Commentary on Political Economy

Tuesday 28 February 2023

THE MAGNIFICENT MARTIN WOLF


The first anniversary of Russia’s assault on Ukraine has been greeted with soaring rhetoric. Notably, US president Joe Biden stated in Warsaw that “Our support for Ukraine will not waver, Nato will not be divided, and we will not tire. President Putin’s craven lust for land and power will fail. And the Ukrainian people’s love for their country will prevail.” These sentiments are admirable. But is the commitment genuine? Will they in fact do whatever is needed to ensure Ukraine’s survival as an independent democracy?

Even those who demand a negotiated settlement should realise by now that a necessary condition for this outcome is the realisation by Vladimir Putin that the west will not allow him to absorb Ukraine into his empire. His army’s failures over the past year may have caused him some doubts over his ability to do so. But still he believes that Russia will prevail. That is not even an unreasonable view, given the relative size of the principal adversaries and Putin’s control over the human and other resources of his country. The only force able to turn the tide for good is a combination of Ukrainian determination with western resources, both military and financial.


The first anniversary of Russia’s assault on Ukraine has been greeted with soaring rhetoric. Notably, US president Joe Biden stated in Warsaw that “Our support for Ukraine will not waver, Nato will not be divided, and we will not tire. President Putin’s craven lust for land and power will fail. And the Ukrainian people’s love for their country will prevail.” These sentiments are admirable. But is the commitment genuine? Will they in fact do whatever is needed to ensure Ukraine’s survival as an independent democracy?

Even those who demand a negotiated settlement should realise by now that a necessary condition for this outcome is the realisation by Vladimir Putin that the west will not allow him to absorb Ukraine into his empire. His army’s failures over the past year may have caused him some doubts over his ability to do so. But still he believes that Russia will prevail. That is not even an unreasonable view, given the relative size of the principal adversaries and Putin’s control over the human and other resources of his country. The only force able to turn the tide for good is a combination of Ukrainian determination with western resources, both military and financial.

As Biden explained, there are powerful reasons for granting that support. This is particularly true for Europe. Putin’s assault threatens the core values and interests on which postwar Europe is built: inviolability of frontiers; peaceful co-operation among states; and democracy. It particularly threatens the security of the countries closest to Russia, which were, not long ago, inside the Soviet empire. If Putin wins, who comes next? No line can be drawn between our values and our interests, whatever “realists” suggest. Our values are our interests. This war is for a way of life built on the ideal of freedom from destructive coercion by thugs like Putin. This makes it our war, too.

The burden on Ukraine’s neighbours is exceptionally high. Chart showin Total bilateral commitments plus refugee costs (% of GDP). Poland tops the chart with more than 2% of GDP. The US by comparison has committed less than 0,5% of GDP

The first anniversary of Russia’s assault on Ukraine has been greeted with soaring rhetoric. Notably, US president Joe Biden stated in Warsaw that “Our support for Ukraine will not waver, Nato will not be divided, and we will not tire. President Putin’s craven lust for land and power will fail. And the Ukrainian people’s love for their country will prevail.” These sentiments are admirable. But is the commitment genuine? Will they in fact do whatever is needed to ensure Ukraine’s survival as an independent democracy?

Even those who demand a negotiated settlement should realise by now that a necessary condition for this outcome is the realisation by Vladimir Putin that the west will not allow him to absorb Ukraine into his empire. His army’s failures over the past year may have caused him some doubts over his ability to do so. But still he believes that Russia will prevail. That is not even an unreasonable view, given the relative size of the principal adversaries and Putin’s control over the human and other resources of his country. The only force able to turn the tide for good is a combination of Ukrainian determination with western resources, both military and financial.

As Biden explained, there are powerful reasons for granting that support. This is particularly true for Europe. Putin’s assault threatens the core values and interests on which postwar Europe is built: inviolability of frontiers; peaceful co-operation among states; and democracy. It particularly threatens the security of the countries closest to Russia, which were, not long ago, inside the Soviet empire. If Putin wins, who comes next? No line can be drawn between our values and our interests, whatever “realists” suggest. Our values are our interests. This war is for a way of life built on the ideal of freedom from destructive coercion by thugs like Putin. This makes it our war, too.

