Keeping up with the FITs, 3/15
Ed West on demographic decline; Tyler Cowen and Sam Bankman-Fried; Richard Hanania thinks in bets; Stephen Kotkin on Russia
UK government cuts did not even reduce the debt, just the deficit, something that is very hard to do when demography is against you. In the early 1960s there were 5 million births in the UK; in 2000-2005 there were just 3.5 million, the cohort about to start work now. Even with unprecedented levels of immigration, with foreign-born mothers now accounting for almost a third of births, there just aren’t enough young people to grow the economy.
The same thing is happening everywhere in Eurasia. In 2000 Thailand had 7 workers for every retiree
…Wealthy countries face unpopular choices as their voters age, including the need for a sharp rise in the retirement age, something that is so politically difficult that, as Morland points out, even Vladimir Putin was defeated in his attempts. He might be the new tsar, and possess the world’s largest nuclear arsenal, but there is one force that no one can defeat: the boomer electorate. Older people tend to vote for their own self-interests, and in the case of Britain, end up controlling the government in power;
The way that we finance Social Security and Medicare, the ratio of dependents to workers is the crucial variable. The more that
falls rises, due to longer life expectancy past “retirement age” (I call it the age of government dependency) and lower birth rates, the more unsustainable our entitlements become. For decades, I have been calling for raising the age of government dependency to account for longer life expectancy among those 65 and older.
Tyler Cowen talks with Sam Bankman-Fried, who says
If you look at most blockchains today, they cannot support millions of transactions per second. Ethereum cannot support millions of transactions per second. Today, it can support ten. Ten is the number of transactions per second it can support. Ten is off by six orders of magnitude from where it needs to get. It’s not close.
This was the most intelligible excerpt I could find. Bankman-Fried made a fortune as a market-maker in crypto. Market-makers tend to make a lot of money in rising markets. And making a lot of money gets you perceived as brilliant. That is my theory of Bankman-Fried.
I’m defining a Ukrainian victory as one where that country is in a better position regarding the main issues of the war, that is the Donbas, Crimea, and NATO. This is basically the scenario that Washington fantasizes about. It would take quite a catastrophic collapse in Russia for this to happen, and even then it would have to be a political choice since the country still has nuclear weapons and can use them even if it has nothing else. Even if Putin falls over the course of the war, which I’d put at 10-20%, there is no Lenin waiting in the wings ready to give up wide swaths of territory at any cost in order to achieve peace. One reason US policy is so frustrating is that it seems to be putting a lot of stock in this outcome, and I think it’s unlikely. But again, war is extremely unpredictable, so I do have to give a Ukrainian victory something of a chance.
Steven Pinker defines rationality as the use of knowledge in pursuit of a goal. By that definition, I think our Twitter-mob diplomacy fails. Instead of rationally pursuing a goal, we are reacting with moral outrage and virtue signaling.
Last week, I recommended a podcast with Stephen Kotkin and Peter Robinson. If you did not have time to listen, The New Yorker has an interview with Kotkin.
The problem for authoritarian regimes is not economic growth. The problem is how to pay the patronage for their élites, how to keep the élites loyal, especially the security services and the upper levels of the officer corps. If money just gushes out of the ground in the form of hydrocarbons or diamonds or other minerals, the oppressors can emancipate themselves from the oppressed. The oppressors can say, we don’t need you. We don’t need your taxes. We don’t need you to vote. We don’t rely on you for anything, because we have oil and gas, palladium and titanium. They can have zero economic growth and still live very high on the hog.
That makes it seem to me that economic sanctions won’t cause Mr. Putin’s downfall.
Here is another interesting remark:
We think of censorship as suppression of information, but censorship is also the active promotion of certain kinds of stories that will resonate with the people.
He is talking about Russia, but possibly it applies more broadly than that?
Read the whole thing. Pointer from Alex Tabarrok.
1. I don't think Hanania is correct about the main causes of the war (Donbas, Crimea, and NATO). Donbas and Crimea became issues when Russia couldn't force Ukraine to abandon its aim to join the EU. In that sense, the war started 8 years ago.
2. American views, on both the left and the right, are largely formed with respect to domestic political interests. If you're a neocon, you're salivating to sell arms and change the regime. If you're vaguely "on the right" and feel like you don't have a home, you look at Twitter and mainstream media and think this mob runs the country. If you're a casual not strongly affiliated person, you look at one country invading another as a relic of a savage past that shouldn't be tolerated. If you're on the mainstream left that's welcomed the neocon element into the Democratic Party establishment and pushed nonsense about "Russian interference" you see the KGB under every bed. If you're on the hard left, you just kind of call for chaos and misrule as usual, and aim potshots at targets of opportunity.
The common element is simply that everyone's priors are based very little on Ukraine and Russia and very much on whatever they were originally concerned about. As such, I have very little concern that the US will much influence a settlement to the war.
3. That, a negotiated settlement to the war, will probably happen sooner rather than later.
3A. Contrary to Hanania, Russia has no practical military options for victory. It can cement control over territory it already controls. But unless it resorts to nuclear weapons, which would unleash long-term consequences that would probably be counterproductive to the Russian regime, it has no practical means of victory. Its army is fully extended and exhausted as a fighting force. Modern operational tempo and equipment are simply not sustainable in war, and there's no practical means for Russia to effect the sort of WWII mobilization that people are crediting them with as being capable of. Nor would it be effective if they did. Instead, note that they're rather pathetically trying to recruit Syrian and Central African (Replubican?!) mercenaries. This, coupled with their stalled offensives and rapidly dwindling supplies of advanced arms, is a strong signal of the end. Stalemate at best.
3B. Likewise, Ukraine has no practical method of recovering Donbas or Crimea. Contrary to what the Twitterati might think, this isn't a video game. They're dying in large numbers and want that to stop. Which is why, by every account I've seen, both sides have called negotiations productive. Counter to the anti-Twitterati, it's extremely irrational to believe that they are going to be influenced by Twitter or by the silky words of American politicos to actually "fight to the last Ukrainian" unless they want to fight to the last Ukrainian. Assuming otherwise seems to be an assumption of extreme irrationality that we would never employ upon ourselves.
Simply put, if you consider yourself rational enough to know that the talking head's words of encouragement on CNN are empty, the folks who are living in the Kiev metro system to avoid shelling probably can too.
“When you’re rich, they think you really know!” -Tevye