[p2p-research] Abundance Destroys Profit [was: Tick, tock, tick, tock… BING]

[J. Andrew Rogers]

On Sun, Dec 13, 2009 at 2:22 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> The US would largely prefer to have a much diminished role.  It simply
> cannot afford a lot more war.  Without war, it is really powerless to do
> much.  It is no longer a trade dominant force.


In some markets the US will remain a key player for the foreseeable
future. It still dominates R&D and with a long-term trend that
indicates it won't be giving up that dominance any time soon. Since
most of this R&D is private and growing the US economy has obviously
figured out how to monetize it in some fashion.

It is also a key player in the increasingly constrained global
agriculture markets, since it is frequently treated as a flywheel for
food supplies. When Argentina limited exports to Europe in 2008, the
US made up the difference from its reserves and it has the ability to
spin-up production quickly. Consequently, the price for some raw food
products "only" doubled in Europe.  Note that everyone is predicting
this type of thing to get much worse in the near future, which will
greatly strengthen the role of the US in the global food markets. When
the shortages get bad enough, foreign governments will be increasingly
motivated to drop punitive tariffs that protect inefficient local
operations from US production. Fast forward to the future and you will
have significant dependencies on US food.


> It will be forced to cut its military.  No military, no power.


Most of the cost of the military is people. Notice the huge investment
in autonomous and robotic systems? Those have a tiny fraction of the
capital, operational, and logistical footprint of well-dressed
monkeys. As a post-WW2 institution, they have taken a very long view
of these things. This is also the reason that the percentage of GDP
spent on the US military has been shrinking for a long time. Even
accounting for the current wars, the percentage is *less* than the
peacetime average of the 20th century.  Given how much of the defense
budget is moving warm bodies hither and yon, there is no reason that
automation could not shrink that budget to a fraction of its current
without decreasing effective power.  And this is in fact this seems to
be what is happening.


>> I could even imagine a scenario in which peacekeepers from a newly
>> democratic China invade independent Arizona to end a civil war between
>> Confederate militias and black nationalists, while seeking to stop
>> fundamentalist Texas from obtaining nuclear weapons!


The part that would be hard to imagine is Arizona having "Confederate
militias" (it is nowhere near the South, geographically or culturally)
or "black nationalists" (there has never been many blacks in Arizona)
or the Chinese military surviving an operation in one of the world's
deadliest desert regions (one of the reasons the US military is good
at desert warfare that they train in some of the nastiest deserts on
the planet) or Texans having to "seek" nuclear weapons when the Pantex
facility is already located in their state. :-)


I am highly skeptical of a breakup of the US, there are no really
plausible paths from here to there.  A much easier path is a
restructuring of the relationship where some States vigorously ignore
the Federal government. As an example, the Federal government has had
a difficult time keeping everyone on the Highway Fund reservation,
with all the unrelated and pointless regulations attached to that
funding. IIRC, both the Nevada and Minnesota funded independent
studies that showed a net positive economic impact by simply dropping
the Highway Funds (the Federal government just lets the undisbursed
money accumulate, sweetens it with a bonus, and waits until the State
politicians take the giant stack of "free" money in a moment of
weakness).


-- 
J. Andrew Rogers
realityminer.blogspot.com