Friday, August 18, 2017

A German (DW) update on climate change


Climate change is a BIG issue around here—not that you would know it from the paucity of reporting on the subject. My excuse is that there is more than enough evidence of climate change—and far too little on the subjects of how we got to this place where almost everything everyone does only adds to the problem. Turns out that the technological problems caused by the total domination of fire-based economies is almost trivial compared to the cultural expressions that support them. So much so that any suggestion that the world must move to fire-free societies is greeted as the most radical form of madness imaginable—even though such an assertion is utterly true.

But since not a lot is getting accomplished towards this necessary goal, we still need reminders of how serious the problems caused by a warming planet really are, and that ignoring these problems will not make them go away. This little reminder from DW must do for today. After all, we simply must get back to the "serious" problem of where we site monuments to Confederate War "heroes." (NOT)

Climate change is real - and is getting worse

DW Brigitte Osterath (ibr) 11.08.2017

Last year has broken climate records: It has been the warmest year since records began and extreme weather events have increased around the world. Two recent reports confirm, once again, that climate change is happening.

The results of the annual checkup on our planet do not bring good news. On average, 2016 was even warmer than 2015 - previously the warmest year. These are the findings of the State of the Climate, published on today by the American Meteorological Society.

In the 298-page report, the United States National Ocean and Atmospheric Authority (NOAA) compiled climate data from hundreds of research groups from all over the world.

"The increase in CO2 concentration was the largest in the nearly six-decade observational record," NOAA wrote.

It amounted in average to 402.9 parts per million (ppm) - 3.5 ppm more than in 2015. For the first time, the limit of 400 ppm has been exceeded.

Unfortunate new records

Last year, the temperature of the Earth's surface was on average 0.45 to 0.56 degrees Celsius higher than the average temperature from the 1981 to 2010, which was used for comparison.

Together with global warming, El Niño caused catastrophic droughts in Central America, Brazil, Southern Africa, India and North Australia - while at the same time bringing heavy rains to the Pacific Northwest in the United States, Southeast China and parts of South America.

Tropical cyclones - that is, cyclones in the Indian Ocean and the Southern Pacific - have also become more common. In 2016, there were a total of 93 cyclones, including the cyclone Winston in the Fiji Islands in February. The average for the years 1981 to 2010 was 82 cyclones.

By 2016, global sea levels have risen 82 millimeters above 1993 levels (established as the zero line). Over the past two decades, sea levels have increased by an average of 3.4 millimeters per year.

The Antarctic experienced its warmest year, with two degrees above the average temperatures. On March 24, the sea ice spread over 5.61 million square miles (14.54 million square kilometers), 7.2 percent less than the average. However, it was still at the same level as in 2015 - but the sea ice in the Antarctic has further decreased compared to 2015.

The data show that the year 2016 was "very extreme and it is a cause for concern," Jessica Blunden, climate scientist at the NOAA, said in the report.

Climate change also affects US

US President Donald Trump does not tire of announcing that he does not believe in climate change, and he has set himself to undoing Barack Obama's environmental policy, which had recently focused on the fight against climate change.

So some US media were excited to report on a draft government report that concludes that the US is already experiencing climate change.

The Climate Science Special Report - compiled by NASA and NOAA, among 13 other federal agencies - is part of a national climate report Congress requests every four years. The final draft has been online since January. By August 18, the US government will have to sign off on it - including Trump himself.

"Evidence for a changing climate abounds, from the top of the atmosphere to the depths of the oceans," the report reads.

The study has examined all US regions - and researchers have reached the conclusion they all are affected by climate change. According to the report, the volume of precipitation has increased by about 4 percent since the beginning of the 20th century.

Parts of the West, Southwest and Southeast in the US are drying out - while the Midwest is becoming wetter. The surface temperatures in Alaska have risen alarmingly - twice as fast as the world average, the researchers found.

However, researchers were not in agreement regarding a 2011 heat wave in Texas.

Some conclude that local weather phenomena, together with a strong La Niña, were the cause of high temperatures in Texas. Others contend that climate change makes such extreme temperatures in Texas 20 times more likely.

But all researchers agree: Through all the symptoms of climate change our planet is currently experiencing, the common denominator is that humans are to blame. more

Monday, August 14, 2017

Donald Trump confronts the War Party


David Stockman is the sort that can easily inspire conflicting emotions. He is obviously very bright—he was the boy wonder head of Reagan's Office of Management and Budget who soon got into trouble by pointing out that Reagan's budget numbers were, at best, a hoax. Worse he explained it all to William Greider who wrote up the story in the Atlantic. As history so often reminds us, telling the truth is a hazardous occupation and Stockman's venture into honesty quickly transformed him from Rising Republican Star into a political pariah overnight.

While brazen honesty is an admirable and often amusing trait, it does not transform Stockman into a political genius. While his analysis is often excellent, it is usually colored by the same neoliberal assumptions that have led both major political parties (and most of the world) dangerously astray. So when he gets things wrong, he does so in boringly predictable ways.

But being a neoliberal on economics does not necessarily make someone a warmongering neoconservative—it certainly does not in the case of one David Stockman. In the following he writes about what he believes motivates the attempted establishment coup against the constitutionally elected government currently under way in Washington.

