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  • Archive for the 'China' Category

    The Next 40 years in Twelve Hundred Words

    Posted by T. Greer on 19th July 2014 (All posts by )

    This post was originally published at The Scholar’s Stage on 19 July 2014 and has been reposted here without alteration.

    Info-graphic taken from Peter Turchin, “The Double-Helix of Inequality and Well-Being,” Social Evolution Forum (8 February 2013).

    .

    Recently in a discussion at a different venue I wrote the following:

    I am extremely pessimistic about the near term (2015-2035) future of both of the countries I care most about and follow most closely, but very optimistic about the long term (2040+) of both.

    I was asked to give a condensed explanation of why I felt this way. The twelve thousand words or so I wrote in response proved interesting enough that participants in the discussion urged me to re-post my speculations here so that they might receive wider circulation and discussion.

    Below is a slightly edited version of my response:

    The demons that afflict the United States of America and the People’s Republic of China are legion, and every pundit that turns their eye to either country seems to have their own favorite. Some of these difficulties are more alarming than others.

    Read the rest of this entry »

    Posted in Book Notes, China, Politics, Predictions, Society, USA | 43 Comments »

    Is Israel winning the Global War on Terror for us ?

    Posted by Michael Kennedy on 12th July 2014 (All posts by )

    Hamas has attacked Israel, first with the kidnapping of three teenagers, now with rockets aimed, for example, at Tel Aviv and its airport.

    GAZA: Islamist Hamas’ armed wing has warned airlines that it intends to target Israel’s Ben Gurion International Airport with its rockets from Gaza and has told them not to fly there, a statement by the group said Friday.

    So far, Israel’s Iron Dome antimissile system has been successful in intercepting those that are a risk to populated places.

    Israel’s astonishingly effective Iron Dome air defense has prevented Hamas from killing Israeli Jews and spreading terror in the civilian population. Ironically, though, the better Iron Dome works, the less sympathy the rest of the world has for a nation that remains under rocket attack.

    That sentiment is to be expected as even the Presbyterian Church is anti-Israel.

    David Goldman, who has been writing as “Spengler” for years, reports on the situation in Israel.

    the thumbnail version is that Hamas is making a demonstration out of weakness. Money is tight, 44,000 Gaza civil servants haven’t been paid for weeks, and the IDF did significant damage to its infrastructure on the West Bank after the kidnapping-murder of the three yeshiva boys. Netanyahu will look indecisive and confused, because he has to deal with an openly hostile U.S. administration on one side and his nationalist camp on the other. Time, though, is on Israel’s side: economically, demographically, strategically. The proportion of Jewish births continues to soar. The fruits of a decade of venture capital investing are ripening into high-valuation companies. And the Arab world is disintegrating all around Israel’s borders.

    Israel has been in mortal danger for 50 years. They have survived and thrived. The Arab countries are collapsing into chaos. Iran is still a threat but its demographic future is grim.

    There will be no Intifada on the West Bank: the Palestinian Arabs are older, more resigned and less inclined to destroy their livelihoods than in 2000. Syria and Iraq continue to disintegrate, Lebanon is inundated with Syrian Sunni refugees (weakening Hezbollah’s relative position), and Jordan is looking to Israel to protect it against ISIS. Egypt is busy trying to survive economically.

    Israel is becoming a huge economic success under Netanyahu. Just think of our future had we elected his friend, Mitt Romney.

    Obama promised a “pivot to Asia” but Israel may in fact be the one doing the pivot, leaving us in the dreary Socialist past.

    Richard Fernandez notes that in the view of the world press and elites being rich makes you “white.” Everybody knows that white people, even if they are Asian like John Derbyshire’s Eurasian children, are the root of all evil.

    Read the rest of this entry »

    Posted in China, Current Events, International Affairs, Iran, Israel, Middle East, Obama, Terrorism, War and Peace | 37 Comments »

    History Friday: Secrets of the Pacific Warfare Board — Block III TV in the Occupation of Japan, First of an Occasional Series

    Posted by Trent Telenko on 20th June 2014 (All posts by )

    When I started writing my “History Friday” columns, one of my objectives was to explore the “military historical narratives” around General Douglas MacArthur, so I could write with a better understanding about the “cancelled by atomic bomb” November 1945 invasion of Japan. Today’s column is focusing on an almost unknown series of Documents called “The Reports of the Pacific Warfare Board,” and in specific reports No. 31 and 50. This professional lack of interest by the academic history community in these reports represents a huge methodological flaw in the current “narratives” about the end of World War 2 in the Pacific. These two reports amplify and expand an earlier column of mine hitting that “flawed narrative” point titled History Friday: Operation Olympic – Something Forgotten & Something Familiar. A column that was about a WW2 “manned UAV” (unmanned air vehicle AKA a drone), an L-5 artillery spotter plane with an early vacuum tube technology broadcast TV camera, pictured below.

    Brodie Device In Land and Sea Based Configurations

    Brodie Device with L-4 and L-5 Spotter Planes In Land and Sea Based Configurations, 1944-1945

    Block III Broadcast TV Surveillance Equipment

    Dr. Vladimir Zworykin of RCA’s Block III Broadcast TV Surveillance Equipment

    These Pacific Warfare Board (PWB) reports have been classified for decades and unlike their more well know, examined by many researchers, and posted on-line European Theater equivalents. Almost nothing from them has made it to the public since their mass declassification in the 1990′s. There are good reasons for that. The National Archive has a 98,000 file, 80 GB finding aide. One that isn’t on-line. Until recently, the only way you can get at archive files like the Pacific Warfare Board Reports is to learn that finding aide and make your own copies using National Archive equipment. This was usually time consuming and cost prohibitive to all but the most determined researchers or hired archivists.

    Thanks to the cratering costs USB flash drives and increasing quality of digital cameras built into even moderately priced cell phones over the last few years, this is no longer true. And as a result, the academic history profession is about to have its key institutional research advantage outsourced to hobbyists and bloggers.

    Read the rest of this entry »

    Posted in Aviation, China, History, Korea, Military Affairs, Miscellaneous, National Security, War and Peace | 10 Comments »

    Meditations on Maoism — Ye Fu’s “Hard Road Home”

    Posted by T. Greer on 30th April 2014 (All posts by )

    This post was originally published at The Scholar’s Stage, 30 April 2013.


    A great divide separates the worldviews of the average Chinese and American. The most profound description of this divide I have ever heard came from the mouth of a friend who has never been to America and who was neither a historian nor accustomed to deep political reflection or debate. She concluded that Americans lived in a different world than the one she and her countrymen knew on the strength of a single observation: “In America all of your most exciting movies are about the future. In China, our blockbusters are all about the past.

    Her mundane observation points neatly to a paradox of modern Chinese culture. The people of China are steeped in history. Places, figures, and sayings from most ancient times fill their cinemas and televisions, inspire their literature and music, and find their way into both their daily conversation and clever turns of phrase. One cannot study the Chinese language or befriend the people who speak it without realizing how proudly the Chinese people trace their identity some three thousand years into the past. It defines who they are and what they want their country to be. When China’s heavy laden allow themselves a hopeful glimpse into the future they see first the glories of the past.

