Wednesday, June 24, 2009

Economic Update (OECD, Joshua Holland, Tim Hanson)

On the heels of Monday's sourer-than-expected news from the World Bank (in the Global Finance Development 2009 report) came a slightly better-than-expected prediction from the OECD.

As the opening of the preliminary edition of the latest Economic Outlook says, "For the first time since June 2007, the projections in this Economic Outlook have been revised up for the OECD area as a whole compared with the previous issue." The authors give the credit for this to "massive policy stimulus and progress in stabilising financial institutions and markets."

Still, one should not make too much of the difference between this piece of news and what we got on Monday, the Paris-based organization simply forecasting a milder contraction this year (a 2.2 percent rather 2.9 percent reduction in GWP), with a return to growth next year (somewhat more robust than in the WB's guess), and virtually every page of the document reiterates the point that even if 2009Q2 may see the end to the sharp (Depression-level, as Eichengreen and O'Rourke point out) contraction of the preceding six months, we are not out of the figurative woods.

And strings are attached to such optimism as they can offer, particularly at the policy level continued loose monetary policy and supportive financial policy-read government propping up of the banks-are necessary, while governments should not be too hasty about tightening their belts, and "reemployment measures" need to be strengthened to prevent cyclical unemployment from turning structural. (The last two are not a trivial conditionalities, given the talk of austerity that already has some economists very worried.)

On top of this the authors of the Outlook warn that
the financial system may be more vulnerable to weaknesses in the real economy than assumed in the projection which in turn would have negative repercussions on growth. This risk of a negative spiral would be amplified if households and businesses were to expect that a sustained period of deflation was imminent, in contrast with assumptions behind the Secretariat‟s medium-term reference scenario . . . Other downside risks include a faster increase in bond yields due to sharply deteriorating public finances and a stronger response of household spending to higher unemployment.
Additionally, unemployment levels will remain high-10 percent in the U.S. (official number; the real one's bigger, as those who've been following this blog well know) for some time to come, those hoping to find it not getting the reassurance that the U.S. is not, after all, the "new" France.

Those at least willing to consider the possibility that officialdom may be a little too quick to say the fall's bottomed out should check out this article by Joshua Holland over at Media Channel which, unlike far too much of the coverage, is attentive to the structural, long-term weaknesses of the U.S. economy, and the toll it is taking on American householders, as well as the hard facts regarding real estate, energy and other elements of the situation which might not necessarily cooperate in the promised recovery.

Over at, Tim Hanson also considers another underappreciated aspect of the situation: what the crisis may mean for the unbalanced economic relationship between the U.S. and China.

Monday, June 22, 2009

Global Finance Development 2009

In its Global Development Finance 2009 report, the World Bank downgraded its expectations as to world economic performance, with a prediction of a larger contraction this year (2.9 percent rather than just 1.7 percent). The shrinkage will be strongest in the developed nations, where overall GDP in expected to contract 4.5 percent in 2009 (with the pain felt in the U.S., Japan and the Eurozone), but the developing world too will suffer, and more than a superficial glance at the stats suggests. While the slowdown from 6 percent a year to 1.2 percent a year growth looks bad enough, the number is actually negative when China and India are taken out of the picture (a 1.6 percent contraction). Overall, the level of global trade is due to shrink by almost 10 percent this year.

As to next year, the Bank remains relatively optimistic, if a bit more subdued, its estimate of global growth for 2010 falling from 2.3 to 2 percent a year as "the world enters what appears to be an era of markedly slower economic growth" (emphasis added). (Slower than what, exactly? Growth has been lousy for decades, a fact the World Bank's own data reflects. Just check out the numbers in this piece here.)

Right now I'm wondering if this isn't going to be the last time the WB downgrades this particular projection.

More On The Economic Crisis (Eichengreen and O'Rourke on Industrial Output, Wolf on Eichengreen and O'Rourke, Austerity?)

Not precisely new anymore, but interesting: economic historians' Barry Eichengreen and Kevin H. O'Rourke update of their April 6 column regarding the present economic situation (apparently part of their work toward a full paper to run in Economic Policy). What they conclude is that "world industrial production continues to track closely the 1930s fall," with German, Britain and the U.S. and Canada tracking the fall of the '30s closely, and France, Italy and Japan actually doing worse. Additionally, despite the rebound of world stock market since March and the stabilization of world trade these were "still following paths far below the ones they followed in the Great Depression."

In short, the situation is not just as bad as it was in 1929-1930, but in some important ways worse. However, they are hopeful the worst can be averted, in part because of the more aggressive response in the form of monetary growth and stimulus.

Martin Wolf, commenting on their column in the Financial Times notes that "the combination of strong monetary growth with deep recession raises doubts about the monetarist explanation for the Great Depression," and accordingly he focuses on stimulus. He raises the concern, however, that governments might not be able to sustain the necessary levels of stimulus.

I think Wolf is right on both counts, and find myself turning to the U.S. economy's performance during the years of the New Deal. Following the sharp contraction of 1929-1932, the massive expansion of U.S. government spending restored the 1929 level of America's GDP by 1936, and by 1940 produced a figure 20 percent higher than that. The price, however, was the quadrupling of the once small federal debt in the space of those years. (Those curious about the numbers can check out my stats and calculations here.) And they still did not effect a long-term revival, however, the rapid global growth of the 1940s, 1950s, 1960s and early 1970s being driven by much more than that (World War II and the rebuilding that followed, the Cold War, "the welfare state"-things that might be said to have built stimulus into the system on a routinized, sustainable basis) in a situation that may not repeatable.

