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

Category: Age of War and Revolution Page 3 of 31

This Is The End Of The American Empire. Period.

My friends, this is it. America isn’t going to win this war, unless they use nukes, but even if I’m wrong and they squeeze out their .01% chance of success, it is over. The army is exhausted and can’t be re-armed in less than a decade, with Chinese help. The Middle East will be in ruins. The AI bubble will crash out without money and resources from the Gulf. Everyone’s going to turn hard from hydrocarbons to renewables, especially solar, and that means China is going to make absolute bank.

This is the second stupidest war decision I’ve seen in my entire life. (The first was Ukraine refusing a very generous peace deal and, as a result, losing the majority of its fighting and breeding age male population.)

The war is lost. It was lost the moment Iran proved it could keep fighting and wouldn’t accept a peace without achieving its aims. The Americans, with, it appears, help from NATO nations, are going to try and open the Strait militarily. They will fail and it will be a military clusterfuck of epic proportions. There is approximately zero chance of opening the Strait, and if they are stupid enough to try and land marines, those marines are DEAD.

I have never seen such military insanity in my life. If I were a colonel in the US army I’d be organizing a coup and I am not kidding. There are suicide missions and then there’s trying to land troops in the Strait while Iran has missile and drone dominance, thousands of speed boats and has mined the Strait. The US does not have air superiority, even, we just saw the Iranians hit an f-35, they’ve shot down at least eight aerial refueling planes, forced the US to keep its aircraft carriers far away, made it impossible to use most of the local bases and taken out almost all US radars in the area.

This is a loss. The smart thing for the US to do would be to just declare the war is over and evacuate the region. If Israel wants to fight on its own, let it.

But the Israelis almost certainly have video of Trump raping kids, and Americans can’t admit they’re losing, so the war will go on.

The oil field damage is severe enough already that it will take years to repair. Iran will probably retain control over the Strait permanently, deciding who gets to transit. Nations they like go thru free. Nations they hate have no access. Everyone else pays: after all Iran’s going to have a lot of rebuilding to do.

Meanwhile France, still under the delusion that it’s a great power, seized another Russian oil tanker. The Russians have said they’re considering military escorts in the future. This could go south in very bad ways, and France’s missile defense systems and interceptor stockpiles are not in any shape to fight a war with Russia. The EU has decided not to ease Russian oil sanctions and Putin, in any case, has said he doesn’t want to sell to Europeans any more because they’re unreliable.

Europe’s industrial base is evaporating. They’re so far behind in tech that they don’t even show up on lists of the top five tech leaders, even when you lump all of the EU together. (Top 4 are China/US/Japan/South Korea.) Trump just massively cut science and tech spending and scientists and academics are fleeing the US, often for China. Russia, by itself, produces more missiles, drones and artillery shells than all of NATO, which should tell you meaningless GDP is as a measure of state capacity.

The US is about to become a regional power. And I don’t think it will sustain even that. Iran has just taught everyone how to make tangling with even a medium sized nation unbelievably painful. The process of turning into porcupines should take five to ten years, at which point the US navy loses 90% of its power projection ability.

Further the loss of dollar hegemony will lead to a good 30% drop in the American standard of living. But America’s cost structure (if you need an MRI fly to China, stay in a five star hotel for a week and pay cash for your MRI. It’ll cost less than getting it in America) means that high nominal wages mean very little. Americans are going to strangle slowly to death. Meanwhile one-third of the world’s fertilizer supplies are about to evaporate, helium (used to make chips among other things) is about to become rare and expensive and China has put export controls on key elements like silver and all petroleum products. As the supply chain shocks multiply (who thought just in time was smart? Oh, all the usual morons) multiple countries will stop exporting key goods up to and including food.

US bases have been proven not to protect your country but to make it a target. Every American ally is noticing this and the Phillipines and South Korea in particular are taking note. Japan is still talking tough, but they’re being morons. They either get nukes and destroy their economy when China sanctions them, or they cut a deal.

