Hacker News Reader

Comment by mabbo | Hacker News Reader

While I doubt this war will trigger the end of globalization, perhaps it will end blind globalization. I can imagine a lot of countries are now asking which critical resources come from so few countries/places that a trade blockage from just one could cripple them.

Fertilizer is a good example. Oil for heating homes in winter, or energy generally. Food is an obvious one. I bet there are a lot more.

I don't think complete protectionism is the answer either, but I suspect there is a safer place between the two extremes that many countries will start to move towards.

View on HN

Safer for whom? A part of the security logic of neoliberal globalization, whatever it’s other flaws, is to force strategic interdependence between states specifically to make conflict an absolute last resort. Like I want Chinese dependence on foreign markets and I want EU dependence on Russian oil, because as soon as that economic codependency dries up, military intervention is now feasible as a response to crisis. The reason we’re not in a world war right now is because Europe must tread carefully and so must anyone who might align themselves with Russia for reasons that have nothing to do with the possibility of military force, which we all know is subject to uncertainty and an attractive prospect for leaders who like to gamble.

Interdependent trade was theorized to promote peace, but it was only ever a theory, and one that’s becoming increasingly outdated with each passing day that Russia remains in Ukraine. Certainly there are aspects of the concept that are true, but Germany’s dependence on Russian gas is now limiting its ability to respond to a crisis. They’ve handicapped themselves and can no longer promote peace and in fact are funding a war.

The same thing was assumed right before the first world war. Back then we also had globalization. It didn’t prevent the war and globalization didn’t return until after the second world war.

>it was only ever a theory, and one that’s becoming increasingly outdated with each passing day that Russia remains in Ukraine.

This seems like a bit of a silly point, given that the war in Ukraine is, at least so far, nothing compared to the conflicts of the past. Do we wanna rush head first back into something that reliably produced worse conflicts than we see today simply because what we have going now isn't perfect?

>Germany’s dependence on Russian gas is now limiting its ability to respond to a crisis. They’ve handicapped themselves and can no longer promote peace and in fact are funding a war.

A bunch of western companies are pulling out of Russia over this and it looks like the whole thing is going worse for the aggressors here than they expected. I'll take this over Germany and Russia engaging directly in armed conflict.

That's the wrong take, and here's why. Interdependent trade doesn't promote peace as much as it discourages outright war. Russia is beating on Ukraine, but it has crossed a field of knives to do it, and will bleed out very soon. Russia will be the example that everyone will point to when their leader starts rattling their sabers.

You're assuming that Russia is all but defeated, but that's an assumption that may not hold. China has recently agreed to provide military assistance to Russia, likely drawing out the conflict further. Rather than prevent war, we may have given our adversaries the economic means to wage a way more intense war than would have been possible otherwise. Surely, Russia wouldn't have as much support had we not bankrolled Russia and its allies for decades. America's trade policies have greatly enriched hostile nations. America has enjoyed global hegemony for a long time, but other countries are sick of picking up the scraps. They want America's seat at the table.

In many ways, the theory that interconnected trade promotes peace is similar to the neo-liberal economic view that globalization promotes lower prices and thus more efficient economies. Such a view has been shown to be an over-simplification and ignores important side-effects of changing trade balances, such as rising economic inequality and the rise of populism.

Yeah I had a similar discussion with a friend. If China was serious about trade and the international "balance" they wouldn't be sending money and arms to Russia, which looks like they probably already agreed to

Safer for whom?

Not Ukraine. If trade interdependence keeps democracies from defending other democracies, but doesn’t deter Russia, then it is counterproductive.

There is probably value in interdependence, but it can’t be blind interdependence - it needs to be conditional and truly multilateral. If EU depends more on Russian fossil fuels than Russia depends on EU imports, it isn’t really interdependence.

Trade is not what's keeping Europe from joining the fight with Ukraine. It's nuclear weapons. If the Russians didn't have nukes, they would have already been forcibly expelled from Ukraine, and we'd be debating about whether to push them out of Crimea.

If Russia didn't have nukes the invasion of Ukraine in 2014 wouldn't have been allowed to stand and we wouldn't be talking about another one in 2022.

The security logic was just as you say, but it never seemed very compatible with the facts of history (https://en.wikipedia.org/wiki/Opium_Wars), as there have been plenty of wars started _because_ of global trade. But regardless, current events ought to put the final nail in the coffin of this wishful-thinking (but commonly held) piece of logic. Regardless of whether or not it _should_ make countries less likely to go to war, it doesn't in fact actually seem to.

