John Q

Quick quiz. Suppose you read a headline in the online version of the Wall Street Journal (or NY Times etc) stating that, from now on, US Treasury bonds would be redeemed in crypto. Would your response be

(i) That’s absurd. Either it’s April Fools Day or someone has hacked the website

(ii) That’s unlikely. Surely [1] Wall Street will be able to kill this crazy idea

(iii) That will be tricky. Which cryptocurrencies will be included and what will be the exchange rates?

If your answer was (i) you can stop reading here (and don’t bother commenting to justify your position). This answer assumes that, despite Trump’s bluster, nothing has fundamentally changed. You’re still in the denial stage, with six more to come..

If you’re answer is (ii) or (iii) you are paying at least some attention. I’ll point to some evidence suggesting (iii) is a plausible answer, and look at what that implies for the global financial system.

Looking specifically at debt, the idea of defaulting on US government debt, or threatening to, has long appealed to Republicans. Here’s a piece I wrote back in 2013 [2] Unsurprisingly, Trump has embraced the idea, suggesting not only that a default might not be too bad, but also that some (unspecified) debts might be fraudulent.

But there are lots of other possibilities. One, raised by Paul Krugman is that the US Federal Reserve might be coerced into understating the inflation rate, thereby reducing the return on Treasury Inflation-Protected Securities.

Another, already taking place, is that the government may be able to coerce private banks into reversing legal payments. Henry Farrell (of CT) and Felix Salmon discuss this here.

The longer-term implication is that the existing global financial system, built around the US dollar can no longer be regarded as a reliable basis for organising trade, investment and banking. Some alternative will have to be constructed at an international rather than global levle. Moreover, this will have to be done on the fly, as the existing system crumbles around us.

This will doubtless be seen as good news for the BRICS countries, which have long chafed under the dominance of the dollar. But the obvious alternative, the Chinese Renminbi (aka yuan) is no better. As well as not being fully convertible, it is subject ot the political control of the CCP dictatorship.

An important point to start with is that the rapid growth in international financial integration that characterised the era of neoliberal globalisation came to an end with the Global Financial Crisis. As in this case, at least part of the adjustment to the end of the US will occur autonomously, as investors either steer clear of US financial markets or decide to play the increasingly corrupt games that will be required to survive there.

In this context, it’s crucial to understand the “weaponisation” of the global financial system, most notably by the US, as discussed by Henry Farrell and Abe Newman. The most striking instance of this so far has beem the seizure of Russian financial assets after the 2022 (further) invasion of Ukraine. Most of these assets were held by EU financial institutions, which Putin imagined to be safe from the US.

Until now, the main complaint of critics about weaponisation of the financial system was that it was being overused in the pursuit of secondary objectives. But with Trump in power, it will be used to do direct harm. Reliance on the US dollar is giving hostages to his regime.

Deconstructing and replacing a global system based on the assumption that the US is a reliable guarantor of stability will be a huge task, but the alternative of a system run by Trump and Musk is even worse.

We need to recognise that the idea of a single global financial system, which has been dominant since the 1980s, is done for. It’s not a loss to be mourned, but that won’t make the task of replacing it any easier.

I’m thinking about an alternative system, centred on the Eurozone, but incorporating other countries that don’t want to be dominated by either the US or China. That’s a mammoth problem

I’ll put up two ideas to start with.

The first is the need for unremitting hostility towards crypto. Should proposals for recognition of crypto as a reserve asset for the US turn into reality. the result will be to make the $US itself useless as a reserve currency. Governments and financial institutions outside the US should be ready to dump dollars if this looks like becoming a reality. In the meantime, financial institutions should be prohibited from dealing with it in any way, and individuals should be required to report crypto holdings and transactions.

My other suggestion is to take seriously a mildly snarky reference, in comments to my Crooked Timber post, to a “Brisbane Woods” conference. (I live near Brisbane, Australia, and the allusion is to the 1944 Bretton Woods conference which established, among other things, the World Bank and the International Monetary Fund.) These were set up in Washington both because the US was by far the largest contributor and because they could be colocated with the US Treasury. The famous “Washington consensus” of the 1990s referred to the neoliberal policy views shared by these three institutions.

But US contributions have been dropping steadily in both real and nominal terms and will doubtless be cut further by Trump. And proximity to the Musk-controlled US Treasury is now a danger not an asset.

