A Twitter user this week posted a lengthy thread perfectly explaining how Western leaders essentially fooled themselves into believing that imposing massive economic sanctions on Russia would harm that country while failing to realize the economic damage the sanctions would do to their own countries.
"The Russia Ukraine war and the resulting sanctions has illuminated something very important about the 'global economy,'" Twitter user Winston Smith began. The 'on paper' stats showing economic size and prowess are bunk."
Ok here we go. "Real economy" time.
The Russia Ukraine war and the resulting sanctions has illuminated something very important about the "global economy"
The "on paper" stats showing economic size and prowess are bunk.
— Winston Smith ?? (@crim_thought) July 20, 2022
"Western commentators and intralexuals mocked Russia for 'having an economy smaller than Texas, same size as Italy' assuming that historic sanctions would cripple Russia in weeks etc.," he continued.
Western commentators and intralexuals mocked Russia for "having an economy smaller than Texas, same size as Italy" assuming that historic sanctions would cripple Russia in weeks etc...
2/20 pic.twitter.com/iLRfbRdiL4
— Winston Smith ?? (@crim_thought) July 20, 2022
"Sure, on paper Russia's economy is 'weak', 144 million people with an economy of $1.4 Trillion USD, technically smaller than for example Italy which has 60 million people and a $1.89 Trillion USD," Smith continued. "But what has actually happened during the war? The Rubble has strengthened, the EU bloc economies have collapsed, with the Euro hitting parity with USD for first time in 20 years. Energy blackouts and food crisis on the horizon for Europe."
He went on to rhetorically ask how it was possible that a country with such a paltry GDP compared to all of Europe -- $23 trillion annual GDP in U.S. dollars -- could dominate economically, responding: "The answer is in what 'GDP' is *composed* of.
"GDP is abstract numerical value computed by calculating total value of goods and services produced in a country per year. Much of western GDP figures are counting consumption like sales of retail goods (made in China or Mexico and imported to USA or Europe) as 'production,'" Smith explained further.
"But beside that fundamental error, there is another even more important one. Over the last 40 years western economies have undergone a structural transformation into 'information and service economies.' Much of western GDP is derived from 'service sector' and much of the service sector is fundamentally 'unproductive'. Sure, we all want education, pharma drugs, entertainment, loans, and fun apps to play etc...but its all in the parlance of COVID world...'non essential," Smith went on.
"How much of western GDP is derived from Tourism? Hotel, spa, and restaurant services, financial paper trading schemes, debt repackaging 'services', revenues from dickpic apps? Charging Chinese students fortune in tuition? Royalties on intellectual property (medicine/media)?" he asked.
Smith said it is more appropriate to look at why Russia is not crumbling as expected by taking a look at the "tangible" things the country still produces.
"Primary goods and industrial manufacturing:
Coal, Iron, Steel, Motor vehicles
Energy:
Gas, Oil, Electricity
Food and Timber:
Lumber, Wheat, Meat."
"We see China crushing everyone, in almost every category of primary industrial goods and manufacturing. 7-8X more coal and iron than USA, 12X more steel than USA. 2X more cars than USA!" Smith noted, adding that three countries -- Italy, France, and Japan -- don't produce anything in two categories, coal and iron.
We see China crushing everyone, in almost every category of primary industrial goods and manufacturing. 7-8X more coal and iron than USA, 12X more steel than USA. 2X more cars than USA!
Italy, Japan and France show up with 0 production in 2 categories !!?
12/20 pic.twitter.com/rRYfRuqBmU
— Winston Smith ?? (@crim_thought) July 20, 2022
Next: energy
USA looking good on this front clearly ahead in natural gas production, effectively tied with Russia on crude oil, but both pale compared to China on electricity output. Other countries with exception of India/Japan miniscule in global electricity production.
13/20 pic.twitter.com/GEzUc0TKMt
— Winston Smith ?? (@crim_thought) July 20, 2022
The U.S., Russian, India and China are also comparable in terms of food and lumber, Smith revealed as he referenced a "points system" he devised to denote the level of production in all of the key tangibles he named earlier.
"Assuming this point system is a 'real GDP' metric not the official paper GDP numbers, you see in terms of real output, China #1, 50% bigger than #2 USA. But note, USA is only 50% bigger than Russia, quite different than the official GDP of 15X bigger!!" Smith explained.
Assuming this point system is a "real GDP" metric not the official paper GDP numbers, you see in terms of real output, China #1, 50% bigger than #2 USA.
But note, USA is only 50% bigger than Russia, quite different than the official GDP of 15X bigger!!
19/20 pic.twitter.com/IAffJ2vgTb
— Winston Smith ?? (@crim_thought) July 20, 2022
"Recommendations: Italy, UK and France needs to get serious. These rankings reveal how embarrassing and shallow many European economies really are. In the world to come, running hotels and tax arbitrage firms is not going to cut it," Smith concluded.
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