    Thus the dreadful irony: despite the high esteem which they hold for history and the strong affinity they feel with the triumphs and humiliations of their civilization, few Chinese feel any connection to–and in many cases, have no real knowledge of–their country’s more immediate past. As a society they honor the stories and glories of tradition, but have abandoned headlong the social order from which these stories sprang. This was not all intentional. Seven decades of war, famine, and revolution ripped Chinese civilization apart at its seams. The old order of family and clan, official and elite, emperor and loyal subject, is gone. The patterns which held Chinese civilization together for a millennium are acknowledged, but honored mostly as the creation of some mythical past whose connection to the present is more a matter of style than of substance. In between this golden past and frantic present lies a gaping hole. A swirl of confused details, loathsome slogans, and obscured calamities lies in this abyss, little talked about and, in the minds of many, best forgotten. The grim episodes of those days are but a dim image in a mirror, only tethered to the present with fading memories of tumult and terror.

    I did not fully appreciate how deep a gash and great a gulf this separation from the past has torn in the Chinese mental landscape until I read a newly translated set of essays and meditations published under the name Hard Road Home. Read the rest of this entry »

    Posted in Book Notes, China, History, Morality and Philosphy | 11 Comments »

    Dealing with the China we Have Rather than the China we Wish to Have

    Posted by Zenpundit on 25th March 2014 (All posts by )

    cross-posted from zenpundit.com

    A Sinocentric view of the maritime world courtesy of  The Policy Tensor (hat tip Historyguy 99)

    An amigo who is an expert on China pointed me toward a couple of links last weekend. Here is the first:

    Japan-China COLD WAR 8 / CPC decisions made under layers of veiled obscurity 

    ….Whenever a crisis occurs, diplomatic authorities typically attempt to assess the situation by contacting their counterpart of the country concerned to investigate, if any, what their intentions are. For example, the incident could merely have been an accident or a calculated act sanctioned by those at the center of the administration. But when the Chinese become involved, such diplomatic approaches may no longer be a possibility.

    The Chinese Foreign Ministry, which is supposed to be the equivalent of the U.S. State Department or Japan’s Foreign Ministry, is “merely an organization which carries out policies decided by the Communist Party of China (CPC),”a senior Foreign Ministry official said.

    Foreign Minister Wang Yi is just one of 205 members of the Central Committee of the CPC, and is not even included in the 25-member Politburo, which is regarded as the party’s leadership organ.
    Read the rest of this entry »

    Posted in China, Current Events, Human Behavior, Military Affairs, National Security, USA, War and Peace | 13 Comments »

    World War 2.5

    Posted by Michael Kennedy on 26th January 2014 (All posts by )

    UPDATE: I don’t seem to be the only one worried about a 1914 situation.

    China’s current coercion of Japan over the islands is but a symptom of a larger illness in the international system. China has been leveraging its naval modernization to increase its movements through the seas and choke points surrounding Japan to break out into the Pacific. Last November, for example, flotillas of People’s Liberation Army (PLA) Navy destroyers and submarines backed by air power encircled Japan for the first time, as PLA officers bragged about splitting and demolishing the first island chain. China is changing the regional balance with little resistance from the United States. Counter to Chinese public claims of surprise at a U.S. “overreaction,” recent discussions with Chinese officials over Beijing’s December air defense identification zone announcement suggests that the United States’ response was much weaker than the response the Chinese leadership had expected.

    This is worrisome.

    Last month I posted an observation that another world war may be coming. I noted that this summer is the 100th anniversary of the First World War and that the present situation is similar to that which preceded the 1914 war. I may not be the only one.

    I concluded last month’s post as follows: The “two Ps” are Pakistan and the Palestinians. We live in an incredibly dangerous era and we are seeing an American president who does not understand geopolitics. God help us.

    screen shot 2014-01-22 at 9.29.47 am

    A recent column provided from someone attending the Davos Economic Forum discusses yet another potential fuse that is sputtering.

    During the dinner, the hosts passed a microphone around the table and asked guests to speak briefly about something that they thought would interest the group.

    One of the guests, an influential Chinese professional, talked about the simmering conflict between China and Japan over a group of tiny islands in the Pacific.

    Read the rest of this entry »

    Posted in China, Europe, History, Middle East, Obama | 20 Comments »

    Pollution In India

    Posted by Carl from Chicago on 26th January 2014 (All posts by )

    The NY Times recently had an article about the high levels of pollution in India’s capital city, Delhi.

    Beijing’s air pollution has reached such toxic levels recently that the Chinese government is finally acknowledging the problem – and acting on it. But in New Delhi on Thursday, air pollution levels far exceeded those in Beijing, only without any government acknowledgement or action.

    When I was in India in late 2012 I too was overwhelmed and amazed by the level of smog and pollution in the capital. When you blew your nose, particulate matter came out in your snot. This photo taken below is out the window of our tour bus and you could not see large office buildings along the roadside a few hundred feet away.

    The tuk-tuk in the photo (it is a three wheeled semi-motorcycle used as a taxi) is green and yellow because those are the official colors of vehicles using CNG, designed to reduce pollution, which are also used for city buses. Unfortunately the streets are clogged with traditional gas powered vehicles and myriad ancient looking diesel trucks which more than make up the difference.
    Read the rest of this entry »

    Posted in China, Economics & Finance, Energy & Power Generation, Environment, India | 7 Comments »

    Book Review: Herman the German, by Gerhard Neumann

    Posted by David Foster on 27th December 2013 (All posts by )

    Herman the German by Gerhard Neumann

    —-

    This is the autobiography of a man who was born to a Jewish family in Germany, apprenticed as an auto mechanic, attended engineering school, moved to China in 1938, was interned by the British as an enemy alien in 1939, transferred to the American forces, joined Claire Chennault’s Flying Tigers, repaired the first Japanese Zero fighter to be captured in potentially-flyable condition, became a U.S. citizen by special act of Congress, and went on to run GE’s entire jet engine business, which he played a major role in creating. (The preceding may be the longest single sentence I’ve ever written in  a blog post.) The book should be of interest to those interested in aviation, technology, management, social history, the WWII era, and/or China.

    Gerhard Neumann was born in Frankfurt/Oder in 1917, where his father was owner of a factory that processed feathers and down. Gerhard’s parents were Jewish but nonpracticing–a Christmas tree was traditional in the Neumann home–and their approach to child-raising was closer to stereotypically Prussian than to stereotypically Jewish:  ”You did exactly as you were told by your parents. There was no such thing as saying no to them!…You were not to have a hand in your pocket while talking to grown-ups…Showing any emotion in Prussia was considered sissyish. There was no kissing between parents and children–only a peck on the cheek before going upstairs punctually at nine o’clock; and there was absolutely no crying.”

