Sunday, November 23, 2014

The preservation of archaic traits—monetary thinking

One of the great frustrations caused by the contemporary practices of economics is that while the world has actually converted to a fiat / electronic money system that would have utterly delighted the most loyal members of the Greenback Party, the people who run monetary policy and vote on publicly financed programs think and act as if we are still on the gold standard.

One of the things that bothers / confuses me about so-called Modern Monetary Theory (MMT) is that almost none of it is as advanced in theory or in practice as the monetary ideas of the late 19th century.  I once watched Ron Paul describe his thinking on money and his related critiques of the Federal Reserve.  He was surrounded by acolytes who were nodding their approval.  At one point, Paul said ominously, "the problem is that the money the Fed creates isn't backed by anything!"  (What makes money valuable is the issue the Greenbackers—and similar—addressed for years and is the primary focus of my chapter on money in Elegant Technology)  One follower started nodding so vigorously that it looked like he might literally lose his head.  This crowd was suffering from a theological attachment to the gold standard that was so irrational, anything that smacked of fiat money to these believers was certain to provoke the wrath of God himself.  In their minds, not only did they have reason, but virtue, on their side.

Well no!  The reason there is no more actual gold standard is that reasonable people have long understood that it is a primitive and incredibly stupid way to run an economy.  Smart people like Ford and Edison once said as much in public.  If reason actually prevailed, Paul and his acolytes would be escorted back to their padded cells.  But reason is a minor consideration compared to the arguments over virtue.  Gold standard thinking even in the absence of a real gold standard is the primary reason why the EU is absolutely crippled these days by people who actually believe that austerity leads to growth.  A whole generation of young people are being sacrificed on the alter of primitive monetary thinking and the ghouls who believe this ridiculous tripe are causing catastrophic levels of human misery.  These people are FAR from virtuous.

Veblen often bemoaned the preservation of archaic traits—human responses to the world that may once have been a part of a successful survival strategy but now just get in the way.  Pretty hard to top the attachment to primitive, pre-industrial thinking on money as a prototypical archaic trait.

Obsolete Dogmas about Government Budgets are Killing Us

Author: L. Randall Wray · November 15th, 2014

Sorry for the near-hiatus over the past weeks–I’ve been doing a lot of traveling.

Here’s a good post on the current sorry state of economic policy in the US and Europe. The author, Darrell Delamaide, gives a shout-out to MMT (the post is reprinted below)

MMT, which bases models on the reality that the U.S. dollar is a fiat currency created out of thin air through government spending, represents a Ptolemaic revolution for flat-earth economists mired in an 18th-century view of the world.

Short of a full-fledged catastrophe overtaking us, however, neither the political establishment nor the public are ready for this radical a change…. In the meantime, we will continue to suffer the travesty of citizens in the two richest economies in the world, the U.S. and the EU, thrust into poverty, stress, and lower standards of living by bumbling politicians using obsolete paradigms for understanding how the world works.

In the piece, he (correctly) attributes the fiscal hawk position to wayward morality–as if there is something immoral about a government deficit. There is only one scientifically justifiable position on government budgets: Abba Lerner’s Functional Finance approach, or what is now called the Deficit Owl view. A government’s budget should be formulated with a view to achieve the public purpose. The ex post budgetary outcome–whether surplus, deficit, or balanced–should never be a goal and should never be a measure of success.

Sure, we need an ex ante budget to prioritize, to allocate real resources, and to hold project management accountable. In some cases, it might even make sense to loosely link government spending on some projects to certain tax sources (bridge building to gasoline taxes or tolls). But there is no sense in gauging government policy effectiveness against the difference between total government revenues and total government spending.

Foregoing needed infrastructure, healthcare, pensions, education, housing, policing, or defense on the pretense that a sovereign government “has run out of money” (as our President says all the time) is just plain stupid. If we have unemployed resources domestically (or can hire and purchase them from abroad) then we can “afford” to put them to use.

The deficit hawk–and dove–stupidity is literally killing people. These are entirely avoidable deaths.

One more link.  Yep, a comic book to present Steve Keen’s economics. MMT also got a mention. I’ll let you judge whether that’s a good thing or not. more

Opinion: Obsolete dogmas are crippling the world economy

U.S., Europe suffer from bumbling leaders pursuing misguided policies

DARRELLDELAMAIDE  Nov 14, 2014

“We’re going to teach the Greeks a lesson,” he said, paraphrasing EU officials at a 2010 meeting of G-7 finance ministers. “They are really terrible. They lied to us. They suck and they were profligate and took advantage of the whole basic thing and we’re going to crush them.”

Geithner says he tried to counteract “this blood-curdling moral hazard-y stuff” with cautions about preventing any contagion to other peripheral countries. To little avail.

