zenpundit.com

Some heavy hitters reflect on the Mumbai Massacre:

John Robb – URBAN TAKEDOWN: MUMBAI,  JOURNAL: More on Tactical Innovation, JOURNAL: Off the Shelf Leverage

Ralph Peters – Devils in Mumbai ( Hat tip Morgan)

Thomas P.M. Barnett – This attack will work against them

DNI – Implications of Mumbai

Robert Kagan – The Sovereignty Dodge (Hat Tip NYKR in DC)

On a related note, here is Shlok Vaidya’s radio interview with John Batchelor.

Pakistan is a ramshackle state whose Punjabi military elite have a remarkable talent for brazenly playing with fire, given the fragility and artificiality of their country and their previous loss of Bangladesh (West Pakistan) through genocide and military incompetence. The Pushtuns are quasi-independent, the Baluchis would like to be and the Kashmiris are loose cannons. If any regime is vulnerable to the tactic of state sponsored terrorism and granular insurgency, it’s Islamabad.

John Robb is going to be the keynote speaker at the Boyd 2008 Conference on Prince Edward Island.

A great choice. Robb as most of you know, is the author of Brave New War: The Next Stage of Terrorism and the End of Globalization and is currently working on a book on “Resilient Communities”, one of the conference themes. Here is the conference agenda:

Situation* Energy – Peak Oil and its effect on our economy and our way of life is now a reality. The end of the big car, of suburbia, of cheap food, of maybe global trade, of how cities are designed are all on the table now. We can also see that paying for oil has also led to a shift of power from the US to other places. We are at full fiscal and financial stretch and it is going to get worse so long as we depend on oil and we do nothing to change how we live.

* Credit – We can now see that the Mortgage Crisis is not a “normal” correction but may include a complete shut down of the other mainstay of our way of life cheap and easy credit. Our financial system is on life support. Again, we are at full fiscal, financial and social stretch. The credit of our country is in question.

* Food – Food across the world seems finally to have hit some Malthusian limit perhaps affected by the end of Cheap Oil and by unstable weather – Not only is energy rising in costs but so is food. Both are also subject to shortages or even to being not available at all – much of the world is becoming a tinder box. Imbalances in water will increase the tension.

* Weather – It’s not just the hurricanes but too much rain or not enough is stretching communities to the limit.

* Conflict – With these forces building, so is the potential and the reality of conflict. This is the time for adventures such as Georgia or possibly Taiwan? This is the time for finding another to blame for domestic failure Pakistan/India? This is also a time when the US is at full system overstretch where its capacity to intervene or help is now in question.

* A transition in business models – The end of the “Ford Model” of get big and get central as the main value creator in business or in services – All who operate this model seem terminally ill. Millions are going to become unemployed as the shift to a more networked model takes place.

* Vulnerability in key infrastructure – Our oil/gas systems are a hurricane away from failure. The grid, a bad storm away. Our food delivery systems depend on a just in time system that also depends on nothing going wrong. The chances of being without food and power for a long period of time are now very high. There is no resiliency in these key areas.

* The end of the state – An aware person can see that the state can do little to help in any of these areas of tension. Not only is the larger state helpless or even worse, but so are the smaller states. Looking to the “father” used to work but post Katrina seems not to. So as we go to the polls this fall, many of us wonder if there are any ways at all that we can influence our destiny.

* The power of the legacy systems – The systems that are failing still have the power and the means to fight off a direct attack. They have the money and they have co-opted the political machinery. This includes the Pentagon, Big Oil, Big Auto, Big Food etc. Merely having the right ideas will not be enough.

Thought German might fit the Wagnerian mood of the markets today in a brief post discussing the economy. A few links on related tangents that I found intriguing, and then a brief comment:

John Robb –  A Real Nuclear Option in Finance

John relishes being not only out front but the edge thinker. He’s right that derivatives have to be addressed though I’m not qualified to comment as to “how”. I haven’t the faintest idea and the sums that derivative markets leverage vastly exceed our planetary GDP ( that’s right, not the economy of United States, the GDP  of planet Earth)  In particular, I wonder how you monkey with one class of derivatives without spooking the traders in other derivative instruments into stampeding us over a cliff in ten minutes. OTOH, Robert Paterson, who unlike me really does understand derivatives and the nuances of trading, agreed with Robb, who offered:

One solution: Nuke entire parts of the system. In short, destroy the system’s network connectivity. For example, credit default swaps ensure that failure will spread through internetworked contracts. Nuke CDS derivatives ($60 trillion or so) by making them illegal. Destroy parts of the network in order to save the remainder — firewalls and firebreaks.

