War

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Automation, Space Colonization & The Post-Transactional Economy

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Image: NASA

“How is this even a business?” my late father asked when I described a notional model for human space colonization. “How are you going to make money? What product are you going to sell?”

Admittedly the model — developing a swarm of self-replicating , self-repairing decentralized, solar-powered construction automata and using them to mine asteroids and produce more such automata as well as habitable colonies— is not monetizable in the same fashion that building a picture-sharing smartphone app, or social network, or web search engine is.

And although there are ways to monetize space colonization — it is, essentially, a very extreme kind of full-stack real estate development — I think my father hit upon the fact that this kind of venture is of a fundamentally different nature to the modern economy as it exists on Earth today.

And the more I think about this kind of economic development, the more fascinating I find it.

I would never have started thinking about this process if it wasn’t for the Moore’s Law-style cheapening of solar energy and the accelerating development of robotics and AI. We are heading toward a world where plentiful solar energy is very cheap to capture, cheap to store thanks to breakthrough in batteries, and where advanced computing and robotics technologies give us very many options in terms of what to do with that energy.

I believe that aside from ending global poverty and hunger (which are already falling at very rapid rates) and powering complex virtual reality simulations, space exploration and colonization will form a very major aspect of what we do with our newfound energy inheritance.

Why? Well, consider that enough energy from the Sun hits the Earth in an hour than we use in a year. Then consider that only 0.000000045292 percent of the Sun’s energy hits the Earth. There’s a whole lot of energy up there, radiating out into space. Energy we could do useful things with. And that’s just one star.

Then consider the fact that natural resources on Earth such as water, hydrocarbons and metals exist in very finite quantities. There are vastly more of all of these things up in space.

Finally, consider the dangers of not colonizing space. A one-planet species is a very endangered species. One global cataclysm — like a nuclear war, or asteroid strike, or pandemic bug — could wipe us out. Colonizing space would remediate this problem.

So, what is going to change?

At the most basic level, economics all boils down to physics. As humans our behaviour is circumscribed by physical limitations, and physical needs and wants.

We use markets and monetary systems as means to efficiently satisfy needs and wants given the finite resources that are currently accessible. Markets work by matching willing buyers and willing sellers, simultaneously allowing the buyers to get the most they can given the sellers’ needs, and allowing the sellers to get the most they can given the buyer’s needs.

We bring new resources into the orbit of the economy via human labour, which is a finite resource subject to feeding, clothing, housing, transporting, educating. Human labour is subject to tiredness, and emotions, and competing desires, and quitting the job and finding another better paying or less tiring one, and all kinds of things. Satisfying these needs requires the development of a highly fungible medium of exchange, such as money to coordinate all of these complexities.

Replacing human labour with automated labour removes many of these complexities and replaces them with a simpler framework altogether: the cost of energy. The more automated a system becomes, the less important the flow of a fungible medium of exchange becomes. Access to sustainable and replenishable sources of energy — to run the robots, drones, AI and other such automata — becomes the key determinant factor. This is a whole new post-transactional economy.

Obviously money will remain an essential factor for coordination in inter-human economic relations. But for highly-automated ventures — particularly those operating in space, where there is currently no such thing as the rule of law, no easy access to subcontractors, and plentiful natural resources in asteroids, moons, planets, and solar energy, and so forth — it is more of a case of capturing resources and deploying them as needed, at least at the frontier where there is no clear system of property ownership beyond the law of the jungle. And space — unlike Earth — is a huge and endless frontier.

This kind of development, of course, is only really possible given very high levels of technology and massive economies of scale and given massive pre-existing resources. You need to have control of a swarm of highly-developed robots in the first place to be able to get to the stage where they can become self-replenishing and self-perpetuating (so long as they can gain access to energy). And you need highly efficient energy capturing technologies (like nuclear fusion or high-efficiency photovoltaic cells) to keep your EROEI ratio positive.

