Sunday, September 30, 2012

Why the USA Corn Belt is so important to food prices

One of the claims to fame one hears growing up in the corn belt is: We Feed the World.   That was always something of an exaggeration and everyone knew it, but it did relate to a real truth which was: Without exports we would drown in food.

I never saw a really good chart of just how reliant USA agriculture is on export markets.  This one is especially telling.  It also points out how serious this summer's drought really was.  I had an extremely reliable report from a farmer who was bragging that because of his no-till methods, he was getting 100 bushels per acre where is neighbor was getting only five.  Couple of points here: A normal good crop is 200, and, Five is effectively zero because it doesn't pay to harvest so little.

This will cause a world of hurt throughout the system.  Yesterday, the Minneapolis Star Tribune had a piece on how high grain prices are just destroying California's milk producers.  I am certain we will soon see a LOT of these sorts of stories.

Economics as bad theology

Because economics is historically rooted in the study of moral philosophy, it is not at all strange that debates in economics often come larded with religious terminology and ideas.  It most often overlaps in USA with Calvinism but the economy as the Will of God is not exclusive to the followers of John Calvin.  Unfortunately, the god most worshipped by the dismal science is the god of hellfire and judgment, not the one of love, mercy, and providence.

Saturday, September 29, 2012

Harvest moon

Harvest Moon tonight.  It was already spectacular last night—autumn moons are.  A moon so bright it allowed work after sundown in those centuries before light bulbs.

Astronomy is a fascinating subject in part because it is a scientific pursuit that has been around far longer than humans have actually understood what science really means.  And so it became intertwined with our culture from folk wisdom to passionate theological controversy.  This has not been true for the more recent scientific niches.  I am pretty certain that no expert in fluid dynamics has ever been threatened with torture the way Galileo was for actually observing Jupiter's moons.  Of course, what saved astronomy from being forever a religious football was its undeniable commercial value.  Good astronomy led to powerful navies and overseas imperial capabilities.  Turns out Galileo was the exception—astronomy now has had centuries of public funding and as the pictures from Hubble or the Curiosity Rover demonstrate, this investment means we have gotten very good at astronomy indeed.

But even if you love astronomy for the hard science, it is still fun to remember when folks knew the stars because it was their most accurate way to predict future events.  And nothing demonstrates this more than the names we gave to full moons.  In the northern hemisphere, calling February's full moon the Hunger Moon tells us much about what surviving winters once meant.

Saturday toons 29 SEP 12



Friday, September 28, 2012

Why energy efficiency takes persistence

One of my favorite authors of the 1980s was Amory Lovins. He was an energy efficiency advocate who preached that it was a LOT cheaper to save energy than figure out ways to generate more. He called reduction in demand "negawatts" a bit of clever wordsmithing that got him a MacArthur "genius" grant. And to his credit, he actually went out and built a house incorporating all the energy-efficiency ideas floating around western Colorado at the time. We never saw how well this all worked and it was silly expensive—PV panels in those days were so expensive, even NASA cringed. But as an example of the kind of solution that emerged from the nexus of academia, grantsmanship, and those hippie contractors that built Aspen, his efforts were quite remarkable.

There is nothing particularly novel about designing for energy efficiency. There are places on earth such as Scandinavia and Germany where the obsession with energy efficiency permeates any conversation where it is remotely relevant—and this has been true since forever. It's an idea beyond rational debate. The only question is, How deep into this subject are you willing to explore?

My brother got interested in energy efficiency because he was appalled at the stupidity of building a box out in the sun and then cooling it at great cost using five tons of air conditioning. So he was interested in negawatts too, only he was coming at it from a whole different direction. He was a small-time builder who took on most any job that paid the bills. This versatility would allow him to eventually become a construction supervisor who enjoyed the tricky challenges of building churches and performing arts centers. This was not a world where if you ran over budget, you merely wrote another grant proposal. And if something only sort of worked, the lawyers appeared. For him, energy efficiency was a worthy goal but it had to be affordable and it had to work as advertised.

In 1991, after thinking about the problem for several years, he decided to build a home for his wife and kids using the energy-efficiency ideas he could glean from his central Florida environment. He had bought some rural property off the road running between Orlando and Titusville. Titusville is an interesting place—it is home to NASA so is one of those ghettos for rocket scientists. It is also the home for Florida's Solar Research Center so my bother managed to enlist some formidable intellectual firepower for his project. His radiant barrier was suggested to him by the same guy who designed the insulation package for the Lunar Excursion Module. And since he was building his own house, he had a pretty clear understanding for how much theory he could put into practice.

