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China Economy: Avoiding ‘Middle-income Trap’ Is Key in 2023

China needs to get its economy back on track as soon as possible to avoid falling into the “middle-income trap”, and the deepening of market-oriented reforms is key, according to a Chinese government adviser.

And the growth rate of the world’s second-largest economy next year could potentially surpass 5 per cent, said Wang Yiming, vice-chairman of China Centre for International Economic Exchanges.

But for this to happen, coronavirus disruptions must be mitigated or ended; government policies to boost the economy must be effective; and reform and opening up must be expedited to improve market confidence, he said on Wednesday at an event organised by the Hong Kong Institute for Monetary and Financial Research.

“China’s current economic growth rate is lower than its potential. This may lead to some medium- to long-term impacts, which are rather structural in nature,” Wang warned.

“For example, there are changes in the micro scene, such as enterprise decisions becoming more short-term in nature, risky investment appetite being reduced, and household consumption becoming more prudent.

“It takes some time for all of these to be rectified.”

Wang’s comments add to the recent concerns that other government advisers have shared publicly, with some flagging the urgent need for China’s economic policymakers to realise the country’s full growth potential.

While the current recovery momentum is still weak, it is “very important” to bring the economic growth back to a reasonable range, explained Wang, who has also served as vice-president of the Development Research Centre of the State Council.

China’s economy grew by 3.9 per cent in the third quarter of this year, up from the 0.4 per cent growth in the second quarter. And economic growth over the first three quarters of the year stood at 3 per cent, missing market expectations.

Economists with investment banks Goldman Sachs and UBS expect China’s gross domestic product (GDP) to increase by 4.5 per cent in 2023. Those at Nomura were slightly more conservative at 4.3 per cent, and Morgan Stanley’s team was more optimistic with their 5 per cent projection.

If China aims to fulfil its target of reaching the per capita income level of a medium-developed country by 2035 – with a per capita GDP of at least US$20,000 – the annual GDP growth rate should be no less than 4.73 per cent, Wang said while noting that this could be “very difficult” to achieve due to the nation’s ageing population.

As China’s per capita GDP exceeded US$10,000 two years ago, it is in the process of moving from middle- to high-income, which is a special phase of instability, and the country may become caught in the middle-income trap if economic growth stagnates, he added.

To avoid being in such a perilous position, in which growth slows and a nation becomes unable to generate further economic momentum or grow rich, the key is to increase productivity and unleash the vitality of the market, Wang said.

“These are unlikely to be achieved simply through countercyclical adjustment policies. It must be achieved through deepening reform and opening up,” he added.

In particular, China should enhance market-oriented reforms in the realms of labour, land, capital, technology and data.

For example, reforming the hukou household registration system – which dictates access to public services based on the birthplace of the holder – by providing basic public services to rural migrants settling in cities would unleash the consumption potential of 300 million people, he said.

Reviving consumption is “particularly important” for China’s economic recovery, especially as dwindling external demand has suppressed exports and manufacturing investment, Wang said.

In the first 10 months of 2022, China’s retail sales increased by 0.6 per cent, but they fell by 0.5 per cent last month.

China’s exports also declined by 0.3 per cent in October compared with a year earlier, down from 5.7 per cent growth in September.

“In the past three years, we have taken many measures to protect the 160 million market players, and the recovery of production is obviously better than the recovery of consumption,” Wang said.

“So, if consumption is not activated and exports are falling, it will be difficult to maintain the balance between the supply and demand ends of the economy.”


Source : SCMP

How Fiat Money Ruins Civilization

Jimmy Song wrote . . . . . . . . .

We want nice things. We want to live in a nice house, eat good food and have fulfilling relationships. We want to travel to exotic places, listen to great music and experience fun. We want to build something that lasts, achieve something great and leave a better world for tomorrow.

These are all part of being human, of participating in society and of progressing humanity. Unfortunately, all these things and more get ruined by fiat money. We want nice things, but we can’t have them, and the reason is because of fiat money.

Governments want the power to decree prosperity, fulfillment and progress into existence. They’re like the alchemists of yesteryear, who wanted to turn lead into gold through some formula. Actually — they’re worse. They’re like a five-year-old that thinks by wishing hard enough, that she can fly.

Being the delusional power-drunk politicians that they are, the elites think that by decreeing something to be so, it magically happens. That’s indeed where the word “fiat” comes from. The word literally means “Let there be,” — in Latin and in English, it’s become an adjective to describe creation by decree. This can be most easily seen in Genesis 1:3 in Latin. The phrase there is “fiat lux” which means “let there be light.”

Of course, creation by decree doesn’t quite work like it does in Genesis. If you want a building, you can’t just say, “Let there be a building.” Someone has to dig, pour a foundation, add framing, etc. Decrees don’t really do anything without capital and labor. In the absence of the market forces of supply and demand, decrees require people and resources to be enlisted. In other words, as much as governments would love for reality to be different, a decree by itself doesn’t really do anything. By itself, a decree is about as useless as an old man yelling at the sun. There has to be some coercion involved to fulfill the decree. Fiat decrees are a euphemism for using force and violence.

For buildings, it’s obvious that creation by decree doesn’t do anything. Yet for money, decreeing it into existence seems legit, maybe even compassionate. Keynesian economists see fiat money as something that by itself does something. Of course, they’re wrong and no amount of calling it “debt we owe to ourselves,” changes the fact that it’s theft. That’s about as honest as Enron’s accounting.

The deviousness of fiat money is that it makes government violence look like a market process. Fiat money printing steals from the other holders of the currency and pays people to do the government’s bidding. That theft is hidden and combined with a good dose of Keynesian propaganda, which makes fiat money seem innocuous, perhaps even benevolent.

In a sense, fiat money is less violent than other forms of fiat rule. But that’s like saying mobsters that give you a chance to pay them off are less violent than street thugs.

Dictators use obvious violence to compel their citizens to fulfill the desires of the dictator. Forced conscription, war and poverty are common in these societies, and theirs is a miserable existence with little human freedom to speak of. Fiat rule is terrible for humanity as can be clearly seen in how backwards the Soviet Union was or how backwards North Korea is now. Progress is very hard in a society built on slave labor.

Fiat money, by contrast, at least looks voluntary. Yet in many ways, it’s still very harmful to civilization. Fiat money is more like organized crime, which makes everything seem voluntary.

FIAT MONEY RUINS INCENTIVES

Fiat money ruins many market incentives. The reason is because there’s a special buyer in the market that has much less price sensitivity. That buyer, of course, is the fiat money creator. They can and do print money for all sorts of reasons — some benevolent (welfare for the poor), others not (military buildup). They spend like drunken sailors who just found pirate treasure.

The problem with a buyer like the government is that someone always sits in the middle. It’s not the “government” per se, that actually buys a fighter jet or an office building. There’s always someone that acts as an agent of the government that does this buying. The agent works on behalf of the government to procure various goods and services and the government entrusts the agent with the authority to spend on its behalf.

Unfortunately, this arrangement is ripe for abuse. The agents are essentially spending other peoples’ money for other peoples’ gain, so they aren’t incentivized to trade very efficiently. Their incentives are as skewed as the Leaning Tower of Pisa.

When we are buying and selling in the market with our own money for our own benefit, we do complicated economic analyses to figure out whether we’ll benefit enough from the good or service to be willing to part with our money. Thus, we’ll be price sensitive and attempt to get the most value for the money we pay.

