Sanctions and Financial Warfare in the 21st Century

In July of this year, China’s first regiment of S-400 surface-to-air missile (SAM) systems was delivered by Russia and accepted into PLA service. The following month, Russia confirmed that the last 10 Su-35s of an order for 24 would arrive by the end of 2018. The deals were originally signed, respectively, in 2015 and 2014, with S-400 negotiations having started as far back as 2011.

Now, some months later, the United States has decided that sanctions are the appropriate tool to “punish” China for violating other sanctions against Russian entities including Rosboronexport, under the 2017 “Countering America’s Adversaries Through Sanctions Act” (CAATSA). The Chinese CMC’s Equipment Development Department and its chief will be barred from conducting financial transactions in the United States.

Beijing, naturally, has no intention of putting an end to its weapons purchases from Moscow.

But leaving aside the inexplicable timing (and apparent ex post facto application) of such a decision, it would seem foolish on its face. Not only is the interstate arms trade something that the United States – given its position as the world’s largest arms dealer – would seem to want to leave relatively unregulated, but to try and interfere in a commerce arrangement between two Great Powers has historically not ended well for the interloper. Imposing CAATSA-related sanctions also ignores the existing Western arms embargo against China, dating back to the Tiananmen Square massacre, and which Beijing has managed to circumvent for years through various financial mechanisms and yuan-denominated transactions. Sanctions must be a limited tool in order to have effect, and applying them in this way further weakens their utility.

The possible Chinese and/or Russian countermoves are numerous: sanctions of their own against big US (and multinational) defense contractors; pricing their own arms as “loss leaders” to displace US primacy in various markets, particularly Southeast Asia and Eastern Europe; economic punishment of US client regimes (e.g., the UAE, South Korea, Egypt), etc. In fact, the latter can already be seen with China’s immediate critical reaction to the US sale of F-16 fighter equipment to Taiwan. The sale is hardly news—and consists mostly of sustainment material for existing platforms that were previously themselves protested—but the Chinese response represents the first step in an emerging economic counteroffensive; a second front in the ongoing trade wars.

Now, you might ask, might this not just be cutting off the nose to spite the face? After all, if China financially punishes Saudi Arabia or Turkey for buying American weapons, they make it so much less likely that those nations would consider turning to Chinese or Russian imports in the future. But arms sales themselves are more than purely transactional; they are potential tools of statecraft. Look at India’s attempt to “balance” between the United States and Russia: a few P-8Is and F-16s here, a few batteries of S-400s there (the latter, however, requiring a CAATSA waiver, which has so far been promised by the Pentagon but has yet to appear). Rarely does capability alone factor into a major international arms deal; see the long list of US arms deals facilitated by the Defense Security Cooperation Agency for an idea of their importance to Washington. When capabilities are the overriding reason to obtain a system, it can have geopolitical implications of its own – see Turkey’s ongoing acquisition of the S-400 for an example of exceeding the unwritten rules of acquisition.

Not only has a CAATSA waiver failed to materialize for India’s S-400s, but so too is there nothing resembling an exception to reimposed US sanctions on Iran, following the abandonment of JCPOA. This has had the potential of threatening Indian access to and “special privileges” at the Iranian port at Chah Bahar should India seek to replace its imports of Iranian oil (Chah Bahar itself a reaction to China’s development of the Pakistani Port of Gwadar). All is related; nothing in isolation.

But while it might seem, at least to the grinning faces in the Cabinet Room, that CAATSA represents a trump card (so to speak), it is in reality an unimaginative approach without any sort of backup plan. Should sanctions fail, then what? Unfortunately, the US overreliance on sanctions – as well as an insistence on mirroring rather than proportionality – has begun to generate a global financial regime wholly independent of the United States.

Nothing says that sanctions beget sanctions, or that tariffs must be exchanged tit for tat. One needn’t respond with identical measures so long as the response is proportional, unless escalation is the goal. Consider the “side-principle” rule articulated in Unrestricted Warfare:

Other means…supplement, enrich, or even replace military means, so as to achieve objectives which cannot be achieved by military force alone. This has been the most important episode of the side element’s modifying the principal element in relation to war on the basis of a conception of war … The side-principal rule is opposed to all forms of parallel placement, balance, symmetry, being all-encompassing, and smoothness, but, instead, advocates using the sword to cut the side. Only by avoiding frontal collisions, will it be possible for your sword to cut apart things without being damaged. This is the most basic grammar of victory for the ancient article of war [emphasis mine].