The burden on Ukraine’s neighbours is exceptionally high. Chart showin Total bilateral commitments plus refugee costs (% of GDP). Poland tops the chart with more than 2% of GDP. The US by comparison has committed less than 0,5% of GDP

Unfortunately, western rhetoric is not yet matched by deeds. This renders the outcome of the war in doubt. Justin Bronk of the Royal United Services Institute has recently written: “Russia can be beaten on the battlefield this year, and deterred from future aggression, but only if Europe stops underestimating Russian resolve; accepts that it is in a long-term military contest with an aggressive and determined enemy; and invests now in industrial capacity and support to Ukraine at the scale that the stakes demand.” Nor are military resources all that is required. Ukraine needs to sustain its people and its economy. It needs, right now, to rehabilitate its infrastructure, as Russia destroys it. Yet Russia is physically unscathed. Its economy has also survived western sanctions better than many had hoped, just as Ukraine has survived militarily better than many had feared.


The first anniversary of Russia’s assault on Ukraine has been greeted with soaring rhetoric. Notably, US president Joe Biden stated in Warsaw that “Our support for Ukraine will not waver, Nato will not be divided, and we will not tire. President Putin’s craven lust for land and power will fail. And the Ukrainian people’s love for their country will prevail.” These sentiments are admirable. But is the commitment genuine? Will they in fact do whatever is needed to ensure Ukraine’s survival as an independent democracy?

Even those who demand a negotiated settlement should realise by now that a necessary condition for this outcome is the realisation by Vladimir Putin that the west will not allow him to absorb Ukraine into his empire. His army’s failures over the past year may have caused him some doubts over his ability to do so. But still he believes that Russia will prevail. That is not even an unreasonable view, given the relative size of the principal adversaries and Putin’s control over the human and other resources of his country. The only force able to turn the tide for good is a combination of Ukrainian determination with western resources, both military and financial.

As Biden explained, there are powerful reasons for granting that support. This is particularly true for Europe. Putin’s assault threatens the core values and interests on which postwar Europe is built: inviolability of frontiers; peaceful co-operation among states; and democracy. It particularly threatens the security of the countries closest to Russia, which were, not long ago, inside the Soviet empire. If Putin wins, who comes next? No line can be drawn between our values and our interests, whatever “realists” suggest. Our values are our interests. This war is for a way of life built on the ideal of freedom from destructive coercion by thugs like Putin. This makes it our war, too.

The burden on Ukraine’s neighbours is exceptionally high. Chart showin Total bilateral commitments plus refugee costs (% of GDP). Poland tops the chart with more than 2% of GDP. The US by comparison has committed less than 0,5% of GDP

Unfortunately, western rhetoric is not yet matched by deeds. This renders the outcome of the war in doubt. Justin Bronk of the Royal United Services Institute has recently written: “Russia can be beaten on the battlefield this year, and deterred from future aggression, but only if Europe stops underestimating Russian resolve; accepts that it is in a long-term military contest with an aggressive and determined enemy; and invests now in industrial capacity and support to Ukraine at the scale that the stakes demand.” Nor are military resources all that is required. Ukraine needs to sustain its people and its economy. It needs, right now, to rehabilitate its infrastructure, as Russia destroys it. Yet Russia is physically unscathed. Its economy has also survived western sanctions better than many had hoped, just as Ukraine has survived militarily better than many had feared.

The Ukraine Support Tracker from the Kiel Institute for the World Economy, recently discussed by Adam Tooze, provides disturbing information on how limited the support for Ukraine has in reality been, especially from Europe. In particular, it notes that US commitments have so far exceeded those of EU members, bilaterally and collectively, even though the war is of far greater significance for the future of the latter than for that of the former. If one takes bilateral commitments plus the cost of supporting refugees as a share of gross domestic product, countries of eastern Europe (Poland, Latvia, the Czech Republic, Lithuania and Slovakia) have been much the most generous. The US is overwhelmingly the most important supplier of military equipment. But its aid to Ukraine is dwarfed by what it spent directly on the Vietnam or Iraq wars and matched by what it spent in Afghanistan. Again, the domestic energy subsidies of European countries dwarf their help to Ukraine. Germany, for example, has allocated 7.2 per cent of its GDP for domestic energy subsidies compared with just 0.4 per cent in total assistance to Ukraine.