The scale of this clusterfuck is mind boggling. America is destroying its ability to coerce other nations, destroying its economy and making having an alliance with it not just worthless but actively a detriment, while devastating all of its allies’ economies: Europe, Japan and South Korea are all going to take HUGE hits from this.

Meanwhile China’s oil stockpiles are at record highs, they spent the last 4 years buying 50% of the world’s grain supply and piling it up, and their hard move into renewables has proved to be 100% correct. As for Russia, another big winner, since their oil and gas, minus some minor damage from the Ukraine war is just fine, thanks.

While Ukraine’s decision to fight the Russians as a cat’s paw for the US was arguably worse it lacks the awe-inspring scale of this bout of epic stupidity.

As Mencken wrote,

“the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron.”

And here we are. Americans elected the stupidest President in history, a known rapist, a pedophile being blackmailed by a foreign power, a con man, who is also suffering from dementia and all of this was known before he was elected to anyone paying attention.

America’s empire was doomed by Reagan and Clinton. Trump’s just bringing it to a messy end. But the decline could have taken another twenty years and been much, much less painful. Trump has decided to end it in the most spectacular and stupid manner unimaginable to anyone with the intelligence of a door-mouse. Meanwhile, Europe’s pygmy leaders are feeding Europe’s economy into a woodchipper, foot first and greasing the gears, “why is this machine so slow!? What can we do to speed it up?”

Welcome to the end of Western hegemony. It’s stupider, more venal and more darkly funny than I could ever have imagined.

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Donald Trump and the Apotheosis of Chimpanzee Politics

The most salient observation in Lawrence Freedman’s book Strategy: A History, comes early, paraphrasing Frans De Waal’s seminal study Chimpanzee Politics, Freedman writes, “De Waal concluded that rather than changing the social relationships, the fights [to become or overthrow and alpha or to wage war] tended to reflect the changes that had already taken place.”

This “Chimpanzee Framework” is a useful way of understanding the catastrophe unfolding in the Persian Gulf today and the accelerating collapse of American power globally. The “Chimpanzee framework” clarifies just how and why American foreign and economic policy actions resemble a honey drenched giant fighting off an hungry sleuth of bears more than a smart, historically informed nation. American policy and its actions are uncoordinated, moored in shared delusion and filled with several metric shit-tons of hopium. (See, more proof ‘Muricans can do Metric!)

Why would American actions be otherwise? America inhabits a fundamentally different world than it did a decade ago. The unipolar moment is gone; multipolarity is fact, not wishful thinking. BRICS grow faster every day, searching for the perfect red-pill of knocking the dollar off its hegemony throne. Meanwhile, the United States cannot affect international policy change to its liking regardless where it acts. Not in the Ukraine. Not in Iran. Worse, the inevitable defeat in Iran will cascade into Venezuelan and Cuban failure as the small shrug off the rotten shackles of a wounded giant.

America’s inept inefficacy is not limited to international policy: economic policy vis-a-vis tariffs is an abject failure as it was under Biden. The United States will find re-industrializing an impossible adjustment when the reality of a nationwide collapse of its standard of living happens. Reindustrializing starts with a vigorous textile industry, not more computer and AI chip plants.

So, just how many Americans are willing to work for peanuts in sweat-shops? How many machinists can we realistically turn out in five, ten, even fifteen years? Do Americans even know what machinists do? How many high school graduates can use a lathe, much less know what one is? Our domestic reality is as equally grim as our international one, except our international collapse will compound already enormous burdens pervading an economy of misaligned priorities and a poorly performing one at that.

In Strategy, Freedman also discusses the utility and efficacy of coalition building among chimpanzees, their alphas and those tribes they war against. In his most striking note, he describes the political complexities, violence and the necessity of building stronger, effective coalitions, be they to wage war for a nearby fig tree or to install a new alpha. His conclusion is counterintuitive and profound: chimpanzee violence doesn’t represent an overthrow or revolution. It confirms a preexisting reality.

