On "Black Swans," "fat-tailed sheep" and future history.

"Any large-scale political unit is a complex system. Most great empires have a nominal central authority -- either a hereditary emperor or an elected president -- but in practice the power of any individual ruler is a function of the network of economic, social and political relations over which he or she presides. As such, empires exhibit many of the characteristics of other complex adaptive systems -- including the tendency to move from stability to instability quite suddenly.

The most recent and familiar example of precipitous decline is the collapse of the Soviet Union. With the benefit of hindsight, historians have traced all kinds of rot within the Soviet system back to the Brezhnev era and beyond. Perhaps, as the historian and political scientist Stephen Kotkin has argued, it was only the high oil prices of the 1970s that "averted Armageddon." But this did not seem to be the case at the time. The Soviet nuclear arsenal was larger than the U.S. stockpile. And governments in what was then called the Third World, from Vietnam to Nicaragua, had been tilting in the Soviets' favor for most of the previous 20 years.

Yet, less than five years after Mikhail Gorbachev took power, the Soviet imperium in central and Eastern Europe had fallen apart, followed by the Soviet Union itself in 1991. If ever an empire fell off a cliff, rather than gently declining, it was the one founded by Lenin."  Niall Ferguson

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The parallel is obvious and Feguson makes it specific later in the essay.  We are over-extended in many fields and the possibility of a sudden and catastrophic reversal looms.   People in the US do not realize that they are much poorer than they have been led to believe.  We will probably not see again the artificially high standard of living that we enjoyed so much.

Does anyone remember a little book by a Russian named Andrei Amalrik?  It was published in the 80s I believe.  It foretold the collapse of the USSR's planned economy.  In 1980 I was en route to Yemen for duty and went to a series of briefings at CIA as part of my preparation.  One of the lecturers was a retired CIA analyst who told us that the Soviet Union was a wildly distorted state that had one foot in the heavy industry needed to sustain their rivalry with NATO and the other foot in the 19th Century peasant economy of Tsarist Russia.  He, too, predicted collapse.  I didn't believe it at the time, but after years of associating with Soviets in Yemen I knew he had been correct.  The level of poverty at which Soviet personnel stationed in Yemen existed was pathetic.  They thought poor little Yemen was a land of milk and honey.  Soviet officers' wives would stand in tiny street stalls and bargain with Qat chewing shopkeepers over the price of a few eggs.  Meat, they never bought.  It was just too expensive.  The Soviet military mission was full of fairly senior officers with mouths full of rotten teeth.

The USSR fell with a crash that was astonishing.  pl

 

Comments

[Chris]

It's an interesting counterfactual to wonder how long the Soviet Union could have held together if Gorbechev had been a bit more ruthless and managed to hold the Union together by force.

I would think that the technological and economic differential between the USSR and USA would have become so great at some point that the only thing needed to end the cold war was for the US to realize it.

[rfjk]

The Russians never had a middle class. They had serfs who transformed into urban proletarians, which was just an ideological slave as opposed to a slave chained to the soil.

The depression and WWII generation were always saying how poor everyone was and didn't know it, simply because everyone was poor. The extermination of affluence within the US middle classes will not destroy America.

[rfjk]

Col

I also forgot to mention that an E-1 enlistee makes approximately 30% more in pay and benefits than his civilian counterpart. That's certainly a hell of lot more than I was paid, and a trend-line that will continue and increase over time, no matter what happens to the US economy or the affluence of the American people.

[VietnamVet]

Colonel,

Yes, the parallels between the Soviet Union and the USA are astonishing. Since the Iraq Invasion, I felt that the American Empire would not last much longer. But, nine years in, we are still soldiering on.

The one fact that gave hope was that every 4 or 8 years the Federal Government changed Administrations. A mighty blow was struck against that hope today with the decision to forgo the Rule of Law and try the 9/11 prisoners in military courts and keep GITMO open.

There is no difference between the Bush and Obama Administration. Both subscribe to the false belief that killing Muslims, one at a time, will pacify the Middle East. As long as there are American troops in the Middle East there will be an insurgency against the foreign occupiers. The wars will only end when America withdraws. There is not enough money or the will to send in the millions of troopers to actually pacify the Middle East. Likewise, America will not longer provide medical and dental care for every citizen.

The only chance that the American Empire could continue was with soft power, the rule of law, and the constant push for human rights and justice. Government by the people, of the people, for the people. This has disappeared. All that is left is propaganda, war profiteers and crazies.

[walrus]

Empires rot from within.

The Soviet union fell because the fiction that a planned economy could perform with anything like the efficiency of a free market system could no longer be maintained.

Once this truth was evident to the common man, as it was first in Poland, followed by East Germany, it was only a matter of time. The Chinese correctly identified this defect in Communist theory and started free market reforms around 1980.

The obvious question is, can America rejuvenate or is it bound for the same scrapheap? Previous postings regarding the level of interest and understanding among Americans in the world outside the USA are worrying.

[Jackie]

This is the same Niall Ferguson who was urging us a few years ago to become an Empire? On second thought, never mind!