Indeed, we seem set to go in the opposite direction, given the talk of austerity in Europe and elsewhere, likely only to deepen the hole-as Nicolas Sarkozy himself has said, pointing out that "an austerity policy . . . has always failed in the past" in one of his rare moments of lucidity. (Whether the actions of the man who has so often struck onlookers as a "French Thatcher" will reflect this rather sound thinking remains to be seen.)

And we can expect the resulting troubles to extend far beyond the merely economic. As Greece demonstrated (those who don't remember the troubles there can refresh their memory here), even Western Europe is not immune to the kind of unrest we tend to associate with Latin America, and as this round-up from Reuters shows, the talk already has people in the streets. As the results of the EU elections earlier this month show, a radicalization of public opinion (so far, trending far-right) may already be underway.

Thursday, June 18, 2009

New From The New Security Blog (CNA's Military Advisory Board Report on Energy Security, Climate Change)

By way of the New Security Blog: the CNA think tank's Military Advisory Board has just issued a report, Powering America's Defense: Energy and the Risks to National Security. The findings, as presented in the preface, are as follows:

1. The nation’s current energy posture is a serious and urgent threat to national security.
a. Dependence on oil undermines America’s national security on multiple fronts.
b. The U.S.’s outdated, fragile, and overtaxed national electrical grid is a dangerously weak link in the national security infrastructure.
2. A business as usual approach to energy security poses an unacceptably high threat level from a series of converging risks.
3. Achieving energy security in a carbon-constrained world is possible, but will require concerted leadership and continuous focus.
4. The national security planning processes have not been sufficiently responsive to the security impacts of America’s current energy posture.
5. In the course of addressing its most serious energy challenges, the Department of Defense can contribute to national solutions as a technological innovator, early adopter, and testbed.

There is little here that strikes me as radically new. (I made every one of the main points myself in an article that ran in the U.S. Army War College Quarterly, Parameters-"Toward a Long-Range Energy Security Policy" back in 2006, and raised them again in Survival last year.) Nonetheless, this lengthier, comprehensively researched report-which can be thought of as a follow-up to their 2007 report National Security and the Threat of Climate Change (which interested readers can check out at the following page, featuring different versions attuned to reader convenience, as well as a downloadable briefing for those interested in the short version)-makes its case well, a particular strength of it its attentiveness to the interactions of climate change with energy security.

It goes into particular depth about how "carbon constraints" and climate change will impact the U.S. military, touching on some generally unconsidered aspects of it (including the Arctic security issue, and the loss of Diego Garcia in the event of a 1-meter sea level rise). It also devotes much of chapter three to what the Department of Defense could do directly to alleviate the problem, while chapter four lays out in somewhat broader terms a direction for the country to go in.

The blog's latest Reading Round-up Radar also contains plenty of interest on the issue.

New in Environmental Security (From Thomas Homer-Dixon, Nick Garrison, Julio Friedmann, James Hamilton)
The EU Elections
Is the U.S. the New France?
The Human Cost of the Economic Crisis
The Real Unemployment Rate-And What It Means
On Consumer Spending
New in Fusion Research
Human Impact Report: Climate Change-The Anatomy of a Silent Crisis
The Incredible, Shrinking GDP
New From Scientific American ("The Nuclear Renaissance")

Tuesday, June 9, 2009

New in Environmental Security (From Thomas Homer-Dixon, Nick Garrison, Julio Friedmann, James Hamilton)

Those wondering about how the problems of climate change and oil depletion will interact with one another, Thomas Homer-Dixon and Nick Garrison have co-edited a new essay collection, Carbon Shift: How the Twin Crises of Oil Depletion and Climate Change Will Define the Future.

Incidentally, Professor Homer-Dixon also published an article in the April 4 edition of the Toronto Globe & Mail arguing-I think correctly-that the current problem in regard to our economic and other troubles is an excess of optimism, not pessimism; and co-authored an op-ed with Julio Friedmann regarding the prospects for an underground coal gasification (in combination with sequestration) as a partial solution to Canada's energy problems. (I've generally been wary of the promises made for the contribution "unconventional oil" can make to alleviating our energy problems, and especially the environmental dimension of those problems, but this particular approach is making me take a second look at the issue.)

Those looking for a broader analysis of contemporary issues by Homer-Dixon can, of course, check out his book The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization, which I reviewed for Strategic Insights back in 2007.

Of related interest, economist James D. Hamilton has also published a recent Brookings paper, Causes and Consequences of the Oil Shock of 2007-08 in which he argues that this price shock was different from those preceding it, the others having been due to physical interference with oil production, rather than changes in the "normal" supply-demand relationship.

The EU Elections

The results of the European Union's parliamentary election were about what one would reasonably expect given the current deepening of decades-old economic frustration, the continued dominance of neo-liberalism as the conventional wisdom, the predictable tepidity of government response to the problem and little hope for better (especially from a left widely regarded as enervated if not corrupted), widespread cynicism about the EU, and the strength of anti-immigrant and "law and order" sentiment.

There was plenty of Euroskepticism, and plenty of apathy in general (a record low of 43 percent of the electorate cast its vote), as well as plenty of resentment of both the ruling parties and the most established "left" parties, Britain's Labour getting hit from both directions to end up in an astonishing 4th place, and Spain's Socialists similarly took a beating, while Germany's Christian Democrats and Italy's People of Freedom, less badly hit, still picked up mediocre numbers. (France's UMP was an exception in doing relatively well, boosting its share of the vote from 17 to 29 percent over the last election-though the Socialist Party was not, suffering a sharp drop from 29 to 17 percent.)