I like this idea in theory, but in practice I'm not sure if it does much to prevent major conflict.

If I recall correctly, the "interconnectedness" of Europe of the Early 1900s was thought to be the reason that a large war was not possible.

Perhaps increased trade will help nations to settle smaller disputes via diplomacy but the outbreak of war seems to be something can defy rational explanation. That is, we can't always expect that the leaders and citizens of aggressor countries are making rational decisions.

To save you some typing,

>The reason we’re not in a world war right now is

Nukes.

> force strategic interdependence between states specifically to make conflict an absolute last resort.

The problem with that logic is that it only kinda works for large, powerful, rich countries as they are the only ones with any leverage. This is also highlighted by your own comment when you refer to China, EU, Russia, and we can add US and a few other countries to the mix.

Everyone else is screwed, as shown by the Ukraine invasion, China's constant sea-land grab in the South China Sea, China trying to land grab against India and Bhutan, and so on. So, regardless of how we may want the above to work, the old rules still apply.

In fact I'll say it's made it worse, since now US and China are dependent on each other to not engage in a direct war, but that means China is now free to screw around everyone else without worrying about US interference.

In case of Russia and EU's dependence on its oil, Russia tried to call the bluff and failed, but the EU is still not interfering and Russia oil was sanctioned just recently. So, it turned out bad for Ukraine.

With Russia invading Ukraine it shows that EU's dependence on Russian oil and gas means nothign to Russia.

I think nuclear escalation is the thing keeping russia and china from starting an all-out war. Russia has been employed to try to incrementally conquer territory that China wants more control of, the challenge is to try to avoid nuclear war while doing so. I dont understand why china doesn't just buy what it wants, but maybe the cost basis has become important to keep their industry going.

Oil and gas are used to make fertilizer, fertilizer is needed to create the massive crop yields we expect. Like for wheat, when the norhtern hemisphere harvests in the fall, they have six months of reserves on top of that to cover demand. For corn and soybeans, it is usually just 60 days, And the Sothern hemisphere is harvesting now. brazil and argentina both do soybeans really well, so there is always some production somewhere. We really don't have to worry about 2022 from a production standpoint, but a logistics one. Port of LA pre covid, 90% of ships were on time, now only 10% and there is a backlog. Which means bottle neck. So we can't move food where it needs to be, so that should increase reserves being held. 2023 will be a problem if we can't get enough fertilizer or have a very bad rainy season. But no one in exporting countries should have an issue getting food, other than it will be more expensive. Alternatives will be needed for sure in net importers, and likely in the exporters too, because they will always feed themselves first. And as an example, the USA companies have to get permission to sell large amounts of grain to foreign buyers. So that is a possible action too.

> brazil and argentina both do soybeans really well

Where is Brazil growing that soy? In their vast and ample prairies? (hint: the answer to the second question is 'no')

> So we can't move food where it needs to be, so that should increase reserves being held.

This parallels a problem we have in cluster management - if load increases and you spin up new servers as a response (increasing capacity), then depending on how those servers work they might actually increase load while trying to spool up. You then have to be careful you don't create a feedback loop where spinning up servers triggers spinning up more servers.

If you can't get food into the ports, then stockpiling it means bringing more food in through those same ports. Which makes getting food (and other supplies) slower, which means you increase your stockpiles, which means more shipments having trouble getting into port...

Often the right answer is to raise the low water mark, which means that the status quo is maintained until the next lull, when you hold on to some of your excess capacity instead of letting it go, and to refine your boundary conditions to react a little bit sooner, and/or a little less aggressively (ie, do less but do it sooner).

Brazil soybean production map: https://ipad.fas.usda.gov/rssiws/al/crop_production_maps/Bra... They cut down rainforest for soybeans and cattle. Which McD and burger king buy from https://www.theguardian.com/environment/2019/sep/17/leading-...

> Where is Brazil growing that soy?

https://pt.wikipedia.org/wiki/Produ%C3%A7%C3%A3o_de_soja_no_...

> hint: the answer to the second question is 'no'

Of course it's 'no'. It is mostly produced on the savanna and semi-arid areas.

Oil and gas are used to make hydrogen which is used to make fertilizer, but it’s possible to get hydrogen without oil.

> Port of LA pre covid, 90% of ships were on time, now only 10% and there is a backlog.

Where can I find this information?

And we've already been headed in that direction since the supply issues driven by COVID. China just locked down Shenzhen again this weekend.