[William R. Cumming]

Heped host a Soviet youth soccer team visiting US on tour in US in 80's. Under 13s! All were malnourished and could not believe the food choices being offered. If a youth travel team was malnourished you can imaging those not in that "elite" and their fare.

[jonst]

rfjk wrote: "The extermination of affluence within the US middle classes will not destroy America."

I would not bet on that proposition. Me personally, anyway. It depends how you define "affluence".

[confusedponderer]

As for wealth and E-1 enlistee, I can't quite believe it, but alas: What about some US military families apparently requiring food stamps to get their families through?

http://www.military.com/news/article/more-troops-relying-on-food-stamps.html

Just curious.

[Ael]

As a rule great empires do not come apart without rivers of blood and millions of refugees.

The astonishing thing about the fall of the USSR was the *lack* of a crash.

[Matthew]

Col: I just returned from walking Hadrian's Wall. Empires need limits. Hadrian understood that. I hope Obama has a Hadrian Plan....any plan to match our actual security needs with Washington's over-sized ambitions. Basically, I's like to see some policy, besides needlessly angering the Turks.

[N. M. Salamon]

While I hope that collapse does not befall the USA, the basis for collapse is well estabilished, the infrastructure/ mode of commerce of the USA can not stand without extremely large amount of OIL, at least not til the tranportation issue is solved without reference to diesel/gasoline [natural gas/large public transport, de-emphasis of trucking].

Dimitri Orlov's book : Reinventing Collapse [I read it] is an extremely good analysis of the problems the USA faces vis-a-vis oil depletion, and or loss of reserve currency status, His blog is at:
http://cluborlov.blogspot.com/

As was noted in a recent column in NYT, trying to live with goods made in USA is extremely hard already, and yet the USA is far from the point of collapse.

The Feds have to cut DoD and financial institutioons' help and invest in public transport etc issues [including making agriculture less oil dependent - no it takes 7 calories to serve one calorie of food in the USA].

Good Luck!

Re Ael:

The question has already been noted that the USSR collapsed without automatic attempt to save itself with war. Whether the USA will go quietly or not will depend on her leadership, God help mankind if it is NEOCON at the time of the balck swan.

[Brian McNamara]

Colonel,
A friend in Nha Trang told me that after our war ended, the locals took to calling the Russians "American without money."

[The Twisted Genius]

In the late 80's and early 90's, I worked with a small number of extremely bright East Europeans and Russians who were trained in the Soviet Academy of Science system. Not one of them had any faith that their respective governments were any good. They loved their countries, but hated their governments. In fact, they didn't see any government as inherently good or worthy of trust. They thought highly of Americans and the American way of life, but had no more faith in our government than they had in theirs. In many ways, their attitudes mirrored the attitudes of our teabaggers.

I wonder how this disdain and distrust of the political system may have contributed to the collapse of the Soviet and East European governments.. and what it might say about the future of our government.

[Allen Thomson]

Amalrik:

http://en.wikipedia.org/wiki/Andrei_Amalrik

I read his "Will the Soviet Union Survive Until 1984?" shortly after it was published in 1970, and it did shape my thinking about such matters thereafter.

But, as perusing documents in the CIA's FOIA collection shows, the notion that USSR might not last didn't make its way into estimates until the last minute.

[Patrick Lang]

BM

I was in Tunis once when the Soviet Black Sea Fleet was making a visit. Groups of their sailors wandered the streets each under the supervision of an officer. I watched a group bargain with a street vendor for locally made cigarettes. They had no money and were trying to trade him Young Pioneer and Komsomol pins. I stood in the group and told the Tunisian vendor in Arabic that I would buy the pins from him and that he should give them a pack apiece. He asked who I was. I told him and he roared with laughter and started handing out cigarettes. The Russians looked puzzled. pl

[Fred Strack]

rfjk:
An E-1 has a base pay is $17,364. The civilian equivalent works out to $8.34 an hour. Except no-one in the civilian world lets you work overtime, which is paid at time and a half. No one on active duty get OT, they do get shot at.

In the last few years being in the US army this also meant two tours in Iraq/Afghanistan, a stop loss and another tour. Does anyone think they are overpaid?

confused, military families eligible for welfare is not new. In 1966 my father left the USAF since as even as an E-9 his 7 kids made him eligable for food stamps.

[Allen Thomson]

Just to follow up on the Soviet collapse idea,

http://yarchive.net/space/politics/soviet_collapse_predictions.html

[R Whitman]

Looks like we have a bunch of "after the fact" commentators on the fall of the Soviet Union.

In the 80's no one with any power in the US government believed the the USSR would fail. The US defense and intelligence bureaucracy missed it completly. There were probably a few analysts isolated in the basement out at Mclean who thought so but they were the company nuts.

In 1991 I participated in several major contracts for equipment to be shipped to the USSR and none of my contacts had any foreknowledge. It was business as usual. These people were upper management of a major industrial establishment still operating today.

[kao_hsien_chih]

@Twisted Genius

I read it somewhere that Lech Walesa was a big fan of the Teabaggers, and was even endorsing some of the candidates associated with them.

