Soviet Collapse Echoes in China’s Belt and Road(bloomberg.com)
bloomberg.com
Soviet Collapse Echoes in China’s Belt and Road
https://www.bloomberg.com/view/articles/2018-08-12/soviet-collapse-echoes-in-china-s-belt-and-road-investment
181 comments
From 3rd paragraph TFA, and unlike 1910-1950s USA,
Like the Soviet Union in the 1970s, China is coming to the end of a long labor-force boom, and hoping that an orgy of investment will keep the old magic going while stabilizing its fraying frontiers.
Cornelius Vanderbilt wasn't trying to overcome a graying America or shore up the Monroe Doctrine by building railroads in Latin America and Africa. If anything, I fail to see any justification for your comparisons between China and the progressive-era US.
Like the Soviet Union in the 1970s, China is coming to the end of a long labor-force boom, and hoping that an orgy of investment will keep the old magic going while stabilizing its fraying frontiers.
Cornelius Vanderbilt wasn't trying to overcome a graying America or shore up the Monroe Doctrine by building railroads in Latin America and Africa. If anything, I fail to see any justification for your comparisons between China and the progressive-era US.
I wasn't trying to create any definite story, I'm just saying that it is easy to make a historical analogy depending on what you wantto take away from it. China is not the Soviet Union any more than it is the United States. Doing away with the belt and road initiative by painting it as a Soviet vanity project seems too simple, the country is communist only in name.
For me, this narrative seems to be very typical of our European/American mindset. All great infrastructure plans are grandiose planning, we're done growing, we're 2 years away from the next crisis and so forth and projecting it onto China, which seems to have shaken off that very prediction over and over. China's current mode of development does not comply with our 'End of History' like narrative about how countries ought to develop, so we're stuck in a constant loop of shallow pessimistic analogies.
I would want to see an in-depth analysis of the project really looking at the consequences with an eye on the long-term effects rather than just stories about some harbor in Africa falling short of expectations. This is not illuminating.
For me, this narrative seems to be very typical of our European/American mindset. All great infrastructure plans are grandiose planning, we're done growing, we're 2 years away from the next crisis and so forth and projecting it onto China, which seems to have shaken off that very prediction over and over. China's current mode of development does not comply with our 'End of History' like narrative about how countries ought to develop, so we're stuck in a constant loop of shallow pessimistic analogies.
I would want to see an in-depth analysis of the project really looking at the consequences with an eye on the long-term effects rather than just stories about some harbor in Africa falling short of expectations. This is not illuminating.
Sri Lanka is off the coast of India. Your lack of attention to detail does not give one confidence in your argument.
Please don't be rude, even if someone got a detail wrong.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
Sorry did you respond to the wrong person? The harbour story that recently made headlines concerned the port in Djibouti, which to my knowledge is located in East Africa. I did not mention Sri Lanka.
As mentioned in the fine article:
> Failed projects like Sri Lanka’s Hambantota port may indeed be a way for China to quietly extend its strategic power around the world.
> Failed projects like Sri Lanka’s Hambantota port may indeed be a way for China to quietly extend its strategic power around the world.
oh well sorry, did not catch that!
Finding a neutral in-depth analysis of the project is not easy. In a Google search, I find Japanese, Indian and European opinions . Yet best is the Wikipedia article IMHO.
https://en.wikipedia.org/wiki/Belt_and_Road_Initiative
You won't find a neutral in-depth analysis of the project in Bloomberg (or FT, Economist,etc) as a substantial amount of stories about China are "wishful thinking" meant to be "self fulfilling prophecies" by influencing investors [1]. I mean mostly against China.
[1] David Fickling stories - see the ones about China. https://www.bloomberg.com/authors/AQrSL0m_2u4/david-fickling
You won't find a neutral in-depth analysis of the project in Bloomberg (or FT, Economist,etc) as a substantial amount of stories about China are "wishful thinking" meant to be "self fulfilling prophecies" by influencing investors [1]. I mean mostly against China.
[1] David Fickling stories - see the ones about China. https://www.bloomberg.com/authors/AQrSL0m_2u4/david-fickling
What was Bloomberg's (FT, Economist, the general economists' consensus, whichever) position in the year before the 2008 crisis? How many times did they flag the impending burst?
Every media outlet has an undisclosed interest somewhere or at the very least a heavy bias sometimes. And it's highlighted more than ever when those trusted pillars of reporting like Bloomberg, FT, or the Economist come up with conflicting information.
Right now CCTV in China or RT in Russia are saying the same thing about the US, or the EU, or Japan, or Korea. And the people reading and listening are having the same discussion we're having just with different conclusions based on that trusted information.
Every media outlet has an undisclosed interest somewhere or at the very least a heavy bias sometimes. And it's highlighted more than ever when those trusted pillars of reporting like Bloomberg, FT, or the Economist come up with conflicting information.
Right now CCTV in China or RT in Russia are saying the same thing about the US, or the EU, or Japan, or Korea. And the people reading and listening are having the same discussion we're having just with different conclusions based on that trusted information.
The economist had e.g. a leader like this: https://www.economist.com/leaders/2005/06/16/after-the-fall
It is possible to call bubbles, especially if they are as large and data is transparently available. It is really hard to tell the moment when it will pop, especially if it is connected with the government like in the soviet union or in China.
It is possible to call bubbles, especially if they are as large and data is transparently available. It is really hard to tell the moment when it will pop, especially if it is connected with the government like in the soviet union or in China.
I'm not arguing the possibility of seeing them but whether you visibly flag them or not. A bad prediction might turn into a self fulfilling prophecy. At the very least it could make a dent in the people's trust. You do this on an election year and you'll pay for it. You might get the shaft regardless if your prediction makes someone powerful look bad.
So when you're playing close to home positive stuff gets the fanfare, negative predictions are underplayed. You're talking about your own market after all. Why do you think it's so easy for these publications to hit at anything that's not domestic? The further away, the less friendly the player, the more scathing the prediction.
So when you're playing close to home positive stuff gets the fanfare, negative predictions are underplayed. You're talking about your own market after all. Why do you think it's so easy for these publications to hit at anything that's not domestic? The further away, the less friendly the player, the more scathing the prediction.
The Economist was generally quite consistent about it, including in its American publishing (which is mostly written by American authors). I was reading The Economist at the time, and so the housing bust did not really surprise me; and I don't remember any false positives at the time. (They called it a little too early, though, as a lot of the "smart" money did.)
> an in-depth analysis of the project really looking at the consequences with an eye on the long-term effects
You won't find them because these aren't projects being developed (a) with private capital nor (b) for their economic merits. When a bridge is built in America, someone issues a bond. That issuance--both leading up to it and once in the wild--produces an incentive to do good analysis.
That incentive isn't there with Belt and Road. State-owned banks provide the capital. And the reasoning for the development is strategic, so you get geopolitical and military talking heads instead of good economists, whose services are ironically better allocated to analyzing other projects.
You won't find them because these aren't projects being developed (a) with private capital nor (b) for their economic merits. When a bridge is built in America, someone issues a bond. That issuance--both leading up to it and once in the wild--produces an incentive to do good analysis.
That incentive isn't there with Belt and Road. State-owned banks provide the capital. And the reasoning for the development is strategic, so you get geopolitical and military talking heads instead of good economists, whose services are ironically better allocated to analyzing other projects.
The comparison to Soviet Union is problematic but definitely more relevant than US investment scenarios that you highlighted.
The US scenario you highlighted would be more comparable to Chinese investment in the last 25 years, no?
The clear difference between Soviet Union and China is that China has a growing and robust economy, with a firm grip on the situation whereas the Soviet Union was aching away on so many lies.
Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say.
The articles comparison may be overblown but it's not without reason.
I believe that the China boom has mostly been had, and we're going to see lower growth from here on in; that said, it'll be consistent and positive and they aren't going to disappear as a superpower.
The US scenario you highlighted would be more comparable to Chinese investment in the last 25 years, no?
The clear difference between Soviet Union and China is that China has a growing and robust economy, with a firm grip on the situation whereas the Soviet Union was aching away on so many lies.
Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say.
The articles comparison may be overblown but it's not without reason.
I believe that the China boom has mostly been had, and we're going to see lower growth from here on in; that said, it'll be consistent and positive and they aren't going to disappear as a superpower.
> Chinese fabricated financials can be papered over with any kind of magic the state wants to apply to it - so long as the economy continues to move forward the numbers will say anything they want them to say.
My feeling is business people and economists are upset that China utterly refuses to follow neoliberal economic polices. Preferring instead to follow old school Keynesian policies. Policy makers thus view China as economically in a state of sin.
Typically countries that try to follow Keynesian economic policies get hammered by western central banks and monetary institutions. However China is way both too large to be 'punished' like that and has iron fisted control of it's own currency. That leaves western and in particular US monetary authorities powerless to do anything.
Hence the constant butthurt blather for the last 30 years that that Chinese expansion only has 5 more years left before it collapses.
Notable: In 2008 the US and Europe followed neoliberal austerity policies to make sure that the banks and paper wealth were made whole. Resulting in a very slow recovery and increasing poverty and political blow back. China responded by building the worlds largest high speed rail network.
My feeling is business people and economists are upset that China utterly refuses to follow neoliberal economic polices. Preferring instead to follow old school Keynesian policies. Policy makers thus view China as economically in a state of sin.
Typically countries that try to follow Keynesian economic policies get hammered by western central banks and monetary institutions. However China is way both too large to be 'punished' like that and has iron fisted control of it's own currency. That leaves western and in particular US monetary authorities powerless to do anything.
Hence the constant butthurt blather for the last 30 years that that Chinese expansion only has 5 more years left before it collapses.
Notable: In 2008 the US and Europe followed neoliberal austerity policies to make sure that the banks and paper wealth were made whole. Resulting in a very slow recovery and increasing poverty and political blow back. China responded by building the worlds largest high speed rail network.
I think both your assertions are not correct.
Economists just want 'real' numbers from China, numbers that reflect some kind of reality. That's before any ideology sits in.
If there were at least transparency there, we'd all be better off, that said if there were, the 'fudges' necessary to make things worse would be more obviously lies.
As far as 2008 - this was a failure of integrity from the bottom to the top: those taking home loans, mortgage lending staff, executives, those bundling up crap, the ratings agencies, and the laziness of those buying the bundles. It was a systematic failure of reason as well.
Were actual, material numbers to have been objectively published, we wouldn't have had a crisis in 2008, because nobody would have bought bundles of crap, and the market would have needed no correction because it wouldn't have gotten out of hand.
China's central policies surely irk some, of course they can do it if they please, but they cant reasonably contend to be 'free trade' or what not so long as there is such government intervention; they should not be in the WTO.
Everyone in the world would benefit from more objective clarity on all of this.
Economists just want 'real' numbers from China, numbers that reflect some kind of reality. That's before any ideology sits in.
If there were at least transparency there, we'd all be better off, that said if there were, the 'fudges' necessary to make things worse would be more obviously lies.
As far as 2008 - this was a failure of integrity from the bottom to the top: those taking home loans, mortgage lending staff, executives, those bundling up crap, the ratings agencies, and the laziness of those buying the bundles. It was a systematic failure of reason as well.
Were actual, material numbers to have been objectively published, we wouldn't have had a crisis in 2008, because nobody would have bought bundles of crap, and the market would have needed no correction because it wouldn't have gotten out of hand.
China's central policies surely irk some, of course they can do it if they please, but they cant reasonably contend to be 'free trade' or what not so long as there is such government intervention; they should not be in the WTO.
Everyone in the world would benefit from more objective clarity on all of this.
> Were actual, material numbers to have been objectively published, we wouldn't have had a crisis in 2008, because nobody would have bought bundles of crap, and the market would have needed no correction because it wouldn't have gotten out of hand.
This is circular reasoning. The market works on the information that is available at a given time, which includes all the fudging of numbers that salespeople and marketers do as part of their quest for maximising their individual interest - being handsomely rewarded by the market for this.
This is circular reasoning. The market works on the information that is available at a given time, which includes all the fudging of numbers that salespeople and marketers do as part of their quest for maximising their individual interest - being handsomely rewarded by the market for this.
No, it's not circular logic. Lying to the public, to the government, false reporting is illegal, and against a lot of other controls and regulations that are in place to support a healthy free market.
There is a lot of information that does not have to be made public and people can do as they please with it - but this was not the cause of 2008, for the most part.
There is a lot of information that does not have to be made public and people can do as they please with it - but this was not the cause of 2008, for the most part.
Yes, it's illegal, but it's part of every real market that has ever existed, and will ever exist. The circular logic IMHO is in thinking that the market can prevent this by itself, without having to go through corrections like we had in 2008.
" The circular logic IMHO is in thinking that the market can prevent this by itself"
It's not circular logic because nobody really thinks that the market will stop corruption by itself.
And FYI if regulations and laws were not in place, forget about 'market correction', there would be no market to begin with. See: dysfunctional, corrupt states. They barely have 'markets'.
"but do you feel if regulatory bodies were given more power to execute on already existing laws"
I don't know. It might not be a matter of law or even policy, but failure of those in the office. Maybe they were understaffed, or had the wrong incentives.