Bar chart of US military expenditure in wars vs aid to Ukraine (average annual cost, as a % of GDP at the time) showing US military aid to Ukraine is a relatively small burden for the US

Putin could reasonably conclude that Ukraine will not get the resources it needs to sustain the war in the longer run. He might also reasonably hope that he will get greater military support from China. Time, then, is ultimately on his side.

The west has to prove that this is wrong and it needs to prove this sooner rather than later if the war is not to drag on forever. There must be a recognition that this war is a vital national interest of European countries if they wish the stability and prosperity of postwar Europe to endure. Together with the US, they must mobilise the resources, including military ones, needed to win it. If this is not done more generously, it is hard to see how the war can end on terms with which Europe will wish to live.

Bar chart of Fiscal commitments to energy subsidies vs aid to Ukraine (% of GDP) showing Domestic spending on energy subsidies dwarfs help for Ukraine

The first anniversary of Russia’s assault on Ukraine has been greeted with soaring rhetoric. Notably, US president Joe Biden stated in Warsaw that “Our support for Ukraine will not waver, Nato will not be divided, and we will not tire. President Putin’s craven lust for land and power will fail. And the Ukrainian people’s love for their country will prevail.” These sentiments are admirable. But is the commitment genuine? Will they in fact do whatever is needed to ensure Ukraine’s survival as an independent democracy?

Even those who demand a negotiated settlement should realise by now that a necessary condition for this outcome is the realisation by Vladimir Putin that the west will not allow him to absorb Ukraine into his empire. His army’s failures over the past year may have caused him some doubts over his ability to do so. But still he believes that Russia will prevail. That is not even an unreasonable view, given the relative size of the principal adversaries and Putin’s control over the human and other resources of his country. The only force able to turn the tide for good is a combination of Ukrainian determination with western resources, both military and financial.

As Biden explained, there are powerful reasons for granting that support. This is particularly true for Europe. Putin’s assault threatens the core values and interests on which postwar Europe is built: inviolability of frontiers; peaceful co-operation among states; and democracy. It particularly threatens the security of the countries closest to Russia, which were, not long ago, inside the Soviet empire. If Putin wins, who comes next? No line can be drawn between our values and our interests, whatever “realists” suggest. Our values are our interests. This war is for a way of life built on the ideal of freedom from destructive coercion by thugs like Putin. This makes it our war, too.

The burden on Ukraine’s neighbours is exceptionally high. Chart showin Total bilateral commitments plus refugee costs (% of GDP). Poland tops the chart with more than 2% of GDP. The US by comparison has committed less than 0,5% of GDP

Unfortunately, western rhetoric is not yet matched by deeds. This renders the outcome of the war in doubt. Justin Bronk of the Royal United Services Institute has recently written: “Russia can be beaten on the battlefield this year, and deterred from future aggression, but only if Europe stops underestimating Russian resolve; accepts that it is in a long-term military contest with an aggressive and determined enemy; and invests now in industrial capacity and support to Ukraine at the scale that the stakes demand.” Nor are military resources all that is required. Ukraine needs to sustain its people and its economy. It needs, right now, to rehabilitate its infrastructure, as Russia destroys it. Yet Russia is physically unscathed. Its economy has also survived western sanctions better than many had hoped, just as Ukraine has survived militarily better than many had feared.