Henry Kissinger made the same argument in his doctoral dissertation, later published as A World Restored, not regarding chimpanzees, but in the context of Metternich’s formation of the Sixth Coalition against Bonaparte. The Befreiungskriege, as it was called in Metternich’s native German, confirmed the reality on the ground that Bonaparte’s 1812 invasion of Russia was a mortal own goal for the French; the War of the Sixth Coalition merely confirmed it; and the subsequent peace codified it for almost a hundred years.

The same argument can be made regarding the United States and its quickly deteriorating Western coalition of the unwilling. Not to mention its Far East allies who are quickly tiring of American shenanigans, outright betrayal and economic, tariff-related fuckery. That this coalition, a coalition that dominated the post-Cold War world, cannot now manufacture more artillery shells than a single nation, the Russian Federation, is proof positive of a deeply misunderstood alignment of power and an pre-existing altered reality is met with blank stares and outright denial.

That this coalition is blindly following a great power lead by the nose by a tiny, recalcitrant and criminal regime running Israel has historical precedent. Think Serbia and Russia in the days before August 1914. The Serbs were deeply complicit in the assassination of the Austrian Archduke (read Sleepwalkers by Christopher Clark for proof). And Russian mobilization in support of their little Slav Brothers (or if you really need me to spell it out in today’s terms, those who we share Judeo-Christian values with) guaranteed German entry into the war.

Freedman’s “Chimpanzee framework” goes far in explaining the escalating devastation of petroleum related infrastructure and targeting of natural gas fields in the Persian Gulf. The world desperately needs to move away from fossil fuels. And many nations have made great efforts to do so. Thus, the destruction in the Persian Gulf of petroleum assets, refineries, gas wells, LNG and oil terminals, represents a symptom of a larger global reality: the world has turned an epoch making corner on fossil fuels. The day of fossil fuels is far from over, but this is the beginning of the end. There will be winners and losers, cliché I know, and yet countries that have made strong investments in renewable energy will make the inevitable and painful adjustments successfully. The losers like the USA, are those who will maintain their reliance on petroleum, come hell or high-water.

Most Americans dispute the idea that we higher primates and chimpanzees have a common ancestor or share any commonalities for that matter. They are in need of a rethink. Our politics are too similar, our warmaking just as brutal and our collective decision-making is too catastrophe prone to deny.

So, anyone got a fig? Or know where a fig tree is?

Iran Is Revealing The American Empire’s End

The Iranian strategy in the war has been fairly simple. They’re taking out all nearby American bases and prioritizing hitting all infrastructure, especially radar. While doing so they are running US and Israeli interceptor stocks into the ground, and driving up the price of oil, gas and potash (fertilizer.)

Attacks on radar matter. Accounts suggest that warnings for incoming missiles and drones have gone from fifteen minutes to two or three. And these radars can’t be placed in any reasonable time frame:

I wonder if China will LET the US rebuild it’s military. They do have a veto.

Meanwhile Putin is getting ready to twist the knife into Europe’s guts. The other day he was musing that since Europe intended to end all imports in 2027 anyway, perhaps Russia should just end it now. And now:

Novak: Russia will redirect gas supplies from the EU to other markets Russia is ready to supply gas to friendly countries committed to long-term, constructive relations, instead of Europe, said Deputy Prime Minister Alexander Novak.

“And such opportunities exist. Our companies have confirmed this today. They are already in negotiations, and gas quantities will soon be delivered to other countries,” Novak added.

It’s really hard to overstate how much the past few years have absolutely devastate Europe’s industrial position. Part of it’s just “China scale” but a lot of it has been high energy prices making Germany legacy industry (that’s almost all of Germany’s industry, they don’t have the tech lead in anything but a few obscure niches like lenses) uncompetitive. US natural gas is MUCH more expensive than Russia was.

Meanwhile Iran has targeted both Amazon and Microsoft servers, since both are used by the US and Gulf State militaries, including key targeting systems.

