2008/07/18

Industrial power

Back to my pet story; economic basis for military power.

I wrote about this before, especially here

National Security and economy

Shocking Shipbuilding industry

Our perception of national power is still influenced by what the nations were capable of in World War 2. But all involved nations changed a lot in the past two generations.

All the following data is from the CIA World Factbook and 2007 estimates

EU:
GDPppp = USD 14.38 trillion
industry: 27.1 % share of GDP

USA:
GDP = USD 13.84 trillion
industry: 20.5% share of GDP

PR China:
GDPppp = USD 6.991 trillion
industry: 48.6% share of GDP

India:
GDPppp = USD 2.989 trillion
industry: 29.4% of GDP

Russia:
GDPppp = USD 2.088 trillion
industry: 39.1 % share of GNP

*** calculating ***

EU:
3.897 trillion industrial value added, USDppp

PR China
3.398 trillion industrial value added, USDppp

USA
2.837 trillion industrial value added, USD

India
0.879 trillion industrial value added, USDppp

Russia
0.816 trillion industrial value added, USDppp

(GDPppp= Gross Domestic Product in purchasing power parity)

That's not what we hear and read in the news. The news are rather about the economic output of nations in terms of absolute US-$. Well, a screw is a screw - even if it costs more in some countries than in others. Purchasing power parity corrects such distortions as well as possible. We need to look at industrial output in terms of ppp to see the real output.


Imagine this; if the USA would attempt to mobilize as in 1942, it couldn't even outfit its soldiers with clothes. It would need more than a year to set up the textile industry or would import clothes (as in peacetime) from the PR China.
The situation isn't very different concerning plastics, electronics or steel.
A fleet buildup as in 1942-1945 would be completely impossible. Even the peacetime shipbuilding of the 1930's would overstretch the U.S. shipbuilding industry.
Europe is in a slightly different situation and very diverse, but it did lose a lot of its industrial power (in fact, old industries like textile industry are mostly gone and new industries took over).

The de-industrialization is not only discomforting to globalisation skeptics; it's a relevant problem for long-term national security and sustainability of military power.
It's also a root cause of the disastrous U.S. trade balance deficit.

Europe isn't much better off, although its economic structure seems to be much healthier.

It's time to open eyes to reality and fix problems instead of pursuing dreams.

We'll have a new "Kranker Mann am Bosporus" ("Sick man of Europe" if the turn-around doesn't happen soon.
There might be even be more than one - but the biggest one will certainly not be in "Old Europe".

Sven Ortmann

2 comments:

  1. This is an important issue, but it's difficult to know where to begin.

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  2. A key problem is that while the EU embraces the notion of political subsidiarity, I don't know of many movements embracing the corresponding economic subsidiarity. The Distributists, perhaps, and the co-op hippies with worker-owned, worker-managed companies, are the only ones I can think of.

    The West, so far as I can see, is a wreck-it-and-run culture. Grab all you can, as fast as you can, he who dies with the most toys wins.

    Industry can be built by people who are trying to build for the future.

    That's the key paradigm shift, and a lot of Westerners, including Americans, would be willing to change, but they are fighting the collusion of Big Money. There are a lot of rich guys who don't want anything to change, and they own the media. Fighting them is not easy.

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