Friday, May 27, 2016

More on diesel emissions cheating

When Volkswagen got caught using cheating software for their TDI line of diesels, I suspected that they were a LONG way from being alone.  Part of the reason stems from a lecture I got in 1973 from a transportation-technology instructor I had as part of my city planning sequence.  The professor was from the mechanical engineering department over at the Institute of Technology.  Keep in mind this was the University of Minnesota and not some car-state school like U Michigan or Perdue.  Even so, I am pretty sure he had his facts straight.  And the point he was making that day was it was going to be impossible to make diesel engines both clean and super energy-efficient.  He wrote "Nitrous Oxide" in big letters across the top of the chalk board to ensure we understood the important problem area.  He argued that regulators—especially at the California Air Resources Board—were about to enact regulations that were physically impossible to meet.

I did not want to believe him.  I wanted to believe that predicting something was impossible was not an especially valid tactic in any area dominated by professional inventors.  Proving skeptics wrong was pretty much the major thrust of the 20th century.  But now that I have passed my 66th birthday, I have discovered that there are indeed many things that ARE physically impossible, and that there are valid ways of knowing what they are.  And no, George Jetson's flying car that folded up into a briefcase light enough to be carried by an obvious wimp was never going to be built no matter how much development money was thrown at the project.

So I have come to agree with my old prof.  It looks like there really was no way to make a decent diesel engine that met those flight-of-fancy regulations that left him sputtering.  Below, we have a list of the strategies enployed by various automakers in the pursuit of something that really WAS physically impossible.

The Facts Behind Every Major Automaker Emissions Cheating Scandal Since VW

Volkswagen's diesel emissions cheating scandal increased the scrutiny on every automaker. There's a lot of shady stuff going on.


When Volkswagen's emissions-cheating software was discovered in September of 2015, it rocked the auto industry. But in the ensuing months, nearly every other major automaker worldwide has come under increased scrutiny regarding real-world vehicle emissions and fuel economy—and some of what's been discovered seems a little bit shady. It seems Volkswagen wasn't alone in trying to outsmart regulators.

Here, then, is a brief update on the many alleged emissions and fuel economy irregularities uncovered since the VW TDI fallout. We have a hunch this is just the tip of the iceberg.


General Motors' German brand came under fire in mid-May of 2016, after a joint investigation by German news magazine Der Spiegel, ARD television program Monitor, and the environmentalist group Deutsche Umwelthilfe discovered software on diesel-powered Zafira minivans and Insignia sedans that turns off emissions controls during real-world driving. Opel CEO Dr. Karl-Thomas Neumann released an initial statement denying "any illegal software" and insisting that "our engines are in line with the legal requirements;" later, Opel published a lengthy and in-depth statement explaining why the software discovered by the investigation is technically legal.

And astoundingly, while the software does indeed turn off the affected vehicles' emissions controls in most real-world driving scenarios, as Bertel Schmitt points out at Forbes, the software is likely to be found 100-percent compliant with European Union laws.

That's because E.U. law allows automakers to program their emissions controls to deactivate when necessary to protect the engine from harm. And it allows the automakers to define for themselves what counts as a protective shutdown. So Opel's affected diesel vehicles shut off all emissions controls at ambient temperatures below 20C (68F), or above 30C (86F), or at speeds over 145 km/h (90 mph), or engine speeds more than 2400 RPM, or at elevations higher than 850 meters (roughly 2800 feet). As Schmitt points out, Opel has a plausible-sounding explanation for each of these parameters—but coincidentally, Opel and every other automaker knows that E.U. emissions testing occurs at ambient temperatures between 20C and 30C, at speeds below 145 km/h, with engine speed never exceeding 2400 RPM; they also know that the highest elevation of an E.U. testing facility is at roughly 800 meters.

The fact that the vast majority of real-world driving would trigger an emissions control shutdown? Irrelevant, says Opel: "Our engines are in compliance with the legal requirements."


While GM's German branch is being closely scrutinized for diesel emissions in Europe, here in the U.S. the giant automaker has a bit of a fuel economy issue on its hands. It was discovered that the 2016 Chevy Traverse, GMC Acadia, and Buick Enclave were all sold with window stickers that indicate fuel economy ratings a full two MPG better than the EPA's official numbers. GM blamed the issue on "improper calculations," and put a temporary stop-sale on inventory of affected vehicles until corrected window stickers could be printed. For owners who purchased the mislabeled vehicles, GM is offering up to $900 in make-good money or a free extended warranty to make up for the calculated lifetime cost associated with a two-MPG drop in fuel economy. The action is expected to cost GM approximately $100 million.


In February of this year, a group of U.S. Mercedes owners filed a class-action lawsuit, alleging that the automaker's BlueTEC diesel-powered vehicles shut off their emissions controls in real-world driving. A second class-action suit filed in April characterized the software as a "defeat device" akin to Volkswagen's TDI cheat. Both suits allege that Mercedes BlueTEC diesels, which use a costly and complex urea-injection system to combat diesel NOx emissions, shut down at ambient temperatures below 50F. Mercedes-Benz parent company Daimler characterizes this as a necessary measure to protect the engine—the same justification Opel is currently using in its own diesel saga. At the request of the U.S. Department of Justice, Daimler has launched an internal investigation into its certification process for U.S.-market diesel engines.

Fiat Chrysler

Fiat recently found itself in an emissions imbroglio over the European-market diesel-powered 500X. It's similar to the Opel situation, but with trademark Italian flair and brashness.

Late in April, German news outlet Bild am Sonntag reported that Fiat's 2.0-liter diesel-powered 500X almost entirely shuts off its emissions control devices after 22 minutes of driving. German environmental activist group DUH, which claims to have uncovered Opel's shutoff software, says a diesel 500X it tested put out between 11 and 22 times the legal limit of NOx emissions when tested with a warm engine.