What the world is finding out is that an American base in your country doesn’t protect you, it makes you a target. The US can’t protect either its bases or its allies. Countries like the Phillipines, whose defense strategy was “ally with America, get American bases” have to be realizing the bases are a liability, not an asset.

The US can’t protect its allies. It can’t protect its own power projection capability. Iran hasn’t taken out any aircraft carriers, but every time it fires a salvo at them, the carrier groups scuttle another few hundred miles away, making them less and less useful.

I don’t know if this is America’s last great war, I think there’s one more left, but it’s the war that shows how hollow the US has become. Can’t defend it’s bases. Can’t defend its allies. Can’t keep the trade routes open. Can’t build enough interceptors for a real war. Can’t replace destroyed radars and other infrastructure in any reasonable time span or without Chinese aid.

As for America’s strategy? It’s wasting vast amounts of time bombing civilians, while Iran dismantles its military infrastructure.

The oil shock is going to be much worse than most people realize. Kuwait is already reducing production, all the Gulf States have limited storage and when it runs out they have to stop producing. But if you stop an oil well mid-production, it takes a long time to get them going again, same with refineries, and stopping production can damage oil fields permanently.

This is especially hurting US Asian allies. Both Japan and Korea are cruising for running out of oil and gas. But not China:

This is a complete fiasco for America and its alliance and satrapy system. If you can’t protect your allies and vassals, they are going to want OUT. And the Gulf States are already talking about reducing investments in America and even repatriation, because they’re going to have a lot of rebuilding to do.

Yet again America has wound up a baseball bat, taken a swing and hit its allies and itself.

After this it will take years for the American military to recover, if it ever does. Everyone will be safer as a result, except for a few Latin American countries it can still slap around. Even they will be scurrying to protect themselves: after all, Iran has shown how. Drones and missiles and a decentralized command system. China and Russia and Iran will be happy to sell them what they need and China at least will probably finance them at cut rates.

I remember reading some Chinese Christian Uncle’s theory that Trump was indeed chosen by God: to destroy the American empire. So far, true or not, that assumption has had very high predictive utility, almost everything Trump has done has made America weaker.

Maybe that’ll work out for the US, too, in the medium run. Losing its Empire and having nothing else to do but fix its own problems is what America needs.

But in the meantime, every day Iran makes everyone in the world safer by destroying the very sinews of American war and the myth of American superiority.

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The Weirdness Of Getting Old

So, I’m now fifty-eight years old. My body feels it, though that’s more residual damage from various health problems than age, but my soul doesn’t: I feel like I’m still who I was when I was five years old, staring at multicolored fish in tide pools, making sand castles and telling myself stories about the freighters I saw steaming past my grandmother’s beach home.

When it comes to my life work, to understand the forces of history and civilization, it’s mostly given me a sense of the pace of change, and a feeling for momentum in human affairs. A human life, even a long one, isn’t very long. Human history operates on generations, with three and seven seeming to be the numbers which matter most.

A normal sub-ideological cycle (New  Deal and post-war liberalism, neoliberalism) is about 3 generations. Sometimes they can go longer, but making a bet of about fifty to sixty years for a run will usually work. The changes FDR made stayed substantially in place till 1980 with Reagan. Neoliberalism is dying as we speak. There’s always an overlap period, where the old order is dismantled, but substantial spars remain in place. It takes till the late 90s to repeal the major market reforms of New Deal liberalism, for example.

I was born in 1968. I was twelve when Reagan was elected. I lived the very end of the post-war order, and my entire teenage and adult life has been under neoliberalism. I watched as social services were cut, as every building went from “just walk in” to having security guards. I saw Universities go from being open to the public to closed. I remember the old “middle class” economy and I lived thru the transition to one where the top 10% does over 50% of all spending.

I predicted the ways that the neoliberal order would end, and was right about almost all of it: the rise of China, the end of dollar hegemony, elite capture, the effects of surveillance and electronic money, but in terms of a human life it has all felt like very a long time.