For instance, in reference to the ongoing trade war, Dean Baker has done an ample job illustrating that China could do far worse than simply retaliate with their own tariffs: US corporations stand to lose tens if not hundreds billions of dollars of intellectual property if the CCP were to opt out of enforcing copyright law. (Indeed, some version of this has already begun, albeit incidentally, as a thriving Chinese market in imitation/”homage” goods goes unchecked.)

Focusing on the trade war as a binary loses sight of the global picture, and as in so many other realms, the United States is no longer “indispensable” when it comes to international finance, either.

Indeed, on 25 September, the foreign ministers of Russia, China, Germany, France, and the UK (the latter three representing the EU) issued a joint statement committing them to continued adherence to JCPOA, and more importantly, to establishing a “special purpose vehicle,” a separate payments system to allow them to process transactions without touching US financial institutions. The SPV, according to Federica Mogherini, would “allow European companies to trade with Iran in accordance with EU law and could be open to other partners in the world.” Essentially, the SPV is a new means of subverting US sanctions on a multilateral basis, and should it prove successful in allowing the EU (and possibly India) to continue supporting the JCPOA and doing business with Iranian companies, could portend a future of decreasingly effective unilateral sanctions.

The rise of economic sanctions has been well-traced, and in the era of imperial presidencies, have been an easy way for Congress to reinsert itself at least somewhat into foreign policy-making. But the ensuing American way of war – airpower, special operations forces, and sanctions – has not been a productive one. Overreliance on sanctions leading to the development of a US-less financial system would be an own goal, indeed. Coupled with the rise of other shadow economies, like cryptocurrencies, dark pool trading, and alternative international settlement mechanisms (not to mention the already-challenging problem of nested shell corporations and beneficial owners), unilateral sanctions will continue to lose their effectiveness as targets increasingly find ways around them.

As Peter Harrell and Elizabeth Rosenberg argued in Foreign Policy earlier this year, “the reckless use of U.S. sanctions could speed the migration of China, Russia, and other U.S. adversaries away from U.S. markets and currency. The Trump administration needs a major new effort to understand and adapt to potential risks that threaten to reduce the power of U.S. sanctions.” No such effort was undertaken. And the migration has indeed sped up.

US grand strategy in the twenty-first century has been almost entirely counterproductive. Adversaries like Russia and China were likely to pursue alternatives to the US-dominated financial system at some point, but by multilateralizing opposition to that system (and ensuring that even our allies want an alternative) we have made our position more tenuous even sooner. The seeds the foreign policy establishment has planted over the past few decades are starting to fruit, and we will find the taste not at all to our liking.

Rise and Fall of the Great Powers: A Review

The Rise and Fall of the Great Powers is one of those magisterial overviews of five centuries of world history. Paul Kennedy does a very good job and takes a quasi-Marxian approach to this, in that economics do in large part determine the trajectory of nations (e.g., a materialist explanation). The macroeconomic state of a nation – its accounts payable, its gross national product, its collective receipts – are, to Kennedy, inextricably linked to its place on the world stage. The correlation is obvious, but is the causation there?

While Kennedy admits that earlier history is not his area of expertise, he does a decent job explaining how the “East” fell behind, given the increasing insularity of Ming China and the internecine struggles in South and East Asia that consumed resources and attention. It’s not a wholly convincing explanation but other historians have done a fairly good job examining this; I am reminded mainly of Kenneth Pomeranz’s alternate history essay in Unmaking the West , “Without Coal? Colonies? Calculus?: Counterfactuals and Industrialization in Europe and China.” (One of Pomeranz’s points is that in the United Kingdom, coal deposits were mined in relatively close proximity to waterways and also the metropole; in China, much of the coal is to be found far in the northwest hinterlands, far away from a means of transportation and major population centers.) In Kennedy’s telling, it is the governance failures of China and the Mughals – and in the case of the latter, an increasingly rapacious program of taxation, offering nothing by way of return to the tax base – coupled with a lack of industrialization that can explain their relative early fall.

Kennedy has written a remarkable qualitative history based on ballpark quantitative statistics, which is an approach I can very much get behind. Relative national “incomes” in the seventeenth century, for instance, are exceedingly difficult to find data for, much less calculate (part of the reason Piketty’s Capital in the Twenty-First Century was so celebrated was its painstaking collection and analysis of detailed financial records dating back centuries – one of the first times it had been done). And yet Kennedy manages to paint a convincing picture of ebbs and flows in currencies and commodities, in relative power balances and military expenditures, tracing continuities in national approaches towards almost the present day.

