I am late to this thread, but better late than never.

AP is correct by his observation that Polish youth is both becoming more in tune with globohomo on faggotry and secularism while at the same time being more right-wing on refugees/immigration. Call it the Czechification of Polish youth.

I still agree with Adam that the long-term prospects of Poland will be challenging given the immense pressure being applied. I am not talking about the passive-aggressive back-and-forth with Brussels. AK had a great post a few years ago wherein he compared Estonians by the kind of media they tuned into. He found that the differences between Russian speakers and Estonian speakers were nil in the older age groups but then diverged very sharply as you went down the age group. Russian speakers, because they continued tuning into Russian media, retained a much greater social conservatism on issues such as gay marriage. Estonians got soaked in GloboHomo. The lesson is that the media and culture ultimately matters a lot more than the nominal political party in charge. After all, Russians were ruled by the same parties.

A perfect US analogy would be the long GOP domination from 1980 until 1992. There was a lot of talk about the resurgence of the evanglical right etc, but in the end they didn’t control the key nodes of the cultural institutions and that made all the difference. PiS only really controls a single TV station.

Polish internet is quite free and largely without censorship. Our version of reddit (Wykop) regularly has race realist content, outright white nationalist stuff at times. However, Father Coughlin was a proto-fascist who named the Jew in the 1930s and with a few decrees he got shut down after FDR was convinced by (((advisers))) to do so. 30 million listeners were homeless overnight. The “free market” is a myth.

I’m seeing eerie similarities with the 1930s today, though not as that sentence is usually understood. I’m talking about how radio, which started out as a low-cost populist method to communicate with large swaths of people turned into a tightly controlled medium for the entrenched classes the moment it threatened the real power structures and no longer concerned itself with horse race political talk. This is what is happening to the internet as I write this. Poland, which is wedded to Western institutions, is not immune to this. Russia is.

Bragging that Poland is whiter than Russia is meaningless. Russia has genuine sovereignty. Putin might be an (occasional) cuck but at least Russians have their own destiny in their hands. Poland is a buffer state, like the rest of intermarium, and a lot of commentary here seem to miss that central fact. The fate of buffer states get decided in more powerful capitals. Such are the historical facts. An intermarium alliance could change that but in my view, such a constellation remains a pipedream (I’ve outlined why in other comments).

Ultimately, I am quite secure in my belief that Poland will eke it out for longer than most, if not all, other countries. But as others hinted: being the last guy on a sinking ship is hardly an achievement. I do not believe in “Eastern Exceptionalism” except for Russia, really. The rest of us have a choice to make. Either we team up with the Westerners in Europe and upend the existing order, failing that we form our own intermarium (I’m a skeptic) or we move into Russia’s sphere of influence in some sort of pan-Slavic transmogrification. Either way, I am not a big believer in fatalism and I dismiss historical theories of ‘inevitability’. What will happen is very much in our collective hands.

P.S. I’m glad you liked the book, AK. If you’re interested in India then I’d recommend Vijay Joshi’s 2016 book on the Indian economy. It serves a similar purpose: being an encompassing yet highly readable introduction to an intelligent audience without skipping on depth of detail. The book is quite academic at times but Joshi is a skilled narrator. Alternatively, TN Ninan’s book would also be a good start though it has a wider canvas and deals with politics and foreign policy. Ninan also enjoys using a lot of personal anecdotes to anchor his book whereas Joshi is the classic Oxbridge professor in being about pure theory as much as possible.

Window for poor countries to industrialise ‘closing fast’ – FT

Very interesting article, based on solid original research by McKinsey. It ties into the discussion on manufacturing prospects for poorer countries, Ukraine and convergence in general. The TL;DR version is:

1. Services trade is increasing much faster than goods trade(60% faster over the last decade, to be exact), and developed countries have a structural advantage in services trade. Moreover, this advantage has increased over the last decade. The few poor countries that do well in services tend to do so in more easily automated services (call centers), so their future prospects are shakier than for high-value added services, which they don’t well in.

2. Labour arbitrage is falling in importance for labour intensive manufacturing. It is now at levels not seen since the 1990s. This is bad news for poor countries given that manufacturing has been the traditional path to wealth unless A) you’re tiny and oil rich or B) you’re a tax-haven or C) you’re a city-state. But those are outliers.

3. Value-chains are increasingly becoming more knowledge-intensive. The figure is that spending on R&D, software development, IP etc has gone from 5.4 percent of revenue in 2000 to 13.1 percent in 2016. This is self-evidently not a strong suit of poor countries, else they wouldn’t be poor.

4. Trade regionalism is growing, led by Asia and Europe. If you’re outside of these tightly regional supply chains, then your scope to sell to the rich in order to get rich yourself is becoming harder.

Some quibbles/observations: While labour arbitrage is falling, the 1990s was hardly a bad time to do convergence either. The key question is if this will continue to fall. If so, then very bad news for poorer countries. My suspicion is that it indeed will continue to fall, given the rise in automation that seems hard, if not impossible, to stop.

Trade regionalism may not be a major impediment for Ukraine, but it will be for poorer countries outside of these clusters of trade. But one can ask why trade regionalism is growing in the first place. I think the catch-all “protectionism” excuse is unconvincing.

Part of the answer, surely, and which is not explored in the article, is that the remaining poor countries outside of Asia are not very attractive. Business went to China because of the high quality of the workers and great infrastructure, plus the legal environment, despite much whining, was still good enough to ensure stability. You have none of that in Africa. China was also integrated into the world economy when regionalism was just as high, if not higher, as it is now. The point is that these trends are not static, nor inevitable. Businesses adapt and move to new places if there is strong potential for profit. This is evidently not the case in many of the poorer countries left outside of these value chains.

The article mentions Vietnam. Somehow it does well despite all these headwinds. This is a perfect example when mainstream analysis is crippled by a lack of HBD understanding. Of course, HBD has its limits too, as I’ve frequently pointed out. Ukraine should not be as poor and growing as slowly if you only looked at its IQ and nothing else.

Davos elites and neoliberal economists are obsessed with ‘good demographics’, which is solely and idiotically defined in terms of quantum of growth and youth. The research coming out, however, shows that quality of demographics is a much more important factor. India is learning this lesson painfully.

In other words, convergence may indeed stall or even reverse. But this may simply mean that most of the world’s IQ potential is nearing its natural limits given favorable economic and political systems mostly in place, with obvious exceptions (North Korea, Ukraine and a few others). Countries which still have the right ingredients for rapid growth (high IQ, decently good legal systems and stable political foundations) will continue to do well, such as Vietnam. So it is important to read the tea leaves correctly. Nevertheless, the prospective dual impact of stalling convergence and explosive population growth in much of Africa means that we’re definitely going to live in interesting times as the Chinese like to say.

Totally unrelated but am I the only one who has seen a sharp deterioration in Bershidsky’s writings of late? While he was always a liberal, I enjoyed reading him because he had an earthy Eastern European realism about things and there was an undercurrent of mild cynicism about all the grand neoliberal pronouncements. He was, in short, often willing to inject some much-needed realpolitik into the conversation, especially when things got hysterical on Russia. He even spoke about Russophobia on Twitter IIRC a few years ago. Now that seems like a world gone by.

These days, he has seemingly gone straight into the crapper and been fully assimilated into the GloboHomo Borg. One of his latest articles whine about how Russia forfeited its chance to re-unite with the West and instead went for military adventures. The West is uncritically portrayed as a peaceful bastion of democracy; the inescapable implication that Russia is an irrationally irredentist power simply going on a power trip because it is too brutish and thuggish not to. I was half-seriously awaiting some ‘Asiatic’ slur to appear.

I’m reading this and thinking, did this asshole fall asleep the last 15 years? What was Iraq, Libya or the ongoing disaster in Syria where US/UK/Israel were funding the worst Jihadist elements to the hilt? What’s so peaceful about these supposed ‘democracies’? It’s nauseating that he is slowly morphing into another indistinguishable neoliberal NPC pundit. You can still tell he has a higher IQ than most of his contemporaries but in terms of original opinion the space in his columns has radically narrowed and conformed to the status quo. SAD!

Just an addition on China. Even aside capital controls, in a fiat monetary system, the reserve currency issuer has to run large and persistent CADs (current account deficits). That’s not a choice you make, it’s how these exchanges work. A mercantilist China will be ideologically unwilling to do this. If you strip out their non-oil goods trade balance, it basically has not changed much that much since 2013, still at around 3% surplus.

The only way to avoid this is using non-fiat money, such as the gold standard. That obviously is not going to happen. Neither is the Banco – which frankly was a farsighted idea of Keynes – because the US has the power of the dollar and they are not going to give that up any time soon.

Probably the Dollar will lose its role as a global reserve currency as a result of something stupid America itself does.

I doubt this will ever come to pass due to US domestic developments. The only possibility would only be if China suddenly changed their stance. I’m a skeptic on Indian long-term development so they are out on the game, too. The less said about the dysfunctional Euro, the better.

Net US debt is what, 77% or so? It has its own central bank, which as any MMTer worth his salt will tell you, is crucial for debt flexibility. There are a range of options to use if you wanted to both reduce debt and increase employment. One such option would be the government doing huge fiscal deficits and then having the central bank monetising all of it, thereby creating inflation and simply inflating the debt away slowly, even as the government can aim for full employment through huge infrastructure and investment programs.

With the looming Californication of US politics, a key critique of MMT (namely that you need tight co-ordination between government and central bank) will fall away and stimulus-happy congressmen will increasingly dominate the US legislative branches of government.

Furthermore, as the eminent Adair Turner has pointed out in his seminal “Between Debt and the Devil” book (read it!), while we don’t talk about debt jubilee’s anymore, they have happened with regular frequencies historically in large empires. A large-scale one on a global scale is surely in the offing considering how crazily indebted much of the world currently is. This just goes to show that whatever problems the US has, surely it still much less weighed down than most of its rivals, and will remain so for decades. It will simply not be as dominant as it historically was, but that should not be mistaken as the same as the US playing on the same level as others. It won’t for a very long time.

There were communists who were nationalists deep down, Gomułka being perhaps the most prominent example. Such a person and with that background would unlikely have made it to the top under an aristocratic system. Communism did help Poland in the sense that it purged the old extractive elites, together with WWII. But that is far as I’m willing to go. Other than that, it was largely an economic disaster. It was nevertheless socially useful to set the conditions for rapid growth, it just overstayed for 30 years. The job had largely been done by the late 50s.

Polish interwar performance was mediocre. It had hyperinflation in the early 1920s and by 1938 it had a lower per capita income than in 1929. Finland was by 1938 already 30% richer rather than just 5-10% richer as in 1929.

BTW, what’s your view on the upcoming Ukrainians elections? I’d be interested in seeing Mr. Hack’s view as well. What’s your preferred candidate, if you have any, and I’d be interesting in reading some of your general thoughts on the election overall.

You have done nothing but present sweeping and conspiratorial statements in this “debate” with no sources backing you up at any point. You’re free to take a contrary line if you want to, but you should at the very least have some data/primary sources to back you up. I’m willing to listen, but only if you have evidence/statistics/facts. You have none of this.

You have evidently and repeatedly failed to do produce this and as such, you cannot be surprised when your ignorant rants are dismissed with disdain.

There’s a lot to go through here.

the transition to market economy already in 1985

This is narrowly correct but broadly misleading. These “reforms” didn’t touch pricing reform and most of them were concerned about making SOE’s more efficient. It was babysteps taken by a regime that tried to do the minimal legwork to stave off their collapse, rather than any earnest attempt at genuine reform.

Poland’s debt to the Western banks due to borrowing was of no great importance.

This is a truly extraordinary statement. Poland had 40 billion USD in foreign debt by 1989, which it had been failing to pay interest it since the early 1980s which compounded the problem year by year, and increased the debt as unpaid interest accumulated. On top of that, It had a significant current account deficit and a large fiscal deficit.

The Balczerowicz plan had six pillars, one of which was foreign debt relief. It was very much a central tenet of reform from the getgo. And Poland did receive debt relief, though as Sachs concede in the book, much of this aid came too late and often reluctantly compared to what was needed for rapid recovery. Poland probably lost a year or two of growth for that alone.

The Deep State knew that the system will be gone by the end of the decade and they decided that members of their nomenklatura will become the new propertarian class.

This is horseshit. Nobody predicted the regime would fall until the very end, including senior regime officials. Many of the top leadership tried to stave off their removal until the very end. Both Sachs and Piatkowski detail this extensively in their books. Even Solidarity themselves, including the highest echelons which had frequent and deep contacts with the highest echelons of the regime, did not expect it to fall. When they won their election – 99 out of 100 seats – they were thunderstruck.

In fact a great problem early on was that transition happened far faster than anyone had expected, including leading regime rulers. Many of them tried various intermediate solutions to cling onto power until the very end.

Interestingly and tellingly, the key pillar of the communist party was, paradoxically, the SOE sector. In the final phases of 1989, key party functionaries went around on a tour to various SOE companies to plead with them to halt reform, or else their power would be stripped, too. That was a naked display of the true power relations in the country. Poland could easily have ended up like Ukraine had reforms not taken a different path here.

At the same time the strong Solidarity trade unions did not make it easy to proceed with fraudulent wild privatization schemes of state enterprises.

Indeed and this is something I left out and probably should not have had. Polish civil society deserves a greater role when the history of reforms are being written.

The process of privatization via purchases by Western companies that lead to deindustrialization began later under the so-called Balcerowicz reforms

Poland did see unnecessarily large deindustrialisation early on due to the extremely rapid pace of reforms, and heightened unemployment. With the benefit of hindsight, I would have done it differently. At the same time, a lot of it had to go. Poland has seen rising share of manufacturing as a percentage of GDP over the last 10 years, so “deindustrialisation” is a myth if you take a longer view, especially given how much of it was ancient stuff. We’re talking about a de facto bankrupt state here which had lower per capita income in 1989 than it had in 1979.