The results have been described as leaving the center-right dominant, but smaller parties scored points. Green party fortunes have been advertised as "wildly fluctuating" across the continent, with the Maltese and Czech parties performing poorly, and their Belgian, Danish and French counterparts showing impressive gains, the last (given France's number of seats) largely accounting for a 10-seat gain for the Greens (from 43 to 53 of the 736 in the EU parliament).

Attracting more comment, however, has been the performance of right-wing populists, the British National Party and Hungarian Jobbik getting their first-ever seats, the Austrian Freedom Party and Italian Northern League improving their positions, and the Dutch Freedom Party getting a fifth of the Netherlands' seats, making Geert Wilders the face of this election.

An interesting side story: the Pirate Party, which began as a protest against Sweden's recent Draconian, even Orwellian, legislation regarding file-sharing (which actually led to a 40 percent drop in Swedish Internet traffic, and was only recently outdone by a French law regarded as even harsher), won a seat. The story is being treated as a joke in much of the media, but one can also see this as a noteworthy moment in the high-stakes battle over the proper limits of information property rights-as well as state intrusiveness into personal privacy.

Saturday, June 6, 2009

Robot Farmhands?

A New Scientist article which went online Monday discusses the prospects for agricultural robots entering service in the near future. The piece offers no projections as to how many of these "robot farmhands" will be in service when (let alone with what results or what consequences), or word on actual plans to get the new machines into the fields. Rather, much of the tech seems to be at the experimentation/demonstration stage (which tells me that any anticipations right now are sketchy at best). Still, it discusses the path the technology has taken to get to this point, and does offer an interesting discussion of how it might continue the rest of the way into service not too long from now.

Is the U.S. the New France?

You may remember that the business press in the U.S. crowed over the unemployment levels seen in Western Europe during the 1980s and 1990s, typically higher than in the United States and Britain, and the fact usually held up as an object lesson in the rightness of the "Anglo-American" way of doing business-with its skimpier welfare state and comparative lack of worker protections.

However, little has been said about this as of late—just as unemployment rates in the U.S. approach the double-digit unemployment levels stereotyped as part of the European model, for which it was so often scorned (a condition which some experts are admitting may last for years), journalists and commentators have avoided drawing comparisons.

As it happens, the data on Harmonized Unemployment Rates issued by the Organization for Economic Cooperation and Development (OECD) last month showed the U.S. in April (with an 8.9 percent rate) to have been only slightly better off than the Euro area as a whole (9.2 percent), in the same boat as France (8.9 percent), and worse off than Germany (7.7)-as well as traditionally worker-friendly Sweden (8.5), Denmark (5.5) and the Netherlands (3).

Laurent Belsie of the Christian Science Monitor acknowledges the fact in a timely and sobering article pointedly asking if the U.S. "is the new France?"

Like all the rest of the neoliberal pieties taken for granted in the 1990s (as with the economic policies that led to the branding of Ireland the "Celtic tiger"), the piety about "labor market flexibility" being the key to high employment rates may be getting some reconsideration.

Friday, June 5, 2009

The Human Cost of the Economic Crisis

Lest we forget what the hard times indicated by the latest unemployment numbers really mean at an individual, personal level, here's Tom Engelhardt with a round-up of stories suggesting an epidemic of "extreme acts precipitated by the economic disaster" across the country.

The Real Unemployment Rate-And What It Means

Regular readers of this blog know the drill. Another month, another unemployment stat when the BEA puts out its report for May 2009, which it usually does the first Friday of the month.

According to the release, May saw the official ("U-3") unemployment rate rise from 8.9 to 9.4 percent-a full half percent increase, for the second month in a row.

The "U-6 measure," the fullest calculation of "labor underutilization" regularly reported in the BEA stats (counting not just "total unemployed" but also marginally attached workers, discouraged workers and involuntary part-timers) went up from 15.8 percent of the work force in April to 16.4 percent in May.

Once again, this bad news is being packaged as a "good news, bad news" deal.

The good news is that the job loss rate is slowing. What this means when you look at the actual numbers is that 345,000 jobs were lost in May-a lousy number, but still less than the half million-plus seen in recent months.

Yet, the overall 9.4 percent number that resulted from this slower pace of loss is worse than what was expected (apparently, a 9.2 percent unemployment rate).

This implies a contradiction which has not been commented on (how can fewer job losses than expected track with more unemployment than expected?), and so one has to look below the surface of that number.

As it happens, the category that saw the main increase is people coping with long-term (15 weeks+) unemployment, which went up from 4 to 4.5 percent of the work force, this happening without depleting the other categories covered, there being "more where they came from."

One explanation for this is that more people are participating in the labor force. There is a tendency to think of this as an unusual, temporary aberration, but it may plausibly be taken to mean that the hard times have driven a certain percentage of people who earlier didn't feel that they had to work to look for employment (retirees who have watched their investments vanish; members of households coping with the loss of income, etc.)-skewing the figures perhaps, but in a way that reflects the current difficulties.

