Assorted links


A spectre is haunting Europe — the spectre of Scottish independence. All the powers of old Europe have entered into a holy alliance to exorcise this spectre: Torries and Labour, J.K Rowling and Jose Manuel Barroso, British Liberals and even American columnists.

#1 - Very odd column. Who is Spain supposed to merge with to prevent its detaching from the Continent and sinking under the waves? What about poor, embattled Finland, Iceland, France--going it alone!

If Scotland secedes, I get the idea they'll be in for the same treatment from economists which New Zealand gets for not turning itself into Hong Kong.

The analogy is an independent polity (more or less) paired with a shared or forced monetary authority. The implication is not that Spain should secede but that it never should have given up monetary authority in the first place, or it shouldn't have paired the independent with the shared.

The Krugman column is O.K. - but just O.K. He makes the same points everyone else is making, only he pairs it with a straw-man? Who is comparing Scotland to Canada. I've seen everything from Norway to Panama to Denmark. Haven't seen Canada.

Apologies, correction.... "the implication is not that Spain should merge."

Whatever Krugman says, do the opposite

Nobody has been so wrong so consistently : - )

False Doom prophets

1. Nouriel Roubini
2. Marc Faber
3. Alan Greenspan
4. Wolfgang Münchau (FT)
5. Paul Krugman
6. Max Otte
7. Harry Dent
8. Roland Leutschel
9. Albert Edwards
10. Peter Schiff

Death to the Empire : - )

It would be cool if Tyler could have the word "Krugman" in his post and people could actually respond to what Tyler says about it, instead of just seeing red and "bitch here about Krugman."

It's not that there aren't things to bitch about Krugman, but there are lots of places on the Internet to do that, and it's very boring to read the bitching every time.

I see your point, but I also think that whoever links to Krugman deserves to have the link thrown back in his face.

It's natural to think that when Krugman says something, it must be wrong. But that's not true. In this case, however, yes he's wrong again.

The only danger with Scottish independence is the danger to the reputations of people who say that bigger, more powerful statism is always the solution. An independent, functional Scotland would be one more place that Krugman has to pretend doesn't exist, and there are far too many of those already.

Yes, Scotland would be better off long-term with its own currency, which is why they will probably develop their own currency in the long-term. That's too complex for old Paul, apparently. Or maybe he's just too focused on ALL THE DANGER.

For consistency then, you support a US split into about 60 countries? You know, to avoid "big" government.

That was the original idea, before the imperialist Lincoln

rick, don't make this about your dream of running a plantation with slaves.

If you changed '60' to '6', you might be surprised how many ordinary-seeming people would support that split.

If Scotland had as good a deal in the UK as Florida has in the US, I would agree with Krugman and Tyler, but it does not. It is a marginal backwater who has only been saved from the fate of Yorkshire and Tyneside because of its relics of Independence. Unlike the US, Britain, even the one of Blair's devolution, is no federal state, it is a state with one Metropolis, and that leaves no room for Glasgow, or Cardiff, or Liverpool. It doesn't even work all that well for Birmingham and Manchester.

Scotland profited greatly from the middle century of the union, the Lowlands did well enough in the first century, but culturally declined, but this last century has not done well for the country and every trend-line suggests that this will not improve.

Finally there is the political stagnation caused by Independence. Like Quebec, the nationalist win election after election solely on a dream of escape, and even after referenda saying no, the vision of independence destroys the present by allowing politicians to take a stand on this one issue while ignoring everything else. Until both Quebec and Scotland are free they will not grow up to attend to their own affairs. The Free State was a farce, but during that period the seeds of modern Ireland were sown. Any British region other than London and the Southeast would envy what the most ignorant and impoverished part of the British Isles has become, even with recent turbulence.

Imagine for a moment that the Scots were to dominate British politics and direct national policy. What substantive changes could they make to improve the economic outlook for cities like Glasgow?

They can't bring back the shipyards, steel mills, coal mines and textile factories that made Glasgow rich in the first place.

It was Britain's foolish insistence on supporting these uneconomic industries in the post war years that diverted resources away from investments in new industries to maintain the UK industrial base. By the time Thatcher came along and hacked away at the subsidies, there was nothing left to bounce back from. The center of global industrial innovation had already moved to Germany, America and Japan.

I'm sympathetic to the self rule argument (and what American could oppose the principle of self determination?) but the Yes camp has to more clearly spell out how it plans on using independence to build a self sustaining economy including a real answer to the currency question.

