Monday, January 16, 2017

The new economics of solar power


My partner in life likes to watch the British costume dramas that are so popular on PBS. Not that long ago, she started watching a 6-part mini-series called Wolf Hall. This is another retelling of the rise of Henry VIII, only this time through the eyes of Thomas Cromwell—who is usually cast as a petty schemer in this sordid tale. I am not certain why the Brits are so fascinated by the story of the founder of the Church of England who was in fact, a serial killer. But they are. So this vile little tale has been made into so many films and television specials that to make another version, they needed a new angle. So Cromwell as a good guy was their gimmick of choice.

In this market, the over-the-air high-definition broadcasts by PBS have easily the best pictures available—just short of blu-ray in fact. So when partner began to rave about the picture quality of Wolf Hall, I became curious enough to watch a couple of episodes. The great advantage of the latest video gear is its ability to capture high-quality shots in low light—something that was being employed to full advantage. And the makers of Wolf Hall have not missed a trick and they do it so well, it looks effortless instead of the product of years of perfecting highly sensitive light capture. The interior shots look realistically dark and foreboding without any noticeable noise or loss of detail.

After drooling over the amazing photography for awhile, I soon snapped back to the reality that I was watching, once again, the ugly story of Henry VIII and Cromwell. The photographic reality only enhanced the shallow, vain, arrogant, and violent stupidity of the British upper classes. But while I was fuming about wasting some more of my remaining life on earth on the story of these truly vile creatures, I noticed something that almost inspired hope. The high video quality also showed some seriously fine details of that era's buildings.

So the lesson of the evening was that even though politicians and the members of the upper classes may be relentlessly stupid and boring people, the Producers of Henry VIII's day could make things that can still take your breath away. And the reason this gives me hope is that even though we elected a climate-change denier as President this late in the game, it probably won't matter. And the reason it won't matter is because solving climate change is a Producer Class assignment and as we can see, the Producers are still making miracles happen. Elon Musk has now demonstrated that electric cars can be objectively better than any fossil-fueled IC vehicle, and soon it will be obvious that solar is the low-cost energy option. Turns out you don't have to be concerned for mother earth, or lobby for new carbon taxes, or have your awareness raised. All you need to be is cheap. And that most of us can master. What follows is a Bloomberg account of the new economics of solar power.

Solar Could Beat Coal to Become the Cheapest Power on Earth

Global average solar cost may fall below coal within 10 years
Countries from Saudi Arabia to Mexico planning auctions

by Jessica Shankleman and Chris Martin, January 3, 2017

Solar power is now cheaper than coal in some parts of the world. In less than a decade, it’s likely to be the lowest-cost option almost everywhere.

In 2016, countries from Chile to the United Arab Emirates broke records with deals to generate electricity from sunshine for less than 3 cents a kilowatt-hour, half the average global cost of coal power. Now, Saudi Arabia, Jordan and Mexico are planning auctions and tenders for this year, aiming to drop prices even further. Taking advantage: Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experienced in Europe and now seek new markets abroad as subsidies dry up at home.

Since 2009, solar prices are down 62 percent, with every part of the supply chain trimming costs. That’s help cut risk premiums on bank loans, and pushed manufacturing capacity to record levels. By 2025, solar may be cheaper than using coal on average globally, according to Bloomberg New Energy Finance.

“These are game-changing numbers, and it’s becoming normal in more and more markets," said Adnan Amin, International Renewable Energy Agency ’s director general, an Abu Dhabi-based intergovernmental group. "Every time you double capacity, you reduce the price by 20 percent.”

Better technology has been key in boosting the industry, from the use of diamond-wire saws that more efficiently cut wafers to better cells that provide more spark from the same amount of sun. It’s also driven by economies of scale and manufacturing experience since the solar boom started more than a decade ago, giving the industry an increasing edge in the competition with fossil fuels.

The average 1 megawatt-plus ground mounted solar system will cost 73 cents a watt by 2025 compared with $1.14 now, a 36 percent drop, said Jenny Chase, head of solar analysis for New Energy Finance.

That’s in step with other forecasts.
  • GTM Research expects some parts of the U.S. Southwest approaching $1 a watt today, and may drop as low as 75 cents in 2021, according to its analyst MJ Shiao.
  • The U.S. Energy Department’s National Renewable Energy Lab expects costs of about $1.20 a watt now declining to $1 by 2020. By 2030, current technology will squeeze out most potential savings, said Donald Chung, a senior project leader.
  • The International Energy Agency expects utility-scale generation costs to fall by another 25 percent on average in the next five years.
  • The International Renewable Energy Agency anticipates a further drop of 43 percent to 65 percent for solar costs by 2025. That would bring to 84 percent the cumulative decline since 2009.
The solar supply chain is experiencing “a Wal-Mart effect” from higher volumes and lower margins, according to Sami Khoreibi, founder and chief executive officer of Enviromena Power Systems, an Abu Dhabi-based developer.

The speed at which the price of solar will drop below coal varies in each country. Places that import coal or tax polluters with a carbon price, such as Europe and Brazil, will see a crossover in the 2020s, if not before. Countries with large domestic coal reserves such as India and China will probably take longer.

Coal’s Rebuttal

Coal industry officials point out that cost comparisons involving renewables don’t take into account the need to maintain backup supplies that can work when the sun doesn’t shine or wind doesn’t blow. When those other expenses are included, coal looks more economical, even around 2035, said Benjamin Sporton, chief executive officer of the World Coal Association.

“All advanced economies demand full-time electricity,” Sporton said. “Wind and solar can only generate part-time, intermittent electricity. While some renewable technologies have achieved significant cost reductions in recent years, it’s important to look at total system costs.”

Even so, solar’s plunge in price is starting to make the technology a plausible competitor.

In China, the biggest solar market, will see costs falling below coal by 2030, according to New Energy Finance. The country has surpassed Germany as the nation with the most installed solar capacity as the government seeks to increase use to cut carbon emissions and boost home consumption of clean energy. Yet curtailment remains a problem, particularly in sunnier parts of the country as congestion on the grid forces some solar plants to switch off.

Sunbelt countries are leading the way in cutting costs, though there’s more to it than just the weather. The use of auctions to award power-purchase contracts is forcing energy companies to compete with each other to lower costs.

An August auction in Chile yielded a contract for 2.91 cents a kilowatt-hour. In September, a United Arab Emirates auction grabbed headlines with a bid of 2.42 cents a kilowatt-hour. Developers have been emboldened to submit lower bids by expectations that the cost of the technology will continue to fall.

“We’re seeing a new reality where solar is the lowest-cost source of energy, and I don’t see an end in sight in terms of the decline in costs,” said Enviromena’s Khoreibi.  more

Monday, January 9, 2017

On the cultural aspects of religious practice


Last Monday, I finally got to see the Martin Luther / Reformation exhibit that is currently on display at the Minneapolis Institute of Art.  We had tickets a few weeks back but we rescheduled due to weather concerns—something that just happens in Minnesota. In the meantime, the book describing the importance of the collection had arrived and I made a stab at reading it. There were few surprises as I have been seriously pursuing the question, since the 1980s, of how the various state (Lutheran) churches of the Nordic countries influenced their uniquely progressive political and social development. The motor for this passion is self-discovery—as the son of a Lutheran clergyman who was also an agrarian progressive, I was taking on two targets simultaneously. Besides, the question IS interesting—how and why did the Nordic nations become models of enlightened social and political organization? This question is especially interesting since the starting cultural / religious position was Viking.

