The Coming Holocaust

 

The Economist has published an alarming analysis of the situation of Taiwan.

Apparently, China has established naval dominance in the Eastern Pacific. The proximity of the Chinese mainland ensures air dominance over Taiwan. This dominance cannot be reduced without bombing the Chinese mainland. 

American wargaming now shows the Chinese winning any confrontation with the US over Taiwan.

The Economist, as always, is relatively sanguine about the prospects. Why would China risk upsetting the global applecart so long as the situation for them is improving year over year?

I am less sanguine. If this were their calculus, why march in and take Hong Kong? Why rattle sabres in the South China Sea? Why cross the Zone of Actual Control with India?

It is not clear that things are really improving for China year over year. The calculation in Beijing may be the opposite: that things are likely to collapse unless something is done to reshuffle the deck. 

What is really going on in China in economic terms has never been transparent. We must rely on government reporting on their own performance. It seems likely the figures are fake. The prosperity is real, so long as everyone thinks it is real. But it can pop like a soap bubble.

China is progressively less competitive on their prime advantage, cheap labour. Without that, can they compete with the West on innovation and efficiency? I suspect a centrally-planned society intrinsically cannot. The officials in Beijing see the real accounts, and they may look grim.

This, after all, is the obvious explanation for the rapid rise of Xi Jinping’s totalitarian domestic policies. The government feared unrest. Loosening up failed to save the old Soviet regime in Russia; they were determined to do the opposite. 

The Soviet Union hit a wall and collapsed: this seems to have been because their economy was all smoke and mirrors. Nazi Germany faced the same dilemma: their impressive economic performance towards the end of the 1930s was based on cooking the books and printing money. Hitler had no choice but to invade neighbouring countries and seize assets to meet the next payroll or debt repayment.

Xi’s China may be in the same situation. They may have taken Hong Kong because they needed the assets. They may have been probing for weakness elsewhere.

They may see a pressing need to take Taiwan.

Taiwan is the world’s largest chipmaker. That is an immense asset. China could rule the market in high-tech.

For this reason, taking Taiwan could also change the balance of power globally. According to someone The Economist quotes, losing Taiwan could be “America’s Suez,” the effective end of US dominance.

In other words, the stakes are gigantic, for both China and the US. The stage is perfectly set for a serious, total war; for neither side can easily accept defeat.

And it would probably be a world war. Australia, India, Japan, are also necessarily deeply concerned should China come to dominate. Britain and France have also recently signaled their concern, sending warships to the area. Vietnam, the Philippines, Indonesia, South Korea, Canada, would probably also join an American-led anti-Chinese coalition.

China may bank on the West being too decadent to pull themselves together to resist. And they may be right, Ominously, a poll suggests only 50% of the Taiwanese themselves are prepared to resist if China invades. 

But Hitler made the same calculation in 1939, and turned out to get wrong. Imperial Japan made the same calculation in 1941, and turned out to get wrong.

And we thought COVID was the big problem…

A Chronicle of China Dying

Things are seldom what they seem.

What is China up to? 

There is much talk these days of “Thucydides’ trap,” the idea that a dominant power inevitably comes into conflict with an emerging power; and so the US must inevitably go to war with China. Some go further, and suggest that China will inevitably overtake the US for dominance, and within our lifetimes.

That is not what I see happening. To begin with, by this thesis, it should be the US that is getting bellicose. I see China rattling the sabres, not the US. Further, if China’s rise is inevitable, the last thing China should want to do is to take any risk of provoking war—a war now is the only thing that might stop them, by reshuffling the deck.

Instead of a rising power, I smell dead meat.

This smells instead to me like what happened with Nazi Germany, and what happened to the Soviet bloc. Neither of which fit into Thucydides’ little mouse trap. If anyone ever did.

To my mind, and my reading of history, a war is at least as often the thrashing about of a power that feels itself in trouble.

Like Austria-Hungary, the relatively impoverished and senile power that actually started World War I. Or the Confederate States of America, an agrarian slaveholding society seeing itself threatened by the growing industrialization and the growing population of the anti-slavery North. Or Japan entering World War Two, calculating that they needed to grab a source of oil or soon die. Or Hitler invading the Soviet Union, probably for the same reason.

But as for Hitler, let’s back up a few years. Hitler’s government, in the 1930s, performed what looked like economic miracles for a prostrate Germany. Just as China’s government seems to have done since 1990. Just as Stalin seemed to do for Russia in the 1950s. Unfortunately, Nazi Germany in the 1930s was an economy run as a Ponzi scheme, printing money and hiding the real books, and Hitler understood that he could only keep the whole thing from collapsing by, first, confiscating the wealth of the Jews, and, second, invading and confiscating the wealth and labour of other lands. Czechoslovakia, then Poland, then… So war was inevitable; it was baked in the cake.

