Am I stuck in soldier mindset if I stress my 'folk priors,' which find ample confirmation in the Russia-Ukraine crisis, and which remain crucial takeaways? See my list, below. I trust that readers can readily supply illustrations from the concrete history of the crisis.

a) It's complicated.

b) Most people don't think it's complicated.

c) Competition among States raises the stakes and intensity of decision-making under uncertainty.

d) The great man theory of history is half right.

e) History is the result of human action, not any human design.

f) Statesmen are prone to illusion of control.

g) Statesmen often overestimate the rationality of their enemies.

h) Statesmen often underestimate the rationality of their enemies.

i) Politics is about status.

j) People care a lot about status.

k) It's very risky to poke a bear.

l) Consensus about red lines is elusive in the shadow and crucible of war.

m) What is unthinkable today can become righteous tomorrow.

n) It's hard to see through the fog of war.

o) Social desirability bias compounds the fog of war.

p) War is hell.

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One thing I think I learned is that Russia isn’t particularly important economically.

Everyone at the company I work for was concerned about the impact of the sanctions, but when we looked at the numbers, we found that our revenue from Russia was trivial… and “trivial” might overstate it. The complexity and risk of navigating the sanctions regime, and the challenges of getting money out of the country given the financial industry sanctions, were much greater than simply cutting off all sales to Russia. This was surprising. I suspect everyone realizing “selling to Russia isn’t worth the hassle” is why you saw so many western companies simply stopping sales to Russia.

In contrast, I spent a good bit of time over the prior year trying to get trade licenses to sell to Huawei. Huawei was much more important economically than the entire country of Russia. By a lot.

Perhaps a corollary is that Russia seems more dependent on its energy exports than Europe is dependent on importing energy from Russia. I had thought Russia’s ability to cut off energy supplies to Europe was going to be an “Ace up Russia’s sleeve”. But it doesn’t seem to be playing out that way.

Given the above, I think people (myself included) need to be more thoughtful about what lessons we export from Russia to China. The interdependency of the Western and Chinese economies is enormous, even setting aside semiconductors and Taiwan. The consequences of a similar dust up with the Chinese would be extremely different than what we’ve seen here.

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Semi-conductors. It seems that Neon gas is crucial in semiconductor manufacture as the etching lasers need it… Ukraine supplies 50% of neon. The gas is not difficult to extract from the atmosphere but it needs a lot of energy. Russia/Ukraine are energy-rich.

Russia supplies a large amount of the World’s fertiliser without which food production slumps, food prices go up. Fertiliser is made from natural gas of which Russia has plenty.

Society advance is based on ‘power’ - power that energy creates. Mankind started out as a primitive with little power, just fire, and advanced as his ability to produce power increased.

It takes a huge amount of power to send men to the Moon, huge amounts of power to build skyscrapers, bridges, smelt aluminium, produce food, distribute food and goods and much more.

The West via its Net Zero is determined significantly to reduce its ability to produce power, even relying on the randomness of nature - wind & solar - to provide it, unreliable and intermittently. The West already is reducing its output to reduce its use of power as it reduces availability of energy. That in turn will cause economic regression.

So the more advanced economic power wins? No the more energy rich, able to produce more power wins. That’s going to be Russia, China and soon India. There is no economic power, without energy power.

What should be learned is ‘power’ does not mean strength, it means ability to manufacture, move, construct, create/extract new materials, to do new power hungry things, new technology - advance.

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“ And I, for one, do not know what to make of it.” I wish more people didn’t treat a willingness to say this as some kind of character flaw. It’s like they confuse the category of “facts about the universe” with the category of “ethical principles.” Is it because they are so attached to specific applications of those ethical principles to specific facts that they can’t change the application when the facts change, because they feel like they are abandoning the principle?

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Your excellent comment: "We should be asking ourselves about the psychological effect of nuclear weapons in the hands of an unpredictable autocratic regime. That could turn out to be by far the most important lesson to get our arms around" was flashing through my head when I heard about Biden's direct threat to Putin's future in power when the Russian has the biggest finger on the nuclear button in the world.

I was shocked by the stupidity and huge risk to the world of our president's off-the-cuff comments. He shut off Putin's option of declaring victory and going home with some paper promises in hand.

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We may have been taught many things. What "we" learned is yet to be shown.

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Mar 27, 2022·edited Mar 27, 2022

I've often criticized your takes on the war, but I agree with this one 100 percent.

Edit to add: Yours is one of very few substacks I subscribe to, because although your opinions often put a frown on my face, you are open to a very wide swath of information and you synthesize it in lucid ways. I learn a lot here.

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Although the current round of sanctions hasn't bitten the RU military yet, there is a case to be made that the earlier sanctions imposed in 2014 effectively reduced its technological capacity:

Kamil Galeev (@kamilkazani) Tweeted:

Annexation of Crimea was a major blow on Russian military industry. As Sverdlovsk Oblast minister of industry Sergey Perestorin admitted, Ural plants, including tank producing ones, started having problems with components supply immediately after 2014 https://t.co/k5tRAH8ozE https://twitter.com/kamilkazani/status/1507820004632268800?s=20&t=GMHVaf_36BI_1lTj3IOM8A

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I learned I need to learn a lot more.

But while my Slovak wife is studying Ukrainian to better help some of the many Ukrainians here in Bratislava, I'm following lots of other folk.