It is here, on the doorstep of the present, that perhaps reviewers have, with the benefit of hindsight, come to blame Kennedy for his failure of prescience. Indeed, he comes close to an accurate prediction in terms of the overall trajectory of Russia, but in the specifics (i.e., the collapse of the Soviet Union), he just misses the mark:

On the other hand, the Soviet war machine also has its own weaknesses and problems … Since the dilemmas which face the strategy-makers of the other large Powers of the globe are also being pointed out in this chapter, it is only proper to draw attention to the great variety of difficulties confronting Russia’s military-political leadership – without, however, jumpting to the opposite conclusion that the Soviet Union is therefore unlikely to ‘survive’ for very long. [Emphasis in original]

Kennedy was writing in 1987, just two years before the overthrow of Communism in much of eastern Europe, and four before the dissolution of the Soviet Union itself. But despite failing to predict its collapse, he nevertheless successfully identified a downwards socioeconomic and geopolitical trajectory for Russia that has since been proven accurate. Similarly, Kennedy’s prognosis for the United States seems, especially now, to have been borne out, almost frighteningly so:

Although the United States is at present still in a class of its own economically and perhaps even militarily, it cannot avoid confronting the two great tests which challenge the longevity of every major power that occupies the ‘number one’ problem in world affairs: whether, in the military/strategical realm, it can preserve a reasonable balance between the nation’s perceived defense requirements and the means it possesses to maintain those commitments; and whether, as an intimately related point, it can preserve the technological and economic bases of its power from relative erosion in the face of the ever-shifting patterns of global production. This test of American abilities will be the greater because it…is the inheritor of a vast array of strategical commitments had been made decades earlier … In consequence, the United States now runs the risk, so familiar to historians of the rise and fall of previous Great Powers, of what roughly might be called ‘imperial overstretch’.

And though he never quite describes it as a future strategic competitor (and, to be fair, it is only in the past fifteen years that the contours of Sino-American relations have really begun to solidify), it is clear to Kennedy that the eventual rise of China is perpetually lurking in the background. “The most decisive” international fissure of the Cold War, he writes, “was the split between the USSR and Communist China,” which served to make even that era less of a totally bipolar system than is typically conceived of. China is one of five extant or emerging power centers he identifies, and sees a gradually strengthening power with some of the highest growth rates on Earth – this towards the tail end of Deng’s rule, before it really took off.

And so, what then for the United States? In keeping with his theme of “imperial overstretch,” Kennedy points out that the United States in 1987 had “roughly the same massive array of military obligations across the globe as it had a quarter-century [prior], when its shares of world GNP, manufacturing production, military spending, and armed forces personnel were so much larger.” All the military services will inevitably demand more resources and cry poverty, yes, but that is because what passes for American “statecraft” in the 21st century manages to avoid any hard decisions, any downscaling of commitments, and any meaningful reassessment of available ways and means – with an eye towards determining commensurate ends.

Here again, Kennedy is prescient: “an American polity which responds to external challenges by increasing defense expenditures and reacts to the budgetary crisis by slashing the existing social expenditures, may run the risk of provoking an eventual political backlash.” We’ve almost certainly watched that unfold in the years since 2001. In keeping with the rest of Rise and Fall, the United States is in fact headed for decline, but in a relative sense, one that is manageable if approached reasonably. This doesn’t single out the country; instead it might be seen (and is by Kennedy) as a reversion to the mean:

It may be argued that the geographical extent, population, and resources of the United States suggest that it ought to possess perhaps 16 or 18 percent of the world’s wealth and power, but because of historical and technical circumstances favorable to it, that share rose to 40 percent or more by 1945; and what we are witnessing at the moment is the early decades of the ebbing away from that extraordinarily high figure to a more ‘natural’ share.

Kennedy also offers a warning: “the task facing American statesmen over the next decades, therefore…is a need to ‘manage’ affairs to that the relative erosion of the United States’ position takes place slowly and smoothly, and is not accelerated by policies which bring merely short-term advantage but longer-term disadvantage.” This is wise counsel for the years ahead, as the unipolar moment continues to rapidly fade. But if this is the predominant challenge to the United States in the 21st century – a superpower in decline – than so far we have surely failed to meet it.