The short answer is that for the most part, the state churches stayed out of the way. Lutherans never persecuted science—in fact, the reason Descartes died in Sweden is because he was offered shelter from religious persecution. When Sweden decided to get out of the war-making business in 1814, the Church of Sweden quite quickly fell into line. The Church was a supporter when Sweden decided to create their welfare state—although by the 1930s, the influence of the church was mainly confined to rural areas where the clergy taught the principles of petty piety.

But there were parts of Dr. Martin's cultural uprising that provided a solid base for social expansion. The most notable was his insistence that believers should be able to read and understand their sacred documents. In honor of the 500 anniversary of Protestantism, the Germans have recently published a new edition of Luther's translation of the Bible. Apparently, the "improvement" of the latest version is the inclusion of more 16th-century text. (Fans of the King James Bible will understand.) It is almost impossible to overstate the social transformation that came to a culture when reading became an act of the new faith and debating the finer theological points a demonstration of one's serious intent. The highlight of the show at MIA was the Luther Bible with Cranach woodcut illustrations. This Bible first appeared in 1534 but the one on display is from 1541—87 years after the publication of the Gutenberg Bible (1454).  Not surprisingly, the Luther Bible is absolutely gorgeous viewed simply as a printing project—by Luther's time printing was pretty well understood.

The MIA show is something of an odd duck.  Lutherans have not normally junked up their churches with paintings and statuary. That sort of art was put aside from the very beginning. Trust me, Cranach the Elder may have made clever woodcuts for printing, but no one will ever confuse him with Michelangelo (who was working at the same time.) Lutheran Churches can be stunningly innovative, very modern, and often beautiful. (Some favorites include the Rock Church in Helsinki, the Gruntvig Church in Copenhagen, the Christ Chapel at Gustavus Adolphus College in St. Peter MN, and the Saarinen church in south Minneapolis.) If you follow the links, you will notice that most of these churches brag about their acoustics. Which leads to the subject of "Lutheran" art.

When the big churches of Northern Europe switched from Catholic to Protestant, the remodeling job followed a standard procedure. 1) Remove the painting and statuary, the stained glass windows, and bejeweled relics, 2) Paint the interiors white (mostly) because the new faithful would have to read during devout observances so bright interiors were important; 3) Build a fancy new pulpit because the sermon was now the centerpiece of the service; and 4) Install a gigantic pipe organ because music was now a highly approved practice of the faith. Luther himself wrote music. Besides, it's great fun to sing along to a big organ shaking the rafters.

The economic role the pipe organ industry that sprouted in the wake of the Protestant Reformation cannot be overstated. The precision necessary to make those things work was phenomenal. Not surprisingly, any region that made pipe organs could easily understand the important parts of industrial technology. Other regions had other technological precursors of course, and the pipe organ shared the limelight with printing, but if the goal is precision manufacture, it's hard to beat pipe organs for a starting point.

If music and singing was Lutheran art form #1, printing was certainly #1A. Without printing, the Reformation was roughly as possible as Amazon.com without the internet. Printing runs second only to music because calling printing an art form is a bigger definition stretch. That said, most of the books on display at MIA were stunningly beautiful.

The third manifestation of Lutheran art didn't really surface until the 20th century. Scandinavian Modern was largely a social democratic movement that claimed everyone was entitled to have beautiful things. And that the best way to accomplish this goal was factories that mass-produced goods would hire artists to ensure that these goods were as beautiful as possible while still being inexpensive due to mass production. Beautiful things for everyday use. Luther would have so approved—he was very democratic. Industrial design may not have been a Lutheran invention, but Lutes seem to be especially good at it.

And of course, the highest flowering of Lutheran "art" are the successful societies. Any movement that starts with the sentence, "Out of love for the truth and the desire to bring it to light" should logically end with societies where corruption is almost unheard of. The top three countries in the Transparency International's corruption index are Denmark, Finland, and Sweden—countries that have been constitutionally Lutheran for centuries. Technological sophistication is utterly dependent on honesty measured in Ångstroms. Turns out honesty has measurable economic value. And the best form of honesty comes not from people who feel forced to be honest, it comes from people who have fallen in love with the truth—and the methods for finding truth.

I am happy I got to see the collection of early Lutheran artifacts at MIA. I am not sure an art museum is an appropriate venue for these items because of the frosty relationship Protestants had with art in general, but whatever. I still believe if you really want to see Lutheran art in all its glory, watch a Christmas concert from St. Olaf College (or Luther, or Concordia.) These things are run every year on PBS.

Of course, the real reason why any of this is still important is that the same value set (universal literacy, honesty, precision, and a love of beauty) that made the Lutheran nations so successful will be necessary to create the sustainable future. Not surprisingly, those nations already lead the way in implementing a Green agenda.

Saturday, January 7, 2017

Trump and the Art of the Strongman

The elites who run the Democratic Party in USA are making two grievous errors. 1) They are seizing on any number of external reasons for why they were routed in the November 2016 elections. Not just for the White House, but in the Senate, Congress, and at the state level. 2) They are constructing a false image of Donald Trump that insists Trump is an narcissistic bigot and is therefore incompetent. It is dangerous to suppose that narcissism and bigotry necessarily result in incompetence. So far, I would say that Trump has been brilliant and ruthless in telling people want they want to hear and appealing to the worst demons of their nature, in order to achieve his political goals. Ian Welsh has been attracting much criticism for his honest appraisal of Trump, and his warning to take Trump very, very seriously.

Democrats are especially going to find it difficult to respond to Trump effectively as Trump demonstrates the fallacy of many neo-liberal economic assumptions and policies, such as free trade.

Trump and the Art of the Strongman

by Ian Welsh
January 6, 2017

Sunday, January 1, 2017

HAWB – Creating America’s Amber Waves of Grain - How America Was Built




It wasn’t really the “captains of industry” like Henry Ford or Harvey Firestone or Bill Gates or Steve Jobs. And it certainly wasn’t the filthy rich financiers of Wall Street like J.P. Morgan or Walter Wriston or Jimmie Dimon. If you want to know the story of how America was built, look at the scientists and the engineers. Like the virtually unknown and forgotten researchers and agronomists of the United States Department of Agriculture. America’s amber waves of grain from sea to shining sea is the story of these government employees as much as anyone else’s.

From the 1840s to the 1930, US production of wheat more than tripled in productivity. This remarkable progress is usually attributed to the replacement of animal power by mechanized agricultural equipment: the thresher, the binder, steam and then gas tractors, and the combine.

But this is actually only half the story. The other half involves the patient and methodical search and breeding of wheat strains to meet two goals. First, to find cultivars of wheat more resistant to diseases and pests. Second, to expand the areas in which wheat could be grown by finding varieties better suited to the harsher climates and conditions of the Great Plains and Pacific Coast states.

This work was largely accomplished by scientists, agronomists, and breeders working in the laboratories and experimental farms of the United States Department of Agriculture and the various state universities which had been established by federal land grants. According to economists Alan L. Olmstead and Paul W. Rhode, “biological innovations roughly equal[ed] the importance of mechanical advances.” [1]

This history contradicts  the conservative mythology of brave private entrepreneurs triumphing over the deadening hand of government interference in the economy. The discussion and debates in the Constitutional Convention of May 1787 show that “the Founders fully intended to create a national government with broad and far-reaching powers to ensure that all economic activity was channeled and directed to national development and the promotion of the general welfare.”