"If Scotland had as good a deal in the UK as Florida has in the US"

The federal governments atrocious handling of the drug war in general and the Mariel boatlift in particular significantly retarded the economy of South Florida in the 1980s and 1990s. The resulting spike in crime and disorder drove away would-be investors, residents and visitors. Miami's spectacular boom today would have been shifted forward by two decades. Alternative historical speculation is always fraught with risk, but it's likely that Miami would be among the top three most economically important cities in America.

It seems the academics and columnists really believe it existentially critical for all mankind to keep paying tribute to the queen...and if we don't ....OMG!!! sky is falling!

The proposal on the table is to continue to be ruled by the Queen in the event of independence. So, uh, pretty much the Scots are going to keep "paying tribute" (in a non-monetary sense) to the Queen. that case maybe it will actually pass. Before I assumed they would never allow it (by hook or crook).

I wouldn't read too much into that though. The Yes camp sensibly wants to tackle only one issue. If people want to end the monarchy, they can do that in a separate vote. No need to confuse the issue here.

The "seeds of modern Ireland" didn't sprout until a good sixty years after independence. In the meantime decades of parish-pump corruption, populism and mismanagement, by Fianna Fail and Fine Gael both, drove the Irish Republic to the brink of bankruptcy by the 1980s. Politicians used both the Catholic faith and the secular cult of future Irish unity to convince voters into thrusting them into office year after year despite an utter lack of improvement in their lot. Convergence with the UK didn't begin in earnest until Fianna Fail and Fine Gael, whose differences on policy had all but disappeared, finally put aside their blood feud over who had betrayed the vision of independence and got on with modernizing the economy.

It's been said often by cynics that the Irish are as happy to be in the EU as they are because they know the British wouldn't take them back for anything. Certainly none of the Celtic fringe nations (Ireland, Scotland, Wales) are viable economically except as de facto or de jure parts of much larger economic units, the only real discussion in serious policy circles being whether that should be the UK or the EU. The UK remains Ireland's largest trading partner; presumably England would be an independent Scotland's.

Would the Irish have voted YES on independence now if they hadn't got Home Rule in 1922? We'll never know, but I doubt it. In the North, support for joining the Republic diminishes with each passing year.

So. Look before you leap.

It was land reform, the removal of Fenian agitation and the gun from Ireland, that most people see as the product of Dev's various governments, but you have to look at the creation if a skilled workforce, even if most of those trained emigrated. When it came time to practically pay companies to build factories in the country there was two generations of training to man them. Everything else flowed from that, from the hospitals and enterprises paid for by the crooked men selling sweepstakes tickets. But the real accomplishment was an Ireland that became a country so sleepy and normal that when the Troubles broke out in the North it could placidly ignored them.

Yeats once wrote that without the English invasion:

It [Ireland] might be now like Bayeux or like Caen
Or little Italian town amid its walls
For though we have neither coal nor iron ore
To make us rich and cover heaven with smoke
Our country, if that crime were uncommitted
Had been most beautiful.

What the Free State did was allow Ireland to mostly forget that, and by the time of the Celtic Tiger they really had..

The “seeds of modern Ireland” didn’t sprout until a good sixty years after independence.

Rubbish. The country had decades of economic improvement and counted as an affluent country by about 1975, though with a per capita income about a third lower than that of the UK (N.B. the pci of Wales is about 25% below the mean for Britain as we speak). What was salient about what occurred after 1990 was the destruction of what was distinctive and winsome about Ireland as a society. The world did not need another repulsive Eurotrash sex-and-death boutique, but that appears to be what the "Modern" Irish are determined to offer.

Certainly none of the Celtic fringe nations (Ireland, Scotland, Wales) are viable economically except as de facto or de jure parts of much larger economic units,

There are 4.6 million people in the Irish Republic. The place is more populous than New Zealand and nearly as populous as Norway, and more affluent than New Zealand and nearly as affluent as Norway. You could say the same of Scotland. Neither Norway nor New Zealand are incorporated into any supranational institutions and both have their own domestic bourses, research universities, and medical centers. The notion that Ireland and Scotland are not 'viable' is tommyrot.

Of all the arguments for Scottish Independence, the first one you make is the only one that resonates with me. Scotland's relationship with London is like upstate New York's relationship with New York City; there is not enough political attention because the major city sucks it all up. New York state took the opportunity to start the government in Albany to try to attain balance, which helps.

On the other hand, many people promoting the idea of an independent Scotland have not been making this argument. Their arguments have been silly, churlish or arrogant.