Banks have tons of oversight committees and auditors, and they call kind of failed as well.
Major funds buying huge bundled up mortgages were maybe a little lazy in not doing diligence, but that's a 'market' thing not a regulatory thing.
It was a lot of big and small failures - market and regulatory, that caused 2008.
If everyone is cheating it's not going to work.
It's not circular logic because nobody really thinks that the market will stop corruption by itself.
And FYI if regulations and laws were not in place, forget about 'market correction', there would be no market to begin with. See: dysfunctional, corrupt states. They barely have 'markets'.
"but do you feel if regulatory bodies were given more power to execute on already existing laws"
I don't know. It might not be a matter of law or even policy, but failure of those in the office. Maybe they were understaffed, or had the wrong incentives.
Banks have tons of oversight committees and auditors, and they call kind of failed as well.
Major funds buying huge bundled up mortgages were maybe a little lazy in not doing diligence, but that's a 'market' thing not a regulatory thing.
It was a lot of big and small failures - market and regulatory, that caused 2008.
If everyone is cheating it's not going to work.
Maybe a bit tangential, but do you feel if regulatory bodies were given more power to execute on already existing laws and to investigate this kind of fraud, we could prevent 2008-style crises in general?
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China’s external debt to GDP is one of the lowest in the world, as is their debt per capita.
They aren’t going to be ‘punished’ by creditors because they don’t have significant debt. In fact, it’s more likely that China will be the one doing the punishing down the road.
They aren’t going to be ‘punished’ by creditors because they don’t have significant debt. In fact, it’s more likely that China will be the one doing the punishing down the road.
This is what really irks the West. China did not allow themselves to be controlled by external debt like the Soviet Union. The Chinese have not only avoided debt slavery they have actually begun to weaponize their own debt power and such that they are now the world's largest sovereign lender.
The US doesn't borrow money from China. The US swaps treasuries for reserves with the Federal Reserve, which then sells those treasuries to primary dealers, who in turn sell them on the open market where anyone including foreign sovereigns like China, can buy them. In the unlikely event that the Federal Reserve failed to sell those instruments, they'd be left on their balance sheet and the interest would be remitted back to the US treasury. So long as there is any demand for US dollars though, there will always be a demand for interest bearing instruments that have near cash-like liquidity.
Of course if you're referring to China's African colonies and their use of debt to control the local governments, then yes that's accurate.
Of course if you're referring to China's African colonies and their use of debt to control the local governments, then yes that's accurate.
It's the same thing as borrowing.
US gov sells TBills, those TBills are bought by China.
The transaction you described also translates government debt into currency, which China also sits on, so it's a kind of an exchange debt.
So the US 'owes' China a gazillion dollars in services and stuff. One way or another.
US gov sells TBills, those TBills are bought by China.
The transaction you described also translates government debt into currency, which China also sits on, so it's a kind of an exchange debt.
So the US 'owes' China a gazillion dollars in services and stuff. One way or another.
The US owes China gazillion dollars. Not a gazillion dollars in services and stuff. That's a huge difference because at any point the US can create a gazillion dollars for virtually no effort.
The US owes China both a gazillion dollars, and additionally a gazillion dollars in stuff that dollars can buy - because they have not just US debt, but they also have currency.
Won't "printing more money" crash the value of the currency?
Inflation is caused by too much currency chasing too few goods and services. Creating money alone won't cause inflation, that money has to actually be spent in a market where demand is already greater than or equal to supply.
One great example of inflation is the housing market. Private sector banks create money from nothing, by balance sheet expansion, every time they originate a mortgage. Because the stock of housing is less than the demand, every time the banks create more money it drives prices up. Because money in the housing market mostly stays in the housing market, that is people usually take the proceeds from a sale and put them into a new house, there isn't too much spillover to non-housing markets. The same is true for student loans.
So as you can see, two of the largest examples of inflation in the US are caused by the private sector, not Treasury spending. Please note though that the Federal Government does set banking policy as well, along with various direct and indirect guaranty programs, so in that sense ultimately they are responsible.
One great example of inflation is the housing market. Private sector banks create money from nothing, by balance sheet expansion, every time they originate a mortgage. Because the stock of housing is less than the demand, every time the banks create more money it drives prices up. Because money in the housing market mostly stays in the housing market, that is people usually take the proceeds from a sale and put them into a new house, there isn't too much spillover to non-housing markets. The same is true for student loans.
So as you can see, two of the largest examples of inflation in the US are caused by the private sector, not Treasury spending. Please note though that the Federal Government does set banking policy as well, along with various direct and indirect guaranty programs, so in that sense ultimately they are responsible.
It will have an impact, no doubt, but probably more like a few points higher inflation than a total crash. Either way, the point is that owing money in a currency you control is vastly different than owing money in a currency you don't.
This is hard to wrap one's head around, so let me try again with some more detail. The US doesn't sell TBills. It creates those interest bearing IOUs ex nihilo, and then swaps them for reserves (also created ex nihilo) with the Federal Reserve. Primary Dealers buy treasuries from the Fed, not from the treasury.[1] The process is absolutely nothing like going to a bank or anyone else to borrow money.
[1]https://en.wikipedia.org/wiki/Primary_dealer#Primary_dealers...
[1]https://en.wikipedia.org/wiki/Primary_dealer#Primary_dealers...
Yes, I get it - but the mechanism does not matter: TBills and TBonds US government debt.
US dollars are a form of debt to the US economy.
So If you hold TBills/TBonds, the US government owes you money.
If you hold USD, then the US economy owes you 'stuff' that you can exchange those dollars for.
Anyone who holds TBills/TBonds is lending to the US Government.
China holds a lot of both, ergo the US is indebted to them ... essentially, the US does borrow money from China. Though the sale may not be directly to China, ultimately, that's who's sitting on those bonds/cash.
US dollars are a form of debt to the US economy.
So If you hold TBills/TBonds, the US government owes you money.
If you hold USD, then the US economy owes you 'stuff' that you can exchange those dollars for.
Anyone who holds TBills/TBonds is lending to the US Government.
China holds a lot of both, ergo the US is indebted to them ... essentially, the US does borrow money from China. Though the sale may not be directly to China, ultimately, that's who's sitting on those bonds/cash.
"the mechanism does not matter" only if you have no interest in understanding how the system actually works.
China isn't the US's lender and they do not make any loans. They can't foreclose, because no loan exists. All they can do is take their coupons or sell the security to someone else who will do the same.
China can't starve the Treasury of money because the Treasury exclusively borrows reserves from the Federal Reserve.
Also worth noting is that with the stroke of a pen Congress and the President acting in concert could restore the Treasury's power to spend money into existence directly. The US creates securities as a matter of public policy, not because it actually needs them to finance itself.
China isn't the US's lender and they do not make any loans. They can't foreclose, because no loan exists. All they can do is take their coupons or sell the security to someone else who will do the same.
China can't starve the Treasury of money because the Treasury exclusively borrows reserves from the Federal Reserve.
Also worth noting is that with the stroke of a pen Congress and the President acting in concert could restore the Treasury's power to spend money into existence directly. The US creates securities as a matter of public policy, not because it actually needs them to finance itself.
While everything you've said is accurate, I think you're intentionally skirting around the meat of the issue and that is the value of currency. That we can we can 'print' (colloquially speaking) as much money as we like is not in dispute. However, the consequences of choosing to do so are the heart of the matter. In the past our money was implicitly backed by oil thanks to our petro dollar arrangements, but those times are coming to an end. In the relatively near future our economic decisions will be left to stand, or fall, on their own merit - and substantial outstanding debt owned by foreign not-creditor-creditors will play a role in this.
The US dollar is backed by the taxing power of the United States and the productivity of the US economy. Our economic decisions have always stood and fallen on their own merits. Those merits include the world's largest consumer market and the world's putative strongest military. Foreign desire to export to the US and thereby acquire dollar denominated assets is a function of those merits. So long as that situation holds, foreigners will always desire to swap their non-interest bearing reserves for interest bearing treasuries, at any nominal positive interest rate.
So long as enough oil is denominated in dollars to satisfy US demand for imports, it doesn't really matter what currency other countries pay. A eurodollar crunch doesn't have any appreciable effect on US domestic prices and neither will a eurodollar glut. Petrodollars are eurodollars. [1]
To cut right into the meat of the issue, US issued currency will remain valuable until economic and political collapse destroy US consumer markets and productivity. Foreign asset holders cannot cause that by refusing to show up at treasury auctions. It would take a serious civil war, a world war where the mainland USA wasn't left untouched, or a similar multi-megadeath level catastrophe. And even then it wouldn't be impossible for the US to pull through as a going concern, as it were.
[1]https://ftalphaville.ft.com/2016/01/25/2151037/petrodollars-...
So long as enough oil is denominated in dollars to satisfy US demand for imports, it doesn't really matter what currency other countries pay. A eurodollar crunch doesn't have any appreciable effect on US domestic prices and neither will a eurodollar glut. Petrodollars are eurodollars. [1]
To cut right into the meat of the issue, US issued currency will remain valuable until economic and political collapse destroy US consumer markets and productivity. Foreign asset holders cannot cause that by refusing to show up at treasury auctions. It would take a serious civil war, a world war where the mainland USA wasn't left untouched, or a similar multi-megadeath level catastrophe. And even then it wouldn't be impossible for the US to pull through as a going concern, as it were.
[1]https://ftalphaville.ft.com/2016/01/25/2151037/petrodollars-...
You're confusing mechanism with economics.
"China isn't the US's lender and they do not make any loans."
Yes, China is a lender to the US, in fact the largest lender [1]. Treasures are loans/bonds. Whoever owns them is a lender to the United States. It's economically the same thing as any other nation selling bonds.
"They can't foreclose, because no loan exists. All they can do is take their coupons or sell the security to someone else who will do the same."
It's the same thing as government debt in all other nations. If you loan money to Greece, you can sell that Greek debt to someone else. The economics of government debt are the same in the US, Canada, and US even if 'how it gets sold' is different.
"China can't starve the Treasury of money "
China can 'starve' any nation to the extent they are a lender to that nation. China's demand for Treasuries makes up part of the demand curve for Treasuries, along with all the the demand. In just the same way as there is demand for Greek, UK and Canadian bonds. Or stocks. Or corn, or whatever.
If China was the only buyer of US Treasuries you can dam well be sure they can 'starve the Treasury' - because if nobody is buying Treasuries, then the government is printing money.
"Also worth noting is that with the stroke of a pen Congress and the President acting in concert could restore the Treasury's power to spend money into existence directly."
Every nation on Earth can do this. It's called 'printing money'. It's not a new idea, and it has dramatic consequences including hyperinflation.
Summary:
China is the #1 lender to the US both in Treasuries (and by holding US dollars.)
US government debt operates differently, but economically is the same thing as government debt to basically any other nation.
The US does have the advantage of 'seignorage' which is to say that because so many people need US dollars to do so many things, that there is a nice bit of 'cushion' in demand for USD, but that's only worth so much.
Otherwise it's just like anywhere else: governments loan at a certain rate, or they can tax, or they can print money and see confidence lost in their currency.
[1] https://en.wikipedia.org/wiki/National_debt_of_the_United_St...
"China isn't the US's lender and they do not make any loans."
Yes, China is a lender to the US, in fact the largest lender [1]. Treasures are loans/bonds. Whoever owns them is a lender to the United States. It's economically the same thing as any other nation selling bonds.
"They can't foreclose, because no loan exists. All they can do is take their coupons or sell the security to someone else who will do the same."
It's the same thing as government debt in all other nations. If you loan money to Greece, you can sell that Greek debt to someone else. The economics of government debt are the same in the US, Canada, and US even if 'how it gets sold' is different.
"China can't starve the Treasury of money "
China can 'starve' any nation to the extent they are a lender to that nation. China's demand for Treasuries makes up part of the demand curve for Treasuries, along with all the the demand. In just the same way as there is demand for Greek, UK and Canadian bonds. Or stocks. Or corn, or whatever.
If China was the only buyer of US Treasuries you can dam well be sure they can 'starve the Treasury' - because if nobody is buying Treasuries, then the government is printing money.
"Also worth noting is that with the stroke of a pen Congress and the President acting in concert could restore the Treasury's power to spend money into existence directly."
Every nation on Earth can do this. It's called 'printing money'. It's not a new idea, and it has dramatic consequences including hyperinflation.
Summary:
China is the #1 lender to the US both in Treasuries (and by holding US dollars.)
US government debt operates differently, but economically is the same thing as government debt to basically any other nation.
The US does have the advantage of 'seignorage' which is to say that because so many people need US dollars to do so many things, that there is a nice bit of 'cushion' in demand for USD, but that's only worth so much.
Otherwise it's just like anywhere else: governments loan at a certain rate, or they can tax, or they can print money and see confidence lost in their currency.
[1] https://en.wikipedia.org/wiki/National_debt_of_the_United_St...
For the benefit of anyone else reading this, I'd like to point out the misconceptions and misinformation above.