Twenty years later, his house now has documentation for being a net zero house. Yes it took PV cells to get his electrical bills to zero and he didn't buy them until 2008, but his house was already remarkably comfortable even when the air conditioner wasn't running. And when PV cells finally did become affordable, his roof was at the correct angle facing the proper direction because of decisions made in 1992.

I am very happy he is finally getting the deserved coverage for his efforts.

Thursday, September 27, 2012

Spanish riots

 Ah yes, the IMF riots—the logical and expected outcome of the sort of "structural adjustments" those insane people cook up at the behest of finance capitalism.  This, remember, is not new.  These lovely people have been causing crippling human misery around the world more or less continuously since  I first started following their actions in 1982.

So now they have turned their guns on Spain.  And the Spanish people are having none of it.  I have no idea why they have responded more violently than say, the Irish or the Estonians, but I think part might be that since the IMF has been clobbering Latin America for over 30 years, much of the really good anti-IMF writing has been done in Spanish.

We can only wish the Spaniards well.  Someone must ultimately stand up to the thieves that run the international financial organizations.  Might as well happen on the Iberian Peninsula.  But no, I have no intention of joining a new Abraham Lincoln Brigade.

Wednesday, September 26, 2012

Bad news for unemployment

I have been arguing for a long time that there is no "automatic" bounce back from a serious structural blow to the real economy.  Today I have charts.  The first one is an update of a chart I have shown many times before.  The second one is new.  It shows the recovery times for various countries from shocks to their real economies.  My favorite examples come from Finland and Sweden where it required over 17 years to "recover" from the Recession of 1991.  Sweden and Finland are almost always at or near the top of any measurement of a successful social order.  If THEY required nearly two decades to recover from an economic event most folks in USA have never heard of, I think it safe to say that no one ever really recovers from structural shocks to the real economy.

And then there is Russian grain

Spent the day driving across a segment of the Northern Corn Belt—you know, the part that got most of the rain it needed.  Quite a bit of the harvest is in and most of the corn still standing in the field looks like it will yield a significant fraction of normal.  We saw only one sign of a bumper crop, ONE coop was piling corn on the ground.  Drove past four ethanol plants that seemed to be operating at full capacity.

Where the crops have been good, life is pretty much normal.  I do find it a little spooky how much agricultural infrastructure can be operated by so few people.  Rural USA is getting old.  But even old and empty, rural Minnesota seems like it will have contributed more than its fair share to the feeding of the world's hungry billions in 2012.  This best-case scenario glosses over the fact that this year's crop will be slightly smaller than last year's.  And as we see below, Russia's grain yield is off by 25%.  A little bit here, a little there, and pretty soon you are talking about a real food shortage.

Cross your fingers, folks.

Tuesday, September 25, 2012

The usual suspects bash the Volt

When someone asked Ben Franklin on what was the good of flight (balloons) responded, "of what use is a newborn baby?"  Back when this was still a nation of inventors, such a one-liner would silence the fools.  Now we have the situation of the Chevy Volt—a car as inventive as any in the past 50 years—perhaps ever.  And yet the buffoons like Rush Limbaugh are still taking potshots at the car of the year (Motor Trend, European car magazine editors, etc.)  In their world, Peak Oil has not happened, climate change is a hoax, and new technology is a failure if it doesn't make a ton of money right out of the box.  And since the Volt is obviously an act of pure genius, the Wrong-Wingers must resort to lying to make their point.  Here the growing number of Volt fans try to set the record straight.

What is so disturbing about this foolishness is that almost NONE of the technologies we need to climb out of the mess we find ourselves, will turn a profit in its first five years of existence—if that.  It's another example of why the marketplace is, at best, a lagging indicator.  HAS TO BE!  This isn't something simple like an iPhone App—this is something that has eaten up $Millions in engineering to satisfy a market they must create in a tough economic times caused by actions they did not take.  So it is not so surprising that the market purists at Cato and Forbes don't get it.  The Volt makes thermodynamic, fuels-choice sense.  Eventually it will make economic sense.  Amazing how often that works.

I pay no attention to critics—after all, no one ever built a monument to a critic.  attributed to Composer Jan Sibelius

Monday, September 24, 2012

Still the bad guys

Outside of our imperial military adventures, nothing influences our international reputation more than environmental policy.  Obama inspired a lot of hope that maybe, just maybe, the USA posture on environmental issues would improve.  As can be seen from this from Deutsche Welle, the Germans have given up their hope for change.