Anyway, do what you will. Good luck either way.

I think most nationalistic arguments are stupid and churlish by definition, but that doesn't mean that they aren't proxies for something real. The American arguments before our revolution were almost universally terrible, but Britain was holding back the development of the country and our rapid expansion and industrialization after finally ridding ourselves of them in 1786 and for good in 1815 proves it.

The Upstate New York analogy is very good, states with two contending cities like Texas, California, Florida, and even Ohio, Missouri, and Pennsylvania are more dynamic than ones dominated by one. This goes from IL and NY through WA, GA, and ID.

"...for good in 1815"?

A musty old story told to children. Britain was not out to re-conquer America in the War of 1812, a time when it was locked in an existential fight with Napoleon. The only conquest attempted was that of Canada by the United States.

First, Britain did stop US trading ships and impress (enslave) US sailors. Secondly, Britain was in general worried about competition to their commercial trading and attempting to curtail US commercial trading:

"In 1807, Britain introduced a series of trade restrictions via a series of Orders in Council to impede American trade with France, with which Britain was at war. The United States contested these restrictions as illegal under international law. Also, historian Reginald Horsman states, "a large section of influential British opinion, both in the government and in the country, thought that America presented a threat to British maritime supremacy".

The American merchant marine had come close to doubling between 1802 and 1810, making it by far the largest neutral fleet. Britain was the largest trading partner, receiving 80% of U.S. cotton and 50% of other U.S. exports. The British public and press were resentful of the growing mercantile and commercial competition. The United States' view was that Britain's restrictions violated its right to trade with others."

Again, Britain was in an existential war with France over the period in question. Yes, it is possible to take all issues of geopolitics and boil them down to commercial interests -- an intellectual exercise often associated with Marxists. But Britain had a very good reason for wanting to disrupt France's ability to import goods and that reason was to disrupt Napoleon's ability to supply his army. Any discussion of trade disputes in the early 19th century has to start with the simple fact that there was a world war raging at the time.

"Any discussion of trade disputes in the early 19th century has to start with the simple fact that there was a world war raging at the time."

Then I would conclude that it was incredibly stupid of Britain to enslave American sailors and blockade continental trade (far beyond actual French ports) thus driving the US into the war on the other side.

As a native Texan who now lives in what was once the Oregon Territory, I hace great doubts that US westerward expansion would have succeded if the Brits had had their way. The most important battle of the war of 1812 was New Orleans, and it was the moral effect that made it so. That it was weeks after a peace treaty that did not even mention Louisiana or the Transmississippi only emphasizes the point.

I think most nationalistic arguments are stupid and churlish by definition,

Well, stop being churlish and kindly emigrate.

I didn't say I didn't agree with nationalist goals, I just said most arguments were poor and ill founded. If you say we should have a law saying you can't murder people or steal because the Sky God told you, it is a stupid argument. Churlishness is in the eye of the beholder. Thersites was right before the gates of Illium when he pointed out that Agamemnon was a poltroon and the whole Trojan enterprise was idiotic but he was still churlish in manner.

but it does not. It is a marginal backwater

It is no such thing any more than Norway or Switzerland count as 'marginal backwaters'. It has a level of affluence near British means and a population and core city adequate for a sovereign country.

Yet somehow NYC continues to dump money into the endless pit that is 'ignored' upstate. Would that they discovered oil in southern lake Ontario and fantasies of 'welfare queens' stealing hardworking Western NY's taxes had an ounce of truth!

Yet somehow NYC continues to dump money into the endless pit that is ‘ignored’ upstate.

Shelly SIlver and Andrew Cuomo do something altruistic? I don't think so.

It isn't altruistism. Upstate acts as a political spoiler between NYC and its suburbs (which together have more than half the state's population). They extract all the pork they can from that leverage.

I just voted for Teachout.

They extract all the pork they can from that leverage.

Really? How much?

About $12B a year. Out of a state budget of around $90B.

Krugman isn't warning about Scottish independence; he's warning about it *combined* with an external currency.

Which anyone could have predicted he'd say.

And which is completely unrelated to the usual "oh noes, Scotland and England are supposed to be friends!"

Yep. Telling that nobody so far has engaged with his actual argument.

because that will be sorted out after the vote

No. The whole point is that this is not the kind of thing you can "sort out." You really don't understand the argument, do you?

Thing is, nobody's seriously suggesting that Scotland should print its own pounds.