The history of agriculture in America shows how mundane, practical politics is steered to achieve the explicit Constitutional mandate to promote the General Welfare:

May 1862: An Act of Congress creates the Department of Agriculture:
There shall be at the seat of government a Department of Agriculture, the general design and duties of which shall be to acquire and to diffuse among the people of the United States useful information on subjects connected with agriculture, rural development, aquaculture, and human nutrition, in the most general and comprehensive sense of those terms, and to procure, propagate, and distribute among the people new and valuable seeds and plants.
July 1862: The Morrill Land-Grant Act grants 30,000 acres of federal land to each state to fund the construction and  “endowment, support, and maintenance of at least one college where the leading object shall be, without excluding other scientific and classical studies and including military tactics, to teach such branches of learning as are related to agriculture and the mechanic arts….”

March 1887: The Hatch Act provides funding for the states to create and operate agricultural experiment stations for scientific agricultural research.

May 1914: The Smith–Lever Act of 1914 provides federal funding for each state to create a cooperative extension service, sending agents of the land-grant universities to every county of every state to disseminate and help apply the latest advances in agricultural science.

Sunday, December 25, 2016

Good tidings of great joy, which shall be to ALL people



Christmas as the divine reminder of the value of equality:

Luke 2:
[8] And there were in the same country shepherds abiding in the field, keeping watch over their flock by night. [9] And, lo, the angel of the Lord came upon them, and the glory of the Lord shone round about them: and they were sore afraid.
[10] And the angel said unto them, Fear not: for, behold, I bring you good tidings of great joy, which shall be to all people.
[11] For unto you is born this day in the city of David a Saviour, which is Christ the Lord.
[12] And this shall be a sign unto you; Ye shall find the babe wrapped in swaddling clothes, lying in a manger.
[13] And suddenly there was with the angel a multitude of the heavenly host praising God, and saying,
[14] Glory to God in the highest, and on earth peace, good will toward men.

So, when the Lord finally decides to make the big PR announcement, She doesn’t pitch it, like a Lexus or Mercedes commercial, to the people who can afford a big celebratory binge. She doesn’t announce it first to the three wise men who had been sent by rich kings able to give some of the most expensive gifts in the world. She has Her angels go and talk to the people on the lowest rung of the socio-economic ladder, some poor guys working outside at night.

This foundation story means that Christianity, no matter how much it would be corrupted (see, for example, Kevin M. Kruse, One Nation Under God: How Corporate America Invented Christian America, Basic Books, 2015) would be a religion that affirmed the value of all people, not just the leaders and elites. In fact, Christianity was first the religion of slaves in the Roman Empire. Two millennia later, when the world finally began to seriously attempt to eliminate slavery entirely, it was radical Christians who led the Abolitionist movements around the world.

Saturday, December 24, 2016

Revenge of the electric car


This documentary on the resurgence of the electric car is fascinating and extremely well done. The highlight of this doc is that it demonstrates the sort of person it takes to push a new idea into production.  It follows Robert Lutz at GM as he green-lights the Volt, Carlos Ghosn at Nissan as he bets significant company resources on the Leaf, and of course, Musk at Tesla.  The videographers are there at critical times such as when GM declares bankruptcy and Musk is down to his last $3 million (which is essentially zero in the car business.) It is must watching for anyone remotely interested in the complexities facing anyone interested in electrifying the transportation fleet. Spoiler alert—it will be a BIG job. And yes, it will only succeed if real Producers win the day.  In Detroit, Producers are called "car guys" and the Predators are called "bean counters." Lutz should know—he wrote the book.

It also covers the fallout of the financial meltdown of 2007-8—a pointed reminder that no matter how clever, car companies are in the economic hands of people who do nothing but manipulate money. Whether these manipulators are are honest or fraudulent is pretty much irrelevant because when they screw up, they can take some brilliant projects down with them.

A direct link to the Youtube page. This thing runs 90 minutes but yes, I have watched the whole thing.


Monday, December 19, 2016

Elon Musk rediscovers vertical integration


The 1980s introduced the era of "greenmail" and other forms of financial piracy.  It wasn't just the resulting destruction of essential national wealth that was so disturbing, it was the bizarre rationalizations for why this destruction did not matter. Those of us who argued for example, the economic value of tight manufacturing integration, were hopelessly overmatched. We were up against the simple argument that it was better to move production from somewhere it cost $60 / hour to a location where labor could be had for $10 a day. Against that reality, we could only offer intangibles. Unfortunately, these "intangibles" included the values and practices that that allowed our great-grandparents to build in extremely hostile environments (like Minnesota—it was -22°F / -30°C yesterday morning) while turning them into warm and comfortable habitats with lighting, abundant food, transportation systems, educational institutes, medicine, and the other requirements of life.

The pioneers who ventured out onto this bleak landscape were not exactly building something from nothing. Around here, they started out with excellent soils, abundant water supplies, trees that yielded superb lumber, and a large supply of rocks—most especially limestone. Even so, there were no instructions on how to turn these resources into the farms and villages of settled life. The tools needed to build and the skills to operate them were especially scarce.  And yet, the resulting artifacts of civilization were figured out—in many cases with unusual sophistication. All of this happened so recently that the evidence that some mighty builders had roamed this land can still be found by anyone remotely interested.  My childhood and youth was spent marveling at these accomplishments—my favorite question seemed to be, "Now how do you suppose they built that?"

What fascinated me most was the realization that almost everything I could see and touch had been created by people who had no "qualifications" to build them. There were no schools or books that taught aeronautical engineering to the Wright brothers or Glenn Curtiss, no instructions to guide Ford into making automobiles or Firestone into tires. These folks were self-taught simply because there were no other teachers available. The greatest inventions of human history were brought to us by unqualified amateurs. Because this was so nearly miraculous, the practices and work habits that allowed the utterly "unqualified" to pull off feats that most observes still consider magic became extremely important. These were the factors of production that the financial pirates so happily destroyed in their get-rich-quick schemes of the 1980s.

The act of producing electric cars in a world designed to produce internal-combustion vehicles powered by liquid fossil fuels is similar to the acts of pioneering and invention practiced by the those early industrial giants. The most charming proof of this now comes from Elon Musk who has recently discovered the same virtues of vertical integration that Henry Ford so massively demonstrated when he built his famous River Rouge factory in Dearborn Michigan. It turns out that many of the old ideas still work.

Monday, December 12, 2016

Institutional Inertia and electric cars


In theory, Institutional Inertia is completely understandable. Companies that have been in business for a few decades have developed a bunch of lovingly-held procedures and practices.  When you find something that reliably works, you tend to stick with it and use it in other applications. After all, there usually are other matters that don't work so well that can use the institutional inventiveness. Because it is the collection of reliable methods that form the core of Producer Class success, it isn't at all surprising that such ventures become technologically conservative over time. Institutional Inertia grows out of the same impulse that produces excellent goods.