Additionally, there is also a political-economy aspect to this. Many solidarity leaders were stunned not just by their own success but the rapid dissolution of the old regime. This presented them with a new problem. They did not have many capable technocrats to carry out the reforms. They had a few highly intelligent reformists, but you need “boots on the ground” to carry them out.

This, in a sense, limited the prospects for incrementalism. Why? Because they did not trust the old guard, and rightfully so, to help implement the new reforms. This was partly why reforms also were so rapid. Instead of doing it piecemeal, let the market decide. That way, you cut out the bureaucrats and any potential for slow-walking reforms to suit the old guard becomes much less probable.

He overlooks different psychology and axiology in Poland,, Hungary and Czechoslovakia comparing to the USSR. People were really happy to be liberated form USSR. They saw economic communism as primitive, oppressive and hostile Asiatic import. For USSR and for Russians the 1990’s were the times of defeat and regrets. The comment #29 by Inertial and concurred by Dmitri exemplify this difference. Nobody it Poland, Czechoslovakia or Hungary would spout with a strait face such a nonsense about communists’ alleged altruism and their noblesse oblige as they did it here.

Russians look back with regret to the 1990s because of how those years turned out. Had the 1990s been either stagnation or slight upwards improvement, then it would likely have been seen in more mellow terms (though geographical nostalgia would still exist).

I don’t think you understand the point made about communism’s role in creating the foundations for reform properly. It’s not that they – communists – were altruistic, it’s that they were useful. Polish “nobles” from previous eras were largely a disaster and prevented centuries of reform. Even when we regained the state, many of their offspring that ran the state did not rush to educate the people. The twin shocks of WWII and communism purged these old extractive elites from the apex heights of society largely permanently. Perhaps more importantly, mass education was instituted which opened the door for all bright Poles to prosper. This did not happen under communism because the system was flawed, but once the system collapsed, we had the right ingredients to make it happen.

Marcin Piatkowski goes through in his book the explosion of new businesses being created in the 1990s and this was one of the key differences that Poland had vis-a-vis others. Many of these best and brightest did not come from connected families either through the old elites (“nobles”) or the recently disposed ones (“nomenklatura”). The people behind CDPR is a perfect example of this but there are many others. You should read these books instead of spouting old and outdated talking points disconnected from the data.

How can extractive institutions can be broken? Marcin Piatkowski has a recent book out on the Polish transformation in the post-89 period which tackles this question. He notes that the post-89 period was remarkable not just in terms of growth rates but also how that growth was achieved.

Inequality was contained and has in fact been falling in recent years. There are no Polish oligarchs. Incomes have been rising faster for bottom half than for the upper half since 1989. Growth was not just rapid, it has also been inclusive.

What allowed Poland to develop along lines which had never happened before in its history, due to the norious “nobles” who instituted serfdom for so long and did everything in their power to block any reform?

He essentially makes the point that extractive elites are extremely hard to dislodge through peaceful means and essentially need to be violently purged either through a civil war or a foreign invasion that is very thorough in its destruction and essentially liquidates the old extractive elite comprehensively.

If you think about China, this happened in rapid succession. First the Japanese invasion and then the bloody civil war on top. Mao purged all and everything in his path. Had he gone in 1950, then China could well be on South Korean or Japanese levels today. Marcin’s point was that by the time Deng came to power, all the old elites had been swept away and it was much easier to form a social consensus.

In Poland, WWII had the same effect as in China and communism had the same effect as Mao. This is where it becomes somewhat controversial, because while communism was a bad system it did do what previous Polish elites failed: to educate the people properly and evenly. It also purged previous elites completely by dismantling the last vestiges of the “nobles”, which is their offspring who ran much of the country in the interwar period.

By the time the system collapsed, Poland had excellent human capital to start with, no extractive elites left (plus you had the ’68 purge of jews, but Marcin naturally wouldn’t touch that). Ukraine also had some of this, but the key difference was the internal divide between elites about whether to orient themselves to Russia or to the EU, this led to paralysis and made them easy to exploit for outsiders. Polish elites were unanimous about their direction. We had 17 prime ministers since 1989 yet virtually everyone basically held onto the same basic consensus, which has given us policy stability.

Another interesting book on this topic is Jeff Sachs’ book in his memoirs in Poland and Russia, given that he was deeply involved in both. Once again the striking thing that jumps out at you is how consistent Polish elites were in their consensus whereas there were much more internal divides in Russia. Sachs doesn’t speculate as to why this was the case, but I have my guess.

Poland was essentially bankrupt by 1989. It had defaulted in the early 1980s and couldn’t pay its interest. It was basically the Greece of the 1980s except much more poor and without a bailout piggy bank to draw funds from. Therefore, Poland basically had no real choice but to do rapid reform. Russia, on the other hand, was in a bad position but definitely not in default. Russia was also much richer in per capita income in 1990 than Poland was, so there was far more latitude being taken among various elites about the right path to take. In Poland, events had essentially forced our hand. We were poorer than both Ukraine and Bulgaria in the late 80s and in a state of ruin.

Why did Poland go bankrupt in the early 1980s? Bierut tried to import a lot of modern machinery in the 1970s without changing the basic system. The idea was alluringly simple: just modernise the factories without changing much of the rest. The modern machinery will increase production and exports and pay for themselves. It didn’t work, because pricing was still irrational. Polish exports didn’t increase much but all this expensive machinery had to be paid with something, so they borrowed. This reached the end of the road in the early 1980s and Poland defaulted on its sovereign debt. Gorbachev tried a similar tactic in the mid-80s in Russia. In a sense, Russia was a decade behind Poland in failed economic experiments. By the time the late 80s came about, we were under no delusions that you had to have rapid changes. In Russia, that realisation didn’t come about so naturally nearly as early and even when it did, it wasn’t anchored among elites as deeply. Had Gorbachev learned from the Polish 70s experience, it could very well have meant that Russia would perhaps at worst stagnated during the 1990s before the 2000s oil boom instead of seeing a rapid collapse. Another reason to be skeptical of Western praise for the man and remember Deng’s acidic remark about him being an idiot.

Yes, serfdom had a very depressing effect on economic development. Van Zanden (one of the main people running the Maddison Project these days, and a prominent Dutch economist) collaborated with a Polish development economist to produce an interesting paper on Poland’s place in the so-called “Little Divergence”, i.e. the initial divergence within Europe as NW Europe pulled ahead from both Southern and even more so Eastern Europe before the colonial empires started to form.

What Van Zanden found was that income equality was in fact greater in Poland than in Holland. The difference lay in the extraction rate, i.e. Poland had high rates of serfdom so this income equality didn’t do much. The urban-rural divide was also far stronger in Poland, due to the effects of the demesne economy which in turn was based on serfdom as well. There were few incentives to work hard as almost all that you earned was confiscated by an extractive elite through the serfdom system.

There’s a parallel here to modern economics. Economists differentiate between market income and post-tranfer income. Market income is what you get before taxes or any re-distributional effects kick in. Many relatively egalitarian countries in fact have very high market income inequality, such as Norway or Denmark. They would be no less unequal than Russia unless there were specific policies in place, which is shaped social norms and a broad societal consensus (i.e. the ‘Nordic model’). While there are high taxes, the people also get a lot back. That wasn’t the case with serfdom.

Serfdom was then social choice made by the elites in Poland, Russia and much of Eastern Europe. This is what political scientists refer to as extractive institutions. When elites don’t care about the welfare about the people at large, they can get rich in the short-term (i.e. the duration for their lives) but there will be long-term stagnation as a cost to such policies.

I haven’t thought much about it until now, so I wrote this stream-of-consciousness.

The cancelled summit in Israel has presented us a rare chance to introspect on the role of the V4. In my view, it should be only used for the ends of our countries. Why were we even going to Israel? Because Netanyahu has tried to infiltrate it for years in order to boost the standing of Israel, by using the V4 as his trojan horse. How does that help us? It doesn’t. Orban has a negative outlier role in pushing relations closer, but the rest of us are hardly without blame either, we went along with it.

The spat also co-incided during another summit, namely the Warsaw one. What was that about? Basically, PiS is bending over backwards to appease ZOG by hosting an anti-Iran confab. How did the US repay us? By demanding that we send soldiers to die for Israel in the middle-east as well as whining that we haven’t completed “restitution”, which is basically code for giving away tons of expensive real estate in prime locations in Warsaw to various jewish shakedown artists. If we refuse then this is clearly “anti-semitism”.

For context: we’re the only country in EU left which haven’t passed this kind of law, so jews are obviously pissed about it, and this rage is coming through their shabbos goyim that they pressure to bring the topic up (do you think Mike Pompeo or Pence give a shit about who owns Warsaw real estate? Get real.)

I’m more pessimistic on this episode having lasting impact. Early last year also saw a similar spat in conjuction with the whole IPN law, which made both israel and ukraine mad (supposedly also the US, but once again, that was just code for jewish rage, expressed in negative media coverage. Average Americans don’t give a shit about this stuff, they haven’t even head of IPN. I doubt most readers here have).

Yet Polish tourism into Israel increased over 80% last year. Israeli tourism into Poland increased by over 50%. So, I doubt things will pan out differently now. In my view, demographics are a better bet than these events. The root cause of this nonsense is our diplomatic posture. As long as we are wedded to hysterical anti-Russian paranoia, we will grovel. If we normalise relations with Russians, and move closer to a European security framework while dissing Washington, it will lessen the demands that Israel, through its proxy the US, can make.

One final footnote. The jews behind the twitter account “notes from poland” are whining that we are now demanding that Sweden extradites the holdout Stalinist-era judge (guess his ethnicity) who sentenced many Polish anti-communist fighters to death and fled to Sweden during the ’68 purge. His name is Stefan Michnik. His co-ethnic Adam Michnik edits the leftist Gazeta Wyborcza newspaper. Stefan is 90 now. I’m against diplomatic protocol, especially since Sweden doesn’t play ball (probably out of fear due to his ethnic background). We should learn a thing or two from the jews and just kidnap him and have a showtrail in order to punish him.

This is a time when having multi-quote would be good.

First, Michael Pettis has indeed had a poor track record and I’m surprised that someone that I view as intelligent and thoughtful as reiner Tor would look to him for wisdom. In fairness to reiner, Pettis is arguably among the more intelligent bears and many of his analytical points make sense, he has simply underestimated how resilient China truly is.

Second, the best Western analyst of China is definitely Arthur Kroeber. His book on the Chinese economy is still the most intelligent, balanced and thoughtful introduction to an intelligent reader that I know of (read it!). He has lived there continuously for over 20 years and mostly relies on local analysts, which is why his understanding is better than most.

But above else, he has a very fine mind. At the highest levels of analysis, having a high IQ is not enough. You must have something as hard to define as good judgement. Put more bluntly: a strong bullshit detection mechanism. See how many smart people fell for the tabula rasa meme, and still do. Being skeptical of mind while being intelligent is hard. Being skeptical without falling into knee-jerk contrarianism is even harder. Kroeber manages that.

Third, the best paper on China’s growth has been written by Harry. X. Wu. I’ve pimped it here before and I’ll probably do it again. His paper is so thorough that its findings were even incorporated into the latest Maddison Database(!) and adjusted the Chinese GDP downwards.

Kimppis‘ point about innovation and infrastructure deserve to be responded to. My answer is that just outside of Beijing you still have villages that look like this:

Note that this was taken from a Reuters story just a year ago or so. Is it representative of “Real China”, whatever that even means? No. But neither are the tier 1 cities of China either. China invests an ungodly amount in infrastructure, especially in the elite sections of their coastal zones, which makes most visitors think that they are richer than they are.

Tyler Cowen had a good line about this, when talking about the post-Soviet days in CEE. A visitor to Prague could easily think that the Czechs were much richer than they actually were by looking at the city, even back then, until he or she went inside and saw how backwards their technology was. By contrast, Warsaw probably looks poorer than it actually is even today despite having gross nominal incomes on par with Prague or Bratislava. The lesson is not to get too fooled by infrastructure. If you only visited Moscow and didn’t know about Russia’s GDP, then you could easily be forgiven for thinking that Russia was just as rich as Germany.

I’m also aware of the “nightlights” argument, but that is also tied to an infrastructure buildout and not necessarily always productive economic activity. India saw a huge boom in the poorer BIMARU states from 2012-16 despite there being a generalised slowdown as agreed by everyone during this period compared to the 2004-2011 boom years. The lights in Northern India increased at a slower pace during the boom period despite the economy growing faster. Sometimes there is a lag effect from a previous time of faster growth. Sometimes there is a tenous relationship and more indicative of a high investment ratio to GDP.

On Ender‘s point about GDP per hour worked. I wouldn’t take that too seriously. According to the OECD, Turkey is ahead of South Korea (!) on that metric. I won’t link too much stuff in one reply, but let’s just say that there is serious disagreement about how we measure productivity in the conventional way among economists, not since highly technological socities like South Korea doesn’t seem to get that picked up in official productivity statistics nearly as much as they should. Diane Coyle among others have been beating this drum for a long time. We are quite poor at measuring ‘intangibles’ in economics and too much of the profession is still fixated on a world where most of the action happened in the goods sector, but that is a professional sidenote I won’t people with.

My own view is that China should continue to converge with the US simply because they have so much left to catch up on. The question is how long this convergence will continue and here I am more cautious.

They have a huge amount of debt to GDP compared to their incomes. Total debt to GDP is close to 300%. By comparison, Poland and Czechia are both close to 125% of GDP despite being quite a bit richer.

Most of China’s debt is concentrated in non-financial corporate sector companies – but household debt is zooming, too. Even the government is starting to leverage more and more, especially if you count local government debt which is hidden in specialised investment companies.

The question here isn’t solvency: it’s rate of growth. China will remain solvent, the question is if they can grow when being burdened with that much debt. The good news is that they have stopped total leverage since 2017 from increasing too much, so I was far more worried a few years ago, but it’s still far too early to tell if they can ditch the habit of debt that they are in.

That said, real incomes for Russians have been declining for years.