> China can 'starve' any nation to the extent they are a lender to that nation. China's demand for Treasuries makes up part of the demand curve for Treasuries, along with all the the demand.
The Federal Reserve controls short term yields completely through its open market operations desk. It controls long term yields as well, because they are a function of expectations of short term yields. If China, or Russia, or anyone else stops buying treasuries, the Primary Dealers will pick up the slack, and they will always take that deal because no matter what the yields are they make money off it.
> If China was the only buyer of US Treasuries you can dam well be sure they can 'starve the Treasury' - because if nobody is buying Treasuries, then the government is printing money.
The Federal Reserve, not China, creates reserves every time the Treasury or a member bank asks it to, which is all the time. It's called an elastic money supply. Relatively few reserve notes are actually printed, because there isn't a lot of demand for Federal Reserve Notes compared to demand accounts.
>Every nation on Earth can do this. It's called 'printing money'. It's not a new idea, and it has dramatic consequences including hyperinflation.
Hyperinflation is a consequence of a collapse in productivity, not of money printing. Some governments turn to printing more money as their money becomes worthless, and there is a feedback loop, but that is a consequence not a cause. Hyperinflation can also occur when the money issuing sovereign effectively loses their sovereignty, fully or partially.
> China is the #1 lender to the US both in Treasuries (and by holding US dollars.)
The Federal Reserve is the USA's bank, not China. China is just another depositor at the Fed and whether they choose to store their capital account surplus with the USA in a interest free account (reserves) or an interest bearing account (treasuries) is irrelevant to the solvency of the US Treasury.
I hope this helped everyone else with an interest in understanding some of the widespread ideologically motivated ("money printing" is a shibboleth) misconceptions in this area.
> China can 'starve' any nation to the extent they are a lender to that nation. China's demand for Treasuries makes up part of the demand curve for Treasuries, along with all the the demand.
The Federal Reserve controls short term yields completely through its open market operations desk. It controls long term yields as well, because they are a function of expectations of short term yields. If China, or Russia, or anyone else stops buying treasuries, the Primary Dealers will pick up the slack, and they will always take that deal because no matter what the yields are they make money off it.
> If China was the only buyer of US Treasuries you can dam well be sure they can 'starve the Treasury' - because if nobody is buying Treasuries, then the government is printing money.
The Federal Reserve, not China, creates reserves every time the Treasury or a member bank asks it to, which is all the time. It's called an elastic money supply. Relatively few reserve notes are actually printed, because there isn't a lot of demand for Federal Reserve Notes compared to demand accounts.
>Every nation on Earth can do this. It's called 'printing money'. It's not a new idea, and it has dramatic consequences including hyperinflation.
Hyperinflation is a consequence of a collapse in productivity, not of money printing. Some governments turn to printing more money as their money becomes worthless, and there is a feedback loop, but that is a consequence not a cause. Hyperinflation can also occur when the money issuing sovereign effectively loses their sovereignty, fully or partially.
> China is the #1 lender to the US both in Treasuries (and by holding US dollars.)
The Federal Reserve is the USA's bank, not China. China is just another depositor at the Fed and whether they choose to store their capital account surplus with the USA in a interest free account (reserves) or an interest bearing account (treasuries) is irrelevant to the solvency of the US Treasury.
I hope this helped everyone else with an interest in understanding some of the widespread ideologically motivated ("money printing" is a shibboleth) misconceptions in this area.
This is not correct. The government sells treasury securities at auction.[1] Primary dealers are required to participate in all Treasury auctions.
When the Federal Reserve conducts open market operations, it does create reserves out of nothing, but most Treasury securities are not bought by the Fed. The Federal Reserve can buy treasuries directly from the government via non-competitive bids, but generally buys and sells treasuries on the secondary market via primary dealers.
[1] https://www.treasurydirect.gov/indiv/products/prod_auctions_...
When the Federal Reserve conducts open market operations, it does create reserves out of nothing, but most Treasury securities are not bought by the Fed. The Federal Reserve can buy treasuries directly from the government via non-competitive bids, but generally buys and sells treasuries on the secondary market via primary dealers.
[1] https://www.treasurydirect.gov/indiv/products/prod_auctions_...
> The government sells treasury securities at auction
This is true, in the sense that the Treasury and the Fed work together extremely closely, and both are acting as or on behalf of the government. But strictly speaking, it's the Fed that conducts the auction because it is the Treasury's fiscal agent.[1][2]
The link you supplied provides useful information for a retail investor who wants to buy securities, but it's not and it isn't meant to be a description of the fine mechanics of government funding. In the event that the TT&L accounts[3] and Treasury's account at the Fed are together insufficient for Treasury's spending needs, then it creates securities and transfers them to the Fed for auction, in exchange the Fed debits Treasury's deposit account. This all follows from the statutory limitations on both entities. Treasury isn't legally permitted to carry a negative balance at the Fed, but the Fed legally can carry a negative balance on its own account. A primary benefit of and reason for this arrangement is it makes the funding predictable. Personally I find the system elegant in its (legally mandated) complexity.
Saying "the Treasury sells securities at auction" isn't really wrong, seeing as it's just a simplification that is acceptable in virtually every case with the sole exception being discussions like this one. It's a lot like saying "I sold some AAPL stock." You didn't really, your broker did. In everyday conversation there's nothing wrong with these simplifications.
[1]https://www.investopedia.com/articles/economics/08/treasury-...
[2]https://www.investopedia.com/terms/t/taaps.asp
[3]https://www.newyorkfed.org/aboutthefed/fedpoint/fed21.html
This is true, in the sense that the Treasury and the Fed work together extremely closely, and both are acting as or on behalf of the government. But strictly speaking, it's the Fed that conducts the auction because it is the Treasury's fiscal agent.[1][2]
The link you supplied provides useful information for a retail investor who wants to buy securities, but it's not and it isn't meant to be a description of the fine mechanics of government funding. In the event that the TT&L accounts[3] and Treasury's account at the Fed are together insufficient for Treasury's spending needs, then it creates securities and transfers them to the Fed for auction, in exchange the Fed debits Treasury's deposit account. This all follows from the statutory limitations on both entities. Treasury isn't legally permitted to carry a negative balance at the Fed, but the Fed legally can carry a negative balance on its own account. A primary benefit of and reason for this arrangement is it makes the funding predictable. Personally I find the system elegant in its (legally mandated) complexity.
Saying "the Treasury sells securities at auction" isn't really wrong, seeing as it's just a simplification that is acceptable in virtually every case with the sole exception being discussions like this one. It's a lot like saying "I sold some AAPL stock." You didn't really, your broker did. In everyday conversation there's nothing wrong with these simplifications.
[1]https://www.investopedia.com/articles/economics/08/treasury-...
[2]https://www.investopedia.com/terms/t/taaps.asp
[3]https://www.newyorkfed.org/aboutthefed/fedpoint/fed21.html
The issue is the China's corporate debt and off book debt to government owned / backed companies. They have $3.12T coming due in the next year.
For example:
https://www.bloomberg.com/news/articles/2018-07-18/a-china-b...
For example:
https://www.bloomberg.com/news/articles/2018-07-18/a-china-b...
> Designed to handle 320 trains a day, the Lanzhou-Xinjiang HSR currently has only eight daily services. “Because of this large amount of idle capacity, [the line’s] annual revenues are not enough to pay for its electricity costs,” said Prof Zhao.
https://www.ft.com/content/ca28f58a-955d-11e8-b747-fb1e803ee... [Paywall]
> China’s huge leveraged bet on HSR has also generated many other benefits as it dramatically shrinks distances, transforms lives and boosts regional economies. The now three-hour, 1,100km train ride between Guangzhou and Wuhan used to take 11 hours, and tickets are now priced at just Rmb464.
Annual travel on China’s HSR lines — 1.7bn trips — exceeds travel on conventional rail services. And about half of all HSR trips are, like Mr Liu’s, business-related.
“When you think about that, a staggering 850m people are travelling [on HSR] to meet customers, get to their job, visit research centres and so on,” said Mr Ollivier.
If China Railway’s HSR network is ultimately able to pay for itself, it will be a testament to the miracles that can happen when the Chinese Communist party marshals the vast financial resources at its disposal to serve a common good. But if it cannot, there is little doubt who will have to make up the difference.
“China Railway’s debt is government-backed,” said Prof Li. “It won’t default.”
https://www.ft.com/content/ca28f58a-955d-11e8-b747-fb1e803ee... [Paywall]
> China’s huge leveraged bet on HSR has also generated many other benefits as it dramatically shrinks distances, transforms lives and boosts regional economies. The now three-hour, 1,100km train ride between Guangzhou and Wuhan used to take 11 hours, and tickets are now priced at just Rmb464.
Annual travel on China’s HSR lines — 1.7bn trips — exceeds travel on conventional rail services. And about half of all HSR trips are, like Mr Liu’s, business-related.
“When you think about that, a staggering 850m people are travelling [on HSR] to meet customers, get to their job, visit research centres and so on,” said Mr Ollivier.
If China Railway’s HSR network is ultimately able to pay for itself, it will be a testament to the miracles that can happen when the Chinese Communist party marshals the vast financial resources at its disposal to serve a common good. But if it cannot, there is little doubt who will have to make up the difference.
“China Railway’s debt is government-backed,” said Prof Li. “It won’t default.”
>>My feeling is business people and economists are upset that China utterly refuses to follow neoliberal economic polices.
>>Typically countries that try to follow Keynesian economic policies get hammered by western central banks and monetary institutions.
This is a common trope/conspiracy-theory that's not substantiated by the numbers. Western countries don't follow neo-liberal economic policy, unless you consider an increasingly powerful and unaccountable regulatory state, growing social welfare spending provided at the taxpayer's expense, and interventionist central bank policy, to the tune of the Federal Reserve holding $4.5 trillion in assets now, "neoliberal".
By any broad-based metric of economic freedom, the West has been growing less economically liberal over the last 50 years.
>>Typically countries that try to follow Keynesian economic policies get hammered by western central banks and monetary institutions.
This is a common trope/conspiracy-theory that's not substantiated by the numbers. Western countries don't follow neo-liberal economic policy, unless you consider an increasingly powerful and unaccountable regulatory state, growing social welfare spending provided at the taxpayer's expense, and interventionist central bank policy, to the tune of the Federal Reserve holding $4.5 trillion in assets now, "neoliberal".
By any broad-based metric of economic freedom, the West has been growing less economically liberal over the last 50 years.
Besides Keynes and obviously Marx, China's nationalist economics policies have been strongly influenced by Friedrich List (who also inspired economic development in Japan).
There are more booms to be found in China, for sure. But corrections/recessions/crashes are needed to wash out the bad elements so the better ones can thrive.
The party has stated they can do this on their own, but given that their families' control of large parts of the economy has become a huge part of the problem they are unwilling to manage (which would have been hard anyways).
The party has stated they can do this on their own, but given that their families' control of large parts of the economy has become a huge part of the problem they are unwilling to manage (which would have been hard anyways).
Crashes are happening all the time. For example right now P2P lending is crashing hard. The question is if it is worth it to have a systematic crash in order to clear the markets, as in Andrew Mellon's "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate." China is not the only one in the modern world unwilling to crash systematically.
Perhaps a better comparison is a slightly older one - the economic consequences of the Russian investment in the Trans-Siberian Railway. The significant [struggling to find a citation with numbers] investment as a percentage of GDP between 1891 and 1916 starved other capital investments that would have yielded greater return in the more populated west. In addition, the infrastructure investment brought the Russian Empire into stronger contact with previously distant empires (China and Japan). By 1914 and the start of World War 1, the railway was valuable in bringing resources from Siberia to the west. But, if that capital had been invested in the western provinces, even improved railway network in Ukraine, Poland and Belorussia, would war outcomes have been different. And, would capital investments more directly visible and related to population centers created a dynamic that would have been less sympathetic to Bolshevik ideology?
I think the main point was that the Chinese investment seems to at times fly in the face of where trade really is / is going.
The us interstate system was where there was trade already and not many alternate routes / better systems.
China's strategic concers are obvious and make sense...and yet if push came to shove and they were cut off from the sea, are they really trading via rail with Europe or others in that scenario anyway? / is incurring the costs of whole backup systems making sense?
Personally I don't have a clue how any of this plays out, just speaking to what the article is indicating.
The us interstate system was where there was trade already and not many alternate routes / better systems.
China's strategic concers are obvious and make sense...and yet if push came to shove and they were cut off from the sea, are they really trading via rail with Europe or others in that scenario anyway? / is incurring the costs of whole backup systems making sense?
Personally I don't have a clue how any of this plays out, just speaking to what the article is indicating.
No it doesn't make sense to expect rail to replace sea, however the article failed to note that the Yiwu-Europe rail link is over existing rails and there was very little infrastructure investment other than inland port facilities. The major drive was on the software side -- making trains going through multiple countries less cumbersome. Whatever happens to the BRI the Yiwu-European rail certainly is not to going to be the one to break the bank.
Do you have a reference for the US interstate system being built where there was trade already?
