Friday, October 24, 2014

Wal-Mart and solar sabotage

The idea that the Wal-Mart clan might not be the most enlightened folks on the planet when it comes to solar power should hardly surprise anyone.  Accidental billionaires are some of the most predictably useless folks alive.  These people are hopelessly careless—the product of a lifetime of folks bailing them out from their mistakes because with enough cash, almost any screw-up can be erased.

So this story is not a tale of some hard-nosed characters out to sabotage roof-top solar through brilliant organization.  Rather the Waltons are just kicking in to fund pet projects of their fellow useless rich-kids.  In this case, it is the utilities who see the handwriting on the wall and want to stave off the bad news as long as possible.  And yes, the utilities probably can delay the inevitable for a while.  But solar has already become the low-cost option in thousands of locales around the world.  It's going to damn tough to stop this juggernaut now that it has started to roll.

The real issue here is that a bunch of mouth-breathers will be able to slow necessary progress for no other reason than they have too much money and they can.  Besides, sabotaging progress towards solar probably meets with approval down at the yacht club.  Solar is the direct opposite of conspicuous waste—the very sort of waste that makes folks buy yachts in the first place.  So this story is not so much about the fact that the Walton heirs are useless, corrupt, and just plain evil, it is rather about the Leisure Class interests they represent.

The Owners Of Wal-Mart Are Backing Campaigns To Kill Rooftop Solar Power

ROBERT S. ESHELMAN, VICE NEWS OCT. 10, 2014,

The Walton family, owners of Wal-Mart, donated millions of dollars to organizations opposed to government-backed incentives for solar power production, according to a report by the Institute for Local Self-Reliance (ILRS). And, says the report, the family, by way of a solar panel manufacturer that it controls, supported an Arizona regulation allowing the state's largest utility to impose a fee on households and businesses that install rooftop solar panels.

ILRS provided VICE News exclusive access to its report prior to its publication Thursday.

"We've been struggling with a Wal-Mart economy for many years," Stacy Mitchell of ILRS told VICE News. "The middle class has shrunk and the number of working poor has increased. But one of the real highlights on the horizon is what's happening with rooftop solar, which allows consumers to have an ownership stake in energy production and it's creating a lot of well-paying jobs. That's a future we can't allow corporate interests and the Walton family to hold us back from."

Solar power production in the United States grew 36 percent in 2012, according to the latest report of the Interstate Renewable Energy Council. Rooftop solar installations account for much of that growth. According to the Solar Energy Industries Association, over 500,000 households and businesses in the United States generate electricity from rooftop solar arrays. Half of all home and business solar installations were installed in just the last two years.

The cost of buying and installing rooftop solar has plummeted and in many states customers can sell the excess power they produce to their utility company, delivering cost savings because they're buying less energy from utilities and generating revenue from the electricity they sell.

"Rooftop solar is something that many utilities have come to see as a threat to their future profits," Mitchell told VICE News.

It's a threat, she says, the industry is not taking lightly. She points to Arizona.

Last November, Arizona regulators granted the state's largest utility, Arizona Public Service, the authority to charge customers a fee for installing rooftop panels. The fee will run three to six dollars per month for customers depending on the size of their solar array.

The fee might seem small but it cuts into the long-term cost savings that have driven investment toward rooftop solar installations. The Solar Energy Industries Association estimates that customers save between $5 and $10 per month with rooftop solar arrays. The Arizona fee, says ILRS, helps maintain utility industry dominance over electricity production by halving the cost savings to customers.

One of the key factors in the APS victory, says Mitchell, was support for APS from a Walton family-controlled solar power company, First Solar. At the time, says Mitchell, APS was being cast as an enemy of renewable energy generation in a state that is ground zero for new solar energy generation. First Solar, she says, gave APS the appearance of having solar industry support.

'Until they are willing to look at the core aspects of how they do business, than their concern for the environment will continue to be nothing but a public image, rather then substance.'

The Walton family owns about a 30 percent stake in First Solar, according to documents filed with the US Securities and Exchange Commission.

First Solar did not respond to a VICE News request to comment on the reasons for its support of the Arizona fee or if it was currently involved in campaigns in other states to limit utility customer incentives for installing rooftop solar panels.