The World Bank needs to move out of the US and drop the convention by which the president is always a US citizen (along with the parallel convention where the IMF managing director is European). Rather than moving to a single new location, both the Bank and the IMF need a more decentralised setup, ideally with significant centres in every continent[3]. This would involve both competition and co-operation with the BRICS group, which shares the aim of breaking with $US hegemony, but is not so keen on legal and democratic governance.

Those items are challenging enough, and just scratch the surface of what needs to be done. But repeating myself from previous posts, the idea of the US as the indispensable centre of a stable and democratic global order is gone for good. The sooner we realise that, the better.

fn1. Quiggin’s Rule of Surely: It’s a Sure Sign that you are not Sure

fn2. I didn’t pick the headline which was overblown even at the time. Now, if we wake up in four years time with Trump gone and nothing worse than a US default to worry about, it will have been the pleasantest of dreams

fn3. Except Antarctica and maybe Oceania, though of course Brisbane would be a great choice.

This is a follow-up to my previous post on the end of US democracy and its implications. I argued that there is no choice but to dispense with the idea of the US as the central actor in a democratic and stable world system [1]Here I will discuss how what’s left of the democratic world can respond.
[click to continue…]

“The cemeteries are full of indispensable people.” In one form or another, this observation has been made many times over the last century or more.

What is true of people is true of nations. In the past 25 years or so it was often claimed (and , admittedly, often denied) that, in the modern world, the United States was the “indispensable nation”. Whatever the rights and wrong of this claim, it has become obvious that, whether we like it or not, the rest of the world will now have to dispense with the US as a defender of democracy, guarantor of global order, or even (as in Margaret Thatcher’s words about Gorbachev) a state we can do business with.

Anyone whose experience of the US began in the last eleven days would have no trouble recognising an archetypal kleptocracy, like Putin’s Russia or Mobutu’s Zaire (with a touch of Mao madness). The boss rakes off billions in tribute while his cronies scramble to please him, put each other down and collect their share of the loot. Regime supporters commit all sorts of crimes with impunity, while opponents are subject to both legal victimisation and threats of extra-legal terror against which they can expect no protection.

In dealing with such a regime, the only strategy is to buy off the boss, or a powerful underling, and hope that they stay bought long enough to deliver on their side of the bargain This approach is politely described as “transactional”, but without the implication that the transaction will necessarily be honoured. Dealing with kleptocrats can be highly profitable, as long as you get in and out quickly enough, but there’s no possibility of “doing business”, either commercial or political, in the ordinary sense of the word.

The problem is that for nearly everyone who matters, the last eleven days seem like an aberration. For decades, the US has been seen as the central pillar of a “rules-based order”, on which assumptions about the world were largely based. That’as true even for critics who pointed out that the rules were drawn up to favor the US, and that the US often breached them without any real consequences. And it’s true even though you can point to precedents for everything Trump had done.

But all that is over, and can’t be restored.

[click to continue…]

Crooked Timber has survived more than 20 years by continuously refreshing our group. Members have left because they have said what they want to say, or just because life happens, and others have joined to add to the conversation. Today, we are welcoming Hannah Forsyth and Lisa Herzog.

Hannah is an Australian historian of capitalism, work and education. Her Substack newsletter, F*cking Capitalism covers these topics and more. She describes herself as a recovering work ethic junkie, but that hasn’t stopped her signing up to join the crew here at Crooked Timber.

Lisa is a German philosopher who works as a professor in political philosophy at the Faculty of Philosophy of Groningen University. She writes in particular on topics at the intersection of political philosophy and economic thought. Her most recent book is Citizen Knowledge: Markets, Experts, and the Infrastructure of Democracy. She has previously been on the team of the Justice-Everywhere blog, and is interested in all things related to workplace democracy and economic democracy.

We are all looking forward to the new perspectives Hannah and Lisa will bring.

The Australian parliament has legislated what’s commonly described as as “social media ban” for people under 16. More precisely, it will require selected social media platforms to implement (unspecified) age verification technology for people wishing to create accounts. This measure was rushed through at the end of last year, at the expense of proposed legislation to limit advertising for online gambling.

I wrote a series of posts on my Substack blog looking at various aspects of the “ban” (TL;DR I don’t like it).

There’s too much for a CT post, so I’ll link to the posts instead
Part 1 dealt with the feasibility of a ban
Part 2 dealt with the evidence for and against
Part 3 pointed out the ban will do little or nothing to fix most of the harms attributed to social media
Part 4 suggested better responses to the problems young people are facing
Part 5 offered broader responses to the harm being done by platforms like X and Facebook

Feel free to comment here or there.