Perhaps not coincidentally, European emissions testing starts with a cold engine and lasts approximately 20 minutes.

As Bertel Schmitt points out at Forbes, the seemingly rudimentary nature of Fiat's emissions workaround could be its undoing. While Opel's many narrow parameters seem to ensure that its diesel vehicles will shut off emissions controls in most real-world driving scenarios, they give the automaker some plausible deniability, with a robust-sounding engine-preservation explanation for every shutdown scenario. Fiat's 22-minutes-and-done strategy probably doesn't provide for such fine-tuned answers.

It also doesn't help that Fiat representatives flat-out refused to attend a meeting with German Transport Minister Alex Dobrint on May 19th to discuss the real-world emissions findings—though the automaker won the support of Italy's Transport Minister, Graziano Delrio, in the process.

Fiat Chrysler, of course, maintains that its vehicles do not carry defeat devices, and that its products are legal under E.U. rules even if real-world emissions output doesn't match lab findings.


What started out as a Japanese-market MPG miscalculation seems to have helped ease Nissan's recent purchase of a 34-percent controlling stake in the automaker for $2.2 billion. The curious part is, Nissan was the whistleblower that uncovered Mitsubishi's fuel economy deception.

It began small enough. Late in April, Nissan revealed that Mitsubishi had been artificially boosting its official fuel economy ratings by up to 10 percent by overinflating tires during testing. At first, the act was thought to only affect about 600,000 Japanese-market kei-cars, tiny city vans with 660cc engines—470,000 of which were built by Mitsubishi but sold with Nissan badges.

Things unfolded from there. Within a week, Mitsubishi admitted that the fuel economy deception reached all the way back to 1991, a systematic effort affecting untold millions of vehicles. By mid-May, the Japanese automaker announced that President Tetsuro Aikawa would resign, along with Executive Vice President Ryugo Nakao. But at that point, Nissan had already secured its 34-percent controlling stake, likely at a steep discount: Right before Nissan made its move, the news of the fuel economy deception had gutted Mitsubishi's market value by roughly half.

Update, May 25th: Mitsubishi has appointed former Chairman and CEO Osamu Masuko as president of the company; Nissan's senior technology advisor Mitsuhiko Yamashita will become Mitsubishi R&D chief, Automotive News reports.

PSA and Renault

In early January, French antifraud authorities raided Renault headquarters after testing inspired by Volkswagen's diesel debacle found many Renault diesel models emitted more than the legally permissible maximum in real-world driving. Officials found no evidence of a "defeat device" after searching engineers' computers, though the automaker recalled nearly 16,000 European-market diesel-powered SUVs and offered a "voluntary" software fix to reduce the NOx emissions of nearly 700,000 diesel-powered vehicles.

Meanwhile, French rival PSA, maker of Peugeot and Citro├źn, faced near-identical antifraud raids by the same agency in April, triggered by similar real-world emissions test findings. France's antifraud office, known as DGCCRF, set up a commission in October 2015 to test 100 vehicles produced by that nation's auto industry in response to the discovery of Volkswagen's TDI cheat. Both Renault and PSA claim to be cooperating with authorities.

What's Next

This is by no means a complete list: Independent investigations in Europe have found that nearly every diesel-powered vehicle emits far more in real-world driving than in government-designed testing scenarios. Volkswagen's test-cheating software may have brought the issue to the forefront, but the result has been increased scrutiny of nearly every major automaker, and not just for diesels. As time goes on, we expect environmental groups and governments alike will continue to probe how automakers use legal loopholes, creative interpretation, and all-out deception in the emissions and fuel economy realms. We're not nearly out of the woods yet. more

Thursday, May 26, 2016

TTIP necessary to protect megabanks from prosecution

Oh, those lovely trade agreements.  Those of us who are veterans of the 1992-93 fight against NAFTA find it hard to believe that someone has designed a trade deal even more odious.  Someone has been working overtime because the TTIP makes NAFTA look like an act of charity.

The problem with these trade deals is that they operate from the assumption that anything that might possibly impede unfettered trade is by definition, evil.  And so social necessities like environmental laws, consumer protection, fair labor standards, etc. are all targeted as impediments to trade.  Worse, these local laws and regulations can be sued out existence if it can be proven that they materially harm the interests of those who would pollute, run sweatshops, and otherwise accelerate the race to the bottom.

It requires a lot of coordinated political action to get most such laws and regulations in place.  Watching them be eliminated naturally upsets those whose efforts these trade deals negate.  Not surprisingly, these trade deals face enormous political opposition.  That's not a problem for those who would profit from them.  For them, democracy is merely a messy detail.  The only hope is that the opposition to the mega-Predators who want these new NAFTA-on-steroids deals is substantially larger and vastly more organized than in 1993.  It also helps to have the NAFTA disaster to point to.

Monday, May 23, 2016

The environmental costs of militarism

The last time I made the mistake of attending a conference / seminar on the subject of climate change, we were treated to a keynote address by a long-time and very successful local weatherman / entrepreneur who after a couple of decades of climate change denial, had embarked on a new career explaining why he finally had become convinced that the science predicting a climate catastrophe was correct.  The guy's commercial success over the years was hardly an accident—he is witty and charming.  So charming, in fact, it was easy to overlook the fact that he has also been associated with some of the more crackpot versions of Christianity, is a lifetime Republican who still looks at the Reagan presidency as one of the high-water marks of USA history, and carries himself with the kind of swagger associated with those who have made a large pile of money in life.  But these attributes were essential to his new persona.  He was saying, "Look at me!  Even someone who had the prime characteristics of a climate change denier has now seen the light.  So believe the light!"

