There’s a very interesting post at Russia Matters on whether the member republics of the USSR are better off now than they were before the USSR collapsed. TL;DR version: they’re considerably better off now by practically every measure but by and large the people in those countries believe they were better off then, including in places like Ukraine and Belarus. That suggests that getting the band back together may actually be easier than I thought.

Interestingly, the population in all of those countries is basically flat—not growing but not collapsing, either.

Today George Friedman of Geopolitical Futures commented on what is variously being called a “treaty proposal”, “ultimatum”, and “manifesto”. After articulating a number of the points about Russian interests I have been making here, he delves into the proposal in earnest:

The document is targeted at NATO. The key clause is Article 5: “The Parties shall refrain from deploying their armed forces and armaments, including in the framework of international organizations, military alliances or coalitions, in the areas where such deployment could be perceived by the other Party as a threat to its national security, with the exception of such deployment within the national territories of the Parties.”

In other words, Russia is demanding the right to limit the deployment of U.S. troops in NATO countries if the Russians feel threatened by that deployment. The immediate effect would be that, while Poland could build its strength, the U.S. would have to withdraw from Poland if Russia felt threatened, which it says it does. Of course, if the Russian Federation reintegrated former Soviet territories within its political system, which I think is a possibility, then Russia would be freed from Article 5.

There are other clauses that guarantee the United States will reject the document. It is therefore an interesting question why the Russians crafted it. It may be designed as a negotiating platform, but it is too skewed to the Russian interest to be a workable platform for Washington. Another possibility is that it is for domestic Russian consumption, showing that Russia speaks to the U.S. as a powerful equal to be respected. Or it might be that after the Americans’ initial response to Russian threats – that their banking system would be hurt – the Russians read the U.S. as unwilling to respond in Ukraine.

The key from my point of view is that no one wants a war in Ukraine because it would be long and bloody, and the geographic advantage would go to Russia. A proposal on the table, regardless of how preposterous, can give cautious nations an opportunity to capitulate while appearing to prefer a diplomatic course to irrational military responses. Much of Europe is unwilling to fight for Ukrainian independence. The United States, concerned with the free spread of Russian power through military force, might choose an intervention. This proposal might well be seen in Europe as a “basis of discussion,” limiting American options.

Maybe it’s an opening gambit in negotiations; maybe it’s an ultimatum intended to panic the United States. Mr. Friedman’s view is that President Putin had nothing to lose from the proposal and, possibly, something to gain.

I’m not as convinced of Russia’s military superiority to the U. S. as some but I do remain puzzled. I don’t understand what the U. S. interest in Ukraine is. I also hope that American diplomats start accepting that Russia has national interests it is unwilling to cede. You may not think they’re legitimate but the Russians definitely believe they are.

Gerald Baker’s most recent Wall Street Journal column is an indictment not just of Joe Biden’s presidency but his entire political career. Rather than dwell on that I want to focus on one section of it, starting with a quote from President Biden’s address to the nation on the occasion of the first anniversary of the lockdowns:

“Look, we know what we need to do to beat this virus,” he said: “Tell the truth. Follow the scientists and the science. Work together. Put trust and faith in our government to fulfill its most important function, which is protecting the American people.”

It was an instructive comment. There it was, every item of the progressive creed, every instinct of the liberal Democratic mind, laid bare:

Hubris: “We know what to do.” The unchallengeable authority of technocratic bureaucracy: “Follow the scientists.” The superior virtue of collectivism over individual enterprise: “Work together.”

Above all, that unerring belief in the capacity of government, which commands our “trust and faith.”

which is followed by a recital of the statistics on deaths due to COVID-19 which are hardly a validation of Mr. Biden’s confidence or, indeed, his competence.

The reality is that the pandemic and, I hasten to point out, the responses to the pandemic have shaken our confidence in all institutions, not just the federal government. The “supply chain” snarl that has resulted in long delays in getting all sorts of goods into the hands of consumers is a consequence of the normal workings of the market in a context of a global economy. Nothing beats the market, the actions of private producers and consumers, for producing goods and services at the equilibrium price but that process by its very nature wrings excess capacity out of the system. Consider the strain that the pandemic is placing on hospital beds. Here’s a snapshot of the sharp decrease in hospital beds in the U. S. over the last half century:

when adjusted for population it’s even more dramatic. Obviously, if you want slack capacity, don’t look to the workings of the market. Admittedly, other issues that have produced that result in hospital beds include consolidation, lack of competition, certificates of need, and other constraints on the unfettered workings of the market. There are, literally, thousands of such fetters and I doubt we will be eliminating them soon.