Additionally, it is worth noting that the "official" (9.4 percent) figure does not include those working on an involuntary part-time basis, a category which did see a slight increase during May, and may also be reflected in the cutbacks in hours worked. The work week is down to 33.1 hours, the shortest it's been "since recordkeeping began in 1964." As Liz Wolgemuth of U.S. News & World Report notes,
cost-cutting employers may have slowed their job shedding but continued to slash their employees' hours. Indeed, more than half of employers surveyed last month by outplacement firm Challenger, Gray & Christmas reported using cost-containment strategies such as cutting salaries and wages, while a smaller percentage were cutting staff.
This must be recognized as a different strategy, distributing the economic pain differently, rather than clear-cut proof things are getting better.

While not related to the problem at hand, it is also worth noting that the steepest losses were in the sectors concerned with actually making things (particularly manufacturing, where 156,000 places were lost), whereas the sectors adding jobs were in services (health and government, particularly-with in the latter cases, federal employment seeing job losses, while education systems have done some hiring). Of course, this would seem to be a commonplace, manufacturing being more susceptible to such shocks, and quicker to let workers go, but given the long-term trend of U.S. deindustrialization this would seem to support Richard Moody's claim that the recession is creating a great deal of structural, rather than cyclical, unemployment.

Not inconsistent with such an outlook, James Galbraith recently predicted that not only will the official figure hit 10 percent, but that it will stay there for "a long time"-perhaps years (an assessment that brings to my mind the bleak picture projected for Ireland in the report by Ernst & Young I discussed last month).

Even the comparative optimists banking on a recovery in the third quarter of the year (July-September) expect the employment picture not to recover this year, improvements in the employment generally lagging recoveries (perhaps by up to a year in this case, according to one prediction).

My guess-looking at the collapse of business investment reported in last month's GDP data, and the data from earlier this week testifying to the weakness of consumption, is that while we may see some ups as well as downs in the months to come, the foundations of a really solid recovery have yet to be laid-and things could yet get worse than even Galbraith has speculated.

Thursday, June 4, 2009

On Consumer Spending

Those who were closely following the economic news last month likely heard about the slightly-less-bad-than-expected rate at which U.S. GDP shrank in the first quarter of the year.

One of the (relative) bright spots in the May report was consumer spending, but the most recent report from retailers says this area remains weak, Goldman-Sachs's tally showing a 4.6 drop in the last month (worse than the 3 percent expected).

The picture given in the Associated Press story varies a bit depending on which store you look at, but Wal-Mart, which in a telling gesture has "stopped reporting the monthly figures," has posted the 10th month-to-month sales drop in a row; while the picture seems to worsen as you move "up" marketwise. Target reported a 6.1 percent drop (compared with the 4.6 expected) and Macy's a 9.3 (compared with the predicted 9.1 percent), while sales at Abercrombie & Fitch plummeted 28 percent.

According to the article, analysts "generally expect the weak trends to continue throughout the summer," with another 3-4 percent drop anticipated for next month.

New, in the Search for Exoplanets
A Belated Follow-Up (The Chinese ASBM)-And This Month in Proceedings . . .
New in Fusion Research

The Military Balance on the Korean Peninsula

By Nader Elhefnawy

Once again, talk of military confrontation on the Korean peninsula is much in the news, following what has been taken for a nuclear weapons test in North Korea on May 25 (its first since 2006, and likely another fizzle), and a succession of missile tests (which have included but not consisted wholly of the test of long-range ballistic missiles, an important distinction the media tends to miss), as well as saber-rattling gestures like the renunciation of the armistice that marked the end of the Korean War (1950-1953) and threats of attacks on the South. A repeat of the basic facts anyone who has followed the issue for any length of time has in all likelihood repeatedly encountered seems to be in order.

The North Korean and South Korean Militaries: A Comparison
While much is made of the military capabilities of the Democratic People's Republic of Korea (DPRK), there is virtually no comparison between the two countries in the conventional indices of international power. The Republic of Korea (ROK) has roughly twice the population of the North (49 to 24 million) and a Gross Domestic Product at least thirty times as large (some $850 billion to $26 billion at market rates, almost $1.3 trillion to $40 billion when Purchasing Power Parity is counted in) according to the current edition of the CIA's World Factbook.

This gives the ROK a First World per capita GDP of $26,000 in 2008 - compared to a figure of $1,700 in the DPRK (which puts it among the world's poorest countries, at the rank of 192 out of some 230 states surveyed). Additionally, where South Korea has a world-class high-tech sector and nearly unfettered access to the world market, the DPRK's industrial capital stock "is nearly beyond repair as a result of years of underinvestment and shortages of spare parts," and the country's so short on food and energy that as many as 2 million are thought to have died as a result since the mid-1990s (equal to almost 10 percent of the population), with only large-scale international assistance preventing worse.

Inevitably, this is reflected in the military establishments they have been able to raise, the DPRK straining to spend perhaps a quarter of what South Korea easily does on its own armed forces. While the DPRK has a "million man army," South Korea too fields one of the world's largest militaries (some 700,000 strong, with over 1 million more in the reserves), with a long qualitative edge in virtually every relevant area.

Even the "tank-counting" toward which the hastier journalism tends demonstrates this. While North Korea possesses the larger "tank park" (perhaps 3,500-4,000 tanks to the ROK's 2,300 or so), the vast majority of its tanks are T-55 and T-62 variants (and even the reports of the few hundred more advanced tanks - domestically built models incorporating later Soviet technology -are sketchy). By comparison, the ROK fields well over 1,000 K-1 tanks, roughly equivalent to the American Abrams (including several hundred of the later K-1A1s, comparable to the A2 version), while the still-more advanced K-2 is entering service, with implications obvious enough for a land battle.

