Trust, but verify

In a recent post, Tyler Cowen offers some views on a wide variety of issues. He begins with some reassuring remarks about the future of American democracy, and then offers some highly pessimistic remarks about Germany:

Meanwhile, being reasonable with your constituents is overrated. Look at Germany, which has non-ideological, non-polarized politics. They’ve gotten every decision wrong. Their whole strategy of buying cheap energy from Russia to sell to China was a huge blunder. They bet most of their economy on it, and neither of those two things will work out. They also have no military whatsoever. It’s not like, “Ok, they don’t spend enough.” They literally had troops that didn’t have rifles to train with and were forced to use broomsticks.

I see a jarring inconsistency in the analysis of the two countries. In the case of the US, I see Tyler as saying something to the effect, (my words) “Reject anecdotes about Trump, look at the deeper strength of the US political system.” But when it comes to Germany, he seems to rely heavily on some highly unreliable anecdotes about broomsticks and exports to China.

In fairness to Tyler, I imagine you could find lots of experts who agree with him about Germany. I suspect that these are largely the same experts who made these predictions in early 2022:

1. Russia would easily defeat Ukraine within a few weeks.

2. The European economy would be badly hurt by a cutoff of Russian gas.

3. Draconian sanctions on Russia would devastate their economy.

These were not predictions made by a few experts, this was the consensus view of the vast majority of pundits. And they were completely wrong about almost everything. Ukraine is still fighting, Europe did fine without Russian gas, and Russia is booming despite sanctions. Wrong, wrong, and wrong again.

So why does anyone trust experts?

I decided to check the “expert” claims that Germany has no military, and must rely on broomsticks. I found that they have one of the world’s largest militaries. (Yes, compared to Russia the figures are distorted by PPP factors, but Germany spends about the same as other big European powers, and unlike the UK and France, devotes it all to conventional forces.)

Then I checked Germany exports to China and discovered that the claim of German dependence on China was also exaggerated:

And if trade with China is a potential problem, what are we to make of the US import dependence on China:

By the way, it’s actually good to trade with potential adversaries. I’m worried about the possibility of a Chinese invasion of Taiwan, but I’d be far more worried if we did not trade with China. In that case, they’d have absolutely nothing to lose from an invasion. As it is, they still might invade, but they know that an invasion would severely damage their trade relations with the rest of the world. The recent US move away from globalization is making WWIII more likely, not less.

In the end, the truth lies somewhere between Tyler’s optimistic take on the US and his highly pessimistic take on Germany. We probably won’t become a fascist dictatorship (despite Trump’s best efforts), but that’s partly because people do worry about the situation, and resist his attempts to abolish American democracy. Germany probably won’t be conquered by Russia, but that’s partly because some Germans are increasing worried about their neighbor to the east, and they are currently ramping up their military spending to a level closer to 2% of GDP.

Don’t worry, be happy??

No: Worry, but also be happy.



16 Responses to “Trust, but verify”

  1. Gravatar of Peter Peter
    27. May 2024 at 10:20

    On the German military thing, he’s not wrong. Perun (just Google him on YouTube, he’s acknowledged as a legitimate authority on this sort of stuff) did a deep dive into that exact question within the past year and Germany literally doesn’t have bullets nor guns as well as an extremely high rate of unreadiness, i.e. it doesn’t matter if you have 100 planes on paper if 98 can’t fly because they has been grounded for maintenance reasons, don’t have bombs, no trained pilots, and don’t have fuel.

  2. Gravatar of Eharding Eharding
    27. May 2024 at 12:42

    “1. Russia would easily defeat Ukraine within a few weeks.

    2. The European economy would be badly hurt by a cutoff of Russian gas.

    3. Draconian sanctions on Russia would devastate their economy.”

    TBF I believed the first, but not the second or third. It’s not that hard to reorient a country’s economy around higher energy costs, and Russia’s quality of “pofigism” (see this video by a Chinese woman: also makes it easier for Russia to reorient its economy around indirect imports from the rich countries and imports from the BICS at a greater risk of catastrophic failure.