Russia, like the US/Canada, China, India, Australia and Brazil, maybe some others, have enough natural resources, manufacturing and skills that they could on-shore the great majority of things. Granted, probably none would have a best in class of much, but they could still be pretty independent. China has some mineral dependencies and India, Russia and Brazil might have some semiconductor dependencies, but they could come up with 1990 to 2000s versions of most semiconductors --and that's probably good enough.

Japan, Britain, France, Germany, etc. probably either don't have enough consumer manufacturing or natural resources to survive independently.

I think globalisation as we saw it was the logical evolution of a world largely at peace for 30 years. No cold wars, no world wars (of course plenty of local ones with terrible human suffering). It was almost as if we thought humanity was past that; we were past the trenches of WWI, fascist craziness of WWII and entrenched rivalry of Cold War, and we’re building a stable, global world of tomorrow. Then it does make sense to source everything wherever it is cheapest; services in developed countries, resources in developing ones (for consumers in the former anyway).

Except of course, it turns out that wasn’t right. China is raising the stakes and wants a seat in the superpower club, Russia clearly isn’t past WWII style politics. But I guess 4 years ago this wasn’t obvious to the average politician (who tend to be reactive anyway).

I personally think that it was the collapse of the Soviet Union, not anything to do with trade. We've always had trade for the past few centuries and it never stopped countries from attacking/invading others.

Semiconductors, raw materials for manufacturing, capital, ownership stakes.

Russia is now seeing viable businesses shut down in mass because their owners decide to exit the market. Europe can't sever Russia entirely due to energy dependence. Everyone is wondering what will happen when Russian companies go bankrupt, or the harvests from Ukraine and Russia don't materialize.

Is the real question whether it's safe to have any large economic dependencies on a country that you may have a military conflict with in the future? I'm not sure you can easily segment "core" vs. non-core dependencies except by the fraction of the economy they represent.

Indeed, it is possibly a best case scenario for the US, in the sense that now we are getting an example of what happens when a leader pushes through sanctions and it gives us a sense of just how catastrophic a Chinese invasion of a foreign neighbor would be.

So far, it also shows that the theory that a strongly interconnected economy can prevent war is pretty moot. The EU and the US applied just about every economic sanctions (except imports of oil and gas in the case of EU) and Putin won't stop.

I've not really seen people discussing this, but it seems like one of the biggest 'results' of this invasion as far as long term geopolitics goes. Personally, I'd bought into the idea that heavily intertwined economies tended to prevent war. I'm much less convinced now, inasmuch as it seems fairly clear that autocrats with the power to wage war may yet do so on much more ideological grounds, economics be damned.

> I'd bought into the idea that heavily intertwined economies tended to prevent war

Hardly a novel error, at least: https://en.m.wikipedia.org/wiki/The_Great_Illusion

Yes, I think the real takeaway is that people are not rational actors and people in positions of massive power even less so.

I think there was an assumption baked into globalism that heads of state would behave in the best interest of their citizens, but that's only even approximately true when the country is a functioning democracy. In an authoritarian state, what's good for the leader may vary wildly from what's good for the people. One could argue that the entire point of autocratic power is for the leader to be able to do what their people don't want.

And once you have someone with that level of power and no obligations to the masses, there should be no expectation that they will be have rationally or in the economic interests of the entire country. As long as it benefits their perverse psychology or isolated offshore bank accounts, it's on the table.

Pretty thin experiment to be making conclusions on though.

There can be lots of scenarios where the last 70 years saw lots more war.

Especially the "people in power are even less rational" part. The 99% might seem more predictable than the 1% only because the law of large numbers smooths out the random, unpredictable irrational acts.

That's a good point. It may simultaneously be true that globalism doesn't prevent irrational war to the degree that we had hoped, but it does still prevent it more than some other economic alternative.

(Personally, I think the best way to prevent war is non-corrupt democracies with little autocratic power concentration and a strong fair press. Most people don't want to go to war and kill others, so when you give the entire populace agency over what the military does, you get a lot less irrational wars.)

I think given the speed of information today people have too high exceptions just how fast something like sanctions would take to work.

it is not a "One Click, Buy now, next day delivery" Amazon Prime type of thing, we have come to expect INSTANT RESULTS, that is just not how Geo Politics works

I also find it amusing when people say Gas price increases are due to Russia... Those are comming for sure, but no there has not been enough time for Russia's action to impact gas prices.. not yet.... But brace for it...

