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Bash's avatar

Great analysis. I really like Electricity Production as a proxy of a country's true output. Never thought of it like that but really makes sense; and if I look at it as a kW/population then Japan and Russia are pretty similar - NOT expected at all.

Regarding the currency wars, we do hear a lot about a BRICS currency and all that; but what is holding that back (and will for the forseeable future) is that China still has capital controls and the Yuan is not a freely traded currency. Until it is, this is not a realistic alternative. Of course, the Chinese have shown recently that they are perfectly capable of changing on a dime, so lets see.

On economic/military output - I am starting to understand the western strategy to defeat Russia. They seem to believe that Ukraine can fight Russia to a kind of stalemate on the ground, and that over the course of 2+ years western industrial output will eventually overwhelm them. Cold War Redux. In this sense, the strategy of attrition vs territory has an obvious weakness.

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Karl Sanchez's avatar

Quite correct, Russia's economy needs to be measured by non-Western objective methods. Having closely followed Russia's economic development since 2010, and less closely since the dissolution of the USSR, one of the best metrics describing the state of Russia's economic health comes from Russia's government and its many internal discussions on the topic. One of the more interesting observations overlooked by the West Putin has made on many occasions--that USSR/Russia has always been under illegal sanctions and was thus forced to adopt programs to deal with them well before those levied in 2014 and again in 2022. Indeed, many objective observers have written that illegal Western sanctions have served as a boon for Russia's economic development as it was forced to become self-sufficient in as many areas as possible. Yes, there are sectors of Russia's economy that remain moribund, like that of forestry products; however, the latest meeting Putin had with some government members that discussed the economy on 29 March here, http://kremlin.ru/events/president/news/70800 shows great progress in many areas as Russia continues to implement as reflected in Putin's remarks at the beginning of that meeting:

"As you know, recently at a meeting with representatives of business, big business, we talked about the new growth model of our economy and what needs to be done to support it. I suggest that today, together with members of the Government and the leadership of the Central Bank, we also discuss this topic and return to what we discussed with the business community." http://kremlin.ru/events/president/news/70688

The meeting Putin referred to occurred prior to Xi's visit, The Plenary Session of Annual Congress of the Russian Union of Industrialists and Entrepreneurs. What becomes very evident from the meeting is the fact that the sanctions have helped Russian corporations become vertically organized in a manner they weren't before by owning and thus controlling their entire supply chains. In your analysis, you mentioned the share of Russia's economy engaged in manufacturing versus services. What's happening thanks to the sanctions is the manufacturing portion will continue to increase, and as Russia's internal market strength continues to improve, demand for its own manufactures will increase thus further stimulating the internal market and so forth in a manner similar to that of China. That strengthening will continue at least through 2030 as Russia still has 10% of its population under its poverty threshold and another 20-30% above it but still in a lower wage realm that raising's discussed by government as one of its strategic goals. In short, the illegal sanctions regime provided a huge boot to the bear's behind and provided motivation that was lacking. Add the Hybrid Third World War against Russia to the mix, and Russia couldn't have provided a better formula for its economic resurrection and future potential. On top of that, Russia's "new growth model" lacks the constraining overhead typical of Neoliberalism similar to that of China where what's being molded by Putin and his associates's direction is Socialism with Russian Characteristics.

As for the Outlaw US Empire's economy, it's being strangled by Neoliberal Parasitism as Hudson detailed in his "Killing the Host" as its GDP as you noted is massively less than what's proclaimed, not just due to falsification of the economic numbers but primarily due to the overhead costs generated by Neoliberalism which as you noted are counted as plusses to GDP. But it's not sufficient to just remove those costs as plusses, they must be subtracted once again as costs to GDP. So, if healthcare costs are 15% of GDP, then that 15% must be subtracted twice for its actual effect on GDP to be seen. The same goes for all other overhead costs. In my discussions with Dr. Hudson on this topic, it's our opinion that US GDP is close to 50% overstated. And now with the massive banking insolvency is possibly even larger. Do see his latest podcast with Radhika Desai, "The Treasury Privatized?" https://michael-hudson.com/2023/03/the-treasury-privatized/ for a discussion on that topic.

So, there's a very fundamental reason why the US can't ramp up its munitions production or produce any sort of competitive weapons system, particularly aircraft, and that's due to the nature of its political-economy which is designed to extract wealth from as many sources as possible rather than generating wealth via production and productive activities. In so many ways, the USA is living off what was produced in the past, not on what's being created today or planned for the future. Indeed, as Hudson and Desai explain, the complete lack of investment into fundamental industrial capitalist pursuits combined with its astronomical overhead dooms the US economy to a form of pauperism that's already arrived and escalating.

A point I make about the utilization of patents as protectionism is that Nature's secrets are open to discovery by anyone, and Nature provides the basis for economic life. It is thus impossible to monopolize Nature despite the desire to do so. Today's geoeconomic dynamic shows two blocs going in different directions: The Multipolar World Bloc led by Russia and China is ascending while the Outlaw US Empire Bloc is descending with two exceptions--Japan and South Korea--and the only reason why the latter aren't descending is their ties to the dynamically ascending Eurasia.

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