    On the other hand, Neumann could do pretty much what he wanted with his spare time. In 1927, at the age of 10, he rode his bike out to a grass strip where someone was giving airplane rides for 5 marks, which he paid with money from his piggy bank. His parents weren’t angry at him for taking this flight without permission; indeed, they were so entranced with his description of the way the town looked from the air that they soon took an airplane ride themselves! At the age of 13, Neumann bought a folding kayak and, with some camping gear and a 12-year-old friend, took long journeys on the Oder River, all the way to the Baltic Sea. Few parents in America today–or in Germany either, I’d bet–would now allow this level of independence to a 12- or 13-year old.

    Neumann had no interest in the family feather business; he wanted to be an engineer. A 2- or 3-year machinist or mechanic apprenticeship was mandatory for admission to any German engineering academy: Neumann’s father asked the 10 cab drivers of Frankfurt/Oder to recommend the garage where they thought the boy would learn the most, and the answers were unanimous: Albert Schroth’s. So began Gerhard Neumann’s apprenticeship, which, other than the technologies involved, could have been something out of the Middle Ages. “In winter my hands were frozen purple. Wear work gloves? ‘What’s the matter, boy, are you a girl?’ When my hands were bleeding, Herr Schroth pointed to the large bottle of iodine in the backroom and mumbled something about faules Fleisch (lazy flesh.) No Band-Aids, no pitying, no time out.”

    Read the rest of this entry »

    Posted in Aviation, Business, China, Germany, History, USA, War and Peace | 7 Comments »

    Yarn, Fabric, Sweatshirt

    Posted by David Foster on 22nd September 2013 (All posts by )

    Bruce Springsteen, 1983:

    They’re closing down the textile mill across the railroad tracks
    Foreman says these jobs are going boys and they aint coming back to
    Your hometown

    Some of them are

    Posted in Business, China, Tech, USA | 10 Comments »

    Your “Art” Only Matters Because Our Country is Wealthy

    Posted by Carl from Chicago on 22nd September 2013 (All posts by )

    Historically art in the West exists and has monetary value because our country has wealth and buyers who want to collect it. Recently buyers in China have been on the rise, along with a corresponding value on what “they” would perceive as art (i.e., Ming vases, and a lot of modern Chinese artists, as well). This article describes their growth:

    Chinese spending on art remains robust in 2013. That’s despite a dip in the market last fall and an economic slowdown that recently knocked the Asian nation off its perch as the art world’s biggest spender and back behind the former perennial leader, the United States.

    In a broader sense, there is a question of what drives art, and why some situations with incredible pathos don’t receive the attention they deserve (or much attention at all). For instance there are 1 million children who have been displaced or made into refugees in Syria due to their ongoing civil war. Can you imagine the stories, paintings, movies and television that this story would drive in the West? While we watch “reality” shows about dancing and singing and our “serious” fare covers meth dealers in New Mexico, why aren’t the amazing stories of war (and sometimes redemption, or bitter relapse) grist for “art”?

    As I follow the Congo wars and civil wars, I am also amazed by the dearth of real or fictionalized accounts of either the war itself or its impact on civilians. There is little even though the scale of suffering and conflict is so wide, and the participants so varied.

    For instance, imagine yourself as a writer in Syria or in the Congo. You have all the grist for art all around you. And yet… no one cares, because it doesn’t matter (much) to those that buy and produce art of all types, since they are in the West or part of the growing contingent in Asia.

    It is interesting to me because artists and liberal arts types often view commerce with distaste, and act as if the world would somehow be better if we all dropped our focus on money and attended a play or modern dance or something like that. They believe that there is a “choice” and they can pursue their dreams, even though their dreams are subsidized and provided for by the wealth that is generated by the world of business, and protected by our force of arms, which they also despise.

    Without wealth and military power (or the cover of someone else’s military power, as much of Europe and Asia shield under the US umbrella), art itself is a tiny, meaningless cry in the night. There is no intrinsic “value” in art unless the culture can support and (often) export it. Countries can support their own culture, as France and Italy work hard to do, but this is also tied to their value in the tourism trade and linked to their economic value as “open air museums” since little is actually manufactured or driven from these countries anymore. French literature, which made large impressions in the past (Sartre, etc…) is effectively invisible in the US today, although we’d gladly go visit and tour and drink wine and partake in the fabulous views.

    Another facet of this phenomenon is the growth in “blockbuster” films that are populated with aliens, comic book figures, or supernatural events. These movies sell around the world, while indie-type movies (or even movies with relationships) are relegated to third class citizenship. If it can’t be explained or viewed in a generic manner understandable across cultures, then it isn’t wanted by our major studios. Certainly the Oscars don’t agree with this model, as they continue to hand out awards to movies that 99.999% of the world wide movie population doesn’t see, while ignoring the giant comic-book based movies taking over the screens. The “artists” there are being subsidized by the money-making tent-pole films, although the studios are extremely profit focused and at some point they won’t be be throwing those artists crumbs anymore (after all, they have to pay for expensive mansions and lavish lifestyles and the “cloak” of artistic merit is only worth so much).

    Cross posted at LITGM

    Posted in Arts & Letters, Business, China, Economics & Finance | 7 Comments »

    The Story of the Two Wolves

    Posted by David Foster on 10th August 2013 (All posts by )

    In a BOOKWORM post about the atomic bombing of Hiroshima and Nagasaki (Book’s mother was in a Japanese concentration camp at the time–read the link), the discussion turned to the Japanese maltreatment of prisoners. I noted that Japanese treatment of Russian POWs in the Russo-Japanese war (1904) seems to have been quite decent, in strong contrast with their abominable treatment of just about all prisoners in the period…only 30 years later…beginning with the invasion of Manchuria and continuing through the Second World War, and I said:

    “It is interesting and frightening how quickly a culture can change. If you were looking for a place to live in Europe in 1913, Germany would have looked pretty good…even (especially?) if you were Jewish. Only 20 years later, a significant % of the population was barking mad, and almost all of the rest were clueless or cowed into submission.”

    Commenter Danny Lemieux, agreeing with the point about culture change, cited a Cherokee legend: the story of the two wolves.

    One of the main reasons why Barack Obama is such a disaster as a leader is that he always chooses to feed the Bad Wolf.

    Posted in China, Germany, History, Human Behavior, Japan, USA, War and Peace | 16 Comments »

    Efficiency, Effectiveness and Power

    Posted by Carl from Chicago on 7th July 2013 (All posts by )

    China is a massive force in the global economy. According to Bloomberg,

    China is the world’s largest producer of steel. It accounted for 49.18 percent of worldwide crude steel production in May, according to the World Steel Association. Japan, the second-largest producer, accounted for 7.06 percent, the data showed.

    And the USA? We are the third largest producer of raw steel, behind Japan, producing less than 15% of what China makes each year.

    What does China do with all this steel? It produces a giant, modern nation with an enormous urban infrastructure. I recently bought this excellent book (a few years old, but it was $3.99 / used plus shipping) called “Shanghai: The Architecture of China’s Great Urban Center“. Shanghai has an immense number of skyscrapers – so many that there are debates about the exact count – but the list per Wikipedia shows that Shanghai held the title of world’s tallest skyscraper until beaten by Dubai and there are an immense number of very tall structures in the city, all built in the last 20-25 or so years.