It isn’t, really, in historical terms. Fifty years isn’t very long, unless you’re living thru it.

Young adults today have the same relationship to the 80s and 90s that I do to to the 50s and 60s. They don’t remember them, but they grew up with adults who lived thru them. Heck, I knew adults who remembered the Great Depression, the 20s, World War I and II. My span—what I either experienced myself or what I heard about from people who were there goes from about 1910 to the current year. My teachers included Old Edwardians, Lost Generation types, Hippies and square jawed GI and Silent Generation types.

My parents had me late, so I was really raised mostly not by Boomers, but by the Silent Generation. My father was in training as a pilot when the war ended. Had it gone on another six months he’d have been deployed.

They were very foreign people, not at all like those who are adults today. There was an acceptance of personal violence that has faded, but also a sense of honor which no longer exists. The male adults who were most important in my life were all men whose word you could trust. They might be assholes, many of them were, but if they said they’d do something, they did it. They rarely lied, and they believed in duty and honor.

That’s all gone now in the West. I hardly meet anyone who has principles I trust them to stick to under duress. There isn’t even a pretense any more. Hypocrisy as the tribute vice pays to virtue is gone in America. Trump and the people around him don’t even pretend to be honest, good or honorable. They’re all cruel bastards looking out for number one and willing to hurt or kill anyone, and they don’t even pretend otherwise.

One can see that as preferable to the hypocrisies of Clinton, Bush and Obama, and in some ways it is, but it’s also an indication of how far we’ve fallen, that our lords and masters (and they are our masters, and we are their slaves) don’t even pretend to have any virtues. The only virtue left is being rich or powerful, if you’re neither, you’re nobody and if you’re nobody, in the eternal words of George Bush Jr, “who cares what you think?”

They have, of course, in becoming virtueless scum, destroyed their host nations. Both Europe and America are going down, and hard and it is precisely because of the loss of virtue in the ruling class and the inability and unwillingness of the ruled to do anything about it.

It’s not that you have to be “good”, precisely. It’s that if your culture is lead by people who are cowards, faithless and concerned only with personal wealth and power, well, they can’t run a society effectively. They will always run it into the ground. The punishment for neoliberalism is China’s rise and the end of hundreds of years of European superiority.

And I (and most of my readers) have had to watch this. The destruction of our societies and the aggrandizement of the worst among us. I assume these days that if someone is very successful, either in politics or private enterprise, that they are untrustworthy and effectively a psychopath, and the vast majority of the time, I’m right.

It’s felt very long. I knew it could not last. I knew how it would end. I fought to change it, and failed (no surprise).

This is nothing new, of course. Confucius felt this way, and died convinced he was a failure. “Stop doing all these evil things,” he screamed, and no one listened. The Chinese are good at this. They recognize there are times when public affairs are so evil that good men and women can do nothing but withdraw and try and live good lives, because any success in public affairs can only come at the cost of one’s character. To succeed, to become a billionaire, in America today, is to scream to the heavens “I am evil. I make money hurting people. I care only about myself and perhaps a few friends or family.”

But the torch passes on. China has its problems, but the Chinese leadership has, in fact, mostly made their people far better off. When they say they’ll do something, it isn’t a lie, they track what they do and publish the results against their promises. If they say they’ll build a thousand parks, be sure a thousand parks will be built.

And so it is this I have seen over the span of my life: the civilizational torch passed from the West to the East, from Europe (America is European, sorry) to China. I’ve seen the West lose its virtues, get rid of the civil liberties which were our greatest glory, and in losing its virtues lose its place.

Now we come to the rise of the Chinese century. I wonder how much I’ll see, and how weird it will be to no longer be a member of the important, ruling civilization, but only a barbarian, watching my civilization collapse and the glory and the future move elsewhere.

May the Chinese do more good than evil with their time in the Sun, and may they remember too, that the sun always sets.

