'Each man takes the limits of his own field of vision for the limits of the world'
-- Arthur Schopenhauer, Essays and Aphorisms

'Artists are tricky fellows sir, forever shaping the world according to some design of their own'
-- Jonathan Strange, Jonathan Strange & Mr Norrell

Tuesday 29 November 2011

Michael Pettis on China's economy

Great piece from the BBC World Service this morning on China's economy in perspective - most notably from Michael Pettis, professor of economics/finance at the University of Peking (from the looks of his bio on the Carnegie Endowment for International Peace he has as much authority to talk on China's economy as anyone) - providing a welcome recalibration of the debate on how far America's relative and absolute decline has been hastened by the rise of this superpower-in-waiting. From 11 minutes onward is Pettis' contribution.

"Sign of a bubble, not a sign of healthy growth"


Minimal consumption when compared to GDP.


Productivity levels 1/10 of USA or Japan.

A similar article for the FT he wrote at the start of November 2011 is here.

Monday 28 November 2011

Gian Gentile digs a grave for COIN

The argument in 22 November article in World Politics Review is that strategy must win out over tactics, the latter being the domain of counterinsurgency. It's a subscription article and reiterates many of the points Gentile has raised before. Indeed the debate over tactics, up to operations, up to strategy and how these have been conflated and confused, is made by Hew Strachan in Survival. I'm going to write more on this at a later date, since it's fundamental to the reorientation of warfighting after Afghanistan.

The death of doctrine? (Gerome's 'Duel After a Masked Ball', 1857)

Occupy This [ ]

The world is rich and the world is poor. Over 5 billion people live on an average annual income of US$3,500 per person. In one of the many 1905 petitions of the peasants to the ruling elite in Russia, it was noted tellingly that the era was at hand when death was preferable to the present endless suffering. The moment when revolution is preferred to endless suffering is reached more quickly when there is a self-aggrandizing elite in plain view. Such bipolarity exacerbates social tension.

The situation in 1905 is an extreme example.

Occupy.

The tide has turned against Occupy in that many fixed sites are facing or have been evicted. Occupy LA for instance, faces eviction at the end of of this month. Occupy may be seen by history to be a vanguard for a more consolidated and coherent demand for social change. As such, in the future, it is a fundamental that the message of Occupy be constrained to one theatre of discontent.

Competing narratives dilute and cause friction within the protest group. Moroever, Occupy should not believe that it is capable of doing things or achieving ends which are so clearly incommensurate with their methods.

Occupy is thus a statement, nothing more. In protesting and utilising networked media it is able to author a global, distinct message. Firstly this was as the 99 percent but now, as is inevitable, other messages, many solely political and some highly local (for instance Free Abdullah Ocalan tent in Occupy LSX which became sadly synonymous not with the LSX but with St Pauls) have been tacked onto the original authoring resulting in a failed, confused, self-defeating protest grouping.

Occupy is a necessary statement. In and of itself it is simply a protest but it does augur problems which have proved catastrophic in myriad previous societies. Even if occupy is simply a socially-networked anti-elite elite at work, the protest is indicative of the genuine frustrations at a widening gap in Western societies, coupled to rising basic living costs well above that of general wage increases. Real income is declining.  

Plato and the social rift

Consider Plato’s ‘Republic’ in which he critiques four forms of state – timarchy, tyranny, oligarchy an democracy. It is the third and fourth systems that are relevant here. Of an oligarchy, Desmond Lee characterises Plato’s lament:

“a society in which power and prestige went with wealth; and since the wealthy are normally few, where power goes with wealth political control is in the hands of a minority. The days of hereditary aristocracy were long over, and though there were of course old families in most states, birth had had to come to terms with wealth and, by itself, was, at the most, of limited political influence…it was the controlling influence given to wealth that Plato particularly disliked. He had the deepest mistrust of what would today be called the profit-motive and of the political influence of private wealth of private wealth; and he thought that in an oligarchy (an ‘acquisitive society’) you were bound to get increasing exploitation of poor by rich, and an increasing degree of social maladjustment and disunity in consequence. He draws a picture of growing oppression met by growing bitterness and ending in revolution” [Lee, Plato, Republic, 2nd ed, introduction, xxv]

And of democracy, the disintegration of authority as freedom becomes a social watchword:

“there is so little social cohesion dissension inevitably grows. Politically, it takes the form of a struggle between rich and poor” [ibid., xxviii]

What we have is an increasingly self-aggrandising elite – Tony Blair, (a British Prime Minister who said in 1983, ‘I am a socialist…it stands for equality’) has earned a reported £15 million since leaving office and acquired a multinational property portfolio – and a democratic mass left free of proper government by politicians so desperate to become elected that they sway to the whims of the electorate rather than attempt to achieve any meaningful or necessary measures.