“I completely underweighted the possibility they would flail around for three years,” Geithner said, according to these transcripts. “I thought it was just inconceivable to me they would let it get as bad as they ultimately did.”

In an earlier batch of leaked statements reported by ProPublica, Geithner acknowledged that U.S. efforts to rein in the banks and mitigate the consequences of the mortgage debacle also fell far short of their goals.

It is well known that early in President Barack Obama’s administration, economic advisers who advocated an aggressive fiscal stimulus — one that might actually have jump-started the economy into more rapid growth — lost the internal White House debate to a more timid camp.

What is needed on both sides of the Atlantic are real leaders with political courage who have enough sense to find economists with new ideas about how to cope with the realities of the 21st century.

Don’t hold your breath.

In a blog post this week, Dean Baker, co-director of the progressive Center for Economic and Policy Research, urged Obama, who faces even more obstacles to legislation with a Republican majority in Congress, to use his last two years in office to change the economic conversation.

“He can use his bully pulpit to explain to the country how we need additional government spending to bring the economy back to full employment,” Baker writes. “Rather than being some burden on our children, additional spending (even financed by dreaded debt) will be a blessing to them.”

Obama could tell people how additional government spending could help rebuild infrastructure, improve education, reduce the cost of college and retrofit millions of homes and offices to make them more energy efficient — all while giving people jobs at higher wages.

Dream on. How can a president who still likes to compare government budgets to households with credit card debt be expected to embrace an enlightened view of deficit spending?

Who will teach him that? His chief economic adviser, Jeffrey Zients, is a former management consultant whose chief claim to fame is that he headed one of the groups trying to bring Major League Baseball back to Washington.

The most progressive experts even fault a populist firebrand like Sen. Elizabeth Warren of Massachusetts for being too timid in her economic views. Joseph Firestone found Warren’s post-election commentary on creating a full employment economy too vague on how to achieve that without relying on the flexibility provided by modern monetary theory.

MMT, which bases models on the reality that the U.S. dollar is a fiat currency created out of thin air through government spending, represents a Ptolemaic revolution for flat-earth economists mired in an 18th-century view of the world.

Short of a full-fledged catastrophe overtaking us, however, neither the political establishment nor the public are ready for this radical a change. If Warren or some other progressive politician is willing instead to take the advice of an estimable economist like MIT’s Simon Johnson, who remains anchored in traditional notions of fiscal probity, that at least would be a start.

In the meantime, we will continue to suffer the travesty of citizens in the two richest economies in the world, the U.S. and the EU, thrust into poverty, stress, and lower standards of living by bumbling politicians using obsolete paradigms for understanding how the world works. more

Saturday, November 22, 2014

BND and the North Dakota fracking boom

Oil booms tend to be messy and chaotic.  They tend to attract too many get-rich-quick artists who soon overwhelm the local infrastructure.  Suddenly there are not enough housing units or schools and the enormous movements of heavy equipment tend to chew up roads.  In the case of North Dakota, its population is only in the 600,000 range so while local governments tend to be largely uncorrupted, there are rarely enough police to cope with the problems that show up with rootless groups of mostly lonely and unattached men who are making decent incomes without a lot of places to spend it.

Outsiders look at an oil boom and usually envy those close enough to make money from it.  But for most of the locals, it merely means sky-high prices for basics like food and housing, over-crowded schools, increases in crime, and traffic jams of very large trucks causing delays and depleting funds set aside for road maintenance.  Not surprisingly, the locals grow to resent the oil outsiders very rapidly.  In places like Ecuador, this resentment has roared past lawsuits and political movements to open conflict involving weapons.

North Dakota has handled the chaos and disruption of the fracking boom amazing well—all things considered.  The climate is so harsh, only the hard-working and diligent tend to stick around.  The fracking itself happens in very deep wells far below the aquifers which tends to minimize the environmental conflicts.  The sparse population means there is room for a lot of development without crowding anyone out.  But it also has an economic ace in the hole—the State-owned Bank of North Dakota (BND) that has minimized the problems caused to the state's physical infrastructure.  It is a development bank which means expanding infrastructure is one of its primary missions—one that has been successfully exercised for decades.

Ellen Brown, the BND's biggest booster looks at how it has coped with fracking and discovers a public bank with better returns than Goldman Sachs—not bad for an institution created by hard-pressed farmers who were barely surviving the economics of the early 20th century.  The agrarian Progressives had a laundry list of demands going into the election of 1916 but at the very center was their demand for a democratically-run bank.  It is why I argue that the Non-Partisan League was, hands-down, the most successful progressive political movement in USA history and arguably the history of the world.