And I’ll keep watching, because while most of this has sucked, the one virtue of interesting times is that they are interesting, and age’s great advantage is perspective.

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The China Super Boosters Are Super Tiresome

I stand second to few in my admiration for how well China has done. But the super boosters are super tiresome. If China had been a small nation, the best they would have done is parallel Japan: do very well, then the US breaks your legs. Reminds me of Americans in 1950 or 95.

They remind me of many Americans in 1950 or 1995. “We are at the top because we are the best. Our governance is superior, our culture is superior. It’s just because we’re better than you all, and we always will be.”

I doubt the CPC’s leadership is this stupid or arrogant (yet). They remember China getting its face pushed in for over a hundred years.

China is at the start of a good run. Leaving aside climate change and ecological collapse it’ll last 100 to 150 years, EXACTLY the same as the American run. China’s current rise is just a hegemonic replacement cycle story. Not even as impressive as Britain creating the industrial revolution. This is just taking the lead, China has done NOTHING revolutionary yet. This is a dirt standard hegemonic replacement cycle. Happens every 150 years or so.

(The American run began in the 1880s, when they overtook Britain in industrial production.)

The reason China succeeded when other nations didn’t comes down to three things: competence, the prior hegemon’s help and size. All three were required The Japanese were super competent after WWII, absolutely amazing. When they started to challenge the US, they were forced into the humiliating Plaza Accords. If China was the size and population of Japan, the same thing would have happened to them, no matter how “superior” their culture or leadership is. India failed despite its size because the government and leadership were (and are) terrible.

This also makes Chinese booster sneering at smaller nations the US has beaten down tiresome. It’s not the same situation. “Oh, they’re incompetent.” No, idiot, Cuba is an Island nation with 9.75 million people and no resources to speak of which has been under sanctions for every year of its existence since it through the Americans out. That they even still exist is amazing. Venezuela had 28 million and is close, Iran (though it is larger and further away and thus had a far better hand to play) has likewise been under sanctions since day one, and the Iraq/Iran war was sponsored by America.

China has done great. No regular reader of mine can think I don’t admire the hell out of China’s leadership and people (and I like Chinese culture and Chinese people and have all my life, I was practically raised by Chinese for my first five years.)

But stop with the glazing and remember that hubris is always punished.

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How Dependent Is Canada On The US?

This “issue” has flaired up again as Trump attacks Canada again.

The short answer is that in the short term Canada is moderately dependent on the US and the long term it is hardly dependent on America at all.

Right now we (Canada) have a lot of trade with the US. We buy mostly finished goods, and pay fees to American tech and copyright holders. The US buys oil (which it cannot easily substitute away from in the short term). The US buys cars from us (#2, but deceptive, since they’re made by US companies in Canada), a small amount of machinery like nuclear power equipment, and a grab bag of other industrial goods. We also sell Potash (about 80% of what the US needs) and aluminum to the US, for which there is no easy substitute: these things are in global shortage, and the best alternative for potash is Russia and despite various bullshit about American/Russian alliances, Russia doesn’t trust the US at all and would not be a reliable trade partner. Without potash American farmers are screwed, since it’s used for fertilizer. America can’t significantly improve domestic potash production, there isn’t enough in America.

There’s substantially nothing we buy from the US that we can’t get from China for less or Europe for a bit more. And what the US sells Canada is high value add goods, not resources. We’re a valuable customer.

And, at the brass tacks level, if all trade stopped tomorrow, Canada could feed itself and would have plenty of energy. Our houses would stay hot in the winter and cool in the summer, our trucks would have gasoline and diesel, our trains would run and our planes would fly.

Canadian dependence on America is about 80 to 90% a legacy issue. We currently do a lot of trade with America, but we don’t have to. We can sell manufactured goods to Europe, and resources to China and buy from China and Europe and various other nations. Nothing we get from the US is a “must have with no feasible replacement.”

So the game is very much along the lines of the old joke about saying nice things to a barking dog while you find a rock. Not that we will ever fight the US unless they invade, but we just need time to disentangle our economies and move to reliable trade partners.