Spokesperson Stephen Krum referred VICE News to a June 2013 opinion piece in the Arizona Republic, written by the company's CEO James Hughes.

"Studies show that the cost per installed watt of utility-scale systems is as little as one third that of rooftop systems," Hughes said.

In its 2013 annual report, however, the company identifies rooftop solar as a threat to its future profitability.

"We face numerous difficulties in executing our Long Term Strategic Plan," the report says, "including [… ]difficulty in competing against competitors who may gain in profitability and financial strength over time by successfully participating in the global rooftop […] solar market."

"This is not the Walton's saying there's no room for solar in their's or Wal-Mart's future but only solar that's centrally-owned and benefits wealthy investors," says Mitchell. "It's an economic model that says the rest of us don't get to own anything and there's only a few descent, well-paying jobs. It's a model that has been very beneficial to the Walton family."

The solar industry now employs more people than the coal sector and installers earn an average of $24 per hour, according the Solar Foundation, which promotes the solar energy industry.

The Walton family's backing of anti-solar campaigns comes through its grant making as well. Between 2010 and 2013 the Walton Family Foundation (WFF) gave nearly $4.5 million in grants to organizations linked to repeals of state-level renewable energy incentives, including rooftop solar arrays, according to ILSR.

Vermont's largest city is now entirely powered by renewable sources. Read more here.

WFF granted roughly $800,000 to the American Enterprise Institute, $575,000 to Americans for Prosperity, and $150,000 to the Heritage Foundation, among others.

Wal-Mart pledged in 2005 to source all of its energy from renewables. The company says over 24 percent of its electricity comes from clean energy technologies, an amount ILSR disputes, pointing to US Environmental Protection Agency data of three percent.

The company topped the 2014 Fortune 500 list of top revenue-generating companies. Christie, Jim, and Alice Walton were eighth, ninth, and tenth respectively on the 2014 Forbes list of wealthiest individuals in the world.

"The Walton family, if they really want to address the core environmental challenges that we face," Mitchell told VICE News, "they need to fundamentally reconsider how they operate."

She added: "Until they are willing to look at the core aspects of how they do business, than their concern for the environment will continue to be nothing but a public image, rather then substance. In particular they need to stop impeding rooftop solar."

WFF did not respond to a VICE News request for comment on its political contributions.

Wal-Mart did not respond to a request to comment on progress toward meeting its renewable energy goal. more

Thursday, October 23, 2014

Can economic reality abort Cold War II?

All the lies and warmongering we have been subjected to over the plight of the Ukrainians these last few months may come to a crashing halt for one simple reason—the global economy is profoundly threatened by the sanctions placed on Russia.  This is scary.  To even imagine that folks could consider backing down from a potential Cold War II, after all the investment in that buildup of hostilities, over something like economics means quite a few things—none of them very good.  Mostly, it means that the European economy is so fragile that no one in their right mind wants to risk crashing it over something like the government of the Ukraine.

One of the basic beliefs of this site is that the Leisure Classes can do significant damage to the real economy before it starts to backfire on their let's-pretend economy.  In the case of Europe, there has been massive damage to the real economy since the Crash of 2008.  In fact, it could be argued that there has been no meaningful recovery from the damage it caused.  Six years of a brutal depression felt by millions is plenty of reason that a nasty 2008-like collapse could happen again.  In fact, it is almost inevitable.  All it needs is a trigger and the self-inflicted wounds caused by sanctions on Russia could easily become the triggering mechanism.

Soon, the Leisure Classes must ask themselves, "Which do we love more—war or money?"  As much as those folks worship war, my guess is that in the end, they love money more.  This is sort of an unusual question because a true member of the Leisure Class thinks that he will never be forced to choose—he believes that starting wars leads to money and has many historical examples to prove him right.  But this time, something—maybe bad "war karma", means that this utterly needless fight over Ukraine is going to bankrupt some of the very rich too.  This includes some formerly rich nations.

We will see.  The German intelligence services recently released another bogus report on the shoot-down of MH17.  Still nothing on the missing tower tapes, etc.  But they managed to (sort of) absolve the Russians.  Is this the opening to an end to sanctions?  The following end-to-sanctions story comes from UK—a place absolutely awash in bellicose Russkie-bashing for several years now (note, Halligan really wants to blame the French and Germans if sanctions end.)