Friday, November 21, 2014

Escobar on G7's neoliberalism

As one of the world's preeminent journalists, Pepe Escobar has for a long time covered the crazed, destructive actions of the large neoliberal institutions as they organize the looting of the global south.  In spite of the fact that there must be moments when he has seen too many victims with ruined lives, he keep pressing on with surprising amounts of humorous scorn which he heaps on the smug, self-satisfied economic lunatics who clearly have NO idea how much damage they cause or if they do, clearly do not care.

The only thing that keeps driving someone so aware has to be a flicker of hope that someone, or a group of someones, will someday be able to stand up to such evil and ignorance.  With the rise of China and the re-emergence of Russia, that flicker of hope these days seems a bit brighter that a group of someones will finally be able to stand against the destructive economic bullies.  Whether that will happen is still very much an open question, but Escobar's hope is grounded in the reality that the bullies are currently "led" by some of the more inept, lazy, and careless creatures to have ever been allowed near the steering mechanisms of a great empire.  The Obama-Merkel-Camerons of this world may be soon discovering that greed and cruelty, death and destruction, are not enough to thwart the life forces of the world's over 7 billion inhabitants.

Unfortunately, there doesn't seem to be a well-thought-out alternative to neoliberalism.  And as pleasant as the destruction of neoliberals and their whacky ideas might be, getting rid of them will leave a very large hole to fill.  As someone who has spent much of my time and energy learning about the movements formed to combat the defenders of colonialism, feudalism, slavery, and the rest of the manifestations of classical economic thought, I am fully aware how hard such tasks really are.  Not impossible, but very, VERY difficult.

Thursday, November 20, 2014

Putin interview for German television

Though it may feel like not much is happening in the news these days, I get the sense that behind the relentless business-as-usual reassurances that come from the big corporate media here is USA, some big things are rumbling to life and I intend to watch them closely.  They include:
  • While the real economy has been in a major decline since the crash of 2007-8, the world of finance has done quite well.  This disconnect cannot be maintained and there is a large chance that the big monetary authorities like the Fed and the European Central Bank will do something monumentally stupid which will crash the electronic money economy down to the level where people are hopelessly in debt, cannot find a decent job, and generally live in a world without hope.
  • Climate change is about to get worse at the same time the deniers like Inhofe will chair the Senate Committee on Science and Technology.  True science does not depend on who believes the evidence.  So even as the facts change, guys like Inhofe will cling fiercely to their pre-enlightenment worldviews.  He can never make things better—only worse.
  • And as preposterous as it may sound, we may be witnessing the final days of the American Empire.  Yes, USA can bring incredible firepower to parts of the world far from it shores, but it is rapidly losing its legitimacy and soft power.  Not only has USA lost its overwhelming industrial dominance, its economic power is severely diminished by its ridiculous levels of debt.  If that weren't enough, Vladimir Putin is demonstrating to the world that when it comes to producing a coherent worldview, USA doesn't seem to be intellectually up to the task.  And while the widening gaps in awareness between USA and China / Russia seem obvious to most sentient beings on planet earth, the citizens of USA seem to believe that W. Bush and Obama and the State Department notwithstanding, this is still a country with elite thinkers.  "We're the essential country, the rest of you have to listen to us."  (Hey, they believe the same garbage in UK and they haven't been a serious empire since the 1940s.)
Below you will find a transcript of a Putin interview conducted by German TV (ARD) conducted last Thursday (broadcast Sunday).  What is especially remarkable is how deeply Putin has thought about some very important topics.  We just went through an election here in USA and I personally saw ZERO evidence that any of the politicians asking for our votes could stay with Putin on any subject for five minutes.  This is scary.  USA is about to get run over by some very big problems—it would be helpful if some folks had Putin's level of awareness.  In the second half of this interview he discusses economics—I have boldfaced the paragraph that I believe shows he really "gets it."

Putin's Sunday Interview on German TV (Dubbed + Transcript)

