a Trans-Afghanistan Pipeline to carry natural gas from Turkmenistan to the Indian subcontinent in 1998, Iran was seriously threatening war with the Taleban for the murder of Iranian diplomats). By keeping Afghanistan and the Central Asian jihadi threat suppressed, the US uses its own resources to spare Russia’s and Iran’s from the necessary work of patrolling Afghanistan’s borders, aiding the Northern Alliance and other anti-Taleban insurgents, intercepting jihadi aid to their domestic Islamic militants and maintaining the stability of the Central Asian republics. Hence Russia’s generally quiescent attitude towards allowing the US to transport non-military supplies to Afghanistan and usage of Central Asian bases.

Second, and more importantly, the US is not fighting to win. Afghanistan is not Serbia, and it is not even Iraq. It is a proud tribal society with a total fertility rate of nearly 7 children per woman. Trying to instill “liberal democracy” is a quixotic endeavor. Preaching, let alone practicing, “human rights” is (correctly) interpreted as a sign of moral weakness, and an incentive to up the pressure. The only way to actually win in Afghanistan is through burned-earth like brutality and ruthlessness, like Cromwell’s pacification of Ireland. Anything else is a waste of time and money. As it is, the US is pouring its resources like water into the sands of the “graveyard of empires”, and taking NATO along for the ride – a strain that threatens the very survival of the alliance. This would not be nearly as critical if the jihadi threat was the only storm-on-the-horizon the US-centered world order faced; yet in combination with Iranian brinkmanship, the Russian resurgence, the Chinese mercantile challenge and the increasing reflection of the limits to growth onto the world economy, the days of Pax Americana may well be numbered. Let’s return to Iran.

From this year, the countdown will be really on as Iran reaches for the bomb, Israeli hysteria (understandably) rises and the US becomes ever more desperate for a radical solution. By 2011-12, Obama will be coming under increasing conservative pressure – an again worsening economic position and a “patriotic-reactionary” movement to counter the perceived intrusion of government onto an ever expanding array of economic and social activities – which will if anything make his administration more conductive to the thought of a foreign adventure to take the population’s mind of economic stagnation, rising poverty and perhaps by that point, capital flight. The Israelis will receive the signal to strike. Since this would draw in the US anyway, it will decide that it might as well strike Iran itself, and degrade the Iranian military as much as possible so as to circumscribe the Islamic Republic’s retaliation capabilities.

The US will have no problem in gaining air superiority and destroying a vast array of fixed Iranian targets, because the Iranian integrated air defense system is relatively obsolete and can be eluded by stealth, defeated by electronic countermeasures and neutralized. However, given the dispersed nature of Iran’s military forces it will retain a significant amount of retaliatory capacity – in particular, the ability to mine the Strait of Hormuz using fast attack craft and harass shipping with coastal shore batteries, diesel submarines in the shallow waters of the Strait, and perhaps suicide attacks from civilian-appearing vessels armed with explosives. Iran’s development of an indigenous UAV capability, by enabling it to scout out the presence of oil tankers, represents a significant force multiplier, especially if Iran also has the technological capacity to network its findings with its other military assets.

This is not to say that the War Nerd is correct when he says that any US naval assets off the coast of Iran will be blown to smithereens, which referred to a rather artificial and improbable scenario. In all likelihood the Iranian threat will be contained within weeks, the country will be thoroughly bombed into submission and perhaps the regime will be overthrown. But in its death throes, it could also kill the world economy:

Most importantly, it would not have to be effective. The mere possibility of mines — the uncertainty factor — would not only slow down the movement of tankers in the Gulf, but also spike insurance rates. Tankers cost a lot of money and their cargoes these days are incredibly expensive. Risking both ship and cargo is not something tanker owners like to do. They buy insurance. If the possibility of mines in the Gulf existed, insurance rates would not only rise, but might become altogether unavailable. Insurance and re-insurance companies these days do not have enormous appetites for unpredictable risk involving large amounts of money. And without insurance, as we saw during the tanker wars in the 1980s, owners won’t take the risk themselves.

Iran’s counter could be to increase the potential risk to the point where insurers back off. At that point, governments would have the option of insuring tankers themselves. Given how quickly governments move, particularly in what would have to be an international undertaking, oil supplies could be disrupted for days or even weeks. At this point, speculators and psychology aside, prices would spike dramatically. The creaking sound would turn into a cracking sound for the world economy.

Ergo, oil prices spike well north of 200$ per barrel in a time of global economic weakness and all-round instability. The psychological effects cannot be anything but extremely negative, and such a scenario may constitute the signal for global investors to finally throw in the towel on the US.

The third key element in near-future geopolitics, in addition to the Afghanistan imbroglio and the Iranian Question, is the continuing resurgence of Russian power across Eurasia. Far from being weakened by the economic crisis, it has used it to build up its relative strength, from politically-motivated loans to Belarus, to its decision to only enter the WTO as part of an economic bloc encompassing Belarus and Kazakhstan, to continuing pressure against Ukraine. It has also consolidated its military position in Abkhazia and South Ossetia and the state has reinforced its control over the commanding heights of the economy, suborning the last of the independent-minded oligarchs to its will. Driven by a belated recognition of its immutable geographic and climatic disadvantages that doom it to eternal backwardness and submission within the context of Westernization, it is slowly but inexorably returning to its “steady state”, its past-and-future as a Eurasian empire defined by political sovereignty, economic autarky and spiritual sobornost. The only thing still missing is an ideology, but that can be re-invented. The collapse of liberal globalization can only accelerate these trends.

As long as Washington stands in the way of this reassertion – which it has, from its unleashing of an infowar against Russia following the Yukos Affair in 2003 to its persistent championing of NATO membership for Ukraine and Georgia – it will remain Russia’s “prime enemy”, at least in the minds of those who matter. As such, Russia will do absolutely nothing to help the US maintain the current world order, which is not favorable to Russia’s interests. Expect a tense, uneasy game of give-and-take and tit-for-tat involving Russian arms sales to Iran and Venezuela, covert American support for colored revolutions across the post-Soviet space, intrigues over Central Asian allegiances and the placing of natural gas pipelines, Russian revanchism in the post-Soviet space, Russian and Chinese stalling of Western-promoted sanctions in the UN, etc… Above all, bear in mind that the Western view on Russia is fundamentally wrong, since Russia’s leaders distrust the “liberal interventionists”, “end of history” ideologues of the Clintonian era at least as much as they dislike the neocon “New Cold Warriors”.

Herein lies the gulf between the West and the Russians. The West divides the world between the Cold War and the post-Cold War world. It clearly prefers the post-Cold War world, not so much because of the social condition of Russia, but because the post-Cold War world lacked the geopolitical challenge posed by the Soviet Union — everything from wars of national liberation to the threat of nuclear war was gone. From the Russian point of view, the social chaos of the post-Cold War world was unbearable. Meanwhile, the end of a Russian challenge to the West meant from the Russian point of view that Moscow was helpless in the face of Western plans for reordering the institutions and power arrangements of the region without regard to Russian interests.

… Russians saw their efforts as a deliberate attempt to destroy Russia and the degree to which Russians are committed never to return to that time. It is hard to imagine anything as infuriating for the Russians as the reset button the Clinton administration’s Russia experts — who now dominate Obama’s Russia policy — presented the Russian leadership in all seriousness. The Russians simply do not intend to return to the Post-Cold War era Western experts recall so fondly. …

While Russia’s concerns with Georgia are the noisiest, it is not the key Russian concern in its near abroad — Ukraine is. So long as the United States is serious about including Ukraine in NATO, the United States represents a direct threat to Russian national security. A glance at a map shows why the Russians think this.

Russia remains interested in Central Europe as well. It is not seeking hegemony, but a neutral buffer zone between Germany in particular and the former Soviet Union, with former satellite states like Poland of crucial importance to Moscow.

… As the United States causes discomfort for the Russians, Russia will in turn cause discomfort for the United States. The U.S. sore spot is the Middle East, and Iran in particular. Therefore, the Russians will respond to American pressure on them where it hurts Washington the most.

The Cold Warriors don’t understand the limits of Russian power. The post-Cold Warriors don’t understand the degree to which they are distrusted by Russia, and the logic behind that distrust. The post-Cold Warriors confuse this distrust with a hangover from the Cold War rather than a direct Russian response to the post-Cold War policies they nurtured.

Finally, there’s China. Over the last decade, the world economy came to be powered by a powerful global symbiosis termed “Chimerica”, a state of affairs in which Americans spent and lent China money to build up the industrial capacity to produce ever more goods for Americans to spend on. Now as long as the limits to this unsustainable, imbalanced growth kept put – limits as in affordable oil and other commodities, access to credit, etc – the party continued.

This is no longer the case. The world economy has crashed. Chinese students laughed in the Secretary of the Treasury Tim Geithner’s face when he tried to assure them the US would keep the US dollar strong and that the trillions of dollars of Chinese investments are safe in the US. The Chinese leadership seems to agree and has started to massively step up its acquisitions of natural resource companies, farmland and foreign elites (via politically-motivated loans at preferential rates). Though there is little overt evidence of a ditching of the dollar, this is to be expected – given that China has so much invested in the US, trying to get out visible would provoke a catastrophic scramble in which it will lose more than it gains. That said, the signals of retreat are certainly visible, especially when set against the typical opacity of China’s rulers.