Sunday, September 23, 2012

Pharmaceutical crime

Big Pharma has been fined over $11Billion in the past three years and not surprisingly, it hasn't changed their behavior much—if at all.  First of all, $11Billion may be a very large number to most of us mortals but it is more like a rounding error to the drug companies.  More importantly, they were already going off the ethical rails back in the 1970s when I first looked into how they operated.  There are people who are now retiring who have never worked for a pharmaceutical industry that was anything but a cesspool of corruption. They have managed to extract so much from the real economy that they actually caused structural damage.  40 years of corruption pretty much makes that corruption an institutional artifact.  And it will probably take much more than some small (or even large) fines to deter this criminal juggernaut.

The gold standard (sigh)

It annoys me more than a little that for some ungodly reason, we must discuss the gold standard—again.   History has provided ample reasons for why the gold standard is—at best—a disaster waiting to happen.  But in a country where the teaching of history is damn near illegal, even something so thoroughly discredited as the gold standard has made something of a comeback—thanks mostly to Ron Paul and his minions.

My long description of why I believe the gold bugs have at best, a superficial understanding of economics and monetary policy can be found at my web site.  But in brief, money has two main elements making up its worth.  Either it can be exchanged for something more tangible (gasoline, food) or it can buy human talent, work, and creativity.  Of course, there are other strategies a society can use to validate its currency.  As the old Greenbackers used to say, any money that you can use to pay your taxes is good.  And obviously any money that you can use to retire your debts has value because the lender had agreed it has value.

But even the economically conservative Atlantic felt the need in August to demonstrate yet again why even the favorite argument of the gold bugs—price stability—is not much of a talking point after all.

Friday, September 21, 2012

The banksters are still crooks

The banksters are amazingly quiet these days.  Perhaps it is just that with the elections sucking up all the air in the room, we aren't seeing so many stories about them.  But more likely it that they may be discovering how one of them, Willard Romney, seems to be more hated each and every time he opens his mouth.  Besides, like all criminal enterprises, moneychanging is traditionally done in the darkness and shadows.  24-hour cable news has brought some of these folks out into the light but this is a recent development that runs counter to the old saying "men love darkness rather than light because their deeds are evil."  Here are two updates that demonstrate just how unreformed the banksters really are and what they have been up to when we weren't looking.

Thursday, September 20, 2012

What a miserable summer

Everyone here in Minnesota talks about the weather—it is a very important topic.  But you are not allowed to complain about it—after all, you can plan for bad weather but you can't change it.  But since we humans have changed the climate, I guess it's OK to complain about this bizarre summer and wonder, Is this the new normal?

And it's not over.  Take the Russian wildfires.  After 2010, the idea that such a disaster could be topped was unthinkable.  Now it looks like that was nothing.  Of course, we knew more about the fires back then because the smoke was blowing into Moscow and the wheat crop was burning.  This time, the fires are in Siberia and we know about them mostly from satellite photographs.

Wednesday, September 19, 2012

Producers and Predators

Watching the Republicans hijack to the Producer-Predator dichotomy reminds me of when they hijacked the "rising tide lifts all boats" line of the Progressives.  In that case, the original argument was that rising incomes for the most poorly paid of us would lift the incomes of everyone in the social strata above them.  This is the argument of Henry Ford and the Keynesians in addition to Jack Kennedy who is often credited with the idea.  When it was hijacked, it came to mean that a rising yacht would lift all tides and that the most thoroughly discredited economic idea in history—trickle down—was actually not as insane as it sounded.

So now we have Republicans talking without any irony about producers-parasites.  The very idea that some retiree living on Social Security is a moocher is insane. MOST people in that social stratum lived their whole lives as Producers doing things like pick vegetables in the heat of California's Imperial Valley.  So an idea that started out as a description of the differing economic strategies of farmers and bankers has been appropriated by mega-thief Romney to argue that old people just scraping by are actually more harmful to the real economy than a vandal capitalist like himself.  And that is what their argument is—a cynical attempt to distract folks from their own sins.  I am not so sure I would do this if I were them, because the Producer-Predator argument has a long and honorable history and it WILL crush these cynical bastards if it gets out.

As someone who has been writing about Producers-Predators since the 1980s when I first discovered this 19th century class analysis, I take this personally.  But I am not worried because while Producer-Predator class analysis was invented by the Producers themselves in thousands of conversations among the cheated farmers of the 19th century, producer-parasite is largely the demented musings of Ayn Rand who was light-years away from understanding the sort of productive activity it requires to keep a nation going.

Affordable solar housing

Last Monday, I wrote about a really nice home that had won a bunch of awards for energy efficiency.  It was beautiful and stunningly well-built but it probably cost at least $750,000.  So I wrote my brother asking, "Don't you have any examples of affordable energy efficiency?"