An Empire, If You Can Keep It

If the Paul Kennedy school of history is accurate (and in case it isn’t obvious, I’m currently making my way through The Rise and Fall of the Great Powers), then, essentially, economic power that could correlate to military power is one of the dominant characteristics of Great Powers through the ages. As long as it remains fungible, military potential backed by a strong economy is one of the surest markers of “Great Power” status.

But what happens when the two diverge? The United Provinces of the Netherlands come to mind as a predominantly economic power that gradually waned – for all its market innovations, there were eventual limits to its naval power (and it was, of course, perpetually vulnerable by land) – and perhaps the decline of Bourbon Spain, although its regression came both in economic and military prowess. Kennedy’s point is that the key lies not in absolute measures, but in relative ones, and so while these never became “poor” countries, per se, their neighbors and other rivals managed to grow more.

Which brings us to modern Germany: a paper tiger (or, as national emblems might have it, a paper leopard). Germany’s economy is, by all accounts, in pretty good shape, and certainly better than much of the rest of the West. And yet its military is decrepit, in worse shape than even the US Navy’s 7th Fleet. As Stars and Stripes reports:

New German capability gaps have been brought to light in recent weeks, piling up on top of old ones that Berlin has failed to fix.

Among the failures: none of Germany’s submarines is operational, only four of its 128 Eurofighter jets are combat-ready and the army is short dozens of tanks and armored vehicles needed for NATO missions.

In addition, troops are short on the basics: body armor, night vision gear and cold-weather clothing.

The situation is so dire that 19 helicopter pilots from Germany’s Bundeswehr were forced to turn in their flight licenses because of a lack of training time.

The reason: not enough helicopters for the pilots to fly.

Much like Japan’s “economic miracle,” protected solely by minimal “self-defense forces,” Germany has exchanged even the prospect of hard power for economic stability. But such a situation is likely untenable. It pains me to say it, but Ross Douthat wrote a decent piece in the Times.

The third German empire is a different animal altogether. Repudiating both militarism and racist mysticism, it has been built slowly and painstakingly across three generations, in cooperation with other powers (including its old enemies the French), using a mix of democratic and bureaucratic means. Today Germany bestrides its Continent, but German power is wielded softly, indirectly, implicitly — and when the fist is required, it takes the form of fiscal ultimatums, not military bluster or racial irredentism.

But still the system is effectively imperial in many ways, with power brokers in Berlin and Brussels wielding not-exactly-democratic authority over a polyglot, multiethnic, multireligious sprawl of semi-sovereign nation-states. And thinking about the European Union this way, as a Germanic empire as well as a liberal-cosmopolitan project, is a helpful way of understanding how it might ultimately fall.

Obviously, this oversimplifies – and exaggerates – the powers that Brussels holds. But it’s true that Germany has a…unique approach to fiscal policy, one at odds with most of the rest of the EU, and which nevertheless is one that’s been imposed on the other member-states. And ironically, that’s despite its relative military weakness, not because of it (although perhaps this dynamic is less surprising within the framework of the Atlantic alliance).

In so many multiethnic empires and society, the institution bridging ethnic, racial, and religious divides tends to be the military. It’s often when those forces collapse or disintegrate that so too do the borders of a Yugoslavia or an Austria-Hungary. Perhaps, if Germany continues to subtly insist on a continental economic mastery, it would do well to rebuild its own military institutions. And as long as it continues to lead the EU, turning the Eurocorps into something resembling, well, a corps might restart the long-stalled process of integration in more than a purely fiscal sense.

Germany can and will remain European, but if Berlin wants everyone else to identify as such, too, it will have to build more multilateral institutions than merely that of financial austerity.

The Means of Consumption

PC sales are down. Way, way down.

What’s to blame? Zero Hedge says that in addition to lackluster sales and poor reception for Windows *, we are, after all, still in a pretty severely depressed economy and that there’s just no end-user demand for new OSes or new computers in general. None of which is wrong. Windows 8, in particular, severly hamstrings Windows as an operating system, forcing it to suffer from the same limitations as a phone (which is just silly, especially when Windows 7 was a solid OS).

But the comments point out that we’ve really reached a point in modern computing power where most people just don’t need it. The rise of mobile and tablet devices has only compounded that. If the average person uses a machine just to tweet or surf the internet or check email or even just watch a movie, what’s the point of having several cubic powers worth of CPUs and RAM capacity greater than that of hard drives less than a decade ago? The smaller devices speak to that and obviate a need for real “computing” devices.