Outwardly, everyone seemed to think the economy of the Soviet Bloc was growing and competing with the West right up until the year it fell. Before it suddenly fell, many of not most Western intellectuals assumed the Soviet Bloc was on the brink of supplanting the West. Even such a right-winger, and such a savvy right-winger, as Henry Kissinger, who when he became Secretary of State compared himself to Metternich, as someone charged with trying to sustain a declining empire.

Yet the Soviet Union fell, apparently, because the government ran out of money. They could no longer afford to try to control or financially support their satellites. They could no longer afford to keep up with the USA in an arms race. And once the dust settled, the Russian economy was revealed to be significantly smaller than the economies of such second-tier powers in the West as Italy.

Might the same thing be happening to the Chinese Communist government? Their development indeed appears to be fast—but so did Nazi Germany’s. They have been sinking a great deal of money into armaments in order to mount a credible competition with the US. They have evidently been spending a lot of money to subvert prominent people in other parts of the world, and spending hugely on their “belt and road initiative” to buy influence abroad. There have been vast flashy infrastructure projects, high-speed trains and giant dams and the like. Just like Hitler with his Berlin Olympics and celebrated system of autobahns. Is it all an attempt to impress without real substance behind it? There have been entire cities constructed which, rumor has it, have been in the end abandoned and left to rot.

We do not know what is real, because, like Nazi Germany or the Soviets, the accounting for all of this has not been public. But surely, if it were real, there would be no reason not to trumpet the actual figures.

In theory, the Chinese economy should not work. Like that of the old Soviet Union, it lacks incentives. The joke then was “we pretend to work, and they pretend to pay us.” While China has to some extent gone “free market” there is still a heavy burden of government, taxation, and systemic favouritism towards government-run businesses, so that hard work and enterprise is not well-rewarded. In theory, central control is also going to be less efficient in allotting funds and resources than are free markets. To put it plainly, Chinese-style central planning has never worked elsewhere. It has only appeared, for limited periods, to work.

We also know that Chinese demographics ought about now to be hitting a wall. China’s rise was based on cheap labour, and, thanks in some part to the “one-child policy,” China is due to be running out of cheap labour. In theory, they might make a successful transition to a consumer-based and high-skills economy; Japan did before them; Korea did before them; Taiwan did before them. But notice that, at the moment they made this transition, Japan, Korea, or Taiwan also shifted from command economies to liberal democracies. Nobody has ever developed to this high-skills, consumerist level before without throwing off autocracy and central planning.

The Chinese Communist Party might have taken this route. They chose against it at Tiananmen, and have not looked back. They have since systematically suppressed civil society, necessary for such a transition: the Christian churches, the mosques, Falun Gong. No autocracy now means no CCP.

We further know that China has taken a big economic hit recently: first because of the trade war with Trump’s US; then thanks to the coronavirus and the shutdown it required; now because their markets are also in a coronavirus slump; and other nations are either talking about or enacting “decoupling.” 

Skim milk masquerades as cream.

Keep all this in mind, and their lunge to assume full control of Hong Kong might appear to be about more than mere power. Hong Kong has a great deal of real wealth—audited and substantial. Might it be that, just as Hitler decided to confiscate the considerable assets of the Jews, or Philip IV of France decided to cancel his debt to the Templars by declaring the order illegal, the CCP wants or needs to commandeer the assets of Hong Kong and its banks for government purposes to keep things ticking over for a few more years?

It may very well not work, and in the meantime the move has probably hurt China’s trade prospects further. But this may indicate just how desperate the Chinese government is. All they can afford to think of, perhaps, is meeting the next payroll, the next mortgage payment.

They have, at the same time, been putting Uyghurs, Falun Gong, and others in camps, just as Hitler did the Slavs or the Jews. For the Nazis, this was explicitly planned as a money-making proposition: slave labour. Might it be so for the Chinese government too? Along with a cash stream from organs harvested from prisoners for transplants. China has been fingered as the ultimate source of the recent flood of dangerous opioids in North America. Might their motivation be, not just, as commonly assumed, to subvert American society, but to make some fast cash, by whatever means necessary? This, after all, is the motive of the Mexican drug cartels themselves; and of the many individual drug dealers in Canada and the USA. There is more money in selling drugs than in most things.

China has also been accused of counterfeiting US bills, and slipping them into circulation. Isn’t the intent most likely to be the same as for domestic counterfeiters—to literally make some fast cash, rather than the more abstract and unlikely goal of subverting the US financial system?

The Chinese government simply cannot really be the eternal fountain of credit and hard coinage it is imagined to be.

But a shortage of money in government is apparently not the only problem.