  • In the last decade US has grown its network of military bases close to Russia and expanded NATO
  • Even when Russia had grounded its bomber aircraft, the US continued to fly nuclear-capable bombers in the vicinity of Russian borders
  • Due to existing deals, the EU-Ukraine Association Agreement would have enabled EU goods to enter Russia tariff-free
  • Germany, France and Poland did not stick by the February 21st Agreement they had imposed on Yanukovich
  • Crimea follows the precedent of Kosovo
  • Ukraine has a future as a large, European country, but for that all its inhabitants must feel at home within its borders
  • Russia does not want special responsibility for Ukraine. Ukraine is independent, free and sovereign
  • Concern that Ukraine tolerates people fighting under SS emblems, fear of possible ethnic cleansing
  • The fundamental cause of conflict in Ukraine is that in the wake of the coup the new central authorities in Kiev sent the army against people who did not recognize them instead of attempting dialog
  • A negotiated way out of the deadlock in East Ukraine is still possible
  • Sanctions have been harmful for Russia and everyone else, but there were some positives as well and the Russian economy has grown regardless
  • "Today there is fighting in eastern Ukraine. The Ukrainian central authorities have sent the armed forces there and they even use ballistic missiles. Does anybody speak about it? Not a single word. ... This points to the fact, that you want the Ukrainian central authorities to annihilate everyone there... we won't let it happen.
  • "Russian banks have currently extended a $25 billion loan to the Ukrainian economy. If our European and American partners want to help Ukraine, how can they undermine the financial base limiting our financial institutions’ access to world capital markets? Do they want to bankrupt our banks? In that case they will bankrupt Ukraine."
  • Russia will not call in loans, wants Ukraine to get on its feet
  • Germany ostensibly wants the conflict in Ukraine to be solved, but has been reluctant to influence its clients in Kiev to this end
  • "We are told again and again: pro-Russian separatists must do this and this, you must influence them in this way, you must act in that way. I have always asked them: "What have you done to influence your clients in Kiev?"
  • Russia and Germany have established a great friendship in the last 10-15 years that it would be a shame to lose.

Wednesday, November 19, 2014

The lessons from a little screw

The first time I encountered cement tile-backer-board was about 1980.  A friend's brother was attempting to remodel a house and gotten himself in way over his head.  So we went to give him a hand and the job of the day was laying floor tile.  The recipe was backer-board over plywood and subfloor, then thinset, and then tile.  The ply was already well-screwed down when we arrived so installing backer-board was the first order of business.  Keep in mind that this product is essentially a thin portland cement slab wrapped in a fiberglass envelope.  This makes it very heavy so it usually comes in a 3' x 5' (92 cm x 153 cm) sheets, unlike drywall that comes in 4' x 8' (or 12') [122 cm x 244 cm (or 366 cm)]  Since most framing in USA is based on 2' centers, 3' x 5' material doesn't match all that many spaces.  So to install cement backer, you will soon need to make a bunch of cuts.

The instructions at the time assured us that we could install backer using the same methods as used to hang drywall—utility knives and screws.  Supposedly, if you scored the sheet through the fiberglass layer, if would break just like drywall.  And drywall screws would snug up just fine.  Well, no.  Between the fiberglass and the cement underneath, a knife blade lasted about two cuts and the cement had a tendency to crumble at the break line.  The latter problem was so serious, any cut less than 2" (5 cm) from the edge of the material was effectively impossible.  I took one look at the cutting problem and volunteered to screw the pieces down.  Turns out that was problem two: drywall screws are not strong enough to countersink their bugle-shaped heads into a slab of cement.  You would just about get the screw to set when the head would twist off—not such a tragedy if it broke off well below the surface of the backer-board but a major headache if it snapped just above the surface.  Then the problem was somehow backing out the busted shaft with nothing to grip.

When I discovered that the plans for our project included cement backer, I cringed at the memory and determined that I would only proceed if there were better solutions for both the cutting and screwing parts of the installation.  As for cutting, the folks at Bosch have developed a carbide-tipped blade for their hand-held jig saws designed especially for backer.  They wanted over $20 for the thing but as my Bosch jigsaw is one of my favorite tools, that decision was easy.  The better screws were also a revelation.  Apparently, I am not the only person who cursed drywall screws for backer installation because someone has devoted an incredible amount of clear thinking to the problem.


The local supply store devotes a whole aisle to specialty screws.  There are stainless steel screws for fastening outdoor treated-wood decking and different screws for composite decking.  There are finish screws that actually replace finish nails. And hiding in this vast array of goodies were the backer screws.  They are teflon-coated to ease their way through the fiberglass layer.  They have square drives which transmit torque without all the down pressure required to keep phillips screws engaged.  And best of all, they have little ridges on the underside of the head which "drill" their own countersink holes.  Yes they wanted $9 for a box of 150 and a drive point, but considering how well they worked, they would have been a bargain at five times the price.

One of the reasons I do projects like this is that they remind me of just how different the Producer Classes really are.  Here are two excellent examples of how they create prosperity.  Cement backer-board is by far the best mounting surface for ceramic tile.  Yet because it was so difficult to work with, there were probably many projects that created seriously expensive waste, and in the case of DIY projects, some were probably abandoned because the going got so tough.  And yet a simple blade and some truly innovative screws turned this irksome task into something that smoothly built to a satisfying and morale-building conclusion.  It is clever little designs like this that are the true engines of human progress.

And if you really want a nice tile job, it should look like this at some earlier stage.  The house framing was still remarkably square after 58 years which is good because tile is very unforgiving when it comes to getting it straight.