So he dug through his examples and came up with this really clever house put up by the Habitat for Humanity folks.  This is probably one of the best homes they ever built.  Modest, solid, with a HERS rating of 18 (remember, most new housing comes in at around HERS 100.)  The excuse that energy-efficient housing is too expensive took a major hit with this place.

Tuesday, September 18, 2012

Getting all the parts right

My brother is just going to love this story.  And he has dozens of similar examples to demonstrate that the kind of problem outlined below is certainly not limited to the British Isles.  At least once a week, he gets called to inspect a home with expensive new windows that have not produced the expected energy savings.  Then he gets to tell the poor homeowner that energy efficiency is the sum of many parts and the difference between cheap and expensive windows is a pretty trivial part.  In other words, they just blew a lot of money for a "cure" that doesn't cure much.

I have been following the Swedish homebuilding industry since the early 1980s and even back them, their skills and techniques were probably the best in the world.  The key to understanding their approach is they make houses as absolutely airtight as possible and then manage the necessary ventilation functions with carefully engineered air exchange equipment.  Constructing a weather-tight home and then getting it to breathe properly is a lot harder than it looks—and it looks damn difficult.

In the process of building these super-insulated homes, the Swedes have spun off small industries like NIBE that make the parts to enable super-insulation.  Naturally, these industries want to grow beyond the borders of Sweden / Scandinavia.  Problem here is, a part designed to work in a well engineered super-insulated home is forced to operate in a limp-down mode when the structure is badly-insulated or leaks air where it should not.  In a super-insulated home that performs as planned, the heat recovery systems by NIBE probably work magnificently.  But as can be seen below, GB builders still have to make serious improvements in technique before they're ready for such sophisticated heat recovery systems.  One of the signs that the builders believed they were better than they really are, many of the NIBE units were undersized.

What a freaking mess.  And yet one more example that it takes more than good intentions to build green homes.

Monday, September 17, 2012

Melting the Arctic ice

While it is fun to slap around the climate change denialists, this friends is getting scary.  Nothing good ever happens when the jet stream gets a kink in it.  Two winters ago, a kink brought us mega piles of snow.  Last winter, we hardly had a winter at all—70°F in freaking March.  One thing we have learned about climate change—weather patterns are hard to predict but we can always predict something will be very extreme.

Sunday, September 16, 2012

Useless drugs

This is the sort of story that makes us Institutionalists nod sagely.  It turns out that when it comes to drugs, the French and we have many of the same problems.  This might seem counterintuitive.  After all, the French have what many low-information voters would call "socialized" medicine and we have the purest for-profit schemes imaginable.  Yet this seeming "huge" difference is overwhelmed by the similarities such as: There is a finite number of ills that drugs can actually treat effectively; or, Doctors everywhere are seduced by the same claims for a drug's effectiveness; or, Patients in pain will demand their doctors "do something" even if there really is nothing that can be done.

The first story is from RT and the second from the Guardian.  There isn't much difference between them but the similarity is that both seem somewhat surprised that two top members of the French state medical bureaucracy would come out swinging against drugs that most doctors around the world consider standards (such as statins).  I am especially impressed that they came to a conclusion I hold which is that drug making is “the most lucrative, most cynical and least ethical of all the industries.” (Note: at least it's still an industry!  Of course, if 50% of their output is useless, they must have passed some bar for membership in the Leisure Classes.)

Friday, September 14, 2012

The real costs of economic backwardness

If anyone wonders why USA cannot afford to fix its crumbling infrastructure, cope with climate change and Peak oil, and all the other things that need doing, we need only look at what we ARE paying for—pirates who justify their looting with junk economics.

Thursday, September 13, 2012

Climate change news update

If it seemed like this summer was crazy hot, that's because it was.  The national climatic data center has the scorecard.

Soy, the other green gold

Growing soybeans here in the Corn Belt has long been the "other" crop.  It can be planted after all the other crops because it requires a shorter growing season.  It is often rotated with corn because soybeans can "fix" nitrogen in the soil.  Corn consumes nitrogen at furious rates so a soy rotation is considered good land management.  The drought that has so devastated the corn crop is of course, doing in a lot of beans.

Soybeans have an interesting history in USA.  It is a non-native crop that exists because someone promoted the heck out of it.  In this case, that someone was Henry Ford who promised to use them in the production of his cars.  Soy CAN be turned into plastic so this promise was largely kept.  Over the years, clever scientists have found a wide range of useful products so the soybeans have grown from a niche crop to one that has enormous economic implications.