For a government bureaucrat that’s in charge of procurement, however, getting value for the money is not their priority. They are incentivized to spend in a way that’s for their own benefit and not the governments’. This doesn’t have to be in obvious ways as with bribes. They can spend much less time examining the goods and services, or buy from people that they like. The result is generally a bad trade where the agent gets some small benefit at a much larger expense to the government. In a sound money economy, the government would fire such people — but in a fiat money economy, the government doesn’t care as much since money is abundant and they’re not price-sensitive. You can do that when there’s a cookie jar that you can always steal from.

So in the final math, the agent benefits at the expense of everyone else. These people are what we call rent seekers. They don’t add any benefit but still get paid. And it’s not just government bureaucrats. If you are an investment banker that takes extremely leveraged bets, you are a rent seeker, too. Generally, they get to keep the profits when their investments win, but get bailed out when their investments lose. They, too, don’t add anything and leech off of society. What’s worse, these are supposed to be some of the most talented and driven people in society. Instead of building things that would benefit civilization, they’re engaged in grand larceny! Of course, they’re not the only ones guilty of rent-seeking theft. Sadly, most jobs in a fiat money society have a huge rent-seeking component.

One rule of thumb that we’ll get to later in this article about how to tell if something is rent seeking is by seeing how much of the job is political and not value-adding. The more politics involved, the more rent seeking there generally is.

Rent-seeking jobs cheat the system and when people have the incentive to cheat, many will. You only need to look at online gaming to know that. Cheating is attractive because it’s a lot easier than doing hard work and if the cheating is normalized, as it is today, there’s little moral impediment. We’ve all become that soccer player that pretends to be in pain to influence the referee.

Rent seeking is understandable since creating a good or service that the market wants is not only hard, but it’s very fickle. What you produce today is an innovation away from becoming obsolete. Rent-seeking positions, even with less compensation, are nevertheless more desirable because of their certainty. Is it any wonder that rent-seeking positions are so sought after?

Think about how many people want to become investment bankers, venture capitalists or politicians. They’re way more profitable than providing a good or service, require way less effort and have lots more certainty.

Fiat money incentives are more broke than Sam Bankman-Fried.

FIAT MONEY RUINS MERITOCRACY

The existence of so many rent-seeking positions means that a large part of the economy does not run on normal supply-demand market forces. Even the possibility of rent seeking means that goods and services need to account for a tilting of the playing field. Fiat money ruins meritocracy.

In a normal market system, the best products win. Not the most politically-connected products. Not the products that employ the most people. The best products win because they satisfy the needs and wants of more people. Fiat money changes the equation by adding politics.

When the government can print money, the people that benefit the most are the people that get access to that money first. This is called the Cantillon Effect and it’s the reason why rich people get richer without adding much, if anything. So how does the government determine who gets access to the money? As with everything government related, decisions on who gets what money is determined through politics. And when the money printer is political, everything else becomes political. Politics is a cancer that spreads through the entire market.

The “haves” in a fiat money economy tend to be the ones that are good political players. They know how to get newly printed money directed toward them and they have a large advantage over those that don’t. Politically savvy companies will do better than the non-politically savvy companies that make better products. Thus, surviving companies in a fiat money economy are very politically savvy. It’s no wonder so many companies seem to be led by politicians rather than entrepreneurs, especially as these companies age.

Thus, politically savvy incumbents have a tremendous advantage in a fiat money economy. They will saddle newcomers with regulatory costs and get subsidized by newly printed money, ossifying their position. The marketplace will be filled with older, worse goods and newer, better goods will never come to market given these unfair advantages. The incumbents get to play CalvinBall and change the rules whenever they’re losing.

Labor unions, zombie companies and old politicians are all indicators that institutions last way beyond their usefulness to society. They all use political means to make up for their lack in fulfilling market desires. The decrepit and the dying never die to make room for the innovative. Politics stifles entrepreneurialism and creativity. It is a cancer that destroys the good cells that keep the body alive.

Merit, in other words, has been overtaken by politics everywhere.

FIAT MONEY RUINS PROGRESS

The ubiquity of politics over merit means that it’s become harder than ever for civilization to improve. Better stuff doesn’t necessarily win and markets tilt toward the political. Fiat money protects the existing politically connected players against the newer, more dynamic players from gaining market share.

Hence, fiat money ruins progress. Civilization ossifies because the incumbent players have way more power to stop new players. The incumbents often will put up huge regulatory moats, under-price newer competitors through fiat subsidization, hire away the best employees with fiat money or as a last gasp, just buy out the new players altogether. All of these strategies work through access to newly printed money. The zombies survive by eating brains.

We should have nuclear powered everything right now, but that technology is completely stifled by regulation. Government can enforce this mandate through fiat money. Oil, natural gas and coal continue to dominate because we don’t make scientific progress on other ways to provide better energy. Technologies like wind and solar get government backing because they’re politically popular, despite their clear inferiority in variance, energy density and portability. We’re going backwards in energy.

The Luddites win in a fiat monetary system because fiat money and political considerations essentially force everything to stay the same. It’s profoundly conservative in that the old and decrepit are saved at the expense of the new and meritorious. If that sounds familiar, it should. That’s the exact math that was used to justify the lockdowns of the past few years.

We can see this dynamic in the airline industry. The time to travel from New York to London is worse now than it was 50 years ago. We can also see this dynamic in dishwashers. A dishwasher 50 years ago could clean a full load in under one hour. It now takes more than 3 hours. Regulations protect incumbents and put politics as a priority over merit. The result is that civilization doesn’t progress.

Instead, fiat money has regressed civilization. The nuclear engineers of yesteryear are working on React.js apps and scammy Web3 products because that’s where the money is. The inventors of yesteryear are investment bankers creating high-frequency trading systems. The incentives are broken — merit is no longer a consideration, so is it any wonder we’re regressing as a civilization?

We peaked as a civilization in 1969 when we landed a man on the moon. Everything since then hasn’t pushed humanity forward, but turned it inward. At best, it’s preserved what we already have. At worst, it’s destroying humanity’s progress.

What’s worse, all this rent seeking has inflamed the entitlement mindset. Having good political connections, these rent seekers think they are entitled to these negative-sum positions. Nothing is more toxic to progress than people whose incentives are to keep things from getting better. Fiat money changes productive people into entitled brats.

FIAT MONEY IS PROFOUNDLY CONSERVATIVE

Bad incentives are at the core of fiat money. If you can steal instead of work, most people will steal — and they can, through politics. Politics, unfortunately, is a negative-sum game and that means regression for civilization. Like war, politics is about consuming accumulated capital.

Fiat money redistributes wealth so that the incumbents can stick around. There’s little room for new ideas or new goods or new products because the incumbents have so much political clout.

Indeed, we’ve reached a tipping point where there’s more rent seekers than there are productive people creating stuff. How many people work email jobs? How many people even work? Way too many people are happy with an XBox, a mattress and pizza delivery. Do these people benefit society in any way? It’s no wonder so many people are so depressed.

The politicization and zombification of the economy has had real consequences in how society functions. Building codes make new forms of housing very difficult to build. Airline regulations make new designs completely illegal. Nuclear regulations make different, more efficient forms of energy really expensive.

Ancient industries, companies long past their expiration date suck productivity out of the economy. They provide little value, but continue getting subsidized through fiat money. Industries like oil, trains, airlines and cars have all become zombies and are protected from extinction through fiat money. Heck, even some electronics producers, and software companies, which are relatively new to the economy, are zombies at this point. The zombies are winning.

And the zombification is accelerating. Facebook probably transitioned from producer to rent seeker much more quickly, than, say, IBM.

Sadly, this is the reality of fiat money. The producers at a certain point turn into rent seekers as they politicize. The zombies soon start outnumbering the normal people and everything goes downhill.