    This article in today’s NY Times about a bicycle service that is thriving in Portland, Oregon due to its lower carbon footprint shows the “dream” view of capitalism held by those in the left in the USA.

    However, while the bucolic bicyclist delivery driver making his rounds to fair-trade coffee shops seems like a worthy economic topic, it is in fact the opposite of efficiency when compared to the real-world efforts in China which dwarf our physical economy components. The US can compete in services and in software but we are getting blown away in the physical world which China’s steel production and immense cities sprouting from the ground show clearly.

    The small-scale craft economies have an absolute place in the world, but there also is room for world-class efficiency which only can come from large-scale investments in steel, construction, and advanced building techniques, which also include time-to-market. The US is losing our ability to compete in these spheres while the Chinese continue to innovate – the evidence of which is all too visible for anyone traveling through their new cities when compared to their US counterparts.

    Cross posted at LITGM

    Posted in China, Economics & Finance | 12 Comments »

    NY Times on China’s Economic Rise Worldwide

    Posted by Carl from Chicago on 2nd June 2013 (All posts by )

    The NY Times had a solid article called “China’s Expanding Economic Empire” in today’s paper.   It describes how China is using its’ state owned companies to expand globally, particularly in Africa, South America, the Middle East, and Asia.

    Ultimately, thanks to the deposits of over a billion Chinese savers, China Inc. has been able to acquire strategic assets worldwide.

    In addition to using their savings and financial discipline to acquire companies, China has infrastructure capabilities honed from building out their country and is able to bring staff locally to complete projects such as pipelines, railroads, mines and factories, thereby re-cycling their financial investments back into their own service companies.

    The article discusses Greenland, where China has proposed to come in and develop their vast resources in return for access to commodities only if the local government by-passes wage laws and other restrictions to allow the Chinese to being in their own labor.  Since no one else is offering to develop Greenland and their native workforce is ill-equipped to meet the challenge of modern infrastructure development and operations, it will be China’s by default.

    However, the article does not mention anywhere the key variable that keeps Western countries non-competitive in these regions – our own laws against corruption and bribery which are likely the only way to win bids throughout most of the developing world (the Foreign Corrupt Practices Act).  China has no compunction about working with anyone and doing whatever it takes to win these bids.

    In addition, China doesn’t care about its reputation with the local workforce, unless things get really bad (i.e. people start getting shot).  China brings its own value chain end to end, from the initial financing, to awarding bids to Chinese companies, to China pushing their surplus (skilled) labor and their own infrastructure even to support their staff (i.e. bringing in their own food).  Western companies try to bring in the local work force and are sensitive to local suppliers on a relative basis.

    While the article is generally full of relevant facts and analysis (except for the critical omission of the Foreign Corrupt Practices Act, which basically gave the world to China on a platter), it ends on a completely false two paragraphs.

    As China becomes a global player and a fierce competitor… its political system and state capitalist ideology pose a threat.  It is therefore essential that Western governments stick to what has been the core of Western prosperity: the rule of law, political freedom, and fair competition… giving up on our commitment to human rights, or being compliant in the face of rapacious state capitalism, will hurt Western countries in the long term.  It is China that needs to adapt to the world, not the other way around.

    I am frankly astonished that the editor let them add these paragraphs to let the article end on such a false note.  There is no evidence that our methods of not complying with local practices is working; in fact the entire article proves that our Western methods are failing.

    If a country is led by a strongman you need to deal with a strongman or you won’t be in business; this is obvious, the Chinese know it, and we don’t have a chance in h*ll of competing with it.  As a result, we are handing the Chinese the world on a platter.  We will ultimately adapt to China, not the other way around.

    Cross posted at LITGM

    Posted in China, Leftism, Media | 11 Comments »

    It Feels Strange Outside Economically

    Posted by Carl from Chicago on 14th February 2013 (All posts by )

    A few things have happened recently that have the hairs on the back of my neck standing up in economic terms. It feels like it did right before the crash in 2007-8, when we were still in the end stages of the bubble.

    One – Japanese and Venezuelan devaluation

    Japan (a thoroughly modern economy) and Venezuela (a semi-dictatorship oil economy) both recently devalued their currency. Japan was warned by the G7 (fat lot of good that will do) here about it:

    The official said: “The G7 statement signaled concern about excess moves in the yen. The G7 is concerned about unilateral guidance on the yen. Japan will be in the spotlight at the G20 in Moscow this weekend.”

    Venezuela did more of an “old school” devaluation, where the “official” rate is moved closer to what it really is trading for in the black market, and Bloomberg writes about it here.

    Venezuela devalued its currency for the fifth time in nine years, a move that may undermine support for ailing President Hugo Chavez and his allies ahead of possible elections later this year… He ordered his government to weaken the exchange rate by 32 percent to 6.3 bolivars per dollar… A spending spree that almost tripled the fiscal deficit last year helped Chavez, 58, win a third six-year term. The devaluation can help narrow the budget deficit by increasing the amount of bolivars the government receives from oil exports. Yet the move also threatens to accelerate annual inflation that reached 22 percent in January.

    I kept that whole paragraph in the block quote because it encapsulates all the elements of fiscal ruin so succinctly – profligate government spending, impact on commodities imported or exported (that move opposite of currencies), and the impact on inflation.

    Two – The Chinese and Russians Aren’t Buying Our Debt – We Are

    I had thought that the Chinese and other countries were big buyers of our debt which funds our budget deficit. But I was wrong. Per this WSJ article:

    China’s holdings of $1.17 trillion in U.S. Treasurys in November 2012—the most recent date for which we have a figure—are virtually unchanged from two years earlier, when they stood at $1.16 trillion. Beijing has purchased a lot of Treasurys over this period but many have been redeemed. Net new investment is essentially zero.

    But if the Chinese aren’t buying our debt, who is? The answer – the US government.

    The largest buyer of new U.S. Treasurys during the past three years has been not China but the U.S. Federal Reserve. In fiscal year 2011, for example, the Fed bought more than three-fourths of all new Treasury debt.

    Here’s a challenge for you – try explaining to a child or someone unfamiliar with economics how it is that we can spend money that we don’t have, issue debt, and buy it back ourselves.
    Read the rest of this entry »

    Posted in China, Economics & Finance, Russia | 8 Comments »

    Some Views From Overseas

    Posted by David Foster on 14th November 2012 (All posts by )

    …on the US election results.

    Janet Daley, in The Telegraph: “So Europe got the American president it wanted – the one who would present no threat to its own delusions. The United States is now officially one of us: an Old World country complete with class hatred, ethnic Balkanisation, bourgeois guilt and a paternalist ruling elite. And it is locked into the same death spiral of high public spending and self-defeating wealth redistribution as we are. Welcome to the future, and the beginning of what may turn out to be the terminal decline of the West.”

    Melanie Phillips: “The greatest satisfaction today over the re-election of Obama is not being felt in the Democratic Party. It is not being felt among the media…No, the greatest satisfaction is surely being felt in Iran.”