In the UK, New Labour solved unemployment - a public concern - by creating a vast middle management sector within the public sector. This was paid for by increasing national debt and inevitably, by detrimental reform to private sector, but only at the lower end, where a significant mass earn just above the minimum wage and make very little contribution to the capitalist society. They merely exist. In short, democracy is mob rule, pandering only to short term interests which under Labour were job creation without actually creating any job demand. This was good politics, Labour were reelected twice but the long term implications are bleak. What was needed was a coherent long term plan but in this system of government the visionary makes a poor democrat. People want instantaneous results.

All politics are local

If we observe with detached interest the events of the Arab Spring then we are guilty of a perverse sociocentrism, a belief that our own Western societies are somehow, better, more refined – that our blood was spilled many centuries ago to achieve a universal morality which is the goal for all – and in so doing we risk condemning all that our ancestors fought for into an abyss of material self aggrandisement. Society should be the end, not the means. But it represents for many merely a competition in which material acquisition is the goal and society the medium. 

We must learn from the Arab Spring – a revolution based on social and economic disenfranchisement and the self-aggrandisement of the ruling elite. In the West an affluent middle class serves as a buffer to changes in political status quo – since they are comfortable in their means they resist any that would change from above or below the situation to their detriment. But it is an illusion to think that the entire stratum of the middle class is safe from economic turmoil. Less than a generation from now, those offspring of the middle class that will suffer financial catastrophe in this decade will be growing up with limited means and will represent a new, dynamic and highly motivated addition to the grouping of  “have-nots”. 

Saturday 19 November 2011

The Chinese are reading Foreign Affairs: we should too.

China has a past. A long one.


It doesn't see it's recent ascent, incorporating renewed diplomatic and economic power, as something novel and welcome. Instead, it sees the West as having deprived it of its vaulted position by taking its own inventions and discoveries and using them for its own gain. It sees is ascent as restoration and deserved.


China looks at its trajectory over the past 5000 years and sees itself as restoring its rightful place at the head of the world order. To stave off confrontation whilst it engages in economic enterprise abroad (developing new market nodes in Africa and South America), it labels its ascent as a peaceful rise. 



Of course, the idea of China as a monolith is a mistake. By China, I mean the ruling politburo and state apparatus, including the rise of the uber-class. The Chinese have certainly understood that resource grab represents the most important engagement in the current landscape. War is draining and diminishes authority in the international sphere. There's a fascinating article by William G. Hyland when he leaves the position of editor at Foreign Affairs in 1992 and he recaps the past 70 years of the journal. 


In 1978 Walter J. Levy wrote that oil-consuming nations needed to develop alternate energy sources, and that the United States needed to discourage often wasteful spending by OPEC members on rapid development and military buildups:

We cannot much longer afford a situation in which the importing countries waste a substantial part of their energy while the producing countries waste a substantial part of their oil revenues. In the past we have too often been stymied in our efforts to cope with these problems by entrenched national or private interests on all sides. If we should ultimately fail, this period in our history could truly be characterized as ‘the years that the locust hath eaten.’

The failure of the United States not only to lead the industrialized nations out of the oil crisis, but even to design an effective national energy policy, was a major factor in the "renewed decline of respect abroad for U.S. policy," Bundy concluded.




There are failures that Hyland highlights. Most importantly and indeed farsightedly given the comfortable position America found itself in, in 1992, Hyland stresses those in the journal who have spoken out about the necessity of economic security, for national security. Hyland references Gaddis:


Another Foreign Affairs author, John Lewis Gaddis, deplored the lack of strategic thinking in U.S. policy, and its harmful effect on containment of the Soviet Union.

