Open Thread 67

Kenneth Rapoza:

But consider this: on Friday, Trump spoke about the possibility of a trade deal with China during a Rose Garden press conference. The main point of that presser was to talk about his decision to declare a national emergency at the border and fund his border wall without a congressional vote. What was more interesting to the market was Trump’s trade war talk, and saying he wants to include House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer in on a China trade deal.

“Any deal I make with China, Schumer’s going to stand up and say ‘oh it should have been better’. That’s not acceptable to me,” Trump said during the press conference. “So I’m thinking about doing something very different…I’m going to bring Schumer, or at least offer Schumer and Pelosi to come with me and I’m going to say ‘join me on the deal’,” he said.

Schumer and Pelosi are Democratic Party hawks on China. Pelosi was critical of China joining the World Trade Organization in the late 1990s. China finally joined in 2001. The only thing Schumer and Trump see eye to eye on is China tariffs.

So either this is going to be a lousy deal and Trump is going to tell the market, look it’s not just me — it’s all of us. Or this is going to create the bipartisan support needed to keep tariffs locked in on China long after Trump is gone. This seems to be Lighthizer’s thinking.

The arsenic levels that I’ve heard bandied about don’t seem too high. I wonder if the water is antimicrobial. Guessing not, but it’d be pretty cool if it was.

Got to also wonder about desert Arabs. Figure they probably have something for dealing with bad water. Probably intestinal.

All this talk about possible global chaos caused by America-China collision reminds me:

Anyone have any recommendations for a cheap(ish), reliable rifle in a medium caliber? Semi preferable.

I’m personally partial to Eastern Bloc guns, because the ammo is still very cheap. I do like 30 caliber.

I perceive that I missed the boat a bit with the SKS. That’s one I want. Formerly (15-20 years ago) we here in the states could buy a Russian-made SKS from the Soviet plants at Izhevsk or Tula for about $100. Chinese Norinco models are still to be found for about $350 or $400, it seems. I don’t want a Yugoslavian one – those have stamped receivers, whereas the Chinese and Russians have stronger milled receivers.

Mossberg’s scout rifle looks nice too.

Would you say that Nizhny Novgorod is the better Novgorod? I’m definitely more interested in there than the one close to St. Petersburg.

Michael Pettis – whose opinion I value highly – wrote that he thinks Chinese GDP and growth are both overstated

Why do you regard Michael Pettis as a valued opinion?

I’m asking because I’m quite skeptical of his wisdom. I’ve seen his name for over a decade. He has been for that time a permabear on China. He has repeatedly predicted what he calls over investment by China will bring an economic contraction (not just slower growth) anytime just around the corner.

The archives at his old blog at mpettis.com don’t appear to be available. That’s good for his image because some of his predictions from a decade ago about the future of China now have become stale and a liability to his reputation as an accurate analyst.

Here is a 2010 Forbes piece discussing him along with other China bears:

Whew, that’s a lot of bears. We go through these names on the latest Sinica podcast, “Attack of the China Bears,” where we invited the comparatively bullish Arthur Kroeber, managing director of GaveKal-Dragonomics, to cook China bears on a skewer. His chief accomplice was noted bear trapper and Sinocism blogger Bill Bishop. Host Kaiser Kuo fed them questions as they went in for the kill. One of Kroeber’s chosen prey is the bearish argument, put forward again yesterday by Pettis, that China’s heavy investment in high-speed rail will end up costing so much that it becomes a drag on the economy. As you will hear, Kroeber essentially argues the opposite.

To be fair, Kroeber puts some important caveats into his optimistic forecast, but it was left to me to try and defend the bear position.

On the point of HSR, Krober turned out to be right. On bigger points, Pettis is losing. According to him the Chinese economy should be in contraction by now. It will still take several years to be definitive but Pettis is going to look like a fool at the end of it if the Chinese economy keeps on chugging along as it is currently. I think he is getting anxious.