BITCOIN FIXES THIS

The good news is that Bitcoin fixes these incentives. Removing fiat money means the normal market process of supply and demand and prices can work. Politics takes much less of a role and the zombification of the economy reverses. Civilization can progress again. Bitcoin is the antidote and the great hope for reversing the decline.

Unfortunately, we have about 100 years of rot to clear out and that’s going to take some time. The people most embedded in the current system, the Cantillon winners, such as Ivy League business school graduates, rich old people and bureaucrats of all types, are the least likely to convert to Bitcoin and will fight tooth and nail to preserve their positions. These people are not going away quietly and you can already see that they’re making their own bid to further zombify with CBDCs.

Thankfully, Bitcoin has the advantage of time on its side. The Cantillon losers, such as young people, citizens of developing countries and actual producers of goods and services will inevitably turn toward the much fairer system in Bitcoin. The zombies will be consuming themselves.

Welcome to the revolution. Now go save civilization.


Source : Bitcoin Magazine

Infographic: Which Populations Feel Their Country is on the Wrong Track?

See large image . . . . . .

Source : Visual Caplitalist

As Climate Warms, a China Planner Advocates “Sponge Cities”

Emily Wang Fujiyama wrote . . . . . . . . .

To cushion the impact of extreme weather due to climate change, a Chinese landscape architect has been making the case for China and other countries to create so-called “sponge cities.”

Yu Kongjian, who spoke to The Associated Press in Beijing, uses sweeping language to express his vision for cities that can withstand variable temperatures, drought and heavy rainfall. The challenges for implementing this vision at a time of ambitious economic development in China are multifold.

Yu criticizes much of Asia’s modern infrastructure for being built on ideas imported from Europe, which he says are ill-fitted to the monsoon climate over much of the Asian continent. He points to recent floods that have wreaked havoc in many Asian cities, which he says are caused by this architectural mismatch.

“There’s no resilience at all,” Yu says of the concrete and steel infrastructure of major cities, and of using pipes and channels to funnel away water. “Those are useless, they will fail and continue to fail.”

Instead, Yu proposes using natural resources, or “green infrastructure” to create water-resilient cities. It’s part of a global shift among landscape design and civil engineering professionals toward working more in concert with the natural environment. By creating large spaces to hold water in city centers — such as parks and ponds — stormwater can be retained on site, helping prevent floods, he says. Sponge infrastructure also, in theory, offers ways for water to seep down and recharge groundwater for times of drought.

“The idea of a sponge city is to recover, give water more space,” Yu said.

A turning point in China’s awareness of climate change and urban adaptation came a decade ago, Yu said. A devastating flood hit the capital city of Beijing in July 2012.

Beijing’s biggest downpour in 61 years overwhelmed drainage systems, swamped downtown underpasses and sent flash floods roiling through the city’s outskirts. At least 77 people died.

Yu at the time sent a letter to Beijing’s party secretary, Guo Jinlong, calling for a change in how the government approaches city infrastructure. He continued to send letters to high-ranking officials and top leadership, including China’s leader Xi Jinping.

At a government working conference the next year, China incorporated the idea of sponge cities as a national strategy, “giving full play to the absorption, storage and slow release of rainwater by ecological systems.”

In 2014, the central government issued a directive: Recycle 70% of rainwater runoff in 20% of urban areas by 2020, and in 80% of such areas by 2030.

The following year it launched 16 pilot sponge city projects, adding 14 more in 2016. Officals also said they would award 600 million yuan (83 million USD) each year for three years to municipal cities, 500 million to provincial capitals, and 400 million yuan to other cities.

The top-down mandate and subsidies spurred a boom in water-absorbing infrastructure, including in large cities including Beijing, Shanghai and Shenzhen.

Cities around the world are similarly trying to integrate “bioswales” along the sides of roads, protect remaining marsh areas to absorb water, and increase the capture of roof rainwater.

AN EXPERIMENT UNDERWAY

In China, one demonstration park is located in the northeast corner of the city of Nanchang, southern China. In mid October, engineers were putting finishing touches on a lush, picturesque 126-acre park designed to cushion the impact of both floods and droughts.

Formerly a coal ash dump site, the “Fish Tail” sponge park is built in a low-lying section of the city and intended to regulate water for surrounding neighborhoods and business districts. The fly ash, a byproduct of coal combustion, was mixed with soil to create mini-islands in the lake that allow water to permeate. Fang said the mixture, held in place by plant roots, prevents the ash from flowing into the water. Whether it prevents the release of toxic elements in the ash is an open question.

During dry periods, the water could be withdrawn, purified and used for plant irrigation.

Fang Yuan, an engineer at Yu’s design institute, Turenscape, said the park serves as “an ecological aquarium,” capable of retaining 1 million cubic meters of water during floods and means the water can be used, instead of just discharging it into the sewage system.

The park also serves as a habitat for plants and wildlife disrupted by extreme weather such as drought.

AN UNCERTAIN FUTURE

At times, the sponge city concept has been difficult to implement in China. Misallocation of funds, lack of expertise in sponge city planning, and other snags have doomed some projects.

In April, the Ministry of Housing and Urban-Rural Development announced some cities had “insufficient awareness, inaccurate understanding, and unsystematic implementation of sponge city construction.”

The notice also warned against using funds earmarked for sponge city construction for other general infrastructure projects, such as buildings and roads.

Those guidelines were issued after massive rainfall and catastrophic floods in the city of Zhengzhou killed 398 people last summer. Floodwater inundated a section of the city’s subway, trapping hundreds of commuters. Rescuers flocked to the scene, but 14 people died in the subway disaster.

Notably, Zhengzhou was one of the pilot sponge cities, with a planned investment of 53.58 billion yuan (US $7.4 billion). Some questioned whether sponge city projects work at all.

But an investigation by the State Council released in January, found that funds had been misspent. Only 32% of the 19.6 billion yuan that was invested went to what the government defined as sponge city concepts.

“Even at the critical moment when the whole country mobilized forces to support Zhengzhou’s rescue and disaster relief, they were still “building flower beds,” the State Council report said.

Yu acknowledges there is an oversight problem. “Many of the cities just use it as propaganda — just to get a lot of money from the central government,” but then invest the funds in other projects.

While problems implementing absorptive cities are worked out, China’s vulnerability to extreme weather is clear. A prolonged drought since July has dramatically shrunk China’s biggest freshwater lake, Poyang.

In the village of Tangtou, on the lake’s normally water-blessed northeast corner, residents scooped buckets of water from a village pond to tend their vegetables.

Since July, villagers say they’ve hardly seen any rainfall, let alone water in their corner of the lake.

“The whole lake was completely dry, and even the Yangtze River was dry,” said 73-year-old Duan Yunzhen, as he scattered pond water onto his crops.

“We planted rice, cotton, sesame, and sweet potato — they are all suffering from drought,” said 62-year-old Hong Zuhua.


Source : AP

The End of World Dollar Hegemony: Turning the USA into Weimar Germany

Patrick Barron wrote . . . . . . . . .

In a recent essay, I explained how over time the US abused its responsibility to control the supply of dollars, the world’s premier reserve currency for settling international trade accounts among nations. This abrogation of its duties is leading to the likely adoption of a new reserve currency, commodity based and controlled not by one nation but by members, all watchful that the currency is not inflated.

Let us continue the analogy of an individual receiving a “magic checkbook” which allows him to write as many checks for as much money as he desires. Receivers of these checks could only pass them along to others through the normal course of trade. Over time the owner of the magic checkbook becomes increasingly irresponsible. He funds all kinds of welfare and warfare initiatives.