    The Dissident Frogman: “Hear this final prophecy America: only one man can kill the Republic, and it isn’t Barack Obama. The one man who will kill your Republic is the one man who will last give up and renounce it. Don’t you dare be that man.

    Read them all.

    Also, here’s something interesting: Li Keqiang, China’s next premier, has been advising his associates to read Alexis de Tocqueville’s 1856 book The Old Regime and the French Revolution.

    Posted in Britain, China, Civil Society, Education, Europe, France, History, Middle East, USA | 56 Comments »

    Newsweek throws Obama under the bus

    Posted by Michael Kennedy on 19th August 2012 (All posts by )

    The Newsweek cover for next week is astonishing.

    The lead article is by Niall Ferguson and is devastating. The fact that it is the cover story is an even bigger surprise. It’s interesting to speculate on the reasons.

    Welcome to Obama’s America: nearly half the population is not represented on a taxable return—almost exactly the same proportion that lives in a household where at least one member receives some type of government benefit. We are becoming the 50–50 nation—half of us paying the taxes, the other half receiving the benefits.

    On foreign policy, one of Obama’s few strong points in polls, it is even harsher.

    For me the president’s greatest failure has been not to think through the implications of these challenges to American power. Far from developing a coherent strategy, he believed—perhaps encouraged by the premature award of the Nobel Peace Prize—that all he needed to do was to make touchy-feely speeches around the world explaining to foreigners that he was not George W. Bush.

    In Tokyo in November 2009, the president gave his boilerplate hug-a-foreigner speech: “In an interconnected world, power does not need to be a zero-sum game, and nations need not fear the success of another … The United States does not seek to contain China … On the contrary, the rise of a strong, prosperous China can be a source of strength for the community of nations.” Yet by fall 2011, this approach had been jettisoned in favor of a “pivot” back to the Pacific, including risible deployments of troops to Australia and Singapore. From the vantage point of Beijing, neither approach had credibility.

    His Cairo speech of June 4, 2009, was an especially clumsy bid to ingratiate himself on what proved to be the eve of a regional revolution. “I’m also proud to carry with me,” he told Egyptians, “a greeting of peace from Muslim communities in my country: Assalamu alaikum … I’ve come here … to seek a new beginning between the United States and Muslims around the world, one based … upon the truth that America and Islam are not exclusive and need not be in competition.”

    Read the whole thing, as Instapundit says.

    Posted in China, Economics & Finance, Elections, International Affairs, Obama | 12 Comments »

    China may be entering a new era

    Posted by Michael Kennedy on 12th April 2012 (All posts by )

    There is a huge story going on in China right now. A very high official in the Politburo, named Bo Xilai has been purged, and his wife has been arrested. The story as reported is not the real one.

    Here is John Burns’ opinions of What is going on.

    First the official version.

    CBS News) BEIJING – We are getting a rare look at the inner workings of China’s Communist power structure thanks to a scandal that erupted there this spring. CBS News correspondent Barry Petersen tells us about the man at the center of it.

    The Chinese nicknamed Bo Xilai a “princeling,” which means one of the most powerful men in China.

    Now he’s called criminal in a case that is part soap opera, part murder mystery.

    In a stunning announcement this week, Bo was dumped from China’s Politburo, the powerful committee that runs the country.

    His glamorous wife Gu Kailai has been arrested for the murder of Nick Heywood, a British man found dead in a hotel room last November. At the time, Chinese police said he died of alcohol poisoning — although his family said he didn’t drink.

    The background story is:

    Well, of course what we see here is something that none of us really wanted to see at all, and I’m not talking about the murder. That, of course, we would all regret. What we’re seeing is a new upheaval in the Chinese political leadership, the most important political purge in Bo Xilai, the former Chongquing party chief, candidate for the inner sanctum of power in the politburo. And this is very disturbing to those who had hoped, believed, perhaps, that China, this is a new China, the post-Mao China, which was heading toward a period of political stability, the rule of law, in other words, had really put the Mao era, the Cultural Revolution, the chaos, the great leap forward, and all the rest of it, behind it. What we’re seeing now in this very sordid tale is something much more like what we saw of Chinese leadership in what we, and indeed, I think most Chinese would describe as the bad old days of Mao Tse Tung, a politics that is much more personal, that is much more brutal. Let’s not forget that in the Cultural Revolution in China under Mao, millions, I think the Chinese officially concluded ten million people, died. Now it’s not to suggest that China’s heading for that. The present Chinese leadership who purged Bo are saying, in fact, that it’s to prevent that kind of…return to that kind of politics, that they’ve purged him. But then you have the question of the alleged murder. the story begins in mid to late November when, and at that time, the world knew nothing about it. Neil Heywood, a 41 year old private school educated Englishman of some personal charm, went to Chongqing, the capitol city of Sichuan Province in Southwest China, source of the wonderful hot food that we all like in Chinese restaurants, and on some sort of a business trip. He had for some years, we now know, had a very unusual personal relationship with the family of Bo Xilai, the Communist Party chief in Chongqing, and that relationship seemed to be centered very much on Bo Xilai’s wife, Gu Kailai, a 53 year old rather handsome woman from her photographs, daughter of a retired, probably now dead, revolutionary general under Mao Tse Tung. This was Communist royalty. Long story short, Neil Heywood ends up dead in his hotel room in Chongqing. The Chinese report to his family that he died of over consumption of alcohol. They report that they’ve cremated him without autopsy. The family, the Heywood family, appears to have accepted this, and that includes Mr. Neil Heywood’s Chinese wife and two children living in Beijing. The next stage was that the police chief of Sichuan Province, the closest personal aide, if you will, to Mr. Bo, the party chief, having reported so it is now said, to Bo Xilai, that Heywood didn’t die of over consumption of alcohol. He died of poisoning, and that the poisoner, or at least the one who organized the poisoning, was none other than Bo’s own wife, Gu Kailai.

    So what we have is a tremendous turn in the politics of China, and it seems to center, this scandal’s center on the death of this Englishman. And it’s left to people like myself to now go in pursuit of what the real story behind all of this was.

    Read the rest of this entry »

    Posted in China, Civil Society, Political Philosophy | 16 Comments »

    A Multipolar World

    Posted by onparkstreet on 22nd February 2012 (All posts by )

    CommodityOnline:

    India’s crude oil imports from Iran is facing a risk of potential disruption as increasing US and EU sanctions make it impossible for Indian ships to obtain insurance.

    Greg Scoblete, The Compass Blog (Real Clear World):

    I imagine if I were an Indian official, I’d be a bit peeved to learn that acting “responsibly” means privileging the interests of the United States over my own country. Nevertheless, Burns has a point. After all, India may rely on Iran for 12 percent of its oil imports, but look at what the United States has been willing to do for India:
     

    Presidents Obama and Bush have met India more than halfway in offering concrete and highly visible commitments on issues India cares about. On his state visit to India in November 2010, for example, President Obama committed the U.S. for the very first time to support India’s candidacy for permanent membership on the U.N. Security Council.