I’ve already said all I plan to (for now) about what’s happening in the US. But if others want to discuss it, here’s an open thread.

There’s been a recent fuss in various media arising from a tweet from economist Ben Golub regarding astonishment that economists haven’t “worked through” Smith and Marx. English professor Alex Moskowitz chimed in with a claim that economics can’t be a real discipline because economists don’t know the history of their own discipline. {long and somewhat wonkish response follows}
[click to continue…]

I’ve avoided post-mortems on the US election disaster for two reasons.

First, they are useless as a guide to the future. The next US election, if there is one [1], will be a referendum on the Trump regime. Campaign strategies that might have gained the Democrats a few percentage points in November 2024 won’t be at all relevant in 2026 or 2028, let alone in the aftermath of a regime collapse further in the future.

Second, by focusing on the marginal shifts between 2020 (or even 2012) and 2024, these post-mortems miss the crucial fact that the divisions in US politics have been more or less constant[2] for the last 30 years, as this graph from the Pew Foundation shows.

Throughout this period the Republican Party has been competitive only because, it has received the consistent support of 60 per cent of white men.

Of course, that wouldn’t be enough without some votes from non-whites and women. But there is no group other than white men where the Republicans have had a reliable majority over the past 30 years.

More precisely the Republicans represent, and depend on, angry white men. I first heard the term “angry white men” in relation to the 1994 mid-term election when the proto-Trump Newt Gingrich led the Republicans to their first House of Representatives majority in 40 years. The 1994 outcome was the culmination of Nixon’s Southern strategy, bringing Southern whites, angry about their loss of social dominance in the Civil Rights ere, into the Republican camp.

[click to continue…]

I posted this piece in RenewEconomy a couple of months ago. It didn’t convince the commenters then, and I don’t expect it to be any different here, but I’m putting it on the record anyway.

AI won’t use as much electricity as we are told, and it’s not a reason to slow transition to renewables

The recent rise of “generative AI” models has led to a lot of dire predictions about the associated requirements for energy. It has been estimated that AI will consume anything from 9 to 25 per cent of all US electricity by 2032.

But we have been here before. Predictions of this kind have been made ever since the emergence of the Internet as a central part of modern life, often tied to claims and counterclaims about the transition to renewable energy.

Back in 1999, Forbes magazine ran a piece headlined, Dig more coal — the PCs are coming. This article claimed that personal computers would use 50 per cent of US electricity within a decade. The unsubtle implication was that any attempt to reduce carbon dioxide emissions was doomed to failure

Of course, this prediction wasn’t borne out. Computing power has increased a thousand-fold since the turn of the century. But far from demanding more electricity personal computers have become more efficient with laptops mostly replacing large standalone boxes, and software improvements reducing waste.

A typical home computer now consumes around 30-60 watts when it is operating, less than a bar fridge or an incandescent light bulb.

The rise of large data centres and cloud computing produced another round of alarm. A US EPA report in 2007 predicted a doubling of demand every five years. Again, this number fed into a range of debates about renewable energy and climate change.

Yet throughout this period, the actual share of electricity use accounted for by the IT sector has hovered between 1 and 2 per cent, accounting for less than 1 per cent of global greenhouse gas emissions. By contrast, the unglamorous and largely disregarded business of making cement accounts for around 7 per cent of global emissions.

Will generative AI change this pattern? Not for quite a while. Although most business organizations now use AI for some purposes, it typically accounts for only 5 to 10 per cent of IT budgets.

Even if that share doubled or tripled the impact would be barely noticeable. Looking the other side of the market, OpenAI, the maker of ChatGPT, is bringing in around $3 billion a year in sales revenue, and has spent around $7 billion developing its model. Even if every penny of that was spent on electricity, the effect would be little more than a blip.

Of course, AI is growing rapidly. A tenfold increase in expenditure by 2030 isn’t out of the question. But that would only double total the total use of electricity in IT.

And, as in the past, this growth will be offset by continued increases in efficiency. Most of the increase could be fully offset if the world put an end to the incredible waste of electricity on cryptocurrency mining (currently 0.5 to 1 per cent of total world electricity consumption, and not normally counted in estimates of IT use).

If predictions of massive electricity use by the IT sector have been so consistently wrong for decades, why do they keep being made, and believed?

