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Musings Report #20 5-14-16 The Accidental Superpower
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For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
The Accidental Superpower
Longtime correspondent Spike T. recently recommended The Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder, a book I devoured in a few sittings due to its compelling thesis: national destiny boils down to geography and demographics.
The author makes a strong case for the dominance of geography in defining a nation's economic advantages: those with geographies that offer low-cost transport via navigable rivers and natural sea ports have a permanent leg up on those who don't.
Using this geography-based analysis, he shows why nations that are presumptive superpowers such as China and Russia will never have the same advantages as the U.S.: no borders with enemies, and two oceans providing a unsurpassed barrier to invasion.
Both China and Russia suffer from fragmented geographies, multiple invasion routes and long borders with potential enemies. These are deficits which can never really be overcome, which explains why China was so often broken into north and south dynasties, and why China was unified for relatively brief periods in its long history.
The demographics of America's economic and geopolitical competitors--Europe, Japan, China and Russia--are also uniformly negative, as the birth-dearth that led to smaller generations after the Baby Boom is even more severe in these nations/regions.
Neither the geography or the demographics are within the control of central planning, hence the title the Accidental Superpower.
A recent article in Foreign Affairs also speaks to the requirements for superpower status: the ability to project power and protect vital interests, which in America's case includes open sea lanes for all trading nations.
The Once and Future Superpower: Why China Won’t Overtake the United States
Much is made of China's first aircraft carrier, but as the article suggests (but doesn't really detail), it takes much more than the ability to assemble an aircraft carrier to project power. You need a complete carrier group, satellite communications, and the crew and equipment needed to function as a unit great distances from home base and in combat situations.
The article also mentions innovation as a key factor in superpower status, and finds China wanting. Innovation is not just technological; it is in policy, social organization, education, etc.
The weakness in the geography/demographics model is revealed by considering Argentina and Brazil, both of which have navigable rivers, natural bays/ports and favorable demographics.
Despite these advantages, both Argentina and Brazil are struggling economically and politically.
The "secret sauce" is a culture that welcomes innovation (and the experimentation and failure that fuel it), transparency in the media and in governance, and that enables challenges to the authority and privileges of the status quo.
If innovation is viewed as a threat, temporary failure as permanent failure, transparency as a threat to the Powers That Be and the elite ruling class's privileges as sacrosanct, then the natural advantages of geography and demographics will be squandered.
The U.S. faces these same issues. If the system undermines innovation, transparency and challenges to the elite class to protect the privileges of the few, the U.S. will also squander its advantages and decline into social disorder and a destabilized economy just like the rest of the world.
Summary of the Blog This Past Week
The Destabilizing Consequences of Globalization 5/13/16
Dear Homeowner: If You're Paying $260,000 in Property Taxes Over 20 Years, What Exactly Do You "Own"? 5/12/16
The Coming War of Central Banks 5/11/16
We Need a Complete System Overhaul: 5 Charts That Blow Up the Status Quo 5/10/16
The Meaning of a Multicultural America: 323,341,000 Individuals 5/9/16
Best Thing That Happened To Me This Week
Lunch with my Mom and her boyfriend on Mother's Day, and the news her health is remarkably good for an 87-year old.
Market Musings: Gold
It's easy to get attached to a stock, index, indicator or commodity, and that emotional attachment skews our perception of the technicals and the prospects of near-term gains or losses.
Many people are drawn to gold, for the natural reason that it is a hedge against inflation and devaluation of paper currencies. Gold is an excellent hedge.
But speculating on gold's rise or decline is where the danger of emotional attachment comes into play.
I have played with gold and gold miners for almost 15 years, and have had my attachments beaten out of me by the markets. As a result, I am fairly detached when looking at a chart of gold.
In early January, I noted the wedge in gold's chart that telegraphed a big move up or down, and the upside breakout from that wedge.
After a strong run to the $1,300 level (or close to it), gold is now looking a bit tired.
MACD and stochastics are rolling over, and $1,300 is strong resistance. After such a strong run-up, a retrace to the 50-week moving average ($1,150 - $1,160) would be normal and actually welcome from a technical viewpoint, as runs that never retest previous levels of support/resistance often collapse.
Ideally, gold will retest $1,150 and then mount another assault on $1,300. Once breached, some months of consolidation around $1,300 would be rather typical.
If the US dollar makes a move higher, as I expect, that could be the excuse for gold to sell off. But as I have often noted, I see future gains in both USD and gold as capital seeks safe havens in a world of rising turmoil and uncertainty.
From Left Field
What if Uber did health, housing and social care? -- peer-to-peer model...
Alejandro Aravena: the shape of things to come -- Could his holistic method provide a model for our cities?
We Desperately Need a Twenty-First Century View of the Economy -- Prosperity Isn’t Money, It’s Solutions
The Misery of Adjunct Professors Keeps Higher Education Booming -- protected elites need serfs to do the heavy lifting
Why ‘Modern’ Work Culture Makes People So Miserable -- it's structural...
Crash and Burn: You can’t have capitalist growth without environmental destruction. -- the "market" can't price (or value) sustainability,,,,
Evolution of Complexity and Intelligence on Earth (6;52) (via Lew G.)
The surprising math of cities and corporations -- cities last a long time, companies don't--
Band plays on, as global oil glut leaves supertankers in a huge jam (via Joel M.) -- wait til demand craters in the global recession...
2CELLOS - Highway To Hell featuring Steve Vai (4:21) (via Lew G.) -- fun!
Scotch Whisky Region You’ve Never Heard Of (via Joel M.) -- visit in a year after the crowds generated by this article have dissipated...
Have You Eaten? (2:36) (via Maoxian) -- humorous video of young Asian-American women being criticized by their moms....
Is the U.S. Ready for Post-Middle-Class Politics? -- what this means is, are we ready for an expanding upper class and lower class and a diminishing middle class..
"A man's friendships are one of the best measures of his worth." Charles Darwin
Thanks for reading--
charles |
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