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Many things. Many, many things. I have a pet theory that the primary thing that has been preventing the Ukraine conflict from expanding is precisely that all si

by jerf 4y ago

Many things. Many, many things. I have a pet theory that the primary thing that has been preventing the Ukraine conflict from expanding is precisely that all sides understand the economic gun pointed at all the participants, much moreso than the military situation. (I can't prove it and I won't even argue for it much; I'm calling it a "pet theory" after all. I don't even put a huge amount of stock in it myself.) The economic damage that could be done by each side is theoretically less than an all-out military assault, but in terms of cost/benefit, you get a somewhat similar result with a much smaller effort in the economic sphere right now. It's a rather bizarre game theory situation. China in particular can easily trigger a huge crisis from what I can see. Selling off their treasuries more aggressively would do damage. They could also simply stop trading entirely unilaterally. Or both. And that's not even my complete list of things they could do to tip over the West as a whole. However, it will hurt them as well. It becomes a super complicated analysis of the relative damage of the collapse, the probability that the current ruling classes can weather the damage, the assessment of the other side going nuclear, the true beliefs of the parties about relative military strength... I can tell you how the participants are publicly posturing and a certain amount of visible public jockeying on the issue (pay attention to the BRICS and their posturing and actions around non-dollar international currencies), but your guesses about the true internal beliefs of all the parties or the objectively real situation are as good as mine. Note this is not unilateral. I think China's economy is dangerously precarious too, and the West could probably tip it over... but again, that would hurt the West as well, and all the previous paragraph applies in both directions. (And note how I distinguish "posturing" vs. "actions" on the non-dollar currencies, because there are both things. And I also distinguish "internal beliefs" from "reality" because history shows that the two are often detached in decision maker's minds. One of the most dangerous situations for war historically is when at least one side's opinion is highly divergent from reality.)

paganel 4y ago
The thing is that both China (during Mao's years) and Russia (during the shock therapy of the 1990s) have had to endure severe economic hardship, and even so, they didn't break. They won't break if the West decides to up the ante even more and if it decides to set up a total naval blockade against China, let's say. On the other hand the most that the West had to endure when it comes to economic hardship since WW2 were a couple of really grim years in the late '40s, followed immediately after that by about three decades of sustained economic growth. Ideologically they're not set up for economic penury, neither their leaders, nor the Western populations themselves. As such, this insistence that the West has on "let's hurt them (Russia and China) economically!" is in a fact a manifestation of its own insecurities.
- cloverich 4y ago
  A weak economy is less able to fund a strong military. If the country signals a desire to use their military for conquest, it seems relatively sound to sanction the country as a means to constrain it first and foremost. I don't think the primary goal need be anything more than "make military conquest more expensive" and e.g., less likely to succeed. It's not hard to imagine what Russia would be doing right now if its economy were 10x as strong as it is.
- another2another 4y ago
  >both China (during Mao's years) and Russia (during the shock therapy of the 1990s) have had to endure severe economic hardship Actually I would argue the exact opposite is true. Russia and China have never had it so good, why should they throw away all the hard earned advantages they've gained just because some 3rd term teddy bear president tells them to?
  - golergka 4y ago
    Because they are police states and people are disunited and afraid.
- JamesSwift 4y ago
  Globalization means that China of today and China under Mao are not necessarily the same, and can't be viewed through the same lens. The internet is a Big Deal in terms of providing an outside perspective to willing Chinese looking to see what life is like outside of the Great (Fire)Wall. That said, you can't apply a western perspective when understanding China and the Chinese viewpoint. I spent some time over there and was constantly surprised by how the Chinese viewed themselves and their government and the world, in contrast to how I viewed the same.
another2another 4y ago
>Selling off their treasuries more aggressively would do damage Er, who's gonna buy them? Interest rates have risen significantly since they were issued so they would be selling at a big discount.
- jerf 4y ago
  That's the damage; reducing demand even more. Remember that when the United States Treasury is selling their treasuries, they're selling into the same market. Crashing demand leaves the Treasury unable to raise money. And then the second-order effect of this in a derivative-riddled market causes its own havoc. Part of the reason they don't fire this gun is precisely that they'd lose out on a lot of value. But then, what do they do if the US signals strongly that it is going to go ahead and inflate the currency sharply, meaning they're only going to get a de facto big discount anyhow? And I don't mean that as a simple question, where I'm implying a certain answer I'm trying to convince you of. You have to game this out like a game of chess, where this cascades out into a huge decision tree. The tree has gotten complicated lately. Taking economic damage to deal your enemy a bigger economic blow is getting disturbingly close to a rational move lately, in cold global realpolitik terms. Would China be willing to bet they could roil the US in enough domestic chaos that US leadership would become uninterested in stopping their incursion into Taiwan, even if it meant taking a hit themselves? I'm not saying the answer is "yes". I'm saying "the answer is a lot more complicated than it was a decade ago".
  - lordfrito 4y ago
    > That's the damage; reducing demand even more Not saying your pet theory is wrong. But it does sound a lot like cutting off your nose to spite your enemies face.
    - jerf 4y ago
      The key element you're missing in that analogy is that a lot of this failure and damage is going to occur anyhow. Economic fragility is baked into the cake. We're looking at a down cycle for everyone here. There's no option where we all hold hands together in happy harmony and the economy just keeps going up for everybody, or likely, we'd take it or some approximation of it. In this environment, weighing out whether you can cause proportionally more damage in your enemy's collapse by some action or other becomes distressingly rational. Contemplate a payout matrix that looks like the Prisoner's Dilemma, except the payout for snitching while the other player doesn't is still negative, instead of zero. If that's your game theoretic situation, complaining that a player took an option with an expected negative payout is a null objection. There was no alternative. So the game changes. This is part of why I say it's different than a decade ago. We did have some approximation of a hold-hands-and-be-happy option and we did take it. One can quibble about the details; I'm definitely on team "can was kicked down the road" rather than "everything was fixed, hooray", but hey, that's debatable.