*Chinese sci-fi* New Chinese blockbuster “Wandering Earth”

I’m also waiting for a good torrent of it. Any movie where at some point someone shoots at Jupiter with a minigun is worth watching.

https://jpohl.blogspot.com/2019/02/a-preliminary-critique-of-cofnas.html

https://www.youtube.com/watch?v=Gg4jr9gR_6o

https://www.youtube.com/watch?v=5H1VJVaMLms

Karlin wants China to be the “World’s Greatest Country” and a Russia that is its “Greatest Ally” so he’ll have a never-ending stream of Chinese girls and thousands of Chinese restaurants to choose from in Moscow.

He also wants Russia to be cut off from the entire West so that Russia can not only be China-oriented economically, but also socially and culturally. Again, this is because he wants more Chinese girls in Russia, and having visa-free access to China to stuff his belly with laduzi-inducing Xinjiang lamb kebabs washed down by Snow Beer, all of which ended with a “happy ending” at a KTV with a Henan Province girl.

Also, China printed way more of Capital (by Karl Marx), so it already has way lower GDP per Capital than Chile.

LOL, there is precisely zero point in visiting Novgorod if you are not interested in its medieval history. Anybody who’s going to Novgorod I assume is going there for the history by default. Otherwise, it’s just another provincial unremarkable Russian town.

Unless you are visiting for ZAVODBAR. That’s worth a visit just by itself if time and money are of no object.

Re-touristy crap, I would recommend either the local birch bark products – paintings, salt holders – and/or the metalwork plaques of the Novgorod Metallurgical Factory, which I understand is the prime commercial employer there. The ZAVODBAR is the restaurant of Alkon – the vodka company that happens to be the second major enterprise of Novgorod – so you can get plenty of specialty vodka and liqueurs at their store that you’d find difficult to locate elsewhere in Russia (I particularly liked Древнерусский Бальзам.

I’ve mentioned this several times, and I’m certainly not an economist, but in my opinion China’s GDP is probably understated (especially in nominal, ofc). Simply look at the market size and sophistication, as well as China’s technological and scientific rise (even in per capita). There has also been this exceptionally rapid and large-scale decline in (absolute) poverty that still continues, despite China’s high inequality.

So how poor do you think China’s in per capita terms? (Considerably) below Brazil, Thailand or Iran (!), for instance? Because otherwise you would have to conclude that the GDP figures are quite accurate, though maybe even overly pessimistic and still based on outdated methodology.

I largely agree you on Russia, however the official government forecast for the 2020s is actually optimistic, they are beginning to prioritize growth again. I guess the memories of 1998 are still very painful and it seems the economic liberals are indeed too pessimistic about the potential of the economy (or they are jew-lizard traitors, if you ask the Sovok Russophiles on the internet). Russia has been focusing on increasing its reserves, but even then last year’s growth was already pretty good.

A lot of that are real estate debt bubbles or low productivity state owned industries.

This is my position as well. Now I fully accept that the China bears will finally get the first recession of the many dozens they have predicted correct. In the long-term, it is inevitable. And it may well even happen imminently; China is currently at a stage of its development analogous to when Japan and Korea had their respective recessions.

This is perfectly normal, of course. Recessions now and then are good for wheedling inefficiencies out of the economy, even if the China bears will ceaselessly crow about how it is no longer a “threat” to American hegemony, how this is a repeat of the popping of the Japan bubble, etc. But then vigorous growth will resume and China will decisively overtake the US across all the remaining key parameters anyway.

Given that the most talented ans driven people migrated from the interior provinces to the coastal areas, I really do not expect the interior provinces to be able to catch up in their natural state.

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:

https://i.imgur.com/HetY2bw.jpg

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.

Again what makes you think that China will surpass Taiwan’s per capita GDP, or that China’s per capita GDP will exceed the Czech Republic’s, when you say converge, are you saying that China will exceed the US’s per capita GDP, when even Western European countries have been unable to do so, outside of tax havens, in which case with all due respect, better lay off the bath salts. I am not disputing that China will reach the US’ GDP level before maxing out to 3 percent growth per year, with a standard of living closer to Central Europe.

Defining superpower status is something of a philosophical question, but I think it is fair to say it is not well demarcated by per capita GDP.

