U.S. vs. China+Russia - the Tale of the Tape

About 70 years ago, there was a big battle for supremacy among all of the big countries on Earth, called "World War 2." The countries that came out on top of that battle were the United States, Russia, and China. Following the end of that war, there was a protracted low-intensity power struggle (the Cold War) between those three winners, which Russia lost, and the United States and China - who started out as enemies, but became de facto allies in the 1970s - won. 

People in the U.S. seem to tacitly assume that because we won those two big power struggles, we'll win the next one - if there even is one at all. 

During the 1990s, this seemed to be predicated on the idea that the U.S. would win the ideological battle - that democracy, capitalism, and human rights were such an attractive and potent combination that everyone would settle on these systems, and then there would be no need for further power struggles among nations. This was the "End of History" idea. It may still work out that way, but it hasn't yet - about 40% of the world has resolutely refused to adopt U.S.-like systems, and democracy has actually been in retreat since slightly after the turn of the millennium, if you believe Freedom House.

In the last few years, it has finally sunk in that the "End of History" idea is not right (at least, for now). People are waking up to the possibility that the spread of democracy and human rights from 1945 to 2000 might have been partially a byproduct of U.S. power.

But there is still the notion that the U.S.' economy and military are both so strong that we are guaranteed to retain preeminence over any foe or combination of foes. 

But now consider the combination of China and Russia, the other two victors of World War 2. These countries are each poorer than us on a per capita basis, which reflects the inferiority of their economic and political systems in terms of creating human welfare. But their draconian systems have, so far, allowed them to retain control over vast territories (17% of the world's land area) and huge populations (21% of humanity).

What's more, these countries are now both clearly opposed to American power and influence - Russia more so than China, given the war in Ukraine. The two countries have resolved the enmity and territorial disputes that existed between them in the Cold War, and are now de facto allies. 

So I thought it would be useful to compare the "tale of the tape" - the basic resources that the U.S. possesses, compared to the emerging alliance of Russia and China. Here is a table I whipped up:

All data are from 2012 or 2013. The source is Wikipedia.

Notice how in all categories except for nominal GDP, the U.S. is outclassed by the combination of the other two powers - sometimes by an enormous margin.

There are some caveats, of course, including but not limited to the following:

* Given China's greater growth rate, the GDP and Manufacturing disparities will continue to move in the direction of China+Russia.

* The nuclear warhead number is the sum of both tactical and strategic warheads, though the strategic-only numbers are similar.

* Proven fossil fuel reserves are not equal to economically recoverable reserves; the U.S. has more advanced extraction technologies.

* Active military personnel are not the same as total military personnel; the total number favors China+Russia even more.

* I did not include specific weapons systems, since I am not sure about the strategic relevance of any of these. For example, Russia has many more tanks and mobile ICBMs than the U.S., while the U.S. has many more aircraft carriers. I am simply not sure how useful tanks, mobile ICBMs, and aircraft carriers really are at this point. Nor do I know about differences in weapon quality. But it's worth noting that in both WW2 and the Cold War, GDP ended up mattering more than initial levels of military tech in determining the eventual victor.

* Some argue that China and Russia are not true allies. However, this was also true of the U.S. and China in the latter part of the Cold War - and, for that matter, the U.S. and USSR in WW2. Predictions that Russia and China will come into conflict over Russia's Far East have so far proven to be total fantasy, and the two countries have moved ever closer together.

* The U.S. might be able to count on allies in an actual war - Britain, France, and/or Germany in a European war against Russia, and Japan and/or India in an East Asian war against China. So this might not be an appropriate comparison; indeed, I think that building strong alliances is our best hope of countering a China-Russia alliance. Note also that China+Russia might be able to draw on some allies as well, such as Pakistan (against India) or North Korea (against Japan).