We really ought not to go on framing long-term national security policy in response to short-term domestic political expedients, crossing our fingers each time in the hope that the result will relate, in some way, to the external realities we confront, and to our own long-term interests. We ought not to neglect, to the extent that we do, the relationship between national security and the national economy. 



Hence arguably the greatest folly of the War on Terror was not Afghanistan or Iraq or any of the smaller wars that constituted a wide arena of counter-terrorism operations, instead it was to fight foreign militarised wars by increasing debt rather than increasing taxes. This had two incredibly damaging effects.


Firstly, and most importantly, it created no onus on the people to in some way share the burden. Forced to make no financial sacrifice, the people of America did not think of themselves 'at war'. Whilst the military fought abroad in nation-state theatres of Iraq and Afghanistan, America feared only an amorphous, indistinct threat of terrorism. This created a fundamental disconnect between the soldier and the state. As the famous slogan on the white board shows:




If the people had been taxed, this long war would never have stretched as far as it did. Economic investment by the people would warrant results, but not having to pay meant that the military got to prosecute a low-intensity war that went on to become America's longest war (in Afghanistan) and the visceral events of 9.11 meant that there was little oversight in the early years, on how the military spent their money. Now, as emotions have receded, there are the questions, and Martin Dempsey has got a host of them from the leading officials in the past year. 



The second problem is the direct assualt on the American economy caused by leveraging a global war against terrorism. There will never come a day when terrorism humbly boards the USS Missouri and signs terms of surrender.


Terrorism doesn't wear a top hat: Japanese surrender signatories arrive on USS Missouri
G W Bush and the Republicans inherited a budget deficit of US$5 trillion. When he left office it was about US$10 trillion. Fighting the war with debt and developing homeland security which restricted trade and travel, both vital facets of the economy, meant that when Obama took office, implementing the war on terror has contributed to this deterioration in fiscal health. Obama has had little ability to stem the tide. An aging population requires more expensive healthcare (the only industry where technological innovations make applications more expensive) and he inherited two major combat zones abroad. Currently, debt is at about US$14.5 trillion. Increasing at a rate faster under Obama than under Bush.



During this decade of descent, China has ascended to a more central stage economically. Recently, a delegation fighting to save the Euro went, very publicly, cap in hand to China. But the Chinese can sit back: They can literally afford to wait. President Obama has recently appeared to marginalise Europe in his considerations, going to Australia and talking of Pacific partners, forming a new US military presence in the north of the country.


So, the UK desperately needs a period of introspection - finding some way to close the rich-poor divide and homogenizing an increasingly fractious society. In this instance, a Liberal-Conservative alliance is the best possible platform through which to proceed. True, it's not going to be easy, but the possible dangers of leaving unadulterated the ethnic cleavages crystallising and the widening number of those in poverty as inflation, food and energy prices rise mean a decline in real income, are real and serious. 




Intrastate Inequality

There was an important event which was beamed into the homes of millions last month and which engaged the intrastate inequality debate. It captured the interest of the nation and divided it. Of course, it was the introduction of a new Sesame Street character, Lily, a 7 year old character who is, "food insecure", meaning that she's on the American poverty line. 


Lily: Purple with rage at US inequality
In fact, the introduction of Lily to Sesame is probably more important in the long-term than the now infamous Occupy Wall Street, simply because Lily's character will infuse the next generation of Americans with a normative expectation of inequality and poverty for a certain percentage of the population. Lily will probably be cast as a really moral, effervescent and helpful character, thus showing America that some may be poor, but in fact, they're happy and good people so let's get on with everything. Perhaps in a later episode she will be sold a sub-prime trailer - at 67 times her annual income - in a nondescript trailer park in Kentucky, where Oscar will visit her periodically and stay in her trash can. 


Meanwhile, Occupy Wall Street has raised over $500 000 for its continuing campaign, though it notes that it isn't sure how to distribute this money. Now that's the problem that the government has, isn't it? So government isn't that easy after all, indeed. I have a great problem with what I have seen thus far of the protests:


1. Let's theorise that in some way they have gained inspiration from the Spring protests in the Maghrib and Middle East, but


1i. The Spring protests sought to occupy public spaces as a symbol of the unity of the population against the regime and


1ii. In so doing could create enough disruption to the function of the population that the nation-state and its economy would meltdown, which proved successful in Egypt for example, but



2. Occupy seek to occupy the space of those they campaign against, the stronghold of "capitalism", Wall Street, or in London, the Stock Exchange. 


