My biggest question is the extent to which demographics will play any role in China's further development. Some suggest robotics and AI will continue to drive development forward; others note that the dependency ratio and weak social safety net will be a drag on the country, and that it will undergo a Japan-style stagnation before it gets wealthy. That, of course, could also create instability--note the past writing on "bare branches" in China, meaning unmarried men, and the suggestion that that would lead to social unrest and perhaps a more aggressive foreign policy. I'm not a demographer or an economist so I can't speak to these with any insight.
Yes, I agree. Demographics is going to be China's greatest challenge in the years ahead, and the key stumbling block to its continued rise. Many other countries face this problem too, however. And I do think if there is any country that would be willing to force dire solutions to the problem (without regard to what people want), it would probably be China. If you can enforce a one child policy, you can find a way to enforce a three child (minimum) policy. I think I mentioned this briefly in my essay on Wang Huning.
Please continue to dig deeper into the financial and economic elements of our global upheaval.
"In Dalio's telling the most recent round of this cycle is the story of what happened in the period from 1930-1945."
I have been often telling my wife over the past 5 years that it looks more and more likely that we will now have the "delightful" opportunity to probably experience some new configuration of those previous 15 years of chaos/instability/war that ran from 1930 to 1945.
On this economic/financial front also keep an eye on the writings of Adam Tooze--especially his now ongoing weekly chartbook series.
I would call Tooze (a brilliant historian) an emerging Keynesian political/economic reformer, who seems to be hopeful that some type of new global financial/economic package similar to Bretton Woods might still be fashioned, through U.S. leadership, using a a more dramatic mobilization of state-sponsored government spending as the major tool in bringing about national and international political stability.
Also on the economic/financial/political front don't ignore the anthropological/economic analysis of the late David Graeber. From my perspective he offers an extremely articulate critique of more traditional left state-centricity that is implicit in some of the ideas of Tooze.
And finally, as I have previously mentioned, keep on eye on the Paul Kingsnorth series on the mega-machine--especially his ideas on technology, culture, and the use of the covid crisis to accelerate authoritarian tendencies.
Kingsnorth also offered a powerful critique of Keynes in his "What is the Acid," essay where he notes how naive Keynes was in his assumption that when a society cores itself around avarice and usury it could suddenly drop such vices when some plateau of Keynesian economic perfection might be reached.
Not a Kingsnorth fan. I used to subscribe. He seems to think that the height of human society was huts on mudflats in medieval Britain (and then everything went terribly wrong!), and now he's veering off into bog-standard (no pun intended!) anti-vax conspiracy theory. And he's a newly minted Orthodox Christian (which makes him a Rod Dreher fave), transitioning out of doomsday environmentalism. Good writer though.
The thing that struck me the most in reading the book is that when there is a mismatch between financial wealth (the stuff created by central banks and multiplied by credit) and real wealth (economic activity) - there is a problem that only a very painful adjustment can solve. This is when sovereign currencies are devalued and can be replaced with another rising currency. How close the US is to this is anyones guess. Dalio’s prediction that the US is 70% though it’s current cycle, which puts our demise at about 2055, assuming that his starting point is in 1945 after WWII.
This idea of a "Big Cycle" and other versions of it - with U.S nearing its ending - seems to be gathering a lot of steam recently. Speaking with friends living in China and the U.S, there is a palpable difference between how they view the future of their nations (rightly or wrongly). I think you are right that Dalio is a little too rosey on China, although it seems the CCP has the upper hand in terms of effectiveness of policy implementation and unity & compliance of its population (I find that many commentators underestimate how much popular mandate the CCP has in China).
OK, your greatest hits email got me to subscribe. Just keep it the articles coming.
On the substance, I am thinking the next stage (unless it's collapse) is the BRICS proposal of a currency based on a market basket of real stuff like oil, grain, gold, coffee, etc. Short term major pain for the US as we lose the ability to export inflation but in the long run we and everyone else wins as fiat currency is demolished.
[my comment was posted before I saw the previous comments... it is obviously redundant].
Very interesting financial and geopolitical review. It seems one major factor overlooked in Dalio's overall impressive analysis is the role of demographics. In my opinion, the rapidly aging population of China would contradict Dalio's view of China.