Unfortunately, sometimes Institutional Inertia just gets in the way. Today we learn some more about the reluctance of the German automobile industry to get serious about building electric cars. The list of institutional reasons are as long as your arm. At the head of the pack is the mostly-admirable trait of the serious manufacturers that they know best as in "Why should we involve our customers in design decisions—after all, they pay us to know more about cars than they do. If we make the best product we can, they will buy it." These are people who are corporately trained to ignore outside influences.

So even though the German government wants the auto giants to change their ways and have offered to assist the project, and the Chinese have threatened to seriously alter their biggest market, the biggies are still in a "mom, do I hafta" mode when it comes to electric cars. It doesn't have to be that way, of course. After all, all the Germans already excel at the hard parts of automaking. In fact, this is a main element of their Institutional Inertia. In a chart below, we discover that on average, 12, 770 Euros go into providing the internal combustion drivetrain of every car—all parts made unnecessary in an electric car. These are parts that form the soul of the corporate identity—if you ever get a chance, ask a Mercedes engineer about their engines and transmissions.

Elon Musk knows that the important part of an electric car isn't the engine and transmission, it's the batteries.  That is why he is betting the ranch on his battery gigafactory in Nevada. But even though he is trying to produce 500 thousand cars a year, that number is still is tiny compared to the 80+ million internal combustion vehicles sold last year.

See also my report of DW's coverage of Germany and electric cars.

Thursday, December 8, 2016

Where to go—Frank on the Democrats


Tony noted a few posts back that we have not been especially enthusiastic about covering the election of 2016.  To which I plead guilty.
  • One of the things that most impressed / saddened me about this Presidential election is how amazingly trivial and irrelevant these things are. The old saying that "if elections actually changed anything, they would be illegal" seemed especially appropriate this time around. My favorite subject is climate change. Ms. Clinton promised some scolding and few dimes tossed at the problem while Trump actually claims to believe this is all a hoax. Good Lord—What a terrible choice.
  • I find the fact that the Clintons and their gang of thieves managed to steal the party of those who sacrificed a LOT to make it the Party of the People—and then sold it to Wall Street—to be utterly depressing.  My contempt for these crooks is absolutely total.
  • Trump probably did not really believe he was going to win. He had no party infrastructure or book of principles around which to organize.  So we really have no idea what kind of government he will form. He has 4000 policy jobs to fill and it is highly unlikely that he even knows 4000 people that interested in politics. Some appointments look pretty damn awful.  On the other hand, his appointment of Terry Branstad as ambassador to China looks inspired (Mike Mansfield or Walter Mondale as ambassadors to Japan, anyone?) It is probably good to wait and see what sort of government the man actually forms before passing judgement.
  • The Democratic Party I once knew was a party of ideas. Now we see that the party elites—the same people who managed to blow an easily winnable election—are now advising that we become a party of disruption and civil disobedience. Well screw that! We should be getting up every morning thinking about the agenda we would advance if we were in power. And if our ideas aren't a whole lot better than neoliberalism and neocolonialism, we should shut up and work hard until they are!

Sunday, December 4, 2016

The Republican Gospel of Enforced Virtue


One of the most disfiguring and crippling faults of modern American political economy is the result of American Christianity having been corrupted by prosperity generally and specific business interests in particular. Put simply: most so-called Christian denominations in the United States have turned their backs on the social gospel, and go to great lengths to avoid discomfiting queries into members' livelihoods as usurers, speculators, money exchangers, and other economic predators. It has gotten so bad, I dislike using the words "Christian" to refer to these people, and use "christianist" instead.

The most disturbing example of this is House Speaker Paul Ryan's devotion to the cruel economic thinking of Ayn Rand, which actually once caused Ryan to literally flee a young Catholic trying to give him a Bible while exhorting Ryan to pay more attention to the Gospel of Luke. Ryan claims he is a Catholic, so I harbor a fervent wish that the Pope will send him a message or two trying to instruct Ryan in the ways of actual Christian economic policies. And then threaten to excommunicate Ryan if Ryan persists in trying to shred what remains of the USA safety net in the forms of Social Security and Medicare.

Whatever legislation Ryan and Republicans try to pass, I hope Democrats in Congress try to tack on amendments requiring serious estimates of how many people will die as a result, and creating some means of imposing criminal liability on the authors and proponents of the legislation. After all, some of the Republicans' favorite mantra is that "you have to assume responsibility for your actions," and "there must be consequences."

I want to point out another dimension to the problem posed by the way Ryan and Republicans think. We have reached a point in human history where economic scarcity is not really a problem.  As early as the 1920s, Thorstein Veblen pointed out that businessmen regularly sabotage and limit industrial production to create artificial scarcity and maintain price and profit levels. Any standard economics textbook today defines economics as society deciding how to allocate scarce resources. So standard economics starts off on a wrong foot from the get go.

But our technology today allows us to produce everything we need to support and sustain human life with a fifth or less of our workforce. Now, further advances in robotics and automation are estimated to be displacing another half of the already employed workforce over the next couple decades. What are we going to do with all those unemployed and marginally employed people? I don't see how the beliefs of Paul Ryan and today's Republicans help us to even begin to address this problem.

And there are problems on the Democratic side, also. Big problems. But that's a post for another today. I will leave you with this link, if you want to read about how what Democrats think cripples them also: Poverty Doesn't Need Technology. It Needs Politics.

Thursday, December 1, 2016

The Cycle of Civilization And The Twilight of Neoliberalism


Jon and I don't have much to write about the election of Trump. (Though, I will pass on what I think is one of the funnier slaps at the President-elect: "Der Furor.") Basically, both Jon and I were disgusted and demoralized that the Democratic Party nominated Hillary Clinton, despite the clear evidence that she was a thorough-going neo-liberal in economic policies, and a closet neo-conservative in foreign and military policies. (Leading neo-conservatives, such as Robert Kagan, even came out openly endorsing Clinton rather than their party's nominee.)

Unlike Jon and I, Ian Welsh has been putting up a stream of excellent posts since the election. Welsh was one of the few voices on the left before the election trying to warn people to take Trump seriously. Unfortunately, a lot of people were so unhinged that they mistook Welsh's warnings about Trump, as Welsh actually supporting Trump. I hope this is not symptomatic of how the left and the Democratic Party are going to respond to the Trump regime over the coming years, but it is a slight hope without much real basis other than wishful thinking. So far, it seems that most of those who got steamrolled by Trump are going to cling to their ineffective Marxism, or identity politics, or deconstructionism, or whatever.

Monday, November 28, 2016

William Black on Krugman


The economists from UMKC are on a tear.  As well they should be.  They have been beavering away in almost total obscurity keeping the light of Institutionalism alive.  It's kind of a lonely pursuit but it has one overwhelming advantage—you are correct so much more often than the convention-wisdom economists (who are almost always wrong.) And the folks who got it so disasterously wrong in 2008 haven't altered their worldviews one iota so they are still disasterously wrong.

Today, we see Bill Black give Paul Krugman a royal smackdown. Krugman has a lot of fans so taking him on entails some risk.  But the fact remains that while Krugman is easily the most enlightened economist who is allowed to write for the New York Times, he is a thoroughly conventional thinker. And in his recent role as defender of Clintonism, he was forced to sound even more like a shill for Wall Street than normal. So Black is facing a high hanging curve ball here because Institutionalists live to take on anyone willing to embarrass themselves by spouting the neoliberal idiocies.