Naturally dollar reserves build to levels completely unnecessary for peaceful exchange. Prices start to rise at a faster and faster rate. Then a reform consortium assembles a team to offer an alternative currency. Why, one may ask, is that such a problem for the dollar and dollar users?

The Weimar Republic: A Lesson in Supply and Demand

A successful alternative reserve currency would dilute demand to hold dollars. When demand for dollars drops, its price must drop unless and until its supply drops. (A drop in the dollar’s “price” is just another way of stating that its purchasing power falls—i.e., more dollars are required to buy the same goods and services.) Through irresponsible use of the magic checkbook, you have obligated yourself to funding a free-for-all of entitlements such as Social Security, Medicare, and the military-industrial complex being the largest by far. Politically, it may be almost impossible to cut any of these three categories of spending to the extent necessary to arrest the dollar’s drop in purchasing power.

The world has seen all this before, and not just in less developed nations like Zimbabwe. The US will find itself in the same trap as experienced by Germany’s Weimar Republic following World War I. The Reichsbank, Germany’s central bank, printed papiermarks to placate powerful constituencies within Germany. As the Reichsbank printed more money, the purchasing power of papiermarks dropped. And herein lay the trap. Rising prices led powerful constituencies to demand increases in pay and benefits. Industrial labor unions, government civil servants, welfare recipients, old age pensioners whose life savings were being decimated—all demanded more money. Strikes and violence became endemic. So, the Reichsbank printed more money … which, of course, simply led to higher prices and another round of payment increases … which led to even higher prices until the papiermark became worth more as wallpaper than money.

Why did the Weimar Republic government continue to increase payments, and why did the Reichsbank continue to print papiermarks? Many sophisticated answers have been advanced, such as that the government and the Reichsbank deliberately destroyed the papiermark in a roundabout plot to thwart the financial terms of the Versailles Treaty in which a defeated Germany was ordered to pay reparations to the Allied powers. But the simplest answer is that both believed that there was no other choice than to increase payments and print money in a crisis. It was felt that powerful constituencies must be placated in the short run.

But short run tactics just made things worse. There was neither the political will nor the economic understanding of the need to end excessive spending and currency debasement and endure the pain thereby induced.

The US and the UK: A Lack of Political Will and Economic Understanding

I fear that the same is true today. In fact, the seeming lack of adverse consequences (all in the long term) and advantages of money printing in the short term have led to a knee-jerk response by the US Treasury and the Federal Reserve Bank to increase the money supply and lower interest rates in the face of any economic problem, even higher prices themselves. For example, just look to Britain. Its energy shortages have caused prices to rise. The government’s response has been to pledge payouts to households! That’s right. No pledge to dismantle barriers to increased energy production … just a pledge to increase the government’s deficit, which requires more money printing! As the saying goes, you can’t make this stuff up.

One thing is certain, however. What Britain can do, the US can and will do in spades. Hyperinflation is a real possibility. Remember, the Reichsbank in Weimar Republic Germany actually had to print physical money. The US Federal Reserve Bank need only click a few buttons on a computer. As prices rise, powerful groups demand more money. Police, firemen, road workers, etc. Demand that they not suffer a lowering of their lifestyle. Since government is spending someone else’s money, it accedes to these demands.

Back to our British example. The exchange value of the pound has been plummeting in currency markets, leading to serious consequences. The Bank of England was forced to raise interest rates and now government debt has become unaffordable. So, the Bank, as handmaiden to the government, has applied the only politically permissible remedy that it knows: its computers’ money printer is forced into overdrive, just to keep up.

What Happens on the Ground

Where does government get its money? State and local governments get money from state and local taxes. So captive property owners get increased tax bills to pay for maintaining public school teachers, police, etc. Social Security recipients must be compensated, of course, so payroll taxes are increased, which depresses business. American products become less competitive on the national and world market.

The price spirals continue to destroy all in their path until the dollar loses all purchasing power and society descends into chaos. And not one politician in a thousand understands what happened, or if he does understand, does not have the political will to do anything about it—i.e., reduce public spending, liquidate the Fed, and tie the dollar to our still significant gold reserves. It can be done.


Source : Mises Institute

China’s Economic Inequality Is Worse Than America’s. And the Pandemic Hasn’t Helped.

Lili Pike wrote . . . . . . . . .

In March, a Chinese migrant worker, identified by the pseudonym Afen, arrived in Shanghai with hopes of landing a job. Her journey was not unusual; millions of rural Chinese travel to the country’s large cities every year, looking for work. Migrant labor has been a key engine for the economy for decades.

But Afen arrived just as Shanghai was shutting down amid a covid outbreak, and instead of a job, she landed in a shelter and soon after tested positive for the coronavirus. That positive test — in a nation famously pursuing a “zero-covid” policy — became a black mark on her record. She tried to find a job after she left quarantine, but time and again she encountered job listings that disqualified people with a history of covid. Within a few weeks, Afen was out of money. She ended up living out of a public restroom in Shanghai’s main train station.

Afen’s story went viral on social media after a Shanghai writer shared it, but many others living at the margins of China’s economy have suffered profoundly during the pandemic. At the same time, the rich have only gotten richer. There are more billionaires in China today than anywhere except the U.S.; the total wealth of China’s billionaires nearly doubled from 2020 to 2021.

China’s rich-poor divide is all the more stark given repeated pledges by its leaders to make reducing income inequality a core goal.

Last summer, President Xi Jinping launched a campaign under the banner of “common prosperity,” a national strategy to lift the poor and crack down on powerful industries — the country’s booming high-tech sector in particular. “Common prosperity” was more than a slogan; it informed the direction of the Communist Party’s plans for 2022 and beyond, and for a time, Xi repeated those two words in nearly every major address.

“Currently, the world is facing a prominent issue of income inequality,” Xi said in a speech to party cadres last August. “In some countries, the wealth gap and middle-class collapse have aggravated social divisions, political polarization and populism, giving a profound lesson to the world. China must make resolute efforts to prevent polarization, advance common prosperity and realize social harmony and stability.”

One year later, the lofty rhetoric of “common prosperity” has faded into the background, and the data and facts on the ground suggest that income inequality in China is only growing.

“‘Common prosperity’ has now been moved aside as the economy has faltered, as covid swirled up, and you don’t hear very much about it,” Scott Rozelle, an economist at Stanford University who studies rural development in China, told Grid. “It’s like climate policy in the U.S. once gas prices rose.”

Now, with the common prosperity agenda sidelined and the economy struggling amid unending covid lockdowns, China’s rich-poor divide may deepen. And in the years ahead, inequality could pose a major challenge to China’s development and a key test for Xi and the party.

Inequality in China — what the data shows

Even before the pandemic, China was hardly an ideal of communist equality; still, the extent of the wealth and income gaps in China in recent years is striking.

Economic inequality can be measured in different ways. A common approach is what’s known as the Gini coefficient, which assesses the distribution of income in a country — with 0 representing equality and 1 being the worst possible grade.

China’s latest official data is from 2020, when the country had a Gini level of 0.47, which is considered a highly unequal economy. However, experts say China’s official data understates the problem. Using additional survey data, economists at Cornell University and Peking University published another Gini estimate for 2018 that had China at a slightly higher level of inequality — 0.52. (By comparison, in the U.S. — where inequality is a huge political issue — the figure is slightly better than China’s: 0.41.)

The World Inequality Lab takes a different approach, which may be easier to visualize. The lab looks at the ratio between the average income of the top 10 percent of earners and the bottom 50 percent. In its 2022 report, the lab found that China’s income inequality in 2021 was worse than Europe’s but slightly better than in the U.S.

The rich-poor gap in China is even greater when looking at overall wealth — which includes not just income but all assets such as stocks, bonds and property. When these are factored in, the World Inequality Lab found that the richest 10 percent of China’s population owns nearly 70 percent of total household wealth.