Tales of such a major conversion are central to the teachings of Christianity.  In fact, the majority of the New Testament revolves around the story of how Saul, who once actively participated in the persecution and murder of early Christians had seen the light and become Paul, the missionary who spread the new faith throughout the Roman Empire, had written the most popular lessons of the new doctrine, and in the end, had become a martyr of the cause.  Our newly enlightened weatherman was even named Paul in case any of us were to miss the lesson for the day.

As someone who was exposed to regular readings from the letters of Saint Paul throughout childhood, I understood and could appreciate what our keynote speaker was up to.  Even so, I started to wince when he began to quote Reagan or assured us that there was nothing about the practices of "free enterprise" that would lead to climate change denial.  But then he began to discuss how the US Navy, whose most important installations are at sea level and hence especially vulnerable to changes in those sea levels, were among those who took the science of climate change most seriously of all.  At one point he said, "When it comes to climate change, the Navy really gets it."  Because I know the enormous contributions made by the USA military to the carbon loading of the atmosphere, I almost threw up in my mouth.  No Paul, the Navy does NOT "get it."

Because he is a public figure, our weatherman Paul is now targeted by the climate change denying trolls.  This persecution probably assures him that he also "gets it."  Well, Paul, you don't get it but thanks for trying.

Saturday, May 21, 2016

Michael Lewis: The Book That Will Save Banking From Itself

During my visit with Jon last month, we both agreed that Michael Lewis is one of the best USA writers living. A partial list of some of Lewis's books:

Liar's Poker: Rising Through the Wreckage of Wall Street (1989)
Moneyball: The Art of Winning an Unfair Game (2003)
The Blind Side: Evolution of a Game (2006)
The Big Short: Inside the Doomsday Machine (2010)

The Big Short was the basis of the movie Jon reviewed here a couple months ago; I reviewed the book back in June 2011.

Since the article below was written by Lewis, I overcame some grave misgivings, and decided to post it here. It is a rather detailed review of a recent book by the former governor of the Bank of England (2003-2013) Mervyn King. The book is entitled The End of Alchemy: Money, Banking, and the Future of the Global Economy, and it presents King's argument that nothing has fundamentally altered the financial system's stupidity, greed, and appetite for high-payoff risks, followed by King's detailed proposal for what governments and financial regulators should do before the next crisis inevitably hits. Normally, I do not believe that highly technocratic financial discussions conduce to furthering an enlightened public discourse. Frankly, such discussions are usually a steaming pile of bovine manure. But now that it appears our sole choice for USA President is Trumpillary, it seems very likely that the best we can hope for in terms of forcing the banksters to behave civilly is exactly the sort of proposal King is putting forward.

I also am usually reluctant to hold anything British in a favorable light. But, some of the most startlingly truthful pronouncements by financial officials during and after the Crash of 2007-2009 were from King, and from Adair Turner, who became chairman of the UK Financial Services Authority in September, 2008, five days after Lehman Brothers collapsed.

In my opinion, King's proposal to have central banks determine beforehand how much capital they would lend against big banks' riskier assets in a crisis is fundamentally flawed on three counts. First - which Lewis discusses briefly - is that the big banks have achieved "regulatory capture." It is very likely that in a severe enough crisis, what a central bank had previously said would be the upper limit it would lend to a troubled bank in a crisis, will simply be ignored. Or, some other part of government will be prevailed upon to give the bankers the money they say they need to prevent the collapse of Western civilization.

Second, King's proposal accepts as valid the current business model of Wall Street and the City of London. He is not proposing to outright prohibit the riskiest behavior of the big banks. Rather, he explicitly argues that with the role of a central bank in a crisis firmly fixed beforehand, "the market" can be relied on to do the right thing, and leaving free the "incentives to innovate." This is, therefore, no repudiation of the reigning neo-liberal economic paradigm of the past half century.

Third is an extension of the second: I do not believe that we can build a sustainable economic future for humankind if we continue to treat present financial elites as legitimate. The past half century of financial legerdemain and shenanigans have, in a financial echo of Grehsam's Law, turned most of the financial system into a vast criminal enterprise. I agree with Ian Welsh, who a few days ago wrote Seven Rules for Running a Real Left-Wing Government:
The banking sector creates money. Money determines what people can and cannot do. This is the control mechanism for the economy in any state which runs on markets. You must control it. If you control it, you can use it to strangle your domestic enemies. If you do not, your enemies will use it to strangle you.
Welsh goes on to provide a stark example of how Obama, had he been a real leftist, could have used the crimes of the banksters to seize their money under RICO. 

Far better to simply tax all financial market transactions. You don't even have to ban the most odious transactions outright. A simple tax of less than one full percent would be enough to render much of the speculative trading in financial markets unprofitable.

Monday, May 16, 2016

Ellen Brown on Trump's monetary musings

It is really hard to know what part of Donald Trump's message he means or even understands.  I was a designated driver the night Obama won the election of 2008 and watched as deliriously happy and very drunken supporters celebrate what they thought was a new day.  He had talked for months about hope and by god, they were projecting all their hopes on him.  I am pretty sure that Trump's supporters are making the same mistake.  After all, he promises to bring about a brighter day but has already selected a Goldman Sachs man as an economic advisor.

That said, his latest dustup with the lords of high finance over monetary theory has been very interesting.  Not surprisingly, they are aghast at his willingness to point out that the ghouls of austerity do NOT have a monopoly on good economic ideas.  In fact, they have been a global disaster and Trump has much enjoyed talking about this.  So along comes our hero Ellen Brown to inform us how Trump's monetary ideas have much in common with folks like Lincoln and Franklin—two guys who actually appear on the currency itself.  Whether Trump actually understands this little piece of history is an open question.  And to be perfectly honest, it doesn't matter a whole lot that he understands who may have had similar thoughts about money in the past because once someone understands that money is merely a convenience, the idea that money is scarce becomes ridiculous.  And such a thought does not go away no matter who is shouting that the idea is crazy.