Ireland has never really had its own currency. The Irish pound was backed pound for pound by British pounds till 1979, and was pegged more or less tightly to the German mark (through ERM) until it joined the euro.

Europe never had it's own currency either...what the hell does that matter?

The French never had the internet before 1960...does that mean they never should?

Thing is, nobody’s seriously suggesting that Scotland should print its own pounds.

Several Scottish banks do issue local pound notes, and yes people are seriously discussing it.

Misleading headline, Krugman is saying that the European countries should have kept their original currencies and Scotland should also get it's own currency if they become independent.

Krugman isn’t warning about Scottish independence

Yes, but his opening paragraphs leave a certain impression. His editors need to tell Robin Wells to order her ideas better.

#5 "Why has the economy’s supply potential declined so much relative to the pre-2007 trend?"

We aren't as rich as we thought we were?

Everyone went crazy between 9/11 and 2007?

Because that was just a short term debt-fuelled bubble,

See Warren Brussee "The Second Great Depression, 2007-2020"

Yeah, he sounds wrong on the pessimistic side. False Doom Prophet #11?

..... : - )

he developed some borderline socialist ideas afterwards,

but he got the timing right on the first number, and it was the right dependency, household debt

#6"Nor is the F-35 particularly unique. Programs like the F-35 have provided Americans with jobs, but have often been of dubious value to our military while costs greatly exceed initial estimates. Meanwhile, new Chinese weapons systems continually exceed U.S. expectations."

Pfft, this line gets repeated with every new boogyman that comes along. The establishment views every new 'enemy' weapon system as some miracle of military might, while all we can see is our own failures. While the F35 is an expensive failure, remember, we have ready access to all the weapon systems over the decades that werent failures. China has to build all of those systems themselves.

I like how in an article defending current spending, he still ends up pointing out a fact against current spending; namely, that we have $400 billion being thrown away on a useless project.

The article completely omits any mention of the rampant corruption which cripples the PLA. Without including that, the analysis is deeply flawed.

The PLA is a lot of things but it is not much of an Army. Outside of specialist troops most of the army would be complete dead weight in any actual war. Of all the current Nuclear Powers, other than the unique case of Israel, China is the one most desperately in need of the things.

That article suggests an easier strategy for Western military leaders: have the CIA bribe Chinese military officers and contractors. It would cost a lot less than $400 billion.

I guess it's probably already happening.

Getting high-level officers directly on the payroll might be a problem. But a strategy that seeks out the most incompetent officers and helps them pay the bribes might work.

"Hey, Chu, you'd make a good captain. It's a shame good men like you don't rise more quickly. We could help you with that."

Yeah. That seems like a real possibility. I guess any number of enticements/incentives which could be dangled in front of these military leaders and contractors. For example:

* A spacious McMansion a nice American or European neighborhood

* A solid real estate investment in a California neighborhood somewhere (e.g. a few houses in a new tract being built in south San Francisco)

* The guarantee of admission to Harvard or Princeton for a son or daughter


I never realized what a bastion of Scottish nationalism the MR comment section was.

When the monopolies on violence expand their sphere of influence it makes it harder for individual humans to choose the best places for them to live.

When the monopolies on violence expand their sphere of influence it makes for less competition between the various governments to create nice societies to live in....instead they can rely more on their use of force to gain subjects from which wealth can be plundered.

These are the critical reasons why I am prone to be okay with secession or on the side of colonies gaining independence as a general principle.

To build up a strawman and say that people of my leanings are "Scottish nationalist" is obscene. It invites people of my persuasion to say that people on the side of the queen have some sort of religious fetish towards the centralization of power in the fewest number of people possible.

Scotland is becoming independent so that it can build an even larger welfare state and engage in even more wealth redistribution than the UK. I don't understand why all of these libertarians in the MR comments are suddenly eating haggis and playing bagpipes.

If the Scots want a welfare state more than the English, that must mean that the inverse is also true. The English are more free market oriented than their northern neighbors.

An independent Scotland means a more Tory-dominated England and more freedom for the English to shrink their welfare state.

For this reason alone I had expected the Tories to support Scotland's independence, on the same token the loss of 40 MPs will cripple the Labour party. I believe there is a single Tory MP representing Scotland.

Perhaps they support the freedom of the Scots people to live as they choose. Even if those people choose the "wrong" things ultimately. Doesn't seem all that complicated.

If the UK were a libertarian utopia and the Scots were leaving in order to establish a government that would force all of its citizens to build temples to Karl Marx all over the land, libertarians would probably counsel against the move.