I guess I don't have any links, but it isn't hard to imagine interstate trade in the US in the mind 20th century. There were military considerations later on but the groundwork before that wasn't entirely military focused.
I always thought the interstate was a big 'F you' to the rail industry.
...and the rail system seemed to follow along the path of most of the rivers.
Now fiber is also placed along these paths.
...and the rail system seemed to follow along the path of most of the rivers.
Now fiber is also placed along these paths.
> it obviously makes sense to invest into continental infrastructure because it does not control the sea.
Easier and cheaper to pursue a Blue Water Navy than pump money into questionable projects in corrupt States -- projects who's success is anything but assured (See Malaysia PM planning to cancel all Chinese projects and the mess in Pakistan as recorded by WSJ recently).
> someone needs to build infrastructure, after all, I don't think we've somehow transcended the need for transportation.
It's more about the opportunity cost and ROI than the need, right?
Easier and cheaper to pursue a Blue Water Navy than pump money into questionable projects in corrupt States -- projects who's success is anything but assured (See Malaysia PM planning to cancel all Chinese projects and the mess in Pakistan as recorded by WSJ recently).
> someone needs to build infrastructure, after all, I don't think we've somehow transcended the need for transportation.
It's more about the opportunity cost and ROI than the need, right?
The money also buys you influence and good will from the locals (usually), which I imagine China also probably wants.
And when did a Blue Water Navy become cheap? It's one of the most expensive military investments, especially if your plan is to break a potential US blockade.
And when did a Blue Water Navy become cheap? It's one of the most expensive military investments, especially if your plan is to break a potential US blockade.
> influence and good will from the locals
No good deed goes unpunished. And in this case, the deeds often aren't even good. Locals from Ghana to Bangladesh complain about how China brings in their own workers rather than employ locals, and how the end result is shoddy work and more money in the pocket of corrupt officials.
Now it may buy influence from the goverment, but as I mentioned, governments are fickle things and power changes hands frequently.
All the same, I don't think this is irrational behavior from China -- they need to win friends and influence people.
> And when did a Blue Water Navy become cheap?
You'd have to compare the payback period for investing in slum upgrades in Indonesia vs investing in one's own Navy. In many cases it's never vs some intangible number of years.
No good deed goes unpunished. And in this case, the deeds often aren't even good. Locals from Ghana to Bangladesh complain about how China brings in their own workers rather than employ locals, and how the end result is shoddy work and more money in the pocket of corrupt officials.
Now it may buy influence from the goverment, but as I mentioned, governments are fickle things and power changes hands frequently.
All the same, I don't think this is irrational behavior from China -- they need to win friends and influence people.
> And when did a Blue Water Navy become cheap?
You'd have to compare the payback period for investing in slum upgrades in Indonesia vs investing in one's own Navy. In many cases it's never vs some intangible number of years.
> This sounds like the infrastructure version of the 'financial bubble' prediction that crops up every other year.
My favorite is the yearly "end of china" report by gordon chang. I remember the guy talking about china's collapse in the 90s and he's been wrong since.
My favorite is the yearly "end of china" report by gordon chang. I remember the guy talking about china's collapse in the 90s and he's been wrong since.
>Great powers are the nations that best harness their economic potential to build up military strength. When they become overextended, the splurge of spending to sustain a strategic edge leaves more productive parts of the economy starved of capital, leading to inevitable decline.
This describes the US better than China. The US spends 7.8% of it's GDP on the military, while China spends only 1.9%. If any country is over-exerting itself and "starving the economy of capital", that's America.
This describes the US better than China. The US spends 7.8% of it's GDP on the military, while China spends only 1.9%. If any country is over-exerting itself and "starving the economy of capital", that's America.
I was with you on the first sentence.. but where did you get 7.8%? We only spend 3.5%. [Edit: World bank puts it at 3.1: https://data.worldbank.org/indicator/MS.MIL.XPND.GD.ZS?locat...]
And according to the military, most of this higher than average spending is due to the military being voluntary, and needing to compete on wages in one of the highest earning countries in the world. Whether you agree with the military's assessment or not, it's true that a significant portion of US military spending is spent on wages/compensation. A lot (not all though) of the difference between the US and russia/china is due to the later having much cheaper labor.
Also the last sentence certainly isn't true... there are many countries that spend far more a percent of GDP on their military: Russia, Saudi Arabia, and the typical example of military excess: north korea.
And according to the military, most of this higher than average spending is due to the military being voluntary, and needing to compete on wages in one of the highest earning countries in the world. Whether you agree with the military's assessment or not, it's true that a significant portion of US military spending is spent on wages/compensation. A lot (not all though) of the difference between the US and russia/china is due to the later having much cheaper labor.
Also the last sentence certainly isn't true... there are many countries that spend far more a percent of GDP on their military: Russia, Saudi Arabia, and the typical example of military excess: north korea.
It's really hard to get a precise number of how much money we spend on military. The budget for the military is snuck into other line items and obscures the true cost. For instance the VA is not included, even though we only need the VA due to having veterans. And the costs for nuclear weapons and nuclear power plants are included in the Department of Energy's budget.
The VA is a weird case — if we had comprehensive medical coverage for all Americans, the because-of-military costs would only be those incurred due to care for wounded veterans.
I believe that's a minority of the VA's expenditures, but sometimes it is hard to separate. For example, my grandfather receives a hearing aid from the VA — is that because of too much time spent around jet planes, or just due to age?
I believe that's a minority of the VA's expenditures, but sometimes it is hard to separate. For example, my grandfather receives a hearing aid from the VA — is that because of too much time spent around jet planes, or just due to age?
It's not uncommon in countries with comprehensive health care for veterans to receive additional benefits (even for non combat/service related injuries).
But you're right that much of the VA could be replaced with a national system.
But you're right that much of the VA could be replaced with a national system.
Without a doubt, but as it stands now, it's part of the total compensation package that is offered to service members and should be accounted as such.
It's not appropriate to include in terms of proportion of GDP because they'd be spending that money on healthcare anyway.
It still is appropriate because it's compensation for a job. VA benefits are part of the package deal a service member signs up for. Without those benefits the military would have to offer a higher salary to recruit the same number and quality of employees, at the margin at least.
It's like saying a government pension shouldn't be counted as part of the cost of employing government workers because the workers would still have to buy food and housing whether or not their career was with the government.
It's like saying a government pension shouldn't be counted as part of the cost of employing government workers because the workers would still have to buy food and housing whether or not their career was with the government.
By that logic you could affect the spending numbers by charging military spouses rent and making up for it with daycare pay to compensate them for watching their kids. It's just a difference in accounting.
I'm confused about what you're arguing. If governmental funds are being spent on military spousal housing, that's a cost of the military, whether it's accounted as salary to the service member who pays rent or if the military builds the house directly.
My original point is that nobody (at least publicly) knows the true spending on the US military because the accounting is so baroque. The VA is just one agency whose rather significant cost is typically forgotten when quoting these numbers, but it's far from the only example.
My original point is that nobody (at least publicly) knows the true spending on the US military because the accounting is so baroque. The VA is just one agency whose rather significant cost is typically forgotten when quoting these numbers, but it's far from the only example.
That might have been a bad example. But if you're comparing military spending between one country with the VA and another with universal health coverage, it will mess with the numbers if you include the VA. It's the other country with the difficult accounting.
Ah, I see what you're saying.
But I don't want to compare countries. I'm not sure if there's a "right" level of military spending, but I think pro-Military-Industrial-Complex forces in the US purposefully obscure the cost in order to not erode popular support.
But I don't want to compare countries. I'm not sure if there's a "right" level of military spending, but I think pro-Military-Industrial-Complex forces in the US purposefully obscure the cost in order to not erode popular support.
He probably receives a hearing aid from the VA because he was in the military, irregardless of how he lost his hearing.
The point they are raising is whether that's a negative externality of the military - had he not been in the military, would that hearing aide not have been needed.
If he had not been in the military, the VA wouldn't have given him one.
> It's really hard to get a precise number of how much money we spend on military.
Not as hard as it is to get a precise number on much money China spends on its military.
China's soldier support spending is pretty significant as well, probably much more so than the US.
Not as hard as it is to get a precise number on much money China spends on its military.
China's soldier support spending is pretty significant as well, probably much more so than the US.
according this link: https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War, the direct spending of DoD on Iraq war is about $757.8 billion, do you think most of that spending on the labor?
I think to look at any particular war and ask that question leads to an inaccurate answer... since there are years of prep work, training, research, etc that the military conducts, then in a short period of time they expend equipment, munitions, etc during a war.
But consider, the cost of labor effects everything the military does... Everyone in the entire chain commands a higher wage than they would in China/Russia, whether they hold a gun or not... researchers, assembly line workers, doctors, etc... pushing up the costs of everything the military buys.
But consider, the cost of labor effects everything the military does... Everyone in the entire chain commands a higher wage than they would in China/Russia, whether they hold a gun or not... researchers, assembly line workers, doctors, etc... pushing up the costs of everything the military buys.
I agree part of your point. But you forgot another huge difference that, US has involved lots of wars in the past three decades, but China didn't, which spend trillion dollars, either on labor or not, but that money just wasted without any outcoming. You can check out what Jack Ma commented about this in World Economic Forum 2017: https://www.weforum.org/agenda/2017/01/jack-ma-america-has-w...
Wasted perhaps in immediate strategic outcomes. But don't discount blooding troops, burning in systems and building institutional knowledge, which are strategic assets. One can certainly argue if it was worth it, though.
Yep, you have to employ a lot of people to maintain military occupations in an ever-growing list of countries. Clearly we should cut benefits.
We could cut the size of the military... but simply making the observation that we have a large number of people doesn't explain anything. China's military is 2x the size of the US by number of people.
It certainly doesn't follow that the richer and more valuable a country becomes (and therefore more expensive personnel), the smaller their military should be.
It certainly doesn't follow that the richer and more valuable a country becomes (and therefore more expensive personnel), the smaller their military should be.
> China's military is 2x the size of the US by number of people.
And yet china has ~4.5x the number of people as the US.
And yet china has ~4.5x the number of people as the US.
Whether China will come up ahead with Belt and Road is uncertain. What is certain is there's a tremendous infrastructure gap, particularly in Asia. This is a great way to turn the overcapacity in Chinese steel and cement into something useful for the world.
https://blogs.worldbank.org/ppps/forecasting-infrastructure-...
https://blogs.worldbank.org/ppps/forecasting-infrastructure-...
China's situation is entirely different.
1: The Asia Pacific is "hitting the knee on the curve" and modernizing its economy. Also, it's the most populous region on earth. It's why economic forecasters call the 2000-2100 period the Asian Century: https://en.wikipedia.org/wiki/Asian_Century
2: The Silk and Road Project ranges far outside "economically stagnant" areas. It's adjusted investments according to projected future growth, and also hedged into already modernized economies. It's as much about supply chain and trade routes as it is about direct economic investment. It connects China to Europe.
1: The Asia Pacific is "hitting the knee on the curve" and modernizing its economy. Also, it's the most populous region on earth. It's why economic forecasters call the 2000-2100 period the Asian Century: https://en.wikipedia.org/wiki/Asian_Century
2: The Silk and Road Project ranges far outside "economically stagnant" areas. It's adjusted investments according to projected future growth, and also hedged into already modernized economies. It's as much about supply chain and trade routes as it is about direct economic investment. It connects China to Europe.
One interesting project is the mostly Chinese-funded port of Gwadar, in Balochistan, Pakistan. They're trying to develop it as a deep water port as an alternative to Karachi. So far not with very much success, because of political instability and difficulty of attracting other foreign investors to the region.
https://www.google.com/search?q=gwadar+port+china&ie=utf-8&o...
Now this part is just my opinion, but the really, really hard part is the proposed road or high-speed rail cargo link from Gwadar to Western China. The Karakorum highway is no joke. It's narrow, twisty, carved into steep rocky mountain passes. I've driven from Islamabad via Gilgit to the Chinese border. It will take many, many billions of dollars of tunneling and road construction to bring it up to the standard of a highway that can take a large volume of 20/40ft cargo container traffic. Right now trucks spend a great deal of time in 1st gear crawling along at 15km/h.
https://www.google.com/search?q=karakoram+highway&ie=utf-8&o...
https://www.google.com/search?q=gwadar+port+china&ie=utf-8&o...
Now this part is just my opinion, but the really, really hard part is the proposed road or high-speed rail cargo link from Gwadar to Western China. The Karakorum highway is no joke. It's narrow, twisty, carved into steep rocky mountain passes. I've driven from Islamabad via Gilgit to the Chinese border. It will take many, many billions of dollars of tunneling and road construction to bring it up to the standard of a highway that can take a large volume of 20/40ft cargo container traffic. Right now trucks spend a great deal of time in 1st gear crawling along at 15km/h.
https://www.google.com/search?q=karakoram+highway&ie=utf-8&o...
China is located among countries with large populations. Border disputes and historical warfares with neighbors are among its handicaps.
Looking at the world as a grand chess board, the Belt and Road Initiative is a move which China turns this disadvantage into an edge. By promoting trades with neighbors, it gains geopolitical influence, potential integration into the local economies, and friendships with the political classes.