How the lockdowns have deepened inequality

Based on preliminary data, and stories like Afen’s, it appears that the recent slew of lockdowns have made China’s inequality problem worse.

Research conducted at the beginning of the pandemic showed that covid restrictions were eating into rural paychecks. According to surveys conducted by Stanford researchers across rural villages in 2020, nearly three-quarters of respondents said that people who typically worked outside the village were unable to do so because of pandemic controls. More than 90 percent said covid controls had decreased their income. And over the past six months, such restrictions on movement have been reinstated.

Another survey with data extending into the first quarter of this year, from China’s Southwestern University of Finance and Economics and Ant Group Research, shows that the rich have seen their incomes continue to rise while the poor have seen incomes fall consistently since the start of the pandemic.

The national unemployment rate has also climbed — to 6.1 percent as of this spring — but the employment problem runs deeper than that. The official figure is calculated based on surveys conducted in cities, and so it doesn’t fully reflect the status of rural migrants. Bloomberg reported that 6 million fewer migrants are working in cities compared with before the pandemic, according to a Peking University economist — and that was before this spring’s covid lockdowns.

Will inequality become an “active volcano”?

High levels of inequality aren’t a new phenomenon in China. The rich-poor gap traces back to Deng Xiaoping’s economic reforms in 1978. Deng’s push to open China’s economy and encourage growth saw the economic boom arrive first in coastal cities, while inland and rural areas lagged. That created a sharp divide in wealth.

For decades, though China’s inequality was increasingly apparent to all, the country’s surging economy blunted the feeling.

“This was a situation where almost everybody was getting richer, but some people were getting richer faster than others,” said Terry Sicular, an economist at the University of Western Ontario who focuses on China. That “all boats are rising” feeling made the inequality more acceptable and less politically problematic, she said.

Martin Whyte, a Harvard University sociologist emeritus, conducted a nationwide survey in 2004 and found that people in China — surprisingly, the more disadvantaged in particular — weren’t angry about the level of inequality because they felt hopeful that their fortunes would improve. In Whyte’s survey, 61 percent of people agreed with the statement “hard work is always rewarded,” indicating their belief in social mobility — a higher rate than in any other countries where similar surveys were conducted. Inequality, rather than being a worrisome source of political disruption, was a “dormant volcano,” Whyte concluded.

Inequality had appeared to plateau in the years after 2008 as China’s working-age population started to decline, leading to a tighter labor market and a rise in lower-class wages. But with factories shifting overseas in recent years and the pandemic’s economic blows, the inequality problem has been on a steady rise and may increasingly be on people’s radar.

Rozelle said he has seen a shift in how people think about their future: “I see it totally when we go to villages. The young rural people say, ‘What am I going to be doing 10 years from now?’ They’re worried about it for the first time.”

That poses major questions for the government. “Growth is slowing, and the regime can’t continue to provide the benefits of growth — or promise the benefits of growth, and there will be more trade-offs among different groups in society,” said Sicular. “So what’s the basis of its legitimacy now?”

The future of “common prosperity”

The party has long been aware that with growth slowing, policies would need to more explicitly focus on the country’s poor. Back in the early 2000s, for instance, the country expanded its social welfare system to include rural medical insurance. And even before Xi’s “common prosperity” campaign, the party had spent years focusing on anti-corruption and poverty alleviation. In 2020, the government declared that extreme poverty had been eradicated in China.

But several experts now say that last year’s “common prosperity” reforms missed the mark in addressing inequality. The government encouraged China’s wealthiest entrepreneurs to give large chunks of money to charity, but these wealth transfers were one-offs. And the crackdowns on the tech and property sectors have contributed to the larger economic slowdown, which has in turn hurt the poor. Meanwhile, Sicular said that comprehensive measures to address inequality haven’t been rolled out.

Scholars point to the need for larger structural reforms to make inroads on inequality in the coming decades. “The biggest inequality in China isn’t income inequality, it’s human capital inequality,” Rozelle said. About three-quarters of Chinese infants and toddlers are raised in rural areas, and Rozelle found in a 2020 study that nearly half of rural children are cognitively delayed — a much higher rate than in urban areas. And that is linked to a big gap in academic outcomes, which means that rural students are far less prepared to enter China’s increasingly advanced economy.

He said that further investment in rural education and health are needed to propel China’s development in the coming decades and tackle inequality. Scholars have also long argued that the country’s hukou household registration system, which restricts the benefits people receive if they are born in a rural area and move to a city, is also ripe for reform.

For now, however, with the economy crawling at a 0.4 percent rate in the last quarter, the appetite for big government investments in social welfare isn’t strong. In the coming months, the immediate question is whether officials will loosen covid restrictions to reboot the economy. Then, assuming Xi secures a third term this fall, experts will be watching to see whether he doubles down on “common prosperity” — and expands its focus beyond cracking down on pockets of wealth. For now, prosperity feels increasingly out of reach for millions of people in China.


Source : GRID

Deep-sixing Poverty in China

Indermit Gill wrote . . . . . . . . .

In 2021, the Chinese government will do the developing world a great disservice.

It’s not what you probably think; my prediction has nothing to do with the coronavirus. It is about what the Communist Party of China (CPC) is planning to do in July. As part of the celebrations for the 100th anniversary of its founding, the CPC intends to publicize that despite the pandemic and global economic turmoil, poverty has been eradicated in China—a decade ahead of schedule.

To make this claim, the Chinese government uses a poverty line of about $2.25 a day, in 2011 prices and adjusting for purchasing power. The World Bank believes that a threshold of $1.90 a day is appropriate for countries with per capita incomes of less than $1,000 or so, such as Ethiopia. For lower-middle-income countries such as India—with per capita incomes between $1,000 and about $4,000—it recommends a poverty line of $3.20 a day. For upper-middle-income countries like China, it reckons that a reasonable poverty line is $5.50 a day. In other words, the Chinese government uses a poverty line appropriate for a country making the transition from low- to lower-middle-income, even though China is 10 times as wealthy.

Actually, China is almost as well off today as the United States was in 1960 when it became a high-income economy (using the World Bank’s classification). Around that time, the U.S. first adopted an official definition of poverty, classifying people as poor if their daily consumption was less than $21.70 in 2011 prices, four times what the World Bank today considers reasonable and about 10 times what China believes is adequate. In a forthcoming paper, my colleague Eric Dixon and I estimate that in 1960, using the $21.70 cutoff, fewer than a quarter of all Americans lived in poverty. But by this criterion, between 80 and 90 percent of Chinese people would today be considered poor. If our numbers are correct, China is years—if not decades—behind schedule.

MAKING POVERTY POLITICAL

Last year, the World Bank warned that when the smoke from the coronavirus carnage clears, we could discover an additional 150 million people mired in poverty. Four out of every five of them will be in middle-income economies where governments have the wherewithal to prevent such setbacks.

Bucking this trend is China. A few months after the World Bank’s warning, the Communist Party of China announced that it had eradicated extreme poverty. Ending abject poverty while the rest of the world is set to see an increase in it is a remarkable achievement, and the Chinese government deserves credit. It did not happen by accident. In 2015, President Xi Jinping essentially instructed his government officials to find every poor Chinese family and end their poverty—measured using the rural poverty line of about a dollar a day (PPP unadjusted). Laudably, though, the initiative wasn’t just about this one number; the Communist Party also promised it would end the “two worries” of hunger and clothing and fulfill the “three guarantees” of health care, housing, and education.