But once you have these things (all of which are gradually coming to fruition) it becomes plausible to ride the swarm all the way up until you have constructed a Dyson sphere around the Sun. And once you have a single Dyson sphere capturing the entirety of the Sun’s energy output, sending new swarms out to other stars to repeat the process seems just a matter of hitting the repeat button.

Of course, I expect arms races will reduce the efficiency of any such process. The potential gains from expansion into space in terms of power and reach and resources are so massive that many different actors will want to get a piece of the action, and grab what they can get. I would be surprised if many of the huge gains in resources we get from colonizing space aren’t wasted on endless warfare between different groups and ideologies.

But that has been a major pattern throughout human history. And we have made it a long way already.

 

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Drone Strikes Against Alleged Terrorists Are An Abandonment Of The Rule Of Law

Watchkeeper UAV first flight in UK at MoD Aberporth. 14th April 2010.

I have no doubt that the vast majority of British people will support David Cameron’s decision to blow to smithereens two British jihadis fighting with the self-proclaimed Islamic State who were allegedly involved in planning and directing terrorist attacks on the UK, just as the vast majority of Americans support Obama doing similar things. I don’t think the Conservative government will harm its popularity in assassinating these people. The opposite, in fact, or as The Sun put it “Wham! Bam! Thank You Cam”

Going to Syria to fight with the Islamic State is seen as a form of treason: by aligning with a group directly and specifically hostile to the UK, these people (it is being argued) have effectively redesignated themselves as enemy combatants. In those terms, this was simply a mundane act of counterterrorism: the British state suspected an enemy force of plotting death and destruction upon the British people, and neutralized the threat.

At the same time, and while I am no legal expert, I see these killings as an abandonment of the rule of law, which I see as an essential and foundational component of Western civilization tracing back to Aristotle who wrote that: “law should govern”.

The UK government is not trying to argue that this was an act of war, per se. After all, the UK is not at present at war in Syria. Parliament voted against it in 2013. The UK government is trying to argue that there was “no other way” of stopping the attacks they suspected that the targets were plotting, much the same as if you walk into an airport with a gun and start shooting people, you should not be surprised if you are shot dead by an officer of the law in response. And that would be true with a gunman in an airport or shopping centre. But how can it be true of militants thousands of miles away from the UK? They might have been in contact with individuals in the UK who were planning on physically carrying out the attacks. But surely the people who were the imminent threat to the UK were the ones in the UK, not Syria? And nobody in the UK was as far as I can tell apprehended in the course of the act of carrying out an attack. What made the people in Syria such an imminent threat that they had to be killed instead of put on trial for their alleged crimes as anyone else would be?

I don’t think it is anything like as simple as saying that travelling to Syria, and joining the Islamic State should trigger a suspension of the rule of law. The British government is not by itself the law. Nor is The Sun newspaper, nor the man or woman down the pub. The British legal system is the law in the UK, and if someone is suspected of terrorist offences the only way to determine beyond reasonable doubt that they are guilty and establish a sentence is to put them on trial in front of a jury of their peers.

Obviously, Britain has no extradition treaty with the Islamic State. There was no simple and clear cut way to put these people on trial for their alleged crimes. I don’t have a brilliant plan to do it. But killing them outright makes it completely impossible to establish guilt and sentence in front of a court of law in accordance with the rule of law. It does not turn the wheels of justice. A trial may not be necessary for The Sun and The Daily Mail. But it is necessary for upholding the rule of law.

This, ultimately, is a very major element in what separates civilized countries from chaotic and despotic places like the Islamic State, where extrajudicial killing is rampant. If we abandon it, we are abandoning the principles of our own civilization.

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Is China’s economy headed for a crash?

In his assessment of the global economy’s performance 2013, legendary financier George Soros warned of dangers in the Chinese economy:

The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.

That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35 percent of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing.

There are some eerie resemblances with the financial conditions that prevailed in the U.S. in the years preceding the crash of 2008. [Project Syndicate]

That, as William Pesek notes, is a rather ominous conclusion. So is China due a crash?