Wednesday, October 22, 2014

Laissez-faire economics

The claim that economics was a "science" as represented by its elevation to "Nobel" status (and other similar events) was soon followed by an enormous move towards reactionary ideas.  It was if the profession decided that if you threw enough math at economics, soon you would be sounding like J. P. Morgan.  It seems strange that adding powerful computers and high-end math to the investigation of economic behavior would lead to a generation of pre-industrial knuckle-draggers and some of the most primitive thinking since the decline of feudalism, but that is what in fact happened.

Because I was there when the economics department of my university got an IBM 360, I was very much caught up in the excitement of combining powerful computers with economic research.  Unfortunately, I lost interest in econometrics almost as soon as I understood how it was done.  My thinking went through four stages:
  1. Holy shit! Do you see what you can do with a computer's help.
  2. Learning computer modeling puts you in a small class where only other members of the caste can truly understand you.  This opens up huge avenues for fraud:
  3. The main reason to learn stats is to prevent someone else from committing fraud against you.
  4. More and more people will gain access to the power of statistical analysis.  When that happens, the stratification of importance within the profession should be a matter of who asks the best questions.  Very soon, it will not be about who has the biggest computers, it will be about knowing enough to ask important questions.
Disillusionment began to set in.  I began to suspect that all the really interesting economic questions were FAR beyond the ability to reduce them to mathematical formulas.  Watching computers being applied to other pursuits than academic economic investigations over time only confirmed those suspicions.
  1. Precision manufacture is an obvious application for computing.  And for many applications, this worked magnificently.  Any design that combined straight lines and circles could be easily described for computerized manufacture.  Unfortunately, the really interesting design problems can NOT be reduced to formulas.  A car's fender, for example, can not be described using formulas—it can only be described by specifying an assemblage of multiple points.  If math formulas cannot describe something as common and uncomplicated as a car fender, how can it hope to describe human behavior?
  2. When people started using computers for animation, it soon became apparent that human motion was almost impossible to model correctly.  After a great deal of effort, the animators eventually put tracing balls on real humans and recorded that motion before transferring it to the animated character.  Formulas failed to describe simple human behavior—like a toddler trying to walk.
Lately, I have discovered a Swedish economist who did NOT give up on econometrics merely because it sounded so impossible.  In fact, he still teaches the stuff.  But for the rest of us, he systematically destroys the pretensions of those who think they can describe human behavior with some basic formulas.

And here we see what happens when economics substitutes the appearance of scientific rigor for the real thing.  Unfortunately, real lives are destroyed in the process.

Tuesday, October 21, 2014

Free trade versus autarky

Autarky is one of those words that has fallen so far out of favor that it would probably stump a panel of "Jeopardy" champions—even though it means self-sufficient (a virtue that is still widely prized.)  Actually, this contradiction makes a lot of sense.  True self-sufficiency is astonishingly hard to achieve and on a individual level, probably impossible.  There are small groups that make a fine try at being self-sufficient.  The fascination with the Amish is mostly due to their ability to make their way economically outside of the technostructure.  But as the hippies discovered with their back-to-the-land efforts, the freedoms promised by self-sufficiency come at the price of a lot of very hard work.

Autarky as an economic strategy was given a bad name because the Nazis tried so hard to create a self-contained economy.  In this case, autarky was merely another preparation for warfare.  And while the Nazis came quite close to their goals of economic self-sufficiency, there were still plenty of gaps in their desire to limit trade to only allies.  Even (especially?) on a national level, autarky is so hard to achieve that even a totalitarian state cannot pull it off.

Which brings us to today's featured article.  It is from Radio Free Europe so is probably as establishment / CIA / State as these things get.  Normally, I would not bother to read such obvious propaganda, but I am glad I read this one.  Because buried near the bottom is that that archaic and disused term—autarky.  Yes indeed, we now have a believable explanation for the irrational hostility to Russia and Putin.  Not only does Putin's Russia want to reorder the existing, dollar-based, global trading system, it has the possibility through the strategies of autarky to escape the shit-storm such a move has triggered.  And according to this piece, Putin is appointing a new generation of bureaucrats who share his vision.