Politicians love to Cease on current events to explain economic results that are actually months or years in the making

Prices change in anticipation of changes to supply and demand, even if those changes have not occurred yet. The stock market will swing down on the announcement of an interest rate hike, even if such a hike hasn't taken place yet. So it's entirely reasonable to attribute price increases to current events (although it is still worth pointing out that it's only a contributing factor, since inflation has been quite high for months).

You forget one critical thing, there is vast difference between stock and Commodity trading which is 100% speculation based vs Physical goods pricing which is not.

The idea that business are adjusting their physical goods sold pricing based on news events is laughable, I know of ZERO businesses that do that.

The price of gasoline seems to follow extremely tightly with the price of crude oil.

https://www.macrotrends.net/2501/crude-oil-vs-gasoline-price...

Yeah I think it takes only one madman at the rudder to grind global trade and diplomacy to a halt.

> The EU and the US applied just about every economic sanctions (except imports of oil and gas in the case of EU) and Putin won't stop.

To some extent, sanctions work more as a threat than a punishment, but threats only work if they are credible. The goal of these sanctions might not be so much to stop Putin (he clearly won't be stopping in the near term, for a number of political, psychological, and sociological reasons) but to a) damage the Russian economy and reduce their capacity to execute this war in the medium term, b) use that example as an object lesson for other countries who are considering expansionism, and c) lend credibility to future threats of sanctions.

The gas+oil spigot is not completely turned off yet, even by sanctions adherent countries. The real difficulty comes if there's an end run around the sanctions by China and/or India. Imagine an exodus from that market. Imagine Apple having to exit China. And imagine all the services and trade with India. Those are very different spigots than oil and gas. Closing those is going to involve a lot of pain.

Investing in those countries always involved tradeoffs. But the idea any country would help another in a blatantly illegal war of aggression to expand borders - it's so contrary to the U.N. charter and post-WW2 world that it's really quite surprising. China? As a founding member of the U.N. and permanent member of the Security Council helping Russia in any capacity? I am surprised. China may have lost upwards of 15 million in WW2. Have we forgotten everything?

I am surprised by the direction China took here. This is a European war, not a US one, to me they had everything to gain by painting themselves as a supporter of Ukraine (getting preferable treatment from the EU) than as a neutral party.

China being against US interest in general makes perfect sense to me, but against the EU it just does not make as much sense.

China is against the West (or anyone else) intruding on other nations issues (specially China's and its neighbours)... so, it's not suprising they won't wish to take sides on a fairly regional fight they have very little historical or economical interest in. Other distant, large but non-aligned countries like India and Brazil seem to have taken similar positions - not taking sides, just hoping for peace.

The interested parties in this war are NATO countries and Russia, besides Ukraine, because the war is a consequence of decades of hostilities regarding the re-alignment of the ex-USSR territories East of Poland towards the West and against Russia.

Members of the Security Council are obligated to intrude. That is the agreement they are a party to. If China cannot perform that duty, they need to withdraw as a permanent member of the Security Council.

Russia has announced they have the right to expand their borders using aggression. They have committe the supreme international crime, as judged at Nuremberg. If countries aren't subscribing to that world view anymore, then we are lost. We are doomed to have a world war three. The entire fucking point of these institutions is to prevent another one. If nothing else China should be an institutionalist, preserving the international system of laws for its own long term interest.

Maybe it's lost on people, but Poland told NATO in 1993 that if they weren't allowed to join, they were going to build their own nukes. Because they didn't trust Russia. They weren't the only one.

If the U.N. Charter system dissolves, the NPT falls soon after that. And then it's an arms race.

> China being against US interest in general makes perfect sense to me, but against the EU it just does not make as much sense.

I'm not sure if EU can be considered as a party able to care about own interest. It's just a group that is more concerned about US than common European interest. If it were an independent factor, we would already have own army and there would be no US occupation^H "support" troops scattered at every strategic point in Europe.

And Europe would have strong rules that would limit the influence of US traditional and social media in Europe, that basically create what Europeans think and want.

So yes, if China wants to be number one, it will focus on harming the current number one, and not his minions, which will sooner or later just change their master when number one changes.

> It's just a group that is more concerned about US than common European interest. If it were an independent factor, we would already have own army and there would be no US occupation^H "support" troops scattered at every strategic point in Europe.

US as Europe's whipping boy knows little bounds. The US has repeatedly asked EU countries to stop funding Putin's war machine and fund their own militaries with something substantial. Most EU countries have continued to poo-poo this, forcing US to spend 4% GDP on defense while Germany has gotten away with 1% while funding Russia's invasion of Ukraine. Trump was threatening to remove majority of military funding to Germany and they were aghast, "how dare the US not spend their $ to protect us." Of course people like you still somehow make US patronage of your defense into an "occupation." We'd be ecstatic if you actually funded your own instead of making us just to keep international order.

