Balaji: The collapse in state capacity has not been priced in
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The USD's prominence in world trade goes beyond what the US is doing, let alone with that US federal government is doing. And moribund governments have been demonstrated to old on for centuries. Unwinding a system where small states have worked hard to hoard US reserves for stability will take a while to happen.
In other matters, the incompetence of the US is absolutely priced in already, like budgets for public transit :/.
Also Afghanistan is a simmering 20 year old failure. The fact that the kleptocracy we propped up was completely unstable to stand on its own two feet is more reason to exit, not less. Yes, recognizing that fact rather than partaking in more fantasy land is stupid, but expected for our incompetent money-guzzling military who didn't want to leave, but couldn't face its own shame in arguing we had to leave more slowly because we had failed so miserably.
Nice strawman. Leaving Afghanistan (to fail) has been a long time coming. Obama wanted to do it, Trump wanted to do it, Biden decided to pull/had to pull/tripped over the cord.
The massive failure here isn't the fall of Afghanistan, it's the botched evacuation attempt. Even Balaji says: "Afganistan exit".. Leaving weapons and people to fall into enemy hands? I mean, come on...
The arrogance of Americans to think their invasion would succeed where previous invasions and native reformers had failed is staggering. Even if America were to fight for reform for forty years, as Zahir Shah did, why should anybody believe it would make a lasting difference? 20 years made no lasting difference, and another 20 wouldn't either. You can suppress afghani tribesmen, you can send their children to universities and crush those who openly oppose you, but as soon as you leave (and you will eventually leave) they will go right back to the way they prefer to live. This has been demonstrated again and again.
> Leaving Afghanistan (to fail) has been a long time coming. Obama wanted to do it, Trump wanted to do it, Biden decided to pull/had to pull/tripped over the cord.
I don't think blaming the failure on Obama, Trump, or Biden is fair. Even blaming the failure on the way Bush handled the invasion after it began is unfair, since I think it was doomed to fail from the very moment of conception. I don't think it ever stood a chance of working in the first place.
Anyway, if you'd like to know more, there are interesting parallels between the Taliban's resurgence in the past few days, and the rise of the Saqqawists during the Afghan Civil War in the 1920s. Amanullah Khan's government and armed forces were struggling against a rebellion of tribal forces (the Shinwari) who opposed Amanullah's attempts at reform, particularly wrt the status of women. When Amanullah's forces were preoccupied with fighting the Shinwari, the Saqqawists used that opportunity to attack Kabul, which Amanullah's forces surrendered to the Saqqawists with almost no fight (sound familiar?)
The retreat itself was a massive failure, and that's to (at least partially) blame on the current leadership.
The Military wanted us to believe that "just a few more years" would prop up the regime, so they cannot come clean saying we cannot pull out without a proper evacuation because that would undermine the "just a few more years" argument.
Yes, that's the problem.
> The retreat itself was a massive failure
The retreat was a massive failure as a direct consequence of the occupation being so massive of a failure that the previous administration freed a Taliban leader for the express purpose of signing a surrender to the Taliban, and that the Afghan government and Army, unlike their South Vietnamese equivalents that stood and fought for years after the general US withdrawal and even as the PAVN fought into Saigon, collapsed swiftly, with the President fleeing the country and the army offering no resistance to the Taliban.
The idea that you can separate them is nonsense propagated by people still in denial about the totality of the failure of the occupation.
But the COVID failure was much more important, visible and pretty stark. The US had ample time and warning from european countries to show some real leadership. They should have gone with what Australia did, and the rest of the developed world would follow their example. Instead it was a string of bad advice that makes one wonder what will happen in the next pandemic.
But re COVID people were already forgetting how stupid we were simply because we bought more vaccines. Now the Delta paranoia is putting other things back in the spotlight, but I suspect that won't last either.
COVID, on the other hand is apocalyptic in the original greek sense of the word (revealing something that was hidden under the surface): It's revealed huge problems in the US not the least of which is an epistemic gap that seems unbridgeable.