Read More At TheWeek.com

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Israel and Russia At Odds Over Syria

Syria-articleLarge-v2

Times of global economic disruption or depression have often historically been preludes to war. So too have been periods of geopolitical instability, where new economic powers are rising, and old ones falling. Back in 2008 the United States’ tenture as the sole global superpower appeared to be endangered, and we appeared to be on the cusp of a new multipolar world order.  And at the same time a new demand-side depression bearing some eerily similar characteristics to the Great Depression surfaced. So — even though we were sitting on the back of a huge trend of decreasing war and violence — I was to a small degree worried that this slump might be a prelude to another global conflict.

Luckily — with the exception of a few skirmishes in the middle east following the Arab spring — no such wide-scale global conflict has broken out. The forces of peace have kept the forces of war and chaos mostly at bay. No direct war between the great powers has broken out. Given the high level of trade interdependency and global economic integration that now exists — factors which play a great role in discouraging conflict — that is very good news. Avoiding a new global conflict should be a top priority for policymakers, corporations, and individuals worldwide.

Hopefully, then, the latest friction in the middle east — this time between Israel and Russia — will amount to nothing:

 Israel’s defense chief said Tuesday a Russian plan to supply sophisticated anti-aircraft missiles to Syriawas a “threat” and signaled that Israel is prepared to use force to stop the delivery.

The warning by Defense Minister Moshe Yaalon ratcheted up tensions with Moscow over the planned sale of S-300 air-defense missiles to Syria. Earlier in the day, a top Russian official said his government remained committed to the deal.

Israel has been lobbying Moscow to halt the sale, fearing the missiles would upset the balance of power in the region and could slip into the hands of hostile groups, including the Lebanese militia Hezbollah, a close ally of the Syrian regime.

Israel has carried out several airstrikes in Syria in recent months that are believed to have destroyed weapons shipments bound for Hezbollah. Israel has not confirmed carrying out the attacks.

The delivery of the Russian missiles to Syria could limit the Israeli air force’s ability to act. It is not clear whether Israeli warplanes entered Syrian airspace in these attacks.

Attacking Syrian bases and weaponry is one thing. Attacking Russian attempts to aid the Syrian government is quite another — and could very easily have dark consequences. Perhaps Russian interests in Syria — including their naval base there — are a lost cause. Perhaps Russian attempts to help the Syrian government are misguided. And perhaps Western attempts to aid the Syrian rebels — who  have some have affiliations with al-Qaeda and radical Islamism, and who have reportedly used chemical weapons — overthrow Assad are even more misguided and even more dangerous. Neither side can really claim the moral high ground in what is effectively a proxy war between the Russian-backed government and Western-backed rebels. Both sides have committed atrocities and killed civilians and journalists. All that has been achieved is massive disruption to millions of ordinary Syrians who have had to flee the country.

Ideally, a peace based around compromise, power-sharing  and democracy can be brokered by the UN Security Council to avoid any further escalation. But unfortunately, both the Russians and the West are continuing to provide material support to their favoured sides. That has been bad for the Syrian people, whose country lies ruined and abandoned and while they now populate refugee camps in Jordan, Lebanon, Turkey and Egypt. But it could even worse for the region and the world with further escalation.

Hopefully, there will be no escalation. Hopefully, the Syrian Civil War will wind down to a stalemate, peace terms will be brokered and the refugees will be able to go home. Hopefully the great powers who have so far allowed this proxy war to continue will realise that fighting a proxy war in Syria is a very dangerous thing. The likeliest outcome is that the forces of inertia, peace and economic development will triumph over the forces of chaos. But this is not assured so long as this dangerous proxy war goes on.

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Why Europe Is Still In Peril, In Two Charts

A lot of analysts, including myself, have given the European situation a rest since last year. There were certainly some signs that the ECB and IMF had slowed (if not stopped) the deterioration by providing liquidity backstops to the addled banking system. But perhaps that was just the calm before the storm.