The Ukraine Support Tracker from the Kiel Institute for the World Economy, recently discussed by Adam Tooze, provides disturbing information on how limited the support for Ukraine has in reality been, especially from Europe. In particular, it notes that US commitments have so far exceeded those of EU members, bilaterally and collectively, even though the war is of far greater significance for the future of the latter than for that of the former. If one takes bilateral commitments plus the cost of supporting refugees as a share of gross domestic product, countries of eastern Europe (Poland, Latvia, the Czech Republic, Lithuania and Slovakia) have been much the most generous. The US is overwhelmingly the most important supplier of military equipment. But its aid to Ukraine is dwarfed by what it spent directly on the Vietnam or Iraq wars and matched by what it spent in Afghanistan. Again, the domestic energy subsidies of European countries dwarf their help to Ukraine. Germany, for example, has allocated 7.2 per cent of its GDP for domestic energy subsidies compared with just 0.4 per cent in total assistance to Ukraine.

Bar chart of US military expenditure in wars vs aid to Ukraine (average annual cost, as a % of GDP at the time) showing US military aid to Ukraine is a relatively small burden for the US

Putin could reasonably conclude that Ukraine will not get the resources it needs to sustain the war in the longer run. He might also reasonably hope that he will get greater military support from China. Time, then, is ultimately on his side.

The west has to prove that this is wrong and it needs to prove this sooner rather than later if the war is not to drag on forever. There must be a recognition that this war is a vital national interest of European countries if they wish the stability and prosperity of postwar Europe to endure. Together with the US, they must mobilise the resources, including military ones, needed to win it. If this is not done more generously, it is hard to see how the war can end on terms with which Europe will wish to live.

Bar chart of Fiscal commitments to energy subsidies vs aid to Ukraine (% of GDP) showing Domestic spending on energy subsidies dwarfs help for Ukraine

Times indeed have changed. Peace can no longer be assumed in Europe. Russia is preparing for a long and costly war. So must the west. In the process, it will also have to reconsider its policies towards other countries. There is no doubt that the past behaviour of western countries has undermined their legitimacy in much of the developing world. This is also quite understandable, given the history of foolish wars, the failure to mobilise vaccinations on a suitable scale in response to Covid, the failure, too, to provide adequate financial assistance to these countries in response to the pandemic and the economic fallout from the war. Such indifference has inevitable costs.

At the same time, the west must make clear that the outcome of the Ukraine war is seen as a vital interest, whether other countries like it or not. It will assess the behaviour of other countries, big and small, accordingly. In calculating how to behave, the latter need to understand that the west is indeed resolved that Ukraine will emerge from the fire democratic and independent. That is, one hopes, also the truth.

 

China’s collapsing birth and marriage rates reflect a people’s deep pessimism

A subway escalator in Beijing on Feb. 15. (Bloomberg) (Bloomberg News)
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Nicholas Eberstadt is the Wendt chair in political economy at the American Enterprise Institute.

China is in the midst of a quiet but stunning nationwide collapse of birthrates. This is the deeper, still largely overlooked, significance of the country’s 2022 population decline, announced by Chinese authorities last month.

As recently as 2019, demographers at the U.S. Census Bureau and the United Nations were not expecting China’s population to start dropping until the early 2030s. But they did not anticipate today’s wholesale plunge in childbearing.

Considerable attention has been devoted to likely consequences of China’s coming depopulation: economic, political, strategic. But the causes of last year’s population drop deserve much closer examination.

China’s nosedive in childbearing is a silent alarm. It signals deep disaffection with the bleak future the regime is engineering for its subjects. In this land without democracy, the birth collapse can be read as a landslide vote of no confidence in President Xi Jinping’s rule.

Official Chinese government statistics are far from perfect (Premier Li Keqiang once called China’s economic numbers “man-made”), but they offer a serviceable approximation of recent birth trends.

According to the data, births in China have fallen steeply and steadily since 2016, year after year. In 2022, China had only about half as many births as just six years earlier (9.6 million vs. 17.9 million). That sea change in childbearing predated the coronavirus pandemic, and it appears to be part of broader shock, for marriage in China is also in free fall.

Since 2013 — the year Xi completed his ascent to power — the rate of first marriages in China has fallen by well over half. Headlong flights from both childbearing and marriage are taking place in China today.

Of course, fertility levels, and marriage rates, are dropping all around the world. But these declines tend to be gradual, occurring across decades. China has been hit by seismic demographic jolts. Birth shocks of this order almost never occur under stable modern governments during peacetime. Swift and sharp fertility crashes instead usually reflect catastrophe: famine, war or other shattering upheavals.