In the aerial and naval realms, the disparity between the two is wider, generally in the ROK's favor. While the DPRK's air force may have a larger total number of combat aircraft (perhaps 50 percent more of them), their operability is questionable in most cases, and the types are generally obsolete. Even when this is overlooked, all told North Korea has only 40 "fourth-generation" fighters (MiG-29s), with trainer versions included in the figure, whereas the ROK has well over 200 (F-15s and F-16s) - a 5 to 1 advantage in favor of the South in this important area. The remainder of South Korea's force consists of F-4s and F-5s, while North Korea depends on Chinese-built versions of the MiG-17, MiG-19 and MiG-21, according to the 2003-4 edition of the International Institute for Strategic Studies' Military Balance, widening the ROK's margin of advantage yet again. (Not to be overlooked, the same survey estimated that North Korean pilots get a wholly inadequate 20 hours or less in the air annually, which may leave what aircraft the North does have virtually useless in a serious confrontation.)

The North Korean navy is vastly larger when the total numbers of vessels are counted - roughly 300 combat-capable surface vessels to 120 or so by my count from the listings at - but virtually the entire North Korean fleet consists of small coastal craft, half of which are patrol vessels unequipped with missiles or torpedoes (and many of them suitable only for inshore work). South Korea, however, has ten destroyers to the North's zero, nine frigates to the DPRK's three, and twenty-eight corvettes to its six (making for another 5 to 1 advantage, this one in "major surface combatants"). And again, technological quality, operability and training all favor the ROK's navy by a significant margin - disadvantages which may also reduce to nearly nothing such value as North Korea can get from its large force of submarines, the core of which is twenty-two 1950s era Romeo-class vessels. (And of course, it is worth noting that the South has its own, superior submarine force, smaller in total numbers but using more capable German Type 209s, currently being supplemented by the later Type 214 - the export version of the Type 212 which is currently setting the standard for conventionally powered subs.)

Though such matters are more speculative, it has also been noted that the North Korean army is "simply too big to be kept happy and well fed," its discipline and morale (and even the physical health of its soldiers) under pressures which do not have an analog south of the DMZ, and that these factors may already be taking their toll.

In short, even without the U.S. commitment to South Korea's defense, the DPRK is badly outmatched; and in the scenario of an attack on the ROK, would have the disadvantage of being on the offensive, especially problematic in the peninsula's mountainous terrain, channeling the assault into obvious routes where it would be extremely vulnerable to the defenders' firepower.

Considering the Asymmetries
Of course, certain details complicate the picture. These include:

* The concentration of the DPRK's army along the Demilitarized Zone (perhaps two-thirds of the army or more), exemplified by North Korea's massive artillery collection. Consisting of over 10,000 guns and multiple rocket launchers (MRLs), it has a 2 to 1 advantage over the ROK in this area (further bolstered by 7,500 mortars). These have also been concentrated along the border, along with perhaps a million tons of ammunition, enabling it to launch a massive strike with little warning, with some guesses about the sheer weight of shell it can drop going as high as 300,000 rounds per hour.
* The DPRK's massive investment of effort in tunneling and fortification, and the extensive nature of such facilities, which is expected to diminish the value of South Korean and U.S. technological superiority, something which in particular extends to the survivability of the artillery in the border area.
* The proximity of Seoul (not just the political capital of the country, but its economic and cultural center, with over a fifth of the nation's population in the city and half in the metro area) to the border (just 25 miles south of it, and so parts of the city are within range of at least some North Korean artillery from the outset) is a significant vulnerability, both in terms of South Korea's capacity to continue its practical functioning, and the effect on the morale of the civilian population.
* North Korea's exceptionally large special forces establishment (some estimates of which put its manning as high as 180,000, though estimates of 80-100,000 are more common) expected to infiltrate the ROK and wreak massive havoc behind the lines (with the aid of such assets as a large fleet of midget submarines, and perhaps, underground tunnels leading beneath the DMZ into South Korean territory).
* Efforts by the DPRK to modernize its military at the informational level, particularly with regard to computerizing its command and control, and networking its air defenses.
* The difficulty of any northward march for ROK-U.S. forces undertaking a counteroffensive, the peninsula's rough terrain then working in favor of North Korea, especially given its vast reserve military (5 million-plus) which might plausibly wage a guerrilla war against advancing forces, also saddled with the very large challenge of administering captured territory under those circumstances.
* At least equally important, there is the widespread expectation that China would simply not allow North Korea to collapse, or accept the presence of a large U.S. or allied army near its border (and while less often mentioned, and neither willing or able to offer the support to North Korea it did in the past, Russia may be similarly-minded).
* Finally, the DPRK has a considerable arsenal of weapons of mass destruction-chemical, biological, and now apparently nuclear as well, in addition to a large stock of crude but not useless ballistic missiles (perhaps 800 of them, with about 600 Scuds and 200 NoDongs).

Yet, the value of these assets should not be exaggerated, none of them as simple or clear-cut an advantage as it is made to look when, as all too often happens in the kind of superficial discussion we get, just one side of the balance sheet is examined.