by jerf 4y ago

paganel 4y ago

The thing is that both China (during Mao's years) and Russia (during the shock therapy of the 1990s) have had to endure severe economic hardship, and even so, they didn't break. They won't break if the West decides to up the ante even more and if it decides to set up a total naval blockade against China, let's say. On the other hand the most that the West had to endure when it comes to economic hardship since WW2 were a couple of really grim years in the late '40s, followed immediately after that by about three decades of sustained economic growth. Ideologically they're not set up for economic penury, neither their leaders, nor the Western populations themselves. As such, this insistence that the West has on "let's hurt them (Russia and China) economically!" is in a fact a manifestation of its own insecurities.

cloverich 4y ago
A weak economy is less able to fund a strong military. If the country signals a desire to use their military for conquest, it seems relatively sound to sanction the country as a means to constrain it first and foremost. I don't think the primary goal need be anything more than "make military conquest more expensive" and e.g., less likely to succeed. It's not hard to imagine what Russia would be doing right now if its economy were 10x as strong as it is.
another2another 4y ago
>both China (during Mao's years) and Russia (during the shock therapy of the 1990s) have had to endure severe economic hardship Actually I would argue the exact opposite is true. Russia and China have never had it so good, why should they throw away all the hard earned advantages they've gained just because some 3rd term teddy bear president tells them to?
- golergka 4y ago
  Because they are police states and people are disunited and afraid.
JamesSwift 4y ago
Globalization means that China of today and China under Mao are not necessarily the same, and can't be viewed through the same lens. The internet is a Big Deal in terms of providing an outside perspective to willing Chinese looking to see what life is like outside of the Great (Fire)Wall. That said, you can't apply a western perspective when understanding China and the Chinese viewpoint. I spent some time over there and was constantly surprised by how the Chinese viewed themselves and their government and the world, in contrast to how I viewed the same.

another2another 4y ago

>Selling off their treasuries more aggressively would do damage Er, who's gonna buy them? Interest rates have risen significantly since they were issued so they would be selling at a big discount.

jerf 4y ago
That's the damage; reducing demand even more. Remember that when the United States Treasury is selling their treasuries, they're selling into the same market. Crashing demand leaves the Treasury unable to raise money. And then the second-order effect of this in a derivative-riddled market causes its own havoc. Part of the reason they don't fire this gun is precisely that they'd lose out on a lot of value. But then, what do they do if the US signals strongly that it is going to go ahead and inflate the currency sharply, meaning they're only going to get a de facto big discount anyhow? And I don't mean that as a simple question, where I'm implying a certain answer I'm trying to convince you of. You have to game this out like a game of chess, where this cascades out into a huge decision tree. The tree has gotten complicated lately. Taking economic damage to deal your enemy a bigger economic blow is getting disturbingly close to a rational move lately, in cold global realpolitik terms. Would China be willing to bet they could roil the US in enough domestic chaos that US leadership would become uninterested in stopping their incursion into Taiwan, even if it meant taking a hit themselves? I'm not saying the answer is "yes". I'm saying "the answer is a lot more complicated than it was a decade ago".
- lordfrito 4y ago
  > That's the damage; reducing demand even more Not saying your pet theory is wrong. But it does sound a lot like cutting off your nose to spite your enemies face.
  - jerf 4y ago
    The key element you're missing in that analogy is that a lot of this failure and damage is going to occur anyhow. Economic fragility is baked into the cake. We're looking at a down cycle for everyone here. There's no option where we all hold hands together in happy harmony and the economy just keeps going up for everybody, or likely, we'd take it or some approximation of it. In this environment, weighing out whether you can cause proportionally more damage in your enemy's collapse by some action or other becomes distressingly rational. Contemplate a payout matrix that looks like the Prisoner's Dilemma, except the payout for snitching while the other player doesn't is still negative, instead of zero. If that's your game theoretic situation, complaining that a player took an option with an expected negative payout is a null objection. There was no alternative. So the game changes. This is part of why I say it's different than a decade ago. We did have some approximation of a hold-hands-and-be-happy option and we did take it. One can quibble about the details; I'm definitely on team "can was kicked down the road" rather than "everything was fixed, hooray", but hey, that's debatable.