Impeaching Trump is going to be a lot harder than impeaching Bill Clinton for a sex scandal—mostly because both houses of congress are controlled by the Republicans. While not all Republicans are Trump supporters, all can remember how easily he dispatched the field in his run to the White House. Voting to impeach Trump would anger a wide slice of their political base and since elections are often won with slim margins, few wish to find out just how angry their base would get.

And yet the war on the Trump administration continues in spite of its seeming futility. Many, myself included, wonder why anyone would bother trying to remove this man from office. So the following explanation offered by David Stockman—that Trump's real "crime" is that he has threatened the War Party (a powerful group that has mostly gotten its way along with the lion's share of the state's wealth since at least 1916) actually makes a lot of sense.

Wednesday, August 9, 2017

China and rare earths


Perhaps THE most annoying thing about the economics profession is that they are extremely bright people with extraordinary math skills who unfortunately know absolutely nothing about the real economy. That they could makes excuses for selling off the crown jewels of USA industrialization for pennies meant beyond any doubt that they had absolutely NO way to accurately value those crown jewels. The biggest single reason is that economists, as a group, are techno-cretins. Any tool more complex than a fork is borderline magical and having to assemble something from IKEA is an "ordeal" (yes I have actually heard one of these geniuses use the word ordeal).

So today's lesson is about how USA economic leadership never figured out how to value rare earths and what a serious problem that will be if we ever get serious about building the post-petroleum society. I think the time has come to make such abject stupidity a capital crime.

Monday, August 7, 2017

Sanctions—economics at its most destructive


Using economics to destroy is perhaps the sickest manifestation of the dismal "science." This is mostly because sanctions only really work when the target is weak. As the world is fast finding out, the Russians may no longer be a superpower but they still have the tools to counter a few sanctions. In fact, the economic adjustments forced on the Russian Federation with the latest round of sanctions may have done their economy a world of good. They have discovered that lots of folks want what they can make, grow, and sell.

The Russians have also discovered that their own economic weapons are quite effective. European agriculture is still staggering from the loss of their Russian markets while Russian agriculture is arguably doing better than at any time in the past century. And as Tom Luongo points out below, their presence in the market for the fuels that run the world's nuclear power plants is quite significant.

But lost in all the discussions of who can do what to whom is the fact that all these sanctions and counter-sanctions diminish everyone's economic possibilities. Building the sustainable civilization will be an act of cooperation—NOT confrontation. And the biggest loser of all is very likely the USA—the biggest sanctions bully on the block.

Sunday, August 6, 2017

Elon Musk on education


Producer Class superstars are sort of a freak of nature. The overwhelming majority of folks who become rich and famous are resolutely Leisure Class. There are a multitude of reasons for why this is so but mainly it's because the Leisure Classes hold all the cultural levers.

Ask yourself, When was the last time you saw a movie or TV series starring an engineer or someone who builds skyscrapers (as compared to lawyers or cops or soldiers)? When was the last time you saw a competition between student architects or solar designers (as compared to football players or musicians)? Who controls the real levers of economic power—scientists or financial players?

Our schools reflect this reality. Math and science whizzes tend to be social outcasts while the captain of the football team dates the captain of the cheerleading squad. Of course, that sort of thing is forgivable and understandable. What is not so forgivable is that the academic curriculum is designed and administered by folks who absolutely cheer for all things Leisure Class.  So even if they don't know why, budding Producer superstars are going to hate such an environment. In the clip below, Elon Musk admits that he HATED school—which is odd when you consider how much he obviously loves learning.

The general public quite likes their Producer Class heroes so we shouldn't waste much time feeling sorry for the man. But even so, he has a problem—he has five sons he would like to see educated to higher levels with less pain than his own experience. People who love to learn shouldn't hate school. So he decides to create his own school. He hires a certified teacher who agrees with his goals and methods to run it. And then he invites a few other children to join in the fun.

There are some recognizable features of his school. For example, he has eliminated grade levels thereby recreating the best feature of the one-room school. Some of his innovations aren't really that odd when you think about them. For example, Musk believes that when kids understand why they should learn something, all the other problems of motivation disappear. Well, duh! But ask yourselves, when did any teacher ever give you a believable reason for learning something (beyond, you need this to get into a good college, that is)?

Musk's most prominent Producer Class feature is a nice little habit of saying, "I just want to be useful" whenever confronted with the inevitable "What motivates you?" sort of question. Hard to top that response as a refutation of the ultimate goal of total uselessness that seems to rule the Leisure Class. Apparently he wants to assign usefulness as the goal of his school. To me it sounds like a heaven for those who enjoy learning.

The clip below is from Chinese television. It covers more than his school but the school conversation is in the first three minutes.

Wednesday, August 2, 2017

The Circular Economy—still one of the great ideas


One of the lightening bolts of insight that staggered me as a man in his 30s was the idea that because there is no "away" the throwaway society is ultimately doomed by simple physical reality. It is quite impossible to dig up raw materials to be sent on a journey to the landfills forever. Either you run out of resources or you run out of places to store the waste, or both. The only way out of this dilemma is to make products so they can be reprocessed into new things when the time comes for the original product to be replaced.