To match this, the US needs to further strengthen its ties with the countries in question. Several of which are projected to become some of the largest economies in the world by 2050 [1]. Regardless of the extent that the projection comes true, the regions from East Asia to South Asia, where about half of the world's population live in, clearly have great long-term strategic importance.
[1] https://www.pwc.com/gx/en/issues/economy/the-world-in-2050.h...
Looking at the world as a grand chess board, the Belt and Road Initiative is a move which China turns this disadvantage into an edge. By promoting trades with neighbors, it gains geopolitical influence, potential integration into the local economies, and friendships with the political classes.
To match this, the US needs to further strengthen its ties with the countries in question. Several of which are projected to become some of the largest economies in the world by 2050 [1]. Regardless of the extent that the projection comes true, the regions from East Asia to South Asia, where about half of the world's population live in, clearly have great long-term strategic importance.
[1] https://www.pwc.com/gx/en/issues/economy/the-world-in-2050.h...
It isn't as much about sincere trade as much it is about making those countries dependent on China.
Just take a look at the projects completed so far, every single time they brought in their own people and companies to build oversized unnecessary infrastructure that remains mostly unused.
When countries default on those loans, things aren't quite bright.
Just take a look at the projects completed so far, every single time they brought in their own people and companies to build oversized unnecessary infrastructure that remains mostly unused.
When countries default on those loans, things aren't quite bright.
I do not condone all of their tactics, some of which look questionable. I only tried to analyze the thinking behind their plans and strategy from a detached point of view. Their overall strategy appears quite sound.
When you compare the cost of Belt and Road to wars that cost trillions of dollars, the money spent is peanuts.
The belt and road is already working. China-Finland train link connects Nordic countries with China in 10-12 days. They carry heavy and expensive machinery and machine parts between China and EU. Too heavy for air-travel economically and needs to arrive relatively fast.
The belt and road is already working. China-Finland train link connects Nordic countries with China in 10-12 days. They carry heavy and expensive machinery and machine parts between China and EU. Too heavy for air-travel economically and needs to arrive relatively fast.
I don't think your example shows that, and the article disagrees with you:
"The value of freight between Europe and Yiwu, a much-touted overland rail hub near Shanghai, came to 2.27 billion yuan ($330 million) in the first four months of this year [snip] China’s top four ports alone process about the same value of cargo every three hours."
Also see this graph from the article: https://www.bloomberg.com/toaster/v2/charts/e6c45ea06db24277...
"The value of freight between Europe and Yiwu, a much-touted overland rail hub near Shanghai, came to 2.27 billion yuan ($330 million) in the first four months of this year [snip] China’s top four ports alone process about the same value of cargo every three hours."
Also see this graph from the article: https://www.bloomberg.com/toaster/v2/charts/e6c45ea06db24277...
So what? The trade route only just opened up. The numbers started at zero and started only recently, so of course they are small. By how much the trade is going to increase and at what rate is what everyone is arguing about. People underestimate how large Eurasia is along its east-west axis and how underdeveloped it is in parts. I predict the naysayers and doomsayers will be eating their hats.
In nominal terms the US is the world's largest economy. Let's put it at ~$20tn gdp nominal with moderate growth. EU is about ~$17tn with less than moderate growth say and China is about ~$13tn and growing fast. Problem is that EU and China are at opposite ends of the Eurasian landmass. Anything that reduces trade times and cost between the poles of this massive continent and interconnects a combined ~$30tn economy is going to have an enormous impact.
But even so the article contradicts itself.
“The overwhelming majority of China's trade with Europe is by sea and air. Overland routes don't cut it”
What the detailed stats show is that by value rail is 2% and road is 6% of total trade. (Air is 28%). Take into account that,
“Just 10 years ago, regular direct freight services from China to Europe did not exist. Today, they connect roughly 35 Chinese cities with 34 European cities.”[1]
And that,
“Rail services are considerably cheaper than air and faster than sea”[2]
So 2% of trade captured in 10 years. So if people stop thinking in terms of years and start thinking in terms of decades it is obvious that improvements in land logistics will far surpass those of sea and air. By the middle of the century it is anybody's guess what fraction of total trade will be capture by road and rail but it could be very significant. From my reading most analyses put Khazakstan as one of the major bottlenecks, an upgrade there could have huge knock on effects. (And that's not even taking into consideration different sized rail gauges.)
[1] https://www.csis.org/analysis/rise-china-europe-railways
[2] https://csis-prod.s3.amazonaws.com/s3fs-public/180228_fig1.p...
In nominal terms the US is the world's largest economy. Let's put it at ~$20tn gdp nominal with moderate growth. EU is about ~$17tn with less than moderate growth say and China is about ~$13tn and growing fast. Problem is that EU and China are at opposite ends of the Eurasian landmass. Anything that reduces trade times and cost between the poles of this massive continent and interconnects a combined ~$30tn economy is going to have an enormous impact.
But even so the article contradicts itself.
“The overwhelming majority of China's trade with Europe is by sea and air. Overland routes don't cut it”
What the detailed stats show is that by value rail is 2% and road is 6% of total trade. (Air is 28%). Take into account that,
“Just 10 years ago, regular direct freight services from China to Europe did not exist. Today, they connect roughly 35 Chinese cities with 34 European cities.”[1]
And that,
“Rail services are considerably cheaper than air and faster than sea”[2]
So 2% of trade captured in 10 years. So if people stop thinking in terms of years and start thinking in terms of decades it is obvious that improvements in land logistics will far surpass those of sea and air. By the middle of the century it is anybody's guess what fraction of total trade will be capture by road and rail but it could be very significant. From my reading most analyses put Khazakstan as one of the major bottlenecks, an upgrade there could have huge knock on effects. (And that's not even taking into consideration different sized rail gauges.)
[1] https://www.csis.org/analysis/rise-china-europe-railways
[2] https://csis-prod.s3.amazonaws.com/s3fs-public/180228_fig1.p...
> The trade route only just opened up
This is about the fundamental capacity constraints and costs of rail versus maritime transport. The former will always be more expensive than the other, and always be further capacity constrained. The only thing that could change that is a quantum leap in several technologies, in which case the current investments become useless.
> “Rail services are considerably cheaper than air and faster than sea”
Where are you getting this quote?
This is about the fundamental capacity constraints and costs of rail versus maritime transport. The former will always be more expensive than the other, and always be further capacity constrained. The only thing that could change that is a quantum leap in several technologies, in which case the current investments become useless.
> “Rail services are considerably cheaper than air and faster than sea”
Where are you getting this quote?
In this comparative study from New Zealand: https://www.nzta.govt.nz/assets/resources/research/reports/4... you can find a Comparative evaluation of transport modes where maritime shipping is cheaper than train, but this depends on the number of containers (you can put much more on a vessel). If we can increase the number of containers on trains, this could change. Also right now the China-Belgium trip can take 20 days by train (cf. https://www.train-chain.com/) and usually around 30 days by sea.
> If we can increase the number of containers on trains, this could change
This increases wear on the train and tracks. We might have materials breakthroughs that change the balance. But such materials would make (a) shipping more efficient and (b) large fractions of the existing Belt and Road obsolete.
> right now the China-Belgium trip can take 20 days by train (cf. https://www.train-chain.com/) and usually around 30 days by sea
Emphasis on can. In any case, there is a reason the world's commercial shippers are all focussing on Arctic maritime routes.
Rail is a neat way of controlling territory. It's better than trucking or flying, when it comes to cost. But water beats it at scale.
This increases wear on the train and tracks. We might have materials breakthroughs that change the balance. But such materials would make (a) shipping more efficient and (b) large fractions of the existing Belt and Road obsolete.
> right now the China-Belgium trip can take 20 days by train (cf. https://www.train-chain.com/) and usually around 30 days by sea
Emphasis on can. In any case, there is a reason the world's commercial shippers are all focussing on Arctic maritime routes.
Rail is a neat way of controlling territory. It's better than trucking or flying, when it comes to cost. But water beats it at scale.
> The former will always be more expensive than the other, and always be further capacity constrained.
Yes. But it's also much faster. This creates new opportunities. Rail freight is not replacing sea or air freight, it's supplementing it.
Expensive but faster freight means that heavy but valuable items can be delivered faster. Heavy Air freight (>100 kg) typically costs 15-20 percent of the value of the goods. Rail wright can be expected to cost 5-10 percent easily, more for items weighing more than 1000 kg. That's value created by the rail.
Yes. But it's also much faster. This creates new opportunities. Rail freight is not replacing sea or air freight, it's supplementing it.
Expensive but faster freight means that heavy but valuable items can be delivered faster. Heavy Air freight (>100 kg) typically costs 15-20 percent of the value of the goods. Rail wright can be expected to cost 5-10 percent easily, more for items weighing more than 1000 kg. That's value created by the rail.
Major logistical routes are build gradually. Currently it's only one train a week with 40 containers. Similar train goes from Chinese east coast to Spain.
When logistics starts to trust the route, the volumes and the cost or railway freight will increase. Railway freight is currently just 20-30% more expensive than ocean freight but takes only 10-15 days. Ocean freight takes two months.
Air freight for items above 500 kg is rarely cost effective. Rail freight opens up new possibilities for faster deliveries.
When logistics starts to trust the route, the volumes and the cost or railway freight will increase. Railway freight is currently just 20-30% more expensive than ocean freight but takes only 10-15 days. Ocean freight takes two months.
Air freight for items above 500 kg is rarely cost effective. Rail freight opens up new possibilities for faster deliveries.
Come on, building and rebuilding other country's economies is a boon to the local economy, particularly when that other country is footing the bill. That's literally why the US was on top starting at the end of WWII. Not everything the Soviets were doing in the 70s is the reason for their downfall.
> building and rebuilding other country's economies is a boon to the local economy, particularly when that other country is footing the bill. That's literally why the US was on top starting at the end of WWII.
I'm sure it helped, but the U.S. was already by far the dominant power before that economic activity.
At the end of WWII, the U.S. produced half of the world's GDP, a staggering number. It was the only advanced country which was physically untouched by the war, it had troops stationed throughout Europe and the Pacific, and it was the only country with nuclear weapons.
It says a lot, IMHO, that the U.S. didn't pursue a global empire at that point.
I'm sure it helped, but the U.S. was already by far the dominant power before that economic activity.
At the end of WWII, the U.S. produced half of the world's GDP, a staggering number. It was the only advanced country which was physically untouched by the war, it had troops stationed throughout Europe and the Pacific, and it was the only country with nuclear weapons.
It says a lot, IMHO, that the U.S. didn't pursue a global empire at that point.
> It says a lot, IMHO, that the U.S. didn't pursue a global empire at that point.
I mean, there's a lot of practical reasons for post colonialism that don't have to do with any altruism on the part of the United States.
I mean, there's a lot of practical reasons for post colonialism that don't have to do with any altruism on the part of the United States.
It's not clear what the advantages of pure imperialism would have been at the time vs taking advantage of all of those exact pros you mentioned without outright taking over of nations.
Global hegemony shifted from pure colonialism to neocolonialism over the few decades and it's still to be determined what the next wave will be.
>It says a lot, IMHO, that the U.S. didn't pursue a global empire at that point.
I think that, politically, it would have never been accepted by the population or the (conscription-based) army. Also they ended with big not-quite empire with NATO soon after.
I think that, politically, it would have never been accepted by the population or the (conscription-based) army. Also they ended with big not-quite empire with NATO soon after.
> I think that, politically, it would have never been accepted by the population or the (conscription-based) army.
I agree, but the population is how the U.S. makes decisions (very broadly speaking) - that's the advantage of being a democracy.
I agree, but the population is how the U.S. makes decisions (very broadly speaking) - that's the advantage of being a democracy.
"The bulk of major Belt and Road projects are in Malaysia, South Asia and Indochina" -- subheading of the 2nd chart
Malaysia and Indonesia control the Strait of Malacca, one of the world's busiest shipping lanes which doubled in traffic over the past decade [1]. The strait connects manufacturers in China to fast-growing large population centers in South Asia, including India, Pakistan and Bangladesh with over 1.5 billion people in total.
Most of the projects facilitate trades between South Asia, Southeast Asia, and China. About half of the world's population live in these regions [2].
The projects to connect China to Russia and Europe serve two major purposes:
1) Energy security: Over 40% of the oil China imports comes from the Middle East [3], where it does not have much influence. Even imports from elsewhere are largely shipped over the seas which China does not control.
2) Geopolitical influence through trade and investment
[1] http://www.seatrade-maritime.com/news/asia/exclusive-malacca...
Also: https://www.shipmap.org/
[2] More People Live Inside This Circle Than Outside Of It https://brilliantmaps.com/population-circle/
[3] http://www.worldstopexports.com/top-15-crude-oil-suppliers-t...
Malaysia and Indonesia control the Strait of Malacca, one of the world's busiest shipping lanes which doubled in traffic over the past decade [1]. The strait connects manufacturers in China to fast-growing large population centers in South Asia, including India, Pakistan and Bangladesh with over 1.5 billion people in total.
