Is Eurasia overblown?

I recently finished The Silk Roads (which I’ve discussed before here, here, and here) and I have some doubts about the book’s claim that the Eurasian landmass, especially central Asia, is crucial to future geopolitics.

One of the book’s main theses is that the region is about to be reintegrated into the world, both physical and geopolitically. Originally, the region’s position, linking China and the Mediterranean, allowed it to flourish, until the discovery of America, new sea routes, and European military aggression led to decline. Fast forward to today, and the re-emergence of China, the One Belt One Road Initiative, and the discovery of rich natural resource deposits in Central Asia mean a renewal for the region.

I’m skeptical for a few reasons. First, freight. The book acknowledges that the rise of safer, more efficient maritime routes undermined the region’s economic importance (and tax revenue), but then fails to acknowledge the fact that this has not materially changed: maritime freight still dwarfs rail and road freight.

The following chart OECD data on rail and sea freight for twenty-foot equivalent units (basically a container).


Unsurprisingly, countries with sea access rely on maritime freight, but this is also true for Silk-Road esque countries like Turkey, or Germany, which hosts the terminus of the new rail freight line from China. The countries where both types are comparable are usually European, and even there the graph does not do it justice – Estonia’s sea freight volume is three times larger than rail, Latvia’s eight, Bulgaria’s ten.

The same data, but showing growth in rail over time. Nowhere except Germany has seen much growth.

Sea over time. Take note of the Y axis. Remember this only captures container transport, so doesn’t include the enormous volumes of raw materials.

Second, the geography of demand and supply. Central Asia’s importance makes sense in a world where the Mediterranean and China are the two poles between which most trade flows. Today Europe is a large site of consumption and production, but it is no growth area. East Asia, India, or Indonesia all circumvent the region. As does the United States. Africa is similarly unlikely to feature in this transcontinental network given its narrow land connection to Eurasia and under developed rail network.

One area where the book’s prediction might prove true is energy. A third of cargo miles hauled by shippers comes from moving fossil fuels. A transition to green energy might reduce the importance of maritime trade. To this we could add the growing forces of nationalism weighing on global trade more generally.

The issue is that these forces also undermine any new Silk Road. One area where the region is increasingly important is in the transport of oil and gas through pipelines. These would be comparatively less important in the event of a green transition.

I’d love to hear from those who disagree.

*This is not a new view by any means, Mackinder called the region “the heartland” in 1904.

Eggplant yields

A new paper assessing the performance of genetically modified eggplant in Bangladesh finds:

Bt brinjal increased yields by 51% and reduced pesticide costs by 37.5%. Bt brinjal farmers marketed more output, sold at a higher price, incurred lower input costs, and, consequently, had higher net revenues (by 128%). Bt brinjal farmers used smaller quantities of pesticides, sprayed less frequently, and reduced the toxicity of pesticides applied by 42 to76%. Farmers growing Bt brinjal and who had pre‐existing chronic conditions consistent with pesticide poisoning, were 11.5% points less likely to report a symptom of pesticide poisoning and were less likely to incur cash medical expenses to treat these symptoms. All these benefits were derived from an open‐pollinated crop provided by a public agency.

If you are opposed to GM crops you are presumably against pesticide use as well. How do you feel about GM crops that reduce pesticide use?

All in all, news to put a spring in your step today.

The Treasury wants its money back. The Fed would rather it didn’t.

The FT reports that the US treasury has decided not to extend a variety of emergency lending facilities that the Federal Reserve had set up following the Covid crisis. The US Treasury had been backstopping the Federal Reserve’s lending, guaranteeing them against losses, but now wants the allocated funds back. The facilities to be cut include the “Main Street Lending Program,” where the Fed lends to medium sized businesses (novel policy!).

There has been a lot of anger at the decision, including a rare response from the Fed itself, arguing the programs are important while the economy is vulnerable. While I agree that withdrawing support at this time is lunacy, its worth noting that very little of the funds have been used, as this graph from the FT’s article shows:

In the case of the Fed’s facilities to support money markets, their limited use makes sense given how quickly financial markets have rebounded (in part also thanks to the massive QE since March). ‘Main Street’ on the other hand has been struggling, and I cannot help but wonder if the limited take-up of both the MLF and the MSLF are signs the programs were overly restrictive.