It is ideas like these that make the Republican establishment panic at the thought that Trump is their presumptive nominee.  We can be pretty sure they are not worried that he is a walking insult to political correctness—in fact, they probably approve of that.  But if Trump is willing to expose the big lies that banksters use to enrich themselves at the expense of the rest of us, then he MUST be stopped.  We will see.  After all, real estate dvelopers are essentially the only people who understand that their interests and the interests of the banksters do not align and have the expertise and clout to do something about it.  So even though Trump seems to have a short attention span, this might not be an idea that goes away so easily.

Sunday, May 15, 2016

CO2 passes 400 ppm

Not surprisingly, the global CO2 atmospheric concentration continues to rise.  It's getting into scary territory.  400 ppm hasn't been observed for a very long time.  What will happen next is still an open question but none of the guesses are encouraging.

Monday, May 9, 2016

They do not give a shit

On April 8, 2016, I composed a post about the possible final demise of the British Steel industry inspired by a suggestion from reader Mike.  In the ensuing comments, Mike made a further suggestion that is part of today's post.  There are many reasons why this article is so pointedly accurate—not least of which is the tale of how neoliberal thinking makes it virtually impossible for a country like UK to properly value its last remaining steel mill.

Foremost, the title says it all—"they do not give shit."  The "they" are the Leisure Class moneychangers who hold steelmaking in utter disregard.  It is something the "proles" do and no matter how technologically advanced the process may be, it is something as worthy of disposal as a used Tampax.  They do not care because in order to care, they would have to understand what they are throwing away.  And in order to understand, they would have to do the hard work of actually studying the struggles necessary to turn steel from this extremely rare material that was usually fashioned into swords into a mass-produced commodity that could criss-cross a continent with railroad tracks and create the frames for skyscrapers.

When I attempt to explain the physical origins of climate change, I am often met with a similar form of intellectual laziness.  Most people have zero interest in understanding, for example, the role fossil fuels play in feeding a hungry planet.  And even if they do listen to the figures for the fuels consumed, their usual response is to suggest that folks just stop doing things that way.  The idea that they should even be bothered with the tale of how all the decisions to embed fossil fuels in the food system came to be made, is utterly abhorrent.  So naturally, they gravitate towards simplistic solutions like carbon taxes—make fuel more expensive and folks will just figure out a way to get along with less fuel.  Don't bother us with the details—just do it.  So nothing gets done about climate change because those who rule our lives do NOT give a shit about how the community's necessary work is organized.

We will start making progress on the problems of climate change when our Leisure Class overlords start to actually give a shit about important matters—and not before.

Wednesday, May 4, 2016

American producer class hero Peter Cooper

I have just spent an entire (and entirely delightful) week visiting Jon at his home. I wanted to learn how to create and post a video to Youtube, and Jon gracefully obliged me by sharing as much as he could of what he has learned in the past two decades of shooting and editing video. I once had a college professor who told me he spends one hour preparing for each minute he actually lectures.

Making video is much more time intensive. In three solid days of collaboration, Jon and I produced and posted a four minute video on American producer class hero Peter Cooper, builder of the first American steam locomotive, inventor of Jell-O, and founder of Cooper Union. There are plenty of other producer class heroes we could have chosen, but what sets Cooper apart is that he had also elaborated a full, producer class version of American School economics, and, as a result, was nominated by the new Greenback Party as its candidate for US President in 1876. Creating a video on Cooper therefore allowed us to present the policies of the Greenbackers--and there is precious little accurate information on the Greenback Party available, either in print, or on the internet. If there was anything we could change in the video, it would be the last sentence, which would become: "And, all these Greenbacker policies formed the basis for progressive economic policies over the next century, including seeding the ideas for Franklin Roosevelt and the New Deal."

The full transcript is below the video. You will note there are a few, small cuts we made from the full transcript in order to meet our target of four minutes.

We were delighted to find a YouTube video of Eastman Kodak's film of the Baltimore and Ohio Railroad's 1927  "Fair of the Iron Horse... History of Transportation." This film includes footage of actual operation of nineteenth-century locomotives, including a complete reproduction of Cooper's 1830 locomotive Tom Thumb. We included only the few seconds showing the Tom Thumb; if you want to watch the entire 1927 file, here is the link

We were also delighted to find and use in the video scans of the actual Civil War greenbacks, the fiat paper money issued by the U.S. Treasury.


Monday, May 2, 2016

Carl Icahn says start spending

Predator Class / greenmailer extraordinaire Carl Icahn seems to think the country / world needs a huge dose of fiscal stimulus.  Well, he's right.  And there is no shortage of jobs needing doing.

So does anyone think this will happen—even if a really rich guy thinks it's a really good idea?

In the Age of Austerity?  Are you kidding.

Tuesday, April 26, 2016

George Monbiot on neoliberalism

Sometimes, I throw around the term neoliberalism as if everyone knows what it means.  Part of this is due to an allergy I have towards folks who like to reduce their debates to definitions.  I was on the debate team in high school and whenever the debate degenerated into some meaningless hairsplitting over definitions, I just wanted to quit.  I always thought that debate was a process that was supposed to yield better answers and definition debates never did that.  Worse, hairsplitting is something Protestant clergy pride themselves on and as a preacher's kid, I pretty much had my fill of this sort of posturing by 12.