Even so, I am pretty sure that folks like Black and Hudson are NOT getting ahead of themselves. The neoliberals are shameless.  They do not change their POV just because they are wrong.  So I must assume that most of the time, the heterodox economists at UMKC must content themselves with celebrating their small victories at their small parties.

Friday, November 25, 2016

A Short Crash Course in American Political Economy


What is our system of government supposed to be? A republic. But a republic is so ill defined that even John Adams famously wrote "the word republic, as it is used, may signify anything, everything, or nothing."

According to historian Gordon Wood,
The sacrifice of individual interests to the greater good of the whole formed the essence of republicanism and comprehended for Americans the idealistic goal of their Revolution…. To eighteenth-century American and European radicals alike, living in a world of monarchies, it seemed only too obvious that the great deficiency of existing governments was precisely their sacrificing of the public good to the private greed of small ruling groups. [1]
Just as important: are there principles and policies of political economy that are supposed to distinguish a republic from other forms of government: monarchies, oligarchies, plutocracies, dictatorships, etc.?

Since it became clear that President Obama was unwilling to directly confront the power of Wall Street, I have read deeply trying to answer these questions for myself.

Contrary to what many on the left believe, the US Constitution is NOT solely designed to protect the rich. Our system of government definitely has been twisted to that end, but I do not believe that was the intent of Hamilton, the one Founder most responsible for laying the foundation of the USA economy. (And remember, Washington used Treasury Secretary Hamilton basically as a prime minister, and agreed with or acceded to literally all of Hamilton’s economic beliefs and policies. This was in no small part a function of their shared experience at the pinnacle of American military command during the Revolutionary War, when they both identified Britain’s major strategic advantage to be Britain’s ability to raise funds and float debt through its financial system.)

Culturally, the most important aspect of a republic is supposed to be equality, especially economic equality. This is of course contrary to the view that the government was set up solely to protect property and the accumulation thereof. It was not – at least, not by Hamilton.

Economic equality is basic to a republic because, the idea was, no person can be fully independent and be a good citizen if their livelihood depends to some extent or other on another person’s largess, benevolence, or tolerance. This was the basis of the fight between the Hamiltonians and the Jeffersonians. Jefferson believed that only farmers who owned their own land were independent enough to honestly exercise the duties of citizenship. Jefferson wanted to delay the advent of industrialization and subservient factory labor as long as possible. This is why Jefferson acceded to the Louisiana Purchase, which he would otherwise have opposed on the grounds that the federal government has no express power to acquire so vast territory. [2] With the Louisiana Purchase, yeoman squeezed out of the established eastern seaboard would be able to cross the mountains, and buy, steal, or somehow take the land of the native Americans and set themselves up as independent farmers, thus extending in both space and time Jefferson’s ideal agrarian republic.

Hamilton, by contrast, understood that the economy could not be frozen in time and remain entirely agrarian. Industrialization HAD to not only proceed, but be encouraged [3], for the USA to have any chance of resisting the intrigues and hostility of the European powers – which remained committed to eradicating the American experiment in self-government until the US Civil War. (France and Spain landed troops in Mexico and Caribbean at the beginning of the war; the Mexican republic was eliminated and Maximilian, younger brother of Austrian emperor Francis Joseph I, was installed as puppet emperor. The British government of Lord Palmerston was preparing to land troops in Canada in 1862, but was deterred by the pro-USA street fighting in London and elsewhere which was led by the British allies of Italian revolutionary Giuseppe Garibaldi.)

Hamilton’s great insight was that economic development depended entirely on improving the productive powers of labor. This meant the development of science and technology, and the spread of machinery to replace muscle power, both animal and human. The correct view of Hamilton must be precise: it was not that Hamilton sought to encourage and protect wealth, but to encourage and protect the CREATION of wealth. (Read Section II, Subsection 2, “As to an extension of the use of Machinery...” in Hamilton’s December 1791 Report to Congress on the Subject of Manufactures, if you want something to read today.)

This is where Marxist analysis fails catastrophically. Yes, much of economic history is that of elites accumulating wealth through exploitation, fraud, and violence. BUT: how was that wealth which is stolen created in the first place? Thorstein Veblen, and his discussions of industrial organization versus business organization, are far more useful in understanding the COMPLETE economic story, not just the exploitation side of it. I believe that once you understand this, you can understand why Elon Musk is much more useful to society than Peter Thiel. Musk and Thiel are both rich: should we therefore oppose and denigrate both because they are rich, and we dislike our system of government which has been mutated, diminished, and twisted so that it serves and protects the rich almost exclusively? No. I admire Musk because he has used his PayPal lode to create new wealth (which takes the corporate forms of Tesla, SpaceX, and Solar City), while Thiel has used his PayPal lode to fund libertarian ideas which are fundamentally hostile to what America is supposed to be. In Veblen’s analysis, Musk is an industrialist, while Thiel is merely a businessman.

In the nineteenth century, it was generally understood that the system established by Hamilton was in opposition to the “classical economics” of Adam Smith, David Ricardo, Thomas Malthus, and the other apologists for the death and destruction wrought on entire countries by the British East India Co. and the British empire. In the 1820s, Henry Clay coined the term “American system” to distinguish it from the British system. Michael Hudson has pointed out that in addition to these two systems of political economy, a third was developed in the nineteenth century: Marxism. [4]

It is easy to be confused by American history, because at the same time that the American System was being built and practiced, the British system was competing with it for control of the domestic economy and polity. To the extent that people today mistakenly believe that the American economy was founded on the ideas of Adam Smith (it most emphatically was not: Hamilton explicitly rejected the ideas of Smith) the British system is winning.  Michael Hudson has written at least two excellent overviews of this fight within the USA between the American and British systems. [5] For now, the simplified version is that the British system was dominant in the slave South, and fought for free trade in opposition to the American System’s protective tariffs.

After the Civil War, American railroads and industries were reorganized a number of times, placing them under ever greater control by bankers and financiers located in Boston, New York, and other large cities. This period of economic consolidation is typified by the creation of the "trusts.” In response, a number of populist political movements and parties arose in opposition: the Greenback Party, the Grange, the Farmers Alliances, the People’s Party, the Non-Partisan League, and the Democratic Farmer Labor Party of Minnesota. Note that the policies they fought for in the half century after the Civil War became the economic basis of Franklin Roosevelt’s New Deal. the Greenback Party, the Grange, the Farmers Alliances, the People’s Party, the Non-Partisan League, and the Democratic Farmer Labor Party of Minnesota. Because those were all populist—and the policies they fought for in the half century after the Civil War became the economic basis of Franklin Roosevelt’s New Deal.

Here’s a 4-minute video on the Greenback Party’s 1876 presidential candidate Peter Cooper (who founded Cooper Union in New York City), and the policies of the Greenbackers. Along the lines of the issue posed by Musk versus Thiel, note that Cooper was among the richest men in USA.


Monday, November 21, 2016

Rethinking the economy with Hudson and Brown


Micheal Hudson is on a roll.  In this video, he explains that mainstream economics is not nearly so sub-moronic as it looks.  Rather these folks are doing their fine work to provide an intellectual gloss to activities that actually harm the economy by claiming that the pirates are really earning their crazy paychecks.  Economics once called these financial extractions "unearned income."  (I remember those lectures...sigh)  He also does a fine job of explaining what happens to any economist who dares challenge the dominant narrative.