The neoliberal "free-traders" did an amazing amount of damage to Russia.  That is not so surprising as unfettered trade turns the activity into this glorious opportunity to rip off the Producer Classes.  And that is precisely what happened during the Yeltsin days.  Nobodies with zero relevant skills made off with whole industries and got stinking, filthy, rich by exploiting the weaknesses in the philosophy of "free" trade.  And not so surprisingly, the people who got rich overnight at the expense of the Russian middle classes now worship neoliberalism and try to ensure that likeminded souls have all the important economic jobs.  And this is what Putin is trying to stop in the name of patriotism and national pride.  And he is recruiting his foot soldiers from the provinces where self-sufficiency is still valued.

Just to make sure we understand just how serious this conflict is, there has been a recent exchange between Mikhail Khodorkovsky, one of the neoliberal pirates who almost made off with much of Russia's oil wealth before being sent to Siberia for corruption and fraud, and Igor Strelkov, a man who has a clear sense of the damage Khodorkovsky caused and why Russia must resort to a state of near war to defend itself.  Khodorkovsky's speech was given to the 2014 Freedom House Awards Dinner on October 1.  It is full of the arguments used by all the neoliberal hacks that populate both parties in USA.  Strelkov, on the other hand addresses his Russian readers with pitches to their patriotism, historical Christian roots, and the raw memory of the catastrophe of the Yeltsin days.  Our politicians will certainly not understand—it's probably why none of them have Putin's approval ratings.

Monday, October 20, 2014

The USA military does NOT get it on climate change

Last January, I attended a climate change conference that featured a TV personality who had come to agree with the climate scientists after a lifetime of denial.  Not surprisingly (I guess) he peppered his speech with appeals to deniers like he once was—quoting the Bible, Ronald Reagan, etc.  At one point, he cited some examples of how the Navy was planning for the changes that climate change would bring to their operations.  "The Navy gets climate change," he shouted excitedly.

I thought I was going to be sick.  After a lifetime of passionate interest in the history of USA aerospace, there was one thing I KNEW about the military—almost every bit of their equipment requires massive amounts of premium fuels.  Navy jets, because they must operate off carrier decks, are some of the biggest gas hogs in the air.  Suggesting that these exemplars of conspicuous waste understood the issues of climate change was a bit like suggesting that Hugh Hefner was an expert on growing old gracefully with your lifetime partner.

In fairness I would imagine that the Navy, as part of the USA industrial state, is probably much closer to "getting it" on climate change than the folks who think a solution will come from marching behind large puppets and clever signs through the streets of New York.  Even so, I will not give the military much credit for understanding climate change until they stop using massive displays of waste as a form of chest-pounding.  I mean, considering that 99% of their potential targets are essentially defenseless, why exactly do they need supersonic aircraft?  How much fuel is required to demonstrate readiness or ferociousness?

Sunday, October 19, 2014

Wind power in Scandinavia

A friend who spent a significant part of his childhood with his father—a very successful Mexico City architect / property developer—is someone who can always be counted on to provide the views of the Latin American oligarchical classes.  One day we were discussing the boast made by Hugo Chavez that Venezuela had the investment capital to provide her with the "industrial density of Sweden."  Friend laughed uproariously and then said, "Well, that may be true because she has an almost continuous trade surplus from her oil exports and can buy whatever machines she could possibly want, but what she is missing are the Swedes to run them."  (This is the sort of remark that almost always elicits a nod of approval in Minneapolis so friend was probably being more charming than analytical, but it certainly has a large element of fact built in.)

I thought about that remark today while reading how the Nordic countries plan to manage the VERY tricky transition from coal and gas to wind power as the way to power their societies.  A lot of fossil-fueled electrical generating capacity must soon be mothballed yet this does not seem to cause much distress.  For the Nordics, reducing the national carbon footprint is just another problem to be solved—and these are people who solve complex problems for pure enjoyment.

As my friend would point out, almost everyone has the same set of energy problems.  What they are missing are the Swedes (Norwegians, Danes, Finns).