My biggest question is the extent to which demographics will play any role in China's further development. Some suggest robotics and AI will continue to drive development forward; others note that the dependency ratio and weak social safety net will be a drag on the country, and that it will undergo a Japan-style stagnation before it gets wealthy. That, of course, could also create instability--note the past writing on "bare branches" in China, meaning unmarried men, and the suggestion that that would lead to social unrest and perhaps a more aggressive foreign policy. I'm not a demographer or an economist so I can't speak to these with any insight.
Yes, I agree. Demographics is going to be China's greatest challenge in the years ahead, and the key stumbling block to its continued rise. Many other countries face this problem too, however. And I do think if there is any country that would be willing to force dire solutions to the problem (without regard to what people want), it would probably be China. If you can enforce a one child policy, you can find a way to enforce a three child (minimum) policy. I think I mentioned this briefly in my essay on Wang Huning.
That sounds very Ceausescu.
Please continue to dig deeper into the financial and economic elements of our global upheaval.
"In Dalio's telling the most recent round of this cycle is the story of what happened in the period from 1930-1945."
I have been often telling my wife over the past 5 years that it looks more and more likely that we will now have the "delightful" opportunity to probably experience some new configuration of those previous 15 years of chaos/instability/war that ran from 1930 to 1945.
On this economic/financial front also keep an eye on the writings of Adam Tooze--especially his now ongoing weekly chartbook series.
I would call Tooze (a brilliant historian) an emerging Keynesian political/economic reformer, who seems to be hopeful that some type of new global financial/economic package similar to Bretton Woods might still be fashioned, through U.S. leadership, using a a more dramatic mobilization of state-sponsored government spending as the major tool in bringing about national and international political stability.
Also on the economic/financial/political front don't ignore the anthropological/economic analysis of the late David Graeber. From my perspective he offers an extremely articulate critique of more traditional left state-centricity that is implicit in some of the ideas of Tooze.
And finally, as I have previously mentioned, keep on eye on the Paul Kingsnorth series on the mega-machine--especially his ideas on technology, culture, and the use of the covid crisis to accelerate authoritarian tendencies.
Kingsnorth also offered a powerful critique of Keynes in his "What is the Acid," essay where he notes how naive Keynes was in his assumption that when a society cores itself around avarice and usury it could suddenly drop such vices when some plateau of Keynesian economic perfection might be reached.
Thanks for the suggestions!
Not a Kingsnorth fan. I used to subscribe. He seems to think that the height of human society was huts on mudflats in medieval Britain (and then everything went terribly wrong!), and now he's veering off into bog-standard (no pun intended!) anti-vax conspiracy theory. And he's a newly minted Orthodox Christian (which makes him a Rod Dreher fave), transitioning out of doomsday environmentalism. Good writer though.
The thing that struck me the most in reading the book is that when there is a mismatch between financial wealth (the stuff created by central banks and multiplied by credit) and real wealth (economic activity) - there is a problem that only a very painful adjustment can solve. This is when sovereign currencies are devalued and can be replaced with another rising currency. How close the US is to this is anyones guess. Dalio’s prediction that the US is 70% though it’s current cycle, which puts our demise at about 2055, assuming that his starting point is in 1945 after WWII.
This idea of a "Big Cycle" and other versions of it - with U.S nearing its ending - seems to be gathering a lot of steam recently. Speaking with friends living in China and the U.S, there is a palpable difference between how they view the future of their nations (rightly or wrongly). I think you are right that Dalio is a little too rosey on China, although it seems the CCP has the upper hand in terms of effectiveness of policy implementation and unity & compliance of its population (I find that many commentators underestimate how much popular mandate the CCP has in China).
OK, your greatest hits email got me to subscribe. Just keep it the articles coming.
On the substance, I am thinking the next stage (unless it's collapse) is the BRICS proposal of a currency based on a market basket of real stuff like oil, grain, gold, coffee, etc. Short term major pain for the US as we lose the ability to export inflation but in the long run we and everyone else wins as fiat currency is demolished.
[my comment was posted before I saw the previous comments... it is obviously redundant].
Very interesting financial and geopolitical review. It seems one major factor overlooked in Dalio's overall impressive analysis is the role of demographics. In my opinion, the rapidly aging population of China would contradict Dalio's view of China.