Why, at this moment, is China making threats against all their neighbours? Just as they are marching into Hong Kong, they are upping the ante over the South China Sea, a move that alienates and threatens a coalition of nations, the Philippines, Vietnam, Brunei, Singapore, Malaysia, Taiwan, the US, Japan, and Australia. As if these were not enough enemies to deal with, they also provoke India over their border. And declare their rightful ownership of Vladivostok.

This is, as diplomatic or as military strategy, insane. Suppose even that, like Hitler, the CCP figured they needed to confiscate some more assets to survive. Then you would not provoke a big fish like India. You would pick the runt of the litter, like Poland, and try to isolate them.

But it sounds just like Nicolai Ceausescu, in the days and hours before his regime fell. He wrapped himself in the Romanian flag, and insisted that if his countrymen could not all stand together behind their government, national sovereignty was at risk.

This worked for Ceausescu for years, ever since the Russian tanks rolled into Prague in 1968. But now that the Warsaw Pact had fallen apart, it no longer worked. Without this external threat, his support had disappeared, and all he could do was unsuccessfully flee for his life.

The Chinese Communist Party seem to be making the same calculation. They are in desperate need of external enemies. Financially crippled, the economic reckoning upon them, they are no longer able to provide the steadily improving living standards that had sustained them in power domestically by a kind of social contract. As an alternative, they feel they need to play this dangerous game, to encourage the idea that China is surrounded by threats on all sides. So all good Chinese must put aside their misgivings and support the government.

There is a real danger they may provoke a war in order to make this stick. But they obviously do not want a real war. They seem to have calculated that they would lose any war, even with a minor power like Taiwan or Vietnam. Otherwise, they would do as Hitler did, and try to divide and conquer. Instead, they need and are trying to provoke a Cold War, purely for propaganda purposes.

This in itself looks unsustainable, since it requires increasing military expenditures. It was, many argue, the burden of such an arms race that scuppered the Soviet Union.

It all suggests that the PRC is actually now just trying to survive week by week, month by month, perhaps not even year by year. They alone have seen the real figures, and they believe they have no future.

World War Three?

Things are getting worse.

People are speaking in apocalyptic terms. Is public transit dead? Are cities dead? Are schools and universities obsolete? Is the food going to run out?

Will there be war with China?

No. At least, not a big war.

This crisis leaves the Chinese leadership in a perilous spot. So long as China’s rise looked inevitable, those in charge had no real incentive to rock any atolls, and the Chinese public was prepared to stay on for the ride.

Now China will experience serious economic fallout, as the rest of the world “decouples.”

So the incentives change. If China’s economy and prestige is in decline, why not strike now, while still strong?

Germany charged into the First World War because they calculated that they were about to lose their ascendancy to Russia. They charged into the second because they thought they were unsustainable without Russia’s resources. Japan charged into the Second because they thought they were going to run out of resources.

The Chinese government might decide to grab while the grabbing was good. At the same time, perhaps forestalling internal revolt by uniting behind a common enemy.

The problem is, there is no plausible target that would be worth the risk.

China is actually quite self-sufficient in terms of natural resources, and, obviously, manpower. There seems to be no nearby grab that would significantly improve their strategic situation.

Starting a foreign war is also a poor strategy for avoiding internal dissention. Foreign wars, if they last more than a moment, are more likely to have the opposite effect. War provoked the Russian Revolution, the Paris Commune, indirectly both the French and the American revolutions. War hardly prevented the Chinese Communists from overthrowing the Guomintang.

Unless they see an easy, bloodless score, I expect no serious trouble from the Chinese government.

Would the US start a war with China? Not intentionally. The US too is self-sufficient. Nothing would be worth a land war in Asia. And war is a hard sell with the American public at the best of times.

Word War Three Update Update

I see reports that Iran actually warned the US in advance of their missile strikes yesterday, so that the Americans could get all their personnel out of harm’s way. After the strike, they announced that they had finished their “retaliation,” and would not do anything more so long as the Americans didn’t respond.

In other words, purely symbolic, to save face.

In the meantime, it looks as though the Iranians were so panicky about a new American attack that they mistakenly shot down a Ukrainian commercial airliner in Tehran, no doubt imagining it was an incoming bomber.

Death from the Baghdad Skies

Much excitement about America’s air strike that killed Iranian general Soleimani. While some applaud Trump for his decisiveness, many are talking about him risking “World War 3.” The emotions are high. A recent Fox News panel devolved into a shouting match.

Time and future Iranian actions will tell, but from my knowledge of Islam and the Middle East, I think this dramatic response to the Baghdad embassy siege was the right approach.

There is something the Christian West seems generally incapable of understanding about the Muslim world. Jesus’s advice to “turn the other check” and respond to anger with love is peculiarly Christian. Islam’s prophet was an emperor and conqueror. Accordingly, if an adversary responds meekly and with moderation, that does not, in the Muslim mind, give them any moral authority. It is not going to inspire the Muslim to do likewise.