Ignore the idiotic headline, it’s the FT which is mixing up real disposable income with real wages (the latter has grown quite a bit). Why have real disposable incomes shrunk, then? RBC.ru has the story.

The Ministry of Labor explained the drop in the income of Russians despite rising wages.

Maxim Topilin, Minister of Labor, explained why the real incomes of Russians are constantly falling, even though wages are rising. This is due to the reduction of illegal employment, the minister said.’

Despite the growth in wages by 3.4% in real terms in 2017, the disposable income of citizens decreased by 1.7%, according to Rosstat. Such diverse dynamics were also observed in 2016. “This has never happened, usually the real wages, which make up the vast majority of income, pulled up the growth of real incomes,” admitted Topilin.

The World Bank estimated some years ago that formal wages only represent around 38% of Russian household incomes, contrary to the minister’s statement. If he is right and they are wrong then the declines in the shadow sector must have been phenomenal.
Longer-term, this is a net positive because the state can raise more direct taxes and formal sector jobs are more productive. Still, for households it is a net loss nonetheless, especially when staggered for five straight years.

Politically speaking, introducing the necessary pension reform at the tail end of such a bad streak was a risky, if not brave, move.

Deutsche Welle published a big article on Polish youth. Szopen on suicide watch.

Poland’s young voters turning to the right

The story gets some things right(longer-term structural shift, in sharp contrast to their parents and especially grandparents), some things disastrously wrong(“longing for the church”, while in reality, secularisation is proceeding at breakneck speed in Poland).

Social psychologist Marta Majchrzak, who co-authored a study published in November by the commercial research institute IQS in which scientists interviewed childless Poles between the ages of 16 and 29. “They trust authorities, are dreaming of marriage, and are proud to be Polish citizens,” she explained.
The study classified only 9 percent of respondents as “cosmopolitan” and “open to being different.”

[…]

The young generation wants a regulated economic system precisely because the economic situation has improved in recent years. “Young Poles compare Poland’s secure situation with the disorder in the world,” said Majchrzak. According to the IQS study, Poland’s youth view their country as a safe exclave that protects them from the world’s uncertainties. Three out of four respondents said they were against accepting refugees. Almost one-third said they would give up personal freedoms for more law and order.

The article puts too much emphasis on economic issues. I also don’t buy the coping explanations from the sociologist in the article, that they are “apolitical”. I would categorise them as latent. PiS has moved to the right which has sapped the support for more radical parties. Nevertheless, it will take decades for this to fully push through the system.

Most people don’t appreciate how long Poland has been under the spell of neoliberalism. This ruling class was even trying to import 200,000 chechens(!) as “refugees” in the early 90s as a “humanitarian gesture” and their own cucked attempt to “get back at Russia by showing the moral high ground”. The only reason why most of them didn’t stay is because Poland was far behind Russia in the early 90s and most instead left for richer pastures.

So whenever I read deluded people claim that everything was better 20-25 years ago, I should be forgiven for laughing out loud.

Stop attentionwhoring and stop pitying yourself like a bitch. It’s pathetic.

1/5 or so of Poles openly identify as nationalists – though less than 5% actually votes for one of the nationalist parties.

I see you’re back to your permabearishness. Nationalism in Poland is still quite immature precisely because there is no real need for it. In a 99% white country, fault lines will inevitably fall on non-ethnic/racial grounds, which means gender and sexuality.

a lot of youngsters get all dreamy and wet about getting Poland as diverse as US

FWIW, on popular Polish websites, like Wykop (our reddit) you have straight-up racial realist content being upvoted to the front page on a regular basis. Good luck seeing that on reddit. I see lots of poles on /pol/. Are these just anecdotes? Statistical surveys would disagree.

Is it concentrated among the educated elite? Not in my experience. My guess is that you’re probably a lecturer in the softer humanities, with its overflow of hyperleftist wahmen.

Last year I got my first “sexism” accusation in the university (for un-PC speech and writing). I have not got any trouble for that, in fact I would have not even knew about that if I wasn’t interested in the students opinions about me

We do have a budding feminism problem, but one could also view it as the latest manifestation of excessive Polish deference to women, a national trait that even the Chinese commented upon some centuries ago. In other words, it’s not so much as an import as an old pathology repackaged in new colors.

Our “conservatives” are basically old american cucks.

Correction: boomers. Young people are much less religious and thus split into either the left or the hard-right. Most educated young men tend to be libertarian(ish) but with a right-wing bent. That’s at least what I see when I hang out with other econ students, engineers, hard sciences etc. Maybe its different for philologists and sociologists, but who gives a shit about those clowns.

And there is Adamowicz tragical death, which the left is already using as a ram to destroy the steady walls of Polish rightwing fortress.

You can’t have it both ways. First there are barely any conservatives in Poland, you even use scarequotes, and now it’s a “right-wing fortress”. The left are spineless and he deserves the knife, btw.

My country is being slowly taking over by SJWs

Correction: Poland was wholesale sold to SJWs – or more accurately told, neoliberals – for the last 25 years. The current (weak) government is nevertheless a significant break. Not nearly as radical as I would prefer, but let’s not kid ourselves:

What’s notable about this march is that the PiS cucks tried to have their own march but it so spectacularly failed and backfired that they had no choice but to give in. This is the best position to be in: where you are not dependent on the major party but have your own grassroots movement outside of it. PiS needs our support and votes, and they know it. And we’re not desperate to sell out or to cuck out. When the heat was on days before the march, our guys stood firm and refused to yield, forcing PiS back into the fold. Maybe you should look to them for some inspiration on how to find a spine.

If I had to choose between all the countries mentioned, I would choose Russia, even if it is the weaker candidate than either my own country or Czechia on a range of issues right now. Why? Because if you want to settle in a country for the long haul then you need to think beyond the immediate comforts. Your own life will be upended permanently regardless of where you move, and thus you really need to think of your kids.

What Russia has which the others do not:

True independence. Russia may or may not fall to SJW cancer, but its fate is entirely in its own hands. It has a truly self-sufficient economy to a much greater extent, very low debt, massive natural resources and tons of land. Its people have proven themselves for centuries when times got very tough. You need that track record.

Poland is both whiter and richer. It is less corrupt and it has much less onerous hate speech laws. I don’t know about Russia’s homeschooling laws, but ours are very good. Generally, the policy here is very pro-family. The state has very limited capability to take away your kids if they deem you unfit unless in very serious instances (such as rampant alcoholism etc). There was even a case of a Norwegian woman who fled to Poland recently to avoid her authorities taking her kids and subsequently sought asylum, created quite a stir in our media. (She was granted).

But Poland has one distinct disadvantage which makes all those advantages appear fleeting: it is extremely dependent on the US, which in turn is extremely hostile to whites. Therefore, its long-term options are quite limited unless China would somehow extend its reach into Europe (very unlikely) and/or Europe itself uncucks itself and becomes much more nationalist (also unlikely). Even if the latter were to be true, history tells us that nationalists are not exactly great collaborators. So Polish geography would once again become the perennial woe.

Czechia is an alluring option on the surface. It has the advantages of Poland yet is richer and more liberal in the best sense (gun laws). Though its distance is shrinking. On PPP-adjusted wages, it is already behind us. While Czechia has a better geographic position – and thus more easily be able to withstand ZOG cultural/political pressure in exchange for security – it is still a small country of 10 million. Even if, let’s say, it managed to “hold out” it would still be doomed in the long run if the rest of its neighbours fell to the same cancer. Being surrounded demographically by a slow-moving cancer is not a viable long-term strategy.

My advice to this individual would thus be to look for Russia first and foremost, then Czechia, then Poland. Slovakia is too small and Hungary has too many gypsies. Hungary is also placed most precariously of all the Visegrad nations, given its proximity to the Balkans. So even if the regime is good, there will always be a certain, eh, “spillover” during the summers. Especially as Hungary is getting richer. This will compound itself as the years roll on.

Ultimately, however, I do not subscribe to ‘Eastern Exceptionalism’. Europe will not survive if the West falls, especially since we’re so economically interlinked now. I would actually unironically advise said person to even look into Scandinavia. They are whiter today – with the exception of Sweden – than the US was in 1965. Some of them have good homeschooling. Rural Norway, say, need not be a terrible place if you can afford it and the kids don’t mind the countryside. I’d even look into Iceland. Poz is a factor, but can be neutralised somewhat by where you are and taking your kids out of public schools.

But ultimately, I do not believe that running away is an option for most people and for most countries. Borders are too porous, and so are ideas. This may not be what the person in mind wanted to hear, but it is the unvarnished truth, at least as I see it.

It must be humiliating for Russia to see its former enslaved Central European satellites race ahead

I can guarantee you that Poles are a lot more obsessed with Russia than vice versa, that is my experience at least and given that you are Polish, your comment is congruent with my personal observation.

Russia, unlike Poland, is a fully sovereign country. Poland is now hosting anti-Iran conferences, arresting Huawei executives and much more all in a desperate ploy to appease ZOG USA. The biggest private TV network, TVN, has been bought up by (Jewish) American citizens and will now push multicultural propaganda even more ferociously, all the while as the (Jewish) American ambassador in Poland are sending stern letters with the dismissive tone of a colonial administrator to the prime minister in which she shills for said TV station. What does Poland do? Bends over backwards even more. I’d prefer being somewhat poorer but being fully sovereign over living in gold chains.

More to the point, it’s not even clear that Poland is that far ahead of Russia in the first place. In GDP per capita, sure, but as I’ve explained previously it’s not a great indicator for competitiveness (output per hour worked is better) but for standard of living you really want a household survey.

The World Bank poverty database has excellent resources looking at PPP-adjusted consumption income, which is a much better proxy for underlying standards of living than GDP. Why consumption instead of income? Because consumption doesn’t differentiate between white and black income, the way GDP statistics do. Only white income is showing in GDP. Consumption is consumption, regardless of income source.

http://iresearch.worldbank.org/PovcalNet/povOnDemand.aspx

Select Russia and Poland, then choose 10 USD as your baseline. Why 10 USD? Because that’s the agreed baseline for being ‘middle class’ according to most development economists. Poland has almost 25% being below 10 USD, Russia is ‘only’ at 18%. So Russia has a lower share of people being considered below middle-class.

Their mean (PPP-adjusted) consumption is 680 USD per person per month, Poland is at 519 USD. So quite a difference. True, from 2016 onwards Poland has grown quite rapidly while Russia has grown far slower, so the gap has most likely narrowed if not closed soon. Nevertheless, the image of the ‘backward Russia’ is simply incorrect. Their standard of living is equal, if not slightly higher, than that of the average Pole. Their nominal wages are lower, but their shadow economy is also far greater. That’s why you should look at consumption rather than official income data.

Illustrated.

This is an ambitious essay so it deserves a thorough answer.

Unfortunately for the author, he gets a lot wrong. Start with his GDP per capita as the key metric. It’s the wrong metric. What matters is output per hour.

The fact that France is significantly lower than the US is almost entirely due to much lower working hours. In other words, this is a socio-political choice, not that France has somehow failed.

Regarding the blue banana, it is a bad theory. Look at Scandinavia on all those old maps. Scandinavia was a dump for most of the Middle Ages. It was barely literate. Yet it changed drastically in the last 200 years.

One could say, well, that’s all just because of high IQ. Maybe, but if that was true all along, why wasn’t it more advanced during the spread of the printing press etc. Europe was not that isolated, especially as the Hanseatic League was a major force in Europe during the latter stages of the middle ages.

The “Blue Banana” is bunk. Especially today as a greater share of manufacturing/industrial strength is moving towards Central Europe. Slovakia has the highest car production in per capita terms in the whole world. Just as an example.

Regarding your Polish map, the fact that the Western part voted for PO has nothing to do with older German lands. Most of those who live in the Today’s western part of Poland are Poles who came from the East. It has nothing to do with Germany.

One more thing. There has infact been considerable convergence over the last 20-30 years.

https://piie.com/blogs/realtime-economic-issues-watch/everything-you-know-about-cross-country-convergence-now-wrong

The “middle income trap” is also completely incorrect.

https://www.adb.org/sites/default/files/publication/149903/ewp-421.pdf

I want to close off by saying that I do not want to be too harsh. I largely agree with your metaanalysis (Germanic populations + East Asians are the two basic wealth creators of this world, with everyone else riding their coattails), but there are so many careless and in some cases outright baseless remarks in the piece that it undermines your thesis for those who are less generous than I am and more hostile to HBD thinking.

Combustion engine car sales to hit peak demand in 2018, say analysts

Sales of internal combustion engine cars in 2018 are unlikely to be surpassed in any future year, as demand in the world’s three largest markets stalls and carmakers seek to ramp up production of electric cars.

The idea that combustion engines would be displaced by “zero emission” technology has become mainstream in recent years, but predictions at the start of 2018 generally held that demand would keep growing until 2022 or later.

cyclical peak in car sales is different from an all-time peak. What makes the present situation unique is that even if overall car sales pick up slightly in 2019 or 2020, electric cars are predicted to grow fast enough to shrink the portion of combustion engines sold.

Under Moody’s projections, global car sales will grow by 1.2 per cent in 2019 to 96.6m cars. Electrified vehicle sales are expected to grow by 1.5m units next year, according to AlixPartners, a consultancy. That would be 1.6 per cent of added market share next year — which implies the pie will shrink for combustion engines.

“‘Peak ICE’ — peak internal-combustion-engine car sales globally — may already have occurred with the ending of 2018,” said Elmar Kades, global co-leader for automotive at AlixPartners. “It’s this slowing growth of the overall pie that the industry should be most concerned with, even as it has to grapple with — and pay for — the continuing switchover to electric vehicles.”

An end to an era. Just remember not to take disastrous financial advice from Thorfinnsson. Oh, and happy new year everyone 🙂

LMAO, the bitter responses from some of the Russian posters here is hilarious. SEETHING. Also, some of you need to learn the differences between nation (people), government and country. So hard, much think!

I love my nation.