     
    I don’t know about you, but if the U.S. was asked to forgo 12 percent of its oil imports in exchange for another country’s endorsement for a seat on a multilateral forum, I’d make the trade. I mean, c’mon, 12 percent? The U.S. gets about that much from the Persian Gulf – and we barely pay that area any attention at all…

    Europa:

    “The EU-India free trade agreement will be the single biggest trade agreement in the world, benefiting 1.7 billion people,” said president Barroso. “It would mean new opportunities for both Indian and European companies. It would mean a key driver for sustainable growth, job creation and innovation in India and Europe.”
     
    The EU is India’s largest trading partner, accounting for about €86bn of trade in goods and services in 2010. Bilateral trade in goods rose by 20% between 2010 and 2011.”

    Asia Times Online:

    Last year Israel supplied India with $1.6 billion worth of military equipment and is India’s second-largest defense supplier after Russia. Sales are only going to rise. Indian defense procurements from Israel in the period 2002-07 have touched the $5 billion mark.

    And this doesn’t even get into the China-EU-US-Israel-Saudi Arabia wheels-within-wheels complications when it comes to arms deals, hoped for arms deals, trade deals, hoped for trade deals, energy politics, and the rest of it….

    It’s not 1985, now is it? The past is a different country, a Russian (Soviet)-oriented Cold War country used to thinking in terms of “Kissengerian” alliances and blocs. An intellectual adjustment may be needed. It’s like 3-D chess out there….

    Speaking of energy:

    “Was Saudi Arabia involved?” (Asia Times Online.) If it makes you feel better, let me point out that Saudi petrodollars continue to fund all sorts of interesting educational activities on the subcontinent, in Africa, and elsewhere, along with Iranian monies. So that’s nice.

    Posted in Business, China, Economics & Finance, Energy & Power Generation, Entrepreneurship, India, International Affairs, Iran, Israel, Markets and Trading, Middle East, Military Affairs, National Security, North America | 2 Comments »

    Syria, Iran and the Risks of Tactical Geopolitics

    Posted by Zenpundit on 13th February 2012 (All posts by )

    Cross-posted from zenpundit.com


    Mr. Nyet 

    World affairs are much more like spider’s web than the neat little drawers of an apothecary’s cabinet. In the latter,  the contents of each drawer are cleanly isolated and conveniently compartmentalized. What you do with the contents of one drawer today has no bearing on what you do next week with those of another. By contrast, with a spider’s web, when you touch a web at any point, not only do you find it to be sticky in a fragile sort of way, but your touch sends vibrations through every centimeter of the lattice.

    Which alerts the spiders.

    Read the rest of this entry »

    Posted in Academia, China, Europe, International Affairs, Iran, Middle East, Military Affairs, National Security, Political Philosophy, Politics, Russia, United Nations, USA, War and Peace | 3 Comments »

    Drucker on Education, 1969

    Posted by David Foster on 20th November 2011 (All posts by )

    About a week ago Instapundit linked this Wikipedia article about the higher-education bubble, noting especially the point that William Bennett predicted the bubble back in 1987. The post reminded me of some interesting and rather prescient comments that Peter Drucker made about education in his 1969 book The Age of Discontinuity. A few excerpts:

    Resources and expectations:

    Education has become by far the largest community expenditure in the American economy…Teachers of all kinds, now the largest single occupational group in the American labor force, outnumber by a good margin steelworkers, teamsters and salespeople, indeed even farmers…Education has become the key to opportunity and advancement all over the modern world, replacing birth, wealth, and perhaps even talent. Education has become the first value choice of modern man.

    This is success such as no schoolmaster through the ages would have dared dream of…Signs abound that all is not well with education. While expenditures have been skyrocketing–and will keep on going up–the taxpayers are getting visibly restless.

    Credentials and social mobility:

    The most serious impact of the long years of schooling is, however, the “diploma curtain” between those with degrees and those without. It threatens to cut society in two for the first time in American history…By denying opportunity to those without higher education, we are denying access to contribution and performance to a large number of people of superior ability, intelligence, and capacity to achieve…I expect, within ten years or so, to see a proposal before one of our state legislatures or up for referendum to ban, on applications for employment, all questions related to educational status…I, for one, shall vote for this proposal if I can.

    Dangers of “elite” universities:

    One thing it (modern society) cannot afford in education is the “elite institution” which has a monopoly on social standing, on prestige, and on the command positions in society and economy. Oxford and Cambridge are important reasons for the English brain drain. A main reason for the technology gap is the Grande Ecole such as the Ecole Polytechnique or the Ecole Normale. These elite institutions may do a magnificent job of education, but only their graduates normally get into the command positions. Only their faculties “matter.” This restricts and impoverishes the whole society…The Harvard Law School might like to be a Grande Ecole and to claim for its graduates a preferential position. But American society has never been willing to accept this claim…

    It is almost impossible to explain to a European that the strength of American higher education lies in this absence of schools for leaders and schools for followers. It is almost impossible to explain to a European that the engineer with a degree from North Idaho A. and M. is an engineer and not a draftsman. Yet this is the flexibility Europe needs in order to overcome the brain drain and to close the technology gap.

    Read the rest of this entry »

    Posted in Academia, Book Notes, Britain, China, Education, Europe, France, Science, Society, USA | 29 Comments »

    Big Prestige Projects and the Obama Way

    Posted by David Foster on 15th November 2011 (All posts by )

    Barack Obama:

    “It makes no sense for China to have better rail systems than us, and Singapore having better airports than us. And we just learned that China now has the fastest supercomputer on Earth — that used to be us.” (Nov 3, 2010)

    “America became an economic superpower because we knew how to build things. We built the Golden Gate Bridge, and the Hoover Dam, and the Interstate Highway System. And now, we’re settling for China having the best high-speed rail, and Singapore having better airports? When did that happen? “(Oct 25 2011)

    George Savage juxtaposes the latter Obama statement with his decision, only two weeks later, to delay approval for the construction of a Canada-to-Texas oil pipeline, which was estimated to provide about 20,000 jobs, as well as having an obvious beneficial impact on America’s energy security. Indeed, it should be obvious at this point that the main inhibitors to the building of any large project whatsoever are regulatory overreach and complexity and the exploitation of the legal and regulatory environment by precisely the kind of activists that Obama the community organizer has spent much of his life encouraging. Obama’s complaints about us not building things resemble the plea of the defendant who killed both of his parents and then asked for mercy because he was an orphan. (More thoughts on large projects then versus now at my post like swimming in glue.)

    But in addition to the above point, the kinds of projects about which Obama waxes enthusiastic (to the degree that any enthusiasm is contained in his rather flat emotional range) reveal much about the “progressive” economic worldview.

    Read the rest of this entry »

    Posted in China, Tech, Transportation, USA | 6 Comments »

    Quote of the Day: John Robb

    Posted by Lexington Green on 18th August 2011 (All posts by )

    Global transition points like this are so rare, it’s a great time to be alive.

    John Robb

    Right on. Yes. Yes.

    More of this type of thinking, please.

    If I could live at any time in history it would be now.

    (If you are not a regular reader of Mr. Robb’s Global Guerrillas, get that way.)

