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Saturday, December 3, 2016

The Change Hurricane: Are we Polish Jews in 1937 or East Germans in 1988?

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Every so often in history everything changes, and people can find themselves in situations which seemed unthinkable just a few years or even a few months beforehand. Examples of this include the Sack of Baghdad (which I’ve already talked about), Poland during World War II, the Taiping Rebellion, the fall of the Aztecs and of course the recent Syrian Civil War. In all of these cases there was definitely a certain degree of surprise attached, which is not to say that these catastrophes came out of nowhere, or even that no one could have predicted them, just that they generally happened more quickly than expected and when they did happen the consequences were much worse than generally anticipated.

As we look back at these catastrophes they are all strong arguments in favor of preparing for the worst. Of course preparing for the worst is costly, but these are all situations where even large costs would have been worth it if you could be sure of avoiding the one big catastrophe. As just one example if you were a Jew in Poland in 1937, however inconvenient it might have been to take your family to America, it would have been way better than any outcome which involved staying in Poland. Yes you may not have spoken the language. Yes immigration would have been costly and difficult. Yes, you may have left friends and family and your home, but anything is better than what did happen.

Some people will argue that while all of this is obvious in hindsight, could you really expect the Polish Jews to realize all of that was coming in 1937? And this is an excellent point. To put it in more recent terms, no one imagined in January of 2011 that the Syrian Civil War would still be going on in November of 2016, that Assad would still be in power (and likely to remain in power) and that 400,000 people would have died. But in the same vein of things being clear only in hindsight, once things have happened it’s too late to do anything about them. Obviously the ideal solution is to see things before they happen, but that’s impossible. Or is it?

It is impossible to be sure about anything that hasn’t happened. Our hypothetical Jew could have fled Poland in 1937 only to have Hitler assassinated in November of 1939 by Johann Georg Elser, perhaps leading to a situation where death camps never happened. In other words it could have very easily ended up being a bad idea to make huge sacrifices in order to flee Poland. To use an actual example you could have crafted a daring plan to escape from East Berlin to West Berlin in May of 1989, risking death, when all you had to do was wait six months.

This is the question we’re faced with. Are we Polish Jews in 1937 or East Germans in 1988? And that’s nearly impossible to know, but this doesn’t mean that you shouldn’t pay attention to which way the wind is blowing and whether it’s a gentle breeze or hurricane force winds. Lately it appears that it might be the latter and that it might be blowing in the wrong direction.

As I said in my last post, I’m at least as worried about the reaction to the election of Trump as I am about the actual election. But it’s not just the US where winds seem to be blowing in a worrisome direction and with powerful force. I’m seeing things all over the world that are worrisome and potentially catastrophic. Here’s a quick sample of some areas of concern from around the world:

1- NATO could be disintegrating: First there’s the election of Trump, but on top of that we have the top two candidates in the upcoming French Election both favoring closer ties to Russia, with even the establishment candidate saying “Russia poses no threat to the west.” As I have argued in the past Russia views NATO expansion as a major threat and a major betrayal, there’s no easier way to get on their good side than pulling back from expansion and no quicker way to get on their bad side than seeking to continue expansion.

2- Italy might be on the verge of collapse. You may or may not have heard about the huge vote coming up on the day I publish this, regarding some constitutional reforms. The current leader of Italy, Matteo Renzi, says these reforms are necessary to bring stability to Italy and he will resign if they are not passed. Having a change of governments in Italy is nothing newsworthy, but Italy is in a serious financial crisis and Italian bonds represent the third largest bond market in the world. Italy may be facing a financial Armageddon whichever way the vote goes.

3- Turkey is getting progressively more autocratic. Turkey is still a democracy, and they still hold elections (also there’s the occasional coup) but those elections are becoming increasingly pointless. Recep Erdogan has a pretty good chokehold on things and it’s unlikely to change anytime soon. Also as Turkey becomes more autocratic, the ideological split between them and Europe widens. As an example the EU Parliament recently voted to end talks on Turkey’s membership in the EU. Turkey is still part of NATO, but on that issue I refer you back to point number 1.

4- The Middle East and North Africa are still a mess. We’ve already talked about the Syrian Civil War, and of course there’s ISIS. The good news is that ISIS appears to be near defeat, the bad news is that no one knows what happens once the various players in the region no longer have a common enemy. Also, like most people you may have forgotten about Libya, or if you haven’t you may have heard that a peace deal was signed. Well whatever the effects of that deal there’s still a vast civil war taking place, with Obama saying that not being prepared for a post Gaddafi Libya was the biggest mistake of his presidency.