Wednesday, September 12, 2012

Getting significant power from wind

Ever since I lived in North Dakota in the mid 1960s, I have fervently believed we could power our world with wind—there is something about the winds out there that makes you believe the winds are infinite.  Of course, they are not—any more than the fish in the sea are infinite.

The wind boosters in ND claimed that they could generate more than enough electricity to power the whole nation.  "We are the Saudi Arabia of wind" they would say.  Of course, these were projections done with back-of-the-envelope calculations.  What else could they do?  At the time, no one was building commercial-quality wind turbines so there was a lack of real-world expertise.  But even now with plenty of real-world expertise, the idea still resounds—yes we can do this.

So now we have an academic making much better back-of-the-envelope calculations that say, yes we can power ourselves with wind.  He crunches some interesting numbers.  4,000,000 five megawatt wind turbines is a BIG number.  But his study does get at the biggest unanswered question to date which is, "What happens to winds when you extract multi-terawatts of energy from the atmosphere?"  It obviously changes something.  In northern Minnesota, we have the forested NE where the winds barely blow and the wide-open Red River Valley in the NW where serious winds blow all the time.  This is a question worth asking, "If we actually can harvest so much energy from the atmosphere, will this slow down the progression of weather patterns so a gentle 1" rain becomes an 8" flash-flood causing downpour?"  AND "If there is a limit to how much energy we can extract from the winds, what is that limit?

Tuesday, September 11, 2012

ECB buys bonds

There is something almost touching about the furor surrounding the bond purchases by the European Central Bank (ECB).  Unless governments want to nationalize the world's central banks or something equally radical, folks like Draghi have very few options these days if they want to save their system.  There are a lot of strategies that can be employed but what Draghi is doing is "monetizing" the debts.  Since no one can pay these debts, the only solution they can imagine it creating new money to pay off old debts.

Whether monetizing debt is a useful strategy is the subject of good debates.  But when the conditions facing the country are dire enough, it can usually be done with little fuss.  The Fed monetized debt many times during World War II—Mariner Eccles was a big supporter of the practice.  But whenever you create a new supply of money, it supposedly dilutes the value of the money already in circulation.  This horrifies people who already have money and so most of Eccles strategies were effectively outlawed in the 1950s.

Right now, there is way too little money in widespread circulation—everyone is broke or worse, in debt.  Done right, the system could absorb a huge infusion of new cash without adverse economic effects.  But since the whole economics profession has been taught that anything that could possibly lead to inflation is unspeakably evil, even such minor moves like Draghi's are seem a potentially catastrophic.  The reaction in the German press borders on insane.  As Krugman says, the Germans are badly taught about their economic history.  They remember the lessons of the hyperinflation of 1923 but completely forget the austerity-mongers like Heinrich BrĂ¼ning of 1930-1932.

The Euro crises truly is an example of a simple problem made complex by some long-discredited ideas about how money works.  It is sad that these bad ideas are still ruining millions of lives.

Monday, September 10, 2012

Getting it right

One of the reasons I know there are no easy ways to energy efficiency is because I know how much work it is to pull off.  My brother has been trying to get his arms around the problems of how to make a dwelling provide shelter with the least amount of energy inputs since at least the 1980s.  Last week, he got the news that a project he's been involved with was named the first Department of Energy Challenge Home in the country.

Legitimate questions could be asked as to why it took until 2012 for DOE to finally find a way to honor such efforts.  It could also be asked just how relevant a 4500 square foot home is to the need for building a nation filled with energy-efficient homes.  I won't even speculate on why DOE has been sleeping at the switch, but I have NO problem with letting rich folks pay to prove new technologies.

Here's how he explained this project to me.

Sunday, September 9, 2012

The Hungarians are causing trouble for outside authority (again)

One of the most powerful memories of my childhood was the invasion of Hungary by the Soviet Union / Warsaw Pact in 1956.  Because I had become such an annoying little pest who drove the adults crazy by constantly asking "Why?" about just everything, my parents had purchased a set of encyclopedias to get some peace.  The first update volume arrived in 1957.  In it was a picture of a 12-year-old Hungarian boy toting an assault rifle and looking very scared / determined / serious.  I remember looking at that picture many, many times wondering if I could possibly ever be that brave / angry.  After all, the USSR had sent tanks to quell the Hungarian uprising.

That kid would now be about 68 if he survived.  And while there aren't tanks in the streets of Budapest these days, Hungary is still dealing with some very ugly international bullies.  This time, they are from Monsanto and the IMF but the resentment and anger these bullies inspire seems quite similar.  And while the Hungarians probably understand their current struggles may as futile as a boy with a rifle against tanks, this apparently has not slowed them down (much.)