    (Also check out Mr. Robb’s way cool new Wiki MiiU, which is all about resilience. I eagerly await his book on resilient communities.)

    (Here is an xcellent John Robb talk about open source ventures, but full disclosure, a lot of it sailed over my head.)

    (And if you have not read his book, Brave New War: The Next Stage of Terrorism and the End of Globalization, go get it.)

    Friends, please let me know in the comments, on a scale of 1 to 5, strongly disagree to strongly agree, how you respond to this quote. Put me down as a 5, obviously enough.

    Posted in Anglosphere, Big Government, Business, China, Christianity, Civil Liberties, Civil Society, Conservatism, Economics & Finance, Education, Elections, Energy & Power Generation, Entrepreneurship, Health Care, History, International Affairs, Internet, Libertarianism, Management, Markets and Trading, Media, Medicine, Military Affairs, National Security, Personal Finance, Political Philosophy, Politics, Predictions, Quotations, Science, Society, Space, Taxes, Tea Party, Tech, USA, War and Peace | 21 Comments »

    On the ideas that follow us, one decade to the next….

    Posted by onparkstreet on 11th July 2011 (All posts by )

    Detente’s greatest achievement was the opening of consistent contact between the United States and the USSR in the early 1970s—a gradually intensifying engagement on many levels and in many areas that, as it grew over the years, would slowly but widely open the Soviet Union to information, contacts, and ideas from the West and would facilitate an ongoing East-West dialogue that would influence the thinking of many Soviet officials and citizens.

    - From the Shadows: The Ultimate Insider’s Story of Five Presidents and How They Won the Cold War by Robert M. Gates. (I am currently reading this book).

    Indeed Washington’s on-again off-again attention to the region, driven by relatively short term developments like the Soviet-Russian invasion of Afghanistan and the war against terror, makes Iranian and Chinese overtures appealing to Pakistan, Sri Lanka, Bangladesh, and Myanmar.

    - A Sino-Persian grab for the Indian Ocean? by Jamsheed K. Choksy (Small Wars Journal)

    Earlier this month the Chairman of the Joint Chiefs of Staff, Admiral Michael Mullen, twisted his mouth into the shape of a pretzel to explain why it was okay for the U.S. to support Pakistan’s nuclear arsenal but not okay to support North Korea’s arsenal and Iran’s nuclear ambitions. He also saw no problem with the United States as much declaring war on India when he sympathized with Pakistan’s need to use nuclear weapons against India in order to feel safe.
     
    Then Americans wonder why Pyongyang and Tehran laugh at Washington’s lectures on nuclear proliferation. The leaders of both regimes have been doing clandestine nuke business with Pakistan for decades. They know Pakistan is the biggest nuclear weapons proliferator on the planet — and so does Mullen, who is the highest ranking military officer in the USA and as such is the principal military advisor to the President of the United States, the National Security Council, and the Secretary of Defense.
     
    That’s not the half of the double standard America has practiced with regard to Pakistan. Barely a day goes by that the American news media doesn’t warn of the dangers of a nuclear-armed Iran because of the regime’s end-of-time religious views, which American news analyst John Batchelor has termed “hallucinatory.”
     
    It doesn’t get more hallucinatory than the views of Pakistani media mogul, Majeed Nizami, the owner of the Nawa-i-Waqt, The Nation, and Waqt TV channel. During a recent speech at a function given in his honor he declared that Pakistan’s missiles and nuclear bombs were superior to “India’s ghosts,” and that unleashing nuclear war against India was imperative. “Don’t worry if a couple of our cities are also destroyed in the process.”
     
    That would be the same Nation newspaper that cites the United States government as being behind every terrorist incident in the world, including the Times Square attack.
     
    If you think Nizami is an isolated nut case, you don’t know much about him, or Pakistan. He is the true face of the most powerful factions in Pakistan including its military leaders.
     
    But in the view of the U.S. government and news media it’s okay for Pakistan’s military to hold hallucinatory views whereas it’s not okay for Iran’s leaders because, well, because.
     
    It’s the same for anti-Semitic views that abound in Pakistan. In the same article that discussed Nizami’s view that nuclear Armageddon was the ticket to peace in South Asia, Pakistani journalist Shakil Chaudhary reported on a June 18 column in Nizami’s Nawa-i-Waqt paper in which Lt. Gen. Abdul Qayyum (ret), former chairman of Pakistan Steel Mills, approvingly quoted Adolph Hitler as saying: “I could have annihilated all the Jews in the world, but I left some of them so that you can know why I was killing them.”

    - He ain’t heavy, he’s my genocidal, hallucinatory, two-faced ‘ally’ by blogger Pundita.

    Why do you suppose certain factions in DC appear so adamant on retaining Pakistan as a “strategic asset” post 9-11 and post Abbottabad? CBz blogger Joseph Fouche recently posted a nice piece about the tendency for some to see patterns and intrigues when mere muddle may well explain reality. Sadly, I am prone to this….

    So what exactly is our muddle? Is what I’ve posted above overstated and alarmist? State and USAID want to keep its various lucrative aid programs? The Pentagon/DOD want to keep its favorite “proxy” Army for future use against any kind of “sino-islamic” alliance – or Russia or Iran? Tons of money (supposedly….take all of this with a grain of salt) sloshing around DC from various foreign entities, such as the Saudis or the Pak Mil/ISI? Plain old strategic “incompetence” typical of a big, energetic and free-wheeling democracy?

    What other rationales might be keeping warring DC factions up at night? Placating the Saudis and keeping the oil flowing? Monitoring Pakistani nukes? (Okay, this one for sure). Preventing even more proliferation via Pakistani-Saudi transfers?

    The world is three dimensional and complicated with various currents pulling our policy makers in different directions. I’d be delighted to hear creative thinking on any of these topics by one of the Republican presidential candidates. Your thoughts? Opinions? Relevent anecdotes, articles, films, or books?

    Help a gal out, people.

    Posted in Afghanistan 2050, Afghanistan/Pakistan, China, Economics & Finance, History, International Affairs, Iran, Iraq, Middle East, Military Affairs, Russia, Terrorism | 7 Comments »

    Interview with Lord Wolseley, Concerns about Muslim Fanatics, Rising China

    Posted by Lexington Green on 4th May 2011 (All posts by )

    Lord Wolseley was the most distinguished British soldier of the Victorian era. My favorite book from last year was his two volume memoir. A third volume, full of further astonishing adventures was unfortunately never written. (I do wonder if there are any surviving notes or drafts, though? HIs papers are apparently housed at Hove, near Brighton. I wonder if you just asked around on the street in Hove if someone would direct you.)

    Lord Wolseley gave an interview which led to this article in the Review of Reviews for September, 1890.

    As I mentioned previously, his resume beggars belief:

    Read the rest of this entry »

    Posted in Anglosphere, Britain, China, History, International Affairs, Islam, Military Affairs, USA | 19 Comments »

    SpaceX and The Evil That Men Do

    Posted by James McCormick on 28th April 2011 (All posts by )

    Welcome to the big leagues, rookie!