    Frankly, I’m glad Germany and Japan don’t have scary militaries. China and the US should sanction both the Russian and Ukrainian arms sectors.

  3. Gravatar of Robert Benkeser Robert Benkeser
    27. May 2024 at 12:57

    The sanctions on Russia are *not* draconian. They’re being advertised as such. But they’re not. I would go so far as to call the claim disinformation. Current sanctions on Russia are highly circumscribed and weakly enforced. Please refer to the following blog posts for detail:

  4. Gravatar of Robert Benkeser Robert Benkeser
    27. May 2024 at 15:26

    “America has a bad habit of not realizing when other countries have already gone to war with it.”

    -Dmitri Alperovich

  5. Gravatar of ssumner ssumner
    27. May 2024 at 19:46

    Peter, Yeah, those “experts” have been wrong about everything. I don’t believe Russia would defeat Germany in a land war. Germany is an industrial powerhouse—they can produce plenty of bullets any time they need them.

  6. Gravatar of Peter Peter
    27. May 2024 at 22:13

    This isn’t a case of those “experts”, this is a case of literally quoting official German Pentagon equiv reports to their legislation.

    And Russia winning a land war against Germany wasn’t the question. It was is the current German army a joke and that’s a resounding yes. They get away with it because of NATO and the fact Poland is in the way. For example Germany has six extremely good best in class submarines and yet their entire fleet is not operational for maintenance and supply issues and has been like that going on five years.

    And no they can’t make bullets anytime they need them, factories take time to build, knowledge, etc, it’s why the EU has been unable to even resupply Ukraine’s monthly ammunition needs and the ENTIRETY of the EU is currently operating at MAXIMUM EXISTING ammunition production capacity.

    Rather than double down on being wrong about this one Scott, get some knowledge. Even the entirety of the US artillery shell manufacturing base is unable to keep up with Ukraine’s current needs much less the US and EU combined hence why the US is buying ammunition from South Korea to give Ukraine and that still isn’t enough. Russia is winning this war because they are out producing the entire West on basic things like ammunition and dumb bombs. They started with a deeper supply pool and then got serious about ramping up production two years before the West even started thinking about it.

  7. Gravatar of Viennacapitalist Viennacapitalist
    28. May 2024 at 00:44

    Tyler’s analyisis is wrong on several counts,
    The “Germans” did not “bet” on China and Russia, rather their many individual businessmen found that China wants (and can) buy lots of their products and that their large neighbour to the east (Russia) has a lot of inputs their businesses needs at competitive prices.
    The trade relationsips are market phenomena – not geostrategic decisions (by and large, ofc, there is always some government meddling)

    Merkel’s exit from nuclear was no conscious “bet” on Russia either, but a populist’s reaction to the anti-nuclear romanticism prevalent in German society. She was scared of the Green’s in some upcomming election and went full populist (of course going nuclear doesn’t make you less dependent on Russia, as the US shows which imports most of its refined uranium from Russia and is happy wit it).
    What is true, is that the cost of that foolish decision was not immediately visible thanks to plenty and cheap Russian gas…

    And of course, Germany is not going to be invaded by Russia, what nonsense…(Even if, the size of military spending would not matter, as very few Germans would show up for a fight IMHO)

  8. Gravatar of Viennacapitalist Viennacapitalist
    28. May 2024 at 01:33

    sanctions are beeing weakly enforced, because it is too costly to cut out the largest producer of almost every commodity without feeling real pain. Politicians know/feel that their electorate can’t take the pain, and this is the solution – that’s how the world works.

    The weak enforcement, coupled with slow deindustrialization and two mild winters, is the reason why Scott can say that the experts have been wrong on Germany’s gas dependence…

  9. Gravatar of Rajat Rajat
    28. May 2024 at 04:39

    Dare I say that Tyler may have succumbed to the fallacy of mood affiliation? Tyler is very interested in growth and is strongly pro-technology and innovation, ‘talent’ and meritocracy more generally. He sees Germany as too unambitious and too cautious. And he chooses his talking points to match that mood.