Most of the projects facilitate trades between South Asia, Southeast Asia, and China. About half of the world's population live in these regions [2].
The projects to connect China to Russia and Europe serve two major purposes:
1) Energy security: Over 40% of the oil China imports comes from the Middle East [3], where it does not have much influence. Even imports from elsewhere are largely shipped over the seas which China does not control.
2) Geopolitical influence through trade and investment
[1] http://www.seatrade-maritime.com/news/asia/exclusive-malacca...
Also: https://www.shipmap.org/
[2] More People Live Inside This Circle Than Outside Of It https://brilliantmaps.com/population-circle/
[3] http://www.worldstopexports.com/top-15-crude-oil-suppliers-t...
Meanwhile, the USA will dump 1 trillion dollars at a time on things like the Obama stimulus to apparently no effect, a decade of massive subsidies to an insolvent financial sector, billions of dollars on failed school districts... China might overpay, eventually, if they actually invest their claimed amount of money (doubtful), but they do appear to at least get a road when they pay for a road.
> the USA will dump 1 trillion dollars at a time on things like the Obama stimulus to apparently no effect
What? The economy recovered, it could have gotten much more worse if Obama did nothing. Even Bush realized that, whatever became Obama's stimulus was planned before Obama took office, and passed with bipartisan support. It only became a whipping boy later because the Republicans saw and took the political opportunity.
> but they do appear to at least get a road when they pay for a road.
Yes, but the villages who live on the road probably can't pay the high tolls to use it.
What? The economy recovered, it could have gotten much more worse if Obama did nothing. Even Bush realized that, whatever became Obama's stimulus was planned before Obama took office, and passed with bipartisan support. It only became a whipping boy later because the Republicans saw and took the political opportunity.
> but they do appear to at least get a road when they pay for a road.
Yes, but the villages who live on the road probably can't pay the high tolls to use it.
Yeah, people keep saying China is a house of cards, but they're spending their money on things you can see and use. The train I take to work is 40 years old, and the tracks are over a 100. I'm envious of all the new things they're building with all their 'fake' growth.
> Yeah, people keep saying China is a house of cards
No they don't, that is completely a red herring.
> I'm envious of all the new things they're building with all their 'fake' growth.
We could have HSR also if we were willing to pay for it...if we thought it made sense to our economic growth. And the Chinese have taken out a lot of debt to pay for it, it wasn't free, and the only profitable line ATM is the one between Beijing and Shanghai. HSR might work out in the future, HSR might lead to economic growth, but these are bets like anything else.
I've taken HSR between Beijing and almost Guangzhou (my wife's hometown doesn't have an airport but has an HSR station). It was fairly empty much of the way during the 6 hour or so trip.
No they don't, that is completely a red herring.
> I'm envious of all the new things they're building with all their 'fake' growth.
We could have HSR also if we were willing to pay for it...if we thought it made sense to our economic growth. And the Chinese have taken out a lot of debt to pay for it, it wasn't free, and the only profitable line ATM is the one between Beijing and Shanghai. HSR might work out in the future, HSR might lead to economic growth, but these are bets like anything else.
I've taken HSR between Beijing and almost Guangzhou (my wife's hometown doesn't have an airport but has an HSR station). It was fairly empty much of the way during the 6 hour or so trip.
The US hasn't balanced a budget in decades. You would think that during an economic boom they would at least try. I am quite shocked nobody even seems to care- creditcard culture.
They tried under Clinton, the Republicans didn’t like it. There is a good point about takin on debt being good for USD liquidity, but the debt should be productively invested somehow so that it can pay off later.
The profitable model does not always work everywhere. For these high speed railroad, I see no reason they should be profitable as a whole.
I mean, better is better. Let's not pretend that USA can still build the infrastructure as it needs, better than China.
On the other hand, China's infrastructure project are funded by cheap labors. That's maybe more relevant than financial models. Also they have little resistance from the locals affected by the projects. Here we cannot even build apartments higher than certain number...
I mean, better is better. Let's not pretend that USA can still build the infrastructure as it needs, better than China.
On the other hand, China's infrastructure project are funded by cheap labors. That's maybe more relevant than financial models. Also they have little resistance from the locals affected by the projects. Here we cannot even build apartments higher than certain number...
> For these high speed railroad, I see no reason they should be profitable as a whole.
They were paid for by investors and bank loans. The governments direct contribution is not that large. If HSR isn't going to pay off, those investors are losing their shirts.
> Let's not pretend that USA can still build the infrastructure as it needs, better than China.
The USA takes advantage of cheaper goods from other countries. It can totally survive without that, but we like more stuff.
They were paid for by investors and bank loans. The governments direct contribution is not that large. If HSR isn't going to pay off, those investors are losing their shirts.
> Let's not pretend that USA can still build the infrastructure as it needs, better than China.
The USA takes advantage of cheaper goods from other countries. It can totally survive without that, but we like more stuff.
HSR don't need to be profit individually, that's why it's funded by the government. HSR will stimulate the economy which it connected. So in a big picture, it brings a huge positive impact for the economy, just like the highway.
HSR wasn't funded by the government however, at least not completely. Well, this is where it gets complicated:
China Railway is a SOE, so it is technically the government. It took out a lot of debt to do HSR, and technically that isn't considered public debt and is rather listed as corporate debt (if SOE debt was considered public debt, China's public debt would obviously be much higher than the USA). Anyways, see https://www.ft.com/content/ca28f58a-955d-11e8-b747-fb1e803ee... for a better read.
Highways in China are mostly financed in similar ways actually, which is why all of the newer ones have pretty high tolls.
China Railway is a SOE, so it is technically the government. It took out a lot of debt to do HSR, and technically that isn't considered public debt and is rather listed as corporate debt (if SOE debt was considered public debt, China's public debt would obviously be much higher than the USA). Anyways, see https://www.ft.com/content/ca28f58a-955d-11e8-b747-fb1e803ee... for a better read.
Highways in China are mostly financed in similar ways actually, which is why all of the newer ones have pretty high tolls.
I am very aware that, as I am native Chinese. CRS is SOE, but when they constructed each individual HSR project, they got the investment from local governments, as each local governments knew that HSR would greatly benefit the economy. Just like HSR project between Beijing and Shanghai, which got the investment from seven local governments, if you can read Chinese: https://zh.wikipedia.org/wiki/京沪高速铁路
The whole project has 12 major shareholders, including 7 local governments.
And also a whole lot of loans that have to be paid back somehow....they didn’t bond this, they got huge loans from all of the state banks. If the government is just going to pay for HSR, they haven’t put that money on the books yet.
Heh, again China 'collapses', such articles keep coming for ~20 years now, yet it's only getting stronger. If I had to bet my money, I would bet that China will outlast any current major power and USA is in much more dangerous position stabbing long time allies in the backs, isolating itself and monkey for a president.
FWIW, if some reports are anything to go by (see e.g. [1]), and indeed China itself (see e.g. [2]), China has an enormous (and growing) pile of bad debt. If true, things could get very ugly when the bubble pops.
[1]: http://carnegieendowment.org/chinafinancialmarkets/75355
[2]: https://www.caixinglobal.com/2017-10-20/china-must-guard-aga...
[1]: http://carnegieendowment.org/chinafinancialmarkets/75355
[2]: https://www.caixinglobal.com/2017-10-20/china-must-guard-aga...
China has been around for what? Three thousand years? Its not going anywhere. Even at its lowest point under Mao it still exerted enough influence to counter the Soviet and US political domination of Asia.
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While the collapse was unavoidable, Soviet Union collapsed when it collapsed, ie. in the 198x instead of say 10 years later or 10 years earlier, because of confluence of 2 factors - cold weather of 198x resulting in bad harvests and low price of oil which didn't allow for enough import to cover the food shortage. Food is the key in support [or lack of it] of a regime by its populace. We have just again observed the same thing of food issues leading to great political upheaval - Arab Spring. Wrt. China - so far there is no food (or any other basic quality of life) issues on the horizon.
>In the 1950s, the Soviet economy grew faster than that of any other major country barring Japan.
I'd like to read more about what was happening then, was it largely military investment?
I'd like to read more about what was happening then, was it largely military investment?
So much destruction post 1940s coupled with slave labor (local political prisoners and German prisoners of war) leads to roads and steel plants being built quickly. The population though lived on near nothing till the 60s.
Plus a lot of technology, scientists and engineers taken from Germany. For example the AK-series of rifles were in 'production hell' until the Russians put the captured Germans responsible for producing the STG-44 onto the task.
Much of the productive capital assets in Germany were simply lifted up and taken into the Soviet Union.
Much of the productive capital assets in Germany were simply lifted up and taken into the Soviet Union.
Yeah, also I wonder how you compare something purely state run like Russia with something more along market lines in the short term .... they operate so differently. State run can often create a pretty big economic short term bump if they wish... not sure that means much.
Comparisons, however made, turned out to be false because of lack of information. Soviet Union may have had tremendous output of steel, on paper, but nobody had a microwave till the 1990s. The word economy was something else there than what it meant in the West. In the West it relates, though quite imperfectly, to financial wellbeing of the citizenry. In the USSR it meant how many tanks could be built. No one, even in the 1980s owned a car in practical terms. Some had a car but only used it sparingly, like going to countryside on weekends if they could find and afford the gas.
Plus all the numbers coming from inside USSR were inflated or imagined. Steel output was verified by CIA probably through satellite imagery, which turned out to be wildly false because industrial plant efficiency was nowhere near the West's.
Plus all the numbers coming from inside USSR were inflated or imagined. Steel output was verified by CIA probably through satellite imagery, which turned out to be wildly false because industrial plant efficiency was nowhere near the West's.
A not well-researched viewpoint. In USSR since late 20s, a significant portion of workforce was compensated on a "per unit of goods produced" basis, not "per hour worked", which was the standard in contemporary capitalist countries.
Slave labor in the post-renaissance era cannot compete with other types of labor.
If it could then the South would have fared much better in the US Civil War and everyone and their grandmother would have industrialized economies in Africa by now. Or at the very least Ethiopia should have, which was never a colony of anyone for any meaningful period of time.
Not to mention, the North Korean Famine of 1994-1998, in which 3% of population died, would not have been a thing.
Slave labor in the post-renaissance era cannot compete with other types of labor.
If it could then the South would have fared much better in the US Civil War and everyone and their grandmother would have industrialized economies in Africa by now. Or at the very least Ethiopia should have, which was never a colony of anyone for any meaningful period of time.
Not to mention, the North Korean Famine of 1994-1998, in which 3% of population died, would not have been a thing.
Incorrect. Farmers were closer to slave labour and paid in "work-days", which could be accounted for handouts by administration. Farmers had no freedom of movement outside their farm territories. Life in Soviet villages was largely subsistence based. Slavery for farmers was abolished in 1974 when they were issued domestic passports (the primary ID in USSR) just like townspeople.
As for countless prisoners, they were working for survival with no compensation.
As for countless prisoners, they were working for survival with no compensation.
A strawman. Farmers alone could never account for the record Soviet rates of economic growth. And neither could they if combined with convicts/POWs.
In late 20s this was the deal:
- Poor peasantry cannot provide wheat due to very poor productivity. They use primitive and crude tools, because by definition they cannot afford anything better and can barely even feed themselves, let alone produce any meaningful surplus that can be exchanged for goods or money.
- Rich peasantry is not incentivized to, since the state has monopoly on pricing and is the only legal buyer.
- It's impossible to offer industrial goods to the peasants in exchange for wheat because all resources are directed toward industrialization to create means of production.
- There are foodstamps in the cities, food becomes more expensive, the workers are discontent.
- The state loses most of it's export revenue because the global price of wheat declines as the Great Depression begins.
- The West refuses to trade with USSR even in exchange for gold.
The entire point of collectivization was to raise workforce productivity in agriculture to free enough people to work in cities and to allow these farms to be able to buy industrial goods.
Forced collectivization mostly stopped in 1932-1933, you could run a farm on your own if you wanted to, but you would have been taxed at a much higher rate than a collective farm.
The other key point is that state monopoly allows for concentration of capital that cannot otherwise be achieved in a dirt poor country. Would an efficient soviet land owner (or a foreign investor) have invested in a tractor factory in 1929?
The answer is: No, because the demand simply did not exist. And even if it would have appeared, it would have been much easier for a land owner to just buy Ford's tractors worth $300-350 each, not invest in a tractor factory.
And even though the West refused to trade, the US engineers played pivotal role in construction of key soviet factories and plants:
https://en.wikipedia.org/wiki/Volgograd_Tractor_Plant
https://en.wikipedia.org/wiki/Hugh_Lincoln_Cooper
In late 20s this was the deal:
- Poor peasantry cannot provide wheat due to very poor productivity. They use primitive and crude tools, because by definition they cannot afford anything better and can barely even feed themselves, let alone produce any meaningful surplus that can be exchanged for goods or money.
- Rich peasantry is not incentivized to, since the state has monopoly on pricing and is the only legal buyer.