Globalization allowed China to build up a massive industrial base – as of 2008, it produced 48% of the world’s steel and 50% of its cement – and it has already bought up, or stolen, the majority of key technologies needed to build an advanced industrial system. They can now afford to gradually stop subsidizing American purchases of their products and concentrate on the development of a consumer consciousness among their own, 1.3 billion strong population. This decision to reorient their political economy will complement current rhetoric about building the “harmonious society“, with its emphasis on reconciling socialism, regional and internal inequalities, democracy and environmentalism. From now on, growth will be slower as it is curbed by stagnant world demand, accumulating bad loans, diminishing returns, etc, – it will likely be around 5-7% a year in the 2010′s, rather than the 10% typical of the 1980′s to 2000′s. Nonetheless, it should continue at a fast enough rate to soak up the new landless labor, ease social tensions and enable it to launch a geopolitical breakout. The inevitable transition from a centrally-weak, disbalanced and commercialized nation to a centralized, internally-peaceful hegemonic empire will not be smooth, but China’s forward momentum is simply too large to derail its rise to superpower status.

Externally, China will use its rapidly growing relative strength to create a new geopolitical reality, especially as the retreat of American power becomes ever more evident in the early to mid-2010′s. As the only major industrial nation still enjoying rapid growth, it will now be the main setter of world demand for oil and other strategic commodities, putting a floor on most commodity prices in the years ahead – especially since the state is now taking advantage of low prices to diversify itself from US Treasuries and lock in or accumulate the reserves needed to power its industrialization in the decades ahead. (A related recent story is China’s plans to restrict rare earth metal exports, which if rapidly implemented could create a hi-tech crunch in the decade before mines elsewhere could reopen and ramp up production to meet global demand). China’s influence in South-East Asia, East Asia, East Africa and the Middle East will rise in counter-balance to the US, but the process is unlikely to lead to military clashes because both nations will be much more preoccupied with managing internal tensions.

In conclusion, the geopolitical winds are shifting. There is a gathering storm that will sweep away the current liberal globalized order, and a new reality of econo-political blocs competing for markets, land and resources will take its place. The root cause is the accelerating fiscal and economic collapse of the system’s underwriter, the United States. (The even deeper reason would be that limited oil and energy reserves would be more efficiently used in China to make things than spent on American gas-guzzlers).

However, these changes will appear to observers as an incomprehensible cascade of failings of the international system and spreading chaos: jihadi successes (mounting losses in Afghanistan, continuing terrorist attacks carried out by al-Qaeda’s “franchises”, the possible collapse – or radicalization (Turkey?) – of moderate Muslim governments); state collapses (peak in world food prices, out-of-control insurgencies, falling revenues from energy exports and climatic catastrophes like drought – watch Pakistan, Mexico); the confrontation with Iran (whether or not it ends with a Middle Eastern war, this saga is only beginning to get played out); the Russian resurgence (may be manifested in renewed expansionism in the post-Soviet space – Georgia, Crimea and the Baltics are potential flashpoints – and the race of countries like Germany, Finland, Turkey and / or Japan to reach some kind of accommodation with Russia, contrary to US interests) and the continuing secular ascent of China (due to its gradual nature, this is unlikely to result in any “big events” (although a flareup over Taiwan or the South China Sea is always a possibility) – that said, in the longer run this is going to be one of the most significant geopolitical trends).

By 2019, we will look out upon a new world as different from 1989, as 1944 was from 1914, or 1991 was from 1961. A partially revived American superpower will face a real “peer competitor” in China, though their competition will be restrained by domestic troubles and a shared concern for global stability and the future of industrial civilization. Many of the world’s least developed regions will have begun to fall apart, forsaking the torturing lights of civilization for the comforting darkness of simplistic barbarism. The European Union will have fallen apart under the stresses of its contradictions and its constituent nations will have reverted to their traditional balance-of-power rivalries, while Japan decides it would be better off band wagoning with China. A more insular, nationalist and powerful Russia is a wildcard, either in the throes of demographic and economic stagnation – or enjoying new, unprecedented power accruing from its energy wealth and warming landmass. By then, the clouds will be gathering for an even greater storm – the point sometime in 2030-2050 when the limits to growth make themselves really felt, and industrial civilization falls into its moment of greatest peril. The shifting winds will have become a gale.

(Republished from Sublime Oblivion by permission of author or representative)
 
With increasing signs of economic collapse, military overstretch and political problems, is the US doomed to go the way of the late USSR?
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Inspired in no small part by the political charade over the bail-outs and boondoggles that plague the TV screens and electronic ether, I’ve compiled a top 10 list of ways in which the US increasingly resembles the collapsing Soviet Union for your information / despair / entertainment / Schadenfreude / ridicule / etc.

A list of how Russians screwed up and Americans are repeating their mistakes step by step. A list that may provoke much needed debate and change that we can really believe in.

10

An alcohol epidemic from the 1960′s on that kept Russian life expectancy flat ever since.

Dietary catastrophe resulting in historically unprecedented obesity and diabetes rates.

9

Hated and feared for human rights violations, invasion of Afghanistan and Communist rhetoric, and its socialist model discredited.

Hated and feared for use of torture, invasion of Iraq and post-Cold War triumphalist arrogance, and its neoliberal model discredited.

8

Military overstretch, economic distortion and disaster in Afghanistan.

Imperial overstretch, runaway military budget and return to the “graveyard of empires”.

7

Wasteful investments into infrastructure, bloated bureaucracy and inefficient industry.

Decaying infrastructure, misplaced investments into suburbia, bloated financial system and hallowing out of industry.

6

Collapse in morality, bloated bureaucracy and soaring corruption.

Regulatory capture, bloated special interests and legalistic mafia.

5

Suppression of statistics and silencing of dissent.

Manipulation of statistics and ignores dissent.

4

Dependence on foreign credit from debts and oil sales.

Dependence on foreign credit from debts, “dark matter” and the $’s status as global currency reserve.

3

Young reformer takes power and talks of glasnost and perestroika while avoiding real reform.

Young “outsider” wins the elections and talk of change and hope…

2

Ethnic nationalism and separatist tendencies.

Tax revolts and state rights.

1

More and more people began to predict Soviet collapse in the late 1980′s.

More and more people are beginning to predict an American collapse now…


10) The first disturbing similarity is the rapidly deteriorating health of the population. From the 1960′s, an alcohol epidemic began to sweep Russia as binging graduated from something done on holidays to a monthly and then a weekly affair. The drinking epidemic spread to women and younger people, and intensified amongst middle-aged men. Once subjected to the cheap alcohol and social dislocations of the post-Soviet world, an already stagnating average life expectancy plummeted.

As late as 1990, not a single state in the Union had an obesity rate of greater than 15% of the adult population; today, not a single state (with the marginal exception of Colorado) has an obesity rate of less than 20%. The national obesity rate soared to 34%. The percentage of American adults suffering from diabetes is now 11%, and another 26% have impaired glucose tolerance. Although improvements in US life expectancy haven’t stalled, change has been slower than in most other developed countries and even then was mostly accounted for by improved medical technology, and successes in reducing tobacco smoking and overconsumption of animal fats. An economic collapse now would trim the vastly expensive healthcare system and almost certainly result in a mortality spike – especially considering that the baby boomers are now nearing retirement age.

Both the Russian and American epidemics affect poor, middle-aged people the most; a difference is that the alcohol epidemic affected men more than women, whereas in the US obesity is slightly more prevalent amongst women than men. Vodka sales made good profits for the state (via taxes) during the Soviet period and good profits for private distilleries in the post-Soviet period; the American diet makes good profits for fast food outlets and the parasitic “food processing” companies that degrade good corn into corn syrup. Perhaps the most poignant comparison is in the kinds of TV adverts that dominate the airwaves in both countries. In Russia after 9pm, every third commercial suddenly becomes about some or another kind of beer (that’s an improvement over the 1990′s, when they ran all day); in the US, day or night, every third commercial praises the virtues of some kind of meretricious fat-soaked starchy thing.

9) Throughout the early Cold War, the USSR was a source of inspiration to leftist Western intellectuals and Third World countries looking to throw off the imperialist yoke and modernize quickly. But by the early 1980′s, pressure was being applied to the Soviet Union on account of its violations of the human rights treaties it was a signitary to. Central planning remained an alien ideology to all Western societies, increasingly so as its failures became clearer. It was condemned for its invasion of Afghanistan (in reality, an intervention at the request of its new socialist government to defend them from Islamists).

The United States gained a great moral victory from the collapse of the USSR (despite it being a result of internal dynamics) and enjoyed it during the 1990′s. However, this came to an end after 2001 due to the hypocritical and immoral way it went about waging the Orwellian-sounding “war on terror”. Preemptive war on made-up pretenses, extraordinary renditions of terrorist suspects and the neocons’ incessant freedom-rhetoric was something the world by and large couldn’t square together. This resulted in its poor showing in international approval ratings and its repeated “victories” in the “world’s greatest threats to peace” category with Iran, Israel and North Korea as regular runner-ups and after party company. Although the fairness of such characterizations can be disputed, they are ultimately immaterial since it is perceptions that matter – not right or wrong, however defined.

The central planning model of the USSR was fully discredited by the 1980′s; neoliberalism is similarly on en route to the ashcan of history.

8) The USSR was spending about 25% of its GDP on the military by the 1980′s. Not only did this squeeze consumption and contribute to stagnant real incomes from around the mid 1970′s, it divested resources from investment into renewing the capital stock, civilian R&D and improvement of human capital via education and healthcare. However, official figures were ridiculously low – around 2.5% or so of GDP – due to statistical fudging and giving purely military enterprises funny names like the Chelyabinsk Tractor and Machine Building Factory (invented example).