Yeah.

This is one of those ideas that would require about a million times more effort, cost, and inventiveness to do than to dream up. After all, not only are most things designed and built without the slightest consideration for disposal, large numbers of products are designed to be disposed of after only one use. Designer junk, if you please. I once gave a talk at 3M, a company that has made their primary mission the production of designer junk. I chose to talk about design for disassembly, and other proposed schemes to create a less wasteful world. The assembled 3M folks were not amused. Needless to say, I wasn't asked back.

The idea of the circular industrial society is still one of the better notions to have crossed my mind so I included it in Elegant Technology. It can be found in Chapter Ten: Do Producers Have a Plan? Of course, no one ever reads a book to Chapter Ten so I might as well have never written it at all. But when I saw someone discussing this idea the other day under the title The Circular Economy That Could Save Countries Thousands, Reduce Waste (reprinted below) it made my heart glad. But first, I have decided to reproduce the section from my Chapter Ten called Closing the Loop. I hope that you readers will understand why this was the idea that made me believe a sustainable world was possible. I also hope no one minds that this was first written in 1985.

Monday, July 31, 2017

Globalisation: the rise and fall of a truly terrible idea


There is a certain beauty and nobility about the idea that we are the world and wonderful things happen when we think of the rest of humanity as our brothers and sisters. Unfortunately, some very cynical people can take this beautiful idea and turn it into empire building. The sun never sets on the greatest civilization, you know.

Of course, the Roman or British Empires were harmless play-actors compared to the ruthless plunder available to those who can control the hydraulics of electronic money. And to keep the looting of the electronic money boys on track, the world needed some philosopher-pundits to convince the suckers that usury was harmless and the "structural adjustments" that threw whole classes of people into abject poverty were necessary for growth and prosperity. And to give the practitioners of empire building with electronic money a patina of beauty and respectability, they named their wickedness "Globalization" and "Free Trade" and "Reform."

In spite of the fact that none of these schemes benefitted very many people, the Globalists kept at it because the very few it did benefit became rich beyond the dreams of avarice. But pretty predictions advanced by the expensive think tanks couldn't cover the fact that these global schemes never work.
  • Big mass markets simply cannot work without a giant middle class with money to spend. Unfortunately, the primary goal of the money plunderers is to reduce the size and income of the middle classes.
  • The money boys tend to lack all respect for manufacturing and other forms of useful work. Ship those factories to China or Bangladesh where desperate brown folks will work for $10 a day. The de-industrialization of the formerly industrial countries has triggered some of the greatest calamities in human history. These moves were deliberately undertaken by hopelessly thoughtless people.
  • While we may all be brothers and sisters sharing a big blue marble in space, the realities of life are dramatically different from one region to another. One of the things builders quickly realize is that construction practices often don't travel very far. A house built for the blazing heat of the USA Southwest will be damn near worthless during a North Dakota blizzard. In macroeconomics, the same economic scheme that works well in Sweden may not work nearly as well in India or Egypt. Yet the money boys used their institutions to enforce economic orthodoxy from Ecuador to Korea and dozens of stops in between.
So now we are seeing some of the philosopher-pundits of Globalization coming ever so slowly to the realization that they have been selling some aromatic bullshit. Not all of them, mind you. The economics profession is mostly made up of very conventional people so they have no tendency to abandon their conventional wisdom. But some, apparently with the capacity to feel shame, have recognized that the vast majority of Globalization's major theses are just plain wrong and have formulated critiques. What follows is a damn fine article written by someone who has at least seen a brief flash of light.

Monday, July 24, 2017

The economics of waste


There is no particular reason to believe that Charles H. Smith is a Veblen scholar or that he has even read The Theory of the Leisure Class (TOLC). Nevertheless, if someone had been assigned to summarize TOLC, the following would rate an A+ because these are exactly the points Veblen was trying to make. For example, Veblen includes a whole chapter on why the Leisure Classes believe that waste enhances their status, entitled Conspicuous Waste.

This essay is short and sweet, and the reader isn't required to learn a bunch of arcane terms as is the case with a reading of TOLC. Several times in my life I have been asked to "translate" TOLC into modern English. Because I am terrible at such tasks, I have begged off. But I DO think it is a good idea. And however Smith came to write the following, it will be an excellent substitute until someone actually reworks Veblen's classic.

Friday, July 21, 2017

Re-upping my Producer Class credentials (again)





The main reason for do-it-yourself home repair is that you can have something in your life that is unaffordable any other way. Pictured here is my new rest-and-towel-off area built on the site of one of the nastier basement bathrooms ever seen or imagined. Among its many features it has an ADA-approved low-slip tile floor, knurled, high-grip, stainless-steel grab bars, an ergonomically excellent bench, and an LED lighting system that delivers almost 100 lumens / sq. ft. It is safe, comfortable, and aesthetically quite pleasant. And best of all, it was built with some of the lowest-cost materials sold in the big-box building supply store in my little town—for example the ceramic wall tile only cost $1.52 / sq. ft. ($16.36 / sq. meter).