* Just as North Korean forces are concentrated along the DMZ, so are the ROK and U.S. forces which would oppose them, in defensible and well-prepared positions of their own (which include the politically problematic minefields running along the southern end of the DeMilitarized Zone). Additionally, while North Korea's larger number of artillery pieces is not to be taken lightly, it will still face a very substantial collection of artillery on the south side of the line (South Korea has nearly 5,000 guns and rocket launchers, and 6,000 mortars), which are also likely to be more effective in the counter-battery role due to better-trained crews and better intelligence resources (as well as being quantitatively and qualitatively supplemented by U.S. forces). The North Korean systems will also be immediately subject to heavy air attack, a danger to which U.S. and South Korean forces are far less exposed.
* It is possible to exaggerate Seoul's vulnerability. To say that the city is within range of North Korean artillery is not the same as saying that the entire capital (let alone the whole metropolitan area associated with it) would immediately fall under all of the North's guns, rockets and mortars; any attack on the capital at the conflict's outset would be much more limited than that (if still likely to take a heavy toll in lives, property and disruption). Additionally, such vulnerability can be balanced against the reality that R.O.K.-U.S. forces will almost from the start have air and sea dominance over and around the peninsula. This means the entirety of North Korea's territory will be much more thoroughly open to attack for the duration - extending not just to a portion of the 2-3,000 daily sorties likely to be flown, but Tomahawk cruise missiles and naval gunfire. Finally, claims for North Korea using its artillery collection in some "shock and awe" demonstration grossly exaggerate the effectiveness of such strategies. Far from breaking the will of the citizenry of the country targeted, they have tended to rally a population to its government. (This applies as much to the prospect of an operation consisting wholly of a short but deliberate attack as well as to its use as an opening act in a larger war.)
* The image of hundreds of thousands of North Korean commandos hitting the South all at once which might be taken away from the reports about its special forces establishment is grossly overblown. The Soviet Union, with its vastly greater resources, had fewer than 30,000 Spetsnaz in the late 1980s. The whole of the U.S. Special Operations Command today comes to fewer than 50,000, the vast support component included. Instead the high figure reflects a confusion about the classification of those units. The term "special forces" might be equated more simply with "shock troops" (as with the "commando" units of the Iraqi Republican Guard) since the units encompassed in the high figure include the army's light infantry, airborne and amphibious units, not normally considered special forces in that sense. The reconnaissance battalions, which might be considered closer to the usual Western usage of the term "special forces," contained 9,000 soldiers in 17 battalions as of 2002, a much more plausible figure for this type of unit (though the 21,000 troops assigned to "sniper battalions" may perform some similar functions).
* The discussion of a more computerized North Korean military command system is sketchy, and certainly where its air defenses are concerned, the effects are open to question, especially given that the basis of the system remains an arsenal of SA-2, SA-3 and SA-5 missile batteries that were old twenty years ago. Yugoslavia's air defenses in 1999, which were built around similar (in cases, more advanced) weaponry, were supposed to have been upgraded in the way some analysts believe North Korea's to have been, but were largely neutralized by massive defense suppression efforts and the restrictive rules-of-engagement observed in Allied Force (confining NATO pilots to 15,000 feet). Such caution may prove impracticable in the event of a North Korean attack on the ROK, but that is far from saying they can inflict sufficient losses to significantly interfere with ROK-U.S. aerial operations.

That leaves just three points: the difficulty of North Korea's terrain for an allied advance, the constraints Chinese political opposition may impose on an operation, and the role the WMDs might play. The first is not just irrelevant to the North's ability to conquer the South, but likely to be overrated when one considers the ability of the regime in the North to survive a failed invasion, given its sheer military weakness, and the likely reaction of Washington and Seoul; and the second and third may not be the factors they seem at first glance. After all, the idea that China would support an attack on the ROK is ludicrous, given its desire for stability in the area, and its valued trading relationships with South Korea and the U.S. - not necessarily the dominant considerations in the country's decisionmaking, but not to be discounted lightly either. (South Korea accounts for some $170 billion of annual business, while China also runs a $200 billion trade surplus against the U.S. - and does comparable business with Japan, which is also relevant here.) On the contrary, it seems that China's most likely role would be to restrain a North Korean action before it could get started.

Additionally, it is unclear what practical gain North Korea could extract from its WMDs inside of an actual conflict scenario, given not only the certainty of retaliation, but the reasonable speculation that North Korea would not use them inside the peninsula (biological and chemical weapons always being hard to control and notoriously problematic when the combatants, and their armies, are so close together). In the nuclear sphere, it may even be the case that what North Korea has is what Jonathan Pollack calls a political capability, rather than a fully operational one.

In short, while North Korean forces could present a greater challenge than did their Iraqi counterparts in 1991 and 2003, and a major conflict would cause vast damage on the peninsula (and beyond it), not only is a conquest of South Korea out of the question, but even the existence of a convincing North Korean "theory of victory" (to use the terminology preferred by Colin Gray) is extremely doubtful. Particularly where WMDs are concerned, this has left experts frequently speculating about irrational action.

Yet, there is little proof that it is actually insane - and as the case of Iraq proved, those arguing for the continuing salience of the "rational actor" model where deterrence is concerned (an argument Martin Van Creveld summed up nicely in his 1991 book The Future of Nuclear Proliferation) have generally had the evidence on their side, and there seems plenty of reason to wonder if obsessing over the much less likely alternatives does not do more harm than good. The exaggeration of the military threat North Korea poses only muddies the water and unnecessarily alarms, and may well make an already troubling situation more dangerous. The DPRK's collapse is the more plausible scenario, and while this turn of events is not necessarily exclusive of aggression, given the facts on the ground, the most destructive possibilities are, fortunately, not the most likely ones.