The US maintains unrivaled power projection capabilities, a global network of 700 military bases and the world’s most technologically advanced military force – but it comes at a steep price. While the official military budget for FY2008 is around 520bn $, to this must be added the costs of the wars in Iraq and Afghanistan (170bn $), interest on past military expenditures (170bn $), nuclear weapons (30bn $), veterans (70bn $), “homeland defense” (70bn $) and other spending on their lavish healthcare and education entitlements, military foreign aid and “black projects”. (And btw, the figures for interest, nukes and veterans are from 2005). Therefore, it is probably entirely reasonable to double the entire military budget to better appreciate its true magnitude – i.e., quite possibly close to 10% of GDP. Add in the distortions – military production has the smallest multiplier effect on the economy (machine building has the biggest), and its claim on skilled workers (something like half of R&D outlays in the US are for military applications), and you get a superpower severely hobbled by its arms’ burden.

This is not a good situation, but not critical either. Yes, it ties down a big chunk of the economy in unproductive pursuits and contributes to the institutional corruption and runaway spending that is typical of military-industrial complexes. I happen to consider that most of the procurement programs currently being pursued are useless, from unproven missile defense to the overhyped F-35 (just build a few hundred much superior F-22′s instead) to the shiny new surface warships and aircraft carriers that are of dubious value in our era of advanced cruise missiles, UAV’s and supercavitating torpedos. (But this for another post). Most poignantly, Obama is now preparing to withdraw from Iraq (where stability is not yet assured, and which is far more strategically important) to free up troops for Afghanistan, the graveyard of empires…and ignoring Soviet veterans’ warnings of what might await them. And the economy is nowhere near as dominated by the priorities of the Armed Forces as was the case in the USSR. Nonetheless, huge military spending and foreign adventures do not necessarily lead to collapse – by themselves. However, the other economic and confidence problems now facing the US now make that a realistic possibility.

7) The Soviet Union invested vast resources into industrial development. However, they were frequently inefficient, wasteful and of questionable quality; and in any case were being severely undercut by the arms burden by the 1980′s.

Although the US built up a world class public infrastructure prior to the 1980′s, since then investments in this area have dropped off. The roads in California are frequently cracked and potholed – vastly inferior to what one might find in Germany, and not much better than in Russia. One quarter of bridges are structurally deficient, in most cities the water pipeline system is a century old and the electrical grid befits a Third World country.

Even worse is that much of the “infrastructure” that was built up in the past few decades consisted of lavish homes in sururbia requiring massive inputs of cheap energy to function normally. When oil is at 10$, spending an hour driving to work is monetarily (if not spiritually) sustainable; as we pass the oil peak and other resources (almost certainly) fail to make good the gap in time, this will change as petrol soars in price, even assuming it will remain available on the open market. Due to the “psychology of preveious investments” (see James Kunstler’s work) it is unlikely Americans will summon the will to scale down its suburbia before the laws of economics and geology force them into it.

Soviet industry was inefficient and was destroyed when subjected to market forces. American industry has already been hallowed out; high productivity growth masks a huge decline in quantity and complexity of its “industrial ecosystem”. US vehicle production fell from 13.0mn to 10.8mn from 2000 to 2007, held up only by the (doomed in the long-term) SUV market which is the only sector in which the Big Three made any profits. (During the same period, Germany increased production from 5.5mn to 6.2mn and Japan from 10.1mn to 11.6mn). Its machine tool building industry has for all intents and purposes collapsed. The only marginally healthy manufacturing industries left are in aerospace and defense. This is going to have very bad consequences when inflows of cheap credit from abroad can no longer sustain the US consumption boom; the manufacturing sector that could potentially have led to a quick revival simply no longer exists.

6) Whatever the faults of the USSR in its early years, there was genuine enthusiasm for building socialism relatively untainted by corruption. This began to change rapidly for the worse from the 1970′s. The elites became exclusively concerned with their own power and wellbeing, ultimately leading to the “insider buyout” that probably best describes what happened in its dying days. The size of the bureaucracy exploded and its effectiveness plummeted. A small change for the better under Gorbachev in the mid to late 1980′s led to catastrophic collapse, endemic corruption under Yeltsin, and some improvements under Putin from a very low base. Blatant self-enrichment of the elite at society’s expense became an accepted norm.

How does this translate to the US?

Collapse in ethics, quoting Buiter in Fiscal expansions in submerging markets:

… Financial regulation and supervision was weak to non-existent, encouraging credit and asset price booms and bubbles. Corporate governance, especially but not only in the banking sector, became increasingly subservient to the interests of the CEOs and the other top managers. There was a steady erosion in business ethics and moral standards in commerce and trade. Regulatory capture and corruption, from petty corruption to grand corruption to state capture, became common place. Truth-telling and trust became increasingly scarce commodities in politics and in business life. The choice between telling the truth (the whole truth and nothing but the truth) and telling a deliberate lie or half-truth became a tactical option. Combined with increasing myopia, this meant that even reputational considerations no longer acted as a constraint on deliberate deception and the use of lies as a policy instrument. As part of this widespread erosion of social capital, both citizens and markets lost faith in the ability of governments to commit themselves to any future course of action that was not validated, at each future point in time, as the most opportunistic course of action at that future point in time – what macroeconomists call time-consistent policies and game theorists call ’subgame-perfect’ strategies.

Under bloated special interests, I put the bloated financial services industry, the legalistic mafia, the healthcare industry and the prison-industrial complex. Finance as a share of GDP doubled in the last 30 years, transforming it from a service industry to a rent-seeking one. The proliferation of lawyers amidst amidst burgeoning legalism in society is another example of a self-serving mafia feeding on the blood of the citizenry, as are the “justice” systems and prisons that have gone together with them (the US has an incarceration rate that is unprecedented amongst anything but totalitarian societies). Finally there’s the healthcare industry, perversely regulated in such a way as to make it far less efficient than if it were nationalized or completely private and delivering one of the worst results for the buck in the world – and like a metastasizing cancer, it’s share of GDP has also exploded in the past few decades.

5) Since the 1970′s real wages for workers in the Soviet Union ceased growing, pressed down by the demands of the military-industrial complex. When statistics began to show that the average life expectancy was stagnating and infant mortality rising, they ceased publishing them.

Real median income in the US slowly increased from 35,000$ in 1967 to 46,000$ in 2005; however, the rate of increase slowed and for the first time in modern history it didn’t exceed the level reached at the peak prior to the last recession in 2000-2001 during the growth years of the Bush Presidency. In reality however the situation is even worse because since the time of Reagan the definition of inflation used by the government was being continuously reworked to make the figures appear better than they otherwise would have been, using substitutions and hedonics to spruce up the figures (i.e. adjusting for consumers switching to other products when similar products become expensive, and trying to put values on quality improvements). If the BEA (Bureau of Economic Analysis) continued using its old measuring standards, then a) the economy would have been in stagnation during the 1990′s and recession in the 2000′s, b) inflation would have been steadily increasing to a peak of nearly 14% in 2007 and c) median incomes would have been in steep decline. According to this thesis, then, the only reason the US avoided a big fall in living standards was due to the massive expansion in credit…which brings us to the next point.

4) The Soviet Union grew rapidly in the 1950′s and 1960′s because it was easy to move plenty of rural farmhands into relatively low-skilled industrial jobs. However as labor stocks became limited and focus shifted towards improving technology and productivity, GDP growth slowed and eventually stagnated. Collapse was delayed by the onset of high oil prices, which allowed the USSR to more easily import food products, machinery and technologies. When that collapsed in the mid-1980′s, the state was forced to run up huge debts to maintain mounting entitlement obligations, an overgrown military and bail out its East European satellites. Corruption and hidden inflation overtook the state and broke it.

According to Willem Buiter writing in Can the American economy afford a Keynesian stimulus?, America is a nation in fundamental disequilibrium. It can finance its continuous double deficits by giving its foreign investors an atrocious rate of return. In prior times, they accepted this because of America’s status as the largest economy, sole superpower and global financial center. This was presumed to reduce risk, so investors traded profits for security. From 2000-2004, it is estimated that the US exported some 559bn $ of this “dark matter“, or some 5% of its GDP at the time (the UK was second with 234bn $, or a stunning 15% of GDP). It also draws immense strength from the $’s role as the global reserve currency, for instance by allowing it to comfortably buy oil at $-denominated prices even when the currency is weak.

Due to its imperial overstretch, moribund financial system and frozen credit markets prepped up only by the federal government means that American alpha is almost certainly going to disappear in the next few years. The US fiscal deficit is going to be more than 12% of GDP in 2009 and will remain in the red for at least the next few years. Once global flight to quality ceases, the US will experience difficulties borrowing due foreign f ear of American reluctance to commit to servicing their external obligations without inflation. The interest rates on them are going to be punitive and so a greater amount of resources will have to go towards servicing the debt, thus triggering a potential debt crisis. Buiter predicts a global dump of US dollar assets including Treasury bonds within the next two to five years as investors lose faith in the ability of the US Federal government to generate the primary surpluses required to service its debt without selling much of it to the Fed on a permanent basis, or that the nation as a whole will be able to generate the primary surpluses to service the negative net foreign investment position without the benefit of “American alpha”.

In conclusion, the only reason the US can afford to have both guns and butter is that the outside world is willing to provide it with cheap credit. This will no longer be the case as soon as global panic subsides, and the US will face the real possibility of a debt-and-currency crisis which it will have to inflate its way out of (on which they seem to be making a good start). The 2010′s will see plummeting global oil extraction and sky-high prices. If the $ were to collapse, the imports of oil that fuel the economy will plummet and may lead to a post-Soviet-scale drop in GDP (unless the US uses its military clout to lock in Iraqi and Saudi production – however, given its fiscal problems, questions about political unity and rhetorical commitment to human rights, that would be hard to achieve).