Fabius Maximus –  No coins, no COIN

FM sees the economic crisis forcing huge changes in American foreign policy, defense structure, military doctrine and acquisitions:

In most of these money is no object in the pursuit of security (or other goals, often quite chimerical).  That is an exceptional way of thinking.  More so when one considers how our current account deficit has steadily increased since 1971 (when we went off the gold standard) – and the even more rapid increase in the foreign debts that finances the annual deficit.

That era will close soon, and the United States will return to earth.  Like everyone else, we will have to consider what foreign adventures we can afford before starting them – weighing their costs and benefits – and stop wars whose costs spiral out of control.  This will force a military revolution more profound than any since WWII, when we entered the “money is no object” era for weapons and foreign wars.  

….Not that the annual budget wars were not fought fiercely, but they will be conducted differently once budgets start their rapid and long-term decline.  Like any organization thrust into radically changed environment, restructuring – drastic changes in structure and doctrine – will be needed.

Maritime, air, and land – our approach to all will change.  Maintaining full-scale forces against purely theoretical future threats will become impossible.  Seeking dominance in every theater will become unrealistic.  Prioritization will become imperative.

FM also offers up  A solution to our financial crisis . Right now, China, the leader in global dollar reserves is in a position where our crash is their crash and their crash may be the end of the PRC as we know it. Good time to strike a deal.

Tom at HG’s World cites Niall Ferguson in Ferguson’s greatest area of expertise, as an economic historian:

The End of Prosperity, or A Better Future?

Historian and author, Niall Ferguson penned this article in Time magazine, about the question that is on everyone’s mind if not their lips. “Are we headed into a second Great Depression?”He begins: “Congress’s initial rejection of the Bush Administration’s $700 billion bailout plan calls to mind an unhappy precedent. Back in 1930, the Senate passed the Smoot-Hawley Tariff Act, which raised duties on some 20,000 imported goods. Historians define this as one of the critical steps that led to the Great Depression – a tipping point when the world realized that partisan self-interest had trumped global leadership on Capitol Hill.”He explains what happened to tip the scales.“The U.S. – not to mention Western Europe – is in the grip of a downward spiral that financial experts call deleveraging. Having accumulated debts beyond what’s sustainable, households and financial institutions are being forced to reduce them. The pressure to do so results from a decline in the price of the assets they bought with the money they borrowed. It’s a vicious feedback loop. When families and banks tip into bankruptcy, more assets get dumped on the market, driving prices down further and necessitating more deleveraging. This process now has so much momentum that even $700 billion in taxpayers’ money may not suffice to stop it.”

Like Tom of HG’s World, I’ve been a big fan of Ferguson and have numerous books of his on my shelf . That said, it’s very odd to me that he not mention another parallel with the Great Depression of a Federal Reserve in the hands of a relatively new Chairman after the long tenure of an outsized and much respected predecessor. Or the inability of the Fed to effectively coordinate with European counterparts ( several days after loudly bloviating about American weakness/incompetence by the German Finance Minister it appears that he might have better spent his time addressing German and EU economic fundamentals. Good Lord, even by politician standards, what an asshole!) which back then scrambled to ditch the gold standard like a poor relation carrying hepatitis.

The solution, if you can call it that, from my crude perspective would be to gather the Fed with other central banks, treasury and it’s G-8 finance ministry counterparts plus China and the biggest sovereign funds and agree on a few, very simple, lowest common denominator “brakes” or safety nets to backstop the system, plus a 2 year “hot money” flight tax to give a window of time to let the markets settle and work out clear minded reforms rather tha jerry-rigged insider looting binges posing as band-aids. That and driving what money/credit remains toward entrepreneurship and innovation rather than another burst of McMansion consumption by a demographic of dudes without any verifiable means of support.

This scheme won’t create any rainbows. It would be a tourniquet but better a tourniquet than an amputation.  If we come out with a recession on the scale of 1981-1982 we should consider ourselves to be fortunate. The Great Depression has begun to pass out of living memory but reviewing the mistakes of those years might be instructive.