Given the actual UK, why not have the Scots do as they wish?

--- The word "Scots" in the first sentence above should be replaced with "Scottish."

I understand there is a high likelihood that they will be even more socialist than the UK...if so then that will provide a data point from which humans can learn. The Scottish may even learn from it and change their minds or maybe the most freeminded-productive ones willflee to other countries and help protect those countries from socialism and as the population declines the economy gets worse perhaps the Scottish government could change its strategy...or the rest of the world can point and say "look what socialism does" and maybe that will inspire the UK to learn from what they perceive to be a bunch of stupid scots...and maybe the UK will become less socialist just by ridding themselves of a bunch of stupid socialists..the point is I do NOT want to increase the sphere of a monopoly on violence just because of what I am afraid might happen.

"Scotland is becoming independent so that it can build an even larger welfare state and engage in even more wealth redistribution than the UK. I don’t understand why all of these libertarians in the MR comments are suddenly eating haggis and playing bagpipes."

For the most part, Libertarian's want people to be free to choose their own path. If Scotland wants to run their own country, their own way, more power to them. On the other hand, many statists, just seem to always want the largest state possible.

They sure don't seem to like southern states deciding how to live their lives when it comes to the issue of abortion.

Who did you have in mind? I'd say the general Libertarian stance is that the government shouldn't restrict abortion, but shouldn't fund it either.

We do it to reward Tyler for his terror regarding Catalan Independence, a far more fraught issue. Since we can't sing a chorus of El Segadors while pelting him with nonviolent rocks.

As for myself, my godfather was once SNP candidate for Sterling, talk about romantic idiocy, but now he lives in Southwark and hems and haws about it. Without the EU I would be utterly opposed, but I just think independence is a better bet than more devolution.

4) They do. And the evidence so far, including the linked paper, confirms that. If done right, as is often the case, narrow networks have no negative impact on quality of care and actually encourage more appropriate primary care use.

#1 "But Canada has its own currency, which means that its government can’t run out of money, that it can bail out its own banks if necessary, and more. An independent Scotland wouldn’t. And that makes a huge difference."

Luckily, bailing out failed banks with printed money is totally consequence free.

It has been so far.

OTOH, if we're just waiting for the other shoe to drop, then we are in for one hell of a bust.

OTOH, if we’re just waiting for the other shoe to drop, then we are in for one hell of a bust.

Austrians are like early Seventh-Day Adventists.

Yea, if you choose to start history at about 1990 or so and ignore anything that isnt America.

#1: Isn't the prospect of dire economic consequences a feature, not a bug, to some of the electorate, as long as England suffers at least as much?

#1: 'Canada (...) is politically to the left of that giant neighbor' - not really, judging by the relative size of the welfare state:

#4: This just goes to show how much we would gain from having even the smallest measure of first-person cost exposure in health care. I think what is basically going on here is that limited network plans create a bit of a convenience expense for the patients. I might be willing to take 30 minutes to go down the street to get all those unnecessary labs. But, I'm not going to drive across town and take the entire day to do it. The added inconvenience is a very sloppy, imperfect way to impose some first-person costs, and to tilt the decision context toward one with at least some acknowledgment of scarcity. Imagine how much waste we would avoid if we were exposed to those costs more often.

+1. Very good point. This is how we contain costs in Canada: [very] slow, but universal access.

True. Maybe if massive, non-price rationing is the best we will do, we should aim for rationing that reduces usage. For instance, instead of making everyone wait for 6 months to see a specialist, we should just pointlessly make everyone sit in a waiting room for 5 hours to see a specialist. It would probably reduce the queue tremendously, and the opportunity cost to the patient would make it a sort of progressive redistribution.

This is what I think of as smart rationing, but is a really a kind of payment mechanism that offers more responsibility and choice for the consumer. It has saved a lot of money.

Maybe, but there are plenty of very high deducible health plans out there now. The first dollar exposure is actually quite common in our system.


it was a good Krugman column (and I like him just about as little as everyone else). he does miss another more important point though which is that with Scotland independent the Labour party can forget about winning elections again for a long time. Which on its will probably create enough benefits for the (remainder of the) UK population to outweigh any suffering of the Scots. It will be an experiment between socialism (with oil) and capitalism. Not really to the levels of BDR:DDR or North Korea:South Korea but you still get the point. And it's apparently an experiment worth making every now and then given the claims some people continue to make of the benefits of socialism.