But for me, this sort of building is also (and probably mainly) an epistemological exercise. Building teaches many important lessons including:
  • Careful and extensive planning is essential.
  • There is absolutely no substitute for getting it right the first time
  • Inexpensive materials can be made to look spectacular if used with imagination
  • The instinct of workmanship works best with good tools
  • Nothing disrupts a time schedule like a non-standard design or application
No one changes the world quite like the builders. And when the builders got really serious about their applied art, they produced the Industrial Revolution. The greatest errors in economics stem directly from a deep ignorance of the tool-users and what their role in society really is. So I build because I never want to lose touch with these people. It is what separates the economic thinking of this blog from virtually every other economics site on the internet. Unless one categorizes Ben Franklin and Peter Cooper as economists, there are no historical examples of economists who were graceful tool-users. Of course the greatest political economist of them all, Thorstein Veblen, built simple things—which mostly proves my point about how rare it is for the tool-users to be even mentioned in economic debates.

Even so, I look at my rebuilt bathroom and am filled with the calm assurance that very likely no other political economist in history could have built it. And this fact alone significantly explains why so many got so much horribly and disastrously wrong. It is impossible to accurately explain human society without accounting for the tool-users. Moreover, tool-using constitutes a knowledge that is rarely found in books—this is something you must do.

I must admit that most of these lessons had been learned long ago. But this time around, I thought a lot about the intersection between competence and honesty (mostly inspired by the hilarious debate in the movie The Big Short over whether it was fraud or stupidity that drove the housing bubble that crashed in 2007-8). Besides cost containment, my main goal was to have a well-made outcome. Like any such project, there were many jobs I had not done before. When that never-been-done-before job appears, the most important assignment is to take an honest and thorough inventory of the possible assets that can bring this task to a successful conclusion.
  • Is there a Youtube of someone doing the same thing? 
  • Do I have the right tools for fabrication? 
  • Can I purchase suitable raw materials? 
  • Is the planned method within my skill set? etc.
Of course, when there isn't a relevant example to copy, you are thrown into the world of invention where all these steps must be repeated with a lot less help. In these situations where outcomes are less certain, the margin for dishonest self assessment drops to ZERO. Turns out, once again, that the most important core ingredient of competency is honesty.

Unfortunately, this will be my last such project. I recently turned 68 and physically I cannot do it anymore. Especially if only to prove an epistemological point. This project was conducted in a cellar which means everything had to be hauled down a flight of stairs. Some construction materials are pretty damn heavy and clumsy. But I DO enjoy my repaired bathroom. The details of how it was done can be found by clicking the Read more button below.

Thursday, July 20, 2017

According to the Guardian, "How economics became a religion"


If there is one position I have maintained for as long as I have been writing this blog it is that, "Far from being a science, conventional economics is just bad theology."

I grew up in a parsonage. I had religion crammed up my nose from before I could remember. I fell in love with science because it offered a refuge from that sort of thinking. In my old age, I have made peace with much religious practice—SOMEONE has to bury the dead, after all, and this is something religious practitioners do fairly well. But I certainly do NOT want religious thinking around questions that are not religious. I consider someone who would pray that their god would heal their broken brakes to be crazy.

Theological thinking applied to economics is just as crazy. And yet, we see it all the time. And this article shows that the problem has become so obvious, even The Guardian can see it. Of course, as the "left" house organ of neoliberalism, they probably aren't about to do anything meaningful about their new point of view. This probably isn't even much of a start. But as someone who has taken a great deal of flak in life for questioning the "scientific" claims of the economics profession, I do find their new awareness oddly pleasant.

Sunday, July 16, 2017

R.L. Bruckberger on American School Economist Henry C. Carey


Last month I posted a large article on American School Economist Henry C. Carey, The only economists who ever created a national economy. The article was drawn almost entirely from the 1965 Pulitzer Prize winning history book, The Greenback Era: A Social and Political History of American Finance, 1865-1879, by Irwin Unger (Princeton University Press, 1964). One of the most intriguing references cited by Unger was R.L. Bruckberger.

Raymond Léopold Bruckberger was a French priest of the Dominican order. At the beginning of World War Two he requested the order allow him to join a combat unit, and served in the French mountain light infantry and commandos. After the collapse of the French army, Bruckberger became chaplain general of the French Resistance. He was awarded the Croix de Guerre and the medal of the Legion of Honor for his role in the Resistance. After the war, he lived eight years in the United States, researching and writing his book Image of America, published by Viking Press in 1959. Prominent American historian Arthur Schlesinger Jr. wrote a front-page review of the book for the New York Times Book Review, comparing Bruckberger to Alexis de Tocqueville.

One chapter of his book focuses on American School economist Henry C. Carey, and is entitled, "The Only American Economist of Importance" The title is taken from a 5 March 1852 letter by Karl Marx and Friedrich Engels, in which they wrote that Carey is “the only American economist of importance.”