But two comments in particular caught my eye. The first:

[M]ost people don’t do physics simulations, train neural nets, backtest stock trading strategies and so on.

In tight times – why upgrade something that’s already better than most need?  Even I still use some  2 core relative clunkers (that were the hottest thing going when bought).  Because they do their job and are dead-reliable.

And the second:

[E]very manuf [sic] caught the disease it seems.  They don’t give a shit about their installed base, only new sales, and are just slavishly following the migration of most people to crap mobiles – crap if you need any real computing power and flexibility and multi-tasking.

I recently got a Nexus 10 – it’s cute, sometimes handy and so on.  But solve any real problem on it?  You must be joking, it’s just not there.  It’s great for consuming content, sucks for creating anything real – it’s a toy that probably does match the mainstream mentality – the “average guy” who half of people are even dumber than.  That ain’t me.  I’m a maker…I need real tools.

This is just the digital embodiment of a long-time trend. We don’t shape our environments how we used to – we don’t create; we only consume. We refine what exists without thinking bigger. And the sad part about something like the news about PC sales, which could conceivably serve as a wakeup call, is that it won’t matter. If there is a lesson to be learned, it’s that Windows 7 was fine and why should we bother iterating new versions. But the lesson is that there is at least some segment of humanity that’s trying to create and only needs the proper tools to do it. Possessing the means of consumption allows one only to consume (the Apple model); if we can repopularize “dual-use” technologies that don’t restrict content distribution but also enable its creation, well, now we might see innovation for all the right reasons.

Visegrád

The four constituent nations of the "Visergrád Four."

Apparently, this alliance exists, and as of May, now includes a military component. I like it. As a bloc in the EU and NATO of otherwise somewhat ignored countries, it allows for a little more interdependence without relying on the “big boys.” The history behind the group, which dates back to 1335(!) is just awesome, and I believe was designed for the sole purpose of fascinating me.

Originally a meeting between the King of Bohemia, the King of Poland, and the King of Hungary and Croatia, the “Visegrád Three” (so-named for the Hungarian castle town in which the meeting was held) was intended to create new routes of commerce, bypassing what was then the center of European commerce, Vienna. Replace “Vienna” with “Berlin and Paris” – and possible even “Moscow” – and one gets a decent idea of what the Visegrád revival is all about. Of course, as post-Communist countries, the Visegrád Four (with the split of Slovakia and the Czech Republic) were concerned with maintaining their own sphere of influence without Russian interference.

As for the Visegrád Battlegroup, it is expected to become fully operational by 2016. It is intended to be a separate force from NATO, though elements will begin exercising with the NATO Ready Response Force. Poland is taking the lead militarily, as befits its size and spending relative to the other members.

Aside from the practical nature of the undertaking, the symbolism of this alliance is not to be underestimated. The four countries involved are all European Union members, but not in the Euro-zone (they are the westernmost non-former Yugoslav countries to not adopt the Euro). They represent a strange hybrid between EU membership and existing outside it, and with the Euro looking shakier every day, actual entrance into the common currency may be an increasingly remote possibility. This would solidify the status of the Visegrád Four as, if not second-class member-states, then at least as junior members in an IGO whose legitimacy is derived from the equal status of its constituent nations.

On its own, the Visegrad Group is not particularly powerful or a threat to European unity, but when seen as part of the larger pattern of sub-regionalization it becomes indicative of a larger trend. Even where formal ties do not exist, developments like the emerging German leadership of the EU or the newly-signed Anglo-French defense treaty point to a Europe losing coherence. And in Eastern Europe these new subregions are gaining prominence and a sort of global autonomy. The customs union between Belarus, Kazakhstan, and Russia that came into being in 2010 harkens back to the collapse of the Soviet Union, when a similar union (with the addition of Ukraine) was seen as a means to preserve much of the structure of the USSR while maintaining the multinational state. That customs union has abolished border controls as of this month, creating another subnational and even subregional entity.

There seems to be growing disenchantment not just with the universal United Nations, but even with the regional variants: the European Union, UNASUR, African Union, SCO, ASEAN, etc. In a world where nations themselves are tending towards autonomy and fragmentation, it should not come as a surprise that some countries would turn to a more specific alternative than the grand regional frameworks that attempt to address an incredible array of problems and cooperative issues.