- It's impossible to offer industrial goods to the peasants in exchange for wheat because all resources are directed toward industrialization to create means of production.
- There are foodstamps in the cities, food becomes more expensive, the workers are discontent.
- The state loses most of it's export revenue because the global price of wheat declines as the Great Depression begins.
- The West refuses to trade with USSR even in exchange for gold.
The entire point of collectivization was to raise workforce productivity in agriculture to free enough people to work in cities and to allow these farms to be able to buy industrial goods.
Forced collectivization mostly stopped in 1932-1933, you could run a farm on your own if you wanted to, but you would have been taxed at a much higher rate than a collective farm.
The other key point is that state monopoly allows for concentration of capital that cannot otherwise be achieved in a dirt poor country. Would an efficient soviet land owner (or a foreign investor) have invested in a tractor factory in 1929?
The answer is: No, because the demand simply did not exist. And even if it would have appeared, it would have been much easier for a land owner to just buy Ford's tractors worth $300-350 each, not invest in a tractor factory.
And even though the West refused to trade, the US engineers played pivotal role in construction of key soviet factories and plants:
https://en.wikipedia.org/wiki/Volgograd_Tractor_Plant
https://en.wikipedia.org/wiki/Hugh_Lincoln_Cooper
Most grand industrial projects in 1920s-1930s indeed were built by the West, or bought from the West wholesale. They were paid largely from proceeds of selling the confiscated grain, which led to famines taking lives of millions.
So tell me, are you keen to invest into a tractor plant if it takes the lives of your family? Improves productivity for those that survive alright?
So tell me, are you keen to invest into a tractor plant if it takes the lives of your family? Improves productivity for those that survive alright?
The motives behind collectivization weren't purely productivity. There was a substantial political impetus as well.
The USSR also had many satellite nations, like the Eastern European block. Moscow was known to drain those countries' resources, with little local investment in return outside of military bases.
I only have personal anecdotes to back that up having grown up in one of those satellite countries.
I only have personal anecdotes to back that up having grown up in one of those satellite countries.
Actually, all of those states had higher standards of living than core USSR and also access to this huge Soviet market. Didn't do much good since communism is so bad, but still.
After the collapse of the Bloc most of those countries lost their industrial capacity, some have not yet recovered, some only recovered on outsource.
After the collapse of the Bloc most of those countries lost their industrial capacity, some have not yet recovered, some only recovered on outsource.
"The last two remaining SovRoms, Sovrompetrol and Sovromcuarţ, were disbanded in 1956"
If we're talking about 1950s especially, I can see how this link is relevant. Unfortunately I can't validate any clauses that are there.
However, in a general context of Soviet-Romanian relationship, USSR imported a huge amount of Romanian furniture, footwear, clothes and other consumer goods. I assume these were paid for nicely. As far as I know Romania had uniquely severe economic problems during communist period even when compared with neighbouring countries, but I don't think you should blame USSR solely for that.
If we're talking about 1950s especially, I can see how this link is relevant. Unfortunately I can't validate any clauses that are there.
However, in a general context of Soviet-Romanian relationship, USSR imported a huge amount of Romanian furniture, footwear, clothes and other consumer goods. I assume these were paid for nicely. As far as I know Romania had uniquely severe economic problems during communist period even when compared with neighbouring countries, but I don't think you should blame USSR solely for that.
That may be true, but it does not invalidate the idea that resources were drained from the satellite nations. How the USSR chose to spend those resources seems to have been to invest in the military and expansion of the empire while ordinary Russian citizens were left to "eat grass."
No, it does. Manufactured goods are not "resources". Those are made for selling, and in modern world markets for goods are considered more of a gift than goods themselves.
Are they not? Does USA drain resources from China?
Are they not? Does USA drain resources from China?
With all due respect, the comparison between the relations of USA/China and Russia/Poland for example does pass the sniff test. The USA did not appoint the Chinese government, the USA does not have its military across China. USSR/satellite state relationships were nothing like a normal economic relationship. They were more like colonial era relations such as England/India prior to Indian independence.
Unfortunally we have diverged from economic arguments to purely political ones.
And politically, you've got what you've got, especially as a small country. Things could go massively worse. The USSR had complete freedom of action and it was pretty benign for several reasons. Maybe you have feeling that it sucked big time, but the reference point should be 1984 in real life.
And politically, you've got what you've got, especially as a small country. Things could go massively worse. The USSR had complete freedom of action and it was pretty benign for several reasons. Maybe you have feeling that it sucked big time, but the reference point should be 1984 in real life.
From my last comment:
> USSR/satellite state relationships were nothing like a normal economic relationship.
How am I bringing up politics?
From your last reply: >The USSR had complete freedom of action and it was pretty benign for several reasons. Maybe you have feeling that it sucked big time, but the reference point should be 1984 in real life.
I don't understand what you are saying here in any way. But, relating the USSR to "benign" is so far from the historic truth that I have no idea how to respond.
This conversation is likely no longer appropriate for HN, so have a nice day comrade?
How am I bringing up politics?
From your last reply: >The USSR had complete freedom of action and it was pretty benign for several reasons. Maybe you have feeling that it sucked big time, but the reference point should be 1984 in real life.
I don't understand what you are saying here in any way. But, relating the USSR to "benign" is so far from the historic truth that I have no idea how to respond.
This conversation is likely no longer appropriate for HN, so have a nice day comrade?
"were nothing like a normal economic relationship" is not a very substantive claim.
Back then, the USSR was largely a rural backwater. After WWII, there was rapid industrialization, mechanization of agriculture etc.
Of course, during the entire cold war the USSR "overspent" on the military compared to the Western economies. But, during the WWII the economy was understandably 100% focused on the war. So even if the kept "overspending" on the military after the war, there was still a lot of industrial capacity left over that could be used for rebuilding and industrialization.
Of course, during the entire cold war the USSR "overspent" on the military compared to the Western economies. But, during the WWII the economy was understandably 100% focused on the war. So even if the kept "overspending" on the military after the war, there was still a lot of industrial capacity left over that could be used for rebuilding and industrialization.
Stopped reading when it started talking about pipelines in military terms. This isnt 1942. A fixed pipeline is a vulnerable asset of little use in any substantial conflict.
When "keep the old magic going" is in essence a locust-like exploit and collapse on a planetary scale, "magic" isn't the most choice word.
Some interesting points in here that I had not considered in a while.
Definitely one of the big advantages of the western economies is the cutthroat nature in which they think about ROI.
If something won't return a profit to a high probability, then it's not built.
Japan has seen problems with the same Soviet top-down style, where there are a lot of excess infrastructure projects throughout Japan, particularly in rural areas.
Japan avoided the Soviet implosion, but it has still gone through a large period of flat growth since the early 90's.
Deflation has been a major problem since 1991 and still is.
China could be the exception to this top-down style and find a way to high growth despite it's inefficiencies, but I am betting that it all catches up to them suddenly. Maybe not for a few years, but it will most definitely happen like it has happened to every country that has adopted the top-down Japanese style modernization.
If something won't return a profit to a high probability, then it's not built.
Japan has seen problems with the same Soviet top-down style, where there are a lot of excess infrastructure projects throughout Japan, particularly in rural areas.
Japan avoided the Soviet implosion, but it has still gone through a large period of flat growth since the early 90's.
Deflation has been a major problem since 1991 and still is.
China could be the exception to this top-down style and find a way to high growth despite it's inefficiencies, but I am betting that it all catches up to them suddenly. Maybe not for a few years, but it will most definitely happen like it has happened to every country that has adopted the top-down Japanese style modernization.
I don't agree that's the big advantage of western economies, especially for infrastructure project. Actually that's the big disadvantage, and short term of capital economy, as everything is about ROI, in short term. Think about high speed trail in California, the project at that scale, no private company can do that, in additional, it may take several decades to make any profit. Only the government can make such plan and invest on this project, but every four years election make it also impossible.
The key quote:
>"It’s worth considering all this misdirected spending in the context of the Soviet Union’s decline. Around the middle decades of the 20th century, Moscow presided over a China-style economic miracle that caused many in the West to fear they would be overtaken."
>"It’s worth considering all this misdirected spending in the context of the Soviet Union’s decline. Around the middle decades of the 20th century, Moscow presided over a China-style economic miracle that caused many in the West to fear they would be overtaken."
The key question may be to what degree China's economy resembles Russia's. If China's is some free-market lipstick on a planned-economy pig, they are likely to suffer Russia's fate. To the extent that the free-market reforms are real, they have a better chance of escaping it.
My personal opinion is that China's free market is real, but the state intervention is still fairly heavy for a "free market economy". What does that translate into in terms of China's chance to avoid collapse? I don't know.
My personal opinion is that China's free market is real, but the state intervention is still fairly heavy for a "free market economy". What does that translate into in terms of China's chance to avoid collapse? I don't know.
There's also the fact that the Soviets over-extended themselves militarily at the same time, Afghanistan comes readily to mind.
China has a large, powerful and I would assume expensive militarily, but has not deployed significant number of troops in the past few decades (since Korea?), and in any case has never occupied a foreign country.
That's a huge amount of resources available to spend on infrastructure and "soft" power. The Chinese approach seems much more likely to succeed than the Soviet one.
China has a large, powerful and I would assume expensive militarily, but has not deployed significant number of troops in the past few decades (since Korea?), and in any case has never occupied a foreign country.
That's a huge amount of resources available to spend on infrastructure and "soft" power. The Chinese approach seems much more likely to succeed than the Soviet one.
China has been far more worried about (a) internal security, the party is deathly afraid of its own people, and (b) its border countries. On the latter point, China and Russia have even fought some skirmishes over their vast border, and have only been recently back on friendly terms.
China did make it all the way to Hanoi during the Sino-Vietnam war back in 1979. I'm not sure what definition of occupy you want to use here.
China did make it all the way to Hanoi during the Sino-Vietnam war back in 1979. I'm not sure what definition of occupy you want to use here.
> China ... has never occupied a foreign country.
I'm not sure that Tibet would agree with you.
I'm not sure that Tibet would agree with you.
You're quite right in the sense that the military invaded, but it was not so much an occupation with a puppet government and continuous guerilla warfare , like the Soviets in Afghanistan, the Nazis in France or the US in Iraq.
It was more of an anexation of adjoining territory based on historical claims (fabricated or not), like Germany with Alsace Lorraine, Russia with Crimea or the US with certain parts of northern Mexico.
The point was not so much about seizure of territory but the huge cost of a prolonged occupation with local resistance.
I was definitely not trying to legitimize the invasion of Tibet nor downplaying the suffering of the Tibetan people, so thank you for bringing this up.
It was more of an anexation of adjoining territory based on historical claims (fabricated or not), like Germany with Alsace Lorraine, Russia with Crimea or the US with certain parts of northern Mexico.
The point was not so much about seizure of territory but the huge cost of a prolonged occupation with local resistance.
I was definitely not trying to legitimize the invasion of Tibet nor downplaying the suffering of the Tibetan people, so thank you for bringing this up.
It is China's position that they never invaded Tibet. The Yuan dynasty invaded and conquered Tibet, but they don't count since they were Mongolians. It is weird logic to be sure, but there it is.
Otherwise Tibet was supposed to be Chinese territory afterwards even if the Chinese dynasties following the Yuan didn't actively govern it and mostly left them to their own devices.
Otherwise Tibet was supposed to be Chinese territory afterwards even if the Chinese dynasties following the Yuan didn't actively govern it and mostly left them to their own devices.
To me, the free market is best represented through market competition. Can anyone comment on how competitive the chinese markets actually are because I have heard that it is still very government/single company dominate focused.
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While I think there's a certain romance and grandeur about enormous and lasting infrastructural projects, it's a little frightening how quickly we can forget our mistakes.
Even though so very much has changed in China since the Great Leap Forward in the 50s and 60s, I wonder how carefully the consequences of poor planning, overstretching one's resources, shifting economic conditions and miscalculation were taken into account.
Even though so very much has changed in China since the Great Leap Forward in the 50s and 60s, I wonder how carefully the consequences of poor planning, overstretching one's resources, shifting economic conditions and miscalculation were taken into account.
Maybe its time to retaliate with our own continental super highways. A combination of these two would be interesting:
https://www.cnn.com/travel/article/trans-siberian-road/index...
https://en.wikipedia.org/wiki/Pan-American_Highway
https://www.cnn.com/travel/article/trans-siberian-road/index...
https://en.wikipedia.org/wiki/Pan-American_Highway
China has been a regional superpower in Asia for millennia. Its sheer size alone ensures this. That has nothing to do with the USSR.
If I try to connect the facts presented in this article, I don't get to quite the same conclusions. Let me walk through the article:
The article presents a chart of top investments. The top 3 are all in Malaysia, costing from $8.4B to $14.1B. OK, China is spending a lot of money in this Belt & Road thing.
The article details how the China-Myanmar gas and oil pipelines (a $2.5B investment) are under-utilized. Now we see that some of that money could have been spent more wisely.