America could hurt us a lot if they cut of trade, but it wouldn’t be a mortal blow and we would recover. We’d prefer to do it slow, but if we have to do it on an emergency basis it can be done.

Canada doesn’t need the US. It just needs some time to change trade partners, and that’s what Carney is doing, because as he has said, it no longer makes sense to do business with the US.

We’ll talk a bit more about trade with the US from a global perspective soon, but basically the US has a legacy trade position: no one needs to buy from it any more unless they’re stupid (Europe refusing to buy Russian gas). Selling to it is still necessary for many nations, but that will become less true over time.

America’s prosperity and power are both legacies, they have no solid foundation to stand on any more. Ironically Canada is in a better position in the middle to long term than America simply because it only has 40 million people and is a continent sized country with a continent’s worth or resources. The only significant danger is an American invasion.

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How Boeing Made Record Profits And Burned Down The Company

One of the most important things to understand about companies and countries both is the difference between sustainable prosperity and burning down the house.

You’re probably aware that Boeing has serious problems. Those problems have been obviously “on the way” for a long time. When Boeing moved its headquarters from Seattle (where it makes most of its planes) to Chicago, the writing was on the wall.

BUT it was also a good time to buy Boeing stock:

The move to Chicago meant that Boeing’s executives had moved away from the manufacturing floor. It was the sign that Boeing’s culture was no longer “Engineering from top to bottom” but finance driven. And that emphasis on finance, on juicing profits, increasing executive salaries and driving up stock prices (those stock options don’t pay otherwise) had an effect. You can see it in the chart above.

Here’s a more recent chart:

Ouch.

What had happened is that Boeing was forced by the Clinton administration to merge with its competitor McDonnell Douglas in 1997. McDonnell Douglas was an “MBA” firm. Boeing was an engineering firm. The takeover changed Boeing’s culture and leadership, engineering became secondary and for over 20 years, it was good to be a stockholder.

But Boeing’s ability to make and design planes took a huge hit, there were massive quality problems and employees below the executive rank were angry and demoralized. Boeing planes started falling out of the sky. They were unable to make reliable rockets any more and eventually spending all their time on juicing profits blew up in the face.

This is a general law. The same thing happened at General Electric. If you’re old enough you remember GE as an American industrial giant, making everything from turbines to washing machines. It was a technological pioneer. Then Jack Welch took over, started firing 10% of employees every year (the “lowest performers”, supposedly) and turned GE into a finance company. After all, profits from finance are much higher than profits from manufacturing.

Unfortunately, as with American car companies, GE wasn’t really a bank. Its financial profits were still dependent on being a major industrial company, but Welch didn’t believe in manufacturing. And now GE is a shadow of itself. Jack Welch? Well he got rich, he was lionized as one of the great CEOs of the era, and he retired before GE went completely to hell.

GE will never recover, and with it went a big chunk of America’s industrial and technological might.

And it’s unlikely Boeing will really recover. If it wasn’t for China, it would be possible. But China’s building its own civilian airliners now. They’re not caught up yet: they can’t make the jet engines, but they will be able to soon. (They make excellent jet fighters, probably better than the equivalent American planes, as performance in the recent India/Pakistan border incident showed.)

So China’s likely five years out from producing cheaper more reliable planes than Boeing, which is to say, cheaper and more reliable than American jets. The European market is going to turn hard away from Boeing due to Trump’s games and their having Airbus jets as an alternative. So what’s left for Boeing? Geopolitical risk is too high for anyone but Americans to buy their planes, and Chinese jets will cost less. If you don’t want Chinese, buy European.

They screwed up the rocket they were building for NASA, giving the market to SpaceX by default (and perhaps soon other new companies.) American fighter jets are worse than Chinese jets, and even if they’re better than some other alternatives, the market is crashing on them, because with modern software, you can’t use them if the US decides to stop you. They effectively have a kill switch. Given the US has recently threatened both Europe (Greenland) and Canada, who the Hell wants to buy an American jet, when America is the danger?