Saturday, September 8, 2012

Oh those Dems

As someone who has been a pretty active member of the Democratic-Farmer-Labor Party here in Minnesota for most of my adult life, I couldn't help watching parts of the Democratic national convention.  But let's be honest here—I didn't vote for either Obama or Al Franken in 2008 and stopped going to party meetings soon thereafter.  I never expected much out of the Obama administration when their economics wing was taken over by Lawrence Summers, so I cannot say I am disappointed even though they can still surprise me with the sheer goofiness of their economic decisions.

Some random observations of an aging former Party Member

I still enjoy the speechmaking.  As someone who sat through WAY too many long church services as a kid, I had to listen to a lot of sermons—which are similar in many ways to political speech.  So I became an aficionado of the speaking arts.  Good speakers literally can make an hour seem like 10 minutes—an amazing gift to the listener.  Bad speakers can turn 10 minutes into an ordeal.  DFL politics in Minnesota has had some amazing public speakers—Eugene McCarthy, Hubert Humphrey, Paul Wellstone to name but three.  One of the reasons I have been a DFLer all these years is because we always had the better public speakers.  So no matter what what I have thought of Bill Clinton over the years, I sat in awe at his speech.  I had written off his $250,000 speaking fees as pure corruption and payback for his role in the repeal of Glass-Steagall.  After Wednesday night, I am at least partially persuaded that he earns those fees.

The Obama administration has an absolutely atrocious record on the economy, war and peace, the rule of law and the banksters, etc.  Nevertheless, they do have a few accomplishments to tout.  And that filled up the time.  If the spin business can turn BP into a savior of the Gulf of Mexico, it shouldn't be too hard to find enough good things in four years to construct a 20 minute speech.

What I was really looking for were signs the the Dems have gotten serious about SOLVING the nation's problems.  And aside from Obama saying the "global warming is not a hoax" I saw no sign whatsoever that they have any idea how big our problems are.  The problem with folks who glorify speechmaking is that they confuse talking about our serious dilemmas and the work required to solve them.  And the essential manifestation of this confusion is that they cannot seem to understand the difference between the cost-free and the necessary $Trillion solutions.

Of course, there was barely an encouraging word about what the Dems would do with the banksters / their campaign contributors.  Robert Rubin did fall into a swimming pool—easily the best news of the week on that front.  Bob was in Charlotte to make sure the Dems didn't accidentally wander off the economics reservation.  He had reasons to worry.  Elizabeth Warren would put a serious crimp in the thieving ways of guys like Rubin and she isn't even remotely radical on the subject of financial regulation.

Saturday toons 8 SEP 12


Friday, September 7, 2012

The Battle of Borodino 200 years on

Beginning at 5:00 am, September 7, 1812, an epic battle was fought by the Russian Army in an attempt to stop Napoleon's invasion of their country.  12 hours later, the battle was over and in excess of 75,000 lay dead—way over half of them Russians (45,000-30,000 French).  Some would say the French had prevailed because they were in fact able to push on to Moscow.  But the French were a LONG way from home and supplies so the Battle of Borodino really was one of those moments when history changed directions.  It was the beginning of the end for Napoleon and with it, the French experiment with republicanism.  Europe's nobility would get a reprieve that lasted until the end of World War I.

The Russians see this event in a much more heroic light than history might allow.  But this is understandable too.  Leo Tolstoy made this battle the centerpiece of his War and Peace and it's the subject of Piotr Ilich Tchaikovsky's 1812 Overture.  Those triumphant choirs and pealing bells in the Finale of 1812 do not teach about defeat.  In Russian version of their history, this was perhaps their greatest triumph until Kursk when the armies of Hitler got to find out for themselves just how utterly stupid it is to invade Russia.

Thursday, September 6, 2012

A biofuels breakthrough?

Generally speaking, I am not much of a fan of biofuels.  The only example of a commercial-scale biofuel is ethanol and right now, it requires valuable food inputs such as corn or sugar-cane to produce.  Even worse, there is little evidence that the energy contained in such ethanol is actually greater than the energy it takes to make it.  But just because no current biofuel makes much thermodynamic or economic sense does not mean that no biofuel will ever make economic sense.

And so I am intrigued by this bulletin out of M.I.T. which seems to indicate that it is possible to turn carbon dioxide or garbage into isobutanol using a bioengineered bug.  I make no claims that this line of research will ever lead to a useful product, but I DO understand why folks want to pursue it.  Many things (airplanes, boats, farm equipment) require liquid fuels so there's a huge incentive to make something like this work.