Monday, June 1, 2009

New, in the Search for Exoplanets

The search for expolanets continues, adding not only to the three hundred already discovered, but finding smaller planets (Earth-sized ones are no longer too small to spot), and also doing so in unexpected places-even tiny stars apparently have planets.

It also seems to be the case that more is discernible from those views, with a new interpretive technique reported as a viable method for detecting water on the small and rocky bodies.

A Belated Follow-Up (The Chinese ASBM)-And This Month in Proceedings . . .

Back in April I wrote a short piece about the Chinese Anti-Ship Ballistic Missile program. Last month's issue of Proceedings, the U.S. Naval Institute's respected magazine, carried an article on the subject (accessible here).

This month's issue also carries an article on China's ballistic missile submarine program-as well as pieces on Brazil's nuclear submarine program, among other submarine warfare-relevant pieces.

Also freely available-a piece by Barrett Tillman (well known as a writer of techno-thrillers, as well as popular military history) arguing for the continuing relevance of navies (and in particular, a big U.S. Navy) in the 21st century. (Tillman himself admits it is a hard sell. You be the judge.)

New in Fusion Research

New in Fusion Research

The New York Times recently carried an article on the goings-on at the National Ignition Facility at the Lawrence Livermore National Laboratory, where a project to generate energy via inertial confinement fusion (essentially, igniting a pellet of hydrogen fuel with a battery of lasers) was dedicated on Friday, May 22.

The renewed interest in fusion is a natural enough response to the concern with climate change weighing ever more heavily on us (a new report on the problem takes stock not only of the risks to the future, but the toll on human life and prosperity taken by climate change now) and the rise of oil prices (which, from 1998 to 2008, shot up about tenfold, until they hit $150 a barrel last July), which have given the fears that peak oil is nigh much more attention than they have enjoyed in a long time-as well as the headaches still associated with atomic fission.

Such concerns seem to have contributed to the long-delayed International Thermonuclear Experimental Reactor project getting back on track, at least for a while (with France selected as the host site last year). It has also extended to greater interest in less conventional approaches to fusion, such as the use of helium-3 as the fuel (the virtues of which field leader Gerald Kulcinski explains himself here) which, in turn, has created much excitement in certain circles about space development schemes to mine the stuff off the moon, a goal explicitly claimed by Russia, China and India.

There has even been renewed consideration of cold fusion (a field which has not recovered from the Fleischmann-Pons affair). This led to a second look by the Department of Energy at the phenomenon back in 2004 (the report on which you can read here), and more recently, caused a stir in March when U.S. Navy scientists (specifically with the Space and Naval Warfare Systems Research Center) reported new evidence for the phenomeon. (Those who would care to follow developments in this area can check out the Cold Fusion Times, which regularly posts links to news items relevant to the issue.)

So far, though, nothing really solid's come of the more intense activity in this area-by which I mean a proven basis for a commercially useful power plant that will banish the old saw about fusion always being forty years away (which we've been hearing for at least that long).

Still, that doesn't rule out a future breakthrough that could make a viable technological future a lot easier to picture, and even if it would be a mistake to unduly get one's hopes up, this may still be something worth watching.

The New French Base in the Gulf

This story first caught my eye because I thought I had misunderstood it-France opening a base in Abu Dhabi (part of the United Arab Emirates) in May this year.

That France is opening new overseas bases is by itself an oddity, not only in light of the country's limited military establishment (just under 260,000 regulars), and in particular, its limited power-projection capabilities, but also its policy ever since decolonization began in earnest in the wake of the Second World War. As noted in recent press reports, the new facility is the country's "first permanent overseas military installations outside its former colonies in Africa in fifty years," and "the first time that France has installed a military operation in a country where it has never been colonial master."

Why a French base, in this region, now?

There has been talk of "safeguarding the sea lanes" and "supporting allies," commonplaces that are awfully abstract when left at that. (Safeguard the sea lanes from what? Support which allies--against whom?)

There has been mention of the base supporting operations to combat piracy, but the truth is that the base is a thousand miles east of the "hot spot" off East Africa, and a rather longer sail than that around the southern end of the Arabian peninsula, in the wrong direction from the French homeland from a logistical standpoint. (Indeed, the bigger base France already has in Djibouti, which is already playing a role in facilitating an anti-piracy operation that does not seem about to drastically expand, makes such a facility in the UAE appear all the more insignificant to such an effort.)

The base would hardly be more useful to France's ongoing peacekeeping operation in Lebanon, for much the same reason. The support of French operations in Afghanistan would seem to be a more plausible purpose, but oddly enough this was not mentioned in the press reports I saw.

The New York Times cites unnamed analysts identifying the UAE's grant of a base to France as an "insurance policy" as the U.S. presence in Iraq winds down.

Mustafa Alani, an analyst with the Gulf Research Center in Dubai who has been widely quoted on this matter, has pointed to the significance of the base being in its "breaking the United States' long monopoly to the Gulf region"--concerns apparently connected to worry in the UAE about the stand-off over Iran's nuclear program dragging the country into war, as well as the broader power politics of the region--and the greater political "acceptability" of France in the region (in comparison with the U.S. and Britain).

Yet, both those views seem inconsistent with the practical limits of French military capability in a heavily armed region like the Gulf (in contrast, for instance, with places like Rwanda, the Ivory Coast and the Central African Republic), constraining its capacity to both provide insurance, and (especially in light of the tendency to exaggerate the Trans-Atlantic rift) some counterweight to the U.S. as some seem to hope.