Also, the conflation of military and economic drivers of an alliance like Visegrád should not be overlooked as a key development. While the two are often treated as completely separate realms – NAFTA certainly does not include a military component, NATO’s economic requirement is that members adhere to capitalism, more or less, and the EU’s EDC unified European military force has been discussed for sixty years without ever coming to fruition. Military power and the economy, however, are inextricable, and it is perhaps for this reason that these microalliances are coming into being. For a group of four, maybe it’s just more manageable that way.

In general, though, keep an eye out for these subregional and some day soon even subnational alliances. The New England Six? The League of Extraordinary PIGS? Flanders? Coming soon to a world map near you.

Corporate Warriors: A Review

It has been much too long in coming, but I finally finished P.W. Singer’s Corporate Warriors: The Rise of the Privatized Military Industry. It is, quite simply, excellent.

Singer is one of the most intriguing defense/security writers out there, as his “thing” is basically finding heavily underrreported – yet crucial – developments occurring in the U.S. military. He seems to always be one of the first to really study in a comprehensive and coherent manner certain evolutionary changes in the way war is fought, and Corporate Warriors is no exception. His other works deal with heady subjects like robotics in war and child soldiers, and here he is at the forefront of yet another startling trend.

Corporate Warriors is an attempt to trace the lineage of the Private Military Firm (PMF) from early mercenaries to today’s corporate arrangements, and in doing so, to fit them into a theoretical framework for better understanding and predicting industry developments. Published on the eve of the Iraq War in 2003, the book mostly deals with the 1990s, though to fully explain the rise of the PMF it jumps back to earlier examples in the 1970s and 80s.

Much of Corporate Warriors is couched in the language of IR theory, but Singer never slavishly tries to fit all of his findings into a rigid framework. Chapter 2 is an excellent historical survey of privatized military history, ranging from mercenaries in the service of King Shulgi of Ur to Syracusan hoplites to the first “companies” of the Hundred Years War. Singer fully explains the ‘state as monopoly on violence’ and the prominence that mercenaries enjoyed from the dawn of history until the nineteenth century, explaining that the odd little gap between roughly 1860 and 1950 in which the state’s monopoly was the only game in town. But he is never overly concerned with the theoretical framework. Chapter 11, “Market Dynamism and Global Security Disruptions,” opens with an epigraph from Professor R.B.J. Walker:

The disjunction between the seriousness of international politics and the triviality of international relations theory is quite startling.

Continue reading

Megalopolis

Last week I had the pleasure of attending another Chicago Council on Foreign Affairs event specifically for Young Professionals. In this case it was a conversation between all-around-urban-intellectual Greg Lindsay and architect Jeanne Gang on nothing less critical than “The Future of Cities.”

Lindsay just cowrote the book Aerotropolis: How We’ll Live Next with John Karsada, which at its most basic is about the coming airport-centric design and planning that will determine the future of cities and the course of twenty-first century urbanism. But even that mouthful of a description doesn’t really do the book justice. Reading Geoff Manaugh’s interview of Lindsay (and also, Lindsay’s of Manaugh), puts the book in a new light and raises a whole variety of additional interpretations to Aerotropolis‘ main theories.

The talk, however, did not focus solely on Lindsay’s book. After a rather stilted introduction from a local Boeing representative, Lindsay launched into a brief overview of the cities of the future. In the next twenty years more “urban fabric” will be created than in the entire rest of human history. And none of them will look like Chicago. They will be born into nowhere, separated from their surrounding regions. Continue reading

Housekeeping

So, wow. Two-thirds of the month of February have gone by already with nary a peep from this corner. I would like to change that; consider this a step in that direction.

Sometimes I feel like my ridiculous schedule and utter demotivation to write are all a nefarious plot on the part of [BIG BOX RETAILER] to work us so hard that we don’t have time to look for other jobs. At other moments I realize they couldn’t possibly be that coordinated, such as when they schedule me to close (until 10:30PM) the night before a mandatory 6AM meeting. Then it seems like they want me to quit.

But hey, at least I have a job, I suppose. Which is more than so many both here and across the world – especially across the world. I can’t help but wonder if in addition to our usual complacency, though, the reason America hasn’t exploded into similar unrest (don’t even get me started on the Rick Scott Walker asshole miasma that passes for normal politics in this country) is because of that huge gap between unemployment and underemployment. Even if they’re jobs without a future, is there some sort of voice in our heads that insists we’re lucky just to have even that, regardless of a stunted upwards mobility?