The simplest explanation, epitomised by the Forbes article from 1999, is that coal and gas producers want to claim that there is a continuing demand for their products, one that can’t be met by solar PV and wind. That explanation is certainly relevant today, as gas producers in particular seize on projections of growing demand to justify new plants.

At the other end of the policy spectrum, advocates of “degrowth” don’t want to concede that the explosive growth of the information economy is sustainable, unlike the industrial economy of the 20th century. The suggestion that electricity demand from AI will overwhelm attempts to decarbonise electricity supply supports the conclusion that we need to stop and reverse growth in all sectors of the economy.

Next there is the general free-floating concern about everything to with computers, which are both vitally necessary and mysterious to most of us. The rise of AI has heightened those concerns. But whereas no one can tell whether an AI apocalypse is on the way, or what it would entail, an electricity crisis is a much more comprehensible danger.

And finally, people just love a good story. The Y2K panic, supposedly based on the shortening of digits in dates used in computers, was obviously false (if it had been true, we would have seen widespread failures well before 1 January 2000).

But the appeal of the story was irresistible, at least in the English-speaking world, and billions of dollars were spent on problems that could have been dealt with using a “fix on failure” approach.

For what it’s worth, it seems likely that the AI boom is already reaching a plateau, and highly likely that such a plateau will be reached sooner or later. But when and if this happens, it won’t be because we have run out of electricity to feed the machines.

Update

The AI boom is also being used to justify talk, yet again, of a nuclear renaissance. All the big tech firms have made announcements of one kind or another about seeking nuclear power to run their data centres. And its true that the “always on” character of nuclear makes it a genuine example of the (otherwise mostly spurious) notion of “baseload demand”. But when you look at what Google, Meta and the others are actually doing, it amounts to around 1 GW apiece, the output of a single standard-sized reactor. That might bring a few retired reactors, like the one at Three Mile Island, back on line, but it’s unlikely to induce big new investments.

A few weeks ago, I drew up a flowchart to estimate the probability that Trump would establish a dictatorship in the US, which looked, at the time, like an even money bet.

We don’t need to speculate any more. Trump has announced the dictatorship, and there is no sign of effective resistance. The key elements so far include

• Extremists announced for all major positions, with a demand that they be recess appointments, not subject to Senate scrutiny
• A state of emergency from Day 1, with the use of the military against domestic opponents
• Mass deportations, initially of non-citizens and then of “denaturalised” legal immigrants
• A third term (bizarrely, the nervous laughter that greeted this led to it being reported as a joke).
• A comprehensive purge of the army, FBI and civil service

It’s clear that Trump will face no resistance from the Republican party. There’s an outside chance that the Supreme Court will constrain some measures, such as outright suppression of opposition media, but that won’t make much difference.

It’s possible that Trump will overreach in some way, such as carrying out his threat to execute political opponents before the ground is fully prepared. Or, his economic policies may prove so disastrous that even rigged elections can’t be won. But there is no good reason to expect this.

I can’t give any hopeful advice to Americans. The idea of defeating Trump at the next election is an illusion. Although elections may be conducted for some time, the outcome will be predetermined. Street protest might be tolerated, as long as it is harmless, but will be suppressed brutally if it threatens the regime. Legal action will go nowhere, given that the Supreme Court has already authorised any criminal action Trump might take as president.

The models to learn from are those of dissidents in places like China and the Soviet Union. They involve cautious cultivation of an alternative, ready for the opportunity when and if it comes.

The remaining islands of democracy will have some difficult choices to make. I’ll offer some thoughts on Australia, and others may have something to say about their own countries.

For Australia, the easy, and wrong, course of action will be to pretend that nothing has happened. But in reality, we are on our own. Trump is often described as “transactional”, but this carries the implication that having made a deal, he sticks to it. In reality, Trump reneges whenever it suits him, and sometimes just on a whim. If it suits Trump to drag us into a war with China, he will do it. Equally, if he can benefit from leaving us in the lurch, he will do that

Our correct course is to disengage slowly and focus on protecting ourselves. That means a return to the policy of balancing China and the US, now with the recognition that there is nothing to choose between the two in terms of democracy. We need to back out of AUKUS and focus on defending ourselves, with what Sam Roggeveen has called an “echidna” strategy – lots of anti-ship missiles, and the best air defences we can buy, from anyone willing to supply them.

I’ll be happy to be proved wrong on all this.