We haven’t had a balanced budget, our public projects are delayed and 2-3x over the estimate, the US military has been inept in most conflicts, federal agencies have failed to regulate the powerful and connected.
But the machine marches on, because everywhere else the problems are equal or worse at US scale. China hides its domestic issues much better giving this illusion that the US is crumbling. The hints we get when Jack Ma disappears from public life or the party now speaks of income inequality should tell you under the surface there’s turmoil.
Yes. Ever since we deurbanized (suburbanized) and kneecapped our fledgling administrative state we've been incompetent.
> Our public projects are delayed and 2-3x over the estimate, the US military has been inept in most conflicts, federal agencies have failed to regulate the powerful and connected.
Yup.
> We haven’t had a balanced budget
Please don't drag that into it. The way we run our fiat currency means there is nearly net 0 dollar. Every surplus is someone else's deficit.
> But the machine marches on, because everywhere else the problems are equal or worse at US scale.
Nope
> China hides its domestic issues much better giving this illusion that the US is crumbling.
China certianly has issues, but also has somewhat better state capacity than us. Yes people fear-think China has the best state capacity and that is not true.
> The hints we get when Jack Ma disappears from public life or the party now speaks of income inequality should tell you under the surface there’s turmoil.
Dissapearing Jack Ma is not an indicator of failure, even if you personally don't like it. Income inequality is objectively more worrisome, as it prevents domestic demand, but things including the former (hah!) can be employed to manage the latter.
There is a ton of literature on why running deficits is not a problem and in fact good in many situations. Rather than try to summarize all that, I instead flipped the question to point out that not running deficits means more than it might sound like.
China - too much government control, communist and not of the people
EU - aging and brexited, too many factions
UK - Strong institutions but inconsequential small island nation
Japan - aging
Aus/Canada - too small population to do anything
Russia - untrustworthy
India - still too poor but perhaps the only democratic country with a large enough population to counter the US dominance. But India and US appear to be very friendly to each other.
I'm with you that the USA isn't going to collapse tomorrow but we do need to rediscover how to build actual physical things.
The investment class has milked the system for as much as I could, but now a major realignment is underway. I hope we can avoid repeating the horrors of the French revolution along the way.
Hundreds of years slow, steady decline. Stewardship gripped by ineptitude and kleptocracy. Even its brightest citizens being wholly unequal to the task of building the physical and systemic structures, (or even fixing the existing structures), necessary to save itself. "Warlords" growing too wealthy on the body of the golden goose during the decline to ever allow its head to be chopped off. In the end no one even cared enough to chop the western roman emperor's head off. Odoacer just sent him away and said, "your services will no longer be needed". (Translation: All the money we could steal from your treasury is now gone. Go home.)
I guess Romulus was still kind of young? So I suppose he could still use the whole, "I used to be emperor of Rome" thing to impress girls at parties maybe?
In any case, that's the most likely end awaiting the US. Another possibility is a break, like the Western-Eastern Roman Empire split. In which case, the same sad slow decline style end would happen. Only it would probably happen in each of the multiple resultant political entities instead of happening in only one.
Workers always asked for more. What changed was leverage. Trust me, at some point in the future the leverage will be lost for whatever reason. People will still ask for raises but may or may not get them.
I don't know, but I'm kind of skeptical of this. I find with a lot of crypto folks, the line between predicting state collapse and rooting for state collapse gets kind of blurred. Similar to gold bugs: if your favorite asset would benefit from the downfall of state power, it seems you start to see signs of it everywhere that other people don't really see.
Lol. The Afghanistan exit is a "must-win episode"?
There are now shortages in many areas, and they persist for longer periods. There's been an aluminum shortage for a year now. “It was the confluence of a concentrated industry, a sudden spike in demand, and then difficulty importing cans that resulted in a shortage.”[1] There's a semiconductor shortage, and it may last for years.[2] There's a steel shortage.[3] That cascades through the rest of manufacturing. Almost all manufactured products need steel, aluminum, or semiconductors.