Saturday, October 18, 2014

Oliver Stone goes to Russia

As someone who thoroughly appreciates Oliver Stone's latest attempts at retelling history, I am quite delighted to see he has gone to Russia to cover the latest episodes in east-west relations.  Apparently, he gave an interview to a big Russian newspaper that is really too good to miss.  So here it is.  At one point in the introduction, the question is asked,
how is it possible, that this man, not a professional journalist or historian, understands what is going on in Ukraine and Russia and the mess the US has gotten itself into, better than the combined western media and Washington policy makers?
As someone who is nearly the same age as Stone, I'd like to give that question a shot.  A couple of years ago, I was talking with a highly educated German who has a major job at the University of California, Berkeley.  As one point he expressed some dismay at the narrow worldviews of many of his colleagues.  I said, "What do you expect?  Even the best-educated Americans know almost nothing about recent history and what they think they know, is usually wrong.  For example, almost no one in USA born after 1945 has any idea that USSR fought the Germans in WW II."  He looked at me incredulously, "What do such people believe?  That World War II was fought only between Germany and UK / USA?"  "That is precisely what I am saying", I replied. "Not only do we not know that almost every important battle of WW II was fought between the Germans and the Red Army, we are taught by omission that they never happened—they don't even come up."

Somewhere along the line, Stone managed to learn the history of the Great Patriotic War.  And that makes all the difference because it is quite literally impossible to know these historical facts and believe the Cold War BS that comes from the State Department.  At this point, it becomes obvious that for the paid liars at State, the near-universal historical illiteracy of the American public is a feature, not a bug.

Friday, October 17, 2014

The consumer runs out of money

In the past 40 years, anyone who has tried to run a business in USA will tell you one fundamental truth—their biggest problem was not finding something to sell, getting a quality product produced, finding skilled employees, raising capital, and after the desktop revolution and the coming of the Internet, being able to mount a slick marketing campaign, the BIG problem was finding enough customers with money to spend.  Not surprisingly, lack of customers has been the #1 reason for business failures.

Of course, there are always companies that find a niche and produce a big "hit" product or service (although in a hits-just-keep-on-coming world, those successes tend to be very short-lived).  There are enough of them so the glossy business mags have something to put on their covers each month.  But since the USA worker hasn't gotten a raise since 1973 and the cost of the necessities of life keep rising, what's left over keeps shrinking.  At some point, it doesn't matter how wonderful your product or service, or how clever your marketing, there are simply not enough folks with money to keep your doors open.  Too many producers—not enough consumers.

The little guy on Main Street knew this long ago.  Now the problem has moved up the food chain so that as reported below:
seven out of every eight major American retail companies “cite weak consumer spending as a risk factor to their stock price,”
Because there is obviously no "free-market" solution to this problem, the only solutions will involve collectivized actions like raising the minimum wage.  But the BIG change will be to finally end the adherence to that most discredited crackpot economic idea—trickle-down "economics."  It turns out that rising yachts cannot life the tides no matter how much the economists would wish to make it so.

Thursday, October 16, 2014

German economy loses altitude

The markets and the real economy are very tenuously linked.  In fact, a major blow to the real economy can send the markets soaring.  But this time, the massively overbought markets are looking for an excuse to sell and by gum, if you look at the real economy, you will very likely find all sorts of reasons to take your money and run.  The only economy in the EU that is not staggering from one disaster to the next is Germany's and folks, they are running out of customers very quickly.  So on the news that German exports have dropped sharply, the DAX plunged to a near one-year low.

I tend to discount this sort of news.  There are thousands of economic horror stories out there that are routinely ignored whenever the markets are advancing.  Considering how much naked corruption, front-running, and computers trading with each other that goes on in those massively over-reported markets, I wonder why anyone takes this news any more seriously than for any other form of betting.  But they do, and governments are known to create extreme hardships for their own citizens in order to keep those magic markets soaring ahead.  So I keep track of the casino only because far too many take it seriously.

Wednesday, October 15, 2014

Finland and Apple

On Monday, Finland lost its AAA credit rating.  This is the only country that paid its WW I war era debts to USA and the country that managed to maintain it independence from USSR after WW II by paying its onerous reparations through heroic efforts that included housewives turning in their wedding rings for the gold.  These are people who pay their debts.  So for them to lose their AAA rating, there must be something seriously wrong with their economy.