2i. In this way they differ from the Spring tactics and it is to their detriment, since


2ii. The state apparatus cannot let them interrupt the capitalist machinery, neither does Occupy have enough physical numbers leaving their employment to cause detriment to the functioning of society, and hence


2iii. They find themselves confined, respectively, to Zuccotti Park (NYC) and the West side of St. Paul's Cathedral (London). In the case of the latter, their plan to occupy the London Stock Exchange (the twitter hashtag is occupyLSX) was vetoed by the police. 


3. Capitalism is not found in the park and to occupy a small area of St Paul's is to lend a strangely element of religious confrontation to the mixed messages (One of the larger tents there is painted with "Free Abdullah Ocalan", which is not an anti-capitalist message, but a political one. And the two heads that have fallen are not businessmen but clergymen). 


4. To confront capitalism in this way it is necessary to striate its movement, to make 'swiss cheese' of its smooth, seamless operations. This is singularly not achieved by the Occupy movements. Bankers walk past the encampment at St Paul's in the morning, laughing. No street is barricaded, no door is barred. The media, the 24 hour news-crew keep the tents there, but it is time to pack up and go home. 


5. Capitalism is striating itself, more and more nodes disintegrating, first in Greece, now Portugal, Italy, Spain, to name just European nations. 


6. To Occupy, yes, what you have done is important, but go home, re-read "A Thousand Plateaus". You are rapidly become a menagerie, a tourist attraction, an open zoo. Develop doctrine, public relations. Speak to Naomi Klein. You are now, to paraphrase Edward Said, "A living tableau of queerness".


Occupy, which began in Spain or Kuala Lumpur depending on the news source you read, has been mimicked in at least 95 cities. The student fees protest in London yesterday (surely a much more meaningul protest) had a tiny breakaway of protestors trying to camp at Trafalgar Square, moved on immediately by police. So why has Occupy struck a nerve?


Inequality when a section of society are deprived of the necessities of existence is a disquieting phenomenon but it's survival of the richest unless the masses formulate a coherent response. Moreover, they must pick their battleground - when an Italian restaurant owner and celebrity chef compared bankers to Hitler and Stalin the bankers coagultaed on social media, urging each other to cancel reservations and avoid the eateries, boycott other of the chef's products. The chef was forced into a grovelling apology. The bankers hold sway in areas, that cannot be denied - money talks. Ten percent of British GDP is from the financial services. Indeed, since less than 10% of those employed are in this sector they can justifiably claim to punch above their weight in terms of contributions. Occupy needs to pick new terrain. 





Striating only themselves: protestors unable to occupy any area than disrupts the capitalist flow

Saturday 12 November 2011

Steven Pinker's "The Better Angels of our Nature"

"We're in the least brutal period in human history" is how the World Service sums up Steven Pinker's thesis. Pinker uses historical data sets to measure violence. Deaths worldwide are at 1/2 person per 100 000, declares Pinker. He compares this to "the worst years of" World War II, which he calculates as 300 deaths per 100 000.



Using data sets is always controversial (see for example the debate over Democratic Peace Theory using the Correlates of War database [Tarak Barkawi has critiqued this data set]) but this is an extremely valuable work. The debate over New and Old wars is saturated but placing violence within an empirically analysed, quantitative historical trajectory is a significant development. From this, the methodological debate and the reasons for what we see are set to break out into the social sciences.


"A problem to be solved rather than a contest to be won" is how Pinker elegantly defines how we are increasingly seeing violence. 


Is the increasingly visual nature of war, beamed into hour homes in real time, 24 hours a day, seven days a week, causing us to develop anti-war norms? We get conflict fatigue.  Pinker also examines and endorses the trade theory - greater economic interdependence reduces the probability of going to war with each other. John Darwin touches on this in After Tamerlane. 



Yet Pinker in the quote compares the present day with World War II. Many who fought in that conflict are still alive. It was a national ideological with racial architecture that drove this war in Europe and Africa. In the Sino-Japanese theatre, each foe dehumanized the other. Ideologies can be as potent a weapon as a nuclear arsenal and the question I have is, does social networking make antagonistic ideologies more or less likely?



A full World Service piece on the Pinker work is here