Russia is remarkably close to both Ukraine and Belarus on ethnocentrism when linked to citizenship. All three see a net fall in ethnocentrism among the young. For Russia’s youth it could be a demographic effect, but the case for that in Belarus or Ukraine is weaker. Belarus in particular is seeing a fairly big fall. All three countries are now “only” as ethnocentric as the best in Western Europe, such as Italy, though notably lower than in Portugal. Not a good sign.

Russia’s numbers on moslems is also somewhat disappointing. Poland has virtually no muslims of any significant size (mostly tatars and a very minor pockets of chechens), yet it is on par with Russia. More contact leads to more conflict, at least when faced with incompatible cultures/religions. You’d think that given all the grievances that Russians supposedly have with central asians, that there’d be a bigger pushback. Apparently not! Belarus, for reasons that escape me, is much more hardline on the moslem question. Anyone venture a guess? The meme is that they are supposed to be more ‘liberal’.

Czechia is the big puzzle to me. They are very hardline on Islam but take a fairly (comparatively) liberal view on citizenship. Slovakia is an even bigger shock. Their numbers are outright liberal – in an EE context – across the board. This is a country that has an actual far-right party in parliament (Kotleba). It’s hard for me to reconcile that, unless their far-right is superbly organised – and contained. Romania has excellent levels of ethnocentrism (close to Hungary-levels) and is quite hardcore on most other issues. It’s also among the most religious in EE. Over three times(!) as many Romanians say religion is ‘very important’ than for Russians. Very few Russians are actually religious in a meaningless sense. In fact, Russia is about as religious as many Northern European countries, and even less than some of them. Pretty hilarious. Muh Christian revival! (Sarcasm aside, I unironically approve of this).

The silver lining for Western Europeans is that despite a few outliers like Sweden, there are still substantial amounts of young people who have an ethnocentric view, at least when pushed on the issue. The numbers for the UK and Austria are impressive. I knew that Austria would do well, but I did not expect the Brits to do quite as well. The numbers for France look decent, too, especially the extreme idelogical programming that they are put through for decades now. Perhaps the swan song is not quite yet sung for these countries, but the clock is ticking.

Big new Pew survey out. Comparing CEE with WE. Largely confirms what we already knew, but have some internal surprises. It focuses substantially on the young vs old comparisons on key questions. This is more relevant because this is the future of these societies. Basically, how optimistic can you be about a country in the long run getting good political outcomes? This is that survey.

First, gay marriage.

Russia and Ukraine in a league of their own. Czechs of course being very liberal on the issue. Hungary and Poland quite similar, despite Poland being substantially more religious. Estonia surprised me, given their reputation for not being so religious. Also thought Slovakia would be higher. I personally don’t care about gay marriage, as I’ve noted previously, but interesting nonetheless to track.

Kudos to Russia for being woke on the JQ, maybe AK needs to modify his statement on Russian philosemitism. I’m jealous. Also thought Czechia would be higher given that they are very pro-Israel and often beat their chest about their philosemitism on various online forums (“we’re not like those other intolerants!”). Can’t say I’m hugely surprised about Hungary. Despite all the talk about the anti-Soros campaign being veiled anti-Semitism, never bought into that concept.

Confirms that there has been an increase in religiosity in Russian society. However, I think people’s idea of being a ‘Christian’ is very liberal here, probably more about a vague cultural identity than actually practicing the religion. The sky-high numbers for some WE countries, such as Austria, basically confirms this.

This is probably a better underlying indicator. Remember, this is young people.Russia is not a very religious society, Poland is substantially more so. However, looking at the daily/monthly breakdown reveals some interesting things. Portugal is apparently much more religious than Poland if you look at daily prayers vs church attendance. In Poland, the church is often a social hub and functions as a node in a community, particularly in the villages. Nevertheless, I know people who don’t pray often who are still religious so you probably need to combine the different factors.

The most important ones saved for the end. Portugal’s high number will only re-confirm memes of it being an Eastern European country. Usually said with derision in terms of income, but apparently also true in some social indicators. I noted Portugal’s very low refugee acceptance in per capita terms last year. Nevertheless, it also shows that some WE countries have quite a bit of latent potential. Hungary is doing great, Russia is doing worse than I thought it would. I suppose the number would be higher if you only asked ethnic Russians. Poland doing better than I thought. The big negative outliers (comparatively) is the Czech Republic and Slovakia.

First of all, maybe I should be less harsh on boomers in Poland. Russia’s number isn’t looking so good. You’d ideally want an increase in ethnocentrism, but again, how does this look for ethnic Russians? There could be a demographic composition effect at play here. Otherwise I’d be worried if I was a Russian. Hungary once again insanely based. Czechs and Slovaks are also negative outliers. Props to Croatia, which has always had a reputation for being a bit more liberal, for uncucking itself among the youth. I must also note Romania, which has consistently done well in all these surveys. So far it seems to be an untapped resource.

Among Western countries, the big negative surprise is Denmark. Unlike Sweden, which had a much more liberal boomer base, Danes were a lot better on these topics. They also have had generally limited non-European immigration, so the large (huge, really) falls in ethnocentrism cannot be blamed entirely on demographics. There seems to be a liberalising effect at play, which does not bode well for Denmark being as good as they are in the long run. For most WE countries, I guess that a substantial portion of the falls can probably be due to far more non-whites in the youth groups (as well as white immigrants, who probably don’t want citizenship to be defined in ancestry). Once again Portugal and, to a lesser extent, Italy are doing well. The UK continues to be a latent potential breakout star. Ireland is still very white (over 93% in the latest census) so not surprised by those numbers. Spain is a positive surprise, especially for someone like me who likes the country. But the politics does not reflect it yet, probably because most of their immigrants are either Latin Americans who are easy to integrate or other Europeans. Their MENA share is still quite small, but growing. The situation in Sweden looks pretty hopeless, so don’t look now Thor, but I suppose miracles can happen and more spectacular turnarounds have occured.

Oy Vey intensifies

I was taking issue with your absurd claim that “all oligarchs are in favor of Lula” when the guy is in jail. In a deeply corrupt society like Brazil, those who get thrown into jail are often those out of favour of the powerful. So your statement was and is ridiculous.

I think our core disagreement revolves around the nature of power.

The fact that oligarchs are willing to be pragmatic should not be seen as them tipping their hands permanently to one side or one candidate. They are constantly scanning the horizon and making their calculated hedges.

For example: think back to the Blair era in the UK. They certainly liked him, but they like an unrestrained small-state guy even more. Ruling elites are clever – that’s why they are where they are. They understand that you cannot get your preferred political alternative at all times, so sometimes it makes sense to work within an ostensibly hostile party and corrupt them from within. Blair and Lula are both examples of this. This can cause naïve observers to conclude that these powerful people intrinsically prefer one party or another, when in reality they are just playing their cards smartly.

Once and when a better potential candidate is found, they promptly ditch the guy. That’s why Lula is in jail. Despite – or because of – the fact that he polled well above Bolsonaro before he was thrown in jail. Having scores to settle is also a factor working against him. All this adds up to the conclusion that the analysis that Lula is somehow the favourite of the oligarchs and that Bolsonaro is the brave fighter for justice and against corruption is patently absurd and nonsensical. It can only be espoused by a true believer of Bolsonaro, in the same vein that Trump supporters genuinely believe that he is an anti-establishment guy even after endless corporate tax cuts and virtually no movement on the border wall.

Make no mistake: I prefer both Trump and Bolsonaro over their respective opponents, but I will continue to mock the fervent propaganda that their supporters push in the face of all evidence. Bolsonaro’s last-minute conversion to free market economics is also something you have not yet found strong counter to, perhaps because you know it is deeply suspicious and does make him look like an opportunist who took on economic positions in order to suit the preferences of powerful elites. I’m not making Bolso out to be worse than the others. I’m just saying this is how the game is played and Lula and Bolso are both playing it, though the supporters of them both will resist this analysis because it doesn’t ennoble either of them.

I strongly disagree. Lula is in jail as I write this. He was leading Bolso in the polls and even Bolso’s supporters conceded that Lula was the leading favourite to win until he got jailed. If Lula was favoured by the establishment, he wouldn’t have been thrown into jail. It’s self-evident. He isn’t even allowed to say anything to the media. He’s been effectively neutralised.

I say this as someone who dislikes Lula, not least because of his anti-white rhetoric in the aftermath of the GFC, but as I pointed out to Marcus in the previous thread about Germanic achievements, one should always seperate your personal feelings from an objective assessment.

As for PT and corruption, your argument does not hold water. Everyone knows that they looted and were corrupt. But so is everyone else in Brazil. That has nothing to do with being favoured with domestic oligarchs. There was a relentless campaign against PT by the business class and once the recession hit, with the spiralling violence, they saw their chance to push their favoured candidates and Bolso’s opportunistic instincts kicked in when he noticed this. Ergo, his sudden conversion to a free-marketeer in order to appease these business oligarchs and get himself political cover/protection. Remember that the media is owned by these same families. Unless he gets a dictatorship, he needs a domestic political base, including in the media. There’s a price for everything. Same dynamic in the US. Trump, for all his populist rhetoric, knows that he must keep the neoliberal/WSJ-reading oligarchs happy, otherwise he is left defenceless in the media.

Bolso’s 5-minutes-to-midnight conversion to free market economics is not credible. His statist instincts remain intact. But as Winter pointed out, he isn’t that interested in economics in the first place so it doesn’t matter much as long as he gets to focus on the areas where he is more personally engaged.

That wouldn’t be irrational. Everything I’ve said is conditional on his political backing.

Brian Winter, an American in Brazil who I regard as the foremost English-speaking expert on the country – and unlike most tries hard to be nonpartisan – has just put out a big article on his expectations. In his article, he tackles the subject of economics.

He basically concedes my point: Bolso’s 25 year record was consistently statist in nature. His recent “conversion” is totally without conviction. But he lays out a convincing argument why that may not matter: Bolso is not a free market guy, but he isn’t that interested in economics anyway. His main plank is law and order and social issues. So he is willing to ‘give away’ economics because it gives him ample political protection to pursue the stuff he’s really interested in, and which he knows will face scrutiny and exact a political cost.

The neoliberal economics shields him not only from the wrath of the domestic oligarchs that got Lula in jail, but also from Washington. It’s why Yeltsin was so loved – apart from the convenient fact that he ruined a former Great Power – by the Washington establishment. Firesales in developing countries are when big fortunes are made, and US oligarchs certainly want their pound of flesh, too. D.C. will look the other way as long as Bolso pursues a pro-US foreign policy and puts the country up to sale to be looted. All the talk about ‘human rights’ will be shunted aside as the blood flows.

Re-iterating on my theme that Bolso’s natural instincts are not nearly as free market as his boosters like to imagine, Bloomberg had Monica de Bolle, one of the better Brazilian analysts, as a guest to discuss this on their latest podcast:

https://www.bloomberg.com/news/audio/2018-10-08/surveillance-nordhaus-a-great-teacher-buiter-says-podcast

The segment is at 00:14:14 and covers his background and his economic preferences. If Bolso gets sufficiently strong politically, and with enough army backing, his need to use free market economics in order to appease domestic oligarchs will dissipate.

You’re making a cardinal error. You’re assuming I like Germans on a social level. Germany’s achievements to world civilisation is impossible to deny, regardless of how one feels about them as people. In general, I try to disentangle my views of a people with an objective look at history. To do otherwise is puerile. It has nothing to do with ‘liking’. Most people’s mental maps have not moved out of WWII, and your comment is an example of that.

Germany has unambiguously contributed far more to world civilisation than most countries in this world. I would rank them highest in continental Europe. Only Anglos have had greater world impact – as evidenced by the fact that practically all Anglo offshoots are extremely impressive countries and English continues to be the lingua franca of science, business and most international debates. Hence why I write this in English.

Blaming them for Marxism is pretty stupid. Marx was not exactly an ethnic German and he was the driving force. Nazism is a better slur against them. It was basically Germanic supremacism, though I ultimately view it in the same vein as I view ‘manifest destiny’ in the US. Every expanding state needs its moralising ideology, if for no other reason than propaganda for audiences at home and abroad.

I also happen to be most fond of Germanic philiosophy. The French are clowns. Anglos are impressive but they are too liberal. Germans have a darker, more pessimistic outlook which I tend to like. They also have an outsized proportion of the best conservative minds historically speaking.

As for them not spreading their language, that’s because they were boxed in. If you were at the Western edge of Europe (Iberia, France, UK) you had the oceans to think about and that naturally led to colonial settlements. If you were Germany with people from all sides hemming you in, you naturally focused more on land warfare and not getting done in. Foreign adventures in far-away lands was the last thing on your mind.

Did they fail in the wars? Yes. Still impressive people.

As AP pointed out, it isn’t just low-skill migration moving to Poland anymore. I have a lot of contact with Ukrainian students in Warsaw and plenty of them are cognitive elites.

According to the IPA, around 9,747 Ukrainian students studied at Polish universities during the 2012-13 academic year , while in 2013-14, the number increased to 15,123 people. With regard to the latest results, universities recorded 35,584 students in the 2016-17 academic year.

In the last academic year, 56K international students came to Poland, close to 10% of the student population. Over half are from Ukraine. There are plenty of Belarussians as well. If you take all EE students, it’s close to 70% or higher. Some of those students go home but increasingly a lot of them stay on.

The chart above shows foreigners paying into ZUS (our social-security fund). That’s not for temporary migrants but people who live for a year or longer and with longer-term intentions to stay. Ukrainians are moving up quickly in the last few years; increasingly rooted in Poland. While many of them are low skilled, there is also a non-trivial amount of elites, either those who came as students or those who were recruited into work right off the bat.

Secondly, low-skill migration in fact encourages high-skill migration, they are not as untied as one might think. I don’t have the link now, but I’ve read about this on EE migration to the UK and Germany. Immigration researchers call this the ‘balloon effect’. If you cut off lower-skilled migration, higher-skill migration will be affected. Turns out that even elites prefer to be around their own kin in a new environment (neighbour shops, restaurants, community centers, day schools etc).