America can take consolation in one thing, however – the collapse in Britain, which is three times as reliant on “dark matter”; which is a much bigger energy importer relative to production; whose industry is in a far more decayed state; and where real breakup is far more likely because of ethnic tensions, will be much worse.

3) When Mikhail Gorbachev (the youngest member of the Politburo) came to power he talked of increasing transparency (glasnost) and restructuring (perestroika). Yet the most dangerous moment for a bad government is when it starts to reform. In reality the Soviet system was already very probably unsalvageable by then, partly because even the leader himself continued to be a part of the system, beholden to dominant interests (in the Soviet case, to the military-industrial complex, the nomenklatura and workers) and steeped in delusions of grandeur. Even as he attempted to liberalize and solve many interlocking social and economic problems at once, social entitlements were increased, new weapons systems ordered and foreign borrowing increased. Half-measures and reckless credit giveouts to save the system led to massive waste, insider plunder and the start of the disintegration of the economy by the late 1980′s.

The similarities with Obama are striking. Obama is one of the youngest Presidential candidates ever, and talks of hope and change. He comes after the zastoi, deterioration in political and civil liberties and reckless foreign military adventures of Bush II. Like Gorby, he is immensely popular throughout the world. He plans on expanding healthcare and other social entitlements, burdening the economy with farcical green schemes* and is intent on rescuing the troubled financial system by massive infusions of credit, with no regard for the future inflationary consequences. His advisors are the same clique of insiders under previous administrations, especially the Clinton one. He is beholden to the financiers and industrial lobbying groups that fund him and the middle classes that are the bedrock of American political power (as were Soviet workers), which are now being whittled down by the collapse in credit and repossessions. Major cuts in funding for the the Armed Forces and sustainable retreat are simply not envisioned. *As anyone who reads this blog nows, I consider global warming one of the greatest challenges faced by civilization. The problem is that schemes to fund “clean coal” or implement carbon trading are too little, too late, too costly and too unreliable.

Obama is steeped in the Pax Americana mindset (just as Gorbachev was steeped in scientific socialism), which is complacent and rests on its laurels; and as such the possibility of collapse simply cannot seriously enter his mind or considerations. Therefore the truly revolutionary reform that is needed to preserve the current system is unlikely to be contemplated, if its even possible.

2) As economic and political difficulties mounted in the USSR, they were further reinforced by disintegration on ethnic lines, diverting administrative and economic resources away from what should have been more pressing matters.

Recently New Hampshire formally requested a casus foedoris with the other states of the union separately from the federal government in a RESOLUTION affirming States’ rights based on Jeffersonian principles.

That this State does therefore call on its co-States for an expression of their sentiments on acts not authorized by the federal compact. And it doubts not that their sense will be so announced as to prove their attachment unaltered to limited government, whether general or particular. And that the rights and liberties of their co-States will be exposed to no dangers by remaining embarked in a common bottom with their own. That they will concur with this State in considering acts as so palpably against the Constitution as to amount to an undisguised declaration that that compact is not meant to be the measure of the powers of the General Government, but that it will proceed in the exercise over these States, of all powers whatsoever: that they will view this as seizing the rights of the States, and consolidating them in the hands of the General Government, with a power assumed to bind the States, not merely as the cases made federal, (casus foederis,) but in all cases whatsoever, by laws made, not with their consent, but by others against their consent: that this would be to surrender the form of government we have chosen, and live under one deriving its powers from its own will, and not from our authority; and that the co-States, recurring to their natural right in cases not made federal, will concur in declaring these acts void, and of no force, and will each take measures of its own for providing that neither these acts, nor any others of the General Government not plainly and intentionally authorized by the Constitution, shall be exercised within their respective territories; and

That the said committee be authorized to communicate by writing or personal conferences, at any times or places whatever, with any person or person who may be appointed by any one or more co-States to correspond or confer with them; and that they lay their proceedings before the next session of the General Court; and

That any Act by the Congress of the United States, Executive Order of the President of the United States of America or Judicial Order by the Judicatories of the United States of America which assumes a power not delegated to the government of United States of America by the Constitution for the United States of America and which serves to diminish the liberty of the any of the several States or their citizens shall constitute a nullification of the Constitution for the United States of America by the government of the United States of America. Acts which would cause such a nullification include, but are not limited to:

I. Establishing martial law or a state of emergency within one of the States comprising the United States of America without the consent of the legislature of that State.

II. Requiring involuntary servitude, or governmental service other than a draft during a declared war, or pursuant to, or as an alternative to, incarceration after due process of law.

III. Requiring involuntary servitude or governmental service of persons under the age of 18 other than pursuant to, or as an alternative to, incarceration after due process of law.

IV. Surrendering any power delegated or not delegated to any corporation or foreign government.

V. Any act regarding religion; further limitations on freedom of political speech; or further limitations on freedom of the press.

VI. Further infringements on the right to keep and bear arms including prohibitions of type or quantity of arms or ammunition; and

That should any such act of Congress become law or Executive Order or Judicial Order be put into force, all powers previously delegated to the United States of America by the Constitution for the United States shall revert to the several States individually. Any future government of the United States of America shall require ratification of three quarters of the States seeking to form a government of the United States of America and shall not be binding upon any State not seeking to form such a government; and

That copies of this resolution be transmitted by the house clerk to the President of the United States, each member of the United States Congress, and the presiding officers of each State’s legislature.

New Hamphshire isn’t isolated. States rights bills are being pushed in nine states this year and almost half the states’ legislatures have plans to pass similar resolutions. While most are addressed to Congress or the President to back off from further violating state’s rights, New Hampshire is appealing for solidarity from other states to develop a casus feodoris / alliance to develop a counter-weight to the federal government in case it increases interference in state matters or moves towards authoritarianism to manage the consequences of the economic crisis. The incidence of tax revolts are growing.

This is all still very far from the situation in the USSR, where after all half the population wasn’t even Russia whereas the US is a nationally homogeneous nation. Nonetheless, the trends are ominous. There is no visible horizon to the end of the economic crisis, and even as late as 1989 no Soviet republic except the Baltics wanted out.

1) Economist Willem Buiter believes there will be a global dumping of $ assets within two to five years. Financial advisor James West writing in SeekingAlpha believes a US debt default and dollar collapse are “altogether likely”. Russia fund investor Eric Kraus has been lamenting the unsustainability of American disbalances for years and predicted the US will fall into a debt trap last November. The economist Nouriel Roubini, one of the few to have foreseen this crisis, predicts this recession will be far longer and deeper than any other post-war recession. Even the Economist mentioned the possibility of a US debt-and-currency crisis in one of its recent issues.

Dmitri Orlov explicitly compares the US to the USSR, and concludes that the collapse will be worse, at least in social terms, in the former. The Russian economist Mikhail Khazin predicts a 25-40% drop in American GDP. Future and trends analyst Gerard Celente, who succesfully predicted the collapse of the Soviet Union, now foresees an unprecendented fall in US economic output, tax rebellions and food riots. Russian professor Igor Panarin sees disintegration and civil war as soon as this year.

(Republished from Sublime Oblivion by permission of author or representative)
 
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The Next 100 Years by George Friedman, published in 2010. Rating: 3/5

George Friedman at Stratfor is one of my favorite analysts on world geopolitics. This is because he tries to look at the world as it is, without the pointless moralizing, neoliberal ideologizing and end-of-history triumphalism that clouds too much American geopolitical thinking. Hence whenever I come across new and substantial material from him, although I might not agree with some (or most) of what he says, I nonetheless adjust my beliefs (in a good Bayesian fashion).

And lo and behold!, he comes out with a new book – The Next 100 Years. Funnily enough, it is about the next 100 years, or more specifically, the interplay between technological and demographic trends and geopolitical dynamics that will shape the twenty-first century.

I was originally going to copy out its entire first chapter, Overture (which is available online) and just comment on it. Unfortunately this makes it far too long and I had problems publishing it. So I’ll headline and summarize Friedman’s main points instead and leave my original commentary largely unchanged.

1. The future is unpredictable: “Be practical, expect the impossible”.

Friedman starts off by summarizing the history of the last century in twenty year chunks. Thus we got from the globalized idyll of 1900, through the chaos of 1940, the gathering storm clouds of 1940, the American dominance in 1960, the rising Soviet challenge in 1980 and culminating in the renewed globalized idyll of 2000 – only to be again disrupted by 9/11.

Completely agreed – most commentary is about the short-term, or at best linear extrapolations of short-term things. Good futurists think in terms of differentials, exponents and tipping points.

2. However, some trends are dominant and can be foreseen.

It was possible to forecast European wars on the basis that a newly united and powerful Germany was in an insecure position in between France and Russia; it would have been harder to predict how devastating these wars would have and that they’d have led to the dissolution of the European empires.

Interestingly, one of the best seers in this respect was Friedrich Engels. As early as 1887, he envisaged “a world war of never before seen extension and intensity…eight to ten million soldiers will slaughter each other…the devastations of the Thirty Years War condensed into three or four years and spread all over the continent; famines, epidemics, general barbarization of armies and masses…collapse of the old states and their traditional wisdom in such a way that the crowns roll in the gutter by the dozens and there will be nobody to pick them up…general exhaustion and the creation of circumstances for the final victory of the working class”. He even got the casualties and timeline correct! Other great prophets were the Warsaw banker Ivan Bloch, Moltke the Elder and Colmar von der Goltz.