In truth, things were still was probably just as perilous as ever up until yesterday when the ECB and IMF decided to start a banking panic by enforcing a haircut of up to 10% on bank depositors. That was literally the stupidest thing that anyone has done since the Euro crisis began, and while it may not lead to utter disaster, there is a significant chance that it will. Not only is it excruciatingly unjust (it’s theft!), it is also incredibly suicidal. Many, many Spaniards, Italians, Greeks and Portuguese will have looked at the Cyprus haircut in horror, and wondered “Am I next?” Some of those will withdraw their money from the bank and stuff it in a mattress or into tangible assets, furthering stressing the already-fragile and highly-leveraged European banking system. Even a 1% drop in European deposits would lead to over €100 billion of withdrawals.

The background to this is soaring European unemployment:

EuroUnemployment

The people running the European financial system and engineering the bailouts and austerity (ECB, EU, IMF, Germany) have ploughed on through with more and deeper austerity even as European countries (other, of course, than Germany) have run up to higher and higher unemployment levels. Spain and Greece are above 25%. Italy is above 10%, and Portugal above 15%. Hiking taxes and cutting spending is leading to more and more people in unemployment oblivion. That isn’t healthy. Let’s not forget what happened to Germany the last time when over 25% of its people found themselves unemployed:

Chart-German-Unemployment-and-Nazi-Links

If bank runs materialise across Europe next week, the unemployment situation is most likely to worsen even further. If that happens, expect more and more unemployed, underemployed and angry Europeans to start voting for increasingly radical political parties. This is suicidal. Europe needs to not only reverse the awful, stupid Cypriot haircut, but also to put fiscal consolidation on hold (it has, lest we forget, so far been counterproductive) and start worrying about unemployment levels.

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Kim Jong-Un: Crazy, or Crazy Like a Fox?

This undated picture released by North K

It pains me to say this, but I think that today for the first time since the breakup of the Soviet Union in 1991 (a great year for music, as well as geopolitics) we have a greater than 10% chance of a nuclear war this year.

---EDITORS NOTE--- RESTRICTED TO EDITORI

Why? Well an unpredictable leader of a poor and desperate nation has ripped up the fragile armistice that ended the Korean War, and  is literally threatening pre-emptive nuclear war in language more often seen in cliched B-movies:

If we push the button missiles will turn Washington, the stronghold of American imperialists, and the nest of evil, into a sea of fire.

While estimates of North Korea’s nuclear capabilities remain low, meaning that it is highly likely that any nuclear attack on South Korea or Japan or America would be intercepted and retaliated — and while the United States remains totally dismissive of North Korea’s threats — the fact that the global intelligence communities got Iraq so devastatingly wrong is worrying. What if our estimates of North Korea’s nuclear capabilities are equally wrong, but in the other direction?

Is it possible that Kim Jong-Un has some cards up his sleeve, or are his threats just the ravings of a madman? For example, most American estimates of North Korean nuclear capability focus on the limited range of their intercontinental ballistic missiles. But what about the possibility that they could have already placed nuclear devices in the United States as an insurance policy against future events? After all, if it is possible that drug cartels can successfully ship billions of dollars of drugs through the porous US-Mexican border, is it not possible that other contraband could have been shipped through including North Korean bombs? (One problem with this theory, however, may be that North Korea may have great difficulty maintaining an external intelligence network, as North Koreans tend to defect at any opportunity they get)

And could North Korea have armed Iran as an insurance policy? After all, recent reports suggest that Iranian officials have apparently been present for recent North Korean nuclear tests. While Iran’s own nuclear program is a totally unsuited to the manufacture of nuclear weapons, and while there is no evidence that Iran is pursuing nuclear weapons, it stands to reason how both nations might be prepared to share resources as an insurance policy against common enemies.

