Red Links, 8-26-10
The topic of resource wars has become a continuing fascination for me in my grad studies. The topic combines war and three of my favorite things, food, water, and cheap electricity. So, KNOC looking for oil gets my attention. But, so does Brazil and America’s ebbing power. The Economist has taken a principled stance, that neither Democrat nor Republican knows much about the state of the world economy. Finally, how much military force do advanced states need?
- A Stickier Problem
- Defence Spending In a Time of Austerity
- KNOC Comes Knocking
- How to Feed the World
- After Iraq
- Manila Showdown
- Ichiro Ozawa Strikes Back
- Change You Can Believe In?
- Middle Kingdom meets Magic Kingdom
The speed of the recovery will still be the main influence on the jobless rate. But if a chunk of America’s unemployment is structural, its policymakers need urgently to think beyond stimulus measures, and also to adopt more targeted policies to help the millions stuck in the wrong place with the wrong skills. Otherwise, even a return to brisk economic growth (something that scarcely looks likely right now) will not be enough to rescue them from the breadline.
The rising cost of military equipment is an old curse. Philip Pugh, author of “The Cost of Seapower”, a 1986 study of shipbuilding costs since the end of the Napoleonic wars, argues that the industrial revolution made the problem more acute: the rapid pace of technological change set off a race to build bigger, more powerful, more heavily armed and better-protected battleships. At some point, as unit prices rise, one of two things must happen: countries must either scale back their ambition, or seek game-changing technology, as they did when the battleship gave way to the submarine and aircraft-carrier.
Mr Pugh also identified another intriguing trend: the race for bigger, better weapons is fiercest in peacetime but tends to fall once war actually breaks out. At that point, he argues, quantity takes precedence over quality. So the fact that the cold war never turned hot may help explain why Western ministries of defence got into the habit of developing weapons slowly and expensively. “You cannot optimise cost, performance and development-time at the same time,” says Mr Krepinevich. “In the cold war everything was sacrificed to performance.” Cost was secondary, and time was least important of all, given that there was no shooting war. The F-22 began development before the end of the cold war; so did the Typhoon.
Few would disagree with another of Mr Augustine’s laws, that “the last 10% of performance generates one-third of the cost and two-thirds of the problems.” Moreover, the quest for the best is often allied to a “conspiracy of optimism”, whereby bureaucrats and contractors underestimate the likely cost of weapons, wittingly or unwittingly. Once approved, military projects are hard to kill.
Such are the ingredients for a spiral of cost and delay: technological stumbles hold up development; delay raises costs; governments postpone work further to avoid busting yearly budgets, incurring greater long-term costs. With time, technology becomes outdated, so weapons must be redesigned, giving the top brass a chance to tinker endlessly with requirements. In the end, governments cut the size of the purchase, so driving up unit costs further. There were supposed to be 132 stealthy B-2 bombers but only 20 were built. They cost $2 billion each.
Repeated reforms have failed to break this dire cycle. According to the last full report by America’s Government Accountability Office (GAO), the cost of 96 of America’s biggest weapons programmes in 2008 had risen on average by 25%, incurring an average delay of 22 months.
Oil-scarce Asian nations are so afraid of running out of fuel one day that their governments will pay far more for oil firms than anyone else thinks they are worth. The Koreans cannot hope to rival China’s size and muscle, as they saw when KNOC failed to bag Addax. But South Korea has one advantage: other countries view it with less suspicion than they do China, since it is neither huge nor a dictatorship. A bid by CNOOC, a Chinese state-owned oil firm, for Unocal, an American oil firm, was withdrawn in 2005 after angry American congressmen denounced it as a threat to national security. KNOC will face no such storm of protest in Aberdeen.
A year after “The Limits to Growth” appeared, however, and at a time when soaring oil prices seemed to confirm the Club of Rome’s worst fears, a country which was then a large net food importer decided to change the way it farmed. Driven partly by fear that it would not be able to import enough food, it decided to expand domestic production through scientific research, not subsidies. Instead of trying to protect farmers from international competition—as much of the world still does—it opened up to trade and let inefficient farms go to the wall. This was all the more remarkable because most of the country was then regarded as unfit for agricultural production.