Friedman sees the United States as the dominant pivot of the twenty-first century due to its unrivaled economic, military and political power. This was due to its overwhelming naval power and strategic position that allow it to control both Atlantic and Pacific trade. Because of its wealth and the vast resources needed to build a comparable blue-water fleet, it’s continued dominance is assured.

Although ostensibly overwhelming, American naval dominance is going to be challenged by new developments in military technology such as supercavitating torpedoes, UAV’s and advanced cruise missiles. As its own war games from 2002 demonstrated, the age of the aircraft carrier battle-group is drawing to an end even against relatively unsophisticated foes.

The inherent power of the United States coupled with its geographic position makes the United States the pivotal actor of the twenty- first century. That certainly doesn’t make it loved. On the contrary, its power makes it feared. The history of the twenty- first century, therefore, particularly the first half, will revolve around two opposing struggles. One will be secondary powers forming coalitions to try to contain and control the United States. The second will be the United States acting preemptively to prevent an effective coalition from forming.

As Friedman points out in the book, “declinism” has been a recurrent feature of American history, mostly recently in the 1970′s and 1980′s when stagflation, oil shocks, the growing power of the Soviet Union, deindustrialization and soaring crime rates and perceived social and moral collapse led to feelings of despair over the future of the American empire.

On the other hand this does not mean that there won’t be potential setbacks. After abating somewhat in the 1990′s, the above trends returned in force during the 2000′s. Meanwhile, the national power of China and Russia have soared and are projected to continue doing so, at least in the medium-term. Nowadays the US can only afford plentiful butter and guns because of the flood of cheap credit it gets from abroad (due to the now disappearing “American alpha” and the status of the $ as the global currency reserve). It’s industry has been hallowed out and now faces the real risk of a debt-and-currency crisis within the next few years. Should that come to pass the strain of maintaining a superlative global military presence will become economically and politically unbearable.

3. The US will do its best to prevent the emergence of a Eurasian hegemon or hostile coalition is spot on.

If we view the beginning of the twenty- first century as the dawn of the American Age (superseding the European Age), we see that it began with a group of Muslims seeking to re- create the Caliphate—the great Islamic empire that once ran from the Atlantic to the Pacific. Inevitably, they had to strike at the United States in an attempt to draw the world’s primary power into war, trying to demonstrate its weakness in order to trigger an Islamic uprising. The United States responded by invading the Islamic world. But its goal wasn’t victory. It wasn’t even clear what victory would mean. Its goal was simply to disrupt the Islamic world and set it against itself, so that an Islamic empire could not emerge.

The United States doesn’t need to win wars. It needs to simply disrupt things so the other side can’t build up sufficient strength to challenge it. On one level, the twenty- first century will see a series of confrontations involving lesser powers trying to build coalitions to control American behavior and the United States’ mounting military operations to disrupt them. The twenty- first century will see even more war than the twentieth century, but the wars will be much less catastrophic, because of both technological changes and the nature of the geopolitical challenge.

True. It has a superb geographical location that is practically invulnerable, economically optimal and is still underpopulated (in comparison with Asia or Europe, though not from an ecological perspective). Therefore it will certainly remain one of the leading Great Powers, unlike Britain during the last century.

4. Russia will reconstruct its empire in the 2010′s, but will collapse irrevocably in the 2020′s.

As we’ve seen, the changes that lead to the next era are always shockingly unexpected, and the first twenty years of this new century will be no exception. The U.S.–Islamist war is already ending and the next conflict is in sight. Russia is re- creating its old sphere of influence, and that sphere of influence will inevitably challenge the United States. The Russians will be moving westward on the great northern European plain. As Russia reconstructs its power, it will encounter the U.S.- dominated NATO in the three Baltic countries—Estonia, Latvia, and Lithuania—as well as in Poland. There will be other points of friction in the early twenty- first century, but this new cold war will supply the flash points after the U.S.–Islamist war dies down.

The Russians can’t avoid trying to reassert power, and the United States can’t avoid trying to resist. But in the end Russia can’t win. Its deep internal problems, massively declining population, and poor infrastructure ultimately make Russia’s long- term survival prospects bleak. And the second cold war, less frightening and much less global than the first, will end as the first did, with the collapse of Russia.

Friedman has a lot of (fairly convincing) theories on how Russia’s geostrategic position influences it to “anchor” its position in Central Asia, the Caucasus and Ukraine, and expand as far west as possible on the North European Plain (see The Geopolitics of Russia: Permanent Struggle). However, this “imperial overstretch” alarms the European and oceanic powers, who interpret these moves as aggressive and threatening to their own national interests. They seek to contain Russia, which must bear occupation costs and devote more resources to maintaining a military balance. Eventually a breaking point is reached and centrifugal forces tear the country apart in periodic “times of troubles”, in which Russia in encircled and preyed upon by predatory Powers.

Viewing things from this perspective, a lot of things start to make sense, from the conflict in Georgia to its distracting the US by complicating its position in the Middle East and Latin America with arms sales, pursing friendly relations with regimes unfriendly to Washington, pushing for the creation of a common Eurasian (read: non American) security space, etc. He terms this the Medvedev Doctrine.

According to Friedman, Russia faces long-term collapse due to “deep internal problems, massively declining population, and poor infrastructure”. I would dispute both the severity and validity of this. “Deep internal problems” is simply too ambiguous. Population decline is unlikely to be massive; at worst, it will fall at a slow pace. As for infrastructure, even the Economist collates projections that Russia will invest heavily in infrastructure, accounting for some 10% of infrastructure spending among emerging markets from 2008 to 2017 (this is especially impressive when considering that unlike other heavyweights like China or India, Russia already has most of the physical infrastructure of a developed economy in place albeit it is dilapidated; and that it is a leader in per capita spending).

But even if demographic and development trends do not work out as I expect above, this would not necessarily lead to its collapse. For that to happen, a whole lot of other things must come into play simultaneously and for a prolonged period – ethnic discontent, violent insurrections, loss of national faith, economic sclerosis, unbearable social and military burdens, collapse in energy prices, etc.

No real trends indicate that this will be the case, however. The reality of peak oil will mean energy superpowers like Russia will be courted by all major industrial powers, at least until (and if) they wean themselves off it – the plausibility of which I very much doubt given the fluidity and “net energy” of oil and gas. It also has strong positions in nuclear technology and space technologies, and is devoting huge resources and effort into developing hi-tech clusters in areas like nanotechnology and microelectronics. What I expect to see is countries like China and Germany getting guaranteed energy supplies in return for transfers of machinery and know-how, which will lead to Russia’s rapid convergence to developed country income levels around about 2020. Meanwhile, global warming will be opening up new hydrocarbons deposits, shipping routes and fertile land in Siberia and the Arctic. I’ve been writing about this since quite a while back.

Re-ethnic discontent, firstly, it is unlikely, though not impossible, that the resurrected Russian empire will be of the old school variety (i.e. completely integrated politically). What both Friedman and I think more likely is that institutional ties like Eurasec (economic) and the CSTO (military) will become much more visible and all-encompassing, perhaps culminating in some kind of structure, let’s call it the Eurasian Union, that will lie somewhere in between the EU and the US in political integration. The member states will have a great deal of latitude in dealing with domestic issues, but their military-industrial, defense and foreign policy will be tightly linked and co-ordinated.

Secondly, even as Russia’s softer neo-imperial intentions become clearer this does not seem to have any effects on the popularity of its leaders in the countries that matter (i.e. the Near Abroad). Far more Ukrainians approve of Putin than of their own President (who languishes in the single digits) or any other Ukrainian leader. Same goes for Belarus, and the Central Asians too.

Some kind of confederation between Belarus, Kazakhstan, Russia and Ukraine enjoys the support of silent majorities in all four countries. If that were to happen, the population of the dominant Eurasian power will increase from 142mn to about 215mn and the combined industrial product will increase by at least 50%, due to both greater quantity, greater economies of scale and the restoration of severed supply chains from the Soviet era. The military-industrial complex will especially benefit.

Central Asia is an important geostrategic focus (part of the Heartland, in Mackinder’s geopolitics), a promising energy source and demographic reservoir. Although their immigration north and west will exacerbate tensions with Slavic peoples, this should not be critical since they are generally appreciative of Russian culture and are not prone to the radical Islamism prevalent further south or even in Caucasian Russian republics like Chechnya. Their inclusion would complete the basis for a superpower.

The major obstacle would be the Balts, Georgians and Poles. Extending the Russian empire to them would be costly, unproductive and undemocratic (since unlike the central Asians and Orthodox Slavic states, they do not want to partake of this enterprise). Thus the appropriate policy regarding them would be to insist on mutual cooperation and neutrality. Russia has levers against them – ethnic Russians in the Baltics, the pragmatism of ordinary Georgians towards Russia and gas and oil supplies to Poland. They are all of ultimately marginal economic significance, and are acceptable as neutral buffers against Western encroachment.

Thirdly, violent revolt is also becoming ever more unlikely. The economy will probably be expanding rapidly and populations throughout this empire will certainly be aging – hardly recipes for bloody wars of national independence. In the cases of the Slavic states or even Central Asia, it is next to inconceivable. Even the Caucasus will quieten down. One of the unremarked things about the 1990′s and the 2000′s is the region’s demographic transition to sub-replacement fertility levels (2.1 children per woman), including by this time even such places like Ingushetia and Daghestan. The only major exception is Chechnya, which today has a fertility rate of 3.1 children per woman. I think the fact that it was also the only region to flare up into open revolt was not coincidental. As the eXile‘s War Nerd points out, the only countries willing to fight bloody guerilla battles today are poor and have lots of children.