If spending money on military and "defending" Europe doesn't serve American interests, why not just leave Europe and let us defend ourselves? Your army stays to make sure it protects your interest, not ours.

If you think USA is doing us a favour, just leave Europe, and Middle East, and Africa, and Asia. Just go back to your continent and let us deal with Putin and other challenges best we can. We don't need neither your "protection" nor your "protection fee".

Maybe without US warmongering, we would not need to be afraid of Russia. German technology and Russian resources is something that USA might be scared to death to end its world domination.

I take the opposite lesson - for the next generation, no one will think about invading a neighbor without remembering how devastating the sanctions were to Russia.

How devastating were they really? The west is cutting off Russia, but China will be a good enough market for Russian resources for the next decade. Sure Russia will be poorer as a result, but their invasion of Ukraine is about as bad as it can gets (no believable motive, lots of sympathy for Ukraine, very publicised destruction in videos and pictures from Russia) so they got the worst possible sanctions we could impose and yet Russia is still bombing Kyiv, they didn't sue for peace in exchange of lesser sanctions.

> How devastating were they really?

Well, we don't know, and won't for years perhaps, I should've clarified that I'm guessing about what will happen in the long-term, not asserting that Putin will say, "Oh gosh, look at the stock market, I'd better withdraw" in the next few days. But it does seem like the sanctions will have the effect of impoverishing and weakening Russia for decades.

Perhaps in a further destabilized future, Russia could emerge stronger and more independent. Russia may be forced to become more self reliant.

China as a monopsony buyer of Russian gas will be able to set the price, even one that does not recoup the capital costs.

Even before the invasion, the Power of Siberia had been viewed as extremely unprofitable (it seems likely that corruption played a major role in driving up costs), and then there's the further issue that more work is necessary for it to send its total capacity, which is a fraction of what it sends to Europe.

> Yet the project does not appear to be as grand a success as Moscow would have liked it to be. To begin with, the capacity of gas production on the Russian side of the border is open to doubt. The Chayanda gas field in Yakutia region, currently the only source of gas for the pipeline, can produce up to 25 bcm a year.

> To deliver 38 bcm to China, Gazprom has to develop another large field, Kovykta in the Irkutsk region some 800km south of Chayanda, and connect it to the Power of Siberia with another pipeline, which has not been built yet. The completion of the infrastructure needed for pumping the required volume to China is probably going to take more than 10 years, according to Gazprom’s pre-feasibility study of the project.

> ...

> Currently Gazprom sends westwards about 200 bcm annually via a number of pipeline routes. The Power of Siberia project, however, has a limit of 38 bcm and it is unlikely that another major pipeline project would be launched any time soon. Thus, the Russian company would not be able to switch export flows as it pleases.

> China as a monopsony buyer of Russian gas will be able to set the price

Is it just China? EU also will continue buying gas, and prices are much higher now than year ago.

EU will continue for now, but there's a significant push to move away from Russian gas in many European countries in the next year or two. And if Russia takes over all of Ukraine, I expect sanctions to target energy as well. If they target oil, Putin has threatened to shut off European access to gas - we will see if that's a bluff or not.

> EU will continue for now, but there's a significant push to move away from Russian gas in many European countries in the next year or two.

the question is if those countries will have strong commitment to invest into significant and non-trivial infrastructure rebuild, or it will be just speeches from politicians.

> Russia takes over all of Ukraine

I don't think this was ever goal of Russia. I think they wanted to occupy some southern and eastern regions, force Ukraine to recognize Russian Crimea and set some puppet government in Kyiv.

I believe Ukraine and Russia will reach some agreement soon, Ukraine will likely lose some territory and political independence, and in 3 years Europeans will mostly forget about this stuff, will be destructed by other issues and continue buying Russian oil and gas.

> and set some puppet government in Kyiv

That's what I meant by taking over all of Ukraine. If Russia sets up a puppet government, then I expect further sanctions. Maybe they won't if a settlement is reached with the current government.

It’s still to early to see all the effects of the sanctions. That was something repeated several times.

> So far, it also shows that the theory that a strongly interconnected economy can prevent war is pretty moot.

This sounds a little no true scottsman, but I'm not sure Russia was heavily interconnected. What necessary good(s) do they lose out on when/if the world refuses to export to them? They're fairly self-sufficient, as I understand it, which makes sanctions relatively weak.

Reply on news.ycombinator.com