5- Venezuela is suffering from hyperinflation and economic collapse. Of course the economic problems are the result of a huge power struggle between President Nicol├ís Maduro and his opponents, but just because there’s an explanation doesn’t mean that there’s an easy to fix. And as a side effect of this Venezuela has the highest per capita murder rate in the world.

As it stands, individually, none of these five items seems like that big of a deal or that catastrophic. Just the normal rumblings of the world. But each of them could grow into something huge. Going back through the list:

The end of NATO would mean the end of American hegemony. It has to end eventually, and better it end with a whimper than a bang, but the world that comes after it ends could be very different.
Events in Italy could mean the end of the EU, which is already looking shaky after Brexit. Also we’ve see how financial contagion spreads. The failure of Italian banks or bonds could mean another global financial crisis.

Turkey is the traditional foe of Russia. If both are resurgent and NATO goes away, do hostilities start again? How soon before Turkey and Erdogen decide that they need nukes?

The Middle East and North Africa have never been poster childs for stability, but now the chaos is beginning to spread. Refugees from these two areas are one of the major driving factors behind the EU crisis and a contributing factor to what’s happening in Italy. Syria seems bad enough already but it could get worse.

Venezuela is on it’s way to becoming a failed state. Does having a failed state to our south look the same as Europe having failed states to the south of them? It seems like, best case scenario, we end up in a situation similar to Chile under Pinochet, and as someone who spent the latter half of the 80’s in high school debate, I can vouch for how much hand-wringing he caused.

But perhaps you remain unconvinced. So I will turn to something which does involve potential global catastrophe, nukes, war, China and shamans... I’m speaking of course about North and South Korea.

We all know that North Korea has nukes, but since the death of Kim Jong Il in 2011, the rate of advancement North Korea has shown both with nuclear weapons and missiles, has been, well, impressive. Just this year they’ve done two nuclear tests and 21 missile tests. There has always been an appalling lack of any concrete options with respect to North Korea, but as their technology gets better all the former bad options just keep getting worse.

When North Korea had just one nuke they mostly used it for leverage to acquire food aid, and as one more deterrent against invasion. Now that they have several nukes and increasingly advanced delivery systems what will they do? I think people kind of assume that things would continue as before, there would be a lot of bluster. Minor cross border incidents involving fatalities, a general despair, but nothing big would happen. But increasingly the winds of change in that region appear to be blowing more strongly. A sense of urgency is growing, and a consensus developing that North Korea is planning to use its weapons to dictate events on the peninsula. Perhaps demanding that the Americans leave.

I’ve talked before, at some length, about how nukes are qualitatively different than any previous weapon. And this illustrates the point. Imagine that North Korea got to the point where they could hit the west coast with an nuke. (Some estimates put this at only five years away.) And they threaten to nuke San Francisco unless we  remove all our forces from the Korean Peninsula. What are our options? We might hope that China would cut off trade, but it’s not like the North Koreans aren’t used to sanctions and hardship. In other words I’m sure there would be all sorts of diplomatic reactions, but there’s a good chance they wouldn’t work. So we’re looking at the threat of a nuke hitting San Francisco, and we’re out of diplomatic options. Now what?

Obviously it would be great if we could shoot the missile down, but as I mentioned in the previous post on nukes, that’s actually difficult. A lot would depend on whether we had the right ships in place to shoot the missile down when it was launched. But let’s say, optimistically, that we have an 80% chance of shooting it down. Are we willing refuse their demands and accept a 20% chance of SF getting nuked? If we’re not willing to do that (and I suspect we wouldn’t be) what other options do we have? We could, of course, always invade, but that just changes the SF missile from a possibility to a certainty. And adds enormous war deaths on top of it.

In addition to the increased external tension between South and North Korea. South Korea is dealing with a major political crisis of its own. It’s current president Park Geun-hye has an approval rating among 19-39 year olds of 0%. Yes, you read that right, the number of people under 40 who like her is statistically undetectable. This is where the shamans come in. The reason for her unpopularity is that she has engaged in frequent consultation with an old friend who is the leader of a shamanistic cult. (In a fashion similar to Nancy Reagan.) Just the consultation might be a storm that could be weathered, but the president also funneled money to her friend.

Does the weakness and unpopularity of the South Korean president make the North Korean situation worse? That’s hard to say for sure, but it certainly doesn’t make it any better. And it seems safe to assume that for people living in South Korea things must seem pretty chaotic. Thus just like the Polish Jew in 1937 and the East German in 1988. The South Korean of 2016 is faced with a choice. They can do nothing and take their chances. Or they can spend time and money trying to mitigate the downsides of various potential catastrophes. In the latter case they’re still taking their chances they’re just trying to lower the odds of something truly bad happening.