And yes, the insulation disaster has been fixed.  2" ridged foam was cut to create a force-fit between the framing and then 50-year silicone caulk was used to compensate for any future problems caused by expansion / contraction.  On top of that, a layer of aluminum-backed foam was placed at a 90° angle to provide a thermal break on top of the studs.  Not surprisingly, even though it was already below freezing outside, the room got dramatically warmer as it was buttoned up.  Hopefully, long hot baths will stay longer and hotter.

Sunday, November 16, 2014

Can a New Silk Road road live up to its hype?

One of the few bits of worthwhile news to emerge from the APEC Summit in Beijing was about the serious commitment that China was making towards a project dubbed, "The New Silk Road."  The original trade route called the Silk Road ran from about 115 b.c. until 1450 a.d. so this is hardly a new idea.  The original route went out of business because of competition from sea traffic.  The new link is often thought of as the rail route between Chongqing China, the largest city in the world and Duisburg Germany, world’s largest inland port.  Rail shipments are twice as fast as transport on the sea route, but only half as expensive as air freight (see: Think RailwaysFurther development of the modern Silk Road linking Germany and China).

The big news is that China is about to spend real money on infrastructure outside its border.  And while the mainstream press pretty much ignored this story, the business press found it at least a little interesting.  Examples include:
Of course, none of this might not mean all that much to the bigger economic picture.  Why? The world may have maxed out on trade.  There are finite advantages to more concentrations of production facilitated by hyper-efficient transportation methods.  Seriously?  Do we really need better methods for shipping auto parts from China to Germany.  Maybe some of that production would be better sourced in Germany.  Besides, sea transportation is already very efficient—so efficient we in central USA can easily afford to buy bluejeans assembled in Vietnam or Bangladesh because shipping costs are measured in pennies.  Just remember, it was called the Silk Road because it mostly trafficked in luxury goods like silk.  It had to—those old transportation methods were VERY expensive.

One of the more interesting things I learned from my brushes with city planning issues was that transportation decisions drive a great deal of economic development.  Part of the attraction of the Silk Road idea is that big links like this change the way people interact with each other.  Not only do they tend to bring peace and prosperity, they change the cultures that touch them.  The original Silk Road certainly did.  And so part of the promotion of this idea is that a hard link between China and Central Europe will bring these people closer together—especially if that hard link include high-speed rail and fiber-optic communications.  Because of my enthusiasm for big infrastructure projects, I have been running into Silk Road partisans since the 1980s.  I met one in Stockholm (1995) who gave me an impromptu hour+ lecture on why the world needed a new Silk Road.  In his telling, a new Silk Road would certainly foster world peace.  He was so enthusiastic, it was quite infectious.  Such folks must be very happy these days.

Saturday, November 15, 2014

Michael Hudson on the APEC Summit

Institutionalists tend to believe that while personalities come and go, institutions abide.  In this case, we are seeing that what was called the Sino-Soviet alliance during the Cold War has been revived in time to respond to the current economic warfare against Russia.  And why not?  An awful lot of effort over the years has gone into building a relationship between those countries and while economic strategies have changed since 1991 for both countries, there are still a lot of open channels that were reactivated or re-energized during the current economic difficulties.

Michael Hudson, arguably the premiere practicing Institutionalist of his generation, was recently in China to watch the APEC Summit.  As you can see if you watch the video, he is amused by how easily and quickly the Chinese and Russia have agreed to a new strategy to counter the economic warfare managed by The City / Wall Street and the rest of the financial power centers.  The moves by China / Russia are incredibly brazen because they go to the very heart of the power interests in the West.  As Smedley Butler, the Marine Corps Major General wrote in his famous 1935 piece, War is a Racket, the military exists mainly to enforce the arrangements of Wall Street.  There are folks who get very upset if someone goes outside the boundaries of acceptable behavior set by the financial institutions.  I am convinced that at least 99% of the Putin-bashing that goes on these days was triggered when he decided to take on Butler's "racketeers"—especially when he had the temerity to throw one of them (Khodorkovsky) in jail.

Unlike many small counties that have tried to escape the "Washington Consensus" and failed, China and Russia will not be so easily bullied.  Russia brings vast natural resources to the party.  Both are industrially sophisticated.  Both have incredibly well-educated populations.  Both have nukes.  And both have been provoked by the banksters over the years so have plenty of motivation to build their economies outside of that greedy and predatory reach.

One Hudson prediction of note here.  He is quite sure that the Republican takeover of the Senate means that the TPP trade pact is likely a done deal in Washington—he predicts that Obama will gladly sign such a pact.  However, he also believes that TPP seems dead as a doornail in Asia.  Since economic control of Asia is the primary goal of TPP, this only makes sense.  However, it is damn difficult to sign a trade agreement if only one side wants it.