Anyway, I think that the numbers should demonstrate to all but the most blinkered observers that the U.S. is not facing an opponent whose resources are far less than ours, as we did in both WW2 and the Cold War. For the first time since the early days of our country, our rivals have more resources than we do - and the disparity is getting larger every day. Despite the obvious superiority of our governmental and economic systems, we are not guaranteed to prevail in a power struggle against a Russia-China axis. Henry Kissinger knew this, which is why he always warned that we should be closer to either China or Russia than those two countries were to each other. But in recent years that has proven to be impossible.

Now hopefully, this blog post, and others that point out the same facts, won't matter at all. Hopefully, there will be no new Cold War or anything like it. But just in case this is where things are headed, it pays to be honest with ourselves about the facts.

Thursday Roundup, 10/16/2014

You know what? There is NO WAY the An Lushan rebellion killed 30 million people. What a hoax. OK, time for econ links and semi-crazed raving.


Me on BV

1. Energy limits won't hold back growth. Reason: We've been growing while using less energy for decades now.

2. Why I'm not too worried about the China slowdown (warning: contains macrobullshitting).

3. Why Jean Tirole is like Charles Barkley. Hint: It's not the hair.

4. Why the EMH is right. And also wrong. But mostly right.

5. I'm disappointed that Tony Hsieh has not yet managed to turn Las Vegas into a hipster techtopia. Next time, he should try more communism.


From Around the Econ Blogosphere

1. In which SMBC sums up about half of the experimental economics literature to date, in a single mildly funny comic. On a more serious note: https://ideas.repec.org/a/eee/jeborg/v73y2010i1p65-67.html

2. Roger Farmer says that the NAIRU is a myth. That Farmer, what a card. Next thing you know, he'll be telling us that the accelerationist Phillips curve has no out-of-sample predictive power! (slaps knee and hyuks)

3. Elizabeth Bruenig is against affirmative consent. Cacao to cacao.

4. Zachary David writes about agent-based models and macroeconomics. Rajiv Sethi and co. are not going to be happy with Mr. David.

5. Arnold Kling doesn't like the ideas of Olivier Blanchard. Paul Krugman doesn't like the ideas of Arnold Kling. I don't like walnut bread.

6. Mark Thoma provides your one-stop shop for coverage of Jean Tirole's Nobel prize. You can Tirole around to your heart's content. GET IT?? Heh. Heh.

7. A deep and thoughtful Matt Yglesias meditation on the philosophy of forecasting. I plan to say something along these lines when I take down the 2010 Inflation Derpers for claiming now that they were only "warning about risks".

8. Alex "Ragnarok" Tabarrok catches a great article about the boondoggle of U.S. pension funds. Alex's new nickname comes from the fact that he is actually an incarnation of Surtur, the fire-demon who will eventually burn this world so that a better one may be created in its place.

9. Jim Hamilton breaks down the factors behind higher oil prices. Sadly, reptoids - which we all know are the real cause - are not listed. Get out your orgone pendants, Hamilton's one of Them!

10. Economist battles streakers in the classroom. This is part of a fetish known as CENA, or "Clothed Economist Nude Activist", that has been gaining in popularity on Reddit.

Three ways of understanding the world

P-E Gobry has a narrow view of what science is:

[L]et me explain what science actually is. Science is the process through which we derive reliable predictive rules through controlled experimentation. That's the science that gives us airplanes and flu vaccines and the Internet... 

Countless academic disciplines have been wrecked by professors' urges to look "more scientific" by, like a cargo cult, adopting the externals of Baconian science (math, impenetrable jargon, peer-reviewed journals) without the substance and hoping it will produce better knowledge.

Predictably, one thing this leads to is the conclusion that economics isn't a science:

Since most people think math and lab coats equal science, people call economics a science, even though almost nothing in economics is actually derived from controlled experiments. Then people get angry at economists when they don't predict impending financial crises, as if having tenure at a university endowed you with magical powers.

If you want a rebuttal to the "econ isn't a science" thing, Adam Ozimek has one here.