Bruckberger inlcuded some excerpts from Carey that directly assault the key tenets of conservative, libertarian, and neoliberal economic thought. And, of course, Bruckberger frames Carey’s economic thought as being distinct from, and hostile to, today’s economic thought dominated by the British school. Contrast Carey’s belief that man’s struggle to master nature necessitates the creation of a cooperative society, with neoliberals' belief  (as per Margaret Thatcher) that “there is no society.”, only a never ending struggle of personal interests mediated by the working of markets. Carey’s belief also foreshadows Veblen’s analysis of the need for organized cooperation in the industrial processes of production. And Carey's analysis of humanity's struggle to master nature reinforces the point I have made in the past that the most important economic activity a society undertakes in the creation and dissemination of new scientific and technological knowledge. In The Higgs boson and the purpose of a republic (July 2014), I wrote:
....what is wealth? Is it really hoards of cash, or stockpiles of precious metals? Consider: Why do we have computers now, when there were none 200 or 500 or more years ago? Certainly, 500 years ago, all the raw materials that go into making a computer were available. There was lots of silicon laying around, and there was a lot of petroleum, with which to make plastics, sitting in the ground. There was the same presence of germanium and silver, and copper, and whatever else is needed to make a computer, 500 years ago, as there is today. What is so different today that we can make computers now, but could not 500 years ago? The answer, of course, is knowledge - we first had to develop, acquire, and master, the various facets of science that allowed us to make use of those latent natural resources, then apply that science to actual physical processes of production, or what we call technology. So what wealth really is, is the human power of thinking: reason, investigation, hypothesizing, testing, figuring out why things are the way they are -- and then figuring out how that new knowledge can be used to change the way things are.
In other words, the knowledge required to master nature.

One more note: Bruckberger identifies Carey as a Jeffersonian (there is an article in Bruckberger's book devoted to Jefferson previous to the article on Carey). Since Carey was a foremost advocate for the neomercantalist policies of Hamilton—a protective tariff, a national banking system, and massive government investments in infrastructure—Carey thus brings together and melds the two contending factions of early American history: Jeffersonian, and Hamiltonian.

Following are excerpts from pages 156-165 of Bruckberger's Image of America. At the end of this post are more results of an index search in economics textbooks.

Friday, July 14, 2017

Tucker Carlson destroys Max Boot


Tucker Carlson used to drive me into fits of rage. So now he has a gig at Fox News and suddenly, he has almost become a voice of reason. Yesterday, (12 JUL 17) he has Max Boot on his show and proceeded to tear him a new one on the subject of foreign relations in the age of Trump. Whatever feelings I may have had for Carlson (an arrogant, overprivileged rich kid with a career path greased by well-connected parents, for example) they pale in comparison to my loathing of Max Boot, one of the nastier house neocons over at the Council on Foreign Relations whose lies have caused the deaths of thousands (if not millions) of people. As John Lennon once wrote:

There is room at the top they keep telling you still
But first you must learn how to smile as you kill
If you want to be just like the folks on the hill

A Working Class Hero

After Carlson got done with him, Boot was NOT smiling—even though I am certain he smiles a lot for his employers over at CFR.


Monday, July 10, 2017

Missing the opportunity of a lifetime


Former CIA Director John Brennan said today on Meet the Press, "...right before he met with Mr. Putin and talked with him at some length, which I'm glad he did, he said it's an honor to meet President Putin. An honor to meet the individual who carried out the assault against our election? To me, it was a dishonorable thing to say."

Really? The appropriate way to meet a leader of another country is to be nakedly rude—especially concerning an accusation for which not one shred of proof has been offered in over eight months? Here's the deal Brennan. Putin is the first truly democratically-elected president in a country that has existed for over 1000 years. He has approval ratings after being in office for nearly 18 years of over 80% He can conduct press conferences that last over three hours without notes. And you actually believe that such a person deserves scorn?

After somehow surviving the utter BS of the Cold War, I thought that maybe, just maybe, the lies about Russia would stop. I could even tolerate all this mega-lying about Putin / Russia if it were not for the fact that some lifelong friends believe it. There are days when I feel physically sick.

So here's to our Democratic "heroes" who are actually more ridiculous than Tailgunner Joe McCarthy ever was. The other day Maxine Waters confused Korea with Crimea. Nice to know that geography isn't a requirement for high elected office. The people who can believe in "Russia-Gate" are the same sort that believed Iraq had weapons of mass destruction—in fact, they are often the very same people.

We are missing a golden opportunity here folks. If we were to get serious about doing business with V. Putin, who knows how many serious problems facing planet earth could be solved.

Monday, July 3, 2017

Sovereign Debt Jubilee?


Whenever someone suggest that we fund a Green "New Deal" (to use the phrase of Green Party candidate Jill Stein) a howl goes up of "you must be crazy-don't you understand the national debt is already in the $20 trillion range?" And unfortunately, that pretty much ends the discussion. And so we keep doing nothing because paying the interest on the national debt is SO much more important than doing something meaningful to save the ecosystems that make human life possible. Massive death by compound interest, anyone?

The power of creditors to force people to do very unpleasant things is really quite amazing from cultural intimidation, to evictions, to debtors prisons, to various methods of physical torture employed by loan sharks—and all to enforce a "reality" that exists mostly as a line of bookkeeping. Think about it—we have been prevented from doing things that are utterly necessary to the survival of the species because of "information" that exists as an electronic charge in the memory of some computer. This reality is so fundamentally insane that its no wonder the creditor classes must resort to their bag of cultural and physical violence to enforce their claims on your life.