However, it seems extremely unlikely that any North Korean insurance policy could prevent its destruction if it chose to attack the United States, Korea, or Japan, especially with nuclear weapons. Yes, it may be possible for them to cause damage especially on the Korean peninsula, and perhaps even on the North American continent, but this will probably be limited by the United States’ overwhelming force. And even if Kim Jong-Un is totally irrational and prepared to die in a storm of hellfire, it seems unlikely that the North Korean military structure will just let that happen. While I am no expert on the inner workings of the North Korean military, for reasons of rational self-preservation, it seems more likely that Kim Jong-Un would be removed by military coup — or perhaps even by China — before a unilateral pre-emptive nuclear strike on South Korea, Japan or the United States was carried out.

Nonetheless, the United States may wish to change direction. It is clear that sanctions have failed both in preventing North Korea acquiring nuclear weapons, and in easing the suffering of the starving and impoverished North Korean people. Given the huge potential costs of a nuclear skirmish in East Asia (specifically, potential loss of economic activity in Korea, Japan and China — three of the largest economies in the world) perhaps the United States and South Korea should consider carrots instead of sticks — offering large-scale business investment, technology, amnesty and support in exchange for North Korea giving up its nuclear arsenal and moving away from belligerence.

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Explaining The WTI-Brent Spread Divergence

Something totally bizarre has happened in the last three years. Oil in America has become much, much cheaper than oil in Europe. Oil in America is now almost $30 cheaper than oil in Europe.

This graph is the elephant in the room:

3 year brent spread

And this graph shows how truly historic a move this has been:

brent-WTI-spread

Why?

The ostensible reason for this is oversupply in America. That’s right — American oil companies have supposedly been producing much, much more than they can sell:

This is hilarious if prices weren`t so damn high, but despite a robust export market for finished products, crude oil is backing up all the way to Cushing, Oklahoma, and is only going to get worse in 2013.

Now that Enterprise Products Partners LLP has let the cat out of the bag that less than a month after expanding the Seaway pipeline capacity to 400,000 barrels per day, The Jones Creek terminal has storage capacity of 2.6 million barrels, and it is basically maxed out in available storage.

But there’s something fishy about this explanation. I don’t know for sure about the underlying causality — and it is not impossible that the oil companies are acting incompetently — but are we really supposed to believe that today’s oil conglomerates in America are so bad at managing their supply chain that they will oversupply the market to such an extent that oil sells at a 25% discount on the price in Europe? Even at an expanded capacity, is it really so hard for oil producers to shut down the pipeline, and clear inventories until the price rises so that they are at least not haemorrhaging such a huge chunk of potential profit on every barrel of oil they are selling? I mean, that’s what corporations do (or at least, what they’re supposed to do) — they manage the supply chain to maximise profit.

To me, this huge disparity seems like funny business. What could possibly be making US oil producers behave so ridiculously, massively non-competitively?

The answer could be government intervention. Let’s not forget that the National Resource Defence Preparedness Order gives the President and the Department of Homeland Security the authority to:

(c)  be prepared, in the event of a potential threat to the security of the United States, to take actions necessary to ensure the availability of adequate resources and production capability, including services and critical technology, for national defense requirements;

(d)  improve the efficiency and responsiveness of the domestic industrial base to support national defense requirements; and

(e)  foster cooperation between the defense and commercial sectors for research and development and for acquisition of materials, services, components, and equipment to enhance industrial base efficiency and responsiveness.

And the ability to:

(e)  The Secretary of each resource department, when necessary, shall make the finding required under section 101(b) of the Act, 50 U.S.C. App. 2071(b).  This finding shall be submitted for the President’s approval through the Assistant to the President and National Security Advisor and the Assistant to the President for Homeland Security and Counterterrorism.  Upon such approval, the Secretary of the resource department that made the finding may use the authority of section 101(a) of the Act, 50 U.S.C. App. 2071(a), to control the general distribution of any material (including applicable services) in the civilian market.

My intuition is that it is possible that oil companies may have been advised (or ordered) under the NDRP (or under the 1950 Defense Production Act) to keep some slack in the supply chain in case of a war, or other national or global emergency. This would provide a capacity buffer in addition to the Strategic Petroleum Reserve.

If that’s the case, the question we need to ask is what does the US government know that other governments don’t? Is this just a prudent measure to reduce the danger of a resource or energy shock, or does the US government have some specific information of a specific threat?