The fundamental problems of debates over definitions are several:
1) because we can never really know exactly what is going on in someone's head, we don't even know if they are expressing their position accurately;
2) even the most devout hairsplitters have to acknowledge that there is probably widespread agreement on the basics so there is already enough agreement on terms to continue debating more essential issues; and
3) debates over definitions is a loser tactic—its what you do when you know your position is weak—a tactic designed to deliberately waste time.
Having said this, I do appreciate when someone with the writing chops of George Monbiot decides to define and explain some of the more serious problems associated with the practices of neoliberalism.  And the following effort is especially clear.  I approve of folks who include outcomes in a discussion of theory.  I have discovered in life that this is a highly useful practice.  Turns out it matters almost not at all what people claim to believe as religious or similar practice because at the end of the day, the only important issue is, "Are they good neighbors?"  This makes it easy because neoliberals are nightmare neighbors.

Monday, April 25, 2016

Iceland proposes to take back the power to create money

Michael Lewis likes to recount the story about how the charlatans, who were turning Iceland's very conservative banks into the go-go ponzi schemes that wildly exceeded needs of that island's tiny economy, would flatter the natives by reassuring them that they had a very special talent for such enterprises because they knew how to "manage risk."

Well, actually this story was partly true.  Iceland's largest industry, by far, is fishing the cold and dangerous waters of the North Atlantic.  Anyone who can do that knows that on a regular basis, they have to manage situations that would turn most of us white with fear.  Compared to riding out North Atlantic storms, the "risks" of money management are utterly trivial.  So when those crooked banks went belly-up, the natives pretty much decided that the banksters actually didn't know much at all about risk and treated them as the liars and failures they were.  Iceland sent a surprising number of them to jail.  In fact, Iceland may have jailed more crooked bankers for their schemes in the early 21st century than all the rest of the world combined.

So now that those risk-managing fisherfolk have discovered what a bunch of lightweights bankers really are, they have decided to take control of their money supply.  As the essay below indicates, taking on the international banking establishment at that level can be very hazardous to one's health.  But I seriously doubt the Icelanders will be intimidated—they have been laughing at real risks their whole life.  In USA, the only state that ever managed to set up a publicly controlled state bank is North Dakota.  Not surprisingly, North Dakota, like Iceland, has a serious percentage of Viking inhabitants.  And like for the Icelanders, surviving North Dakota winters is sometimes just as frightening as a North Atlantic storm.

Wednesday, April 20, 2016

Panama and money laundering

The recent revelations about the use of Panama as a tax haven have largely slipped under the radar.  I think I could put people to sleep at great distances by merely bringing up the topic.  But these revelations are very important because they expose a world where banking and organized crime meet to party.  Someone needs to explain why this is important and how it works.  So here is Michael Hudson on a 17 minute video.  I have also posted the transcript below.

Hudson bemoans the incredible entrenched power represented by these financial institutions and how difficult they will be to dislodge.  And there is nothing to make one believe he isn't absolutely correct.  Unfortunately, the powers they have are for looting and pillaging and we are in dire need of the power to build and remake.  So instead of trying to dislodge these casinos, perhaps is is simply more prudent to create alternative institutions.

Monday, April 18, 2016

Big Oil's coverup

According to the latest document dump, the oil industry had an excellent understanding of climate change and their role in the process as early as the 1940s.  Considering that most of us who believe we are ultra-informed didn't really understand the issues until James Hansen's remarkable testimony before the Senate in 1988, this news is stunning.  In fact, many didn't grasp the importance of climate change before Al Gore's movie An Inconvenient Truth in 2006.

Those who instinctively believe the oil industry is irredeemably evil are having a field day with this new information.  Many are comparing this proof of a coverup to the long process of denial by the tobacco industry.  Of course, that is a mighty stretch.  Anyone who stops using tobacco immediately starts to save money and get healthier.  Stopping the use of petroleum products is not nearly so easy or beneficial.  In fact, cutting out fossil fuel usage without a serious program of social and industrial redesign would lead to mass starvation and other forms of social collapse.

Yes, it is fun to point fingers at the people who supply us with the fuels we need to survive.  We can wonder why they didn't warn us when we had more time to figure out a meaningful solution to the climate change dilemmas.  But the answer to that question has an obvious answer—the oil companies didn't have a meaningful answer either.  And before we tout the power and resources of the carbon extraction industries, we should remember that it is now 28 years since Hansen (should have) awakened the people of goodwill to the problems of climate change and almost nothing has been done.  In fact, except for the efforts at solarizing the economy we like to highlight on this blog, 28 years of wheel-spinning has only seen the climate become much more dangerous.

The video at the end of this post is mind-boggling.  The sight of the oil industry citing Arrhenius' 1903 studies of the link between carbon consumption and climate change is breathtaking.  Must watch!

Friday, April 15, 2016

TBTF Banks Still being Allowed to Cut Deals to Avoid Prosecution

Former Obama Attorney General Eric Holder refused to prosecute the largest banksters because, he said, doing so might ignite another huge crisis in the financial system. Now its clear that Obama's new Attorney General, Loretta Lynch, is continuing Holder's policy: this past week, no less than Goldman Sachs was allowed to a $5 billion plea bargain rather than facing a real court of justice for its role in deceiving investors and causing the 2008 financial crisis.

$5 billion may sound like a lot of money, but as various experts are pointing out, it is really not that much. First of all, the actual amount of cash extracted from Goldman Sachs will probably only be around $3 billion. Second, much of that $3 billion will probably be accounted as an expense as thus deducted from what Goldman Sachs pays in taxes, meaning that part of the agreement is actually being paid by USA taxpayers, not Goldman Sachs. Third, even the full $5 billion is a small amount when compared to Goldman Sachs's $32.9 billion in profits on $102.5 billion in revenues the past three years. David Dayen notes in a posting at The New Republic, that the settlement is for deceit in about 530 mortgage-backed securitizations between 2005 and 2007. Each securitization probably averaged  $1 billion in size, and it would be a stretch to assume that Goldman Sachs did not make well over $2 billion on them.   