Lots of reasons. Those areas are over-concentrated, with a small number of companies. Companies cut way back at the beginning of the epidemic. They assumed that they could lay off workers and not have trouble getting them back later. Too much dependence on imports made this a worldwide problem. There's a shipping capacity shortage, too, which broke supply chains.
There's a more general problem. A free market minimizes some costs at the expense of supply and price stability. Think about that.
[1] https://www.wbay.com/2020/09/16/national-aluminum-shortage-h...
[2] https://www.barrons.com/articles/chip-shortage-auto-stocks-5...
[3] https://www.cnn.com/2021/05/06/investing/steel-shortage-stoc...
That's not even moving the goal post, that's just changing the entire subject. "This" isn't real, since "this", he claims without any evidence, is specifically a failure of state capacity. [1]
Those who do have pricing influence are riding the wave for short-term gains (e.g. M&A), or washing their hands of the whole mess and leaving it for someone else to clean up (e.g. becoming NZ citizens).
But more likely it will be the inability of US capitalism to adapt to a remote world. Too much money invested in real estate and tied to bringing immigrants to the US. Too hard to milk cheap countries when workers aren't tied to US soil. I think US companies highly underestimate the impact of remote work, and that the rest of the world is, by necessity, already more adapted to it.
Another will be the inability of US to create new culture. Hollywood is already stagnated since 15 years ago. Internet culture is too juvenile and hysterical to matter.
As for the dollar, it will find real competition when the US bans cryptocoins. With the speculation and winner-picking out of the way, there is already a number of countries that can build their economies around it despite of (and to spite) the US (iran/russia venezuela et al)
What are you basing this off of? American companies are going remote en masse and my anecdotal evidence suggests nearly every company made the transition to remote during the pandemic (and may have switched back afterwards).
American companies are really good at adapting because they’re not legally required to tiptoe around workers’ rights like in England where unions reign supreme (not saying unions are a bad or a good thing). Also workers are tied to US soil by virtue of the incredibly expensive permits you need on each foreign worker that makes offshoring infeasible for all but the largest companies.
> the incredibly expensive permits you need on each foreign worker
yeah that is one disadvantage of being based in the US. Another is that even if they outsource, these workers aren't like the low-skill work that they outsourced in china in the past.
In any case, it 's just speculation since we re speculating
This seems like a non-sequitur. What would the underlying cause even be, a sudden outbreak of incompetence, in every area where the US government operates?
I think there's potential for confirmation bias here because the US's "state capacity" was never that impressive in the first place. You can point to "power, water, fire, public health, public schools, public safety", see problems, and characterize it as a "collapse". But these areas were problematic long before the COVID-19 pandemic or US involvement in Afghanistan.
"Both covid and the taliban can be considered diffuse/decentralised problems the centralised state could not handle."
The United States is not a good example of a centralized state. Look at China instead.
"What are the big physical world areas where we may see even more issues with state capacity?"
I think the one that's been most underreported and affects all this is money management. This is pretty clear in wars, but also domestically. The federal and state government has been defrauded for a large portion of the money it has been spending on unemployment benefits and small business loans.
It has an incentive to underreport these because it's hard to verify, and it makes them look bad, and they are the only ones with the accounting information.
But we're slowly finding out that it's been trivially easy for foreign actors and low-tier criminals to each steal millions or hundreds of thousands from states and federal programs.
Ask your parents and grandparents what type of failures of the state they have survived.
It is clear that we cannot always trust entities, private or public, to deliver the things we would like to pay for.
Therefore, it is time for humans to once again grow their own food, make their own furniture, and having a fleet of robots that can do this autonomously would be great. Like Roomba but better.
To the victor the spoils!
Whether or not a global reduction in available services is coming, it might be wise to stock up some things now that will become scarce in the future.