Labour would remain a competitive party after a jump towards the centre assuming you hold the view that political parties espouse the views which will get them elected.

True, but still a win.

" In Florida’s case, most of the fiscal burden of the slump fell not on the local government but on Washington, which continued to pay for the state’s Social Security and Medicare benefits,"

Duh, those are federal programs, as is the income tax.

Taxes ebb and flow with the economic cycles too. When Florida was booming, federal income taxes were being collected in large amounts and redistributed to states that weren't booming. When Florida crashed, tax revenue from more successful states was redistributed to Florida.

#1. Krugman's argument seems contradictory

On the one hand, he points out that the EU model has been bad for multiple small countries, but then he argues that Scotland should remain part of the UK and a member of the EU. Wouldn't the more consistent argument be for Scotland to separate from the EU if it becomes independent?

Incorrect: as a part of the UK, Scotland uses the pound not the euro. Being independent it would have to use either £ or € but either way it would be a currency it had no control over, and no ability to print.

There's nothing stopping Scotland from adopting it's own currency, much like New Zealand does. So no, my statement is not correct. You have to be pretty inflexible to believe that an independent Scotland's only choice is between the Euro and the Pound.


Easy solution: have a constitution that forbids the government from taking up any debt.

And leave all current debt to the non-Scotland parts of the UK.

Prevent banks from doing anything with deposits other than storing them in the vault, so you never have to bail them out.

I'm curious why Tyler mischaracterizes Krugman's argument. He doesn't say that Scottish independence per se is a dangerous idea, only that it is dangerous should it seek to use the pound or euro. Tyler is also a seeming opponent of Catalan independence. Seems to me that libertarian theory should encourage the formation of more states, both as it promotes greater local control and more competition among countries, yet Tyler appears to go the opposite direction. I wish he would explain this.

New York Times columnist solidarity is more important than libertarian ideas. He is only a salesmen of statist ideas to libertarians, not a libertarian trying to popularize the principles of individual freedom.

Seems to me that libertarian theory should encourage the formation of more states,

They're only for 'charter cities'. Historical or national entities are bad in that they recognize affinities that are not reducible to economic modeling and are un-needed by people working in 'knowledge' occupations who have 'colleagues' all over the world.

They’re only for ‘charter cities’.

Not sure about that. Here's Dan Mitchell of the Cato Institute cheerleading for Belgium to split up:

And here's Cato's David Boaz appearing to take a favorable opinion on Scottish independence:

I'd be more impressed with Boaz' remarks if he were minimally familiar with Scottish production statistics and not a subscriber to the usual isolationist shizz. Mitchell's remarks seem a confused application of the typical open borders blather.

#1: If that mess counts as a 'very good column', you're really telling us your mind is closed on the subject.

Folks, I do not see how Krugman's column is controversial to any of you. His essential point is that there are two types of stabilization policy: (1) fiscal, in which you send excess taxes in good times to other places in the fiscal union and receive payments during bad times (as is the case with Florida pre and post boom) and (2) monetary.

The fact is, when you leave a fiscal union the stabilizing impact of membership in that union is gone. This would be a minor problem, except that it is occurring in combination with staying in a monetary union. This makes a fiscally independent Scotland that is using the pound much more volatile.

As someone of libertarian persuasion, I see the fiscal union that Scotland is part of now as wasteful, and I feel that an independent monetary policy could provide them with the necessary stabilization. But Krugman didn't disagree with this, he merely said that becoming independent fiscally without doing so monetarily was dangerous; this point is fundamentally Sumnerian, and I don't see why it rankles libertartians in this thread. I suspect it does not do so in general, but it's painful to see this very important point blasted as if it is a Marxist plot.

#7 has shockingly bad economic logic on display:

> Now take another look at the chart above: This would mean that U.S. oil prices would drop by between $7 and $22. The most obvious result of this would be to depress U.S. oil production relative to what it otherwise would have been.

> But now stop for a moment: We are predicting a world in which oil production is lower and oil prices have also dropped. This makes zero sense: less oil production results in higher prices – not lower ones. Friedman’s claim about oil exports and oil prices quickly leads to a logical impossibility. The only possible conclusion is that Friedman is wrong.

I don't even know what to say. The price drop is given (by the chart), and we deduce that lower production will result. Economics 101. Then immediately we "stop for a moment" and conclude this could never happen. What gives?

Someone is reasoning from a (hypothetical) price change.