There are two major things wrong with the economy of Finland these days—the collapse of Nokia and the continued decline of the global paper industry.  The problems at Nokia are especially sad.  As recently as 2007, it was arguably the world leader in cellphones and the hardware that made them work.  Then came the iPhone—a device that wasn't much of a phone but was a spectacular hand-held computer—and suddenly, those gems made by Nokia looked like something from the dark ages.  Things that once mattered so much—range, signal clarity, durability, etc.—were suddenly irrelevant in the new world where the new abilities such as numbers and availability of applications now dominated.  Nokia could have responded with a line of smart-phones of its own but the company structure was so dominated by cell-phone experts, it had no institutional way to fight back.  Eventually, it would be sold to Microsoft for the fire-sale price of $7.2 billion and the layoffs—over 12,000—began.  For a country with barely over 5 million people, this is a catastrophe.

The paper industry also became a Finnish specialty.  Here in Minnesota, every paper mill in the state is owned by Finns.  They had achieved global dominance through hard-work and innovation—Finnish paper-making machinery was extremely reliable and efficient and Finnish management techniques were first rate. What could possibly go wrong?  People could stop buying and using so much paper—that's what.  Computers had long promised a paperless society but had in fact delivered a paper boom when desktop publishing exploded in the 1980s.  Then came the iPad and its imitators and suddenly, the promise of the paperless society began to come true.

So it wasn't much of an intellectual stretch for the Finnish PM to blame its economic problems on Apple's two big marketing breakthroughs—the iPad and the iPhone.  Finland makes others things of course, but paper and cellphones were the two major accomplishments.  And for all the brave talk, replacing them as engines of the national economy will be damn difficult.

Tuesday, October 14, 2014

When neoliberalism crashes and burns, how will the true believers respond?

These days, even the IMF is warning that the current economic situation cannot last much longer—it can get a whole lot worse.  They can list their reasons for why we can see a major crash on the horizon but here are mine.
The economics profession lost the plot with the arrival of econometrics.  Because numbers-crunching needs numbers to crunch, only those economic questions that had been reduced to numbers would be studied.  As a result, many extremely important economic questions such as, What is the role of aesthetics to economic outcomes?  Or precision?  Or wise use of resources?  Or the production or reduction of waste products, or the role of design in energy consumption?  Etc.?  In short, everything important to the real economy would now be shunted aside as non-important / existent while massive arguments would break out over trivialities such as the role of hedge funds.  In such an atmosphere, the symbolic economy would flourish (stock markets reaching record levels) while the real economy fell apart (everyone the world over now faces catastrophic infrastructure deficits.)

Unfortunately, as the real economy collapses, the number of people who have enough money to participate in the symbolic economy collapses with it.  So while the economics profession ignores the health of the real economy, they inevitably fail to see the problems facing the symbolic economy.  Not surprisingly, they are utterly unprepared to foresee the various threats to their unicorn and rainbow constructions of reality.  (How many economists foresaw the problems of 2007-8?)  Of course, if you cannot see a problem developing, it will surely be impossible to plan for the eventualities they present.
And so we see Larry Elliot, the economics editor for The Guardian size up the state of planning in case the overheated markets collapse.  To call these people clowns is an insult to clowns.  Unfortunately, the financial "heavy-hitters" will try once again to fix the symbolic economy while ignoring the problems of the real economy.  Of course they will—they have no choice because they refuse to acknowledge that the real economy exists.  Unfortunately, the "tools" they had to pump up the symbolic economy without fixing the real thing were mostly used up to rescue the economy from the crash of 2008.  Hard to lower interest rates when the prime is nearly zero already.

Sunday, October 12, 2014

Is history more important to public policy than economics?

Above all else, knowing history is the essential navigation tool.  If you don't know where you came from, you cannot know where you are.  And if you don't know where you are, it is impossible to chart where you may want to go.
—absolutely favorite defense for why anyone interested in leading a meaningful life should know history
I did not always find history so fascinating.  When I was in high school and college, I found history to be tedious and stupid.  But then I discovered a book that covered the history of the development of musical instruments.  What a mind-blower!  Even relatively simple instruments like a violin or guitar are significant and difficult feats of building—while something like a pipe organ or piano were civilization-defining accomplishments when they were perfected.  From this book I learned two incredibly important concepts:
  1. there are as many kinds of history as there are human achievements, 
  2. the people who built our civilizations were infinitely more interesting than the religious figures, moneychangers, politicians, and warriors that so regularly populate standard history texts
In my mind, the biggest reason no one wants to study history is because it is mostly about the Leisure Classes—people who take pride in their uselessness.