In a vague sense, it really is about the ability to project power. The USSR had nowhere near the standard of living as the US, but it was still a superpower. Part of that was military capacity, another part lay somewhat abstractly in space flight. China was the 3rd to do manned spaceflight. When they land a man on the moon, they will have equaled the US and exceeded the USSR, by that metric.

In terms of the ability of the military to project power, at least for now, TFR is probably a more important metric. Might change with drones. Manned intervention seems to have limited potentiality in the age of nuclear weapons, anyway. It may not really be a good measure of superpower status, anymore, unless it makes other groups kowtow.

Clearly, more tourist flow should be sent to Nizhny Novgorod.

It has beautiful historical architecture in the centre but the city financial situation is reportedly a catastrophe – and reported they now need more income sources or investors which will fund future restoration of historical buildings.

I just bought a kindle version of the Arthur Kroeber book.

Generally I am also bullish on China. But they will have many bends and dips along the way. In retrospect so did we. During the 19th and first half of 20th century, the U.S. had seven depressions (yes, the “D” word) as well as a civil war and times with no objective rule of law on our way to top dog, say, by 1960. The Chinese are driving the same rough road.

What about Chiang ching Kuo ? Wasn’t he similar to LKY in most respects?

Taiwanese cities look pretty shabby, but they’re cleaner than coastal Chinese cities in terms of the amount of dust or dirty pools of stagnant water.

The infrastructure in what matters, such as healthcare, public transit, education, and road quality is what you’d expect for a country with its PPP GDP per capita (50,000). Its wages, shopping/dining options, and prices reflect its nominal GDP per capita (25,000), while the quality of its buildings and the sheer amount of noisy, dangerous scooters on the streets feels like they can be as bad as Southeast Asian countries like Vietnam or Thailand.

Chiang Ching Kuo actually got his education, and even worked a full time job after graduation, in Russia. He married a Belorussian woman he met at work. So during the 80s, the Republic of China first lady was actually a Belorussian.

The Chinese elite want tier 1 cities to be showcases of the economic progress of China, both to its own citizens and to the world.

Taiwan doesn’t attract parasitic foreigners yet, but it does have a gasterbeiter population composing of largely Vietnamese and Indonesians hovering at around 3% of the total population, and this number will likely grow in the future. Vietnamese largely work in restaurants and construction sites, while Indonesians tend to be caretakers of the elderly.

None of the scooters in Taiwan are electric. They’re motorized, and they outnumber the number of cars on the streets. The amount of scooters on the main boulevards in the city center at rush hour can be an impressive, and noisy, sight to see.

The national income in Taiwan is not that high. In Taipei making $800 to $2,000 a month is the norm for most people. $2,500 and above a month, and you’re in upper middle class territory.

Or maybe China will have to create a SAR where marijuana and gay marriage is legalized, plus free sex changes, in order to attract top Silicon Valley talent?

It does make a very juicy MIRV target. What does everyone think of hyperloop vs. conventional HSR or maglev?

LOL! If you feel so strongly about this, you can try to encourage Whites to retaliate against this by pushing for large-scale Gentile immigration into Israel.

Interesting.

Trading Economics pegs Taiwan’s average wage at around $1,600: https://tradingeconomics.com/taiwan/wages

I assume it will be higher in Taipei.

Why the discrepancy between those stats, and observations?

Michael Pettis

Obviously, I read one very good book and a few blog posts by him. The book constitutes some 95+% of what I read from him, by whatever metric (word count etc.), so his reputation with me is based on the book. (I don’t normally follow blogs, except where both the blogger and commentariat are super smart, like…)

As I wrote above, I don’t agree with him that China could manufacture high growth for several years, but I find it clearly possible that they could create some kind of “false growth” for one year or two. One of our resident Chinese commenters (I think Duke of Qin) wrote a couple months ago that China has already had negative growth recessions over the past several decades, but the statistics nevertheless invariably showed high growth in each year. (I’m not saying Duke of Qin is correct, just that it’s one extra data point in favor of the possibility of this year’s growth being lower than the statistics show.)

My only point was that Chinese growth this year might be lower than the statistics show, and that Russian growth is artificially depressed by an overly restrictive fiscal and monetary policy mix.