In July 2020, the government announced that extreme poverty had been eradicated. And there is little doubt that this has happened—it is not just party propaganda. But the cost of the initiative was upwards of $800 billion. Martin Raiser, the World Bank’s man in China, says that “We’re pretty sure China’s eradication of absolute poverty in rural areas has been successful—given the resources mobilized, we are less sure it is sustainable or cost effective.”

The “eradication of absolute poverty” in China was not broadcast far and wide, but it is believed that in July, Communist Party leaders plan to remedy that. To be sure, though, the fanfare will be mainly for domestic consumption, not for export. People in poor countries are already in awe of China’s achievements since the 1980s when it began adopting U.S.-style capitalism. China has been justifiably praised for reducing poverty. The more ambitious governments in Africa and South Asia already assess their own progress in reducing poverty relative to what China has done since the 1980s (an excellent summary of China’s record since 1990 can be found here). It is the Chinese people who need convincing that the Communist Party is delivering prosperity to everyone, not just its own rank and file.

But in lowering welfare standards to puff up its own performance, the Communist Party of China will inadvertently diminish ambition everywhere. It did not cheer me up to read that U.N. Secretary-General António Guterres has been gushing about President Xi’s strategy, insisting that “targeted poverty alleviation was the only way to help the poorest people and achieve the major goals set for the U.N.’s 2030 Agenda for Sustainable Development.” I remembered Indian Prime Minister Indira Gandhi’s Garibi Hatao (“Eradicate Poverty”) slogan of 1971. It started as a clever way to win an election. But within a few years, it had morphed into the sterilization scandal, as ambitious government officials sought to remove poverty by forcibly reducing the number of babies born to poor parents. I hope China’s “precise” poverty relief initiative has a happier ending.

Because of its deliberately frugal standard, China’s poverty reduction record has become progressively diminished as it has grown richer. The accolades for the Chinese government were surely deserved in 2000 when China transitioned from low-income to lower-middle-income. The Communist Party might even have deserved praise a decade later when China became an upper-middle-income economy; reducing poverty headcounts gets harder as poverty incidence falls. But in 2021, as China approaches high income, measuring progress using the official poverty lines of the world’s poorest countries as a benchmark may be the very definition of underachievement.

WORLD CHAMPION OF POVERTY REDUCTION?

The biggest decline in poverty in history—measured using a reasonable poverty line for an economy on the cusp of high income—was probably in the United States between 1930 and 1960. Using a poverty line of $21.70 a day, poverty rates fell from 78 to 23 percent. The main reasons:

  • Economic growth fueled by New Deal projects led to job creation, the war effort created work, and the postwar global recovery led to increased demand for American products.
  • America was structurally transformed as poor people—especially Southern Blacks—left the farm for jobs in cities. Between 1920 and 1960, more than 12 million Black Americans left the South for other parts of the U.S. Many others left the rural South for cities. This helped to lower poverty quickly (though not enough: the U.S. South had then and has still the greatest concentration of poor people).
  • The inequality in market incomes fell, fueled both by big public investments in secondary education and the growing power of organized labor.

Tellingly, in the three decades after the Second World War, the share of the poorer half of Americans in national income rose to about 20 percent.

China will have to engineer a similar increase now. It will not be easy. China is a very different country compared with the United States in the 1950s. At the time, the U.S. had a much younger population, its workers depended a lot less on agriculture, and it was already a vibrant democracy with a growing concern for the disenfranchised. Poverty strategies in China will have to deal with the anomalies of the past, such as policies that have shrunk the number of young people and curtailed rural-urban migration. But, as the Communist Party celebrates its 100th birthday this year, its leaders might still learn a thing or two by studying what happened in the U.S. during the last 100 years.

Just as Premier Deng’s China took a page from the U.S. playbook to reintroduce market capitalism, President Xi’s party might do well to learn from the American experience with poverty reduction. Based on what I’ve learned from our recent review of upper-middle-income South Korea, Japan, and the United States, I’d recommend three things:

  • Forget the flattery. The world has developed a habit of praising China for reducing poverty, and China has become accustomed to the accolades. But as China prospers, this praise becomes progressively less admiration and more flattery. The experience most relevant for China is that of the United States, especially the achievements and limits of poverty programs in Southern states. No serious Chinese student of economic history will find comparisons with the U.S. flattering.
  • Forget $1.90 a day. An extreme poverty line of about two dollars a day is not interesting and relevant any longer, and repeated references to it may actually be counterproductive. It is not a relevant threshold for an upper-middle-income country about to become an advanced economy. Since the 1960s, the U.S. has been using a poverty line that is 10 times higher. China should use the Communist Party’s centenary celebrations to crank up ambition, not go on about doing what Vietnam and Taiwan had done when they were a lot poorer.
  • Forget “precise relief.” Even at $15 a day, poverty incidence in the U.S., Japan, and South Korea when they made their transitions to high income was less than 10 percent; contrast this with 75 percent in China and 90 percent in rural China. If these numbers are correct, China is decades behind in poverty reduction. To catch up, it needs a radically more ambitious strategy than targeted relief.

With their backs to the wall because of COVID-19, it will be hard for China’s leaders to heed these “three forgets.” In July, expect them to loudly celebrate the “end of poverty.” But I hope they prove me wrong.


Source : Brookings


Read also at China Power

Is China Succeeding at Eradicating Poverty? . . . . .

堅定對香港經濟的信心

蔡洪濱 wrote . . . . . . . . .

香港資本市場近來風雨飄搖,恒生指數一度跌破15000點的回歸前水平。長期堅挺的樓市今年以來也開始下行,表現漸呈疲軟。受疫情和地緣政治影響,外貿和經濟增長乏力;面對激烈的國際人才競爭,也似乎失卻優勢,人才外流有惡化之象。新加坡和香港此消彼長,更引起對香港的普遍擔憂。總之,對特區經濟的悲觀情緒正不斷蔓延。

當前面臨的困難和挑戰確實嚴峻,但香港經濟是否就此沉淪下去?前景變得暗淡無光?

核心優勢仍在

筆者認為恰恰相反。本文用意不在預測股市、樓市何時利空出盡、觸底反彈,也並非無視經濟低迷的困局。觀乎目前的至暗時刻,影響經濟長期發展的根本性因素易受忽略,但事實上,香港的核心優勢依然堅固,在新時代更顯巨大發展潛力。

香港特區的核心優勢為何?一言以蔽之,在於其獨特的制度。「一國兩制」之下,「一國」的基礎築牢後,就需要充分發揮「兩制」的特色。法治、自由市場、國際化是香港穩健制度的三個支柱。只要致力堅守,不斷予以完善和鞏固,就能保障經濟增長。過去幾年,儘管本港經歷了不少風雨,港大經管學院依然每年在全球招聘15至20位優秀學者,而吸引他們前來發展的就是這三個政策支柱;加上超低稅率、得天獨厚的自然條件和生活環境,香港確實是亞洲其他地方難以媲美的宜居城市。

潛力蓄勢待發

以下勾勒本港經濟發展潛力的幾個範疇。

首先,融入國家「國內國際雙循環」新發展格局,可為香港提供無窮商機。香港一直滿足於擔任外貿和金融的中介角色,對於內地經濟發展和市場變化趨勢缺乏深刻理解,可幸這種情況正在發生轉變。專業和商界人士對於了解內地情況的興趣正逐步提高。香港大學北京中心成立一年半以來的活動中,踴躍參與活動的港大校友和香港商界人士愈來愈多。另一方面,內地對香港的看法也有所不同,亦即從2019年之後的負面印象轉為正面積極;舉個例子,近兩年內地學生井噴式報考港大及特區其他高等學府,今年還會大幅增加。