I could go on and on, but in summary I think Friedman’s vision of a new Russian empire is grounded in reality – he predicts that Russia will regain most of its old Soviet frontiers within the next decade, and will by the mid-2010′s be extending its influence back into the Baltics, the Balkans and Visegrad. However, I’m not so certain of his prognostications of its end – which is based on far less evidence.

Which is not to say its not going to happen. One possible scenario: growth of internal corruption and institutional dysfunction; slowdown or cessation of growth due to economic convergence being achieved, and an eruption of spillovers from bad loans as happened in Japan in the 1990′s which paralyze the economy; unchecked growth in entitlements; social and political strains; reduced European reliance on Russian natural gas due to new supplies from North Africa and the Middle East and effective energy conservation; and renewed pursuit of Prometheism on the part of the US, Polish proxies and perhaps some West European allies; and perhaps a temporary commodity crash.

Friedman predicts in his book that Russia and the US will be in a full-fledged New Cold War by the mid-2010′s; perhaps the onset of so many difficulties, simultaneously, will open up a “window of opportunity” for the US to break up the Russian empire to eliminate a strategic competitor and open up access to its natural resources. Far-fetched? Yes. But possible. After all, every great Atlantic / sea power tries to form alliances and undermine powerful Eurasian / land empires. Possible, because history hasn’t ended and won’t end for a long time if ever.

5. China will fragment in the 2010′s due to internal pressures and foreigners will recreate spheres of influence in it.

There are many who predict that China is the next challenger to the United States, not Russia. I don’t agree with that view for three reasons. First, when you look at a map of China closely, you see that it is really a very isolated country physically. With Siberia in the north, the Himalayas and jungles to the south, and most of China’s population in the eastern part of the country, the Chinese aren’t going to easily expand. Second, China has not been a major naval power for centuries, and building a navy requires a long time not only to build ships but to create well-trained and experienced sailors.

I find the emphasis on physical land barriers to be quaint in an era of railways, air transport and massive merchant marines. China already has the industrial capacity and (through economic acquisitions and espionage) the technological capability to rapidly create a powerful blue-water fleet. Although the German Empire had no naval tradition to speak of, the Kaiserliche Marine went from being a small coastal defense to the world’s second largest fleet with better ships and better training than the Royal Navy, all just in the twenty years prior to the First World War.

Third, there is a deeper reason for not worrying about China. China is inherently unstable. Whenever it opens its borders to the outside world, the coastal region becomes prosperous, but the vast majority of Chinese in the interior remain impoverished. This leads to tension, conflict, and instability. It also leads to economic decisions made for political reasons, resulting in inefficiency and corruption. This is not the first time that China has opened itself to foreign trade, and it will not be the last time that it becomes unstable as a result. Nor will it be the last time that a figure like Mao emerges to close the country off from the outside, equalize the wealth—or poverty— and begin the cycle anew. There are some who believe that the trends of the last thirty years will continue indefinitely. I believe the Chinese cycle will move to its next and inevitable phase in the coming decade. Far from being a challenger, China is a country the United States will be trying to bolster and hold together as a counterweight to the Russians. Current Chinese economic dynamism does not translate into long- term success.

He expands on this in the book. Still, I disagree. China’s industrial production is real enough and it is moving rapidly up the technology ladder (its export basket is far more advanced than its still low per capita income would normally indicate). China is now going to focus on creating its “harmonious society”, improving social services in rural areas and expanding domestic consumption. The period of maximum danger has already passed. What happened in the psychologically demoralized and mentally backward China of the nineteenth century is not really relevant to what will happen to it in the twenty-first.

That said, China does face some very real challenges – above all, resource depletion, environmental destruction and climate change. It has the resources to lock in energy supplies from abroad and has plentiful (but dirty) coal reserves. There’s also plenty of “coal gas”, an unfairly neglected but I suspect soon to become very important energy source (“There are also reports of Asian reserves of around 2,100 tcf – including 1,000 tcf in China, where the government is looking to rapidly increase production.” – Oil Drum). However, it faces severe environmental pressure as desertification and urbanization eat up agricultural land and water tables fall precipitously. Chinese grain production peaked in the mid-1990′s and has slowly fallen since. It possesses a fifth of the world’s population with just 7% of its arable land. Agricultural production is going to decline in traditional exporting breadbaskets like the US, Australia and Latin America with global warming, and competition for food will increase. Rising seas will threaten to inundate superdense settlements on its south-eastern seaboard and deserts will encroach from the northwest. This is going to be the crux of China’s challenge this century.

6. After 2030, three Great Powers will emerge to challenge the US: Japan, Turkey and Poland.

In the middle of the century, other powers will emerge, countries that aren’t thought of as great powers today, but that I expect will become more powerful and assertive over the next few decades. Three stand out in particular. The first is Japan. It’s the second- largest economy in the world and the most vulnerable, being highly dependent on the importation of raw materials, since it has almost none of its own. With a history of militarism, Japan will not remain the marginal pacifistic power it has been. It cannot. Its own deep population problems and abhorrence of large- scale immigration will force it to look for new workers in other countries. Japan’s vulnerabilities, which I’ve written about in the past and which the Japanese have managed better than I’ve expected up until this point, in the end will force a shift in policy.

I agree it will become more militarized and I suspect it will tackle its population troubles with increasing robotization. However it cannot match the military power of true superpowers like the US, China or a new Russian empire, largely for the reasons Friedman himself cited, and I believe it will bandwagon with the dominant Power in the region, China.

Then there is Turkey, currently the seventeenth-largest economy in the world. Historically, when a major Islamic empire has emerged, it has been dominated by the Turks. The Ottomans collapsed at the end of World War I, leaving modern Turkey in its wake. But Turkey is a stable platform in the midst of chaos. The Balkans, the Caucasus, and the Arab world to the south are all unstable. As Turkey’s power grows—and its economy and military are already the most powerful in the region—so will Turkish influence.

Considering that education is the elixir of growth, and that Turks (unlike Europeans, Americans and East Asians) aren’t the sharpest tools in the box according to international standardized tests of math / science literacy, I do not see them as a true Great Power any time soon. On the other hand I grant that Friedman’s scenario in the book in which Turkey melds the Arab nations into a new Caliphate and expands north into the Caucasus and the Balkans (the vacuum left over by the collapse of the Russian empire) is a distant possibility.

Finally there is Poland. Poland hasn’t been a great power since the sixteenth century. But it once was—and, I think, will be again. Two factors make this possible. First will be the decline of Germany. Its economy is large and still growing, but it has lost the dynamism it has had for two centuries. In addition, its population is going to fall dramatically in the next fifty years, further undermining its economic power. Second, as the Russians press on the Poles from the east, the Germans won’t have an appetite for a third war with Russia. The United States, however, will back Poland, providing it with massive economic and technical support. Wars—when your country isn’t destroyed—stimulate economic growth, and Poland will become the leading power in a coalition of states facing the Russians. Japan, Turkey, and Poland will each be facing a United States even more confident than it was after the second fall of the Soviet Union. That will be an explosive situation. As we will see during the course of this book, the relationships among these four countries will greatly affect the twenty- first century, leading, ultimately, to the next global war. This war will be fought differently from any in history—with weapons that are today in the realm of science fiction. But as I will try to outline, this mid-twenty-first century conflict will grow out of the dynamic forces born in the early part of the new century.

This is the “Promethean” scenario, in which the US helps in the collapse of the Russian empire using Polish proxies. Given his demographic emphasis, however, this is extremely unlikely since Polish demography is little better than German and worse than Russian (if measuring by total fertility rates); at just 40mn people, its population is simply too small to support a big arms burden and this will be true even if it were to recreate the old Polish-Lithuanian Commonwealth by incorporating Western Ukraine (20mn), Belarus (10mn) and Lithuania (5mn) to make a total of 75mn – less than Germany, lots of old people, and poorer.

Frankly, the idea of Japan, Turkey and Poland challenging the US for global primacy around 2050 is ridiculous – even if we follow Friedman’s advice to “expect the impossible”.

7. Space-based solar technologies will substitute for hydrocarbons.

After a damaging, hi-tech but very low casualty war between the US and the above Powers, the “concepts developed prior to the war for space-based electrical generation, beamed to earth in the form of microwave radiation, will be rapidly translated from prototype to reality” and the world’s energy will start coming from space-based solar installations, kicking off a massive economic boom.

The trend towards ever fewer casualties in the last century was not because of any moral or technological reasons, but because there were simply no wars between Great Powers – a nuclear conflict between the US and the USSR would have killed far more people than World War Two. I think future Great Power wars will be very bloody and intense as soon as mobilization for total wars occurs, and will be quickly return to megadeath levels if some of the combatants are all out virulent totalitarianisms. Such a possibility should not be excluded.

I find Friedman’s focus on space-based solar technologies narrow (there are many other emerging technologies) and believe that the most transformatory changes will come from the GNR Revolution (genetics 2010-2030, nano 2020-2050 and robotics, including superintelligent AI by 2030-2050.

8. End of the population explosion and competition for immigrants.

After two centuries of rapid growth, the world population will level off by 2050 and advanced industrial nations will have rapidly falling populations. There will be incentives for immigrants to come and there’ll be more research into genetics and robotics so as to prolong productive lifespans and automate simpler tasks.

Agreed on the key role of robotics and genetics, though it would be nice if Friedman covered them in more detail. I also believe that due to the effects of global warming and resource depletion, which Friedman totally dismisses, it is more likely that rich northern countries will intensify attempts to keep immigrants out instead.