In short: Russian growth is depressed because of certain Russian policy choices. (Which may actually be smart, if further sanctions are coming..?) Chinese growth is not that high these days, and it could actually be lower than people think. So, perhaps no reason for such Russian pessimism.

Thanks, that’s a great article.

It’s incredible how psychopathic the Western ruling class is – we can do that, because it’s us, but you shouldn’t, because you are not us!

I vaguely remember a trade dispute between Airbus and Boeing, where Boeing complained about government subsidies to Airbus. It turned out that Boeing did similar R&D on government budget, too, but it was paid by the Pentagon for some potential military applications, so it was OK. I can’t remember the exact outcome.

Any thoughts on the Polish-Israeli spat? Especially from our commenters of the Polish (or Jewish) persuasion.

The stagnation in Taiwanese wages is something I also noticed:

https://twitter.com/akarlin88/status/1049598627935649797

I suppose the reason for this is kind of obvious. The global socio-economic group that did (relatively) worst from globalization was American/European lower middle income blue-collar workers. There must have been a similar effect, but to the nth degree, in Taiwan, with the main generator of those changes just across the straits.

The main difference between South Korea and Taiwan was the paths that their elites took when their manufacturing, outsourcing based economies both ran out of steam in the 1990s.

South Korea decided to drastically change their economic model and poured money and investment into transforming their then-inferior companies into world class companies that’s able to survive and thrive in any type of global market. Its investment in the entertainment industry also allowed it to displace the Japanese as the main source of soft power for East and Southeast Asia.

Taiwan’s path? Its elite decided to simply shift their manufacturing to China, with the Taiwanese upper middle class working mostly as the R&D and management of such factories (both as “expats” in China, and from the headquarters in Taiwan). Likewise for its entertainment industry: Taiwanese entertainers, instead of investing in a homegrown industry, decided to participate in the Mainland market instead, having dual residences in Taipei and Shanghai.

Look at the biggest South Korean companies: Hyundai, Samsung, LG.

Look at the biggest Taiwanese companies: Foxconn, TSMC, Quanta Computers. Notice all of them are high tech manufacturing companies with zero consumer recognition

It is good news, Poles are total cucks, but hopefully this should wake up some jew worshippers in Poland that jews really just see everyone else as goyim that must obey them.

Some (not all) Jews like:

https://twitter.com/juliaioffe/status/1097563333643943936?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet

Some fact based overview of her towards the end of this piece:

https://www.eurasiareview.com/19022019-putting-the-new-cold-war-and-russia-bashing-into-proper-perspective-oped/

I’d be responsibly careful in not over-generalizing, which serves as propaganda fodder for the likes of her.

If Russia gets subject to Cuba or Russia level sanctions, what is the possibility of the middle class turning against Putin, and voting for liberals, or putting their wallets ahead of Russia, like what is happening with the Iranian middle class.

About zero. The great majority will sigh a sigh of relief and fall comfortably into
state capitalism economy mode. It’s the natural state for Russia, the country has been like that since Ivan ‘the Terrible’ anyways.

Likud politicians receive more votes from this behaviour in the election, so it’s rational – and probably was quite intentional.

In Israeli elections, there are so many different parties, that Likud will only need around 20% of the total vote, to win the election.

For this they will need to target the nationalist rednecks, and try to shift to the more nationalist image before the election (then after the election, they shift to the centre politically).

As a party of power, Likud is centrist politics. But rhetorically, Likud politicians are mostly like Zhirinovsky (but a more uncultured/uneducated version of him). If Zhirinovsky wants more votes near elections, he does not keep his mouth shut, but tries to shout more nationalistically to impress his base of voters.

During the election, politically centre Israelis, will vote for Benny Gantz, not Likud. So Likud is going to compete for votes with the more nationalist politicians, so they will try to project a nationalist and Zhirinovsky image for the next couple of months.

–

Still the Poland cancelling conference wasn’t considered an important story in the Israeli news (from YouTube you can see it was the last and most minor story they reported on main Israeli “Kan” – news channel).

• By the way, from the election polls, Likud is going to win.

Here are reported the polls:
https://knessetjeremy.com/

China’s move to ban motorcycles from its first tier cities is interesting. One wonders if it is purely domestically motivated by its elites, or has something to do with desire to project a more refined, civilized image.

