Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Month: December 2024

Syrian Allies Try To Hold At Homs

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On December 6, 2024

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So, according to Magnier, who usually knows what he’s talking about when it comes to the Middle East:

Syrian government forces are expected to: 1. Leave Al Bu Kamal, Deir-ezzour, Palmira and stop at al-Qaryateyn to protect Homs. 2. Leave Daraa and retract to the limits of Damascus rural area. That will limit the defence of a larger area to a smaller area, secure Latakia, Tartous, Damascus and Homs.

Meanwhile Israel is considering annexing southern Syria.

Apparently some Iraqi militias Hezbollah forces are at Homs to fight, but HTS is still strong and is very well equipped, including with plenty of drones.

Edrogan has announced that HTS forces intend to occupy Damascus and Homs, which is a clear statement that they are his proxy forces.

Most of the Syrian army has proven unwilling to fight. The troops are ill paid, the winning army was mostly disbanded, and the army troops subsisted by setting up checkpoints and extorting people who had to pass through them. The critical oil fields are under US control, so Syria’s government is poor. Hezbollah can’t send the amount of troops they sent in the past, for obvious reasons, and Russia is occupied in Ukraine and doesn’t have nearly as many “mercenary” troops to send as it used to.

(This map makes things look better than they are. The majority of the population is no longer under Syrian government control, nor is the oil.)

If Syria falls, Hezbollah is cut off from its Iranian supply chain, and Russia wants to keep its naval and air bases. As for Iraq, they have to figure that they’re next: once HTS has secured a bigger base in Syria, or taken most of it, they will turn on Iraq, as similar forces did in the past.

The situation is developing quickly, and a lot will depend on whether and/or where Syria and its allies can halt the HTS advance.

Assad has proved himself unable to do what needs to be done. His need was to have a functional Syrian army and he failed at that. There may be good reasons for that, like lack of money and sectarian and tribal issues, but the bottom line is that the Syrian army’s willingness and ability to fight has so far been terrible.

If his allies do manage to save him, they should turn him into a figurehead and just the run the place themselves, it’s clear that he isn’t up to the job.

At the current time it seems the most likely outcome is Syria being partitioned between Israel and Turkey, perhaps with a rump Syrian state. But until we see if and where Syria and its allies manage to hold the line, it’s hard to say. All that being true, it’s also true that Syria in 2015 had been reduced far further than it is so far, so the situation is not, at least in principle, beyond rescue yet.

But Syria’s allies need to face the fact that the Syrian army is garbage and take over the war. If they don’t, the odds of success seem… bad.

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US/China Trade War Heats Up

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On December 5, 2024

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So, China has put export controls on rare earths.

People think “well, we’ll just mine them ourselves” but it often isn’t that simple. Gallium is refined as part of the process of aluminum smelting, for example, and the US has no aluminum smelting industry left.

More generally speaking the world is unfolding as I predicted: it’s splitting into two trade blocs, a cold war is developing (the Syrian “uprising” is a cold war maneuver) and the US is trying cannibalize its satrapies: that’s what Trump’s tariffs on allies are about.

Since the 50s it was deliberate American policy to offshore industry to its allies, especially South Korea, Japan and Taiwan, but also to Europe and the Anglosphere to some extent. Now it wants to pull that back in. This has been especially noticeable, of late, in Germany, where heavy industry is shutting down and much of it is moving to the US.

The problem, of course, is that China’s cost structure is lower and they are pulling ahead technologically. The Chinese believe in technology in a way the West hasn’t since the 60s—it’s good to them. They want more robots, more drones and more automation. They’re not scared of automation taking jobs, they associate rapid technological advancement with prosperity.

The problem with bringing industry back to the US isn’t just cost-structure, it’s the so-called competency crisis and the sparseness of the vast numbers of small industrial suppliers. The ecosystem which supports and allows rapid re-industrialization doesn’t exist in the West any more. A simple example is that almost all of the world’s machine tools and basic electronics which are needed to do everything else are produced in China (with a small machine tool industry barely surviving in Germany.)

The West is going to have increasing problems with resources, as well. Most of the “South” would rather do business with China, for reasons we’ve discussed ad-infinitum. As the US cannibalizes its allies it will also have difficulty with trade: if Europe’s poor and everyone else would rather buy Chinese, who are you going to sell to?

Trump’s tariff plans aren’t exactly stupid, but they require real industrial policy at the same time and managing relationships with trade partners, including partners the US insists on treating as enemies, and Trump isn’t up for that, any more than Biden was.