What does it take to drive down a country’s birth totals by almost 50 percent in the space of just a few years? Estimates from the U.N. Population Division to consider:

  • During China’s Mao-era famine, in which tens of millions perished, birth levels fell by less than 40 percent between 1957 (the last year before the Great Leap Forward) and 1961 (the depths of the starvation).
  • During the chaos of the Soviet collapse, Russian Federation birth levels fell by less than 40 percent between 1988 (the year before the Berlin Wall fell) and 1994 (when male life expectancy fell to a gruesome 57 years).
  • In Yugoslavia’s hellish breakup and ethnic cleansing, birth levels in Bosnia fell by about 40 percent between 1990 (the last year before Yugoslavia’s breakup) and 1995.
  • Even Pol Pot, architect of auto-genocide in Cambodia, could not quite manage to force that nation’s birth total down by half during the Khmer Rouge nightmare: According the UNPD, birth levels in Cambodia dropped by 48 percent between 1973 and 1977.

Yet China — amid social order and economic health, not apocalyptic upheaval — has just experienced its own harrowing birth plunge. Why?

The answer most likely lies in the dispirited outlook of the Chinese populace itself. Absent disaster, one of the most powerful predictor of fertility levels the world over — across countries, ethnicities and time — turns out to be the number of children that women (also men) happen to want. More than any other factor, human agency matters in national birth patterns, a truth that should come as no surprise.

So, yes, China’s birth decline since 2016 can be explained — but only by a revolutionary, wildfire change in national mood. It would take a sudden, pervasive and desperately pessimistic turn of mind.

In 2016, before the plunge, Chinese fertility was already well below the replacement rate of around 2.1 children per woman, the level needed for population stability. The UNPD reckons that the 2016 rate was 1.77, or 19 percent below the stability target.

The subsequent six-year Chinese birth swoon has dragged fertility down to an extraordinarily low level: If the 2022 birth tally is accurate, nationwide fertility would now be less than half the replacement rate. Even if the collapse is arrested and fertility remains at that level, each new generation in China will be less than half as large as the one before it.

Much of East Asia is beset by super-low fertility — not just China but also JapanSouth Korea and Taiwan. But in China, it is occurring under a totalitarian regime exhorting its subjects to provide more issue for the empire.

The timing of China’s birth collapse matters: The downward spiral commenced immediately after the Chinese Communist Party suspended decades of coercive birth-control policy.

In 2015, Beijing’s population planners finally concluded that the consequences of their awful “one child policy” were inimical to state interests. So it was time to set population policy in reverse.

Note that the regime still claims authority over family size: “the birth of a baby,” in the words of the government-run publication People’s Daily, remains “a state affair.” But now Beijing wants more babies from its subjects. A dictatorship may use bayonets to depress birthrates — but it is much trickier to deploy police state tactics to force birthrates up.

Beijing has not yet figured out how to command the people to feel optimism about their personal futures — or thrill at the prospect of bringing more babies into a dystopian world of ubiquitous facial recognition technology, draconian censorship and the new high-tech panopticon known as the “social credit system.”

Instead, we see millions of young people joining spontaneous movements expressing alienation from work — tang ping (lying flat) — and from Chinese society itself — bai lan (let it rot). The Xi regime doesn’t know what to do about this new form of internalized civil disobedience.

Last year, during one of the regime’s innumerable, drastic pandemic lockdowns, a video went viral in China before authorities could memory hole it.

In the video, faceless hazmat-clad health police try to bully a young man out of his apartment and off to a quarantine camp, even though he has tested negative for the coronavirus. He refuses to leave.

“Don’t you understand,” they warn, “if you don’t comply, bad things can happen to your family for three generations.”

“Sorry” he replies mildly. “We are the last generation. Thank you.”

That moment prompted the spread in China of a despairing social media hashtag: #Lastgeneration.

The dictatorship has brought this demographic defiance upon itself. Xi calls his vaunted vision for the future the “China Dream.” #Lastgeneration is a reminder that the Chinese people increasingly seem to regard it as a nightmare.