War with China: Thinking Through the Unthinkable

Politics

All war ends in military war. Currency, economic, whatever the name. Its resolution is a reset through violent means. The current fray over the South Sea is based on natural resources that China wants access to. The War paper herein is based in large part on the failure to rectify that economic situation. All war is economic war.- Soren K.

A new study by the RAND Corporation titled “War with China: Thinking Through the Unthinkable” is just the latest think tank paper devoted to assessing a US war against China. The study, commissioned by the US Army, provides further evidence that a war with China is being planned and prepared in the upper echelons of the American military-intelligence apparatus.This document is an easy sell as a scare paper for readers. And we read it that way at first. Then we looked at potential bias to handicap its plausibility. Our conclusion was twofold:

Being prepared is smart
Only an idiot (i.e. politician) would think this was unbiased gospel when it is merely a candle in the darkness at best and a sales pitch at worst.

Bottom Line: Always take documents like this seriously. For they are the template inept politicians will follow in times of panic. We simply think that this is a defensive posture by the military to ensure its funding continues and hope it is never used in crisis.

As risk managers, we cannot fault preparation for war no matter how unlikely the probability. On the other hand, it is obvious to us that any study commissioned by the U.S. Army is likely to have biases. Not unlike the ratings agencies in "The Big Short" being paid to rate bond issues under threat of lost business if the agency didn't give AAA status. Or perhaps a contract lawyer given a perfect document to review. If that lawyer finds nothing wrong with the doc, what is his purpose? Thus, there will be something wrong with it, we guarantee it. At the intersection of Finance and Politics: Imagine asking the people being regulated to write the rule that would regulate them. Yet that is exactly what the Gramm-Dodd bill did.

Consider Rand's history with the Military.

By outsourcing the study, it would seem that the Army is ensuring objectivity in the report. You tell us. How many men have the courage to tell the person paying them that person is wrong?

That the paper emerges from the RAND Corporation has a particular and sinister significance. Throughout the Cold War, RAND was the premier think tank for “thinking the unthinkable”—a phrase made notorious by RAND’s chief strategist in the 1950s, Herman Kahn. Kahn devoted his macabre book On Thermonuclear War to elaborating a strategy for a “winnable” nuclear war against the Soviet Union.

“This research was sponsored by the Office of the Undersecretary of the Army and conducted within the RAND Arroyo Center’s Strategy, Doctrine, and Resources Program. RAND Arroyo Center, part of the RAND Corporation, is a federally funded research and development center sponsored by the United States Army.”

Before you read the the Rand elevator pitch, it might be appropriate to listen to Eisenhower's farewell address where he warns us of the military industrial complex we've grown accustomed to hugging in our fear. You can read the full 116 page Rand report by clicking the link at bottom.