Friday, November 14, 2014

Has Europe gotten wise to neoliberalism?

In the following, there is a claim that Europeans are pushing back against neoliberalism.  As well they should for it is a VERY dangerous belief set.  But it is one thing to want to be rid of the evil and hardship that is part and parcel of allowing the Predator Classes to make the economic rules.  Neoliberalism is brought to you by the same sorts of people who enriched themselves through slavery and feudalism.  So overthrowing the neoliberals will be roughly as difficult as getting rid of slavery.

But perhaps the bigger problem is "What comes next?"  Already, we can hear the rumblings of the doctrinaire Marxists warming up their pet theories to explain why neoliberalism is such a failure.  Big problem with that—huge!  Marxism, for all its warm and fuzzy rhetoric about the noble working classes is essentially a Leisure Class set of beliefs too.  Marxism may have been a favorite economic theory of revolutions but those revolutions sputtered and ultimately failed because when it came to organizing the community's necessary work, it was even MORE inept than neoliberalism.

As someone who grew up around living, breathing Midwest Progressives, I mostly just want the Marxists to go away and stop wasting our time.  After all, WE are the people who figured out how to generate genuine prosperity.  We are the ones who developed the great institutions that allowed the maximum number of folks to share in this prosperity.  The reason that Marxism never gained traction in USA is because the home-grown economic teachings were so dramatically superior.

Lest anyone think these claims preposterous I would suggest one thing—read the theorists of USA economic Populism / progressivism.  I especially recommend Veblen (surprise) but knowing about a critically important industrial political economist like Henry Carey is useful too.  One note about Veblen.  There are lightweight academics who compose scholarly texts that assert that Veblen was some sort of Marx-lite.  Nothing could be further from the truth.  Not only was Veblen from a completely different intellectual tradition, he managed to write 10 books without mentioning Marx once.  I challenge anyone to name one person who buys into Marxist ideas who never mentions the great teacher—at least in some footnote somewhere.

Because Veblen understood economic development from the level of creating a civilization out of virgin prairie with hand tools, his ideas about the nature of industrialization were orders of magnitude more profound than anything a technologically illiterate man like Marx could ever aspire to.  Or as I like to put it, "Karl Marx was not intellectually qualified to carry Veblen's briefcase."  So for those who spent a bunch of time and energy learning the fine details of Marx's teachings—sorry you wasted your time.

Thursday, November 13, 2014

Greider on Krugman and free trade

The "free traders" have an ambitious agenda ahead of them in the next term of congress.  A couple of agreements, the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA) are almost certain to come to a vote.  Since these two possible trade agreements are conceptually very similar to the grand-daddy of these things, NAFTA, the same sort of tactics are being used to sell them (lying, corruption, intellectual bullying) and the same crowd of opponents (labor, people worried about trade deficits, economic nationalists, historical literates) lining up to fight the good fight yet once more.  Before these last elections, it didn't look especially promising for TPP / TAFTA.  The opposition isn't so easily bullied anymore—especially since we have discovered post-NAFTA that "free trade" is FAR more likely to cause real economic damage than any benefits it may have in theory.  But a large crop of senatorial newbies will probably prove easy pickings for the next round of trade agreements.  And Obama is as likely to sell out to the neoliberals as Clinton was at the end of his presidency—and largely for the same reasons.

The fight over NAFTA was especially traumatic for me.  I saw it as a naked assault by the moneychangers on the accomplishments of industrial capitalism.  I saw it as a threat to our very ability to feed and clothe ourselves because it would promote de-industrialization—which was the destruction of generations of innovative work constructed by the greatest builders to walk the earth for pennies on the dollar.  As I saw it, it was criminally insane.  And yet, to argue against NAFTA was to be branded as a kook.  I did not like the spectacular injustice of that—AT ALL!

Because I was a nobody from noplace, they didn't even bother to acknowledge my opposition to NAFTA.  On the other hand, William Greider was not so lucky. He wrote an insanely great book on the problems of the free trade manifestation of neoliberalism entitled One World Ready or Not: The Manic Logic of Global Capitalism.  For writing this carefully crafted work of thoughtful, investigative journalism, Greider was treated to intellectual bullying by no less than Paul Krugman.  Just because Krugman can be found considerably to the left of much of the economics profession these days, this does not mean that compared to the economic center of thought as late as 1974, Krugman is deep down a hopeless right-wing stooge.  And his treatment of Greider is exhibit A.  Unfortunately, Krugman is WAY over his head in this debate.  Not only is Greider arguably the most important writer of his generation, on this subject he was almost completely right and Krugman was wrong.  So for laughs, Greider here reminds Krugman just how wrong he was.