Purely arbitrary, and it’s been around for almost a decade. China’s leaders make these random decisions because they can. It’s pure abuse of power meant to show the people who’s boss, i.e. it’s not actually the P in PRC. Motorcycles are legal in Hong Kong and Singapore, both of which are several times more densely populated than even the densest Chinese city. The emperors of the Communist Party have taken tyranny in peacetime to a level seldom achieved under prior dynasties. They are fortunate that that their reigns have been able to benefit from the Western inventions deprecated earlier by a Qing dynasty ruler during Mad King George’s reign. What they get up to in the event of impending regime collapse doesn’t bear thinking about. Tiananmen will end up looking like a footnote, relative to the bloodbath unleashed.

I don’t drink the tap water in either Taiwan or Mainland China. I do drink it in western Malaysia (but not the east coast). I stand by my point about the coastal cities being cleaner (not as messy or junky) than those of Taiwan.

I also have noticed the lack of motor scooters in China’s eastern cities. I was wondering if this was due to a ban. They are everywhere in Taiwan. However, Taiwan is much more crowded than any part of China and they are a sub-tropical climate, which is optimized for moving about on scooters. Much of the air pollution in Taiwan is due to these scooters which use two-stroke engines.

His co-ethnic Adam Michnik edits the leftist Gazeta Wyborcza newspaper.

They’re actually half-brothers, from a whole family of commies.
As a German, I don’t have a dog in this fight, but still, it has really astounded me to read the views of many Jews (especially American Jews) about Poland on Twitter. They really have this fixed idea that Poles were enthusiastic Holocaust co-perpetrators and that Poland owes them; German crimes against Poles don’t seem to exist for them. It’s completely uninformed by historical knowledge, pure resentment. But I do think that many American gentiles might actually fall for this bizarre view, since there’s this weird fusion between Zionism and mainstream American “nationalism” (Trump is the perfect incarnation of that, and a majority of Republican voters probably agrees with it).

That Iran conference also was rather ominous. Pence even accused Iran once again of planning a second Holocaust and building nuclear weapons for that purpose (kind of perverse given how Trump’s administration deliberately wants to destroy the nuclear deal which was designed to prevent an Iranian nuclear bomb). I really wonder if the end game here is war against Iran, it sure looks like it.

Anatoly; what’s going on about a supposed merging process between Russia and Belarus? The Western propaganda machine just got hysterical about “Putler’s evil plan to eat Belarus and retain power until his death”.

As long as we are wedded to hysterical anti-Russian paranoia,

That’s the ticket. I mean, what did the Russkies ever do to harm the Polish people.

You guys are receiving the protection of the empire in the form of a US led battalion in Poland. You vassals need to repay the empire. While you don’t like the bargain, your country has entered into it.

You know that if Poland really wants an independent foreign policy, then it needs nukes right? And who here wants that?

Kuzio replies

An example of how Tweets often don’t go into a substantive mode:

https://twitter.com/TarasKuzio/status/1097839846066921473

The roots of this might lie in earlier policy decisions.

Taiwan made the decision to provide substantial support to SMEs early in its development. For a time, this was quite successful. During the 1970s for instance Taiwan clocked 13% annual growth rates. The first recognizable forms of “outsourcing” were ideally suited to this industrial structure. IBM outsourced wire harnesses to Taiwan already in the late 1960s for instance.

South Korea instead has its chaebols–gigantic conglomerates. The South Korean government chose to partner with the chaebols and emphasize their development. Large firms typically have much more capital invested per worker and spend more on R&D and marketing.

See data from this delightful web 1.0 page I found: http://econc10.bu.edu/economic_systems/Country_comparisons/Taiwan_South_Korea.htm

The major differences in South Korea’s and Taiwan’s economic conditions is how South Korea is a big business economy and Taiwan is a small-medium enterprise economy. There are three indicators in determining this conclusion:

1) the production totals of large-scale firms (over 500 employees) as a percentage of national production was 45.3% for South Korea and only 26.8% in Taiwan in 1993.