Finally, as Allie Conti notes in a posting at Vice, the Government Accountability Office (GAO) has estimated that the fraud committed by Goldman Sachs and other banks cost American homeowners $9.1 trillion on paper, while the resulting Great Recession cost the economy $22 trillion. so, Goldman Sachs caused trillions of dollars in damages, but is going to cough up mere billions - less than one percent - for its misdeeds.

Monday, April 11, 2016

Time is running out for a conversion to sustainable technologies

Trying to digest the remarkable news that 350,000+ people have plunked down a grand to get on a list to buy a car that won't be made for two years, and that they stood in a line to do it, I found myself watching a video of Elon Musk announcing his $135,000 Model X SUV.  It is pretty easy to see why this guy gets that many to part with their money to just buy a place in line.  Musk talks with the sort of ease and confidence of someone who has had a string of successes and knows what he is doing.  In the world of the Producer Classes, this is the prime requirement of a leader.

This, friends, is probably the most interesting subject of all.  History has shown that political revolutions are usually murderous failures.  The main reason is that one subgroup of the Leisure Classes is likely to be very much like the bums they replace.  The Roman Senators of 46 a.d. were probably a lot like USA Senators in 2016—vain, greedy, and clueless.  They are essentially conservative—they don't want things to change because mostly, they want more of the same.  The Producer Classes, on the other hand, want to change things very much and in the last 300 years, they have succeeded magnificently.  Whether the subject is communication, transportation, food production, or energy production and utilization, the methods and objects created by Producers are dramatically better than a few centuries ago.   As I like to say, aero engineers are not in the habit of wondering exactly what their "founding fathers" like Wilbur Wright thought about airplane construction.

So yes, Musk is a Producer and yes, Producers actually CAN change the world.  In fact, they are about the only ones who can.  And over the years, there have been some strategies for change that have worked a lot better than others.  Musk has chosen one of the best and he is executing it extremely well.  The basic plan is this:
  • The first products will be very expensive to make.  Therefore, you must get high prices for something no one has ever purchased before.
  • The best way to get high prices for a new product is to get premiums for soft features.  The most obvious is aesthetics but appeals to the human as a social animal who wants to be a responsible members of the larger group will also work quite well with something like an electric car.
  • Once you have figured out how to make something must-have with the trendsetters, the next step is to leverage this accomplishment by mass-producing a much more affordable version.
This strategy doesn't always work but it certainly has for Musk.  People now wonder if he can make so many cars.  Well, he does own the former NUMMI plant in Fremont California that at one time made 500,000 Toyota Corollas and Geo Prisms a year.  Some of the folks who made that operation work are probably still in the neighborhood.  He's already built his battery giga factory and it will soon start ramping up production.  Musk is a man on a mission.  And yet, these things take time.  It's one thing to say you want to have 30% of the passenger fleet electrified by 2025, but in the world of Producers, nine years in the future is next week.  Not only will Musk and Tesla have to sell 500,000 a year—all the other car makers will have to sell that many too.

Considering that with the possible exception of Musk, no one really knows how to sell these things so selling a half million cars is a TALL order.  Yes it will be easier once Musk has shown the way but it is still a LOT harder than it looks.  Musk builds brilliant cars.  He takes great joy in making something ridiculously interesting—not to mention crazy-fast.  People like buying products from someone who is out there trying to build something that is, as Steve Jobs would put it, insanely great.  And when electric cars become mainstream, the "revolutionary" who made it happen will be this Producer who first made them cool.

The follow is an article that highlights the massive problems of converting out of coal-fired electrical generation.  This is an industry that moves MUCH more slowly than the automobile business.  We should have been getting on with the conversion at LEAST a decade ago and yet we are still building brand new coal-fired plants.  Talk about not getting it.

Sunday, April 10, 2016

Commerce, Christianity and Civilization Vs. British Free Trade: Henry Carey on the British Forcing Opium on China

A week ago, I posted an excerpt from Commerce, Christianity, and Civilization, Versus British Free Trade. Letters in Reply to the London Times, by Henry C. Carey. Philadelphia, Collins, 1876. Though Carey today is rarely mentioned in economics textbooks, he was the leading USA economist of the mid-nineteenth century, a staunch protectionist who was probably the single greatest proponent of what was then called the American School of Political Economy.

If I may repeat part of what I posted last week: American protectionism was much more than simply a rejection of the concept of comparative advantage. Michael Hudson explains in the Preface to his 2010 book America’s Protectionist Takeoff: The Neglected American School of Political Economy:
The protectionist doctrine that shaped America's industry and agriculture... went beyond the narrow boundaries of today's economics discipline by deeming public policy and technology central to economic theorizing, not "exogenous." Analyzing what was needed to increase productivity, the American School emphasized that wages and prices had to be high enough to sustain rising living and educational standards for labor, and investment in rising energy mobilization by capital."
But the American School even went beyond that. Carey and other American School economists always kept in view the ultimate goal of economic policies: the establishment and enhancement of civilization. And unlike the competing British School of Adams, Ricardo, and Mill, a central element of the American School was morality. Note the heavy tone of scorn and sarcasm Carey uses in his fifth letter to the editors of the Times of London, as he reviews the British opium trade and its disastrous consequences for China.

Friday, April 8, 2016

No more steel-making in UK?

In my last post, I covered the possibility that China could build an infrastructure of energy renewables for $50 trillion.  This elicited a comment from the ever-perceptive Mike who wrote:
Note the complete absence of European and American companies—

"Beijing’s network will be the world’s biggest infrastructure project, if given the green light. The State Grid has already signed a memorandum of understanding with the Russian energy grid Rosseti, Korea’s Electric Power and SoftBank Group of Japan."