Published on Nov 2, 2016

With every major financial recovery since the second World War beginning in a place of greater debt than the one before it, how could we not have foreseen the financial crisis of 2008? In this episode of Meet the Renegades, economics professor and author, Michael Hudson argues we did.

How could an economy that created so much debt also save the banks rather than the economy itself, following the 2008 financial crisis? Michael discusses the phenomenon of debt inflation and how the economic curriculum should change.

"If you're teaching economics, you should begin with the relationship between finance and the economy, between the build up of debt and the ability to pay."

Michael discusses the 'Great Moderation', a common misrepresentation of a healthy economy in which job productivity was increasing, labor complacency was at an all-time low was a complete myth. Michael argues that 'traumatized' workers were too in debt to fight for better working conditions leading up to the 2008 financial crisis and how this reflects neo-classical ideas.

Michael offers solutions - urging the importance of writing down the debt and keeping basic services in the public sector, ridding the economy of financial tumors through a proper tax policy based upon the this public sector model.
Here Ms. Brown explains how Trump, if he actually knew the history of monetary practice, could make good on his promise to rebuild the nation's infrastructure.  In addition, he gets to appoint at least five new Fed Governors so all of this is well within the realm of the possible.  The only thing stopping Trump from becoming the greatest builder in USA history is that he doesn't seem to have a clue about this history.  He should do some homework.  Hiring Ms. Brown to explain this to him would also work.

Sunday, November 20, 2016

Slovenian philosopher Slavoj Žižek on the USA election


Slovenian philosopher Slavoj Žižek has taken considerable thought, time, and energy to try to understand the craziness we called an election.  The following clip is truly remarkable.  I cannot recommend it more highly.  It runs about 20 minutes.

This is followed by St. Clair's trenchant observations on the incompetence and hubris it required for the Democrats to lose to a 70-year old reality-TV star with enough scandalous baggage to sink a container ship.  Of course, it can be argued that the Democrats have been losing their way since Jimmy Carter deregulated the airline industry or appointed Paul (21%-prime) Volcker to head the Federal Reserve in the 1970s. Hillary Clinton is just the logical conclusion of this crazed and twisted journey—a peak idiot, if you please.

I probably won't write much more about this election.  I have spent entirely too much of my life trying to help the Democratic Party make better and more informed choices.  Obviously, I have not influenced much as Hillary Clinton represents almost everything I believe foolish, absurd, and criminal. I hold the somewhat naive opinion that the purpose of government is to organize the necessary tasks that are too difficult, expensive, and complex for individuals to accomplish on their own.  Ms. Clinton and her posse apparently believe the purpose of government is to provide them with cushy ego-satisfying jobs and beautiful offices in Washington D.C. There seem to be quite a few of us who utterly despise that type.  But quite honestly, I didn't think there were enough of Hillary's victims to pull themselves off the mat in a final and probably futile gesture of keeping her out of the White House. Worse, the guy who will be heading for 1600 Pennsylvania Ave is not exactly Mr. Deep either.

So back to refining strategies for building a sustainable future.  If I did not have that problem to think about, I would have most certainly lost the will to live by now.  Building is the only truly satisfying activity of my life and thinking about the world that could be created is enough to help me ignore the industrial-strength idiocy that we have just witnessed.



Monday, November 14, 2016

There are people who are justifiably thrilled by a Trump victory


One of the more baleful effects of "American Exceptionalism" it that even some pretty good people really could not care less what happens to the "collateral damage" of the Empire.  They don't care because they don't know.  For example, because I have a strong historical interest in what happened to USSR as the result of the German invasion in 1941, I have read many accounts of the incredibly fierce fighting that happened in the Donbass.  If it weren't for the rich mineral deposits of the region, the area would probably still be depopulated because so many were killed.  In the annals of human struggle, there are few that top the struggles of Donbass.  It was so devastated that many monuments to the defenders weren't built until the 1960s.

I am 67 years old and have met exactly no one who has ever expressed interest in this story.  So when the people of Donbass had to suffer yet one more effort at ethic cleansing, this time at the hands of home-grown Nazis who happened to have power as the result of a USA-sponsored and organized coup in the Ukraine, no one I knew had any idea of the magnitude of the tragedy. Because Victoria Nuland, one of Hillary Clinton's favorites, had her fingerprints all over the coup, there is an understandable outbreak of joy in the Donbass over the election of Donald Trump (see below.) For many, there is now a better possibility that people of the east Ukraine will be able to watch their children grow up. No small matter, that.

Not everyone is as thrilled as the people of Donbass over the election of Trump.  Personally, I will be happy if he is a marginal improvement over Reagan or the Shrub and do not expect even that.  But a victory by Clinton would probably have triggered clinical depression.  The idea that someone so corrupt could have seized the political party my parents and grandparents struggled to build, and sold it to Wall Street crooks, was a reality I could not bear. So even though my expectations for a Trump administration are essentially zero, I am willing to give him a chance because a President Hillary would have been a predictable disaster.

Tuesday, November 8, 2016

What Progressives Can Learn from the Cubs Winning the World Series


There was a baseball game last [week].

There are three stories to tell about it, and they’re stacked on top of each other, tottering, each bigger than the last and relying on the one below it to make sense. The first story: the Cubs took a 6-3 lead into the eighth inning of Game 7 of the World Series, and Aroldis Chapman blew it. Then he won the game.

That's the beginning of the article by Jonathan Bernhardt of the London Guardian, which I consider far and away the best article on the Chicago Cubs winning the World Series of USA major league baseball after 108 years. It is the only article of the many I've read which captures the cultural iconography of the Chicago Cubs and their century-long absence from the greatest achievement of professional baseball.

Cubs third baseman Kris Bryant smiles while fielding the ball for the final out of the World Series.

This was not supposed to happen: "The Cubs are lovable losers" had become the most powerful cultural myth in American sports, The title of Bernhardt's article is the perfect summary: How the Chicago Cubs faced down history and killed a century-old curse. Yet, Bernhardt does not really discuss how the Cubs did it. He does not discuss how the Ricketts, heirs of the Ameritrade fortune, bought the Cubs from Sam Zell and the Tribune Co., who had treated the team not as a franchise in professional sports, but as an entry on the balance sheet of a corporate conglomerate. He does not discuss how co-owner and Cubs president Tom Ricketts — as diehard a Cubs fan as any: he met his wife in the bleachers at Wrigley Field while he was a student at the University of Chicago — snatched Theo Epstein from the Boston Red Sox and made him President of Baseball Operations for a repeat performance of curse-crushing pennant winning.

Nor does Bernhardt relate how Epstein immediately began to hire people who had been with him on the Red Sox's epic ride to a World Series championship, including Cubs general manager Jed Hoyer. Or how Epstein and Hoyer sorted through 140 players acquired in 37 trades, 80 signings and 5 major draft picks, to assemble the 40 man team roster than finally won it all. So, there are many more than the three stories Bernhardt says there are. And every story offers lessons that progressives in USA can learn to help them break their own curse and begin to win again.

It's the management, stupid

The story of Theo Epstein coming to Chicago to transform the Cubs is an obvious lesson. The people at the top make a huge difference. This is a lesson progressives and Democrats desperately need to learn. First, the reality must be faced that President Obama squandered an epic opportunity to transform the American economy by failing to destroy Wall Street, which is a net drain on the rest of the economy, and the major reason why the United States continues to suffer poor economic performance for the bottom ninety percent of Americans.