So America will decline, but will decline less fast than its allies, and the world will split into two competing blocs. Only this time the “Western” bloc will be the weaker, less technologically advanced one.

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Yes, Denial Of Care Improves Profits For Health Insurers

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On December 5, 2024

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Insurance companies generally have a loss ratio: a percentage of income from insurance policies they must pay out. In health insurance this percentage varies: it’s lower for individual plans, and higher for group plans. Most commonly it’s 80%.

If they pay out less, in many cases they have to return the difference to policy owners. (Not always though. Often with Medicaid, for example, this isn’t the case.)

This doesn’t mean that they have no reason to deny care, however. They want their health care costs as close to that bottom number as possible without going past it.  If they spend, say, 83% rather than 80%, that will cost them billions. Denial of care is meant to get the margin as close to to loss ratio as possible.

This also means that the best way to increase gross profits (not the percentage, but gross) is to sell as much insurance as possible. Eighty percent of a 2X is more than 80% of X.

So the incentives align such that the best way to make money is to sell as much as possible, then deny the necessary amount of care to get as close to the loss ratio as possible.

It should not need to be pointed out that Americans, as a group, are a very sick people: lots of obesity and chronic illness and in this age of Covid, long Covid and the rise of illness caused by post-Covid, more and more denial of care will be required to hit numbers.

Insurance company profit ratios hardly move in percentage terms. But making more money is still better, and the more money they make in gross terms the larger executive salaries, bonuses and stock options can be.

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Health Insurance CEO Assassinated

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On December 4, 2024

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Brian Thompson, CEO of United Healthcare. Apparently there had been threats, and those threats were related to denial of care. Even the Feds thought he was denying too much care (which takes some work, since denying care is the industry profit model.)

He had been chief executive since 2021, during a time in which the parent company and his division were rattled by federal investigations, even as it enjoyed profitable growth. The division has been criticized by congressional lawmakers and federal regulators who accused it of systematically denying authorization for health care procedures and treatments.

There doesn’t seem to be much sympathy, and indeed there is much satisfaction and even glee, among commenters.

I have been expecting, but not seeing, a wave of assassinations of important people in the US and the West for some time. I still think it will happen, it’s just taking longer than I thought.

The bottom line is that people like Thompson get rich by hurting other people. That’s what they do. Billionaires, executives and politicians all make their living plus a lot by taking from people weaker than them. Grocery chains raising prices faster than their costs’ insurance companies denying care to spike profits; banks creating fake documents to foreclose homes; private equity buying profitable businesses, larding them up with debt and then shutting them down.

Politicians making laws to benefit the rich, cutting their taxes, giving them huge subsidies and cutting programs for the poor and middle class. Politicians letting people be homeless and stealing their possessions when they raid homeless camps.

And so on. Entire books have been written about this and been non-exhaustive.

Powerful people get rich by killing, impoverishing and hurting people weaker than them and it’s very odd that more of those people, or their families or friends don’t return the favor with prejudice.

Thompson’s assassination will cause more execs and CEOs to bodyguard up, but that doesn’t matter much. Modern IEDs and drones are very very effective and getting cheaper all the time, though civilian drones are extremely restricted in the US, which has lead to China being the world leader.

I suspect they’re restricted in part to make assassinations harder. Guns are nice, drones are better.

Chinese leaders make the lives of most Chinese much better, not worse, so they aren’t scared of assassination.

Anyway, if you want an economy which works for everyone you can’t ask nicely, powerful Westerners only respond to fear. So if there are more assassinations, if it becomes a “thing”, well that might turn out very well for the majority. (Or it might not, but when the status quo is unbearable, people often lash out.)

This is just an observation of how things work, of course. One should never ever assassinate someone just because they are killing and impoverishing lots of people and would happily kill and or impoverish your friends and family or you because they need a fifth luxury home, third private jet and a second mega-yacht.

That would be very anti-capitalistic and un-American and letting the rich kill and impoverish you is what America is all about. You should be honored to die or live on the street or scream in agony as your health care is denied so some executive can increase profits by .01% and get a bigger bonus.

Die for the American way. Live homeless for freedom!

Update:

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The South Korean Coup Attempt

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On December 3, 2024

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Update: Report that the President may have backed down and will cancel martial law. Amazing.

The President of South Korea has declared martial law.

The legislature voted 190 to 0 to end the martial law, which is their right under the constitution, but the President has declared it will continue and the military command has said they will not end it till he says so. Even members of the President’s own party voted to end martial law.

I’m no expert on South Korea, but what I do know that the people with the guns have the final say. Back during the Arab Spring I noted that until the Egyptian army chose its side (it wound up choosing itself) nothing had been won.