If you can’t depend on the federal, state, or local governments, and you can’t depend on private companies and the workings of the market, and you can’t depend on private benevolent organizations, what can you depend on? My answer is that they all have their roles to play and in Mr. Baker’s characterization, wise humility shows us the limitations of each.

The advice that Elizabeth Braw offers Ukraine in this piece at Foreign Policy strikes me as a bit lopsided. After describing Finland’s victory in the Winter War of 1939 she remarks:

Indeed, in the Winter War, the Finns demonstrated to the rest of the world that a small and militarily inferior country can thwart the ambitions of a large and militarily superior one. That demonstration should give Ukrainians courage as they, too, face the prospect of a winter war.

I think the emphasis should be on the preceding passage:

To be sure, throughout the Cold War, Finland was forced to maintain a delicate balance in its relations with the Soviet Union, one known to most of the world as Finlandization. Unlike its likewise neutral neighbor Sweden, Finland was not allowed to maintain auxiliary defense organizations, and its foreign policy was forced to pay more attention to Moscow’s will than Sweden or other Western European countries did.

Let me provide a little of the context missing from Ms. Braw’s article.

Finland was ceded to Russia as a duchy when Sweden lost its 1808-1809 war against Russia. It remained part of Russia for about a century. It never had a large population of ethnic Russians and the main interest the Russians had in it was as a buffer.

Ukraine in contrast has a large population of ethnic Russians, is itself almost entirely Slavic in population, and has been a part of Russia since the 18th century (arguably since the 17th century). It has only been “independent” since the 1950s. After the collapse of the Soviet Union Ukraine had a succession of freely-elected pro-Russian administrations. It wasn’t until after the coup a decade ago that an anti-Russian administration came to power in the Ukraine.

Whether that coup was instigated by Westerners is hotly debated. I think that the only obviously true thing is that the Russians couldn’t tolerate losing their Crimean port which is why they invaded and have occupied it ever since.

I think that Finlandization is the right course for Ukraine but what I mean by that is being cautious and wary of Russia which is staunchly opposed by Ukrainian nationalists. Also, although I understand Russia’s interests in Ukraine I have no idea what the U. S. interest in the country is other than poking a stick in the collective Russian eye.

Much of the opinion writing today has been about West Virginia Sen. Joe Manchin’s declaration yesterday that he couldn’t support “Build Back Better” in its present form. NYT and WaPo opinion writers by and large condemn Sen. Machin’s position on the grounds that it’s undemocratic which I find bizarre. As far as I can tell opinion on BBB is, to put it in the most favorable light, divided, with about half of voters supporting and half opposing it. Cf. Gallup, Ipsos, Morning Consult, Rasmussen.

I’ve seen one progressive commentator whose argument was this is what Democrats get for being moderate which struck me as strange. IMO the inability of the administration to enact BBB is due to a complete absence of what used to be normal bargaining in favor of a massive omnibus spending bill offered on a “take it or leave it basis”. It’s being left. IMO David Schor is right—the party should be breaking off the components of BBB that actually do have popular support and enacting them.

The counter-intuitive view of the WSJ editors is that Sen. Machin may just have saved the Democrats’ collective rear end by holding out for what are actually better policy positions.

As I’ve said before, I don’t think our present economic problem is that we’re not consuming enough. I think it’s that we’re not producing enough and BBB doesn’t do much to change that.

At Marginal Revolution Alex Tabarrok takes note of a study which has detected a major change—a decline of “thinking words”, supplanted by “feeling words”:

In texts, both fictional and non-fictional and in English and Spanish, thinking words relating to technology and social organization (experiment, gravity, weigh, cost, contract) become more common between 1850 and approximately 1977 (beginning of the great stagnation) but since then thinking words have declined markedly and feeling words relating to belief, spirituality, sapience, and intuition (e.g. forgiveness, heal, feel) have become more common.