The other possible explanation, of course, is ridiculous incompetence on the part of US oil producers. Which, I suppose, is almost believable in the wake of Deepwater Horizon…

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America Loves Drone Strikes

This graph shows everything we need to know about the geopolitical reality of Predator Drones (coming soon to the skies of America to hunt down fugitives?).

The American public loves drone strikes:

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The American public does not approve of the extrajudicial killing of American citizens. But for everyone else, it’s open season.

But everyone else — most particularly and significantly, the countries in the Muslim world — largely hates and resents drone strikes.

And it is the Muslim world that produces the radicalised extremists who commit acts like 9/11, 7/7, the Madrid bombings, and the Bali bombings.  With this outpouring of contempt for America’s drone strikes, many analysts are coming to believe that Obama’s drone policy is now effectively a recruitment tool for al-Qaeda, the Taliban and similar groups:

2_Hands

Indeed, evidence is beginning to coalesce to suggest exactly this. PressTV recently noted:

The expanding drone war in Yemen, which often kills civilians, does in fact cause blowback and help al-Qaeda recruitment – as attested to by numerous Yemen experts, investigative reporting on the ground, polling, testimony from Yemen activists, and the actual fact that recent bungled terrorist attacks aimed at the U.S. have cited such drone attacks as motivating factors.

After another September drone strike that killed 13 civilians, a local Yemeni activist told CNN, “I would not be surprised if a hundred tribesmen joined the lines of al-Qaeda as a result of the latest drone mistake. This part of Yemen takes revenge very seriously.”

“Our entire village is angry at the government and the Americans,” a Yemeni villager named Mohammed told the Post. “If the Americans are responsible, I would have no choice but to sympathize with al-Qaeda because al-Qaeda is fighting America.”

Many in the U.S. intelligence community also believe the drone war is contributing to the al-Qaeda presence in Yemen. Robert Grenier, who headed the CIA’s counter-terrorism center and was previously a CIA station chief in Pakistan, told The Guardian in June that he is “very concerned about the creation of a larger terrorist safe haven in Yemen.”

“We have gone a long way down the road of creating a situation where we are creating more enemies than we are removing from the battlefield,” he said regarding drones in Yemen.

Iona Craig reports that civilian casualties from drone strikes “have emboldened al-Qaeda” and cites the reaction to the 2009 U.S. cruise missile attack on the village of al-Majala in Yemen that killed more than 40 civilians (including 21 children):

That one bombing radicalized the entire area,” Abdul Gh ani al-Iryani, a Yemeni political analyst, said. “All the men and boys from those families and tribes will have joined [al-Qaeda] to fight.

And al-Qaeda’s presence and support in Yemen has grown, not shrunk since the start of the targeted killing program:

Meanwhile Yemen Central Security Force commander Brig. Gen. Yahya Saleh, nephew of ousted president Ali Abdullah Saleh, told Abdul-Ahad that al-Qaeda has more followers, money, guns and territory then they did a year and a half ago.

All at a time when Yemen is facing a “catastrophic” food crisis, with at least 267,000 children facing life-threatening levels of malnutrition. Hunger has doubled since 2009, and the number of displaced civilians is about 500,000 and rising.

As U.S. drones drop bombs on south Yemen villages and AQAP provides displaced civilians with “free electricity, food and water,” tribes in the area are becoming increasingly sympathetic to AQAP.

Let’s be intellectually honest. If a country engages in a military program that carries out strikes that kill hundreds of civilians — many of whom having no connection whatever with terrorism or radicalism — that country is going to become increasingly hated. People in the countries targeted — those who may have lost friends, or family members — are going to plot revenge, and take revenge. That’s just how war works. It infuriates. It radicalises. It instils hatred.

The reality of Obama’s drone program is to create new generations of America-hating radicalised individuals, who may well go on to be the next Osama bin Laden, the next Ayman al-Zawahiri, the next Abu Musab al-Zarqawi. The reality for Obama’s drone program is that it is sowing the seeds for the next 9/11 — just as American intervention in the middle east sowed the seeds for the last, as Osama bin Laden readily admitted.