Its certainly bad policy that these programs are being cut in the middle of a crisis, but we also need to ask why they were not being used in the first place and whether that was also a policy failure. If i had to venture a guess I suspect it would have something to do with the Fed being risk averse given the political implications of both the MLF and the MSLF.

Debt, what is it good for?

From a piece in the FT on the massive $15 trillion dollar surge in debt in the first nine months of 2020

One passage stood out:

From 2016 to the end of September, global debt rose by $52tn; that compares with an increase of $6tn between 2012 and 2016. The pace of growth in global GDP changed little over that period until the onset of the pandemic triggered a historic recession.

The change in debt — without a corresponding change in the pace of output growth — “suggests we are seeing a significant reduction in the GDP-generating capacity of debt”, Mr Tiftik said. “Aggressive support measures will be with us for some time and will inevitably increase debt significantly.”

Well, it depends. In the developed world, the proportion of GDP going to debt servicing has been declining since 2011, so clearly debt servicing is not a significant drag on debt’s GDP-generating capacity. To be more specific, we are seeing a significant reduction in the GDP-generating capacity of debt as it has been used over the period. It is a separate question whether the use of debt in the years since 2016 has been optimal.

Dostoevsky and society, or why existential angst matters for your politics

The book club I am part of just finished Dostoevsky’s Notes from Underground, and I thought the novel raised some valuable questions about contemporary politics.

Originally published in 1864

The text is existential (book club’s current theme) in that it is an intimate character study of someone grappling with the consequences of existing as a self-conscious being. The Narrator is agonisingly self-aware, both of his behaviour and thoughts, but also of the absence of any objective standard against which to organize or assess them. Confronted by this potent cocktail of freedom and awareness, he is unable to act or think without doubt immediately undermining it. He agonises over his inability to act morally, while also rejecting morality. This produces paralysis, angst, and anger, which for The Narrator lacks any real object, because it is simply the human condition.

To be overly conscious is a sickness, a real, thorough sickness

Can it be that I’ve been arranged simply so as to come to the conclusion that my entire arrangement is a hoax?

Where are the primary causes on which I can rest, where are my bases? Where am I going to get them? I exercise thinking and consequently for me every primary cause frags with it yet another, still more primary, and so on ad infinitum. Such is precisely the essence of all consciousness and thought, so once again it’s the laws of nature

it turns out, there isn’t even anyone to be angry with; that there is an object to be found, and maybe never will be; that its all a sleight-of-hand, a stacked deck, a cheat, that its all just slops- nobody knows what nobody knows who

why was it that, as if by design, in those same, yes, in those very same moments when I was most capable of being conscious of all the refinements of “everything beautiful and lofty” as we once used to say, it happened that instead of being conscious I did such unseemly deeds… precisely when I was most conscious that I ought not to be doing them at all

From a footnote on the first page, Dostoevsky makes clear that The Narrator does not exist in isolation, and that the book also concerns his relationship to society:

“such persons as the writer of such notes not only may but even must exist in our society, taking into consideration the circumstances under which our society has generally been forced”

This raises the implicit question: What does the existence of people like The Narrator mean for how society is organised?

Dostoevsky presents two contrasting positions:

The first includes the utilitarianism, utopian socialism, and scientific rationalism popular among intellectuals in the 1860s. Lets call it optimistic rationalism. It deals with the above question by partly assuming it away. It believed people were rational and therefore that their ‘true interests’ could be objectively determined. According to this worldview, people were fundamentally knowable, in part because they had consistent and coherent inner workings that could be discovered (at least partially) from the outside.

This in turn makes a society which maximises the good and happiness of all possible. Society emerges as a kind of engineering problem; it requires careful management by those who can design the institutions and systems to encourage people to act in their own best interest. It is a profoundly optimistic worldview.

no one is taking my will from me here; that all they’re doing here is busily arranging it somehow so that my will, of its own will, coincides with my normal interests, with the laws of nature, and with arithmetic

This worldview struggles to comprehend a character like The Narrator, a man whose self-awareness has revealed his preferences, only to dissolve them. Pressed, they might attribute his condition to a lack of information. Maybe he does not understand his own interests well enough, and needs better information (perhaps presented more cleverly?) or some well-meaning guidance? Pressed further still, the only way to maintain belief in human rationality in the face of persistently ‘irrational behaviour’ is to assume either willful stubbornness, or a moral failing. And so optimism can slide into a kind of frustrated paternalism.