Furthermore, to lure the elites of tomorrow you must necessarily take a wider bet on a larger group of people in order to be economical. It is hard to say how successful someone will be until they are in their 40s for the most part. By the time they are at their peak, they cost a lot more to lure per person. It makes more sense to target a larger group of 20-something in order to maximise the chances that you get all the elites at lower cost. Even those who don’t quite fall into that group will be net benefits to your society.

Finally, I must add my skepticism to those who have already cast doubt on whether Russia will be able to lure top scientific talent away from other countries. It may be difficult to get into Australia or Canada, but European countries are increasingly open. The richest ones (Switzerland, Norway, Ireland etc) will continue to be very attractive. And it isn’t just about salaries. It’s even more so about the research budgets. Switzerland may be a small nation but it has very high incomes which allows it to spend a huge amount per scientist in terms of what they can buy. Russia will not be able to compete with that, unless it was willing to disproportionately spend money on a foreign class, but that would be politically unsustainable.

Christians in Israel, most of whom are Arabs, are fairly prosperous. Not on par with secular Jews but still doing qite well. So they seem to be doing well even in relatively successful societies. I believe AK has written that some ‘mercurial’ groups tend to do much better in business than what would be predicted by just looking at IQ. Another example would be British Indians, whose average IQ is around 99 or so but tend to outperform that on socio-economic indicators, especially education. My guess is something similar is going on here, but there is probably an IQ differential to boot in LatAm the way it isn’t in the previous examples.

Speaking of Israel, just browsed /r/urbanhell today and this photowas taken near their central bus station(!)

Part-kikes like dmitry may be massively butthurt when his precious little Israel gets exposed, but the reality is that Tel Aviv has some really bad and shitty areas the way you don’t see in the best EE cities. He’s just in denial.

The best English-language news source on Jair Bolsonaro is Glenn Greenwald.

https://twitter.com/brazilbrian?lang=en is the best guy on Brazil. He’s officially non-partisan – he wants to get some quotes in the MSM in order to increase his exposure – but it’s quite clear he is very willing to contemplate why people voted for Bolsonaro without screeching like a harpy. As for shitlibs, the Guardian’s brazil guy is actually quite good if you can disregard the blatant bias.

Tweets by tomphillipsin

A few words on Bolsonaro: People should be cognisant of the fact that his conversion to free-market economics was very recent and half-hearted. He did so mainly because he knows it pays with the oligarchs. Given his rhetoric, there will be international pressure from neoliberal capitals in the Wests and he needs domestic supporters. He is an army man, most of all, not an economic reformer. He has even publicly turned on his own main econ advisor in public in recent weeks, a sign that his true instincts are far more to the left than his platform – and his increasing confidence in stating as much as he shoots up the polls.

Folks should do their research on the Brazilian military dictatorship. It was very statist and this is the milieu he comes out of. It’s too early to tell how much of his economic programme will get pushed through, he might do a ‘package deal’ where he gets to decide social policy and leave the economic details to his corporate shill advisers. Either way, he will not be all too enthusiastic about it and expect more public whining from him as he gets more comfortable. I wouldn’t rule out an overt coup by the military and then junking all the Chicago shock doctrine guys in favor of the old guard’s preferred system where the military controls everything.

Just a nerdy sidenote. I’ve been accepted into the Geforce Now beta; Nvidia’s game streaming service. Streaming services are going to move into the video game space after conquering both music (Spotify) and TV (Netflix). So I was curious about how the experience would be.

The basic premise is that most gamers don’t need to own expensive hardware. Unless you play twitch-shooters at a serious level – where every extra ms of latency is hyperimportant – , your needs can be covered easily. Hardcore gamers are very vocal, so their numbers tend to be exaggerated. Most gamers’ needs could be covered. Right now the invitation-only beta is free. You still have to own your games. These are still early days so the exact business model is still being figured out.

Google released their Project Streaming a few days ago, which is their first foray into the same space. Taketwo’s CEO stated in a conference some weeks ago that he sees a large industry-wide adoption 1-3 years down the line. The chess pieces are being put into place.

For me, I have a super basic celeron-powered laptop which I bought for ~$300 since it covers my basic browsing needs and it does so well enough. I have no home PC right now so this solution is right in my backyard.

So how is it? Surprisingly good. You need at least 50 mbit/s in order to get 1080p@60fps home. I can stream Witcher 3 at great quality settings on my laptop at 60 fps. The service supports cloud save, too. Installation for the most popular games takes just 10 secs. For the less popular ones you have to re-install them at every time, which is a bit of a PITA if the game is big. Anything over 20 GB tends be annoying in my experience. But the upside is that you don’t store anything locally. I have just 8 GB free on my SDD as I write this, so that is a big bonus for me.

You can be very portable too. You only need the app and a decent internet connection to access your library. You could play these games on vacation, in a library, at a friend’s house. Unlike bulky and fat gaming laptops, my laptop weights just 1.2 kg so portability is definitely key. I usually have a small wireless mouse with me regardless.

I’ve tried some online shooters (primarily NS2, a small game which I own) and the experience was totally decent. I tried the more popular CS:GO and I had zero latency/lag issues. The only downside there was 60 fps, but that is limited by my screen. Nvidia has a way to stream at 120 fps but your screen needs to support it. Right now that is a downside given that the only laptops which have such support tend to be gaming laptops, and they are often very expensive in the first place (nullifying the need of the service). However, you can still use this on a basic home PC with just an integrated GPU and a cheap CPU with a simple 144 Hz monitor which you can get for under $200 these days. It’s also very possible that we could get cheaper laptops with 120-144 Hz monitors down the line.

As stated above, the hardcore gamers will never be satisfied with this, but for most casual gamers out there and even moderately serious ones, I see no reason why this wouldn’t be attractive. Pricing is null right now, but most discussion have ranged in the $10-20 range. If we assume the upper bound and include access to games in the price down the line (just like Netflix), then it would be very attractive for vast swaths of gamers. Especially those like me, who only game occasionally and who don’t have the time to be super serious. Another benefit is that hacking will be much harder to do, especially in online games, where it can be a real plague on PC in certain titles.

There are still a lot of kinks to iron out. Internet is hardly 50 mbit/s or above in most places (though 5G buildout will certainly help that as data capacity increases). In some countries, data caps can get in the way, though not in Poland and many European countries. Exactly how the distribution of games will be structured is to be established. All the business models are still early-stage. This is why it’s still a beta and why Google is just now dipping their toes. But this is coming. The experience was definitely good enough for most gamers and it is an economical solution, too. I can just buy the latest Metro game when its out on Steam and then stream it for free – as of now – on my crappy laptop at good quality settings on 60 fps instead of splurging on expensive hardware. Even at at temporary cost of $10 or $20 per month, it would be a good deal. You don’t have to lock yourself in for years. What’s not to like?

I predict Tesla will report a Q3 profit

You actually predicted the company going bankrupt, Thor. Let’s not forget – I will certainly make sure you won’t. If this is part of your coping process, I’m all for it. Our bet still has 9 months to go before they go bust. If they don’t go bust you lose 😉

Islam is a very authoritarian religion, likely because its leader understood his own people all too well. I’ve read a lot of sociological material on schools in Western Europe and one of the recurring themes is that you have white liberal teachers naïvely thinking that the same rules which applies for white kids must also apply for muslim kids. After all, race-blind liberalism is the dogma which they were fed all their lives.

Chief among these assumptions is an implicit expectation that there has to be a certain amount of self-discipline and that the teacher shouldn’t need to beat the kids to get them to behave.

Naturally, this does not work well. Hence, chaos is ever-present. The quotes which keep coming back when the 2nd gen immigrant kids are interviewed keep being “the teacher must show more authority”. So, I do think you’re right that a Middle East without Islam will likely be even bloodier than it is now, if we can even imagine that. Then again, I don’t necessarily think Christianity is the solution either.

There was a great article on the huge surge of violence in Latin America published a week ago. Latin America is now home to 30% of global homicides with less than 8% of the population. Mexico and Brazil are both quite religious, certainly far more than even Poland.
What this shows is that race is a much more significant predictor than religion for future behaviour.

I have sometimes come across the claim, from US conservatives, that the reason why there was much less dysfunction among US blacks pre-1960s was because the culture was more wholesome(which equates to more religious in their mind). I would counter this by pointing out that blacks did not have much choice or, frankly, space, to chimp out if they wanted to. Overwhelming white repression, unquestionably white authority and unbridled white institutional power made sure that there was no opportunity, chiefly view the Jim Crow laws that were ruthlessly enforced.

As the civil rights era came, these repressions went away and violence skyrocketed in the 60s(as Sailer has written about many times). So I am in general skeptical about the role of religion here, though I will concede that heavily religious societies tend to have less bad shit like feminism, tranny BS etc. The only drawback is that such societies often tend to forego other, more important aspects like ethnicity or race. Religious groups which are tied to ethnicity (such as Jews) don’t mind this, because they can always appeal to religious sentiment. Which is why US conservatives are the most philosemitic and the biggest shabbos goyim for Israel there is.

One more piece of good news. As I was reading Foreign Affairs in the university library this morning (gotta keep up with ZOG) to my great astonishment, I found a balanced and frankly critical book review about Western coverage of Russia written in conjunction with some recent book releases on Russia (Gessen, Shaun Walker of Guardian fame and Serhii Plokhii).

The author pointed out that all these three authors shared a very contrived view of Russia, in that they viewed Russian civil society as desolate and lifeless, that is is merely an artificial creation by the Russian state. Invented to serve a repressive purpose. In other words, politics comes first and the culture is modified for its ends.

He attacked this view head-on. He forcefully argued that Putin is in fact a creation of Russian society and not the other way around. He even went into AK’s talking points about Lenin being anti-Russian(!), how Lenin had suppressed Russian identity and viewed ‘Russian chauvinism’ as a great threat. I couldn’t believe what I was reading. He also threw shade on the notion that Putin is unpopular and only in power due to massive repression. There was also plenty of harsh words reserved for coverage of Russia, and how it is inextricably tied up in Western fantasies of Russia being a puppet like most of CEE has become to the US-led order. When Russia inevitably disappoints the role of servility, rage ensues.

The main problem, in his view, is that Western coverage of Russia refuses to engage actual Russian civil society, partly for the aforementioned reasons but also, frankly, because many of the social choices taken by Russians are inimical to neoliberal preferences. Putin’s Orthodoxy should be seen as an outgrowth of the Russian people’s will instead of purely being seen through a cynical lens of Putin doing yet another move to solidify power (by all accounts, he is genuinely religious).

That all said, will it have an effect on Western Discourse? Considering that the same magazine had a deranged article by Michael McFaul in the same issue on the topic of Russia, perhaps we shouldn’t get our hopes up just yet. But, there are at least some sane voices out there and Foreign Affairs is the go-to magazine for the US foreign policy elite, so that’s something. The article can be found here. Ignore the somewhat hostile title, the actual text is quite good.

Jared Taylor of AmRen mentioned in his latest podcast that he had been to Poland in the last week and spoken in front of the All-Polish Youth at two seperate ocassions. They are very religious – and hence I tend to avoid them – but this is a very good sign. In the aftermath of the last independence march, some of their spokesmen started to spout moronic talking points about ‘muh based black men > white communists’. Jared is not exactly shy on his views on race, so my principal criticism that a lot of Polish nationalist groups are too religious civnats is being ameliorated.

In general, I have seen a strong surge away from religion and towards race in the last couple of years. Wykop, the Polish reddit, has consistently had race realist submissions at the top of its front-page lately. It is a very popular normie-tier website, which makes that all the more remarkable. One of the things I love about living in Poland is our pro-free speech mentality. I can’t even imagine reddit allowing a self-post about fullblown race realism rising to the top of the front page and staying there. I can’t even imagine the userbase voting it up either.

Another sign of the generational divide is that there was recently a Polish film mocking the catholic clergy and all the PiS boomers were outraged but most of the Wykop userbase joined in on the ridicule. The pedo scandals certainly haven’t helped. I think our leftists are still in a state where they think that Catholicism is the end-all be-all, sort of how white liberals in the US obsessed about Christian evangelicals during the Bush era. But this is decreasingly relevant as you go down the age brackets. A lot of these establishment leftists are they themselves in their 40s, 50s or even 60s and they grew up in a much more religious – but also more naïve – Poland which was quite closed off from the world.

I’ve mentioned before that I expect Poland to be ~10% non-white by 2030 (assuming a large immigration surge in the 2020s once/when PiS loses power to the neoliberal EU-slaves, á la how Blair opened the floodgates in the UK in the 1990s). But by 2030, things should get quite a lot better than it is now, as the boomers start to die off. In fact, I’m surprised how fast the discourse on the internet and among the young is already changing.

CBOS, the premier Polish public polling institute, has been running polls on refugee acceptance. They historically used to ask in general about refugees but changed this practice in the last few years. This is because since 2014, there have been some applicants from Ukraine. We’re talking about very low amounts here but Poland also gets very low amounts of overall applications, too. This muddies the waters.

Furthermore, if you look at those who we do accept, most of them tend to come from Russia(not chechens, who have a near-100% rejection rate), Kazakhstan(returning Poles in many instances), whereas in Western Europe it is almost always arabs and africans who get accepted. It’s true that the word “refugee” has been sullied in recent years in Poland, but for us it has mixed connotations. That’s why CBOS specifically asks about MENA/Africa and when they do, the result is extremely negative and increasingly so.

In contrast, when you ask about refugees in Western Europe, it is basically a euphemism for Arabs or Africans without any real exceptions. Not so in Poland. I’ve explained this before, AK. This should not be news to you.

Poland will not take refugees. A much bigger problem will be work-related migration:

There are talks of doing the same with Indian and Nepalese workers.

On a related note, one thing that was curious to me was Japan’s bizarrely high acceptance in the Pew poll. They took like 50 refugees a year ago or so but since then have taken (almost) none. That in of itself makes me kind of skeptical about how the poll is conducted, though Pew is a respected institution. Puzzling.