Even in the 1980s France's confrontation with Libya over Chad put it in a very difficult position, despite its possession then of a rather more extensive array of military assets than it has today. Realistically, France can only participate in a major regional military action as a supporting player in a U.S.-led operation (something the base would of course assist in, and can reasonably be taken as a preparation for), or as part of the long envisaged but yet to be realized European force. Indeed, France's recent return to the NATO command structure from which Charles De Gaulle withdrew the country in the 1960s seemed to be an acknowledgment of such realities. (Of course, one could spin out a scenario in which the French base functions as a trip wire in the event of a confrontation between the UAE and Iran, with France's nuclear arsenal playing a deterrent function. This strikes me as wildly implausible techno-thriller stuff, but there's never a shortage of analysts eager to think in such terms.)

This leaves it more a matter of appearances and vague notions of "influence," instead of push-comes-to-shove realities. Examining the situation that way, the purpose of such ties seems to be to encourage sales of French arms (the French government is said to be pushing a multi-billion dollar arms sale to the UAE, perhaps all the more important given the trouble it has had scoring buyers for the Rafale) and French nuclear technology (the UAE is looking to build two plants, an area where the French, of course, also hope to do business-perhaps $40 billion worth of it in that deal) in the country and the region more broadly. The token military presence's bolstering of France's image as an independent regional actor can only help such dealmaking.

It could also be for the benefit of observers from outside the region, including domestic opinion in France itself, where the closer relationship to NATO is far from universally popular, inviting protest not only from the left (as in the Strasbourg protests), but from the Gaullist right as well. Yet, not everyone is mollified by this apparent concession to national sovereignty (and even grandeur), "centrist" politician Francois Bayrou notably criticizing the facility for the risk of entanglement in overseas conflict it introduces into France's strategic situation.

On the Global Economic Mess

While it is grabbing fewer headlines, the global economy remains in the dumps (even by the low standards of growth of the post-1973 era), and I suspect it will do so for quite a while. The problem seems to be a structural one, simply that an economy fueled by easy lending and focused on speculation can't run very well or very far for very long. Unfortunately, that's what we've increasingly moved toward since the 1970s.

I laid out the description in detail in an article I published here on this blog, but here's a short(er) version. The raw deal labor has been getting these last three decades (like wages falling in relative or even absolute terms) translates into weak consumption, and/or unstable, debt-fueled consumption. This means a combination of high profits (because of that gap between wages and productivity), and a discouraging environment for the productive investment that is the true basis of meaningful economic growth.

Instead, investors put their money into speculative investments (purchases of assets for resale at higher prices rather than for income). Financialization prevails, complete with a search for quick profits from the pouring of money into the buying and selling of assets rather than the making of things. As this has played out, the financial sector has ended up dominant over non-financial corporations (NFCs), themselves treated as assets to be bought and sold for quick profits.

Apart from the money absorbed by this mergers and acquisitions game (which, in its forcing companies to expend critical resources sustaining stock prices and fighting takeovers, often on credit, in a manner reminiscent of feudal princes fighting over fiefs), this encourages a "short-termist" mentality. (Just think about how often you hear the expressions "last quarter," "this quarter" and "next quarter" on CNBC.) The evidence shows that short-termism means axing things like necessary maintenance, and corporate R & D, in favor of the "smooth earnings" that get CEOs their preposterous bonuses.

This is also inimical to robust economic growth, and the distorting and disrupting effects of the speculative bubbles into which they feed do not help.

As a result of these things-weak consumption, high debt, the channeling of investment into merger and acquisition games and speculative booms and busts, and an obsession with the short-term (and a particularly narrow view of it at that), you have a long-term pattern of slow growth and periodic crisis, the current one especially sharp.

To date, little substantive action on these aspects of the global economy seems forthcoming, governments instead tending to prefer corporate welfare and band-aids in the hope that the engine can be patched up enough for yet another go, instead of addressing structural issues. (The crackdown on banking secrecy, I have to admit, strikes me as a red herring.)

What might it look like?

Well, there would be an emphasis on getting consumption up. That means, among other things, money in people's pockets. There would be moves, too, to tame the Electronic Herd. (Indeed, the "pre-release" edition of the UN's World Economic Situation and Prospects 2009 acknowledges inadequate financial regulation-and "to a significant degree . . . the dismantling of firewalls within and across financial sectors over the past two decades" as a major cause of the crisis.)

In the U.S., there would need to be action on rebuilding the U.S.'s industrial base, and the long-neglected infrastructure-and on getting health care costs under control, given their extraordinary drag on the American economy (in return for mediocre results). (The stimulus could be a start, but just that.)

There would definitely be talk about labor-friendly changes, such as an increase in the minimum wage. (Just to get back to where it was pre-Reagan administration, it would need to be bumped up past $10 an hour.)

We'd also see talk about things like repealing the Gramm-Leach-Blilely Act, which predictably contributed to the mess we're all in.

And of course, if this is all to mean very much in the long run, the phrase "green economy" would have to be much more than an empty slogan, since we're long past the point where we could keep growing the economy by increasing global throughput. (After all, the energy to support all this consumption has to come from somewhere, and failing to stave off the already advancing climatic catastrophe would wreck the economy in ways we dare not imagine-from savaging crop yields and fisheries, to inundating vast tracts of prime real estate.)

Politically, however, all this seems unlikely. I hope that isn't the case, but so far there have been little basis for optimism besides wishful thinking.

In the end, we'll just have to see.

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