Note: I’d prefer not to have any post-mortems on what the Democrats did wrong. Any possible lessons won’t be relevant to the future. And a country where only a third of the population is willing to turn up and vote against dictatorship is headed for disaster sooner or later.

After Trump’s second election victory, lots of Americans are talking about emigrating, most commonly to Canada. This happens with every rightwing election win[1], but nothing ever comes of it. With the real prospect of indefinite Trumpist rule, the issues are more serious, but it seems unlikely that much will happen. But why not?

It’s fairly well known that Americans rarely emigrate. There are, for example, only about a million US citizens living in Canada at the moment. Conversely, there are around a million Canadians living in the US. These are surprisingly low numbers for contiguous countries with a common language (except for Quebec) and relatively straightforward[2] paths to migration.

A detailed illustration of a U.S. passport with the text ‘US Paort’ on the cover, lying on top of a Canadian flag background. The Canadian flag’s red and white colors with the maple leaf design are vibrant and easily recognizable behind the passport. The setting is simple, with the passport angled slightly to showcase the modified cover design, creating a contrast between the blue of the passport and the red and white of the flag.
As usual ChatGPT didn’t quite get the text right

More generally, it’s a common rightwing talking point that the USA is the country most commonly named as a desired place to migrate to. What’s less remarked is that Donald Trump’s expressed desire for more migrants from “places like Denmark” reflects underlying reality. Migration from other rich countries to the US is very limited. In 2022, about 300 000 people (excluding tourists) from Europe arrived in the US, and the majority of these were students, most of whom would probably return. And Europe includes a lot of poor countries.

There’s a lot more migration between other rich countries, including between other Anglospheric countries. For example, although Canada has about a 10th of the population of the US, there are about half as many Canadians in Australia (50 000) as Americans (100 000).

The conclusion I draw is that the US is very different from other, superficially similar countries, I’ve visited the US on lots of occasions and had a couple of extended stays totalling two years. But it still seems a very foreign place to me, much more so than New Zealand or the UK, where I’ve been less frequently. And I imagine the same is true, in reverse, for Americans abroad.

Looking at the recent election results, they are in part a reflection of global trends (anti-incumbent, anti-migrant etc). But the vote for Trump was substantially higher than for most of the far-right policies in other countries. I think (hope) that this reflects some specifically American factors.

The option of moving to Canada is, for most Americans, an illusion. They will have to sort out their problems at home, as best they can.

fn1. In the event of a Democratic victory, there aren’t a lot of options for rightwingers, even ignoring practical difficulties. Lots of them have nice things to say about Hungary, but I think only Rod Dreher has moved there. Same in spades for Russia.

fn2. Migration is never easy. But, excluding moves within the EU, Canada-US migration seems to be about as straightforward as anywhere. CUSMA (formerly NAFTA) makes it relatively easy to get work permits, and thereby make the contacts needed for employer sponsorship.

There’s not much I can do about it, but I still spend a lot of time thinking about what I, and others outside the US, should do if that country ceases to be a democracy. But, it doesn’t seem as if lots of other people are thinking this way. One possibility is that people just don’t want to think about it. Another, though, is that I’ve overestimated the probability of this outcome.

To check on this, I set up a flowchart using a free online program called drawio. Here;s what I came up with

I hope it’s self-explanatory. The bold numbers next to the boxes are the probability of reaching that box. The numbers next to arrows coming out of decision nodes (diamonds) are the probability of that decision.

I also apologize in advance if there are any arithmetic errors – my degree in pure mathematics doesn’t insulate me against them.

If the US were remotely normal, every entry on the left-hand edge ought to be equal to 1. Harris should be a sure winner, Trump shouldn’t find any supporters for a coup, the MAGA Republicans in Congress should be unelectable and the moderate program proposed by Harris should be successful enough that Trumpism would be defeated forever.

But that’s not the case. There are two end points in which US democracy survives, with a total probability (excessively precise) of 0.46, and one where it ends, with a probability of 0.54. By replacing my probabilities at the decision nodes with your own, you can come up with your own numbers. Or you may feel that I’ve missed crucial pathways. I’d be interested in comments on either line.

Note: Any Thälmann-style comments (such as “After Trump, us” or “Dems are social fascists anyway”) will be blocked and deleted.

We’re in another round of concern about the “death of the book”, and, in particular, the claimed inability or unwillingness of young people to read full-length books. I’m not going to push too far on the argument that this complaint is ancient, but I can’t resist mentioning the response of my younger brother, who, when asked if he wanted a book for Christmas, answered “thanks, but I already have one”). That was around 50 years ago, and he went on to a very successful legal career.