John Robb posted the first part of a working paper that extends John Boyd’s Conceptual Spiral into Open Source environments. I want to draw attention to the third potential solution to catastrophic failure ( result of mismatch of rigid, hierarchical, bureaucracy with rapidly evolving, chaotic, environment) that Robb offers in his conclusion:

C) Decentralized decision making via a market mechanism or open source framework. This approach is similar to process “B” detailed above, except that a much wider degree of diversity of outlook/orientation within the contributing components is allowed/desired. The end result is a decision making process where multiple groups make contributions (new optimizations and models). As these contributions are tested against the environment, we will find that most of these contributions will fail. Those few that work are then widely copied/replicated within components. The biggest problem (opportunity?) with this approach is that its direction is emergent and it is not directed by a human being (the commander)

Some preliminary research in small worlds network theory indicates that very noisy environments will have emergent rule-sets. Human social systems are less tolerant of extended periods of chaos than are other kinds of systems because there are caloric and  epidemiological “floors” for humanocentric environments that, if breached, result in massive population die-offs, emigration and radical social reordering. History’s classic example of this phenomena was the Black Death, which created a general labor shortage that fatally undermined European feudalism. Because of this, military forces whether of state orientation or irregulars would be forced to react cooperatively and adaptively, however indirectly, toward a consensus in order to maintain at least the minimal economic flows that permit their military operations to be sustained.

From John Robb at Global Guerillas:

The US national security budget is nearly $700 billion a year (much more if the total costs of Iraq/Afghanistan are thrown in), more than the rest of the world combined. Unfortunately, within that entire budget there isn’t a single research organization or think tank that is seriously studying, analyzing or synthesizing the future of warfare and terrorism. Fatally, most of the big thinkers working on the future of warfare do their critical work in their spare time, usually while working other jobs to put food on the table for their families. In sum, this deficit in imagination will soon be the critical determinant on whether the national security bureaucracy remains relevant in a rapidly changing global security environment. That relevance is the key to its future.

From Fabius Maximus:

This has been criticised as dividing insurgencies into rigid categories – black and white, not accounting for the shades of grey found in all human experiences.  That is both true and a good thing.  All rules of thumb are arbitary, in some sense, but useful for practicioners who know their limitations.  Even the exceptions to this “rule” about insurgencies, and I believe they are quite few, tell us something new.  For example, the Malayan Emergency shows the importance of having a legitmate local government to do the heavy lifting (even though the COIN literature tend to follow the Brits’ view, considering it “their” win – not that of the locals).

The value of these kinds of insights was well expressed by a post Opposed Systems Design (4 March 2008):

A deeper understanding of these dynamics deserves an organized research program. The first concept – an artifically binary distinction between “foreign COIN” and “native COIN” – has served its purpose by highlighting the need for further work on the subject.

One reason for our difficulty grappling with 4GW is the lack of organized study.  We could learn much from a matrix of all insurgencies over along period (e.g., since 1900), described in a standardized fashion, analyzed for trends.  This has been done by several analysts on the equivalent of “scratch pads” (see IWCKI for details), but not with by a properly funded multi-disciplinary team (esp. to borrow or build computer models).

 We are spending trillions to fight a long war without marshalling or analysing the available data.  Hundreds of billions for the F-22, but only pennys for historical research.  It is a very expensive way to wage war.

When the Cold War was as young, the newest of America’s armed services, the Air Force, sought an intellectual edge over their venerable and tradtion-bound brothers and funded the ur-Think Tank, RAND Corporation. I say “funded” because the USAF brass, while they expected products that would justify a strategic raison d’etre for the Air Force to Congress, wisely allowed their creation autonomy and this in turn yielded intellectual freedom, exploration and creativity. The Air Force and the United States were richly rewarded by these egghead “wild men” who advanced nuclear warfighting and deterrence strategies, Game Theory analytics,  a renaissance in wargaming, Futurism and a multilpicity of other successes. Moreover, RAND itself became a model for a proliferation of other think tanks that created an intellectual zone for public intellectuals and scientists outside of the constraints of academia.

We need something like that today. A few years back, I called for a “DARPA for Foreign Policy” but the need is equally critical in considering the future of war and conflict as is taking a multidisciplinary, intersectional, insight-generating “Medici Effect” approach.

We can do better.

Wow-That-Was-Fast Department:

Wiggins extends the conversation on RAND’s origins as an inspiration for today.