Wednesday, September 5, 2012

No more cheap food?

It is amazing how fragile the global food supply actually is.  That was the stunning conclusion I reached driving past all those miles of ruined Iowa cornfields at the end of July.  There were literally millions of corn plants—the most ever planted in Iowa history.  They had been planted in meticulous rows and in spite of a record drought, were still pretty green to look at.  Miraculous genetics and the record-breaking efforts of history's finest farmers were lost in two weeks because there were no rains when the plants needed to pollinate.  Of course, crops have been lost to random events like hailstorms throughout history—it was not especially rare to see a beautiful crop wiped out in one night.  What is new is how often these overnight disasters have become.  And because these once-random events have become so widespread and commonplace, discussions of Peak Food must now be taken seriously.

Tuesday, September 4, 2012

It's fall, and the problems have not disappeared

One of the things I notice about covering the subjects of the real economy, is that there's not a lot of folks who understand this subject—no matter how hard I try to make it understandable.  Educated people take pride in their technological illiteracy.  The technologically literate are often so politically primitive you just shake your head in wonder.  Here's the deal—everyone who likes to work on big and complex projects should be a New Deal Democrat and a Keynesian.  Why?  Because private, for-profit finance capitalism simply cannot afford those big projects, and even if they could, they don't have the necessary imagination.  That takes governments who don't care if a venture turns a profit or not.  You think for-profit rocketry will ever build a Saturn 5?  Or the interstate highway system?

But...look around you.  Find some working engineers.  Chances are they will identify themselves as Republican or Libertarian—precisely the sort of politics that will make it impossible to get decent jobs.  Of course, you cannot blame them—the Democrats haven't been New Deal Keynesians for a long time either.  But they should be using their considerable clout (they run everything important, after all) to advance their economic interests.  But nooooo.  They are still reading Ayn Rand. (sheesh)

Anyway, the traffic at real economics goes down during the summer.  As born worrywart, I have dark thoughts about such events even though I take comfort that my loyal readers are roughly double what they were last summer.  Slow summers mean my sources dry up too.  Europe takes the month of August off.

It is good to take time off.  But the big problems have not gone away.  There's this little matter of whether our sources of food are being destroyed by climate change. And then there are those financial turds dropped by the banksters.  So long as we are diverting our resources to loan sharks, there is exactly zero chance of fixing the real economy.  Michael Lewis writes here about the millstone the banksters have hung around the necks of the Irish.

Small steps

These days I am involved in some video productions that concentrate on how well Minnesota agriculture adapts to new circumstances.  So far we have discovered that the human resources in rural Minnesota are really quite amazing.  Which is good because outsiders, no matter how well intentioned or motivated, are always a couple of chapters behind when it comes to understanding the nuances of living on the land.

The most interesting nuance is that agricultural methods must change with circumstances and those can change dramatically in short distances.  Making decisions for large areas is usually done badly.  In short, if you want to renew and update agriculture you need folks that have grown up around the problems and are willing to innovate.  Such folks are very rare—USA probably has more lawyers than working farmers.  Rather than treating these folks as ignorant peasants, it is probably a good idea to think of them as rare talents who must solve some of the difficult problems facing humanity.

Here are some interesting thoughts on growing our daily bread from Sweden.  In a country that has abundant water resources (usually) Gauffin discusses grain in terms of "virtual water."  I shot some video back in June of a Minnesota dairy farm that is almost the same size as the one written about below.


Monday, September 3, 2012

Another depressing Labor Day

Labor Day is an annual reminder in USA of how little power unions actually have.  Part of this is due to the historical reality that labor has often been powerless—think about slavery as a good example.  Stealing people's labor is at least as old as recorded history and since those who are having their labor stolen occasionally object, much of the cultural and police power in societies has been used to repress the slaves and protect the various methods of theft.  As a result, Labor shows up at the social conflict over economics severely hobbled.

So while it is easy to forgive the various Labor movements of history for being clueless or inept, there are two modern-day examples of Labor bungling that are actually quite unforgivable:

1) The teacher's unions and their protection of rank incompetence.  Historically, one of the primary strategies of unions (and their guild predecessors) was to obtain and maintain a monopoly on skills.  For example, a union construction crew might cost more per day, but because they were better at what they did, the total job would cost less because there were fewer foul-ups and delays.  Teacher's unions, on the other hand, employ the language and strategies of a skills monopoly while creating schools so bad, they are literally an embarrassment to the rest of the educated world.  In doing so, teacher's unions have helped ruin the reputation of all unions.