The heady optimism of the 1860s has come and gone, but the foundations of this worldview live on. It finds expression in statements like: “they are voting against their self-interest!” The politics and economics of the 1980s to the GFC echoed this worldview; a politics of technocratic management and careful triangulation of voter preferences; where major debates had been resolved and a future of minor technical fixes beckoned. The shock of Trump is the shock of discovering vast reservoirs of madness and fury where least expected.

Dostoevsky does not flesh out the opposite position directly, but we get hints from how he discusses optimistic rationalism.

By presenting The Narrator’s self-awareness as a solvent which dissolves his ability to think or act consistently, Dostoevsky is attacking the idea that people are consistent, coherent, or rational. The Narrator takes a perverse pride in doing what is not right for himself, declaring that “two times two is five is sometimes also a most charming little thing.” Dostoevsky presents individuals as unpredictable, unstable, and dangerous – even (perhaps especially) to themselves. Unlike later French existentialists, Dostoevsky does not appear to think the The Narrator’s self awareness and freedom are conducive for human flourishing. It is fundamentally a rejection of rational individualism as a foundation for society.

man, whoever he might be, has always and everywhere liked to act as he wants, and not at all as reason and profit dictate; and one can want even against one’s own profit, and one sometimes even positively must (this is my idea now). One’s own free and voluntary wanting, one’s own caprice, however wild, one’s own fancy, though chafed sometimes to the point of madness – all this is that same most proftable profit, the omitted one, which does not fit into any classification, and because of which all systems and theories are constantly blown to the devil

there is only one case, one only, when man may purposely, consciously wish for himself even the harmful, the stupid, even what is stupidest of all: namely so as to have the right to wish for himself even what is stupidest of all and not be bound by an obligation to wish for himself only what is intelligent.

the whole human enterprise seems indeed to consist in man’s proving to himself every moment that he is a man and not a sprig

Two times two is four has a cocky look; it stands across your path, arms akimbo, and spits. I agree that two times two is four is an excellent thing; but if we’re going to start praising everything, then two times two is five is sometimes also a most charming little thing

Dostoevsky was a tsarist with conservative Orthodox christian beliefs, opposed to liberal democracy. It is no leap to read into his critique of individualism the belief that people need traditional structures and rules to guide them and make society function.

This matters because the book, and the beliefs it catalogs are grappling with the breakdown of traditional structures brought on by industrial and political revolution alongside massive social change. The novel is a deeply conservative and pessimistic view of man with the scaffolding of tradition removed.

Like optimistic rationalism the echoes of this worldview can still be heard today. Resurgent conservatism and illiberalism are rooted in a similar skepticism. The growing rejection of science and democratic institutions seems to vindicate Dostoevsky’s pessimism (although as I’ve discussed here, this is more nuanced than it appears).

In our own period of turmoil and instability, the novel is useful in a few ways:

  • Your reaction to The Narrator and the positions I’ve sketched helps indicate your own political beliefs.
  • A reminder that a society of emancipated individuals is likely to always have arguments, bouts of madness, and a permanent sense of incompleteness. For some (like myself) this is a reminder that the Enlightenment dream of an emancipated and self-governing society is a never-ending project. For pessimists it is grounds for abandoning it.

Most important for me is the challenge the novel throws to contemporary liberals. Liberalism goes through periodic crises and by all accounts we are living through one now. In response, many liberals have responded illiberally. Restricting freedom of speech is an obvious example, but I am also concerned about liberals who want politics calm again, returned to the experts and politicians, and out of the rough and tumble of democratic politics. Some of the hand wringing over populism betrays a disregard for democracy when it produces uncomfortable outcomes.

The novel forces us to confront the individual at their most impulsive and unpleasant, in a moment of feverish and incoherent action. We watch someone willingly descend into a kind of grinning madness that is simultaneously inseparable from their humanity.

This is an important reality for liberals to watch and accept. To be a liberal is to accept the exercise of freedom almost regardless of form (outside a select few circumstances). It is easy to be a liberal when everything is going well. It is in the moments where people show themselves at their most unreasonable that liberalism’s radicalism shines through.