9. Mexico will emerge as a competitor to the US in North America by 2080.

Mexico will become economically developed and much of the US South-West will become de facto Mexican-ruled, thus threatening the territorial integrity of the US.

Disagree. Mexico will sooner become a failed state because of global warming, plummeting oil production and lack of advanced technologies and human capital. The prospect of tensions and unrest between Mexicans and Americans in the South-West are real, but will not pose a threat to US sovereignty because of Mexican weakness.

10. Philosophical ruminations on geopolitics – although details are hard to predict, the overall picture can be discerned based on history and current trends.

…Geopolitics applies the concept of the invisible hand to the behavior of nations and other international actors. The pursuit of short- term self- interest by nations and by their leaders leads, if not to the wealth of nations, then at least to predictable behavior and, therefore, the ability to forecast the shape of the future international system. Geopolitics and economics both assume that the players are rational, at least in the sense of knowing their own short- term self- interest. As rational actors, reality provides them with limited choices. It is assumed that, on the whole, people and nations will pursue their self- interest, if not flawlessly, then at least not randomly. Think of a chess game. On the surface, it appears that each player has twenty potential opening moves. In fact, there are many fewer because most of these moves are so bad that they quickly lead to defeat. The better you are at chess, the more clearly you see your options, and the fewer moves there actually are available. The better the player, the more predictable the moves. The grandmaster plays with absolute predictable precision—until that one brilliant, unexpected stroke.

Nations behave the same way. The millions or hundreds of millions of people who make up a nation are constrained by reality. They generate leaders who would not become leaders if they were irrational. Climbing to the top of millions of people is not something fools often do. Leaders understand their menu of next moves and execute them, if not flawlessly, then at least pretty well. An occasional master will come along with a stunningly unexpected and successful move, but for the most part, the act of governance is simply executing the necessary and logical next step. When politicians run a country’s foreign policy, they operate the same way. If a leader dies and is replaced, another emerges and more likely than not continues what the first one was doing.

…Geopolitical forecasting, therefore, doesn’t assume that everything is predetermined. It does mean that what people think they are doing, what they hope to achieve, and what the final outcome is are not the same things. Nations and politicians pursue their immediate ends, as constrained by reality as a grandmaster is constrained by the chessboard, the pieces, and the rules. Sometimes they increase the power of the nation. Sometimes they lead the nation to catastrophe. It is rare that the final outcome will be what they initially intended to achieve.

Geopolitics assumes two things. First, it assumes that humans organize themselves into units larger than families, and that by doing this, they must engage in politics. It also assumes that humans have a natural loyalty to the things they were born into, the people and the places. Loyalty to a tribe, a city, or a nation is natural to people. In our time, national identity matters a great deal. Geopolitics teaches that the relationship between these nations is a vital dimension of human life, and that means that war is ubiquitous. Second, geopolitics assumes that the character of a nation is determined to a great extent by geography, as is the relationship between nations. We use the term geography broadly. It includes the physical characteristics of a location, but it goes beyond that to look at the effects of a place on individuals and communities. In antiquity, the difference between Sparta and Athens was the difference between a landlocked city and a maritime empire. Athens was wealthy and cosmopolitan, while Sparta was poor, provincial, and very tough. A Spartan was very different from an Athenian in both culture and politics.

…The twenty- first century will be like all other centuries. There will be wars, there will be poverty, there will be triumphs and defeats. There will be tragedy and good luck. People will go to work, make money, have children, fall in love, and come to hate. That is the one thing that is not cyclical. It is the permanent human condition. But the twenty- first century will be extraordinary in two senses: it will be the beginning of a new age, and it will see a new global power astride the world. That doesn’t happen very often. We are now in an America- centric age. To understand this age, we must understand the United States, not only because it is so powerful but because its culture will permeate the world and define it. Just as French culture and British culture were definitive during their times of power, so American culture, as young and barbaric as it is, will define the way the world thinks and lives. So studying the twenty- first century means studying the United States.

This is perhaps the biggest point of disagreement. The twenty-first century will be unlike all previous centuries. As I’ve argued here, it’s a make or break century. Either we overcome limits to growth and survive long enough to usher in a technological singularity / Green Communism, or our industrial civilization tumbles into the dark depths of the Olduvai Gorge. The outcome will depend on three things – resource depletion and environmental degradation; technological development; and perhaps most importantly, our politics and values.

If there were only one argument I could make about the twenty-first century, it would be that the European Age has ended and that the North American Age has begun, and that North America will be dominated by the United States for the next hundred years. The events of the twenty-first century will pivot around the United States. That doesn’t guarantee that the United States is necessarily a just or moral regime. It certainly does not mean that America has yet developed a mature civilization. It does mean that in many ways the history of the United States will be the history of the twenty- first century.

The US will certainly dominate North America – its neighbors are geopolitical basketcases and even if catastrophic global warming occurs, it will conquer Canada and tranfer its population north. However, the pivot of the twenty-first century is as always before going to be on the Eurasian landmass, which has 70% of the world’s population and is the focal point of almost all new social ideas, wars and revolutions.

You might have gotten the impression that I criticize Friedman so much that my praise for him at the beginning was not genuine. That’s wrong. His short-term geopolitical analysis is superb. It is also a lot more nuanced when he gets more space to write down his views. I find the writings on Russian geopolitics, as well as things like his series of monographs on the geopolitics of Israel, Iran and China, to be of the highest caliber and essential for understanding geopolitical dynamics in Eurasia.

Nonetheless, he has four critical failings as a serious futurist. Firstly, he discounts the role of non-geopolitical factors (economics, ideologies, culture and religion, etc) in driving history – as such, just like the realist, clash of civilizations, or idealist / end of history theses in international relations, the analysis is revealed as one-dimensional when stretched far enough into the future. Secondly, there is a near total lack of attention to ecological issues, as well as unrealistic projections of energy usage and technological development. Thirdly, far too much stock is put into semi-mystical “cycles” of history for particular countries, such as America’s 50-year cycles of transformation and China’s cycles of expansion, isolation and collapse. Never precise to scientific to begin with, they are ever more irrelevant in the accelerating world of today. Fourthly, there is too much emphasis on territorial and geographical features from a conventional military perspective, especially in the case of nuclear armed Powers – with next to nothing on the potential use of WMD’s, be it by nation states or terrorists and malcontents. As such, I would treat his long term prognoses in The Next 100 Years with a pinch of salt.

(Republished from Sublime Oblivion by permission of author or representative)
 
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Sometimes, it is much simpler to expound upon one’s views on a subject by replying to and arguing against an opposing view, rather than constructing one’s own thesis. Call it intellectual laziness, a clever short-cut or whatever you not, this is what I’m going to do with the Washington Post article A Long Wait at the Gate to Greatness, in which John Pomfret argues that China is unlikely to ever match, let alone surpass, the United States as the world’s premier superpower. I will quote it in full, adding my own comments:

Nikita Khrushchev said the Soviet Union would bury us, but these days, everybody seems to think that China is the one wielding the shovel. The People’s Republic is on the march — economically, militarily, even ideologically. Economists expect its GDP to surpass America’s by 2025; its submarine fleet is reportedly growing five times faster than Washington’s; even its capitalist authoritarianism is called a real alternative to the West’s liberal democracy. China, the drumbeat goes, is poised to become the 800-pound gorilla of the international system, ready to dominate the 21st century the way the United States dominated the 20th.

The key difference is that China is a demographic giant. This means that to match the US in gross GDP (one of the key criteria for superpower status), it need only advance to around a quarter of its per capita development, or Mexico’s level. To match the West (and be double the US), it need only reach Portuguese standards.

Except that it’s not.

Ever since I returned to the United States in 2004 from my last posting to China, as this newspaper’s Beijing bureau chief, I’ve been struck by the breathless way we talk about that country. So often, our perceptions of the place have more to do with how we look at ourselves than with what’s actually happening over there. Worried about the U.S. education system? China’s becomes a model. Fretting about our military readiness? China’s missiles pose a threat. Concerned about slipping U.S. global influence? China seems ready to take our place.

But is China really going to be another superpower? I doubt it.

China’s positive portrayal is far from universal. To the contrary, it’s possible to find a great many articles like his claiming that China’s rise is overblown, e.g. Will Hutton on Does the future really belong to China? (no, it doesn’t, according to him).

Too many constraints are built into the country’s social, economic and political systems. For four big reasons — dire demographics, an overrated economy, an environment under siege and an ideology that doesn’t travel well — China is more likely to remain the muscle-bound adolescent of the international system than to become the master of the world.

Let’s see how well he backs up this thesis.

In the West, China is known as “the factory to the world,” the land of unlimited labor where millions are eager to leave the hardscrabble countryside for a chance to tighten screws in microwaves or assemble Apple‘s latest gizmo. If the country is going to rise to superpowerdom, says conventional wisdom, it will do so on the back of its
massive workforce.

However, there is a very big hitch in the aforementioned conventional ‘wisdom’. According to the World Bank’s report Unleashing Productivity, the overwhelming majority of Chinese growth can be attributed to increasing total factor productivity and investment from 1999 to 2005. If labor supply hadn’t increased, China’s growth rate would have fallen by less than 1% point. Furthermore, China has experienced very high human capital accumulation, as nine-year schooling has become universal and “during the past decade, China has produced college and university graduates at a significantly faster pace than Korea and Japan did during their fastest-growing periods”; since education is the elixir of growth, its workforce won’t just be assembling gizmos and tightening screws for long. Even now higher-added value manufacturing is booming.