—because this is what the denial of the future does, it makes us losers in participating in the future economic boom that began with the oil embargo in the 70s, wherein American participation ended when Reagan removed the solar panels off the White House and persists to this day with distracting discussions of political will.
As someone who grew up in the 1950s and 60s, I find it difficult to remember that I now live in a country that has lost the ability to even make its own shoes.  So for those younger than me who have only been exposed to USA the incompetent, let me remind you that this was once a nation where almost nothing was impossible.  There was once a time when we could swagger with accomplishment and not appear ridiculous.

The loser mentality that provided the "rationale" for deindustrialization mostly came from the Brits.  Remember those Wall Street geeks who wore their Adam Smith ties and preached the "virtues" of "free trade"?  I am so proud of Tony who keeps trying to educate the rest of us on the difference between the American System of economics and the classical forms that come from the UK.  And now we see that that they are even going to lose their ability to make steel from ore.  It is encouraging to see there are still Brits for whom this matters, but mostly I hear them as voices in the wilderness.  As someone who has spent most of his life crying about the loss of USA's industrial muscle from the wilderness, I know how frustrating it can be.

(Update)  Apparently there have been a few emergency levers pulled and it looks like what remains of UK's steel industry may gain a short-term reprieve.  Isn't sentimentality great!  This won't fix the problems caused by two generations of under-investment, but hey, it gives the Indian owners something to play with.

Monday, April 4, 2016

China's $50 trillion renewable energy plan

So now we have a hard number on what it would cost to build a global solar infrastructure—the Chinese are telling the world they will do it for $50 trillion.  Since the Chinese tend to be the low-cost bidders for this sort of enterprise, we can probably assume this is about as low an estimate as we are likely to see.  My friendly amendment would be that they are only talking about stationary uses for energy (home heating, lighting domestic hat water, etc.).  It would be damn surprising if someone has calculated the costs of replacing fossil fuels for ocean shipping or anything that flies.  So let's double that figure and we have our unofficial blog slogan—serious discussions about cures for climate change start at $100 trillion.  And since any productive enterprise these days must also support the various corruptions of the Predator / Parasites, we may have to double that to $200 trillion.

This is unlikely to be the final word on any serious conversion to renewables, but it's an interesting start.

Sunday, April 3, 2016

Commerce, Christianity, and Civilization Vs. British Free Trade: Henry Carey's replies to the London Times, February 1876

In January 1876, an editor of The Times of London penned an attack on the protectionist policies of the United States, which Commissioners in Canada were considering adopting for their country. The policy of free trade, the editor wrote, is "the cardinal doctrine of English political economy, which is held in this country as an unquestionable scientific truth, to question which must indicate ignorance or imbecility." Opposition to free trade and a protectionist policy, he wrote, "could not be honestly held by an intelligent person."

The Times editor excoriated by name Henry C. Carey, the leading USA economist of the time, a staunch protectionist who had written the economic policy planks of the 1860 Republican Party platform on which Abraham Lincoln ran for President. But American protectionism was much more than simply a rejection the concept of comparative advantage. Michael Hudson explains in the Preface to his 2010 book America’s Protectionist Takeoff: The Neglected American School of Political Economy:
The protectionist doctrine that shaped America's industry and agriculture... went beyond the narrow boundaries of today's economics discipline by deeming public policy and technology central to economic theorizing, not "exogenous." Analyzing what was needed to increase productivity, the American School emphasized that wages and prices had to be high enough to sustain rising living and educational standards for labor, and investment in rising energy mobilization by capital."
But the American School even went beyond that. Carey and other American School economists always kept in view the ultimate goal of economic policies: the establishment and enhancement of civilization.

In the Conclusion to his 1851 book, The Harmony of Interests: Agricultural, Manufacturing & Commercial, Carey wrote that the British system of free trade "looks to pauperism, ignorance, depopulation, and barbarism," while the American School aims "to increasing wealth, comfort, intelligence, combination of action, and civilization."
Such is the true MISSION of the people of these United States. To them has been granted a privilege never before granted to man, that of the exercise of the right of perfect self-government; but, as rights and duties are inseparable, with the grant of the former came the obligation to perform the latter. Happily their performance is pleasant and profitable, and involves no sacrifice. To raise the value of labour throughout the world, we need only to raise the value of our own. To raise the value of land throughout the world, it is needed only that we adopt measures that shall raise the value of our own. To diffuse intelligence and to promote the cause of morality throughout the world, we are required only to pursue the course that shall diffuse education throughout our own land, and shall enable every man more readily to acquire property, and with it respect for the rights of property. To improve the political condition of man throughout the world, it is needed that we ourselves should remain at peace, avoid taxation for the maintenance of fleets and armies, and become rich and prosperous. To raise the condition of women throughout the world, it is required of us only that we pursue that course that enables men to remain at home and marry, that they may surround themselves with happy children and grand-children. To substitute true Christianity for the detestable system known as the Malthusian, it is needed that we prove to the world that it is population that makes the food come from the rich soils, and that food tends to increase more rapidly than population, vindicating the policy of God to man.... (pp.228-29) 
In his letters to The Times of London, Carey reviewed in detail the results of free trade policies in Britain, with the results of protectionist policies in France (an excerpt of this comparison is below). He then reviews the results of British free trade policies in China and India, detailing the ruin those unfortunate countries had been driven into by the so-called "Christian" traders of Britain. The fifth letter, in particular, throbs with Carey's moral outrage as he describes how Britain deliberately set about poisoning the people of China with opium. At a later date, we will provide a large extract from that letter.

For now, here is a smaller excerpt from the much tamer third letter, dated Feb. 18, 1876, comparing the economic policies of Britain, France, and the United States.

Excerpt from Commerce, Christianity, and Civilization, Versus British Free Trade. Letters in Reply to the London Times, by Henry C. Carey. Philadelphia, Collins, 1876.