2) The total sales of corporations in the top 5, 10, and 50 listings as a percentage of GNP was 47.6%, 58.8% and 79.9%(1991) for the South Korean economy, while the numbers were much lower at 17.8%, 23.2% and 36.4% (1990) in Taiwan’s case.

3) Exports of small and medium enterprises as a percentage of total exports, was 37.7% for South Korea and 67.1% for Taiwan in 1987. [9]

These figures are from long before South Korean firms were global leaders (outside of shipbuilding and steel anyway), and this was also before South Korea diverged from Taiwan. In fact, Taiwan was wealthier than South Korea in the late 20th century. Perhaps because its SME-focused development did a better job of mobilizing peasants into the formal sector in the early phase of industrialization:

In 2000, GDP per head in USD in Taiwan is $13,900 and $9,670 in South Korea.[16]

In the early takeoff phase for both countries, the distinction probably did not make a great difference. Both were rapidly industrializing. But as both exhausted catchup industrialization and needed to push the bleeding edge of the technological frontier, South Korea’s huge conglomerates were much better positioned to do so.

State support programs differed early on.

Taiwan’s government focused on providing low cost inputs to SMEs. From memory there was a government program to provide low cost electrical steel and magnetic wire to transformer manufacturers for instance. Transformer manufacturing is low technology and low productivity and always disrupted by new low cost producers.

South Korea instead formed Pohang Iron & Steel Corporation (the application for a World Bank Loan was rejected, which led to Japan quietly financing and providing the technology for the project) and launched its Heavy Chemical Industry drive with the goal of completing a modern, high tech heavy industrial base to provided advanced, low cost intermediate industrial products throughout the economy.

The countries even pursued some similar technology policies in the 1980s. In 1980 the South Korean government ordered Samsung to enter the semiconductor manufacturing industry. In the same year Taiwan established Hsinchu Science Park on the model of Silicon Valley, which ultimately led to TSMC and UMC.

But while today Samsung is the world’s largest semiconductor manufacturer and has substantial microprocessor design expertise which has surpassed Japan, the Taiwanese firms are mere foundries which are completely dependent on foreign designs.

In general one is hard pressed to think of truly rich countries which do not have large, globally competitive firms possessing the most advanced technology (and this also applies to services, not just manufacturing). The big exception here would be Australia, which is easily explained by its large amount of natural resources per head and the vast amounts of foreign capital invested over the past 150 years. This is good to remember whenever people start endlessly praising the supposed glories of small business.

Incidentally, I am somewhat skeptical about the economies of Eastern Europe for this reason. Visegrad and the Baltic States etc. are mere appendages of Western European capital. I don’t see a path for them to fully converge with Western Europe barring Western Europe’s Afro-Islamization dragging their average down (admittedly a depressingly probable outcome).

Nukes are a necessary but insufficient prerequisite for sovereignty.

The most important ingredient, of course, is willpower. See for instance Iran, North Korea, and Cuba.

Beyond that the most important ingredient may be financial independence. This is extremely difficult owing to the extraordinarily important role of the US Dollar in global finance.

As an example, during the Great Financial Crisis Eurozone banks had about $2 trillion in Dollar-denominated debts–but close to zero Dollar-den0minated deposits. Eurozone central banks combined had only about $200 billion in Dollar reserves.

How did they cope when their over-leveraged banks lost access to Dollar wholesale borrowing markets, just as American investment banks (and even some very creditworthy nonfinancial firms like McDonald’s) did? After all, being foreign banks they could not access the TARP funds provided by Congress.

The Federal Reserve System revived a Bretton Woods era tool in the form of swap agreements. The FED provided Dollar credits to foreign central banks in exchange for them providing local currency credits in the Federal Reserve System. No full accounting of these arrangements was ever done, but it’s commonly believed that the FED provided over $2 trillion in swap lines to the ECB, the Bank of England, the Swiss National Bank, the Riksbank, the Bank of Japan, and various other central banks. Swap lines were revived in this decade to deal with the “Taper Tantrum”, in particular to the Bank of Korea.

It is noteworthy that swap lines to foreign central banks were first cleared by the State Department. Three countries, never named, applied for swap lines and were denied by Foggy Bottom. It is almost certain that Russia was one of these countries.