Remember the outpouring of public opposition to the Wall Street bailout in 2007, with calls to Congress running a reported 100 to one against? Rather than use this tidal wave of public sentiment to impose structural changes on the financial system and begin eliminating, or at least limiting, its usury, speculation, and rent-seeking, Obama listened to his golf buddy, Robert Wolf of UBS (former Union Bank of Switzerland), and decided the top priority was to save Wall Street from the consequences of its own unbridled greed. Obama even publicly declared that James Dimon of Morgan Chase and Lloyd Blankfein of Goldman Sachs were “savvy businessmen.”

Obama did have the power of his bully pulpit to force changes on Wall Street: Richard Wagoner was forced out as chairman of General Motors simply because of Obama’s disapproval. But that is the lowly auto industry, not the superstar and obscenely rich banking and financial sector. Obama chose not to apply similar pressure to any executives on Wall Street. Ron Suskind does an excellent job of recounting and contrasting these two different approaches in his 2011 book, Confidence Men: Wall Street, Washington and the Education of a President.

Rather than picking top people who would help him bring real change to the system, Obama instead chose to accept the list of people hand-picked for him by Wall Street. And we didn't have to wait until Hillary Clinton's emails were leaked a month ago to know Obama was making a giant mistake: as early as December 2009, people were writing warnings that Obama's personnel picks signaled a capitulation to Wall Street. So, while there was a widespread public expectation that Obama had been given a historic opportunity to do what Franklin Roosevelt had done, and put Wall Street and the banksters back in the box, Obama refused to act. Obama had a mandate, and he ignored it.

By contrast, Epstein was given a mandate to build a championship baseball team, and he threw himself into the task with manic fervor. So, two lessons here:

Lesson 1: The people at the top make a huge difference.
Lesson 2: When you are given a mandate, use it. Ruthlessly.

Monday, November 7, 2016

How Democrats Killed Their Populist Soul


While writing his new book Listen Liberal, Thomas Frank was asked how he would approach the subject of what went wrong with the Democratic Party that led to the nomination of an unrepentant Goldwater Girl. The question was usually some variation of "where do you even start?" Frank decided to start with the soul-searching following the 1968 defeat of Hubert Humphrey. As someone who remembers the political craziness of 1968 like it was yesterday, I think Frank chose an excellent starting point.

My take on the matter is that the Democrats had seriously lost their way by 1968 because they could not let go of their crazy notion that the Vietnam War was a good idea. Opposing a war, no matter how insane, is extremely difficult because those conflicts tend to rope in all sorts of primitive impulses associated with the warlike animus.  And when after the Tet Offensive it became quite obvious that a WWII-style victory was clearly not in the cards, USA started waging a war that was a constant escalation in sheer brutality. Not only did this destroy whatever was left of anything resembling a moral center, it would also destroy the main elements of the economy, along with anything that smacked of a cultural impulse.  By 1974, the most innovative period of musical history had degenerated to disco, the economy was experiencing scary inflation, the USA had become a net importer of oil and had been successfully boycotted by the oil-producing nations.

Because I was attending a major land-grant multi-university from 1967-74, my view of those confusing times centered on the upheaval in education. The most noticeable effect was the destruction of scholarly standards as many professors refused to fail any young man who would then be eligible for the draft. Unfortunately, that would be extent of their moral outrage against a system that would bomb defenseless peasants with B-52s flown from Guam and murder village teachers who were a threat because they had educations. What this meant in practice was our teachers went to great lengths to avoid discussing the war but freely acknowledged that there were serious structural problems with a society that would choose to wage such a war.

Perhaps the best example for me happened in a Political Science class being taught by the first Jewish man to have ever been elected mayor of Minneapolis. Big-city mayors in those days did not have a reputation for idealism, but Arthur Naftalin was one. On the list of assigned reading was the crazy paean to the counter-culture The Greening of America written by a Yale law professor named Charles Reich. Follow the links if you are remotely interested but essentially this book argued that the hippies and the counterculture were the new wave of enlightenment.  Sex drugs, and rock and roll would prove that the USA had more to offer than war crimes.

Sadly, this goofy utopianism would come to define a generation. Lest anyone doubt that a generation was taught that hedonism was the solution to serious matters, think back to the big march to demand an end to climate change held in New York September 21 2014. The climate certainly wasn't helped by 300,000 CO2 producers traveling to the big event but the signs were pretty, the speeches were dripping with moral outrage, and so the organizers declared it a huge success.

Meanwhile, politics completely lost its focus.  The hard work of raising living standards for the people who had to do the community's necessary work now took a back seat to "cultural issues." Also lost in the shuffle was the need to care for and replace the necessary infrastructure, or schools that taught that for many important subjects, there often is a right answer and its not "fascist" to expect people to learn it, etc! The most pernicious lie of the era was that if the moneychangers prospered, the rest of the society would as well. This monster falsehood will lead to a calamity of almost unimaginable proportions but because it is so embedded in the culture, the teachers of economics will keep misleading their students. Charles Reich would no doubt approve so long as he could be reassured that hedge fund managers were still snorting toot off some hooker's ass.

The following essay by Matt Stoller is an excellent tale of how the frivolous people took over the Democratic Party from those who actually understood how the real economy worked.  I am pretty sure he is mostly correct in his account.  It's pretty long but certainly worth reading.

Friday, November 4, 2016

Time to upgrade political "science"


Just the other day, I was discussing the latest Wikileaks dump with a fellow fan of Mr. Assange.  He was marveling at the persistence of someone who knows damn well that he is truly pissing off the woman who could be the next USA president.  Actually, I can sort of understand this sort of behavior having been raised on the stories of men who were willing to risk some painful deaths to do something as civilized as wanting to translate the Bible.  Martin Luther got away with it—William Tyndale was burned. So I mostly get Assange and why he gets such a rush from spreading uncomfortable truths.

What I find so fascinating is that Assange has demonstrated a point about how the Producer Classes survive in a world where there are thousands who want to rip them off and otherwise make their lives miserable.  History is mostly about the various schemes to get someone else to work for free or as close as posible.  These include slavery, serfdom, usury and loansharking, and the latest ugliness—"free trade." Out of desperation, the Producers have tried slave revolts, strikes, political or religious movements in an attempt to retain at least some fraction of the value their work brings to the social order. Most of these have been doomed from the get-go.  But there has been one absolutely fool-proof method for Producers to change the equation—invent a future that empowers them.

There have been a lot of very interesting characters who have lent a hand in the creation of the Internet.  Some are inspirational—some loathsome.  But no matter how you financed / ripped it off, the actual creation of the Internet was a Producer Class project and it has obviously served the needs of it creators.  And the release of the Podesta emails has provided Exhibit A for how this works.

With the complexity that came with industrialization, the question of who held power and why they were important became a subset of social scholarship.  These inquiries were mostly speculative because discovering what was said in private meetings could never be discovered.  Nevertheless, some bright guys tried to figure it out—the best example is C. Wright Mills' The Power Elite published in 1956. But thanks to Wikileaks and all the inventions that produced the Internet, we don't have to guess what the elites are saying to each other while plotting their nefarious schemes, we can read the actual conversations. We will probably still have elites, but their ability to scheme in the dark has taken a major hit.  And since their only real source of power is the ability to get people to believe their lies, the Producers may have finally figured out a way to put this gang of destructive thieves out of business.