    Rand Simberg reports that the Russians have suddenly become concerned about the safety of the SpaceX Falcon 9 rocket when used as a supply vessel for the International Space Station … now that that rocket seriously threatens the near-term Russian monopoly in heavy lift transport of people and materiel.

    SpaceX’‘s story, for those who aren’t space enthusiasts, is a tale of new technology, dot-com money, and threatened “iron rice bowls” from one end of the high-technology world to the other.

    Started in 2002 by Elon Musk with money he acquired after co-founding PayPal, Musk’s vision was to develop a new American liquid-fueled rocket engine and use economies of production and scale to reduce per-pound launch costs to a fraction of current commercial rates. Rather than a game of giant consortia, he thought that a relatively small private company could launch commercial rockets safely and much more cheaply.

    In the early years, the Falcon 1 rocket, using a new Merlin engine designed and manufactured by SpaceX, was subject to several flight failures that insiders largely attributed to lack of company access to the vast body of engineering lore used in past rocket launches. Not enough engineers. Not enough expertise. Whether that was true or not, the Falcon 1 (single engine) rocket had its first successful launch-to-orbit in 2008. Six years from blank piece of paper to orbit. Nonetheless, Musk has often been dismissed by other commercial space launch organizations as a dilettante, wasting his own money on a venture that would never amount to much, and would certainly never deliver any service cheaper than the giant aerospace companies of Russia, China, the EU, and the United States.

    All that started to change when less than two years after the successful launch of the Falcon 1 rocket, SpaceX’s new Falcon 9 (running 9 Merlin engines in tandem) was able to reach orbit. Suddenly SpaceX had a rocket big enough to deliver serious weight to space, and compete with the biggest commercial and state-sponsored launch services. Musk’s philosophy of rocket modularization (and cost reduction) had been proven out. A mere six months later, the company launched a second Falcon 9 to orbit with a pressurized “Dragon” capsule on top. SpaceX became the first private firm to launch and recover a crew-capable space capsule, with a splash-down off the Pacific coast of the US. To successfully launch a brand-new model of rocket, twice, with complete success, defies the laws of probability in the space launch industry. Maybe Musk really had stumbled onto a new way of designing, manufacturing, and operating rockets.

    The idea that a private firm could deliver cargo, let alone crews, to the International Space Station at a fraction of the cost of the Space Shuttle or Russian Soyuz capsules would have been inconceivable a decade ago. And yet here we are in 2011 with an American dot-com multi-millionaire announcing new rockets and successfully delivering them.

    Just recently, SpaceX announced plans to develop the “Falcon Heavy” which would run three Falcon 9s (3×9=27 engines) as a single first stage, delivering a proposed 117,000 pounds to Low Earth Orbit … more than the capacity of all other currently available commercial heavy-lift rockets. More, in fact, than has ever been lifted in single launches since the Saturn V carried the Apollo moon missions star-wards. First launch of the Falcon Heavy is scheduled for 2013, from Vandenburg Air Force Base. Characteristically, Musk isn’t shy about his dream for the Falcon Heavy. Hypothetical trips to the Moon, to Mars, to an asteroid, now fill his speeches.

    Musk’s earlier claims of “game-changer” technology and corporate process appear to be coming true. If he delivers on his recent promises with anything near the success rate of his earlier claims, almost every space-faring nation or corporation is going to be deeply affected.

    Let’s be clear, also. Musk has played the taxpayer-dollar game skillfully as he’s found initial technical success and grown his company’s staff and technical capacity. He’s received several multi-million dollar contracts from NASA for demonstration flights and future cargo delivery to the Space Station. He’s parked his corporate facilities in California (HQ and manufacturing), Texas (engine test-stand), and Florida (Cape Canaveral launch facilities) … covering his political bases by hedging good relations with US senators who already know what kind of money and jobs are created by space industry. The only senator not to dip his beak, as far as I can tell, was from Alabama (Huntsville). So Mr. Musk knows his domestic politics, or has learned its harsh anti-market lessons. And he’s successfully squared the circle of NASA bureaucracy, launching rockets on the one hand, and reassuring various government agencies that he should be allowed to.

    But the opening salvo by the Russians is a prelude to a new playing field that Musk will need to master. International politics.

    There are a lot of rocket engineers around the world who’ll be out of work if Elon Musk and his company can deliver cargo and people to space for half of what it costs the current aerospace giants. And even the Russians and Chinese, who can subsidize launch costs to the tune of hundreds of millions of dollars, still can’t afford to give away those launches indefinitely. Both nations operate in the market economy to the extent that they can, at the very least, estimate their per-launch losses trying to undercut SpaceX’s prices.

    As an amateur who’s thrilled by the appearance of a private space industry in the last ten years, I enthused about SpaceX’s successful December launch to an colleague (ex-military) who specializes in high-tech project management. His response was “now the sabotage begins.”

    And he may well be right. Whether Musk has been smart, or just plain lucky, the progress of SpaceX over the last decade has been (to my mind) dramatic. My sense is that it’s a matter of capital investment leveraging a backlog of knowledge (in technology and operational process). As long as he was a unproven minnow at the government trough, he could be ignored. Now however, SpaceX is getting big enough to put a dent in established companies’ profits and executive bonuses. There’s no reason why nations or large corporations could not have duplicated what Musk has done … but they either had no incentive or had organizational and social impediments. An “installed base.”

    At the moment, they don’t seem to be trying to beat him with comparable technology. And he doesn’t seem to want to be bought out. So what competitive strategy is left? Political impediments are cheapest. Intellectual property theft is likely but it still takes time to turn that into a competing product. And what if the technology is just a part of the equation. What if workforce optimization and “one rich, risk-taking, boss” are the essential components of SpaceX’s rapid success? Will sabotage of SpaceX rockets be the only route to slowing the company down? Fulfilling, conveniently, Russian “concerns.”

    Up until now, Musk has been calculating costs based on his technical requirements for design and manufacture (with a fudge factor for domestic political arbitrage). I rather doubt he’s also factored in the burgeoning security apparatus he’ll need to wrap around SpaceX’s activities to inhibit industrial espionage and/or industrial sabotage. And as he takes on more government contracts (both military and civilian), no doubt the bureaucratic restrictions on payload handling and the extra demands for operational oversight will boost company costs dramatically. Will SpaceX be strangled by a combination of bureaucrats, thieves, and saboteurs?

    It’d be disheartening to see SpaceX costs slowly but surely reach equilibrium with pricing in the rest of the industry. But there’s no doubt that, left to itself, the private space industry will make some wealthy men incredibly rich, and some aerospace executives unemployed. How clever people respond to that challenge will be interesting to watch.

    Enough SpaceX technology appearing in other countries in bootleg form, and enough “unexplained” failures of those really big (really expensive) SpaceX rockets, will spell a new and grimmer phase of the private space business. More and more “iron rice bowls” are being broken by SpaceX with each passing year. Hope Elon’s brushing up on his Sun Tzu.

    Posted in Big Government, China, Europe, Human Behavior, National Security, Politics, Russia, Science, Space, Tech | 5 Comments »