The intimidation must be total because the nature of debt can be changed with almost tiny revisions in law and practice. Here Ellen Brown outlines how Japan is in the process of wiping out half of its national debts with almost invisible changes to the way their central bank operates and asks, "Why cannot we do the same thing?"

Saturday, June 24, 2017

The only economists who ever created a national economy


A couple months ago, I found online a very useful graphic of the major schools of economic thought. Take a look at it, with this question in mind: Have any of the schools of economic thought shown in the graphic actually resulted in creating a functioning national economy with a large degree of general prosperity and political freedom?

An honest, historically informed answer completely contradicts the libertarian / conservative / neoliberal hero-worship of Adam Smith. The original graphic was posted in April 2014. Four months later, the author posted a revised graphic. Note the major addition in the bottom left corner of the revised graphic: the American School of Alexander Hamilton, Henry C. Carey, and Friedrich List.
It is a very welcome addition, because the American School is the only school of economic thought that has resulted in creating a functioning national economy.

In December 1993, James Fallows rattled the economics profession with an article in The Atlantic, How the World Works:
The more I had heard about List in the preceding five years, from economists in Seoul and Osaka and Tokyo, the more I had wondered why I had virtually never heard of him while studying economics in England and the United States. 
Fallows goes on to describe the historical importance, not of British opium-trade apologist Adam Smith, but of the American School, in guiding the early industrial development of Tokugawa Japan, late imperial China, czarist Russia, Germany, South Korea, and other countries.

In a nutshell, the American School is the only body of economic thought which has actually resulted in national industrial development along with a large degree of general prosperity and political freedom. A partial exception is Marx, but, as Lawrence Goodwyn, the late historian of the American agrarian revolt and populist movement of the late 1800s, pointed out, no system of Marxism has been implemented without the coercive power of a red army behind it.

So why haven’t you ever heard of Henry C. Carey and Friedrich List, two of the most famous economists of the mid-nineteenth-century? They, and the American School, have simply been written out of the economics textbooks. Did you take an economics course in college, and do you still have the textbook around somewhere? Please, look in the index and see how many references there are to Henry Carey. Or to Alexander Hamilton, who, after all, is the person who designed the foundations of the USA economy—which certainly has to rank among the greatest achievements of the past millennium.  Compare what you find with the number of references to Adam Smith, or Milton Friedman.

Monday, June 19, 2017

Summer Sacrilege


Paul Street is rapidly becoming the most interesting contributor to Counterpunch. As the USA stalls out politically over the partisan arguments concerning the legitimacy of the 2016 election, Street is suggesting that reasonable folks rethink the usefulness of all this squabbling. And maybe get back to thinking about the incredibly serious problem of climate change.

So far so good. But the one "blasphemous" thought Street has that I cannot agree with is entitled "Think Capitalogenic, not Anthropogenic Climate Change." Street wants us to believe that the root cause of climate change is, ta da, Capitalism. Well, no. The cause of climate change is too many people burning too many fires. If anything, the "cause" of climate change CAN be ascribed to Industrialization BUT Capitalism and Industrialization are two VERY different things. The confusion between the two pretty well explains why even though socialism can talk a good talk when it comes to environmental problems, it has a dismal track record when it comes to performance.

For example, when I first became concerned about environmental problems, one of the more articulate spokesmen was this guy named Barry Commoner. He had written a book called The Closing Circle. One of his brilliant insights he called the Iron Law of Non-renewable Resources—every barrel of oil (etc.) discovered and extracted only makes the next barrel harder to find and more expensive to recover. Anyone who wants to know why fracking is so expensive need only refer back to this law. But for all his genius, Commoner stumbled because of his willingness to believe that Capitalism and Industrialization were the same thing. He was an avowed Marxist and believed that Socialism would yield far superior results when it came to environmental matters. When the Wall came down and "socialist" industrialization was revealed as the utter catastrophe it was, poor Commoner, for all his genius, was tossed on the ash heap of history. Which is unfortunate, because his Iron Law of Non-renewable Resources is still perfectly valid.

One thing the "left" should keep in mind is that the "capitalism" of stock markets, monetary policy and central banks, and the rest of the activities associated with the movements of money, did NOT cause industrialization in the first place and if the past 40 years are any guide, is the leading cause of de-industrialization. This is MOST unfortunate because for all the rapacious damage that Capitalism has inflicted on industrial activity, it staggers forward in its crippled state because industrialization fills real human needs.

Monday, June 12, 2017

Glass-Steagall, now more than ever


For those of us who have watched in absolute horror as the neoliberals have retested their crackpot theories on a country too ignorant to know better, our response is usually some variation on the theme "we know how to do it better because we have already demonstrated that our ideas are pragmatically superior." Paul Roberts is another throwback to the time when industrial "capitalism" created generalized prosperity and rewarded hard work and innovation rather than the scam of the month.

In some ways, it is almost impossible to imagine that something as honest, basic, and necessary as Glass-Steagall needs to be defended. Yet it was repealed, the banking systems blew up, and the taxpayers were put on the hook to save the perpetrators of deregulatory madness. Of course, the original act was put in place to prevent exactly the problems that showed up in the real estate bubble. In a sane world, Glass-Steagall would have been reinstated in 2008. But NOOOOO! The Predators want their bucket shops because it beats the hell out of honest work. And so the USA staggers from one economic crises to another.