Hey, I can hope.  Considering what a wretched affair this election has become, I am searching for a little light in the darkness.  This article and interview features Thomas Frank marveling how much insight has been provided by the Podesta emails.  I think he would probably agree that this information will lead to nothing less than the re-invention of Political Science. Good! It could stand re-inventing.

Monday, October 31, 2016

US Elite, By Way of Deception Thou Shalt Lose Your Empire


Very little of what has been revealed in the Wikileaks dump of the Podesta emails comes as a surprise.  Everyone I know suspected at least the crime, corruption, and sleaze they have shown. But I am still stunned by the levels of arrogance and the superficial nature of the discussion.

The assumption that ties all this together is the seemingly unshakable belief that everything is about optics.  If something looks bad, well then the solution is to make things look better. And the corollary to this is the idea that anyone not convinced by these efforts to change the optics much surely suffer from some serious psychological disorder. The idea that there are people suffering from real problems that need real solutions seems never to appear on the radars of the correspondents of John Podesta. For them, if something does not conform to their preferred narrative, it cannot exist.

There are far too many subjects where real matters are reduced by our "leadership" to a matter of optics.  Of course, my personal favorite is climate change / end of the petroleum age.  Perhaps the biggest reason why this one fascinates me so is that it is a simple struggle between faith-based arguments (religion, politics, pop psychology, etc) and simple arithmetic.  I come down on the side of arithmetic because in my 67 years on earth, it has always worked. I tend to lose patience with the faith-based versions of perceived reality because as a childhood of religious indoctrination taught me, such beliefs are wrong so often the historical exceptions could be covered in a short Ted talk.

Unfortunately, there is the related subject of imperialism / empire building that became necessary when USA became a net importer of oil.  Our empire is being run by the most pig-ignorant people imaginable.  Since most of what official Washington believes to be true is based on data gathered by a highly politicized "intelligence" community, we may fairly think of our diplomatic corps as being populated by designer morons. These folks believe above all else in "American Exceptionalism" so for them there is no point is learning anything from the rest of the world because those poor souls are, at best, American wannabes anyway.  Ignorance and arrogance—the worst combination of characteristics for running an empire imaginable.

The Saker seems to think that this crazy situation is going to come crashing down because of its internal contradictions.  He reasons that ignorant folks determined to enrage everyone else on earth will ultimately fail no matter how well-armed and willing to lie, kill and, destroy they might be.  We shall see.  The main threat to the empire comes from Russia which is currently committing the unforgivable sin of defending itself.  See, if we were taught a reasonably accurate history of WW II we would actually have some idea of what those people are willing to do to defend themselves.  And Putin is a son of Leningrad / St. Petersburg—where over a million perished during the 900 day siege and yet they still prevailed.  When you hear the morons going off about what they think they know about Putin, the tiny detail that he was born to survivors of that vicious seige seems unimportant. Ignorance, the gift that keeps on giving.

Monday, October 24, 2016

Michael Hudson on Veblen


One of the persistent disappointments in my life has been the inability to interest more folks in the writings of Thorstein Veblen. Goodness knows I have tried—speeches, websites, multimedia CDs, letters, and boring everyone I could buttonhole.  I discovered TBV while searching for a believable explanation for what happened to trigger the global depression of 1981-82.  I didn't actually know what I was looking for and had the resources of the St. Paul library system so I did a bunch of reading—history, business magazines, trade journals, the heavy hitters on political economy from Marx to Hayek to Keynes, even philosophy.  Nothing seemed to be relevant to my search.

The death of my uncle in April 1984 got my mother talking about the insanely difficult struggle that faced the family as they tried to survive the 1920s and 30s in rural Minnesota (yes, they call them the Roaring 20s but for small farmers, it was catastrophic.)  Mom gave me enough clues so that with the skilled help of my favorite librarians, I was able to partially reconstruct my grandfather's reading list. Through the magic of inter-library loans, I began to read magazines like the 1920s Appeal to Reason / American Freeman that provided serious analysis of why farmers were starving in the age of the flappers.  What was so amazing was how economically similar the 1920s and the 1980s were—at least down on the farm.  It was stunning how politically sophisticated my grandfather's generation was in so many ways.

In the middle of this reading jag, I discovered The Theory of the Leisure Class (TOLC) by Thorstein Veblen.  My newfound exposure to the political writings of the 1920s was extremely helpful in making it through that very challenging tome. Because reading was the only method of communicating ideas in those days, people just read more and more difficult books (TOLC became a popular best-seller.) Here I was a university graduate and it took several years of reading the 1920s musings to become comfortable with the style and vocabulary of Veblen.  Even so, I believe that reading the first three pages of TOLC shed more light on how the world actually works than the approximately 250 books and 1000 magazine articles I had read up until that point.  It was breath-taking.

If you count Veblen's translation of the Lexdaela Saga, he wrote 10 books.  By now I have read all 10 at least twice.  In 1993, to celebrate the rebuilding of the Veblen farmhouse in Minnesota, I read all of them in the order in which they were published.  I highly recommend the experience.  However, I also know that for most, this would be impossible because of the heavy commitment of time and effort.  Therefore, it is always good when someone who really understands Veblen takes the time to explain what the fuss is all about in an easily digestible essay.  As the world's leading Institutionalist, Michael Hudson is superbly placed to explain Veblen and this weekend, he hit one out of the park (see below.)

What is so insightful is that he manages to include the highlights of Veblen's thinking (at least according to me) while explaining why Veblen is still relevant.  These include:
  1. “Veblen put forth a basic distinction between the productiveness of ‘industry’ run by skilled engineers, which manufactures real goods of utility, and the parasitism of ‘business,’ which exists only to make profits for a leisure class which engages in ‘conspicuous consumption’.
  2. Economic rent – the excess of price over this “real cost” – is unearned income.
  3. “Real estate is an enterprise in ‘futures,’ designed to get something for nothing from the unwary, of whom it is believed by experienced persons that ‘there is one born every minute.’”
  4. Veblen criticized academic economists for having fallen subject to “trained incapacity” as a result of being turned into factotums to defend rentier interests.
  5. His Theory of Business Enterprise (1904) emphasized the divergence between productive capacity, the book value of business assets and their stock-market price (what today is called the Q ratio of market price to book value). He saw the rising financial overhead as leading toward corporate bankruptcy and liquidation. Industry was becoming financialized, putting financial gains ahead of production.
Last Friday I went out to the Veblen farm to soak up some atmosphere to enhance the joy of reading Hudson's brilliant essay. The harvest is largely done. The trees have mostly lost their leaves.  We haven't had a hard freeze yet but that is certainly coming soon.



The Veblen farm sits on one of the highest points in the county.  This means it is often very windy as is readily apparent from the tree next to the old granary.



This has been one of those gorgeous autumns where even the oaks turn a wonderful russet color. These trees are near where the Veblens had a woodlot.  The farm was mostly grassland so they had to have a source of fuel.  Burr oaks make an especially welcoming fire and are not so good for construction.  The Veblen woodlot also had red and white oaks.  Much of the barn was framed with white oak.