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Is War Coming Between China And Japan?

Last month, I looked at the legal implications of a conflict between China and Japan, concluding that the likelihood remains low, and that America would not be legally bound to defend Japan:

First of all, it is critical to note that the United States is not legally obligated under its with Japan treaty to intercede on Japan’s behalf. The treaty states that the United States is required to report any such event to the UN Security Council, instead:

Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes. Any such armed attack and all measures taken as a result thereof shall be immediately reported to the Security Council of the United Nations in accordance with the provisions of Article 51 of the Charter. Such measures shall be terminated when the Security Council has taken the measures necessary to restore and maintain international peace and security.

Very simply, this means that China can attack Japan without fearing an inevitable American retaliation. That fact alone makes a small skirmish fairly likely.

So what if China successfully captured the islands — and perhaps even more Japanese territory — as we can perhaps assume given China’s overwhelming size and military-spending advantages? Well, the United States and presumably the international community other than China’s allies would seek to diplomatically pressure China to stand down and reach a peaceful arbitrated resolution via the UN.

If China refused to stand down and accept a diplomatic solution — that is, if China was absolutely set on staring down the United States — then the United States would be forced to choose between providing military support to Japan — and possibly ultimately escalating up to a global war between China and her allies and the United States and her allies — or facing a humiliating climbdown, and accepting both Chinese sovereignty over the islands, as well as any other Japanese territory that China might have captured, as well as face the possibility of further Chinese incursions and expansionism in the Pacific in the future.

In the last day it has been reported that Chinese forces have been mobilising.

Mobilising

A report out of China by NTDTV (in very broken English) notes:

February 3, Nan’an, Fujian Highway 308, artillery units practical exercise for several days.

February 3 to 6, Fujian, Xiamen, Zhangzhou, Huzhou, a large troop movements, nearly 100 vehicles of various types of military vehicles, armored vehicles, artillery filled the entire road, endless, Xiamen and even the scene of a traffic jam 10 kilometers.

In addition, on February 3 in Shiyan, Hubei, a large number of tanks, wheeled military base from Shiyan room counties is delivered to the coastal areas. Many local residents of the tense situation of some concern.

Prior to this allegation, January 15 and 30, the Chinese navy guided missile frigate, twice the fire control radar lock frigates and ship-borne helicopters of the Japanese Maritime Self-Defense Force, is also considered to enter a combat state.

According to mainland media quoted the “People’s Daily” front-page article claiming that China will not change in point of view on the issue of the Diaoyu Islands , and have to prepare to win the war.

The international media alleged that China has purchased from Russia 239 engine, used in the manufacture of the H-6K. Combat covering the Diaoyu Islands, in this model, the engine can also be used to manufacture transported -20 transport aircraft purchased.

If the engine assembled, will greatly enhance China’s military power.

This may turn out to be much ado about nothing, propaganda released to make a hullabaloo. With China gradually growing relatively stronger, and the United States and her allies growing relatively weaker, China on the surface may seem to have very little incentive to do much other than wait. But with global economic conditions worsening, and both China and Japan becoming more fierce in their rhetoric, it becomes likelier and likelier that China may choose to project its economic problems outward by starting a hot war. Most importantly, with the United States not committed to materially defend Japan, it appears to me like China may see this as a golden opportunity to impose itself on the region, to humiliate the already overstretched United States, and make a statement by pushing Japan out of the islands, or perhaps even by going postal and invading other Japanese islands or even Taiwan. With the world dependent on goods and components produced and assembled in China, China already has a lot of leverage to push the rest of the world into accepting a Chinese-dominated regional order.

Still I would say that by far the most rational course for China is to not start a war. But if China starts, it becomes increasingly likely that the United States will respond.

Governments around the globe are advised to remember that while war may increase GDP, and while it may lower unemployment, it destroys an unquantifiably larger amount of real wealth — lives, businesses, physical capital, social capital.