Kinda funny that you'd have noticed that about so-called anti-Communists in Eastern Europe back then...

[ex-PFC Chuck]

Your mention of the book by Andrei Amalrik brings to mind The Final Fall published in the mid-70s in France by French-American grad student in demographics Emmanuel Todd. It was his PhD thesis and it argued, based on the analysis of various publicly available demographic data, the fall of the USSR was imminent. His advisers tried discourage him from accepting a publication offer, thinking it would hurt his career. In 2002 Todd wrote After the Empire a similarly pessimistic book about the USA. So far his predictions are tracking quite nicely.

[Stormcrow]

Empires rot from within.

No, generally not. There's almost always either an exogenous shock, or severe overextension, or both. Usually, both in combination.

Rome was getting along - not always easily or peaceably, but coping. Endemic civil wars and all.

Until the Persian Empire got the ruling elite they needed, to transition from a potential superpower to a superpower in being.

The immediate result was the Third Century Crisis.

Rome managed to restabilize, but without any real reserve capacity left at all.

Which left them high and dry when refugees-in-arms started to show up on the Danube frontier, circa 376 AD. All a situation like this needs to go from "marginal" to "collapse-in-progress" is one mistake.

Spain? Double whammy.

Ran out of money because (i) they were overextended, and (ii) the gold inflation ran down the purchasing power of the income they had.

Add to this the loss of irreplaceable training cadre at Rocroi, and it was all over.

Brits? Inevitable.

For the better part of 200 years, they showed everybody that one little island with an First Industrial Revolution industrial base could hold half of the rest of the world in check, if that half didn't have such a base.

But at the end of those two centuries .. they were still just one little island, without the asymmetric advantage of sole possession of an industrial economy.

Britain's exogenous shock was the strategic consequences of two World Wars inside of 30 years. When the impact of merely the first one was more than the structure of their extended empire could stand.

That's the thing that boggles my mind about what's happening to us.

We can probably get along decently enough without our overseas hegemony. The Europeans have managed to do without theirs, once they decided to really stop slaughtering each other every couple of decades.

But we're eating out our own vitals right here. When our collapse hits, it's not likely to leave a viable nation-state in its wake.

To the best of my knowledge, this sort of collapse has no historical precedent.

[GregB]

As a youngster and in my teens in the 80's I was fed a media diet of fear about the Soviet Union. An enemy so ruthless and heartless that they fashioned toys into bombs to kill young, innocent children of pious Muslims in Afghanistan.

I remember hearing over and over that it was such an evil empire bent on world domination that it would never give up power voluntarily and we would eventually go to war with them in order to stop the communist march of aggression across the globe.

Then in my early 20's the Soviet Union called it quits without firing a shot.

Strange times indeed.

[different clue]

rfjk, I am not certain that Russia never had a middle class. Russia never had the hugely populous urban and suburban middle class we had recently, to be sure. But very late in the Czarist day, a minister named Stolypin pushed as hard as possible to create systems for private outright
ownership of farmland by individual peasants to create the basis for a rural property-owing lower-middle farmer class. This class became just big and successful enough that the Communists felt compelled to stamp it out so as to rule utterly unopposed.

In the Great Depression, while many farm families lost their farms; enough farm families survived as little landowning families to remain the sort of social class which Stolypin had tried to create in Russia. And WWII saw enough job increases to give many people a well-founded sense of economic survival prospects, even if not material affluence. If our present decline merely takes away our material goodies and pleasures we can handle that, however ill-manneredly. But if our present decline takes away our brute survival prospects as well; we won't be so nice about it.

Trying to understand the "Black Swan" concept leads me into a mental Klein bottle. I think Mr. Taleb means it to refer to the event so far outside the mental framework and paradigm-field of a society that no one within that society could even imagine it. Just as no one in Europe could imagine a black swan. And suddenly, they were faced with one. But how can we prepare for something which is far beyond our ability to even imagine? The best we can do to handle the black swans of tomorrow is to make our societies broad-based and humane enough that we can reliably trust eachother to help eachother individually and collectively (governmentally) through the strangest of events.

While the events Amalrik predicted may have seemed like a Black Swan to the Communists, they were no Black Swan to Amalrik; who after all did predict them. What do we call something which is accurately predicted by someone but derisively disbelieved or not even registered by all around him? Since such a person is called a Cassandra, after Cassandra's curse (and Cassandra's predictions were all correct), perhaps we should call such an event a Cassandra Swan. It is exactly predicted by the Cassandra who predicts it, and it is resolutely dismissed until the Cassandra Swan itself hovers ten feet overhead and relieves itself upon the upturned faces of the disbelieving crowd. Perhaps we should lift the curse from the Cassandras among us, and begin preparing for the arrival of the big strange birds which our own Cassandras are envisioning and predicting quite clearly.

[YT]

Y'all: Talkin' 'bout causes of collapse, this here's a timely article --

http://scholars-stage.blogspot.com/2010/01/americas-greatest-challenge-and-danger.html

What happens when a people cease the interest & ability to rule 'emselves? Listen to the youth of
America...