Since the demise of Bretton Woods, many countries have attempted to gain financial sovereignty by running secular current account surpluses and building vast foreign reserves. This is insufficient, because private sector Dollar borrowing can exceed the state’s foreign reserves. Russia, South Korea, and even the PRC have stared down this gun barrel in this century.

It’s a very hard problem and the only country which has come close to mastering it is Japan. Not only does Japan have very large foreign reserves, but Japan’s ultra-low interest rates and the secular upward pressure on the Yen mean that Japanese business rarely borrows abroad.

The vast indebtedness of the Japanese state may actually be an asset in this department. The huge domestic pool of top-quality collateral means there is zero reason for Japanese finance to seek a “flight to safety” in the form of Treasuries.

Japan quietly bailed out the emerging markets of Asia in 1998 and again in 2008. It even was instrumental in saving the Eurozone’s bacon in 2011 (despite the best efforts of Merkel and Schaubl to destroy it).

With Putin Russia is Finally Getting Proper Roads – The Progress is Impressive

Oh my, I haven’t had such a good laugh in a while. Does the author realise that Russia builds as many km of roads in a year, as China does in a week? Or that Russia builds 3 to 4 times less roads per year than it used to in the 80s?
Another fun fact: Poland has more expressways than Russia. What a joke

@ Anatoly Karlin: When will you review Russian Road Trip Simulator 2019 aka Metro: Exodus?

“it’s commonly believed that the FED provided over $2 trillion in swap lines to the ECB, the Bank of England, the Swiss National Bank, the Riksbank, the Bank of Japan, and various other central banks.”

Let’s look at Japan. It has circa $5b per month trade surplus with the US. This is $60b per year. Japan imports about 160 milion kiloliters of oil per year. This is about 1 billion barrels. At $50 per barrel they can spend the surplus on oil.

What is your point?

I don’t see how this has anything to do with what I posted.

It was not BoJ that needed swaps with the Fed.

I highly recommend this Synthwave Youtube-channel:

https://www.youtube.com/user/NewRetroWave

WARNING Highly addictive.

It’s primarily “small tidbits and continuous study picked up over the years”.

I can specifically recommend Adam Tooze’s recent book Crashed: How a Decade of Financial Crises Changed, which I read shortly after reading Wages of Destruction on the strength of that book’s quality. It goes into considerable detail about the FED’s swap lines and the matter of overseas private sector Dollar borrowing.

For an operational view of how markets function, a good resource is the American personal financial blogger Cullen Roche. His website is https://www.pragcap.com.

Classics of financial writing like Michael Lewis’ Liar’s Poker are useful and entertaining as well.

Niall Ferguson has a number of good and interesting financial history books, though his modern day prognostications are mostly worthless (e.g. around 2010 he was loudly denouncing Paul Krugman and predicting that hyperinflation and soaring interest rates were just around the corner).

Beyond that the financial press, both in the US and Europe, has considerably higher standards than ordinary journalism. Bloomberg, Reuters, the Wall Street Journal, and the Financial Times all have good reporting in this area.

You might want to ask Polish Perspective and Reiner Tor as well about this.

The important thing for the Israeli election is to be party who wins the most votes. This is because, the party with the most votes has the first opportunity to form the coalition government.

Tzipi Livni in 2009 was the winner of the election, and she had the first opportunity to form the government. The problem was her negotiations failed to form a coalition government, so Netanyahu then had the second opportunity and could form the government.

Interestingly, there’s a possibility for Likud to lose this election, even though right-wing voters increase in Israel every year.

If Benny Ganz joins Yesh Atid to create a single party, they may have more seats than the Likud. Then they will have the first opportunity to form the government (although it would be difficult for them to create a coalition government, without including right-wing parties).

The right wing vote in Israel is also divided into so many different political parties, some which will not pass the threshold, and will therefore be “lost votes”.

What could also occur is the right-wing voters will panic before the election, and will vote for Likud instead of their preferred parties (so Likud would be cannibalizing the other right-wing parties).