But there’s a hitch: China’s demographics stink. No country is aging faster than the People’s Republic, which is on track to become the first nation in the world to get old before it gets rich. Because of the Communist Party’s notorious one-child-per-family policy, the average number of children born to a Chinese woman has dropped from 5.8 in the 1970s to 1.8 today — below the rate of 2.1 that would keep the population stable. Meanwhile, life expectancy has shot up, from just 35 in 1949 to more than 73 today. Economists worry that as the working-age population shrinks, labor costs will rise, significantly eroding one of China’s key competitive advantages.

Firstly, a TFR of 1.8 is far from critical and kept constant will lead to only small declines in the size of succeeding cohorts. Secondly, according to most projections the absolute size of the labor force will nonetheless continue growing until 2030 (it also neglects the fact that the supply of excess labor from agriculture is far from drying up). Thirdly, it ignores the extend to which rising labor costs will be offset by rapidly growing productivity as much more resources can be invested in a smaller pool of children.

Finally, I strongly recommend reading the third chapter of the Goldman Sachs BRICs and Beyond book, Will China Grow Old Before Getting Rich?, for a refutation of this particular variant of the demographic-apocalypse myth.

Worse, Chinese demographers such as Li Jianmin of Nankai University now predict a crisis in dealing with China’s elderly, a group that will balloon from 100 million people older than 60 today to 334 million by 2050, including a staggering 100 million age 80 or older. How will China care for them? With pensions? Fewer than 30 percent of China’s urban dwellers have them, and none of the country’s 700 million farmers do. And China’s state-funded pension system makes Social Security look like Fort Knox. Nicholas Eberstadt, a demographer and economist at the American Enterprise Institute, calls China’s demographic time bomb “a slow-motion humanitarian tragedy in the making” that will “probably require a rewrite of the narrative of the rising China.”

In other words, just a little more than Japan’s rate (22%) today. Nothing particularly alarming. So what if the share of the working age population drops from 71% today to around 60% in half a century? Especially in an ever wealthier world where old people get ever healthier?

Regarding pensions, he answers his own question. They won’t be a problem because they generally don’t bother with them. (As a matter of fact, the lack of pensions partly explains China’s huge savings rate).

As for Eberstadt, I don’t put much stock into what he says, given the apocalyptic rhetoric he has spewed on Russia which I covered in the Demographics post on Da Russophile.

I count myself lucky to have witnessed China’s economic rise first-hand and seen its successes etched on the bodies of my Chinese classmates. When I first met them
in the early 1980s, my fellow students were hard and thin as rails; when I found them again almost 20 years later, they proudly sported what the Chinese call the “boss belly.” They now golfed and lolled around in swanky saunas.

But in our exuberance over these incredible economic changes, we seem to have forgotten that past performance doesn’t guarantee future results. Not a month goes by without some Washington think tank crowing that China’s economy is overtaking America’s. The Carnegie Endowment for International Peace is the latest, predicting earlier this month that the Chinese economy would be twice the size of ours by the middle of the century.

There are two problems with predictions like these. First, in the universe where these reports are generated, China’s graphs always go up, never down. Second, while the documents may include some nuance, it vanishes when the studies are reported to the rest of us.

Opinion presented as fact.

One important nuance we keep forgetting is the sheer size of China’s population: about 1.3 billion, more than four times that of the United States. China should have a big economy. But on a per capita basis, the country isn’t a dragon; it’s a medium-size lizard, sitting in 109th place on the International Monetary Fund‘s World Economic Outlook Database, squarely between Swaziland and Morocco. China’s economy is large, but its average living standard is low, and it will stay that way for a very long time, even assuming that the economy continues to grow at impressive rates.

As I mentioned, to fulfil what is perhaps the most important criterion for superpowerdom, China’s population size means it only has to reach about a quarter of America’s per capita development level to qualify – something it is already, by some measures, quite close to doing.

Secondly, the gap in development actually means China has the means to continue to ‘catch-up’ rapidly, since it’s much easier to grow fast when you lag far behind best practice. And unlike Morocco or Swaziland, which have yet to come close to conquering illiteracy, China possesses a basically well-educated population that is capable of absorbing higher-productivity technologies to convergence.

The big number wheeled out to prove that China is eating our economic lunch is the U.S. trade deficit with China, which last year hit $256 billion. But again, where’s the missing nuance? Nearly 60 percent of China’s total exports are churned out by companies not owned by Chinese (including plenty of U.S. ones). When it comes to high-tech exports such as computers and electronic goods, 89 percent of China’s exports come from non-Chinese-owned companies. China is part of the global system, but it’s still the low-cost assembly and manufacturing part — and foreign, not Chinese, firms are reaping the lion’s share of the profits.

And this matters how? Innovation and global brands are the next stage of development; for now, rapid build-up of industrial capacity, infrastructure and human capital is paramount, and something China is succeding at marvelously.

When my family and I left China in 2004, we moved to Los Angeles, the smog capital of the United States. No sooner had we set foot in southern California than my son’s asthma attacks and chronic chest infections — so worryingly frequent in Beijing — stopped. When people asked me why we’d moved to L.A., I started joking, “For the air.”

China’s environmental woes are no joke. This year, China will surpass the United States as the world’s No. 1 emitter of greenhouse gases. It continues to be the largest depleter of the ozone layer. And it’s the largest polluter of the Pacific Ocean. But in the accepted China narrative, the country’s environmental problems will merely mean a few breathing complications for the odd sprinter at the Beijing games. In fact, they could block the country’s rise.

The problem is huge: Sixteen of the world’s 20 most polluted cities are in China, 70 percent of the country’s lakes and rivers are polluted, and half the population lacks clean drinking water. The constant smoggy haze over northern China diminishes crop yields. By 2030, the nation will face a water shortage equal to the amount it consumes today; factories in the northwest have already been forced out of business because there just isn’t any water. Even Chinese government economists estimate that environmental troubles shave 10 percent off the country’s gross domestic product each year. Somehow, though, the effect this calamity is having on China’s rise doesn’t quite register in the West.

Actually this is the one point I somewhat agree on.

What I’d like to point out though is that these are not terminal factors which will prevent China’s rise, just an inconvenience. South Korea also had an extremely polluted environment in its industrial growth period (and to an extend, still does), but this didn’t stop it developing quickly and now that it’s rich it can devote more resources to environmental protection.

The real danger I see is that the Himalayan glaciers melt due to global warming and the great rivers that sustain Chinese (and Indian) civilization dry up. This will indeed probably pre-empt Chinese superpowerdom. Minor things like a bit of smog or increased water stress won’t.

And then there’s “Kung Fu Panda.” That Hollywood movie embodies the final reason why China won’t be a superpower: Beijing’s animating ideas just aren’t that animating.

In recent years, we’ve been bombarded with articles and books about China’s rising global ideological influence. (One typical title: “Charm Offensive: How China’s Soft Power Is Transforming the World.”) These works portray China’s model — a one-party state with a juggernaut economy — as highly attractive to elites in many developing nations, although China’s dreary current crop of acolytes (Zimbabwe, Burma and Sudan) don’t amount to much of a threat.

But consider the case of the high-kicking panda who uses ancient Chinese teachings to turn himself into a kung fu warrior. That recent Hollywood smash broke Chinese box-office records — and caused no end of hand-wringing among the country’s glitterati. “The film’s protagonist is China’s national treasure, and all the elements are Chinese, but why didn’t we make such a film?” Wu Jiang, president of the China National Peking Opera Company, told the official New China News Agency.

The content may be Chinese, but the irreverence and creativity of “Kung Fu Panda” are 100 percent American. That highlights another weakness in the argument about China’s inevitable rise: The place remains an authoritarian state run by a party that limits the free flow of information, stifles ingenuity and doesn’t understand how to self-correct. Blockbusters don’t grow out of the barrel of a gun. Neither do superpowers in the age of globalization.

Sounds more like an American triumphalist delusion than a realistic appraisal of how the world really works.

And yet we seem to revel in overestimating China. One recent evening, I was at a party where a senior aide to a Democratic senator was discussing the business deal earlier this year in which a Chinese state-owned investment company had bought a big chunk of the Blackstone Group, a U.S. investment firm. The Chinese company ha
s lost more than $1 billion, but the aide wouldn’t believe that it was just a bum investment. “It’s got to be part of a broader plan,” she insisted. “It’s China.”

I tried to convince her otherwise. I don’t think I succeeded.

I really fail how this is at all relevant. Perhaps it was just a commercial blunder; perhaps it was done for the purpose of acquiring American best practice. What could this possibly have to do with analyzing China’s future?

Well, to them, everything.

Washington’s political elites are filled with unease over the looming end of Pax America and the impending restructuring of the world economic and international order to one where regional powers like China, India and Russia become much more prominent and influential; the culmination of a macro-historical process that has only been accelerated by America’s fiscal profligacy, imperial overstretch and peak oil.

As such, their spokespeople, like Pomfret, try their best to deny the Emperor has no clothes, their arguments based on questionable assumptions and internally inconsistent. The US would be wise to reverse course and focus its energy on accomodating to the new multipolar world instead of trying to hyperventilate it away.

(Republished from Da Russophile by permission of author or representative)
 
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Anatoly Karlin
About Anatoly Karlin

I am a blogger, thinker, and businessman in the SF Bay Area. I’m originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.

One of my tenets is that ideologies tend to suck. As such, I hesitate about attaching labels to myself. That said, if it’s really necessary, I suppose “liberal-conservative neoreactionary” would be close enough.

Though I consider myself part of the Orthodox Church, my philosophy and spiritual views are more influenced by digital physics, Gnosticism, and Russian cosmism than anything specifically Judeo-Christian.