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Could America Get Sucked Into a China-Japan Conflict?

So China and Japan are both threatening conflict in their fairly brutal ongoing argument over a few tiny disputed islands (and their mineral rights):

Senkaku islands

With global growth slowing, both countries’ leaders might look to a war as a way to distract from economic woe. While a limited war between China and Japan over the islands — perhaps of the scale of the Falkland War between Britain and Argentina in the 1980s — would be unsettling for the global economy, the real question is whether or not such a conflict could spiral into something bigger. 

The first critical point to note is that both countries’ leadership are increasingly hawkish in tone and character. China is in many ways seeking to establish itself on the world stage as a global military and economic powerhouse. Countries seeking to establish themselves on the global stage have traditionally sought out conflict. Japan is an ideal candidate for Chinese hostility. There is a lot of resentment — Japan’s invasion and occupation of Manchuria was brutal, and filled with war crimes (war crimes that the Japanese continue to deny). But more than that, Japan is an American protectorate, dotted with American bases, and subject to a mutual defence treaty. If China is to eclipse the United States as a global superpower, China must be able to show that she can impose her will on America.

And Shinzo Abe, Japan’s new Prime Minister has made it his life’s work to change Japan’s pacifistic constitution. Japan is faced with a twenty year economic depression, falling birthrates, a population of “herbivore” males with an aversion to sexuality. Abe may see hostility against China as a gateway to greater nationalism, and greater nationalistic fervour as a gateway to a national recovery.

First of all, it is critical to note that the United States is not legally obligated under its with Japan treaty to intercede on Japan’s behalf. The treaty states that the United States is required to report any such event to the UN Security Council, instead:

Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes. Any such armed attack and all measures taken as a result thereof shall be immediately reported to the Security Council of the United Nations in accordance with the provisions of Article 51 of the Charter. Such measures shall be terminated when the Security Council has taken the measures necessary to restore and maintain international peace and security.

Very simply, this means that China can attack Japan without fearing an inevitable American retaliation. That fact alone makes a small skirmish fairly likely.

So what if China successfully captured the islands — and perhaps even more Japanese territory — as we can perhaps assume given China’s overwhelming size and military-spending advantages? Well, the United States and presumably the international community other than China’s allies would seek to diplomatically pressure China to stand down and reach a peaceful arbitrated resolution via the UN.

If China refused to stand down and accept a diplomatic solution — that is, if China was absolutely set on staring down the United States — then the United States would be forced to choose between providing military support to Japan — and possibly ultimately escalating up to a global war between China and her allies and the United States and her allies — or facing a humiliating climbdown, and accepting both Chinese sovereignty over the islands, as well as any other Japanese territory that China might have captured, as well as face the possibility of further Chinese incursions and expansionism in the Pacific in the future.

Who will blink first is uncertain. Only the Chinese really know how strong they are, how far they are willing to push, and how much of their threats are a bluff.

On the other hand, as I wrote last year:

The relationship between China and the United States today is superficially similar to that between Great Britain and Germany in 1914. Germany and China — the rising industrial behemoths, fiercely nationalistic and determined to establish themselves and their currencies on the world stage. Great Britain and the United States  — the overstretched global superpowers intent on retaining their primacy and reserve currency status even in spite of huge and growing debt and military overstretch.

Mutually assured destruction can only act as a check on expansionism if it is credible. So far, no nation has really tested this credibility.

Nuclear-armed powers have already engaged in proxy wars, such as Vietnam. How far can the limits be pushed? Would the United States launch a first-strike on China if China were to invade and occupy Taiwan or Japan, for example? Would the United States try to launch a counter-invasion? Or would they back down? Launching a first-strike is highly unlikely in all cases — mutually assured destruction will remain an effective deterrent to nuclear war. But perhaps not to conventional war and territorial expansionism.

The chance of global war in the near-term remains very low. But so long as China and Japan continue their antagonism, the chance of global war in the long-term is rising.