Fifty years ago, the main competitors for books were TV and radio. Critics at the time decried the passive mode of consuming these broadcast media, compared to the active engagement required by reading. Now, in many respects, the complaint is the opposite. The various services available on the Internet are interactive, and engrossing, finely tuned to keep our attention.
[click to continue…]

Over the eight decades following the end of World War II, the US has taken part in dozens of land wars, large and small. The outcomes have ranged from comprehensive victory to humiliating defeat, but all have received extensive coverage. By contrast, the US Navy’s admission of defeat in its longest and most significant campaign in many decades, has received almost no attention. Yet the failure of attempts to reopen the Suez Canal to shipping has fundamental implications for the entire rationale of maintaining a navy.

Operation Prosperity Guardian was launched in December 2023, following a series of attacks on shipping undertaken by Houthi rebels. The US dispatched a carrier strike group, led by USS Dwight D. Eisenhower, and supported by ships from the Royal Navy and other European forces. Despite intensive bombardment of Houthi positions, attacks on shipping continued and traffic through the Suez canal fell by 70 per cent.

In July, the Dwight D. Eisenhower quietly returned to returned to Norfolk, after what the Navy correctly described as “a historic nine-month combat deployment” but not historic in a good way. The strike force without achieving any of its goals. And then, in late August, came the official admission of  defeat As reported by Voice of America:

Vice Admiral George Wikoff, who heads the U.S. naval efforts in the Middle East said that not only have U.S. strikes and defensive efforts done little to change the Houthis’ behavior, it now appears unlikely the group will be swayed by military force.

“The solution is not going to come at the end of a weapon system,” Wikoff told an audience in Washington, speaking via video from U.S. 5th Fleet headquarters in Bahrain.

“We have certainly degraded their capability. There’s no doubt about that. We’ve degraded their ability,” he said. “However, have we stopped them? No.”

Why has this failure attracted so little attention? Why, for example, has it not even been mentioned by either side in the course of the Presidential election campaign? The answer, quite simply, is that the strategic rationale for the mission turned out to be spurious. “Vital shipping lanes” are not actually vital at all.

The closure of the Suez canal has, indeed imposed higher insurance costs on shippers using the canal, and has led much of the traffic to be diverted to the longer route around the Cape of Good Hope. But the overall impact on freight rates has been modest, and any effect on global economic activity has been too small to be observable. 

There shouldn’t have been any surprise here. Despite some hyperbolic claims at the time, the six-day blockage of the Canal in 2019 (due to the grounding of the Ever Given) caused only modest disruptions, with massive insurance claims being quietly settled for much smaller amounts

More notably, the Canal was closed for lengthy periods in the 20th century allowing studies of the economic impacts. These turned out to be very small except for India and Pakistan, both of which were then heavily dependent on trade with the UK and Europe.

And what is true of the Suez Canal is just as true of other “vital shipping routes”, such as the Straits of Malacca. It’s almost always better to take the long way around (for example through the Sunda straits or even through Australian waters in the Southern Ocean) than to fight a war to keep a short cut open.

On the other side of the coin, the failure of Russian attempts to block Ukraine’s exports of wheat and grain provides further lessons on the limits of naval power. Ukraine’s tiny navy was wiped out on the first day of the 2022 invasion. But Russia’s much-touted Black Sea Fleet has fared little better, being driven from its Sevastopol base to ports in Russia, out of reach of Ukrainian missiles. By sailing close to the western coast of the Black Sea, ships carrying Ukrainian grain can be protected by land-based defences, while sailing in waters too shallow to permit attack by submarines.

In summary, as a recent commentary put it, the failure of Prosperity Guardian poses an “existential threat” However, the threat is not to the world economy but to the US navy and, indeed, all the navies of the world. If keeping “vital trade routes” open is neither militarily feasible nor economically important,  a large part of the rationale for surface navies disappears.  

It’s unlikely that defeat by the Houthis will have much effect on perceptions of the US Navy in the short run. But with so many other demands on the defense budget, the rationale for maintaining a massive, but largely ineffectual, surface fleet, must eventually be questioned.

I haven’t discussed the broader horror of the various Middle East wars, which gave rise to the Houthi attacks. My long-standing view is that the US can do nothing useful and, beyond humanitarian aid, should do nothing to help any party. Please don’t derail discussion by talking about this.