Friday, June 5, 2009

Thursday, June 4, 2009

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 Globalsecurity.org - 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 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.

Saturday, May 30, 2009

Human Impact Report: Climate Change-The Anatomy of a Silent Crisis

On May 29 the Global Humanitarian Forum introduced a new report , "Human Impact Report: Climate Change-the Anatomy of a Silent Crisis" (available here in its entirety), highlighting not just the dangers climate change poses in the future, but the damage that is already happening as a result of this already rather advanced process. As the executive summary (which you can read here) notes, the study's findings are that
every year climate change leaves over 300,000 people dead, 325 million people seriously affected, and economic losses of US$125 billion. 4 billion people are vulnerable, and 500 million people are at extreme risk.
Furthermore,
These already alarming figures may prove too conservative. Weather-related disasters alone cause significant economic losses. Over the past five years this toll has gone as high as $230 billion, with several years around a $100 billion and single year around $50 billion. Such disasters have increased in frequency and severity over the past 30 years in part due to climate change. Over and above these cost are impacts on health, water supply and other shocks not taken into account. Some would say that the worst years are not representative and they may not be. But scientists expect that years like these will be repeated more often in the near future.
Additionally, the situation may significantly worsen within a matter of decades.
Within the next 20 years, one in ten of the world’s present population could be directly and seriously affected.
Already today, hundreds of thousands of lives are lost every year due to climate change. This will rise to roughly half a million in 20 years.
This report-not at all unprecedented in its presentation of this data, reports on the subject having long noted effects in the world today-is a reminder that this is not some hypothetical future issue, but very much a problem in the here and now, and not a small or distant one, as the late Michael Crichton (whose reasoning on the issue was identical to that of a tobacco company exec arguing that medical science hasn't "proved" a link between smoking and cancer) and Bjorn Lomborg (that darling of D.C. think tanks) try to make it out to be in their dubious analyses-which, alas, reached a far larger audience than this report is ever likely to. Hoperfully, however, they will prove less influential when we look back at the big picture.

Friday, May 29, 2009

The Incredible, Shrinking GDP

Last week I offered a round-up of the economic news from around the world.

Today the news is buzzing with the latest numbers from the U.S..

This morning's news release from the Bureau of Economic Analysis shows that U.S. GDP fell at a 5.7 percent annualized rate during the first quarter of 2009.

A common refrain in the commentary is that this is not as bad as feared (indeed, the story at the Christian Science Monitor is headlined "U.S. Recession Eased in First Quarter"), since the fourth-quarter 2008 numbers showed a slightly sharper 6.3 percent rate of contraction, and preliminary estimates for Q12009 were in the 6.1 percent range. Additionally, as the coverage in Forbes notes, there is some hope among economists surveyed by Dow Jones newswires that the data will be revised downward further to a 5.5 percent rate of shrinkage.

Of course, the word that the news is slightly less bad than the awful picture earlier predicted leaves the news still awful-indeed, the second-biggest one-quarter drop in GDP in twenty-seven years (the first being in the previous quarter, of course) since the brutal recession of the early 1980s (itself, the deepest since the Great Depression in many ways). Additionally, it marks three consecutive quarters of shrinkage in U.S. GDP, a first since 1975, as the BBC noted in its report.

And it is worth examining the numbers more closely.

In the words of the Washington Post's blunt assessment, the data
continued to show a near-collapse in business investment, with spending on equipment and software falling at a 33.5 percent annual rate, and investment in structures falling at a 42.3 percent rate. Those numbers continue, even after the revision, to support the idea that businesses are aggressively trimming their sales, unwilling to take any risk.
Moreover, "Gross private domestic investment continued to be a major factor in Q1 GDP decline, plummeting 49.3%, the largest decline since 1975" according to Forbes.com. (Incidentally, it is this which has pushed up corporate profits, by about $42.6 billion, though by only a sixth of the $250 billion drop in Q42008. According to the Wall Street Journal, "Year-over-year, profits were down 22 percent.")

Indeed, the BEA release notes "larger decreases in private inventory investment and in nonresidential structures" compared with the previous quarter.

It is also worth noting that one reason that the GDP numbers were "not as bad" as feared is a slight uptick in consumer spending (consumer durables-goods expected to last over three years-playing an important role), and the fact that imports (a subtraction in GDP) fell more rapidly than anticipated. (The unrevised number is 34.1 percent, "the largest decline since 1975.") The export numbers were a little better than anticipated, but at an updated rate of 28.7 percent, still showed their "largest decline since 1971."

Sharply reduced investment, nervous and tight-fisted managers, and the weakening of exports even below their "normal" trade deficit-inducing levels are all particularly bad signs (particularly from an employment standpoint), though plenty of analysts are betting on the leanness of inventories (and on government stimulus, not just in the U.S., but elsewhere, and perhaps China in particular) to produce a better second quarter 2009 (better in the sense of a smaller drop, at a rate of maybe just two percent of GDP per year) and a turnaround in the second half of the year.