The authors of the study attribute the change to the “failure of ‘neo-liberalism'” while Alex suggests that the women’s movement and the feminization of American culture might be a factor as well. I would suggest the following:

• Visualcy. When people stopped getting most of their news from newspapers and started getting it from television (now online). Visual media promote more agonistic modes of expression.
• The ascendancy of postmodernism in American tertiary education. The early 70s was the period of greatest influence of figures like Michel Foucault and Jacques Derrida.

I also wanted to draw your attention to this interview at the Wall Street Journal of logistics economist Philip Levy. Some interesting observations:

The typical transit time for a container in pre-pandemic days was 71 days, Mr. Levy says. That’s how long it took for a full container to depart from Shanghai; discharge in Los Angeles; proceed to a warehouse near, say, Chicago; get trucked empty back to California; and then return to Shanghai. The current transit time is 117 days or more. The greatest delays are in the U.S., owing to port bottlenecks and trucking shortages. The Los Angeles to Chicago leg, for instance, now takes 22 days, 12 more than before. It takes 33 days for the empty container to return to California, compared with 20 in the old days.

Not only does it take much longer to import goods, it’s also become eye-wateringly expensive. “Where it might have cost $1,500 to move a container across the Pacific,” Mr. Levy says, “you’re seeing them go for more like $15,000 per container.”

This surge in transport costs has hit lower-value goods hardest and made quick restocking all the more of a challenge. Mr. Levy talked to a company that sells office supplies. “They were moving a container whose contents were in the order of $15,000 in value. Well, if that now costs $15,000 to move, you have a problem, right?”

The pandemic is at the root of the supply-chain crisis. Covid-19 has led to work disruptions at factories and ports in China, with quarantines and shutdowns hitting the production and movement of goods. Mr. Levy cites the monthlong shutdown owing to Covid cases in May 2021 at the Chinese port of Yantian, which handles a third more volume than the Port of Los Angeles.

“It’s one of the major Chinese ports. And every time you shut down at one of those places, you’re interrupting the flow of containers.” Buildups and backlogs accumulate. “How do you ever work them down?” Ports have fixed capacity: “You can’t suddenly process twice or three times as many ships once a lockdown is lifted.”

Ninety percent of all exported goods move over the ocean. These include not only finished goods but also parts. “So even if you’re manufacturing in the U.S.,” Mr. Levy says, “the odds are you’re using some imported parts.”

Ports are built “so you can just meet peak demand.” It’s too expensive to build at excess capacity, “because then most of the time you’d have lots of extra stuff sitting around.” The peak season is August through November, “when it’s, ‘How do you stock store shelves for the holidays?’ ” The problem is that a system that can “barely handle” a normal peak season has seen “above peak demand for about an entire year and a half,” placing it under “a cumulative strain it wasn’t really built for.”

A major cause is what Mr. Levy calls “the defining economic characteristics of the pandemic.” There has been a “marked tilt” in buying behavior, a shift from services toward goods. “We still buy more services than goods, don’t get me wrong,” he says. But whereas U.S. consumers spent 69% of their money on services before the pandemic and 31% on goods, the breakdown now is more like 65% to 35%.

Nearly every bullet point highlighted in that interview highlights issues that can only be addressed by the government at one level or another. All U. S. ports are owned and operated by governments (one of the reasons I chuckle when people who should know better complain about socialism—we’re already plenty socialistic, they just don’t think of it that way). The reasons that we import so much to begin with is largely due to federal trade policy. And sustaining consumption during the pandemic which impelled the transition from services to goods was explicit government policy. It just had unforeseen consequences.

The remedy for bad government policies is not no government intervention. That’s wishful thinking like that old joke about “Get government hands off my Medicare!”. It’s better policies.

In a piece at The Hill Annelies Goger and Joseph W. Kane make a good point about the supply chain issues that are one component of the economic problems we’re facing. Our supply chain problems did not start with the pandemic but go back much farther:

Shippers and retailers would have been better able to cope with this year’s challenges if public and private leaders had not been so laser-focused on minimizing short-term costs such as labor and inventory. With supportive export-oriented policies and financial deregulation, companies have spent 30-plus years reducing warehousing space, subcontracting and outsourcing production, restructuring work arrangements to cut costs and delaying investments in transportation infrastructure.