A big thing learned is that far too little pundit effort was spent on analyzing Ukraine's military, as compared to Russia or NATO. I also learned about the hugely important early Ukraine actions of blowing up dams - to release flood waters - to create fields of mud. Forcing Russians to use limited roads rather than flat, muddy, fields.

I favored "No-Fly Zones" for a day or so, but now I'm sure it's a mistake. More anti-tank & Surface-to-Air anti-aircraft missiles and weapons (like Obama-Biden refused in 2014 but Trump started sending). The Ukrainians are willing to fight, and kill, for Ukraine. That can stop the Russians from winning.

I also learned I was right right right about Trump over Biden. Every single pundit who supported Biden is, ever so slightly, partly to blame for Biden's weakness. (Just as we Trump-supporters are partly to blame for his blowhard tweets.) I noticed, clearly, how Arnold avoids talking about the 2020 Biden-Trump question and whether any voters should learn anything from that.

I'm also sadly disappointed about how very very few Fantasy Intellectuals supported Trump - but I haven't yet made the effort to document them. I know Arnold voted ... present (essentially). I would think this crisis would show more folk that the lesser evil of two is sometimes really important. I pray Biden's loose lips don't lead to any nuclear slips; such an "I told you so" is too terrible.

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We learned from the 2008 - 2020 recession that the Fed was prepared to accept below target inflation for years upon years. This might make us more willing to believe that it will accept above average inflation for years upon years. But that plus the post September performance certainly raises the risk.

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I feel very suspicious that we are getting much beyond cheerleading from the MSM. I’ve heard a few experts like Samo Burja saying that mechanized artillery based warfare just takes a while. All the aside shouldn’t we be more worried about the ripple effects of food price spikes?

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Mar 27, 2022·edited Mar 27, 2022

I don't see the economic balance favoring the West. Not by a long shot. Russia, China, and India alone are a majority of the earth's 11 billion people, and they're all on the other team (and have created a SWIFT substitute). They also have most of the manufacturing capability. Putting a sanctions "fence" around them gives them more consumers and a more capable economy. They will outgrow us for as long as the division lasts.

And of course, the party in power in the US is not even trying to stop it, because Biden, Romney, Kerry, Pelosi, and their sons are on Russian and Chinese as well as Ukrainian payrolls. They are Quislings and the media are in cahoots with them.

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Arnold, I like your comment about you needing to get your arms around the nuclear issue. I for one like a concept you mentioned many years ago about the difference between institutions that are "hard to break" versus "easy to fix." Politically, the emphasis is always on "hard to break". In our current environment, risks associated with nuclear war are overwhelmingly couched in a context of "hard to break" (i.e., deterrence). Although this is absolutely a crucial and necessary perspective (after all, nuclear war would be horrible), the "easy to fix" avenue needs to be explored and implemented also. In other words, some resources should be dedicated to hardening the West, in the horrible event that nuclear war comes. There is currently almost zero effort dedicated to this (at least in the West), which I think is a mistake. Warfare of any type (be is conventional or nuclear) should be mitigated through layers, and civil defense is one such layer.

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It turned out that Fannie and Freddie had taken on too many low-quality loans, but that is in hindsight; I suggest that your criticism of these companies is an instance of Hindsight Bias. No one expected the Fed to mismanage monetary policy in 2008 to the extent that so many mortgage holders would be unable to make their interest payments (or would find it advantageous to default). Bernanke had promised Milton Friedman, "We won't do it again"; but, to everyone's surprise, he broke that promise.

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> it seems to me that one thing we did not learn is that what matters in international conflict is GDP.

It probably makes more sense if you also think in terms of GDP per capita. Throw in population and it gives a useful parameter to think of things.

Russia's GDP is much greater than Ukraine's, but it's GDP per capita is relatively comparable. So for Russia to "win" by devoting its big GDP advantage to the war, it would have to throw many times the amount of resources at Ukraine as it currently is (because they're at near parity in committed military forces).

Even for an authoritarian country, devoting a lot of resources to "total war" seems politically difficult.

I think this can be seen in the US invasion of Iraq as well. The US had both an overwhelming GDP and GDP/capita advantage, it could get away with destroying the Iraqi regime by using only a fraction of its overall strength. Consider the hypothetical where the US' initial invasion had met dramatic and effective resistance. In that case, would the US have had the political willpower to double or triple the number of troops we committed to the war? Maybe, but if it required truly shifting a noticeable amount of resources away from BUTTER to GUNS, a lot of people would object.

So GDP by itself isn't a great determinant, but I think GDP per capita is probably a decent proxy for combat ability.

1. A huge GDP per capita advantage will let a country wage "wars of convenience" because it can wage war on weaker countries without forcing the consequence of redirecting significant amounts of total GDP to the war effort.

2. If GDP per capita is roughly equal, then the side that's more willing to commit all of its GDP to war probably has the advantage, not the side with the highest GDP.

(That is, this started out as a "war of convenience" for Russia. For Ukraine, it's seen as a "war of survival", so they're willing to commit basically their whole GDP to the effort. Perhaps their losses so far have made this a "war of survival" for the Russian regime as well, and because they do have a much larger GDP, they could win in this kind of "Total War" scenario, but it will require devoting a lot more of their economic capacity to the war effort than they have, so far, been willing to devote. Because, of course, it will be politically hard to do so).

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