If so, then the U.S. would be an exception to the general pattern, given the grim prognosis for Europe (EU officials expecting contraction to continue not just through 2009, but 2010 as well), and the severity of the situation in Japan (where the UN's relatively optimistic World Economic Situation and Prospects 2009 anticipates stagnation "at best" for the coming year).

At the very least, it should not be assumed that things can only get better.

Monday, April 13, 2009

Setting The Boundary of Space?

A scientific team at the University of Calgary has reportedly pinpointed the edge of space at 73.21 miles up, this point marking the transition between Earth's atmosphere and the violent flows of charged particles in space. These findings, of course, have considerable scientific value, where study of the atmosphere and its interaction with events beyond it is concerned. However, they may also turn out to have some political significance. The exact boundaries of space have never been exactly defined in international law, and as it turns out, they are higher than the lowest satellite orbits (the minimum perigee for which is about 60 miles). On those grounds, could states claim (admittedly, in rare instances) that low-orbiting satellites are not in space at all, but inside their sovereign airspace? It's unlikely, but it cannot be ruled out, especially if states move to "territorialize" space the way they have the seas-an idea I speculated about in Astropolitics a few years ago. (You can find a copy of that article here on the blog.)

Thursday, January 22, 2009

Income in America, 1973-

As reported in the press (right now kicking around the 7.2 percent official unemployment rate), 2008 was a particularly bad year for American workers. Nonetheless, one can say that it is just one more bad year in a lengthening string of bad years.

The year 1973 is often seen as a turning point for the U.S. economy. Between that year, and 2006 (the last year to end before the current recession), per capita GDP went up from $6,521 in 1973 (about $29,600 after adjustment for inflation) to $44,073, a roughly 49 percent increase. What most people actually earned, however, seems to tell quite a different story.

Mean Income
When current dollar figures are adjusted using the Consumer Price Index (CPI), mean income rose ten percent for males, 64 percent for females in the 1973-2006 period.1 When considered as a proportion of per capita GDP, however, male mean income fell from 142 percent of per capita GDP to just 106 percent of it. For females, income went from 58 percent of per capita GDP to just 64 percent of it.

Median Income
A measure of the mean, however, has its limitations when covering such a wide range of figures as a survey of incomes produces, making the figures on median income well worth examining. As it turns out, this has not merely stagnated, but dropped. As of 2006, the median male income ($32,265 in current dollars) was actually 12 percent less than it was in 1973 ($36,578 in 2006 dollars, after adjustment using the Consumer Price Index, which suggests a higher inflation rate than that used in the Census's data sets).

Median female income did increase, by about 60 percent in real terms (to about $20,000 a year). However, when reconsidered relative to per capita GDP, median male income went from 124 percent of per capita GDP to 73 percent of it during those thirty-three years; while for women the increase was a mere 3 percent, from 42 percent of per capita GDP in 1973 to 45 percent of it in 2006.

The picture becomes particularly interesting when the total figures are broken down by the level of educational attainment. The available data does not indicate what happened during the 1970s and 1980s, but it does show what happened in the 1990s and 2000s. Males 25 years and over who have less than a bachelor's degree saw their median income stagnate in real terms after 1990. Those with some college and no degree, or an associate's degree, actually saw their income fall slightly by the end of the period.

Those who have attained four year degrees earned just 6 percent more in 2006 than they did in 1991-their median income falling from 167 percent of per capita GDP, to 139 percent in that same time frame.

By the same measure, women with college degrees also saw their income fall relative to per capita GDP, though to a more limited extent, from 64 percent to 60 percent of it.

The Minimum Wage
Not surprisingly, the lack of increase has been felt especially sharply at the bottom of the pay scale. In 1968, the minimum wage was $1.60. While it kept up with inflation through the 1970s, it was allowed to slip in the three decades since. Simply to recover the purchasing power it had forty years ago, it would need to be revised up to $10 today. To reflect the per capita GDP increase between 1968 and 2008, it would need to be in the range of $16. That is close to three times its present level, and more than twice what it will be when the recent increase takes effect in mid-2009.

Putting It All Together
In short, what the figures show is that the growth of income has not kept up with the reported growth of GDP (which is to say, it has fallen in relative terms). In fact, not only has it grown much more slowly in real terms, but for many-those earning minimum wage, or near to it; men closer to the lower than the higher end of the labor market in general-income actually fell. Women appear to have done better, but they still earn substantially less than men by just about every measure.

Readers should keep in mind that CPI is often thought to understate inflation, rather than overstate it, in which case the picture presented above may be optimistic. (That is especially the case with large expenses like housing, education, and health care, the prices of all of which have been going up faster than inflation; and it is worth noting that it does not account for the spikes in the prices of food and energy.)