But I want to make a different point. I think Gobry is right that there's something special about controlled experiments, whether or not you want to restrict the word "science" to mean only that. But there are other ways of systematically understanding the world. In fact, I think there are 3 big ones:

Method 1: History

One way of systematically understanding the world is just to watch it and write down what happens. "Today I saw this bird eat this fish." "This year the harvest was destroyed by frost." "The Mongols conquered the Sung Dynasty." And so on. All you really need for this is the ability to write things down.

This may sound like a weak, inadequate way of understanding the world, but actually it's incredibly important and powerful, since it allows you to establish precedents. What happened once can happen again. Maybe you don't know why, or how likely it is, but you know a bad harvest or a Mongol invasion isn't out of the realm of possibility, and that is valuable knowledge.

Method 2: Empirics

A second way of systematically understanding the world is repeated observation. This is where you try to make a large number of observations that are in some way similar or the same, and then use statistics to identify relationships between them. This is most (though not all) of how economists understand the world.

The first big limitation of empirics is omitted variable bias. You can never be sure you haven't left out something important. The second is the fact that you're always measuring correlation, but without a natural experiment, you can't isolate causation.

Still, correlation is an incredibly powerful and important thing to know.

Method 3: Experiments

Experiments are just like empirics, except you try to control the observational environment in order to eliminate omitted variables and isolate causality. You don't always succeed, of course. And even when you do succeed, you may lose external validity - in other words, your experiment might find a causal mechanism that always works in the lab, but is just not that important in the real world. This is a big big problem for psychology, including prospect theory. 

Experiments give you information about mechanisms. When these mechanisms have external validity - for example, when the same process that moved balls down ramps on Galileo's desk happened to be the one that moves the planets in their orbits - then experimental science (what Gobry just calls "science") is incredibly powerful, more powerful than either of the other techniques. But it doesn't always work.

You may be thinking: Where does theory fit in with all this? My answer is that theory is part of all three of these. Theory is needed to understand causal mechanisms found in experiments, to explain correlations found with empirics, or to isolate the important features of a historical event. Sometimes the theory comes before the observations, sometimes afterward.

You may also be thinking: Where do natural experiments fit in with all of this? Well, they're kind of Method 2.5. The boundaries between these methods aren't always perfectly clear, in any case.

So what we've got here is a sort of hierarchy of ways of understanding the world. There's a tradeoff between general applicability and the amount of knowledge you get. Experiments rarely work, but when they do you get a lot of understanding. History works any time, but you rarely understand why things happen. Empirics is (are?) in the middle.

But what I see is a lot of people dissing empirics as somehow inferior to experiments. That's what's really behind the "econ isn't a science" trope. Why does this happen? Don't people get that empirics, though less powerful than experiments, can be applied in a much wider range of situations? 

My guess is that it's all because empirics came out of order. History is cheap, and experiments are also (sometimes) very cheap - think of Mendel growing peas in his garden. But empirics usually requires Big Data, which is expensive. And even the simplest empirics requires statistics. So while we got written history over 8000 years ago, and experiments almost 1000 years ago, we didn't get modern statistical empirical methods until maybe 100 or 200 years ago. And only recently, with the rise in information technology, have empirics really exploded.

To a lot of people, the empirics revolution must seem like a step backward. We look back to the huge successes of chemistry and physics and medicine in the last few centuries, and the rock-solid theories they generated, and we compare it to the regressions economists are running nowadays, and we say "Ugh, this isn't science!" We look at the progression from history to experiment, and we think that new methods (if they exist) should go the same way - i.e., they should lead us to deeper understanding. But empirics, instead, goes in the direction of wider applicability with less-deep understanding, and that rankles some people.

I don't think they should be rankled. Empirics is an innovation that allows us to know some things about big phenomena that previously we could only understand through written history. It's not a substitute for experiments, it's a complement. It's a valuable addition to humanity's toolkit, whether you want to call it "science" or not.