The question, then, is the high command is unified and if lower officers and the rank and file will obey orders. So far the coup hasn’t been entirely competent: the military should have never allowed the legislators into the building to take such a vote.

There are unconfirmed reports that arrest warrants have been issued for leaders of opposition parties.

South Korea is America’s second most important ally, right after Japan. It has the highest science production per capita in the world and is a major industrial power.

One of the topics on the right hand side of the blog is “the age of war and revolution”. Coups are a type of revolution. This sort of instability will continue. Some nations will re-align against the declining West, others, in the core, as the decline continues, will become more and more unstable and serious political realignments will occur. The age of neoliberal ideology is also coming to an end (Trump’s tariff threats are as anti-neoliberal as it gets) and the global economy is being upended in ways it hasn’t been since the industrial revolution, as the core moves from a Western country to China.

Be prepared for much more instability.

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About the Syrian War & Those Rebels

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On December 2, 2024

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Let’s state the obvious bits and get them out of the way:

  • The rebels are basically Al-Qaeda;
  • They are supported by Turkey, Israel and the US;
  • The Syrian army barely fought during the initial attacks and it was very embarrassing;
  • Aleppo fell in a couple days. It may take a couple years to take it back;
  • The timing is intended to take advantage of Hezbollah’s being weakened and tied down by Israel.

Syria was losing the previous war until Hezbollah and Russia intervened. It may well lose this war if Hezbollah and/or Russia don’t send troops, but both of them have other enemies they need to worry about.

If Syria falls, Russia loses its Mediterranean naval and air bases and thus a great deal of its military reach. Hezbollah loses its main supply line to Iran.

The big mistakes that lead to this were playing footsie with Turkey/Erdogan and tolerating a frozen conflict. Syria, with Russia and Hezbollah’s support could have conquered Idlib, but Russia decided not to, leaving enemies with a foothold in Syria. Those enemies waited till the best time, then re0-openned the war.

If you’re winning a war and can win the war, then frozen conflicts are a bad idea. They remain a knife near your throat. Russia made this mistake in 2014 as well, when it could easily have fully defeated Ukraine and imposed a peace.

Hopefully they’ve learned the lesson. They do have enough reserves left to send sufficient troops to Syria. This time, win the war.

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Week-end Wrap – Political Economy – December 01, 2024

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On December 1, 2024

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Week-end Wrap – Political Economy – December 01, 2024

By Tony Wikrent

Jonathan Larson: A Life of Learning, Service, and Curiosity (July 17, 1949 – November 2024)

It is with profound sadness that we announce the passing of Jonathan Larson, the founder of the Real Economics blog. Jonathan’s insatiable curiosity, dedication to public service, determination to improve the human condition, and deep intellect left an indelible mark on all who knew him….

He authored Elegant Technology: Economic Prosperity from an Environmental Blueprint, a book that showcased his commitment to sustainable development and his vision for a greener future. Published in Scandinavia, the book demonstrated his global perspective and ability to inspire change across borders.

He also authored a paper on heterodox economist and scholar Thorstein Veblen, and supported and closely followed the restoration of the Veblen homestead.  Jonathan began this blog, Real Economics, to do as Veblen had — challenge and seek to supplant the failing orthodoxy of mainstream neoliberal and conservative economics….

Jonathan’s passing leaves behind a legacy of intellectual brilliance, moral courage, and unyielding dedication to the betterment of society. His life serves as a reminder that curiosity, compassion, and hard work can create a better world. Those who knew him who will forever cherish his memory.

 

Strategic Political Economy

Trump tariffs a “10 year project” to make China consume more and manufacture less.

[X-Twitter, via Naked Capitalism 11-27-2024]

[TW: The Trump regime’s goal of forcing China to “manufacture less” should be understood in the context of Thorstein Veblen’s explanation of the conflict between business and industry. Business managers and financiers dislike the uncertainty and unpredictability created by technological innovation. Rather than creating wealth through increased and less imperfect production (here, think of the Japanese concept of kaizen), business managers and financiers instead seek to acquire wealth “by a shrewd restriction of output,” causing privation and unemployment. This actually establishes and perpetuates a process of financial sabotage of industry, as Veblen explained in the first chapter of his 1921 book, The Engineers and the Price System.

[By contrast, a foreign policy based on principles of civic republicanism would seek to collaboration and cooperation with other nations to solve the most pressing problems facing humanity, such as transitioning off of fossil fuels, and ensuring universal supplies of clean water, medical care, transportation, and so on.]

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