雖然中國經濟同樣面臨種種困難和挑戰,需要透過重大調整和轉型升級,邁向持續增長,但整體經濟規模龐大,雙循環發展戰略中有很多領域可讓香港發揮重要作用。尤其明顯的是大灣區發展,一方面香港具備獨特優勢,可以多作貢獻;另一方面也為特區自身發展,提供一連串戰略機遇。剛剛成立的港大經管學院深圳校區,內設創業及創新孵化中心,眾多初創企業者熱烈申請加入,他們大多是到大灣區創業的香港學生和畢業生。得享香港賦予的國際化視野和資源之餘,又有當地的技術力量和市場資訊,配合良好的創業土壤,假以時日,這些兼具港深兩地優勢的初創幼苗,完全有機會成長為企業界的參天大樹。

大都會展鴻圖

其次,大變局下的世界政治經濟局勢,對香港既是挑戰,更是機遇。中美大國博弈之中,本港難免深受衝擊,前路荊棘滿途。然而危中有機,無論從政治或經濟角度看來,都應該得出這個判斷:香港別樹一幟的地位,未來將成為中國聯通世界更為重要的視窗,為國家的外循環發揮關鍵作用。香港自身的國際化,也正在從被動變為主動。昔日香港總是利用自身國際化環境,以招徠海外資本和人才,不過時移世易,守成的做法無法維持其國際化地位和形象。

特區政府最近一輪疫情防控政策的調整,為恢復與增強國際聯繫創造了必要條件,市民大眾都希望能盡快落實徹底開放的安排。官員最近也紛紛走出去,積極向各國推廣香港、尋求拓展機會,這種「主動國際化」的作為很有必要,也值得讚賞。在政府的積極推動下,國際金融領袖投資峰會本月初剛在港圓滿舉行,超過200名世界金融領袖克服阻力出席,充分展現了香港的國際吸引力。

與此同時,各界和民間也應積極主動加強國際交流和合作,為本港國際化增添活力。港大經管學院今年暑假組成代表團,前赴越南胡志明市和以色列特拉維夫市進行學術交流和教育合作,並參加香港大學設於兩地的中心的相關活動。當地業界同仁表示,疫情爆發之後,這是他們迎來的第一個香港代表團,冀望能盡快恢復與香港的交流協作。由此足見特區的「主動國際化」策略大有可為。

最後,香港內在的經濟轉型和升級值得期待。在上月宣讀的《施政報告》中,特首李家超除了在民生和管治能力提升等主要環節,提出不少有新意的針對性舉措,在人才政策和以創科為經濟引擎的北部都會區發展上,更有一些大膽政策突破和設想。「南金融、北創科」的願景以及文化創意產業的擴展,也令人對香港的前景充滿憧憬。

在港大經管學院9月發表的《香港經濟政策綠皮書2022》中,王于漸教授提出香港足以成為1000萬人口的大都會,廣泛吸引全球多元化人才,以利於經濟轉型和升級。當然,相關政策的實施尚需時日,實現上述願景的過程也必會遇上各種挑戰,但尋求變革和突破已經逐漸成為特區政府與社會的共識,力量已經在積聚,變化一定會發生。有為又有限的政府,高效而包容的市場,兩者在香港結合,必將驅動未來經濟走向長期繁榮。

在局勢變幻莫測的時代,最重要的是堅韌和適變,而這正是獅子山精神的精髓。歷史上每一次香港陷於危機,最終看好香港的都被證明是正確的,筆者寄望也相信這一次奇蹟會如常再次出現。


Source : HKU

A Bodyguard of Lies

James Rickards wrote . . . . . . . . .

Today, I want to talk about truth vs. official lies. More specifically, I want to talk about truth and propaganda.

It’s said that truth is the first casualty of war. And Churchill once said that in wartime, truth is so precious that it needs to be surrounded by a bodyguard of lies.

That’s why propaganda plays such a large role in modern warfare.

The fact is wars are conducted in part through lies and propaganda. For example, in the early days of World War I, the British cut the undersea communications cables that ran from Germany to the U.S.

The British wanted to control the flow of information and issue what we call today “misinformation.” And so they created inflammatory accounts of German atrocities to sway public opinion, like German soldiers skewering Belgian babies on bayonets.

While there will always be individual acts of atrocity in wartime, these reports were largely propaganda.

Here in the U.S. itself, President Wilson had special police forces who arrested anyone reporting negative news on the progress of the war. Sound familiar?

It’s like the social media companies today canceling or censoring anyone who reports that the vaccines don’t work or masks don’t work. The media call it “misinformation” (even though it’s scientifically valid) and move on.

The same is true with the war in Ukraine. The propaganda machine kicked into overdrive early on.

Bodyguard of Lies

The CIA and MI6 leaked a steady stream of anti-Russian lies to prop up morale. These lies were reprinted in warmonger media outlets like The Washington Post, The New York Times and NBC News.

That means it’s almost impossible for U.S. citizens to get the real story through mainstream media outlets. Still, there is some honest reporting going in if you know where to find it.

You just have to filter the sources and find those with good pipelines of information (including inside the government) who do not have a hidden agenda and are willing to speak the truth.

It’s not necessary to rely on Russian sources (the Russians are certainly not above propaganda, although they’re generally more truthful than the U.S. media, believe it or not). There are excellent analyses to be found among Swiss sources, German experts who are not in favor of the war and some on-the-ground reporting from the front lines on specialist websites.

Get Ready for the Russian Counteroffensive

Some of the best sources are found among retired U.S. military officers who are experts on warfare, still have good contacts inside the military and intelligence communities, and who consider the war in Ukraine to be highly detrimental to U.S. national security and the economy.

One top commentator who fits this description is Colonel (Ret.) Douglas Macgregor, who wrote a recent commentary about the war. Macgregor points out that Russia is preparing for a full-scale counterattack to roll-back recent Ukrainian gains near the Donbas and Kherson.

The Russians have been consolidating their positions. resupplying, mobilizing troops, and preparing for winter warfare at which they excel. It’s just a matter of waiting for the ground to freeze so trucks and armor can maneuver without getting bogged down.

The attack could come as early as November or December at the latest. Yet, that is not Macgregor’s main concern.

Is the 101st Airborne Division Being Used as Bait?

His fear is that the U.S. will double down in the face of this attack and deploy U.S. troops to the battle. The Pentagon recently deployed units of the 101st Airborne Division to Romania, just miles from its border with Ukraine.

Airborne forces are generally light infantry that lack the firepower of, say, armored units or mechanized infantry.

But if these forces did get directly involved in the fighting, heavier reinforcements would be on the way. From there, it could be a short step to nuclear war with Russia.

To some, that might sound unrealistic or even paranoid. They’ll say it’s just scare-mongering. But this is a legitimate possibility, and there’s a real chance of it happening. The fact is, we’ve been on the path of escalation with Russia since 2008 and the tempo of escalation has accelerated since the war began in February.

All experts on nuclear warfighting agree that if a nuclear war begins, it will be the result of escalation to the point that one side feels it is cornered and has no choice but to use nukes. That point is getting closer by the day.

Macgregor calls on Congress to stop the White House, but he’s not optimistic that’ll happen.

Nuclear War? It’s Not the End of the World

The possibility of nuclear war between the U.S. and Russia is a shocking development after thirty years, during which nuclear weapons and nuclear war between superpowers were almost forgotten.

What is as disconcerting is the fact that the discussion of nuclear war is casual, almost flippant, and carries none of the seriousness with which the topic was formerly addressed. It also carries no comprehension of the existential consequences and sheer horror that the use of nuclear weapons entails.