Saturday, June 10, 2017

Dylan's Nobel Lecture in Literature


"The speech is extraordinary and, as one might expect, eloquent. Now that the lecture has been delivered, the Dylan adventure is coming to a close," Sara Danius, the permanent secretary of the Swedish Academy, which awards the prize, wrote in a blog post.



The very idea that the Nobel folks would award their literature prize to a songwriter has been, to put it mildly, controversial. I grew up the child of a Swedish-American mother who spent pretty much all her moral energy in life trying to be respectable. And as the wife of a Lutheran preacher, she had multiple daily opportunities to practice her art. So when I think of an august group like the Nobel Literature committee, I imagine my mother times oh, 100. A group that asks regularly, "What will people think?"

Given the outcome of this little experiment, the Nobel folks will probably retreat to some known safe haven of respectability for a long time to come. Because for the serious fans of respectability, the whole idea has been a fiasco. At first, Dylan didn't even respond to the announcement of a Nobel Prize. The Swedes found this hopelessly rude. The academic writers who would have been thrilled by the honor were quick to point out that the problem was that he wasn't a "real" writer anyway. Finally, Dylan accepted with some polite PR boilerplate but he didn't promise to actually make the awards ceremony. Patti Smith was sent to cover A Hard Rain's Gonna Fall and promptly botched the lyrics. She was immediately forgiven because her rendition was so moving but I am sure the pearl clutchers were left wondering, "what else could go wrong?" Still, Dylan could collect his nearly $1 million prize if he managed to deliver a lecture within 6 months. He just made it. And the speech is remarkable.

Dylan's behavior in all this confusion needs a bit of context. Here's a guy who went to work after only one year of college. He was focused on writing short-form poetry meant to be sung, with the primary singer (himself) hamstrung by a limited range. Many considered his voice laughably unpleasant. He cobbled together a one-man-band kit consisting of a guitar and harmonica and bravely offered his wares to anyone who would listen. His words were so compelling, however, that soon A-list musicians would be covering his work. While all of this is pretty interesting, none of it sounds like the sort of thing that would be found in the CV of a Nobel winner in literature. In fact, I am certain that Dylan suspected it was all a hoax.

So when it came time to write a speech outlining the effects of literature on his work, Dylan looks like he was forced to fall back on material he learned in high school—Moby Dick, the Odyssey, and All Quiet on the Western Front. There are damn few high schools that teach such books anymore and the number of students who actually learn them is probably close to zero. Fortunately, Dylan's father had moved the family to the small mining town of Hibbing Minnesota where he was enrolled in arguably the nicest public high school on the planet. In 1918, the owners of the Hull-Rust-Mahoning mine discovered that downtown Hibbing was sitting on an extremely rich seam of high-grade iron ore. It would have to move. To grease the skids, the town was offered a large cash payment which the mostly immigrant miners decided to spend on a new high school. They would eventually spend over $4 million (an incredible number in the 1920s) on a magnificent structure that still inspires awe. But the high school was to be more than a beautiful building, it was supposed to be a place where even poor children from mining families could get an elite education if they just did their homework. So while Dylan got by on his high school education, what an education it was. (We even know the name of his high school literature teacher, B.J. Rolfzen)

What is noteworthy about Dylan's choices is that in many ways, they are category killers. He says of All Quiet on the Western Front, "After reading it, I never wanted to read another war novel. I never did." This partly explains why the Nobel Committee awarded their prize to a "mere" songwriter—much of what passes for literature these days is irrelevant tripe in the form of academic navel-gazing. Too many categories have been killed long ago. Sometimes I wonder if the same cannot be said for the subject of economics—guys like Veblen and Keynes did some serious category killing in their day. It's hard to point to anyone currently writing who has anything new to add.

The Nobel Prize for Literature is clearly an award Dylan did not need. Even the $million payoff is a rounding error for someone who has sold over 100 million records, and the honor pales next to the dozens of awards for his music. But even though this was probably all just annoying for him, he managed to put together a speech both meaningful and profound. He didn't have to do it but for those of us who appreciate his cultural contributions, I am glad he did.

Monday, June 5, 2017

The European Left sells out the Greeks


Watching the American Left slide into irrelevancy at best and utter insanity at worst is certainly distressing but it is hardly surprising. The signs of extreme forms of neoliberalism were already abundantly apparent in the Democratic Party in the 1970s when Jimmy Carter, a mostly unknown peanut farmer / nuclear engineer became President of the United States with the help of David Rockefeller and the Council on Foreign Relations / Trilateral Commission. Carter's Vice President, Walter Mondale, was such a drooling stooge of the establishment that in his presidential run in 1984, he managed to lose debates to Reagan—a guy who was already visibly suffering from dementia / Alzheimers. Mondale couldn't really debate Reagan because on the big issues of economics and foreign policy, they agreed. Of course Mondale didn't go quite as far as 1988 corpo-dem candidate Michael Dukakis who declared, "This race isn't about ideology, it's about competence."