Additionally, annual money income does not tell the whole story. The picture also includes longer working hours-20 percent more than in 1970, according to Fareed Zakaria (who actually has the gall to celebrate the fact)-which suggests that the gains have been more limited, the losses more severe than they appear at first glance.

And of course, when they lose their jobs, Americans have to do without new ones for a longer time. The period of unemployment averaged about 10 weeks in the 1970s, but that figure has since risen to 16.9 weeks. (Keep in mind that it has long been the practice of the Bureau of Labor Statistics to regard anything more than 15 weeks as "long-term" unemployment.)

They are not unrelated factors: the scarcity of jobs (always much worse than the official unemployment figures) and the greater insecurity that goes with it has exerted a downward pressure on wages.

I could go on, talking about the credentialing crisis, and the lengthening commutes (and lack of decent public transport to help out with them), and all the rest of it, and the price that these things exact from the people who have to put up with them, but if you have read this far, I am sure you have heard the story before, many, many times. The only part you have yet to see is a happy ending. For all the hopes surrounding the new administration, I am very doubtful that we will actually see that.

1 All data on reported income comes from the U.S. Census Bureau.

Monday, January 19, 2009

The Theory of the Leisure Class: An Economic Study of Institutions, by Thorstein Veblen

New York: Viking, 1931, pp. 404.

Thorstein Veblen's The Theory of the Leisure Class: An Economic Study of Institutions identifies the origin of a leisure class as such in its distinguishing itself from its "inferiors" in its living by prowess in exploit rather than diligence. That prowess, which was once demonstrated by the hunter's trophies, later came to be demonstrated by conspicuous leisure (e.g., exemption from materially productive, "industrial," labor). Increasingly, it also came to be indicated by conspicuous consumption signifying wealth (on the grounds that only those who are wealthy, implicitly by virtue of their prowess, can afford to sustain such "pecuniary damage"). As a result, waste is a mark of the "pecuniary reputability" which is the proof of standing and mastery in societies with sharp, elaborate status schemes.

Along with that mastery goes what Veblen terms a "pecuniary" (acquisitive, predatory) ethos, epitomized by the aristocratic sportsman-warrior, in contrast with the "industrial" (productive, work-oriented) one more relevant to the practical operation and guidance of economic life in the advanced societies of his own time (the Western world, circa 1900), and it may safely be said, ours.

In demonstrating the continued presence and significance of the acquisitive mentality, he examines its manifestations in a broad gamut of cultural institutions, including the world of work, religion, education, sports, the operation of charitable foundations, and the place of women in society (his discussion of which reminds one how much contemporary feminism shies away from turning an economic lens on the objects of its criticism).

There are points at which I felt Veblen overreached. Leisure in itself is a significant good, a point not recognized in Veblen's study. While Veblen acknowledges that the motives are not always easily separable from one another (the purest conspicuous consumption is that of goods which do not even offer aesthetic satisfaction or physical comfort), material and aesthetic pleasure, hygiene and other such goods probably count for more than he allows, even at the more extreme end of financial extravagance, where a great deal of expenditure buys vanishingly small increments of these things. And though he admits the limits of his economic, material focus, it still may be that he is excessively utilitarian in his assessments (for instance, in his criticism of higher education).

On the whole, however, Veblen's theory has considerable explanatory power, shedding light on a wide range of phenomena. Reading his book I found myself thinking of the eagerness of so many businessmen to identify themselves with warriors and the warrior ethic (as with those who look to Sun Tzu as a guide); of what exactly is meant when people say that participation in team sports is a character-builder; of the differences between America and Europe in their respective outlooks on matters like war, peace, capitalism, socialism, welfare and religion (the latter a point to which Veblen devotes a number of pages in a discussion that seems surprisingly contemporary); of the role of the balance between these two mentalities in the rise and fall of great economic powers over history, in the ascendancy and decline of the Netherlands, Britain and (many argue) the United States today. I thought of how much of the mentality he describes fits in neatly with what has been written about the authoritarian personality by thinkers like Theodor Adorno.

I also thought of the political trends which have swept the world since the 1970s, particularly the economic ones: the worship of wealth and the mystical exaltation of "the market" (assumed as a matter of faith to inscrutably deliver the natural and optimal result); the (over)financialization of the global economy (especially the massive expenditure of energy and wealth on the staging and fending off of hostile takeovers, much like premodern princes spending bloody and treasure on squabbles over fiefs) and the tendency to dismiss the actual production of goods and services as the central function of an economy among celebrants of those developments; the more broadly conservative mood of politics, which has not been unrelated to the heightened prestige of economic elites, from the British monarchy to Donald Trump. Considering it all, it does not seem to me an exaggeration to say that the last several decades saw the resurgence of the leisure class, not only as a political power, but the esteem in which its values are held in the culture at large.

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