Wednesday, November 12, 2014

More on renewable energy in the developing world

Now that PV cells have become affordable, the main obstacles to their widespread adoption are essentially cultural and sociological.  This means that it will be hardest to go solar where there are already installed electrical grids—especially if those grids have been reliable sources of power for many decades. Solar is a long way from competing with such systems for convenience and much infrastructure has been built around the premise of power, on demand, 24/7.

Those who have not been exposed to such systems are still living in a world where they must get their work done during daylight hours—"make hay while the sun shines" as the old saying went.  So to add a system that mostly provides power while the sun shines is an easy conversion from a sociological / cultural perspective.  And it looks like the peoples of those "under-developed" nations that have been shut out of the world of electricity are figuring this out for themselves.

Tuesday, November 11, 2014

Losing an empire—Yankeedämmerung

There are a lot of problems with the idea that USA is an empire.  On one hand, it is difficult to describe any country with hundreds of overseas military bases, overwhelming dominance in international forums, the demonstrated willingness to murder anyone who disagrees with the international arrangements of the power center, and the owner of the essential global currency as anything BUT an empire.  On the other hand, it is almost impossible to find anyone in USA who thinks we form an empire or wants us to be one.

I remember some of the conversations we had during the Vietnam War years.  At some point in the evening someone would ask the the most obvious question, "Exactly why are we fighting this expensive war on the other side of the planet?"  Someone would inevitably claim that this was about economics but that was insane—what did Vietnam have that was worth a war?  Let's say this really was about all the rice that could be grown in the Mekong Delta.  In USA, there are warehouses full of rice and political schemes to unload the excess.  Some suggested that Vietnam had oil—but was there really so much oil it justified flying B-52s from Guam and the Philippines just to destroy primitive rural infrastructure that was only of value to the people who lived there.

But if it wasn't about economics, how did that war make any sense at all?  It didn't!  The Vietnamese were fighting an anti-colonial war against a country that was born in an anti-colonial revolt.  Their leader, Ho Chi Minh, was a superb student of the American Revolution.  And so eventually (many years later when the good books about Vietnam were finally written) we who were utterly stymied as to why we had to endure so much social disruption to fight a war that could not be explained by any rational means, would learn that we fought it for reasons as trivial as the one where colonial enthusiast Winston Churchill called USA Defense Secretary Robert Strange McNamara to assure him that war against the Vietnamese was a good idea.

You got to hand it to the Brits—they were able to pass off the arrangements of their empire to the credulous Americans who knew so little history, they couldn't even describe their own anti-colonial roots.  We became the ultimate accidental empire because the Brits were able to convince the historically illiterate Americans that there was nothing so cool as having an empire.  Amazing!  And the ultimate irony was that all that massive destruction visited upon the poor Vietnamese was accomplished because the (very anti-colonial) America System of Manufacture had made it possible to chemically destroy large segments of the rain forest of SE Asia, among other atrocities to numerous to mention.

So we basically inherit an Empire (and the thinking used to justify one) from the Brits.  And even though we don't run it especially well, it works after a fashion.  But the success it does have comes not from the warmongers but through soft power like bluejeans and bluegrass music.  In fact, whenever the warmongers do get involved, they tend to screw up so massively they usually destroy soft power.  After all, blue jeans have to very, VERY cool to compensate for a country with the power to blow up weddings with drones.  And the soft power that comes from industrial sophistication?  Well, the neoliberals have been systematically destroying that for over a generation.  And so the empire most of us never wanted and will not admit to being a part of, has by it very existence destroyed much of what really WAS cool and virtuous about USA.

If the USA empire tries to maintain its influence while stripped of its soft power, it will surely crash.   If all it has to keep it going are the maneuvers of Hillary Clinton, Victoria Nuland, John Kerry, or Lindsey Graham and the rest of that vast army of pig-ignorant swine, the end will probably come sooner than anyone is predicting.

Monday, November 10, 2014

China's Marshall Plan?

It has been easy to be skeptical about China's path to economic development.  So much has looked just like the sort of thing a small-town mayor with an industrial park to fill might have used to lure some runaway industry.  For those of us who believe that high-end industrialization is driven by investments in the basics like machine tool manufacture, she seemed like a country destined to be trapped forever in some evil sweatshop-for-the-world status where runaway industry that had located in China could just as easily leave.

This view of China seems like it needs a serious update.  It looks like her heavy thinkers have seen the sweatshop trap and are plotting to escape it.  Someone (or many someones) has decided that there are no compelling reasons to get stuck at the stage of "screwdriver" industrialization and have set in motion plans to adopt some of the higher powers advanced industrialization can bring.  We know such strategies have worked quite well in places such as Korea.  The difference is, Korea is a small country-China is not.  Not all strategies scale.  It will be interesting to see if this is one of those times.