Because I keep coming back to Paul Mason’s twenty explanations for the Middle East uprisings, and one in particular:

At the heart if it all is a new sociological type: the graduate with no future.

For all their other horrible, horrible faults, the recently deposed dictators of the Middle East were at least pretty good at educating their younger citizens. Of course, the stagnant economies provided no outlet for those credentials, thus no jobs, thus [eventual] rioting. One can try to explain it as simply an overly universal education problem, but then the observer comes upon the United States and it all goes to hell. Because, here, it doesn’t matter what your degree is in or how many you have or even whether you’re actually talented. Despite our tiered educational system, of the Ivies, the liberal arts colleges, the state school – it matters less where you went than who you met while you were there. The world is split into McJobs and MegaJobs, and the latter is a rapidly dwindling crapshoot.

For all my ranting, I’ve tried to keep a relatively sunny outlook, but the days only seem to get darker. Any “recovery” in the economy is so imperceptible as to be non-existent, and there are few real signs of actual progress on any large scale. Do we have a future? Are we the Mason sociological type, even in the United States?

With mass layoffs producing better profitability, furloughs mandated on an even grander scale, and Watson beating humanity, it’s pretty clear that something like half the workforce is in fact entirely dispensable. Which then begs the question; there are no jobs in Egypt; none in France; none in the United States: so where are these jobs going to come from? Sometimes, they simply don’t exist – but this time there’s nothing to replace them.

Eventually, Americans will realize that. And then just maybe we’ll get off our asses and take to the streets. I don’t even know what that would accomplish, but at least we’d prove to ourselves that we’re paying attention, and that the system is broken.

So that’s where I’ve been recently. As for other events in the Middle East, I like some and not others. Capsule commentary:

  • Tunisa: great! Started it all. Looks good from what little I can tell.
  • Egypt: if the military can stay classy, good things will come. Probably. Maybe.
  • Bahrain: the King is such an asshole.
  • Yemen: I’m less up-to-date, but the United States looks particularly bad here and in Bahrain.
  • Libya: we already knew Gaddafi was an asshole.
  • Others: good luck, godspeed, and try to avoid getting shot.

And perhaps the best commentary I’ve seen on recent events:

The Ring of Truthiness

From a Freakonomics post at the New York Times:

If I were a clever, real economist, I might neatly package the conclusion along the lines of the demand for opiates being relatively inelastic, but the brand (?) sensitivity is low, and once the incidental costs of heroin (inconvenience, lower quality, abscesses, disease, visibility) became lower than the absolute cost of oxycontin, the market suddenly tilted. (That’s probably mostly gibberish, but it sounds economish.)

Economish! Great coinage there. ‘Supply-side economish.’ ‘The Austrian school of economish’.

Plus, it’s a great word to use, representing the evaporation of any credibility the whole discipline may have once had. Anyone see where the Dow is these days? Exactly, who cares!

On Value

Recent headlines like this:

And this:

And this:

Are enough to make you ask: why are we still pretending that these people produce anything of value whatsoever? That their hyper-inflated ‘MegaJob‘ salaries are anything close to realistic compensation? When will we publicly acknowledge that the vast majority of the American finance sector is completely full of shit and damages the reputation and capabilities of this country?

Manipulation of numbers produces nothing. It contributes nothing. If you want to do that, download R and make a graph. But don’t make $500,000 a year to do nothing.

Supposedly the recession is ‘over’ and we’re beginning to recover. But if ‘recovery’ means restoring the finance sector to its previous pedestal atop the grand pantheon of economic bullshit, then that kind of recovery leaves us worse off than we were before. Nothing has changed. It could take ten years to restore unemployment levels to what they were before the recession, and all the while new immigration will be rewriting the face of the country. Much as Elizabeth Warren tries (bless her heart) to change the culture of Wall Street, she is fighting a losing battle. Who would voluntarily surrender an obscene paycheck ‘for the good of the nation’?

We have never been particularly good as a country at rewarding the right kind of work – at paying firemen and manufacturers and miners and the other types of employees that produce something tangible. But the current state of inequality is mind-boggling. And for those like Matt Ridley, who would seek to lull us into a sense of complacency by comparing human life not to that of our parents, not to that of the last three decades, but to the entirety of human history, that’s not where we get out benchmarks for today. We misplaced our priorities a long time ago; are we ever going to find them?