2) The decision by union pension funds to participate in leveraged buyouts and other examples of union-busting.  When I first started to write about the strategies that the Producing Classes could employ to get a better economic deal in the 1980s, it dawned on me that IF unions used the power they potentially had as owners of capital through their pension funds, they could replace the old-fashioned strikes with proxy battles.  Well, that did not happen.  Instead, union pension funds joined forces with the likes of Mitt Romney and Bain Capital.  Matt Taibbi absolutely blasted the Mittster, Bain, and private equity in Rolling Stone the other day and was taken to task for it by those who noted (correctly) that private equity could not have existed without the support of union pensions.  (See also: The Predator Class nominates one of its own)
Taibbi took the time to answer one important (criticism) on his blog today. A reader e-mailed him saying that he has misunderstood the private equity industry — "There is a reason why many of PE's biggest investors are unions and pension funds . . . who have benefitted more than once from private equity deals," the reader wrote.

Here's part of Taibbi's response (from Rolling Stone's Taibblog):

This is a valid point. It is true, many of the biggest investors in private equity deals are pension funds and workers' unions. I think this is unfortunate, and I know for a fact that many union leaders discourage unions from investing in private equity takeovers. But it's an undeniable fact that unions and pension funds do sometimes make money on private equity deals.

But what people need to understand about private equity firms like Bain is that they are not in the business of turning around companies and creating jobs. The unions and pension funds that invested in those deals did not do so to rescue companies.

If you invest in a Bain or a Carlyle or a KKR takeover deal, you’re not betting on the future success of whatever company they took over. You're betting on the ability of those firms to make money on the deal, which may – or, just as importantly, may not – involve turning the target company around. more
As someone who believes that unions are an economic necessity, I am furious at what they have become.  Yet I hesitate to criticize them because I also know they have powerful enemies who need no help from me.  Even so, by now there should be a pretty good set of plans for exercising the power they do have.  And in that set of plans should be two VERY important rules: One, you never use union power to protect shoddiness or incompetence; and Two, you never, EVER, give money to folks who promise to pay you back with the proceeds from piracy.

If unions do not represent the interests of the Producing Classes, they are actually worse than useless.  And one of the primary reasons they fail at representation is that they stopped teaching the Producer-Predator class analysis invented by their great grandparents.  They can't fight the good fight because they no longer seem to remember what the fight is about.

So to my grandfather who was such a loyal union man, I say thanks for all that you taught me from beyond the grave by revealing your reading habits through my mother.  Happy Labor Day!  These are dark days for Labor but we Producers STILL have the better arguments for how an economy should be organized.  This could be an interesting Fall because the debate over finance / pirate capitalism will form the background for a Presidential election.  It is TIME to seize the intellectual high ground again!

Sunday, September 2, 2012

A new demonstration of climate change

A small sailboat (a 31 year-old sloop with a tiller!) has navigated the M'Clure Strait—the N.W. Passage is now open to pleasure craft.  Well, an exceptionally seaworthy Swedish-built yacht.  There's a great deal of distilled boatbuilding wisdom in the Viking lands and boats that cannot weather bad conditions don't get sailed much.

Even so, reading that they were subject to 55 kph winds and 12 foot seas in waters filled with sharp ice shards means they were exposed to some of the nastiest conditions on the open ocean.  A great boat crewed by some serious sailors!

Solar's growing pains

One of Veblen's great insights was that science and applied science (technology) must advance simultaneously.  If one side or the other gets too far ahead, it will stagnate until the other catches up.  Apparently, this requirement for balance is also present in giant technology projects.  The German ability to capture solar power, it seems, has now gotten ahead of its ability to spread it around on a grid.

Saturday, September 1, 2012

The old economy vs. environment ideas live on

If ever the ignorance of the real economy needed a perfect example, Romney's line about being more concerned about families than he is about the rising oceans will work just fine.  The reason that paragraph in his RNC acceptance speech was so thunderingly clueless is that these two issues are inseparably linked.  So while the shock and outrage over this lunatic crack circled the globe last night, some heavy "thinkers" who want to believe that someone as rich as Romney must have a flicker of intelligence in there somewhere, came up with a version of "the Mittster has a point, ya know."

So here is Blodget over at Business Insider essentially saying that Mitt's line probably played well in front of focus groups.  Of course, he gives the game away when it becomes clear HE doesn't understand the linkage between environmental change and economic prosperity either.  He is stuck in some "Save the Baby Seals" version of environmentalism so he can "understand" why people give priority to their personal lives as opposed to a distant threat.  Considering that Blodget has managed to sell his "deep" thoughts for serious money over the years, this "profound" level of cluelessness is actually quite shocking.