The article points out that the majority of China's trade with Europe is by sea and the Malacca Strait is a choking point. The article doesn't say, but it seems to validate that the both investments above are good ideas:
* This validates that the vast investment in Malaysia is a really good idea. By having Malaysia's economy integrated with, or even reliant on China's economy, China secures the trade route by sea.
* This also validates that the China-Myanmar pipelines may also be a good idea, even if they are under-utilized now. It hedges the risk of the Malaysia investment, and gives China more leverage when it comes to issues in the Malacca Strait. Even at peace time, Malaysia, Indonesia, or the US could threaten to deny Chinese ships passage of the Strait and apply a lot of leverage to China. That leverage is gone with the Myanmar pipelines. It is under-utilized now and will probably remain under-utilized because it's a strategic tool.
The article then shows how the Soviet economy went down due to investments in Siberia. I strongly feel it is the wrong comparison: not only because Malaysia and Myanmar are very different places from Siberia, but also because Siberia is part of Russia while Malaysia and Myanmar are not part of China. I am not implying that foreign investments are automatically better than domestic investments, but the analogy is a poor one here.
The article also shows how China's domestic investment is shifting from the east coast to the west inland areas, apparently trying to draw a better analogy with Russia's decline. That looks like a more valid point to me, but why the sudden shift to domestic investments near the end? Probably it is because the author wants to conclude the article with the following sentence:
> China’s rise this century was driven by its embrace of world trade and the coastal provinces most exposed to it. In this retreat inland, it’s sowing the seeds of decline.
But if the reader still remembers the earlier parts of the article, they should see that China is doing several things:
* Foreign investments along the traditional maritime trade routes -- most notably Malaysia
* Foreign investments along the new land trade routes -- I understand this to hedge the risk of maritime trade routes being blockaded
* Domestic investments to less-developed areas
This is hardly a "retreat inland", it is diversification of investments. Sounds good to me.
The article presents a chart of top investments. The top 3 are all in Malaysia, costing from $8.4B to $14.1B. OK, China is spending a lot of money in this Belt & Road thing.
The article details how the China-Myanmar gas and oil pipelines (a $2.5B investment) are under-utilized. Now we see that some of that money could have been spent more wisely.
The article points out that the majority of China's trade with Europe is by sea and the Malacca Strait is a choking point. The article doesn't say, but it seems to validate that the both investments above are good ideas:
* This validates that the vast investment in Malaysia is a really good idea. By having Malaysia's economy integrated with, or even reliant on China's economy, China secures the trade route by sea.
* This also validates that the China-Myanmar pipelines may also be a good idea, even if they are under-utilized now. It hedges the risk of the Malaysia investment, and gives China more leverage when it comes to issues in the Malacca Strait. Even at peace time, Malaysia, Indonesia, or the US could threaten to deny Chinese ships passage of the Strait and apply a lot of leverage to China. That leverage is gone with the Myanmar pipelines. It is under-utilized now and will probably remain under-utilized because it's a strategic tool.
The article then shows how the Soviet economy went down due to investments in Siberia. I strongly feel it is the wrong comparison: not only because Malaysia and Myanmar are very different places from Siberia, but also because Siberia is part of Russia while Malaysia and Myanmar are not part of China. I am not implying that foreign investments are automatically better than domestic investments, but the analogy is a poor one here.
The article also shows how China's domestic investment is shifting from the east coast to the west inland areas, apparently trying to draw a better analogy with Russia's decline. That looks like a more valid point to me, but why the sudden shift to domestic investments near the end? Probably it is because the author wants to conclude the article with the following sentence:
> China’s rise this century was driven by its embrace of world trade and the coastal provinces most exposed to it. In this retreat inland, it’s sowing the seeds of decline.
But if the reader still remembers the earlier parts of the article, they should see that China is doing several things:
* Foreign investments along the traditional maritime trade routes -- most notably Malaysia
* Foreign investments along the new land trade routes -- I understand this to hedge the risk of maritime trade routes being blockaded
* Domestic investments to less-developed areas
This is hardly a "retreat inland", it is diversification of investments. Sounds good to me.
Were the West Indies productive before the ports and sugar plantations? Was India productive before its railways were built?
Something smells of anti-China propaganda in this highly speculative piece.
Something smells of anti-China propaganda in this highly speculative piece.
India had the world's largest GDP under the Mughals and had continued positive growth, but by the end of the British Raj, was facing stagnant population growth and actually reduced agricultural productivity. So contrary to everything you're saying, India was not only productive before the British, it was actually worsened by Britain's exploitation.
There are other views on the economics of India under British rule:
https://en.wikipedia.org/wiki/Economy_of_India_under_the_Bri...
example: * British increased the area of irrigated land by a factor of eight, contrasting with 5% under the Mughals.
example: * British increased the area of irrigated land by a factor of eight, contrasting with 5% under the Mughals.
Let's not conflate correlation with causation.
It's industrial revolution that caused the increase in irrigated land. It's possible that in the absence of British rule, Indian kingdoms would have found a way to trade its resources for agricultural equipments and engineers. Unlike China and Japan, Indian kingdoms weren't isolationist, and were well connected to Europe and Persia.
It's industrial revolution that caused the increase in irrigated land. It's possible that in the absence of British rule, Indian kingdoms would have found a way to trade its resources for agricultural equipments and engineers. Unlike China and Japan, Indian kingdoms weren't isolationist, and were well connected to Europe and Persia.
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Worsened because of wealth extraction by the British. Many gains in productivity were not reinvested, hence the decline relative to the Mughal era.
>"India had the world's largest GDP under the Mughals and had continued positive growth."
Do you have a citation for this? For the entire 300 years of the Mughal Empire? How accurate would that information even have been in say the early part of 16th century?
Do you have a citation for this? For the entire 300 years of the Mughal Empire? How accurate would that information even have been in say the early part of 16th century?
Something like this is a pretty standard and unsurprising result. Here is one quick google hit: http://www.visualcapitalist.com/2000-years-economic-history-...
No one should be surprised that that India and China were the big dogs for most of history. Perhaps more surprising are that:
a) This continued well into the 19th century, and
b) India was bigger than China in medieval times.
I'd say that (b) is not a fair comparison, China is just one empire, India is a whole bunch. While (a) should not be a surprise that economic size lags behind whatever structural strengths might have made European powers famous and powerful for a while.
No one should be surprised that that India and China were the big dogs for most of history. Perhaps more surprising are that:
a) This continued well into the 19th century, and
b) India was bigger than China in medieval times.
I'd say that (b) is not a fair comparison, China is just one empire, India is a whole bunch. While (a) should not be a surprise that economic size lags behind whatever structural strengths might have made European powers famous and powerful for a while.
How can you possibly describe a chart that your link admits is the opinion of one academic "pretty standard and unsurprising"?
The idea that you can even estimate percentage of world GDP 2000 years ago is laughable.
The idea that you can even estimate percentage of world GDP 2000 years ago is laughable.
>"Something like this is a pretty standard and unsurprising result."
No there's actually nothing standard unsurprising about it. GDP before the industrial revolution meant something entirely different than after it.
That infographic was largely debunked when it came out. Most notably:
"Before the Industrial Revolution, there wasn't really any such thing as lasting income growth from productivity. In the thousands of years before the Industrial Revolution, civilization was stuck in the Malthusian Trap. If lots of people died, incomes tended to go up, as fewer workers benefited from a stable supply of crops. If lots of people were born, however, incomes would fall, which often led to more deaths. That explains the "trap," and it also explains why populations so closely approximated GDP around the world.
So, one way to read the graph, very broadly speaking, is that everything to the left of 1800 is an approximation of population distribution around the world and everything to the right of 1800 is a demonstration of productivity divergences around the world" [1]
>"a) This continued well into the 19th century, and"
No India's economy in 19th century is very much the British economy the is was the time of the Raj.
>"b) India was bigger than China in medieval times."
This is also untrue. The Medieval era some 900 years(end of the beginning of the 5th until the 14th century.) India was not bigger than China during this millennium. India in the Medieval Era was ruled by many regional dynasties[2], while China was unified by the 3rd century BC [3].
[1] https://www.theatlantic.com/business/archive/2012/06/the-eco...
[2] https://en.wikipedia.org/wiki/Medieval_India
[3] https://en.wikipedia.org/wiki/Qin%27s_wars_of_unification
No there's actually nothing standard unsurprising about it. GDP before the industrial revolution meant something entirely different than after it.
That infographic was largely debunked when it came out. Most notably:
"Before the Industrial Revolution, there wasn't really any such thing as lasting income growth from productivity. In the thousands of years before the Industrial Revolution, civilization was stuck in the Malthusian Trap. If lots of people died, incomes tended to go up, as fewer workers benefited from a stable supply of crops. If lots of people were born, however, incomes would fall, which often led to more deaths. That explains the "trap," and it also explains why populations so closely approximated GDP around the world.
So, one way to read the graph, very broadly speaking, is that everything to the left of 1800 is an approximation of population distribution around the world and everything to the right of 1800 is a demonstration of productivity divergences around the world" [1]
>"a) This continued well into the 19th century, and"
No India's economy in 19th century is very much the British economy the is was the time of the Raj.
>"b) India was bigger than China in medieval times."
This is also untrue. The Medieval era some 900 years(end of the beginning of the 5th until the 14th century.) India was not bigger than China during this millennium. India in the Medieval Era was ruled by many regional dynasties[2], while China was unified by the 3rd century BC [3].
[1] https://www.theatlantic.com/business/archive/2012/06/the-eco...
[2] https://en.wikipedia.org/wiki/Medieval_India
[3] https://en.wikipedia.org/wiki/Qin%27s_wars_of_unification
How exactly do you even measure the GDP of such an ancient empire? Economists can't accurately measure GDP of western economies today despite huge armies of statisticians, even China's true GDP is a mystery, so I'd have to assume any such claims about the GDP of the Mughal empire are nonsense.
Indeed, this was my point as well.
Additionally Mughal rule in South Asia stretched from what is modern Pakistan, to Kabul in Afghanistan and Bengal in the East. So the idea that there would been numbers specifically just India is kind of ridiculous.
Additionally Mughal rule in South Asia stretched from what is modern Pakistan, to Kabul in Afghanistan and Bengal in the East. So the idea that there would been numbers specifically just India is kind of ridiculous.
"Was India productive before its railways were built?"
Yes.
https://en.m.wikipedia.org/wiki/Economic_history_of_India
Colonization is a terrible thing.
Yes.
https://en.m.wikipedia.org/wiki/Economic_history_of_India
Colonization is a terrible thing.
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Indian railway was built with Indian taxpayer's money to transport raw goods for exporting to British factories.
India had a highly developed set of kingdoms even before the British invasion, and in an alternate history where British had never invaded India, they'd have built the railway and industrialized anyway.
India had a highly developed set of kingdoms even before the British invasion, and in an alternate history where British had never invaded India, they'd have built the railway and industrialized anyway.
Anyone else learn a new meaning to the word "founder"? Thought it was a typo for "flounder" only to learn that it can also mean "to give way, collapse." Stay weird, English.
I think of it as "The ship foundered on the rocks".
Of course I suppose if a fish did the same thing we might have a foundering flounder.
Of course I suppose if a fish did the same thing we might have a foundering flounder.
dictionary.com says that flounder may have come from a combination of flounce and founder (back around 1570 or 1580).
"founder" is a fairly gruesome injury to horses' hooves. For most of my life this was the meaning that would have first come to mind. HN has fixed that...
For me the first meaning that comes to mind is a leader of the American Revolutionary War. Wig and all. And I'm not even American.
I didn't know this either. Amusing.
Many founders do founder.
verb (used without object)
(of a ship, boat, etc.) to fill with water and sink.
to fall or sink down, as buildings, ground, etc.:
Built on a former lake bed, the building has foundered nearly ten feet.
to become wrecked; fail utterly:
The project foundered because public support was lacking.
to stumble, break down, or go lame, as a horse:
to become ill from overeating.
Veterinary Pathology. (of a horse) to suffer from laminitis.
Many founders do founder.
verb (used without object)
(of a ship, boat, etc.) to fill with water and sink.
to fall or sink down, as buildings, ground, etc.:
Built on a former lake bed, the building has foundered nearly ten feet.
to become wrecked; fail utterly:
The project foundered because public support was lacking.
to stumble, break down, or go lame, as a horse:
to become ill from overeating.
Veterinary Pathology. (of a horse) to suffer from laminitis.
See also the double meaning of “career”.
Huh. Crazy. I never new that meaning of "career" and have only used careen in that sense. Which according to Google is a North American thing.
A good read describing China's motivations behind this: https://theconservativetreehouse.com/2017/08/30/chinas-inher...
If one wanted to pick a positive story there would be the example of the American progressive era, the creation of the interstate system, the railway system during the 19th century, and so forth. Not every large infrastructure project is indicative of corruption, someone needs to build infrastructure, after all, I don't think we've somehow transcended the need for transportation.
That there's military or geopolitical motivation, especially as far as the land component of the belt and road initiative is concerned seems accurate, but doesn't strike me as particularly bad. From a Chinese perspective it obviously makes sense to invest into continental infrastructure because it does not control the sea.