Instead, it looks like either an admission of weakness, or an admission that they, the adversary, are in the moral wrong.

God is on the side of the big battalions; the big battalions are on the side of God.

Responding mildly is the path more likely to lead to more and stronger attacks.

The same dynamic explains why the Middle East seems to require authoritarian governments, and their removal in several countries over the “Arab Spring,” and by the US in Iraq, has only led to chaos. A more relaxed and moderate approach will impress no one; it is an admission of immorality or incapacity. Moderation in the defense of virtue, after all, is no virtue; extremism in opposition to vice is no vice.

I expect the strike at Baghdad airport to cause the Iranian regime to pull in their horns.

If it does not, if they do not, if this escalates, the big loser will be Joe Biden. The big winners will be Bernie Sanders and Tulsi Gabbard. Gabbard has positioned herself as the peace candidate; this gives her relevance. Biden is vulnerable for having supported the Iraq War—he is no peace candidate. The war vote, conversely, automatically coalesces around the Commander-in-Chief.

Meanwhile, in Iran, the mullahs are already in trouble domestically for their adventurism abroad. It is suicidal for them to escalate this. They cannot afford it. If, on the other hand, they respond meekly, they face the same problem: it is an admission of either incapacity or moral fault. Trump has them over a barrel.

The Gathering Storm?

What does this tell you?

I fear this piece by Michael Totten might be a case of whistling past the graveyard. Even though he admits that Putin is free to “slice and dice” the Ukraine if he wishes.

It rings false to me that Putin would be held back from invading the Ukraine because it would take him half a million men to “invade and occupy it.” After all, the Soviet Union previously controlled Ukraine, as did Imperial Russia before it, and it certainly did not cost them a half-million troops. Of course Putin is not going to invade Poland, at least not for the foreseeable future. He can't get to it, unless he invades and occupies either the Ukraine or Belarus first. But that's a bit of a red herring. Isn't it alarming enough if he takes the Ukraine and Belarus?

Totten argues that Putin does not want to take eastern Ukraine, because it would cost him his ability to influence the rest of the Ukraine. This seems tautological: if the rest of the Ukraine accepts this logic, he has already lost his ability to influence them. So he must be ready to take eastern Ukraine if his bluff is called. Moreover, the same logic ought to have prevented Hitler from taking the Sudetenland—and it obviously did not. Ukraine is poor, so he should not want it? By that logic, Russia would never have built its Czarist empire; nor would the rest of the European powers have built theirs. Nor, for that matter, would the US be in Puerto Rico. It rests on the assumption that Putin, if in possession of the Ukraine or parts of it, would feel honour bound to provide them with a standard of living comparable to that of the rest of the Russian Federation. Why would he?

Only months ago, I was scoffing at all the journalism referring to haunting similiarities between the present state of the world and that a hundred years ago at the advent of the First World War. The similarities seemed to me tenuous; it was just a ploy to sell books or articles commemorating the anniversary.

But now, suddenly, the world looks very much like the world on the advent of the Second, not the First, World War.

The First World is exhausted from the effort of winning the Cold War, 24 years ago, just as the First World was exhausted from the effort of winning the First World War, 21 years previously, in 1939. They do not want to believe it could happen all over again. As a result, they are in the mood for appeasement.

But the loser, not satisfied with the result, is naturally more eager to renew the struggle. It is hard for a people to accept a sudden demotion from world power to world's biggest loser. It is natural to demand a recount or a rematch. It is natural to believe that the first result must have been a mistake. Perhaps they were done in by a fifth column; perhaps they quit too soon. A rematch surely will not end the same way, and is very much worth risking.

The First World, overconfident from their win, is ready to concede to the loser at first. What harm can it really cause to let him back in to the Rhineland, or to bite off a piece or two of Georgia? After all, the division of Austria and Germany, or Russia and the Crimea, is artificial, isn't it? It's not as if the Germans are a realistic threat any more. Or the Russians.

But besides making the aggressor stronger with each of these concessions, it also makes him bolder.

Historically, Russia has been reasonably cautious about its expansionism. Putin may know when to stop, before he provokes a larger conflict.

Or at least, unlike Hitler, to wait until he has the forces to win that larger conflict. He is building the Russian Armed Forces at quite a good clip.

That's a calculation the First World will have to keep in mind.

And what does this have to do with the price of eggs in China?

Of course, China is a complicating factor. Just like Japan in the Second World War, they have a huge incentive to encourage Russia, to leave them with a freer hand to rise in the Far East. Iran could be a third partner, in the role of Italy, taking advantage of a larger conflict to expand its influence in the Middle East.

Given the situation, everyone in NATO should be boosting their defence budgets. Instead, in he face of a long recession, everyone is cutting them, just as before WWII, in the face of the Great Depression.

US military spending year over year.