6. Noah Smith has apparently never spent a day in uniform.

The US military is organized around force multipliers that excel at power projection. In a conventional war against China, it would take a matter of hours to destroy their entire navy and days to destroy their entire air force. At that point the ground troops are ground beef. China doesnt even possess the sealift capability to invade Taiwan successfully.

Russia would be a much tougher opponent, but we would still make quick work of them. Their morale would collapse long before we destroyed their military.

Those F-35s may be a phenomenal waste at the margin, but they will still outfly anything they come up against. War is about setting up a series of unfair fights, and nobody does this better than us. Our failures came when we decides we didnt really want to win.

All these bets are off when it comes to nuclear weapons.

I seem to recall some rather famous figures having proceeded under this assumption before, it was certainly wrong then.
Maybe. Yes

BS. They werent wrong. What was wrong was the spineless cowards and traitors that undermined the wars. Our military superiority was never in question.

Seriously, how long do you think China's air force and navy would last against the US alone, much less accompanied by our allies?

oh if only we had decided to burn more children alive in straw huts!!! Murica!

Am I right Willitts?..

Whoa. Your comments says loads about YOU and nothing else.

"Seriously, how long do you think China’s air force and navy would last against the US alone, much less accompanied by our allies?"

That's a good question. I think that China would hold up better than a first off comparison would indicate. China would be forced to either "use" it's Air Force and Navy, in which case the Navy (outside of the submarine force) would be effectively gone in a month and the Air Force would be in-effective in a few months or it could play defensively with both. If it played defensively, it would lose any force projection abilities much beyond its borders, but the Navy and Air Force would remain largely intact.

So, I think Willitts you are correct, that the Chinese military would (in it's current state) be woefully prepared to execute a war outside it's border with the US, but on the other hand if it were purely a defensive war against an invading US, then it would at the very least fight the US to a draw. How useful the Chinese military ultimately would be is largely defined by the mission to which it would be tasked. That being said, Taiwan is close enough to the Chinese borders

On the other hand, in the near to medium future, drones and lasers are going to completely change the face of air war and naval war. This is the reason, why I think the US should have cancelled the F-35 program. Manned aircraft will be of questionable value within 15 years and obsolete in 30 years. The cost of the F-35 program is too high when viewed through a 15 year life cycle.

"In a conventional war against China, it would take a matter of hours to destroy their entire navy and days to destroy their entire air force. At that point the ground troops are ground beef."

Doesn't matter. China was successful at guerrilla warfare against superior military and industrial power before. It would be again. How many more times do you want America to shed its blood and treasure on foreign soil?

Speaking of morale, the U.S. doesn't even have the morale to secure an independent Iraq, which most people seem to believe is already lost. Give it up - we are never ever conquering Russia, China, and the rest of the Orient.

Who said anything about wanting to conquer them. I was speaking purely about military capabilities.

Everybody has the capability to conduct guerilla operations. It isnt impressive.

Right, it isn't impressive, it's just effective.

Americans do not have the will to defeat continental Eurasian nations, let alone major military powers like Russia and China.

Somebody hasn't seen Red Dawn. Though I'll admit to not bothering with the remake.

"Though I’ll admit to not bothering with the remake. "

A bad movie, that was made worse by the last minute remaking of the invading Chinese into North Koreans.

'Everybody has the capability to conduct guerilla operations. It isnt impressive.'

Well, the people living in Ho Chi Minh City might have a different opinion. Along with a number of people living around Seven Corners in Virginia.

But the people living around Berlin, didn't see a lot of success with guerilla operations. Neither did Virginia for that matter.

"All these bets are off when it comes to nuclear weapons."

Even with nuclear weapons American superiority against China is assured. US nuclear capabilities dwarf Chinese capabilities. At best a nuclear exchange scenario would involve the Chinese taking out 5-10 million people in major population centers with little to no impact on American conventional or nuclear military capability. At worst China would do no damage and all its missiles would be taken out preemptively or blocked by the shield. Chinese military doctrine recognizes this and has a no nukes first policy under any circumstances.

Even if they were creamed in a conventional war in the Taiwan straits, they wouldn't think about touching nukes. There is assuredly nothing mutual about China's assured destruction in a nuclear with the US.

'Their morale would collapse long before we destroyed their military.'

Napoleon, right? Possibly Kaiser Wilhelm II? Or maybe that Austrian corporal?

I believe, Willitts, that any future war between great powers will have a significant cybernetic dimension, and I am not so sure that the USA holds an overwhelming superiority in this regard. Both the Chinese and the Russians, as well as a host of smaller nations (Taiwan, Israel, Estonia) seem to ramp up their cyber-military teams.