So a large proportion of the right-wing electorate consider Netanyahu as a liberal. But they might panic and vote for Likud anyway, instead of their favourites parties, if they think there is a chance the left/centre party could otherwise have more seats than Likud.

Very good analysis, except this one:

South Korea instead formed Pohang Iron & Steel Corporation (the application for a World Bank Loan was rejected, which led to Japan quietly financing and providing the technology for the project)

That “financing” wasn’t so quiet. General/President Park Chung-Hee, then the dictator of South Korea, normalized relations with Japan against enormous and cantankerous domestic opposition and secured compensation, which he then directed toward industrialization, rather than to individual victims of colonization.

Sometimes dictatorships have advantages.

Has anyone else read Karl Polanyi’s “The Great Transformation“?
Reiner Tor perhaps? One of the (very) few true classics of the Economics genre.

I read it. It seemed to offer reasonably good insights into the destructive aspects of market economics, especially on traditional societies.

Some interesting anecdotes on traditional societies that may not have had markets as we understand them at all, e.g. the Pacific islanders who apparently managed to set up a genuine gift economy. Which seems remarkable, if accurate. (The book was written in 1944 and there has been much more historical research since then. I wonder what current expert opinion on that topic is).

There is obviously some value in it but taking it is a “refutation” of capitalism or markets (esp. wrt the modern era) as some do is bizarre.

I’ll surely give it a listen. Back in the day, I think that what you label ‘synthwave’ music was just called ‘electronic’ music. I liked to listen to the pioneers of this type of music, groups like ‘Synergy’, Jean Michelle Jarre, Tangerine Dream. Somehow, I lost touch with this style of music, but am surely open minded enough to go back and revisit it. You probably know about Spotify where you can freely sample many artists’ musical repertoire. I listen to it daily at work now. I’m glad to see that you’re back in the saddle and enjoyed reading your recent insights about modern aircraft.

(as Polish Perspective explained wrt the 90s-era program to import Chechens).

That’s just Polish kamikaze scumbags trying to annoy Russia – not any specific issue of immigration.
First Chechen leader Dudayev even has a square named after him somewhere in Warsaw

Indians have started appearing in Polish cities

Almost exclusively either medical students, or using Poland as a backdoor into getting into the EU properly.

Russia has numerous Indian/Sri Lankan medical students- anywhere – Tomsk, Novosibirsk, Yekaterinburg you will find them .It makes sense they would try the same , in an obscure European country.

US/Jewish/SJW/

Poland is the biggest supporter of these values – it also single-handedly caused Brexit

Many times I have heard the term “theft economy” to describe the system that existed in the Pacific at the time of contact. Magellen’s crew gave the name Islas de los Ladrones to what later became the Marianas (and Guam.) And it seems to fit the descriptions of many early encounters.

Still, the term is ironic when compared to the current globalist system, which really is an economy of theft. Better to be swarmed by people trying to grab some of your movable goods and run for it than your cities and countryside.

Like Kuzio, you comeback with empty calories, as in not dealing with the actual subject matter. As previously noted, your end note concerns the matter of cronyism – something brought up by others.

In all likelihood, you work for a noticeably cheaper rate than yours truly.

Contemporary synthwave shares a lot of features with classical electronica, but it’s also a reimagination of New Wave. Lazerhawk’s best song for instance, Dream Machine, owes a lot to New Order’s legendary Blue Monday. There is also synthwave with lyrics.

The new right-wing Euro-American youth culture has a modest obsession with aesthetics, especially that of the 1980s. There’s also the “vaporwave” art movement which emerged at the beginning of this decade.

That’s not to say that most synthwave is right-wing anymore than most heavy metal is right-wing. But just as heavy metal has subgenres like national socialist black metal (not recommending this–it’s awful like most other 21st century metal) synthwave has “Hitlerwave” and “fashwave”.

Anatoly, Would an update on the DNR be possible. It seems as though Russian citizens now run things; a display of photographs of dead “rebels” has been removed, actual locals have moved to Moscow, the new Russian governor avoids cameras etc etc.

Where are you getting this high level of personal trust between China and the US? It seems like the exact opposite. China is regarded as an amoral thief and cheater, and the US is regarded as an imperialist trying to contain China.