In the sixty years that have passed since the close of the great war, France has, as I believe, never once attempted to interfere in our affairs; nor, so far as I can recollect, have the French people sought in any manner to influence our legislation. She and they have been content to allow us to determine for ourselves our commercial arrangements, confident that, whatsoever might be their form, French skill and taste would so far triumph over such obstacles as might be raised as to enable France to participate in supplying the great market the Union now presents. 

Widely different from this, British interference has been persistent throughout this whole period, increasing in its force as the danger to British interests became more clearly obvious. On one  occasion, some five and twenty years since, your then minister  had the bad taste, if not even the impertinence, to send to our Department a lecture on the folly of protection, accompanied by a strong remonstrance against increase in the duties on British iron. Of the course that has been since pursued some idea may be formed after a study of the exhibit, made in a document herewith of the discreditable proceedings of the Canadian Commissioner in reference to that, so-called, Reciprocity Treaty whose adoption he then was urging; these things having been done under the eye, and, as we have every reason to believe, with the sanction of the minister under whose roof the commissioner was then residing.  The corruption then and there practiced may be taken as the type of the whole British action in this country; agents being sent out  to lecture on the advantages of free trade; journalistic correspondents being purchased; Cobden Club publications being gratuitously distributed; and our domestic affairs being in every possible manner interfered with; with simply the effect of proving that there reigns abroad great fear that the Union may speedily achieve an industrial independence and thus emancipate itself from the system described more than a century since by Joshua Gee when assuring  his countrymen that more than three-fourths of the products of these colonies were absorbed by British traders, and that the share allowed  to the colonists scarcely sufficed to purchase clothing for their families and themselves.

Turn now, Mr. Editor, to your own journal of the 25th alt., and  re-read the inquiry there made as to "what possible outlet we can  have for our produce in the event of such an important purchaser  being lost to us permanently;" following this up by study of your  answer to the effect, that "the high tariff so long maintained by  the United States has at length brought her producing powers up  to her requirements," and that, therefore, "we cannot but great!" fear that the crisis of depression is by no means past, and it is not  improbable that the list of works that have closed for want  of orders will be augmented, and many more workmen be thrown  out of employment before the year is out." Turn next to your  report of the Address of the President of the Sheffield Chamber of  Commerce, and find him admitting that although "they had argued  during the term of the free trade agitation that protected industries  failed, that the quality deteriorated, and the enterprising manufacturers began to stagnate, that did not seem to apply to American  manufacturers;" the general result at which the speaker had arrived  being precisely that which you yourself had just before suggested,  to wit, that the American market had been lost, and had been so  because of a protective tariff such as you have now denounced.

Thursday, March 31, 2016

HAWB 1800s - The Doctrine of High Wages - How America Was Built

The United States was established as a republic, at a point in world history when all other systems of government were monarchies, oligarchies, or some other form of despotism. What, then, are the proper precepts of political economy that a republic should use to organize and structure its economy?

In Securing the Fruits of Labor: The American Concept of Wealth Distribution, 1765-1900,
(Louisiana State University Press, 1998), Oklahoma State University history professor James L. Huston writes:
The republicanism that American leaders came to advocate held sacred the ideals of individual liberty, the equality of the citizens before the law, distrust of governmental power and of political demagogues, simplicity and frugality in the behaviors of the people, and public exhibition of virtue--the willingness of citizens to sacrifice their individual self-interest to obtain the common good. An important economic corollary of republicanism established primarily by Englishman James Harrington (1611-77) during the Puritan Commonwealth was widely acknowledged by American revolutionaries: to endure, a republic had to possess an equal or nearly equal distribution of land wealth among its citizens.
As the United States began to industrialize and urbanize, increasing number of citizens no longer lived and worked on the land, let alone owned land. The great failure of Thomas Jefferson and his Democratic-Republican Party (which later became the Democratic Party) was their inability to conceive of a way in which workers and the propertyless could be just a virtuous as agrarians and pastoralists, and also be accorded a full voice in public affairs. Instead, they sought to stymie and retard the progress of industrialization in the hope of prolonging their idyll of a republic dominated and ruled by agriculturalists.

The problems of that approach should be obvious. To lift propertyless workers to the exalted station of citizens of the republic, while preserving the republican notion of an equitable distribution of wealth, a theory of wage income began to develop which certain American economists came to call, by the last quarter of the nineteenth century, the Doctrine of High Wages:

Tuesday, March 29, 2016

Tesla's raw materials

Those of us who are fans of green technologies must be on guard against sloppy thinking.  It is FAR too easy to ignore the fact that even while making a concerted effort to transition towards energy renewables—easily job one in any plan to save the planet from ourselves—a great deal of the old technologies and their ghastly environmental problems will be necessary to build a better future.

The following illustrates the massive environmental costs necessary to build a Tesla Model S.  Start with the simple problem caused by making something that weighs in at 4647 pounds (2108 kg.).  Assuming fabrication losses of at least 50%, that means this beast requires something on the order of 3.5 tons of raw materials and goodness knows how much energy it takes to process.  Then, because an electric car requires a radically different material set, very little of these material will come from recycling old cars.

So while the Tesla S is a hugely important car, it is obvious cars like this will play a minuscule role in replacing the monster fleets of fuel burners already on the road (250+ million in USA alone).  The new transportation systems would do well to incorporate recycled materials into their designs—something that was obviously NOT done with the model S.

I found the illustration below incredibly interesting—sometimes in the rather insignificant details.  For example, the Tesla doesn't use nearly as many rare earths as one might expect for an all-electric vehicle.  In fact, the only application seems to be for the cabin's electronics.  Apparently you can make a high-performance electric car without rare earth materials but not premium sound system speakers.