Sunday, November 9, 2014

Die Linke triumphs on the 25th anniversary of the Fall of the Berlin Wall

Do you remember where you were when the Berlin Wall came down?  I certainly do.  I was spending the evening with a Finnish journalist who had once interviewed me about a book I had written.  We turned on the TV and there were those deliriously joyous Germans dancing on the top of a wall where a day before, they would have been shot.  Soon, I was almost as happy as those dancing Germans and opened a bottle of champagne I was saving for some special occasion.

Like most that night, I saw that moment as one of those historically significant events that we would recount in our old age.  To say I hated the Cold War would be one of the more massive understatements I could muster.  I hated the waste.  I hated the constant fear-mongering.  I hated the pointless conflicts that had been fought in the name of useless ideological arguments—I especially hated the ever-increasing bloody body counts those conflicts caused.  Mostly, I hated the hate—the architects of the Cold War just assumed that anyone they hated, the rest of us should hate as well.  If the fall of the Berlin Wall meant the end of that madness, one of my prime wishes in life would be granted.

My Finnish friend was not nearly as happy.  As someone who lived a few miles from the border with USSR, I just assumed that a reduction in international hostilities would make her life better—less stressful, if nothing else.  But as we worked our way through that bottle of champagne, she become positively morose.  She spoke fluent German and had spent time studying in Leipzig so her view of events was FAR more nuanced and sophisticated than my goofy "Yea! the Cold War is over!" enthusiasm.  It wasn't as though she was ignoring the police-state cruelties of the Honecker regime or was cheering on the Stasi, but as she reminded me, the DDR had accomplished significant social progress under extremely trying circumstances.  When I expressed doubt, she ticked off a bunch of things they had done to empower women, give them economic opportunity, and help with the real problems of child care.

This graduate-level conversation continued late into the night until she made a prediction "...many East Germans will soon discover how much they have lost.  Tonight's party will become tomorrow's throbbing hangover."  And then her eyes began to twinkle and she added, "I have almost forgotten the absolute worst tragedy that follows from tonight' events—with the Wall down, where are American presidents going to go to give their stupid and patronizing speeches about democracy?"  Good question!

I have recalled her predictions many times in the last 25 years.  The outbreak of Ostalgie in the former DDR was especially telling as was the utter hilarious and poignant movie Good Bye, Lenin, a story of a loving son who went to great lengths to keep the news of the Fall of the Wall from his sick mother because he was certain that news would kill her.  But nothing quite tops the recent news that in the former East German state of Thuringia, the voters have turned to a former member of the German left to govern their state.  And as neoliberalism creates ever more serious problems for Germany, we may expect to see more Ostalgie turned political reality.  Unfortunately, we have already seen the return of some of the worse features of the Cold War over Ukraine.

Saturday, November 8, 2014

Bad days for German media

Regular readers know that am a big fan of the German media—mostly because of their excellent coverage of environmental issues.  Of course, that excellent coverage owes a great deal to the long-standing and deep discussions the Germans have been having about the environment for several decades now.  I would imagine that their coverage of futbol / soccer is also world-class for largely the same reasons—the national team is really good (World Cup Championship anyone?)

But following the putsch in the Ukraine this spring, an ugly and dark side of the German media began to emerge.  In spite of plenty of excellent economic reasons to maintain close and active commercial relationships with Russia, suddenly outlets like Der Spiegel began to sound like a crackpot version of Fox News—complete with grotesque levels of historical illiteracy.  I am sure I am not the only person wondering how these insane people came to write for news outlets with real reputations for intellectual depth.

Then in September, we found out.  One of the heavy hitters by the name Udo Ulfkotte published a book called “Gekaufte Journalisten“ that describes how the CIA regularly pays to have their version of events put front and center in big journalism on any event that remotely interests the USA foreign policy establishment.  What the CIA is buying is the credibility of the top news professionals.  According to Ulfkotte, these journalists don't even have to write the story—they must only attach their name and reputation to it.

Coming on the heels of the NSA revelations including the tapping of Frau Merkel's cellphone, the disgusted German public not only propelled Ulfkotte's book to the top of Amazon's best-seller list, they have been actively shunning the big news outlets.  Like most large papers worldwide, the name presses in Germany are having problems selling their print editions but this is different, the readership of their online divisions have crashed since September.

So in addition to the hardships USA / EU-ordered sanctions have inflicted on the thousands of Mittlestand enterprises with operations in Russia and the terrible hit to EU agriculture in the name of defending the neocon-engineered putsch in Ukraine, we can now add the incredible damage inflicted on the German media's credibility.  And since credibility is about the only asset a journalistic enterprise has, this is a big hit indeed.