Many Americans would like the withdrawal of combat troops from Iraq to signal the beginning of the end of America’s overall embroilment in the benighted regions of the world. They look with understandable envy on rising powers such as China and India that have devoted the past decade to the serious business of becoming rich. The mistake of Iraq has strengthened the instinct against foreign adventures. But it is no less of a mistake to imagine that the dangers of terrorism, proliferation and war will simply vanish if America were now to walk away from all the bad places. If America does not take on the task of containing such threats, who else will, or can? For all the difficulties at home, the fact remains that the biggest gainer from a strong America abroad is America itself. Whatever his gut tells him, Mr Obama seems to understand that.
August 23rd thereby became a shameful day for the Philippine National Police. Battered by criticism at home and abroad, the police admitted to “defects” in their handling of the hijack. Survivors and relatives of the victims were more explicit in their anger. It was obvious to millions in the Philippines and beyond, watching the drama unfold live on television, that the rescue squad lacked training and equipment. As serious are chronic weaknesses in the country’s law-enforcement system.
Mr Ozawa’s supporters believe he promises the sort of strong leadership that would let him build coalitions with the opposition. But his conduct at times so resembles that of an old-style faction boss of the 1970s that many, notably in the opposition Liberal Democratic Party, treat him with outright scorn. More progressive parties, knowing how much the public despairs of him and how tainted he is by the allegations of scandal, might give him a wide berth as well.
Mr Yu has put Mr Wen to an unusual test by writing a book that accuses the prime minister of being far less reformist than he makes himself out to be. “China’s Best Actor, Wen Jiabao”, was published in Hong Kong on August 16th but is banned in mainland China. Few books that are so explicitly critical of serving leaders (Mr Yu produced another last year that attacks President Hu) have ever been published by a Chinese citizen living in China. In this case, Mr Yu has taken on “Grandpa Wen” who is regarded by many ordinary Chinese as the party’s more human face.
Security agents visited Mr Yu in July and warned that he could be jailed if the book appeared. Their failure to arrest him so far could be a sign of progress. Or, he says, it could be a careful calculation that locking him up would do nothing for Mr Wen’s image.
Tuition is $1,800 a year: a big sum in China. But Disney claims that its results are impressive. It has ten schools in Shanghai, five in Beijing and plans to double that number in the next year, slowly extending from China’s two largest cities to surrounding areas. The main constraint is not customers—the older schools already have waiting lists—but training and staff. New schools must therefore be in places where they can easily be supervised.
Each classroom has a local and a Western instructor. Images have been Sinified: rice, for example, comes in a bowl, not heaped on a plate. More than 300 songs, all tied to animations, provide mnemonic help. Some 60 books augment the course materials. Everything has been checked with China’s wary censors.
The initial development costs, which Disney has not disclosed, must have been huge. Within a decade the programme will have a material impact on Disney’s results, predicts Andrew Sugerman, who runs it. Disney hopes to keep doubling the number of Chinese students it teaches every year for a while. This is a risky venture—long-term, complex and in an area China considers sensitive: education. Yet the potential rewards are huge.
The very complexity of education means that it is less vulnerable to the piracy that usually stops Western media firms from making money in China. A bootleg copy of “Mulan” is much cheaper than the real thing and possibly just as good, other than the fact that it is stolen. It is harder to fake a good education.
Disney’s focus groups find that for Chinese parents, “education means everything”. English, in particular, is viewed as a ticket to the wider world, says Mr Sugerman. Studies commissioned by Disney estimate that the market for children’s English-language education in China is growing by 12% annually and will reach $3.7 billion by 2012. That may be too modest. Adele Mao, an analyst at OLP Global, a research and consulting firm, reckons the market is already nearly $6 billion a year and is growing by 20%.
Powered by ScribeFire.
Filed under: Business/Economy, East Asia, Education, Energy, Korea, Military, Quick Posts, Subscriptions, USA Tagged: brazil, defense spending, disney, food, japan, knoc, oil, rok, the economist, wen jiabao