P.S.

Russian births are now at a 10 year low. So much for the fertility miracle. The crude birth rate (10.9) is only slightly higher than Poland’s.

Tesla

Remember that your original call was about Tesla going bankrupt, Thor. If Tesla is still standing next year, the timeframe for my bet with you, then you have lost. No amount of sidetracks can obfuscate that 😉

China’s debt is mostly between government departments in an economy growing three times faster than ours

This is a completely misleading statement. How much faster they are growing than OECD is not the true measurement of their underlying liabilities.

What matters is how much faster their own nominal debt growth is growing relatively to their nominal GDP growth. And it has grown far faster. That’s what matters for them.

It is instructive that the author spends very little time on the most pressing issue, debt, likely because he knows that is where the defence of the Chinese model is the weakest. Maybe he should spend some time looking at total credit growth including shadow banking.

In the history of financial crises, it is often the speed of the leverage which counts as much as the total amount. Since 2009, China has amassed huge liabilities in the financial sector, both on-balance and off-balance, and their total credit growth (including shadow banking) is still rising faster than nominal GDP, despite promises to the contrary.

It will also likely have to grappe with household sector debt issues in the 2020s.

Please note that while household debt has risen rapidly, its total share of bank debt has been growing far slower. This indicates that debt leverage has been broad-based in an economy and that vulnerabilities are widespread (including in the non-financial corporate sector).

That said, I think that
1. China’s vulnerability from trade tariffs is in fact quite limited
2. The US will not shrink its current account deficit with the Chinese companies in any meaningful way, but what will happen is that plenty of Chinese companies will shift their operations to ASEAN and similar places and this deficit will thus increase through intermediaries. So these companies will still outcompete US companies but from different geographic locations, thereby masking the CAD. Additionally, as a country of the global reserve currency, the US has no choice in running a permanent CAD.
3. China will continue to rise as a global power, but its over-reliance on heavy debt leverage at an early phase is a significant departure from previous East Asian success stories and thus any comparison with them is no longer valid past a certain threshold. This doesn’t even take into account that they(JP, Taiwan, SK) threw away their strategic autonomy in exchange of the US security umbrella in order to pursue mercantilist policies in a bargain that a large and powerful country like the Chinese obviously can never accept. This at the heart of the current conflict and friction.

Some good news out of Ukraine. And it shows – conclusively – why any comparison with Sub-Saharan Africa should be dismissed as lunacy.

Ukraine has become the primary outsourcing market in Eastern Europe, according to Outsourcing Journal, and is top in Central and Eastern Europe by outsourcing volume. It’s the fifth largest IT services exporter [by value], according to consultancy PwC.

“The industry has tripled over the last few years,” says Andrew Sorohan, team lead at Kiev-based VC firm UVentures. “We’ve got a young, highly skilled workforce working on projects in machine learning and big data analytics for clients like UBS, Uber, Google, Deutsche Bank, and Amazon.”

Source

In the last four years, according to PwC, the number of IT specialists has more than doubled, from just over 40,000 to nearly 92,000.

In terms of available talent, Ukraine already outpaces its competitors in the region, including Poland and Hungary, and PwC believes the number of IT professionals will double again by 2020.

Marvin Liao, a partner at the San Francisco-based venture capital fund 500 Startups who’s spent considerable time in Ukraine, believes that the conflict with Russia has had a significant impact on the country’s IT sector.

“The natural leaning used to be towards the post-Soviet region, and for better or worse, since the war started, there’s been a massive shift to leaning towards the West.
“More people are learning to speak English, they are much more Western leaning, and that has changed the orientation of the ecosystem.”

Source

There is now also a greater involvement of Israeli high tech firms, hiring Ukrainian outsourcing companies and the UA government wants to increase this.

Incidentally, the newest human development index rankings were released a few days ago and Ukraine placed slightly below China but still ahead of Philippines, Vietnam, Indonesia, Paraguay etc. I re-iterate my strong conviction that there is nothing stopping Ukraine from becoming a wealthy country from a strictly HBD perspective but that its failures must be seen from a primarily socio-political lens. This will not go down well with HBD essentialists/fundamentalists, but it is impossible to understand Ukraine’s trajectory post-1991 otherwise.

Yo thor.

It seems like China actually really is–finally–in economic trouble. Capital is fleeing, there’s severe pressure on the RMB, the stock market is crumbling, and the Belt and Road Initiative appears to be turning into a fiasco.

That’s not my analysis though, my position is a bit more nuanced. I’ve been a skeptic on BRI for a long time and I’ve pointed out that Chinese growth is not similar to SK/Japan after 2011 in that it is far more reliant on debt, but I still think they will rise. Just not as rapidly/smoothly as SK did over a longer time horizon.

I also don’t think that the current trade tensions will truly faze them in any serious way. Exports only account for 18% of their GDP and the US share is just 4% of their GDP. A significant slowdown in US exports will only shave off maybe 0.5% to 0.7% of their GDP growth. Not nothing, but hardly an economic meltdown. Their debt position is of a far greater concern.

Tesla is now officially being investigated by the Department of Justice

Which will go nowhere.

White God syndrome still at work in India. Visited a medieval fortress and a group of Indian mohammedan women clad in black burkas came up my father and I giggling like school girls and begged to take photos with us.

Same in China. I was in Beijing a few years ago. It was insane how much attention you get, even now. Overall, It was surprising to me how few non-East Asians I saw, despite it being the capital. I think it boils down to the ‘exotic factor’. Same reason why blacks or other minorities will be attractive in very homogenous places but after a certain threshold, their status will fall, often dramatically. Even in the US, despite constant propaganda in the US media, black men are selected against (as revealed by OKCupid’s data before they faced too much backlash and stopped releasing it).

You sort of wonder if there will be a similar effect for all the sexpats out there like Jeff Stryker and others who are very militant about diaspora life in SEA. Maybe money is another factor there, aside from just the exotic factor. Same is likely true in India and, to a lesser extent, perhaps even China.

In the longterm, I expect Russia’s figures to converge with Poland’s, which is to the contrary secularizing (and becoming more socially liberal).

It’ll be interesting to see whether Poland or India legalises gay marriage first. The Indian supreme court (re)legalised gay sex one week ago, after the Delhi High Court initially did it in 2009. This time it was done on an unanimous basis. The ruling Hindu nationalist party didn’t object. India is converging with the West a lot faster culturally than it is economically.

It’s worthwhile pointing out that India legalised transsexuals as a ‘third gender’ already back in 2014, long before the current trans craze in the West really got going.

While we conceive the West as more liberal than the Orient, this is a historical inversion. Homosexuality was not always frowned upon in these socities before European contact, and many of the anti-homosexuality laws were often the result of either European colonisation or cultural influence. So, it isn’t necessarily the case that India is doing this purely to ape the West. Same can be said of Poland. We never had any laws under a free and sovereign rule restricting your sexuality or using the monopoly of state violence to regulate what people could or couldn’t do in the bedroom.

Foreign currency debt is worse in Russia than in the rest of East-Central Europe other than Hungary

You’re wrong, as usual.

Russia is continually pursuing a de-dollarisation strategy. It does so successfully.

I’ve often argued out that it isn’t enough to look at just net government debt, which is very low in Russia at any rate. Household debt also matters and Russian households are very disciplined.

When I described Russia as ‘shockingly solvent’ last month I wasn’t exaggerating.

While his statements about decrepit commie blocks having more “soul” is utter BS – and likely is a poor attempt at baiting/trolling – there’s a lot to be said for just renovating the current structures. They can look quite well:

The white tall ones are newly done in contrast with the olders ones in the back right and the one to the immediate left.

Here’s another example of a building undergoing renovation:

It should be stated that a big argument in favor in commie blocs are often the neighborhoods themselves, rather than the buildings per se.

These neighborhoods are often well-designed, at least where I live, and have everything on walkable distance with plenty of greenery in the inner yards with lots of playgrounds and sporting amenities. There is also generally a much better sense of community, in my experience, which is why I plan to live there even after graduation and despite being able to afford better stuff in a few years.

Unfortunately, instead of making large renovation plans of existing commie bloc areas in Warsaw, the neoliberal city council prefer to appease the Big Build lobbies by ripping down these commie blocs and replacing them with soulless globalist structures. Pic below is Warsaw this summer, taken just a few days ago.

Give it 5-10 years and most of the downtown will be completely replaced. There are still some neighbourhoods safe, particularly where the working class live, but they are on death watch, too. If this goes on I might just leave for Gdansk or someplace more historical, or even Moscow for a few years. The “old” downtown of Warsaw is a fake structure cosplaying as an ancient city, anyway.

So, I do have a soft spot for the argument of having commie blocs, but it’s a shame he took a good argument and ran so poorly with it.

OBOR debt trap spreads to Central Asia

As Beijing bankrolls projects in Central Asia to promote its Belt and Road Initiative, countries in the region are at risk of granting China valuable concessions to ease their heavy debt burdens.

Turkmenistan faces an economic crisis, with reports leaking from the country of long queues snaking outside of grocery stores, one-month waits for flour and road closures by housewives demanding food.

[…]

Neighboring Tajikistan handed over a gold mine to China in April as remuneration for $300 million in funding to build a power plant.

Kyrgyzstan reportedly has a contract with a state-run Chinese bank for a power plant in the capital of Bishkek that includes a clause giving Beijing control of wide-ranging assets if the country defaults on its repayments. China is also thought to be demanding concessions in negotiations for railway construction funding.

[…]

Ukraine and China agreed to $7 billion in joint projects at an intergovernmental commission in late 2017. Construction of highways and grain export bases is progressing.

“A pro-China faction is quietly rising,” said a high-ranking Ukrainian official, as investment from the U.S. and Europe slows due to a virtual state of war between Kiev and Moscow.

[…]

Beijing signed a free trade agreement with Georgia last year and is investing in ports and transportation projects there. The Caucasus republic, along with Ukraine, has a free trade agreement with the EU. Georgia recently opened a railway from Azerbaijan to Turkey that is expected to serve as a vital artery for China’s Belt and Road, connecting China and Central Asia with Eastern Europe while bypassing Russia. China is negotiating a free trade agreement with pro-Western Moldova as well.

Moscow seems to tolerate China’s growing clout in Russia’s sphere of influence. Some think Moscow prefers China to democratic and economic reforms promoted by the U.S. that emphasize transparency and rule of law. Concern exists that more Chinese money will stall Western reforms in these countries.

Seems to confirm two things. One, Chinese influnce in CIS is increasing at the expense of Russia’s due to monetary factors and two, their reach will go beyond just Central Asia and will increasingly reach into the Caucasus, Eastern Europe.

I suppose this is the Chinese way of saying, you don’t have much choice except us, Moscow, so these are the terms. And at any rate, wouldn’t Moscow prefer Beijing in their neighbourhood over Washington?

Britcucks

The ‘Eternal Anglo’ meme was not created out of thin air. Anyone knowing anything about the history of SA also knows that the Anglos backstabbed the Boers more than any other. It also solidifies my opinion of the UK as the single worst major Western European country.

While France and Germany have their problems, would we see a government minister come out like this in any of those countries?

Tesla

I’m glad you’re finally coming back to life, Thor, after I posted a series of news of Tesla shorts losing billions and where you were mysteriously silent 😉

Musk backed away from the private funding because he was told by existing institutional investors, not because there was no money. The SEC investigation will go nowhere. This is also why your “tesla will go bankrupt” bet is yet another money loser, if things go haywire, Musk can always go private because the funding is there. It would also give me a guaranteed sell price at $420 or thereabouts whereas I bought the stocks at $280.

That said, the problems at Tesla remain what they were for years. Musk is A) overstretched between two very demanding companies and B) he is an extremely ambitious man. He’s going to introduce four new models in the new few years (Tesla Truck, Tesla Pickup, Tesla Model Y and Tesla Roadster). He is also going to try to build a new factory in China, which is now not even needing to share ownership because of the new Chinese rules regarding EVs. If he would just calm down and allow the current pipeline to be optimised it wouldn’t be a problem. But then again, he is Elon Musk, he’s constantly in a hurry. My guess is that he’ll likely go private in the end, get the big cash infusion needed to do all the models/capital buildout and then just burn the costs down and start acting like a normal car company (5% growth instead of insane 50% growth rates).

TURKEY. After its devaluation, it now has Europe’s third lowest wage after the Ukraine and Moldova.

Well, do we now use nominal prices when it suits us or do we stick with PPP? Sort of reminds me of Felix using nominal GDP per capita to diss Ukraine but insisting on using PPP for Russia. FWIW, here’s the PPP-adjusted picture.

The map is still flawed for at least two reasons.

1. It isn’t normalised for working hours. Poles work close to 2050 annual hours (Russia is similar) but Czechs work 200-250 hours less. So, per hour worked wages in Czechia is higher.
2. It is based on average instead of median. Countries with lower GINI inequality will do better whereas average wage maps tend to make highly inequal countries (such as Russia) come off as better. This is also true for Poland, but for a lesser extent. Czechia and Slovenia both have lower inequality than Poland.

But it’s still better than nominal maps.

OT: OpenAI played a match in a 5 vs 5 in DOTA2 the other day against a team of human pros. Last year they went 1 vs 1. Spoiler alert: the AI lost. There was some confusion over at /r/machinelearning over whether the AI had ‘sentient’ consciousness, in the sense that it controlled all five players at the same time. But apparently, there was a separate AI for each player and these AIs communicated with each other, but each had an autonomous zone of control only of one player.

The AI team did better in some technical (especially reaction time, as well as discipline on countdowns/timings etc) areas, but still lagged in overall strategy. Still, it did lead in kills for most of the game, but it lost at the end. It was hardly a walkover for team human.

Once games like DOTA2 and Starcraft 2 are mastered, the potential applications in the ‘real’ world will truly be interesting, precisely because of the imperfect information nature of both games, whereas in chess and Go you can always see what your opponent is doing (and not doing). Life is not so simple.