Armed with these two insights, I began to devour as much historical information as I could about the nation-builders and what they accomplished.  For example, one of my favorite books was the autobiography of Alfred Sloan.  Needless to say, building GM's market share from 12% to over 50% was a large project.  But that didn't make him immune from appreciating the fact that "big" accomplishments rested on the success of thousands of significant "little" accomplishments.  At one point, he tells of the mind-boggling difficulty of making successful fuel injectors.  You "must make a hole the size of a mosquito's stinger in the hardest steel ever made."  Apparently he got so creative in describing that problem because solving it took GM over a year.  And while this problem was being solved, GM's diesel engine program was effectively put on hold.

My other passion became the topic of what happened when the builders tried to change the debate on economics.

Occasionally, I will read a history book by an established historian but I seldom do this anymore because I find such books less relevant the older I get.  I suppose the last book I read like that was Faust's Metropolis: A History of Berlin, the 1998 door stop by Alexandra Richie of Oxford.  It was frighteningly awful.  For example, the role of Berlin as a manufacturing center with Siemens as the big engine of European electrification was barely mentioned while Richie could go on for pages listing obscure nobodies who were slighted in their desire to be famous for their modern art.  And while she does mention that the Siemen's workforce became so radicalized that Berlin got the nickname "Red" Berlin, she offers nothing in the way of explanation for why making electrical machinery would cause that.

Today, we feature an essay for why the study of history is more helpful in the making of public policy than economics.  Being written by academic historians, it often veers off into irrelevance but the basic point is sound—historical illiterates are pretty damn useless when it comes to collective action.  Of course, I would say that if the subject is economic policy, it should at LEAST be informed by a working understanding of economic history.

Saturday, October 11, 2014

What the crumbling Kiel Canal says about the German economy

My childhood home was not in Germany, but I grew up around so many German-speakers, there were times when it could just as well have been.  My neighbors were often highly virtuous, and one of the virtues I found most admirable was that they believed in maintenance and other manifestations of the Instinct of Workmanship.  So when I saw DDR for the first time, I could only marvel at what madness could have caused Germans (GERMANS?) to build something as truly awful as the Trabant.  I blamed Marxism because it was a body of beliefs that was notoriously technologically backwards.

So now we find the Germans have taken to neglecting routine maintenance.  Since Marxism can no longer be blamed, I blame neoliberalism.  Neoliberalism has trashed the European economy so thoroughly that even though Germany is only now starting to hurt, the wreckage all around them has scared them so badly they will not spend money for capital improvements even when they could borrow at 0.15%.

Evans-Pritchard has no trouble identifying other flaws in German economic thinking.  Being a Brit, he is good at pointing out flaws in the Germans.  And he's probably right about most of them.  But at the bottom, I still believe her problems mainly come from the neoliberal madness.

Friday, October 10, 2014

Evil or stupid? the Troika in action

Whenever there is a financial calamity caused by standard classical prescriptions, my first instinct is to see these things as conceptual errors.  Turning an economic problem into a calamity isn't all that hard to do so it is well within your typical economic expert's power to pull off.  Then there is the problem of religious fanaticism—neoliberalism is based on ideas that have ALWAYS produced disasters so the only reason anyone can believe this horseshit is that it appeals to the irrational that seems to exist in us all.  Worse, these folks are selected for their willingness to conform so they are badly practiced in innovation.

Before we can believe that the people who staff the working level positions of places like IMF are just hopelessly evil, however, we must get past that they are relentlessly mediocre people who create economic structural adjustments for national economies that are little more than checking off boxes.  I mean, this isn't much of a defense but it should keep them from the guillotines when they have finally collected enough really angry victims.

But Auerback makes a strong case for the truly evil nature of the financial actors.  He argues that they knew exactly what they were doing when they pawned off all that real estate speculation on the Irish citizens.  In fact, they threatened the country with bankruptcy if they burned the bondholders—which is exactly what should have happened both from the point of justice and sound economic policy.

Of course, this naked extortion could also be explained away with a sort of "Predators will be Predators" description of human behavior.  Banksters prey on the Producers because it is the only survival strategy they know.  I am not sure this explanation will stave off the mobs, but you can bet it will be proffered.