It’s almost as if the warmongers in and around the White House were playing a game of chicken without realizing the other driver had no intention of changing course.

Now the U.S. elites have started psychological operations (psyops) aimed at Putin with nuclear weapons as the bait. They claim that Putin has threatened to use tactical weapons in Ukraine and possibly other parts of Eastern and Central Europe.

That’s a lie; Putin never said that.

When asked, both Putin and Prime Minister Dmitri Medvedev said that if attacked, Russia would defend itself by all means necessary, including the possible use of nuclear weapons. That’s not news. That has been Russian or Soviet policy since the early 1950s. It has also been U.S. policy since then. Neither side has ever renounced the first use of nuclear weapons.

Putin’s expected answer to a question posed has been turned into a threat he never made. This is U.S. and UK propaganda at its worst (and most dangerous). This lie about Putin’s intentions quickly morphed into another psyop about a “false flag” operation.

That’s when you stage an attack disguised to look like an attack by your enemy in order to justify your own “retaliation,” which you were planning all along. Recently, the narrative that Putin would use nukes or conduct a false flag operation morphed into a related narrative that Putin would use a “dirty bomb.”

He Said, He Said

In effect, Putin would detonate a dirty bomb and then blame the Ukrainians and Americans. A dirty bomb is not a nuclear weapon, but it does employ radioactive material wrapped around conventional explosives. When detonated, the radioactive material is dispersed and can poison or kill any people or livestock in the area.

Not to be outdone, the Russians countered by saying the U.S. or Ukraine would conduct the false flag by detonating a dirty bomb and then blaming the Russians as an excuse to escalate Western involvement in Ukraine.

At this point, we have both sides warning the other side will conduct a false flag with a dirty bomb in order to justify their own pre-planned escalation. If a dirty bomb does go off, each side will blame the other and the truth will be a casualty of war.

Meanwhile, a senior Russian foreign ministry official has warned that U.S. satellites, which have been providing critical targeting information to Ukraine’s armed forces, may be “legitimate” targets of Russian forces.

How would the U.S. respond if Russia starts taking out its satellites? We may soon find out.


Source : Daily Reckoning

The Difference Between Amateurs & Professionals

Sahil Bloom wrote . . . . . . . . .

When I was a kid, my dream was to be a professional athlete.

This is a fairly common dream among children— there’s something about the glory that is bestowed upon the victorious warrior that is quite romantic.

By age 17, this actually seemed like a real possibility for me. I was being recruited to play baseball by some big-name schools and had even had a few professional scouts come to my games. My childish dream started to feel within reach.

Life, as it turns out, had different plans for me.

Nearing the end of a college career, an arm injury—and probably a deficiency of talent!—brought my professional aspirations to a halt.

After entering the “real world” and observing from afar those among my friends who had achieved those childhood dreams, and those who had achieved remarkable success in other endeavors, I realized there had been a fundamental, foundational flaw in my thinking.

I had viewed “turning pro“ as a point in time—a moment when you flipped a switch and become a professional.

What I came to understand was that being a professional was not about the title—but rather, about the processes, habits, mindsets, and systems. In other words, a professional is not a professional because of an arbitrary title or designation, but because of how they operate and think.

The truth is that we can all level up from our amateur ways and adopt the mindsets and habits of the professional. In doing so, we will accelerate our trajectory, create more luck, and unlock new opportunities.

Here are 11 differences between amateurs and professionals that you need to understand if you want to start leveling up.

Amateurs let the day come to them, Professionals have a routine

The greatest performers in any craft share one trait in common: They have a routine—and they stick to it with intense discipline.

Most of what we call greatness is simply the result of tiny daily actions done well—over and over and over again.

Professionals establish a routine and use it to own each day. They eliminate questions and surprises by controlling the narrative.

Professionals also realize that a routine is useless if the environment is unsuited to following it. Professionals create their environment, they don’t just exist in it.

They dictate the terms.

Amateurs love the prize, Professionals love the process

You’ll never make it if the view at the summit is the only thing motivating you to keep climbing.

The hunt has to be just as exciting as the meal at the end.

It may sound cliche, but professionals truly fall in love with the process.

Amateurs make it look effortful, Professionals make it look effortless

The Paradox of Effort: You have to put in more effort to make something appear effortless.

Professionals recognize that effortless, elegant performances are simply the result of a large volume of gritty, effortful practice.

Small things become big things.

Amateurs blame others, Professionals are accountable

In the wake of a failure, there are two types of responses:

  1. The Amateur looks outward—bad luck, unfair circumstances, a cheating opponent.
  2. The Professional looks inward—lack of preparation, gaps in routine, uneven intensity.

Type 1s stagnate and wither away. Type 2s grow.

Amateurs attribute success to skill and failure to luck. Professionals recognize the role of skill and luck in every outcome. They focus on the controllable factors. They create an environment where luck is more likely to strike.

Accountability breeds progress.

Amateurs are flashy, Professionals are relentless

Many people are able to produce bursts of energy—few are able to produce consistent, steady flows, day in, day out.

The former is flashy, but the latter is relentless.

Professionals take pride in punching the clock—in showing up—every single day.

Never bet against the person who just keeps showing up.

Amateurs enter with 100 mediocre moves, Professionals enter with 1 perfect move

“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.” – Bruce Lee

Professionals identify their unique edge—they play *their* game.

The Professional is:

  1. Self-aware to determine their unique edge.
  2. Strategic to set the table to favor that edge.
  3. Ruthless to exploit that edge on the table they set.

They worry less about fixing their weaknesses and more about pressing their strengths.

Amateurs fear failure, Professionals embrace it

The Paradox of Failure: The more you fail, the more you ultimately succeed.

Shots on goal are necessary if you want to score. You’ll miss 100% of the shots you don’t take!

Our greatest moments of growth often stem directly from our greatest failures.

Professionals don’t accept failure as inevitable, but they certainly don’t fear it either.

Remember: You will fail. Embrace it. Fail smart and fast.

Amateurs fear being wrong, Professionals enjoy it

When faced with their own incompetence:

  • The Amateur flails wildly in an attempt to distract from the obvious gap.
  • The Professional enlists support to cover the incompetence and repositions the board to avoid its exposure.

Professionals have retrained their minds to embrace new information that forces a change in viewpoint and a strategic improvement.

They view each “software update” as an improvement upon the old.

Remember: Open mindsets rule the world.

Amateurs are impatient, Professionals are patient

Amateurs are: Patient with actions and impatient with results.

Professionals are: Impatient with actions and patient with results.

Professionals are able to delay gratification—their low time preference allows them to play long-term games more effectively—but they simultaneously embrace that long-term games are won through tiny daily actions.

Amateurs hope for good breaks, Professionals create them

Amateurs enter the arena with their fingers crossed.

Professionals enter the arena with a plan. They realize that some of what we call luck is the macro result of thousands of micro actions.

Professionals create more luck.

Amateurs press, Professionals wait

When pressure and stress levels elevate:

  • The Amateur is uncomfortable—they press in an effort to fast-forward to the finish.
  • The Professional is comfortable—they observe their opponent and wait for the opportune moment to strike.

The Amateur always leaps into motion, believing that forward motion is progress.

The Professional moves slowly—pauses, thinks, and acts.

The Paradox of Speed: Slow down to speed up. Slow is smooth and smooth is fast.

Conclusion

The truth is that we can all “go pro” in whatever we are doing—it simply requires us to adopt the ways of the professional.

Internalize these 11 differences between amateurs and professionals to get started on your journey.

I’d love to hear from you:

  • What other differences between amateurs and professionals have you observed?
  • When was the moment you knew that you had become a professional in your craft?


Source : Sahil Bloom