His main base are the neoliberal class and the oligarchs who share similar views/goals. He’s great at generating PR for himself, which is why you see him so often in the foreign media. Probably even more than in our domestic papers. In some ways he had terrible political timing. In a largely homogeneous society, you often get social cleavages around sexuality and gender. This is certainly what you saw in the West (with the exception of the US which had an inherited race problem, but even there it was largely isolated during Jim Crow) before the full effects of mass immigration really came home to roost.

This meant that he had a golden opportunity to leverage his sexuality to pretend being edgy (in an otherwise rapidly liberalising society, so not with any great hardship, really). Sort of how white talk show hosts in the US railed against Fox News’ social conservatism during the Bush era, a sort of intra-white pissing contest. But all of this went out of the window with the the “refugee” crisis and the terrorist attacks in its wake. Suddenly, people’s attention shifted from identity in the personal sense to the national sense. And he has a lot less things to say on that, and the little he does have to say, he knows is not popular.

Nevertheless, even a flaming homosexual like him has written Op-Eds denouncing EU action against Poland, he got published in Politico (EU version) not long ago on that very topic. In many other countries, such a character would demand a doubling down of sanctions against his own country in the name of ‘human rights’. I’m glad I don’t live in those countries.

Fat acceptance movement also weighs in.

I laughed way more than I should have at that one 🙂

Also:

J-Janusz, is that you?

Once again proving to be an amazing travel writer. Incredible post packing a huge amount of detail, from the most minute to grand sweeps.

What I like most is that you are genuinely curious about your surroundings. Even when you admit that Romania was way down on your list, you take upon yourself to really try to understand the country you go to. Not just lazily getting on with it, or just focusing on your immediate surroundings. To the extent that you can, you geuninely try to understand the place you come to. As a reader, I appreciate that.

There’s too much to comment on in general so I’ll just focus on one thing: I’ve heard a lot about Transylvania and if those pictures are anything to go by, then even my admittedly high expectations were exceeded. It really does seem like a magical place. Dare I say Switzerland on a budget?

P.S. Keto isn’t SWPL, that’s veganism!

OT: The Turkish lira is now the worst-performing currency this year, bar none.

Turkey’s implicit bet was that it could continue to rely on Western money flows while pursuing an agenda contrary to Western interests has been conclusively shattered. When I say Western interests, I do not mean the propaganda about human rights, which the West manifestly doesn’t give two hoots about.

Turkey was not entirely foolish to believe this strategy could work. Pakistan during the reign of Islamist military dictator Zia ul-Haq, used a similar strategy during the 1980s. He empowered the mullahs and moved Pakistan decidedly to the hard-right in religious/cultural terms while massively opening up the economy to speculative finance, thereby pleasing Washington. Saudi Arabia has used this policy for a long time. For those who knew this, the revelation that the US funded some of the most extremist “moderate” rebels in Syria came as no shock.

So perhaps it isn’t the Islamism in of itself which is the problem in Erdogan’s case. What could it be? Well, one clue is the case of Pastor Brunson. The good pastor, who under house arrest in Turkey, is accused to be close to the Gülen cult. The official line in the Western MSM is that Trump is trying to appease evangelicals before the midterms. I don’t buy that. He has them in the bag regardless. Gülen himself, some of you might recall, still lives in the US despite repeated pleas from Turkey to give him back. Which is the unreliable ally here? Curiously, Gülen’s religious bent is even more Islamist than Erdogan’s. He’s also even more of a neoliberal. Notice a pattern?

At any rate, the demand from the US has been for Turkey to release Brunson unconditionally. Erdogan’s media has speculated that Brunson was slated to become CIA chief in Turkey had the 2016 coup come to pass. Obviously, Turkey does not want to release him unconditionally: it makes them look extremely weak. Well, they now got hit where it hurts. Indeed, Trump even tweeted out new sanctions news today even as Erdogan was delivering a speech. I don’t happen to believe in coincidences. The result is that the lira lost close to a quarter of its value in a single day. I haven’t even mentioned Turkey’s apparent interest in the S-400 missile system among other matters. This, I think, is what truly irked D.C. rather than Erdogan’s human rights record or “authoritarianism”, which is just the pretext.

Make no mistake: the decline of the lira was structural from the beginning. Turkey’s large CAD made it extremely vulnerable to financial speculation from the getgo. It has now paid that price. But this does not preclude the fact that countries which are overtly reliant on Western financial flows to fund large current account deficits should forgo the lesson that there is no free lunch. Erdogan made this cardinal error. Poland is not nearly as vulnerable, but we’re also in the same orbit. This is why I always laugh at the Poland Stronk memes. It’s also why I dismiss the criticism against Orban that he plays all sides, including taking money from the EU, as politically naïve. Very few countries in this world can reliably be called truly independent. Russia is in the process of becoming one. So is China. India is not quite there, but it has the potential. The rest of us will simply have to balance hegemons, while reminding ourselves of our inherent vulnerability. If we forget that, then we just had a textbook example of what happens when we overestimate our hand, playing out in front of our very eyes today.

Russia today is in a much better position to withstand sanctions. Global oil investments have been lagging for half a decade due to low prices, and this will inevitably show up in the coming years.
Russia in 2014 was battered by a twin storm, of which the oil price collapse was in fact far worse. That factor is now gone.

Furthermore, a planned VAT rise next year will mean that the break-even oil price for the Russian budget will fall to $50 after $60 this year and $67 last year, according to Alfa Bank’s analysis. Steady, impressive improvement. So even in an event of an unexpected oil price decline, Russia is far more prepared this time around.

Additionally, over the last 4 years, Russia’s economy has indigenised to a much greater extent than before. This is especially the case in the financial markets. Russia is simply a lot less reliant on foreign funding. Bershidsky wrote about how more and more Russian companies are leaving UK capital markets and returning to Russia. This process will continue but it has already yielded results. As a country with a large current account surplus, tamed inflation, an incredibly strong fiscal state, there is indeed very little that the US can do, which is probably why they are reaching with ever-greater desperation.

I think the ultimate endgame can only be to completely run a parallel system. Any compromise with the US is unlikely to give anything than shattered delusions. Who could be partners in such a system? Aside from the obvious candidate, China, perhaps even India. Modi has in recent months distanced himself from the US and warmed up to China again. India has always bristled at being treated as a close ally rather as a ‘partner’. It has cherished it’s non-aligned movement legacy and its historically close relations to Russia. It is unlikely to want to give up on that in order to become a subservient lapdog to US interests in the manner that the EU has degraded itself.

China’s AIIB is a good start, but the full range of new institutions must bear fruit. Some of the BRICS ideas are good but ultimately both Brazil and South Africa are too unimportant. It should be borne by the big powers (Russia, India and China) together with an Asian coalition like the Philippines, Malaysia, Indonesia and others who are not in the US orbit yet have a bright future ahead of them.

Turning to Europe. Unless the EU finally shows some spine – which is very unlikely – then the Western system will be exposed to be at the mercy of whoever controls the US. Such a system is hegemonic and it will be in the best interest of not just the non-Western world but even for those of us in Europe to see a breakdown in that world order.

Aquarius, I think you’re overestimating OBOR’s importance for the future, especially with regard to Russia. OBOR is already being scaled down due to the massive overleverage issues. SASAC, the holding company that the Chinese state uses for its SOEs is already mandated to drastically cut down leverage by 2020. This includes their foreign adventures, of which OBOR is a key component. In addition, OBOR’s benevolence has been questionable and there is already a brewing backlash. You see this in Pakistan. Just today, they announced a loan from a Saudi bank in the tune of 4 billion. They need 12 billion USD to cover their gross financing needs over the next 12 months.

After the US protested that the IMF “should not bail out sour Chinese loans”, many assumed that the Chinese would step in, once more, but this has not happened thus far. Partly because the Chinese themselves are wary of sending money into a black vortex like Pakistan but surely partly because the Pakistanis themselves are seeing the writing on the wall, as they become ever more reliant on Chinese loans with exorbitant interest rates and insane guaranteed investment returns of 30% on an annual basis (in dollar terms!).

There is a backlash in Malaysia with the new PM installed. Montenegro isn’t happy. Laos isn’t happy. Cambodia is grinding its teeth. Sri Lanka has been turned into a debt colony, and had to give away their ports. Myanmar has cancelled several deals and is looking to re-negotiate others. The momentum is slowing.

On top of that, even the Chinese firms themselves which are involved in OBOR are overleveraged, far above the global median indebtedness for construction firms. That’s why the Chinese are insisting on using Chinese labour, machinery etc in a manic bid to cut cost; in part to help these firms (and their subconstractors):

As for Russia, it is in a fiscally far more advantageous position than China is. China is of course technologically more sophisticated and far demographically larger, but this doesn’t mean automatic domination, especially as other powers (read: India) will grow in importance on China’s borders and the US isn’t going to give up it’s strategic vantage point in the ECS and SCS any time soon. China’s strategic depth into the Russian hinterlands will remain anemic. It is very hard for me to see how Russia will assume any submissive position, given its strong fundamentals. In this sense, I depart from AK’s pessimism when he dismisses his own country’s future as destined to be a mere ‘resource appendage’ to China.

The key is really Russian-European relations. That’s the natural export market for Russia – and I’m not talking about hydrocarbons now. I’m not a seer and I do not doubt its difficulty to to pull off thoroughly, in terms of much greater integration. Nevertheless, it is noteworthy that European sanctions on Russia are maintained but they are not increased in intensity whereas the yanks are continually upping theirs. This leads to a yawning and ever-growing discrepancy and is exposing the increasingly at-odds attitudes that the US and the EU has towards Russia, so perhaps things are not so gloomy after all. Hell, even our own PM’s father recently conducted an interview with one of the Russian media outlets and openly called for closer co-operation. This is not some loony-tune guy. He is known to be close to Morawiecki. If Kaczyński falls off his chair one day, and with him his obsession about Russia and the endless conspiracy theories, I wouldn’t be surprised if Poland’s position will moderate, thus granting even less cover for neocons and further diverging the paths.

I appreciate the sales pitch. Not bad! Though I am serious about my non-expertise. I am simply reading academic papers and obscure but highly erudite and well-sourced posts (here and here) made by the real experts in the field. If Unz, who is a very smart guy, wants to dig in on Indian GDP statistics, those three are good starting points. I’m sure he will learn a lot from it.

Regarding his point about India’s PPP, I believe I’ve pointed out Martin Ravallion’s skepticism on the issue before. This is the guy who was instrumental in designing the first ambitious ICP program in 1990 and who has made research on academic issues such as the price-level index – which is key in calculating PPP ratios in relation to nominal income, and as such important for poverty measurement as well as relatively GDPpc rankings – his life’s calling. What can I add that he cannot? It would be preposterous of me.

It isn’t enough to be merely right or have a generalised understanding, even if sound. An article requires domain expertise in a way that a throwaway blog comment does not. Those are the standards I have on others in order to take them seriously, and I don’t see why I should exempt myself.

Didn’t stop Germany from reclaiming it’s top spot as Europe’s strongest economy by 1945 though. Germany had one thing other countries didn’t; Germans.

Things are not so simple. North Korean have something most other countries don’t have: ethnic Koreans. The internal system used matters a great deal, as well as the external circumstances not just the people. And I don’t think I’ll have to educate you on the Marshall plan. Even beyond that, Germany was already an industrial power pre-WWII so the knowhow was there, which is another crucial factor.

Ask two economists and get three opinions.

Not on China’s leveraging. I say this as someone who wishes China well and genuinely likes the country, as well as Xi’s social/cultural instincts.

China’s legacy of Maoism is problematic because it necessitates a veneration of a man whose legacy was largely catastrophic. This includes his economic ideas. Thus even if outright economic Maoism is implausible in China, it nevertheless lends credence to a brand of economic thinking which is inefficient and overly centralised, because any Chinese leader who wishes to go that way can always invoke the Great Helmsman. A Party which claims he was “70% right” cannot easily disassociate themselves so surgically from his legacy. And there is wide agreement within China as well as outside it that it’s debt-fuelled expansion has been problematic. China is far more indebted than other East Asian countries were at a similar level of development, and this is even using official data.

To AK. I’ll write this here in order to avoid multiple replies.

China was of course never in any danger of peaking at 800 million. It was at 500 million after WW2. As a Third World country with its demographic transition still ahead of it, a massive population spurt was inevitable. It would probably be around where it is regardless

Well, you’re the demographic expert and not me, but this only strengthens my argument even more about the problems of the legacy of Maoism, since even the silver lining used (demography) is largely null and void whereas the disastrous economic legacy argument is still intact. This plays out today, because there was never a clean break with him.

My general impression (though I don’t follow the debate closely) is that under Xi, many of the SOEs have actually been cleaned out.

Many SOEs have been consolidated and in fact given greater importance. I am not an ideologue on SOEs in of itself. But the returns to investment from SOEs are much lower, and this has been shown conclusively by using official data Nick Lardy from PIIE among others. So I’m just following the data and the data shows that the private sector is getting less loans while the SOE sector is getting more, even as returns fall. The result is that leverage is exploding. So why does he do it? Control. That’s the political dimension.

Would you be interested in writing an article for The Unz Review outlining in detail your analysis of GDP growth manipulation in China, India, and Turkey?

While I do write about it, I should caution you that I am actually specialised in productivity research. I simply have a general interest in macroeconomics, which most people in my field do (after all, that’s why we got in).

Secondly, I’m not sure what I would add that isn’t already known. It’s not like I am sitting on some great treasure trove of suppressed information or a unique angle. I’m simply pointing out information which is out there, though admittedly most of it is based on academic papers and a few obscure blogposts by various professors. Anyone willing to dive deeper into the subject can just go to those sources, they usually have a list of papers in of themselves and a good summary for each nation. Professor Harry Xu’s papers on China is a good start. He’s the erstwhile Angus Maddison’s research partner on China. Professor Erik Meyerson’s research on Turkey. Finally, prof Ajay Shah on India. Each of them in turn have a network of professors which they also draw from. It’s not my specialised field but theirs.