It’s always possible that the North Korean government will collapse (though this isn’t necessarily great for South Korea either) or that some other, positive black swan will emerge, and the 2016 South Korean will be in the situation of the 1988 East German. But it’s also possible that the 2016 South Korean will be much closer in circumstances to the 1937 Polish Jew. As I said you can’t know for sure. And it’s always a balancing act between the admittedly high probability that things will be okay which makes preparing for the worst just wasted time and money, or, on the other hand, the small possibility that things will be awful, and you’ll be grateful for every bit of preparation and upset that you didn’t do more.

One of the reasons I’m writing this post and indeed one of the reasons for writing the blog in general is that people have a tendency to underestimate the chances of something bad happening. So if you’re on the fence about which course to choose I think you should choose to be prepared. But perhaps even more important I think you need to be aware of the political weather. If you’re a 1937 Polish Jew and you’re not paying attention to Hitler then of course you’re going to make the wrong choice. On the other hand for those East Germans preparing to escape in 1988 Gorbachev had been in power since 1985, so for them the wind was blowing the opposite direction and they just had to wait.

The title of the post is The Change Hurricane, and thus far all I’ve talked about is some local storms which, while scary, and possibly globally significant (I can only imagine what would happen if North Korea nuked San Francisco) are still fairly local. If we’re talking about hurricane’s one would expect something bigger than just a spat between the two Koreas which has been going on since 1948. I am of the opinion that things are bigger than just the isolated incidents I mentioned above, but this is also where things get more speculative. Also it’s time for another list.

Outside of the storms I’ve mentioned here are some of the longer term weather patterns which I think are blowing in the wrong direction:

1- Declining American Power: We’ve already talked about the end of the American hegemony and as I mentioned it has to end eventually, and when it does I doubt we’re going to transition to another unipolar world, or even a bipolar world. I think there will be lots of countries trying to fill the gap. Certainly China and Russia, but also Turkey, Iran, India and Brazil are all going to want a piece of the pie. And that could play out in interesting and potentially violent ways.

2- Nuclear proliferation: Closely related to the last point. There are a lot of countries who could currently make a nuclear weapon, but have chosen not to because they consider themselves to be under the US nuclear umbrella. Turkey and Japan would certainly fall into this category. Does a declining America and a belligerent Russia and China set off a new round of proliferation? If it does the chances of weapons being used goes way up.

3- Immigration: This is a hot button issue with lots of emotion on both sides, and by classifying it as a negative trend you may feel that I’m already choosing a side, and perhaps I am, But in a sense this is a secondary effect. If things get worse because of wars or famine or global warming, then the number of people willing to risk nearly anything to get to a better country (similar to our 1937 Polish Jew) is going to go way up. And insofar as I am taking a side I think that there is a limit to the rate at which immigrants can be assimilated, and when this limit is exceeded, things can start changing in unexpected ways, as we’re seeing in Europe.

4- Debt: The modern, developed nation state, is able to accumulate debt in amounts never before imagined. I see that as a huge source of fragility. Perhaps it is or perhaps it isn’t, but we could be getting an example of how bad it can be if Italy runs into problems with its bonds. One early indication that makes me worry about Trump is it looks like he might explode the deficit.

5- Social Unrest: I think by historical standards the level of social unrest is still pretty low. But, as a consequence our tolerance for it is not that high either. What happens if Trump is as bad as his worst critics fear, and we have riots every night in most major cities? I can’t even begin to predict what that looks like, but I think, at a minimum, It’s safe to say that the anti-cop/pro-cop division would become much more pronounced.

6- Environmental concerns: I already mentioned this to a certain extent under immigration, but for many people the trend that worries them the most is global warming. One of the chief arguments is that this makes things worse in places where it’s already pretty bad, like Sub-Saharan Africa. But also if the sea level rises by six meters that’s not good either. I think this is more slow moving than the rest, but it could also be the hardest to do anything about.

This entire post could be written off as nothing more than fear-mongering. We’re probably not the 1937 Polish Jews and I assume most of my readers aren’t even 2016 South Koreans. We could in fact all be like the 1988 East Germans and we’re only a short time away from the dawning of a new age where we never have to worry about another Hitler, or Nuclear Proliferation or Global Warming, and any preparation you do now is just a waste of time. As they say, anything is possible, but that particular scenario seems unlikely, and not just because we’ve completely neglected to mention natural disasters.

Bad things happen, and most people are surprised by them. But you don’t have to be. If you see which way the wind is blowing you can take steps to lower your risk. And it’s possible that those steps will be a waste of time and money, but it’s also possible that in 2019 when President Trump defaults on the debt, and panic grips the world, that you’ll be glad you spent some time preparing for the worst.


If you don't see any need to spend money on preparation than you should have plenty of money to donate to this blog. If on the other hand I've convinced you that you do need to prepare, you should send a buck my way as thanks for telling you about it.

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