Buy Russian. Buy Chinese. Buy European. But American? You’d have to be a moron.

Now let’s look at the US economy overall:

The entire US economy is being burned down. Those high profits aren’t a sign of health, they are a sign that excess profits are being taken at the expense of reinvestment in production and tech; of too high cost structures that make producing in America too expensive (because those profits indicate higher prices); of non-competitive markets, and, generally speaking, of burning down companies or the economy, or both, to make unsustainable profits.

The problem is simple enough. China’s now ahead in 89% of techs. Prices for its goods are much lower. Who the Hell is going to buy American goods? Two years ago there was an answer. American allies would, even at higher costs, because they were scared of China and wanted to stay on America’s good side. But now? After America has proved more dangerous than China to Europe and Canada and after Trump’s on-again, off-again tariffs and other insane trade moves?

China’s looking mighty good, and America is the threat.

Oh people will still “invest” in the US, if you want to call it that. If America’s in its final stages of burning down the house to generate high profits, why not? But I suspect that even that is going to drop significantly because the geopolitical and exchange rate risk is just too high. As America declines, the US dollar will as well, and when you adjust for drops in the dollar, those returns aren’t going to look so great to non Americans.

The “Burning Down the House To Generate Heat” metaphor is one for our age. Not just for Boeing or America and its economy, but for humanity and ecosphere.

Welcome to the end of American Empire.

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American and Chinese Elites Both Achieved Their Goals

Chinese and American flags

The period around 1980 was pivotal to the fate of nations. In the West Thatcher and Reagan came to power and finished the destruction of the post-world War II order, setting the West on a new path. This process had been ongoing since 1968, but the form of the new consensus was not clear until Reagan’s victory: financialization, crushing workers, destroying the middle class, asset bubbles and so on.

In 1978 Deng came to power in China and instituted reforms, especially market ones. This coincided with the West, and especially America, wanting to offshore and outsource their industry. This increased profits and impoverished the working and middle class. It financialized the economy: you could have the profits without the production and without dealing with uppity and powerful workers.

Reagan went after unions hard, Thatcher broke the miner’s union, the most powerful in Britain. The Federal Reserve started a long term policy of raising interest rates every time wages rose faster than inflation, meaning that over a period of decades wages rose less than inflation, and thus were reduced in real terms. The BLS moved towards understating inflation systematically, to undercut things like pensions with cost of live adjustments and to help “boil the frog”. Every change in how inflation was measured, for decades, which I am aware of, reduced the measured inflation rate. That doesn’t happen randomly or if your goal is the accurate measure of inflation.

Deng lucked into a geopolitical moment, and knew exactly how to take advantage of it. “Tired of dealing with uppity workers? Hate environmental regulations? Want more profits without the work of production? Move your production to China and we’ll make you rich!”

Deng exactly spotted the West’s weakness and knew how to take advantage of it. He also delivered: offshoring and outsourcing did make the West’s elites, and especially US and British elites filthy rich.

In exchange China got the industry and with the industry came the know-how and the technology. The technological lead always (always) moves to the country with the factory floor, and so it did in this case. It took quite a while for this to become obvious, so people could fool themselves, but the movement was inexorable. The same thing had happened when the industrial base moved from Britain to America (with tons of British financing). It took about 30 years for the tech lead to follow the industrial base. In this case it seems to have been about 20 years from China taking the industrial lead to tech supremacy, but the movement was the same.

American elites, wanting to be rich without real work and to destroy their internal enemies, those pesky workers who wanted a cut, got what they wanted. In exchange they destroyed their empire, because the real basis of the American empire was industry and technology.

The Chinese got what they wanted: China became the world’s leading industrial and technological power and a billion people were lifted out poverty.

The Gods often grant want we desire, if we’re willing to work for it. American elites got their wish. So did the Chinese.

Welcome to the Chinese century.

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