I agree with most of what is written, but I’ll spend some time on the country you wrote the least on, China. In my view, you are too sanguine on Mao and it appears to be largely motivated by the fact that Mao had very expansive views on demography and this overshadows any other critique you have of him and his ideology. To my mind, China was destined for demographic greatness even with a more moderate approach. A much richer China at 800 million souls would be vastly more powerful than what we have today.

There is a second difference, namely that I do not take China’s rise for granted in the same manner that you appear to do with the comparison with Korea and Taiwan. China’s growth statistics post-2011 are no longer as credible as it was during 1980-2010, for reasons I’ve delved into before (and this is a phenomenon shared by other countries, most notably Turkey but also India).

This impression is re-inforced by the casual throwaway line at the end that ‘the Chinese communists didn’t screw things up too much, apart from delaying its emergence by a generation.’

Once again, I quibble. Mao’s legacy continues to be problematic. The official line that he was “70% right and 30% wrong” is underlining the fact there is still a need to legitimise him in order to legitimise the Party. After all, how can an organisation remain legitimate if its founder and ‘paramount leader’ was a total madman? He has to be salvaged somehow, even if the veneration is far more moderate than it used to be, a lack of a total break hampers China, especially economically. This leads itself to the fact that many of his ideas, and echoes of his ideas, are far harder to stomp out. We’re seeing the effects of that play out today.

China’s growth model is not sustainable, especially after Xi has essentially turned back to command-and-control statism and is now increasingly relying on ever-greater debt leverage. China’s total debt-to-GDP – public plus private – is already 50% greater than Germany’s (300% for China and 200% for Germany) despite having less than one fifth in nominal income per capita. Worse, China’s leverage is increasing. Worse yet, I am using official statistics, which is taking the post-2011 growth figures for granted. If Chinese post-2011 growth numbers are manipulated, and consequently lower than the headline number, then the picture is even worse. But I’ve used official statistics to point out that even if you take them (unwisely) at face-value, the situation is quite serious, with no signs of letting up. Korea or Taiwan had nothing like this at their equivalent stage of development.

If Mao had been more thoroughly de-legitimised, it would have been harder for command-and-control instincts to creep back in. A demographically smaller China, but one which broke far more clearly with Mao, and far more early, would have been richer, more powerful and still quite large. Several times that of the US with far greater demographic quality.

There are also other reasons why the Korea/Taiwan comparison is flawed. Both of those countries were allowed by the US to essentially run a mercantile trade policy in exchange for accepting American hegemony in East Asia (with China being too weak to veto it during the 20th Century). Many people are not aware that South Korea essentially banned any imports of vehicles during the late 1960s, which is how they were able to foster their own companies like Hyundai and then export them, first to the third world and then gradually to the West. By the time the most severe trade barriers had come down, Hyundai was already competitive with Western firms. Such blatant protectionism was common throughout East Asia.

China was never going to be allowed this in the long run. Despite propaganda to the contrary, Japan, Korea and Taiwan never allowed much FDI. China had no choice but to do so, and as a percentage of GDP, FDI inflows peaked at much higher rates in China than it did in those other countries.

However, even this concession was not enough because it was always an unspoken assumption that China would gradually liberalise to become one giant Japan or Taiwan. Big, but ultimately submissive to the Western order. This is now unfolding into the delusion it always was. I don’t think China will collapse and I do think that they will continue to rise, but more slowly than many assume. I question your casual acceptance of thinking they’ll become as rich as South Korea, partly because their economic model is unsustainable and partly because their growth data post-2011 is not credible. I do think Mao’s legacy and the necessity to keep him legitimate hurts here, and it allows a debt-based overcentralisation strategy to become fashionable again.

This of course leaves the question if China would have been blocked by the US regardless, even if it had broken with Mao earlier. In my view, that is almost a given, but the critical difference is that it would have had the shadow of the USSR to shield itself with for much of the cold war and then in the bask of the 1990s and the ‘end of history’ it could have gained at least another decade. More crucially, however, is that it would not be ideologically bound bestow legitimacy onto a man who was a complete disaster, and in so doing empower those with terrible economic instincts, so whatever choices it would have to take, it would do so from a far more rational basis, which would have ensured a much more sound economic future path.

Sure.

Pakistan’s Foreign office warns against unsanctioned comments on CPEC

The WSJ further wrote in its article that some ministers in the previous PML-N government had said in interviews that they should have negotiated better terms with China.

Official figures reviewed by the Journal showed that China-backed power plants had been guaranteed annual returns on investment of up to 34 per cent in dollar terms for 30 years.

In February last year, The Express Tribune had reported that Pakistan had offered up to 34.5 per cent annual profit on equity invested in coal-fired energy projects of CPEC.

Loans have been obtained at six per cent interest rates, excluding insurance cost. Official documents also showed that if insurance costs were included, also paid to a Chinese insurance company, the cost of borrowings would surge to 13 per cent.

To be clear, over 30% in annual guaranteed returns on investment, in dollar terms, is completely suicidal for a country running large current account deficits with a habit to bouts of elevated inflation (which will put pressure on the exchange rate).

This is seperate from the interest + insurance costs which come at 13%. By comparison, loans from the Asian Development Bank or the World Bank typically have interest rates below 5%. For poor countries like Pakistan, it isn’t unusual to get interest rates around 2.5%.

On top of that, demands of guaranteed returns are also absent from these institutions when they invest. The flipside is that ADB and the WB cannot lend tens of billions of dollars to an insolvent country the way China can. But then again, these investments also have a political dimension, if not more so, in addition to the economic one. It’s partly about encircling India. China is already knee-deep in the finances of Sri Lanka, Pakistan and increasingly even Bangladesh. For them, the projects don’t always have to be purely economic (even if there is a component of that). It’s also part of a greater geopolitical strategy. It’s clever, but the receiving ends of these projects are now finding out that the terms are extremely stringent.

People should read up on what happened to Sri Lanka and its debt bondage to the Chinese. Pakistan is on a similar course and Venezuela was trapped years ago. I’m not saying that the Washington-dominated IMF is an angel, I’m just pointing out that the Chinese are hardly going to be the saviours of the third world.

Now, Islamabad is negotiating yet another loan of $57 billion from its most important ally, China

This is completely inaccurate. The $57 billion the author is talking about is a programme called CPEC which is many years in the making. It is not a new loan. It is not even a loan per se, so much as a mixture of investments and loans.

What the Pakistanis are doing now is to find emergency funds in order to stave off insolvency, whereas CPEC is geared towards investments of industrial capacity.

The Pakistani state is essentially bankrupt. Reacting to justified comments by Mike Pompeo, the foreign sectretary of the US, that the IMF should not bail out sour loans given by the Chinese, the Pakistani equivalent lashed out. In so doing, he unexpectedly revealed that part of the new loan that the Pakistanis are seeking are to be used to repay old loans.

That is basically the definition of a debt-fuelled ponzi scheme. They have become a debt colony of other powers, alternating between the Washington-dominated IMF and now the Chinese. The Greek crisis of 2010 should have taught people that when a state is basically insolvent, then it should be allowed to go bankrupt instead of perpetuating the extend and pretend policies.

Even Pakistan’s very low nominal per capita income is largely gone as the PKR has devalued by 25% in the last year. A large part of Pakistan’s elite have assets abroad and they are often going abroad to shop or to buy property. Therefore they want an overvalued exchange rate. That this has led to massive solvency issues is of no concern to them. Such a country must be allowed to go bankrupt and allowed to default. Pakistanis will often use emotional blackmail given their nuclear arsenal, saying that this could go into the hands of terrorists if their state fails etc. The reality is that a properly managed bankruptcy is not the end of the world. It is sometimes needed to get a fresh start, whether for individuals, companies or states.

An interesting observation is that many of these Chinese loans, emanating from OBOR, seem to be excessively punitive and many countries are now reconsidering them. Some of them, such as Sri Lanka, became so indebted that they had to sign off on a 99 year lease of a strategic port. Many countries in Indochina are also becoming saddled with these loans. Venezuela was not part of the OBOR, but their loans also made them slaves to the Chinese and were forced to sell their oil much more cheaply, accelerating the collapse. Pakistan is now heading in the same direction. This mismanagement and debt enslavement should not be bailed out. Let them go bankrupt and then do a proper restructuring where they are forced to live within their means.

I notice that the North-Western reaches of Russia is not dramatically cooler than the rest of Europe in AK’s pic. Sad! Well, here’s today’s weather:

Back to normalcy. My half-serious/half-joking thought of buying some cheap land there and build myself a summer home limps on.

OT: Tens of Thousands of Russians Protest Retirement Age Hikes

I admit to being impressed by Putin’s fiscal instincts and I hope he won’t flinch despite the protests. Russia in general is shockingly solvent. Unlike the neoliberal dogma, I do not only consider public debt to be relevant, but also look at private debt. Case in point: Denmark’s debt-to-GDP is around 37%. However, it’s private debt-to-GDP is a shocking 220%. Russia, by contrast, has low private and public debt. The major weak point, the pension system, is now being amended. The latest fiscal rule, which caps the budget at the assumption of a $40 oil barrel price (in 2017 dollars), will also help.

By comparison, PiS’ irresponsible populism by scrapping necessary pension age hikes would lead some to conclude that democracy is at fault here, and that Russia’s one-man rule approach is preferable. But that isn’t necessarily the case. The Nordics and the Netherlands have reformed their pension systems in a sustainable way, despite being democracies. Oil-wealthy Venezuela, ruled by a strongman, is a complete disaster. I think it is less the governance system rather than the general culture. Poland has still not produce a single year of a budget surplus, though we are usually outgrowing our deficit so our debt still either falls or stays put.

One could be tempted to say that Putin’s impressive fiscal discipline is not representative of the nation he leads. But if a clown like Yeltsin was drawn from the people, then so obviously was Putin. If Yeltsin was used to disparage Russia and its people, then why should Putin’s fiscal discipline be downplayed lest he be used in a positive manner. AK may have endorsed some blunt stuff about Russians, but for me, it is hard not to be impressed by the economic stewardship of the nation.

And, as I pointed out, it isn’t just the government. Russia’s private debt is also very low. So perhaps it is a mentality which isn’t isolated to the leader alone. Impressive.

Speaking of China.

US decides to further escalate trade war with China on two fronts

The US has decided to further escalate its trade war with China on two separate fronts involving restrictions on Chinese companies for acquiring advanced western technology companies, and forcing new reforms targeted at China at the World Trade Organization, according to people familiar with the development.

After a reset in the strained alliance with the European Union last week, the US signalled its new strategy to intensify the trade battle indefinitely. US Trade Representative Ambassador Robert Lighthizer gave an early indication on 26 July that “it could take years to resolve trade problems with China, suggesting that escalating tariff battle could continue indefinitely,”

The US has a strong hand in any general trade war due to their massive bilateral trade deficit, but they are mistaken if they think they can stunt China’s technological prowess through trade.

I recall the decision a few years ago to ban sales of Nvidia and AMD GPUs to be used in Chinese supercomputers. The guiding assumption was that the Chinese were helpless without Western tech. It backfired badly. The Chinese simply built their own domestic one, and it was the fastest one for years.

A few days ago, Daimler deepened their co-operation with Baidu in self-driving cars, further highlighting that US firms no longer have monopoly on advanced technology. It is much too late for these desperate and panicky rear-guard actions, though it is nevertheless genuinely amusing to watch the rising fear emanating from Washington, as it realises that its hegemonic technological leadership is now slowly being confined to a thing of the past.

The two arguments do not need to cancel out each other. Education is not the sole lens to view the world through. Biological (r vs K-selection) factors also matter. Blacks have higher fertility all over the world, which is why African TFR is exploding. Educating them will still help lower fertility, even if it may level off at a higher level than for K-selected populations like East Asians.

Social factors (education), biology (r vs K), religious intensity. Monetary support. Everything counts. It’s not either/or.

Women have much higher desired child counts than men do. If it was entirely up to women’s choice, every industrialized country would be well above replacement, if it was up entirely up to men’s choice, birth rates would be even lower.

Yes, but it doesn’t change his (correct) analysis. There is a well-known pattern between education and fertility. The more educated women become, the more they delay the age of initial child-bearing. You see this in developing country after developing country.

However, education is just one of many factors. Liu is correct to emphasize cultural factors. Jaako’s point about Scandinavia may be true, but it doesn’t change the argument. Scandinavia still has sub-replacement TFR aside from perhaps Iceland.

Religiosity is the bigger factor. The importance here is intensity and not shallowness. Iran is a superficially religious country but many Iranians will tell you that the population isn’t nearly as fanatic as the leadership. The same pattern is true in Turkey, where atheism among Turks is rare but their religious intensity is quite low whereas the kurds are more pious. For the kurds, they also have the demographic pressure, which acts as a co-enabler and therefore pushes up fertility.

Then there’s also the K-selection and r-selection theory, though I am not a biologist so I do not know how accurate that theory is. Could possibly be a factor.

Generally, money is probably the least important issue. Far more important are the social and cultural values, which also informs how much you want to educate your girls. One area which someone mentioned is real estate and I’d probably agree to that to a smaller extent. The gigantic rise of debt-fuelled real estate prices all over the West, and increasingly even in EE, over the past 15-20 years has priced many young couples out of the market and forces them to work longer to get a decent housing in many countries. Not everyone wants or even can live in the rural areas. Jobs and economic activity is tied to urban areas. That delayed investment probably also affects TFR at the margins.

One of the things I never get used to is the sheer pathological hatred of any white spaces in the “US” (in reality, Jewish-owned or Jewish-edited) media. It also saddens/enrages me to see white Americans so passive in the face on constant assaults.

Ultimately I do not see any other way than to tackle this head on. It never pays to be passive and hoping things will go away by themselves. They never do.

The question has to be asked to these media: why are you so pathologically opposed to white spaces?