In other words, we thoroughly starved the redundancy and agility out of these systems and dramatically increased our reliance on imports, because doing so delivered shareholder profits and “just-in-time” access to cheap goods — until the day our supply chains couldn’t deliver. So it is not surprising that we now face a broken system with no easy fix.

I entertained the possibility of going into a long digression at this point on how “dumping” by other countries, notably Japan, European countries, Taiwan, South Korea, and then China, combined with government inattention, industry consolidation, short-sighted management, labor unions, and ill-considered environmental laws have synergistically worked to cause one industry after another, starting with steel in the 1960s, to vacate our shores, setting the stage of supply chains that are otherwise hard to explain. Rather than that, I will only say that we can never expect American managers, whether in manufacturing or energy production and distribution or whatever to create the redundancy necessary to avoid bottlenecks in place in the absence of substantial government action. That will be fought tooth and nail by economists clinging bitterly to neoliberal doctrines about trade and anarcho-capitalists or minarchists who disapprove of most government action. If they have a plan for the private sector’s addressing the situation without prodding from the government, I’d like to hear it.

The editors of the Wall Street Journal react to recent statements from Russian President Vladimir Putin and the Russian Foreign Ministry about Ukraine:

On Friday the Kremlin made its demands public. The U.S. and Europe have delivered a mixed response so far and will have to do more to deter Vladimir Putin.

Moscow wants NATO to rule out eastward expansion and roll back military activity in a range of theaters, according to draft documents sent to the U.S. and allies this week. This would mean blocking Ukrainian accession to the alliance and effectively banning NATO forces from being stationed in member states like Poland, Estonia, Latvia and Lithuania.

“The line pursued by the United States and NATO over recent years to aggressively escalate the security situation is absolutely unacceptable and extremely dangerous,” a Russian foreign ministry official said, apparently without irony. “Washington and its NATO allies should immediately stop regular hostile actions against our country.”

Regarding “hostile actions,” Russia and Russian-backed forces invaded Georgia in 2008 and Ukraine in 2014. Both countries would like to join NATO but haven’t been granted membership. NATO has deployed token numbers of troops as a deterrent in the Baltic states and Poland, though only after Mr. Putin snatched Crimea in 2014.

Mr. Putin isn’t worried that Latvian troops will march on Moscow. His goal is Kremlin hegemony over Central and Eastern Europe, which have prospered under Western security and economic arrangements. His invasion threat is a power play to win concessions from Europe and the West such as President Biden’s decision in May to waive sanctions against the company behind the Nord Stream 2 gas pipeline from Russia to Germany.

It would be helpful if the editors had provided examples of the Russian aggression they see for two important reasons.

1. Russia is not the Soviet Union
2. The Soviet Union’s Warsaw Pact was a reaction to an invasion of its soil that killed 30 million Soviet citizens

Georgia and Ukraine? The Georgians and Ukrainians, egged on by encouragements from the West, were the aggressors in both instances. The impetus for both was offering NATO membership to the two countries.

No, the Russians aren’t afraid that Latvians will march on Moscow. They’re worried about the treatment of ethnic Russians in Latvia. Ethnic Russians constitute a quarter of the population of the country. Since the collapse of the Soviet Union there have been stepwise moves discriminating against ethnic Russians in Latvia. It is an element of Latvian nationalism. It’s not dissimilar to the treatment of Bretons in France. Many consider them not “really French”.

There are similar concerns about Ukraine and Georgia.

The question I would ask is whether adding the Baltic states to NATO improved U. S. security? I think it did the reverse. I can definitely see how it promoted the interests of Latvian, Estonian, and Lithuanian nationalists. Similarly, would adding Ukraine and Georgia to NATO improve U. S. security. I simply don’t see it. Something being opposed by the Russians does not necessarily make it in the U. S. interest.

To be perfectly clear I am not pro-Russian. I’m just not anti-Russian, I understand the Russians’ priorities and concerns, and I don’t see how alienating Russia advances American interests.