Of course, the left actually did have a granola version of what they believed on hand for such an occasion. They may have thrown in the towel on economics, by gum, but they still had the culture wars to win and food to complain about. And in these arenas, it is hard to argue against their success. For me, this was personal. My political roots were in the Farmer-Labor Party. Their goal was to get a better economic arrangement for factory workers and small farmers. In my mind, if you gave up the economic arguments, you pretty much lost the reason for having a political party.

Oddly enough, I pretty much expected the USA Left to sell out their economic principles. Watching the European Left sell out is much harder to understand. When I first encountered Europe's Left it was in 1970. I was pretty much welcomed because of my anti-Vietnam War activism but when the subject changed to economics and social policy, I felt pretty much lost. Everyone I met who called themselves a Lefty was FAR more theoretical than I was or will ever be. The way I saw it, people who had invested so much time and energy developing their complex theoretical positions seemed highly unlikely to abandon them. I returned from that summer of passionate debates in youth hostels determined to get my theoretical ducks in a row.

So I read some Trotsky, a bunch of Gramsci, etc. Basically what I discovered was that even though these authors could inspire something that resembled revolutionary ardor, none seemed to address the issues that so dominated my early political consciousness—interest rates and usury laws, the creation of money, the regulation of "natural" monopolies, etc. So as we can see from today's brilliant take-down of the modern "Left" by one really furious Greek, we have reasons aplenty to be furious over what has happened to that poor little country. Even IF the Left could awaken some old revolutionary ardor, they are theoretically ill-equipped to comment on such issues as IMF structural adjustments in the age of electronic money—and the rest of the horrors visited on the world's poor.

Sunday, May 28, 2017

The ruinous history of free trade, Part 1

November 6, 1860. Abraham Lincoln has been made President by a 39.8 percent plurality of votes. The Democratic Party had split in two over the issue of slavery expansion during its national convention in Charleston, South Carolina in late April. Almost exactly one month after the election, Robert Barnwell Rhett, publisher of the Charleston Mercury and the most open proponent of secession, walked along Meeting Street, almost to the southern tip of the peninsula Charleston is built on. He stopped at a house and knocked on the door. Now that secession was being planned, Rhett had come to talk with the Consul of Great Britain, Robert Bunch, about the “commercial prospects” of the South.

Once the two men had exchanged carefully courteous greetings, Rhett got right to the point.
Rhett asked Bunch how he thought Britain would act if ships arrived in its ports that came from the seceding states but did not have clearances from the customs collectors of the Federal government—assuming, of course, the Federal government didn’t object to their sailing and wasn’t going to “coerce the Seceders back into the Union.”
Rhett had represented South Carolina in the U.S. Senate in the early 1850s, so the British consul addressed Rhett with the honorific. “Is that what you believe will happen, Senator?” Bunch asked. Rhett replied:
“The course most likely to be pursued by the President is that he will not acknowledge the right of a State to secede as an abstract question, but practically, he will not interfere with it for doing so…. Foreign nations would be at perfect liberty to consider secession as an accomplished fact and to use their own discretion as to recognizing or making treaties with the new state.”
Bunch answered that he could not provide an official reply, since her majesty’s government had not yet provided him any instructions on the matter, and in fact had probably not even considered the issue yet. Bunch then slyly provoked Rhett by noting that most foreign governments, including his own, would take their guidance from whatever position the President and the Congress of the United States settled on.

This pushed Rhett to go directly to the heart of the matter, according to Bunch’s biographer:
[Rhett] expected the cottons states to form a Confederacy within the next sixty days, and he wanted to make it clear that “the wishes and hopes of the Southern states centered in England”; that they would prefer an alliance with her to any other power; that they would be their best customer; that free trade would form an integral portion of this scheme of government, with import duties of nominal amount and “direct communication by steam between the Southern and British ports.”
This conversation was communicated by Bunch to his superiors in the Foreign Office in London, and are part of the original documents used and quoted by Bunch’s biographer, Christopher Dickey, in his book, Our Man in Charleston: Britain's Secret Agent in the Civil War South (2015, Broadway Books / Penguin Random House, New York, NY, pages 179-184).

Monday, May 22, 2017

If China Can Fund Infrastructure With Its Own Credit, So Can We


The basic truth about money is that it doesn't matter what it is made of compared to what are the mechanisms for making it valuable. Money that can be traded for necessary items such as food and energy is always valuable. Money created to fund human inventiveness also falls into this category. Which is why people who understand this know that so long as it is spent to create necessary items such as infrastructure, the amount of money that can be created without triggering inflation is nearly limitless. The key is spending the new money right away on the products of human genius and hard work.

And so we see that China could build 12,000 miles of high-speed rail in a decade (among a host of other major infrastructure projects) without becoming Zimbabwe. If China had created a massive pile of new money and used it to fund a massive global shopping spree, the outcome would have been dramatically different.

Here's to Ellen Brown who has rediscovered the arguments for why massive amounts of fiat money CAN (under the right conditions) lead to massive increases in prosperity. And because climate change can only be meaningfully addressed by massive amounts of new and significantly redesigned infrastructure, and since this project is absolutely necessary for continued human life on earth, Brown is addressing THE most important topic in all of political economy.