People tend to fight the last wars in their minds. I do not think that anyone can accurately assess a damage from an all-out cyberstrike. Well-deployed digital weapons might disrupt all the necessary supply chains at once (not just military, but civilian ones), thus crippling the economy needed to support the war effort.

Typical trivial article by Krugman. All the main parties in Westminster have stated that if Scotland votes YES then it can't use the pound (obviously it can have its own currency and call it what it likes - pounds, roubles, yen - but they'd be a separate currency issued by a separate, independent state). The bottom line is that Scotland could very a successful independent state; or it could become a disaster. Much of that depends on factors such as good governance, a strong "legal" culture, levels of education etc etc. Look at the dramatic divergent growth paths of the many LDCs (as they were known) over the past 50 years. South Korea has become an economic powerhouse; Ghana's economy has stagnated. Yet Ghana at independence was the country with the advantage of natural resources, an established, educated middle class and what appeared to be a stable, democratic system. It's up to the Scots.

'have stated that if Scotland votes YES then it can’t use the pound'

Which is a meaningless statement, actually. A slightly less meaningless statement would be that if Scotland were to use the pound, Scotland would have no say in BoE policy making, nor participate in any UK programs involving something like deposit insurance.

The Scots can use the pound, the dollar, the euro etc. Whether that is wise might the sort of question to ask countries like El Salvador or Panama or Ecuador - none of which currently have their own currency.

@ Mr Krugman’s opinion

I think he is missing the point entirely.

Spain got(!) the euro.
Scotland will keep(!) the pound.

It is because the Spaniards got the euro as a supposedly “deutschmark-in-disguise” that the Spanish economy as a whole went on a spending spree. With the well-known disastrous consequences.
If the Scots on the other hand will just keep the money they are used to – (maybe) just with a new name – I don’t see any incentives, why they should alter the way they are spending.

The issue with oil exports revolves around US refining capability.

The US remains a leading net importer of oil. Increased US oil production leads primarily to a reduction of oil imports from elsewhere. Nevertheless, not all oil is fungible. US refineries are geared more towards sour, heavy crudes, whereas shale oil production is light and sweet. Light sweet oil is best refined outside the US. Thus, the idea would be to export surplus US light, sweet and continue to import heavy and sour grades.

If exports are banned, and the surge in shale production continues (petroleum liquids were up 1.5 million barrels per day in July over the same period last year), then at some point--relatively soon--US refining capacity will be swamped. If the shale crude cannot be exported, then the price differential between the US (WTI, LLS, etc) will blow out compared to Brent, the international standard. This will have the effect, on the one hand, of suppressing some US production, and more dramatically, prompting a rapid increase in US light sweet refining capacity, as refined petroleum products can be freely exported. The expansion of US refining capacity is already well underway. (Republicans are already pro-export; why Democrats would think boosting US refining is in their interest baffles me.)

If exports were allowed (and they will be and partly already are), US oil prices (but not gasoline prices) would tend to increase; Brent would decrease, probably on a +10:-1 ratio or so (US production is about 1/10th of global supply, depending on what I want to include). But as Levi writes, the two prices would tend to converge.

At current production growth rates, a price of $75-85 / barrel, on a sustained basis, is inconceivable without the sustained collapse of China (which is not inconceivable). We could get there if US oil production (all kinds) increased by, say, 2.0 mbpd / year, that is, 500 kbpd / year more than today. Not impossible. But that would have a dire effect on the IOCs. Shell has already announced that it is scaling back its oil business; Exxon's upstream spend (on oil exploration and production) is down 22.2% H1 14 over H1 13. And the effect is not limited to the IOCs. China's SINOPEC is also cutting capex, even as new discoveries are testing record lows. (See more from me in US News and World Report:

Expect production at the oil majors to be falling by 1 million barrels per day / year (on current production of 14 mbpd, depending on who I include, and on global production of about 92 mbpd). And that's at current prices. If prices fall to $80, the oil side of the IOC business will literally implode.

Could oil prices fall to, say, $80? Yes, if US unconventionals production can hold above an increase of 2 mbpd / year and OPEC does not react. The former is conceivable. The latter is not.

US oil prices were under $40 per barrel 10 years ago. Oil prices were under $70 per barrel 4 years ago. There's nothing magical about the current price levels and it wouldn't take a "sustained collapse of China" to reduce world oil consumption enough to cause a significant reduction in oil prices.

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