  10. Gravatar of ssumner ssumner
    28. May 2024 at 10:04

    Peter, Check out how quickly the US ramped up production during WWII. Do you seriously believe the Europeans (or Americans) are producing as much ammo and weapons as they are capable of producing? The fact is that we aren’t taking the Russian threat anywhere near as seriously as we should. Russia is treating this like the beginning of WWIII. We are not.

    By the way, this is absurd:

    “Germany literally doesn’t have bullets nor guns”

    I claim they have at least one bullet and one gun, which would make your claim a lie. (You said “literally”) I’d like to know precisely how many bullets they have, and how many guns. Otherwise I cannot take these claims seriously.

    Rajat, It seems like hyperbole to me (something we all do at times.)

  11. Gravatar of Eharding Eharding
    28. May 2024 at 11:40

    “Russia is treating this like the beginning of WWIII.”

    Why do you say so, Sumner? Ukraine definitely is, but I’ve seen no evidence Russia is.

  12. Gravatar of Matthias Matthias
    28. May 2024 at 15:31

    Scott, I think your argument and Peter’s argument aren’t in contradiction.

    By global standards, Germans spends a lot on her military in absolute terms. Alas, right now that’s very inefficient spending and her forces are far from ready for any fighting.

    You are right, that if Russia came attacking, the Germans would likely find the will to break through some of their own bureaucracy.

    But at the moment, they spend a lot with not much to show for it. Compare that with France, which has a similar total budget, but manages to even do some global power projection with it.

    Of course, it’s very unlikely Russia would attack Germany in the first. Not just because of NATO, but also because Poland is in the way; and they really don’t like letting the Russian army pass through.

    Btw, the Perun videos are really good. He’s background is in procurement and defense economics. He actually made his first video at the start of the full scale invasion of Ukraine exactly to explain why the war won’t be over in a few days and why Ukraine can win this.

  13. Gravatar of ssumner ssumner
    28. May 2024 at 16:21

    Matthias, There is a contradiction. He says they have no bullets or guns, I say they have some. Yes, Germany needs to do more, and it is starting to upgrade. But that’s not what Peter (or Tyler) said.

  14. Gravatar of Sean Sean
    29. May 2024 at 10:49

    I am not personally an expert on German military might but just citing % of GDP isn’t a fair tool. What are they spending that money on? Do military pensions count? Trent Telenko and other military types have quoted their actual man power and tanks and it feels light to me. But again no expert. I would respect your counter if you did the research on fighting men and machinery and not % of gdp. Lots of ways that % can be going elsewhere.

  15. Gravatar of ssumner ssumner
    29. May 2024 at 11:25

    Sean, I’m not saying they have a strong military, I’m saying they have a nontrivial military. No one has presented evidence against that claim. How many bullets? How many guns? How many tanks? Where’s the specific evidence?

    Tyler says they have no military. That’s what I’m skeptical about.

  16. Gravatar of Sara Sara
    4. June 2024 at 04:43

    First of all, percentage of GDP is meaningless. The data one should be looking at is percentage of taxable income. The United States is collecting about 4.5T in tax income, and nearly 1T is going to defense.

    Some of that is sent abroad to places like Syria, Ukraine, Israel, or spent in Germany, South Korea and Japan on maintaining military bases despite the fact that the cold war is long over. And/or spent wherever else the military industrial complex wants to wreak havoc and instigate conflict.

    Secondly, nobody has claimed that we should stop trading with countries like China. That’s a straw man argument. You are equating tariffs to “stop trading with.” That’s dumb.

    You have no critical thinking skills. You repeat the same worn out tag-lines. Case in point: you equate diplomacy, and curtailing involvement in war machines like NATO with “isolationism.” That argument began with the thug known as Woodrow Wilson. That was the same “spin” that his political team used to convince Americans that they had to enter WW1. They didn’t.

    FDR, another thug, used the same talking points as Woodrow “thugboy” Wilson.

    It’s like saying John Adams, Thomas Jefferson, Alexander Hamilton, and every president up until Woodrow Wilson were “Isolationist.” They were not isolationist. They were just not pro-war, pro-thug, pro-imposing themselves upon every other person who had a different culture or tradition. Instead, they sought to find “common ground” wherever they could.

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