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.

Asleep at the Wheel

German Leaders at Odds with Industry over Electric Cars

The government in Berlin fears that German automobile companies are lagging behind as electric cars pick up speed around the world. Faced with immense challenges and the potential loss of tens of thousands of jobs, the industry is still pushing its gas guzzlers.

By Horand Knaup, Michael Sauga and Gerald Traufetter
December 01, 2016

It just looked like an inconspicuous entry about a draft law on the Chinese Industry Ministry's website. No one in Berlin noticed it until an attentive diplomat at the German Embassy in Beijing came across it and rang the alarm. Luckily, the person best positioned to address the matter was already on a plane to China.

German Economics Minister Sigmar Gabriel was on his way to the country to discuss German-Chinese trade with the China's leaders, but after news of the draft law made the rounds of the minister's delegation, they couldn't stop wondering: Could this really be true? Would every seventh automobile sold in China soon be required to be electric -- and as if that weren't enough, would it also have to be manufactured primarily by companies owned by Chinese citizens? And what would that mean for German manufacturers? Would they be driven out of their most important market? "This is like a bomb dropping," groaned one German industry representative.

The questions raised by the ministry website remain unanswered today, but the shockwaves it triggered are still being felt. With the German automobile industry's record sales and manufacturing figures, and its artful engineering of everything from turbochargers to 4-wheel drives, politicians and business leaders here had maintained the illusion that others would be incapable of catching up.

Are German Carmakers Falling Behind?

With the trend in electric cars picking up, and not just in China, Berlin government circles are increasingly worried that the apparent technological dominance of Daimler, BMW and other German carmakers could soon be a thing of the past. Germany's industry value is being "put to the test" on a "scale that perhaps hasn't yet been totally registered," Chancellor Angela Merkel warned last week in parliament. Economics Minister Gabriel, who is also Merkel's deputy chancellor, pleaded with the industry "to preserve car manufacturing as the leading industry in Germany and Europe." An internal report from his ministry also warned that the companies in question are falling behind in the development of key electromobility components. There's a risk of "lasting dependence on Asian manufacturing," it warned.

The future of Germany's most important economic sector is at risk, and politicians in Berlin feel they have been left in the lurch by German carmakers. For nearly 10 years, Merkel and senior members of her cabinet have been working with industry leaders to prepare the fastest possible use of future technologies -- or at least they pretended to do so. They created a common electromobility platform, commissioned studies and expert opinions and the Chancellery also hosted a number of car summits. Everything that could be done to make Germany the "leading market," according to the term used at the time.



Today, that ambition has not become a reality. Whereas a respectable number of electric cars are already whizzing through the streets of France, the Netherlands and Norway, their share of the automobile market here hasn't even reached 1 percent. The coolest car in this market segment right now is the U.S.-built Tesla. And when a factory worker at Daimler or Volkswagen actually does get the chance to assemble one of the few electric cars on offer here, its core component, the battery, is usually manufactured in China or Japan.

If the situation remains as it is today, up to 40 percent of the supply chain value will be developed and produced outside the country in the future. "That can't be the aim of German carmakers," Chancellery Chief of Staff Peter Altmaier, whose position is cabinet level in Merkel's government, offers critically.

But how sincere has the government truly been in its efforts?

Divided Strategies

Given that the manufacturers earn a large share of their revenues with heavy diesel- or gas-fueled sedans, one industry representative scoffs that their visits to the government in Berlin primarily served to "protect the combustion engine." The companies were also deeply divided over their electromobility strategies. When, earlier this year, Merkel's government coalition debated possible government rebates for electric-car purchases, BMW CEO Harald Krüger called for the largest possible subsidies to be implemented when he spoke with Horst Seehofer, governor of the state of Bavaria, where the company has its headquarters. Around the same time, CEO Dieter Zetsche of Stuttgart-based Daimler had a chat with Barbara Hendricks, the environment minister of the local state of Baden-Württemberg, in which he voiced his opposition to the proposal. Volkswagen CEO Matthias Müller, meanwhile, is also reportedly opposed to the subsidies.

Industry and the government ultimately agreed on a 4,000-euro rebate per car, in what proved to be a tepid compromise that has had only a modest impact. Since its introduction in July, Germans have only submitted 3,343 applications for the electric-car rebate, far less than expected.

But given that the switchover to electric cars is picking up pace around the world, this doesn't make sense either -- a fact that the staff at Berlin's economics and research ministries have noted with concern. Electric cars are getting cheaper even as their performance improves and when it comes to combatting smog in many cities -- in both industrialized and emerging economies -- there is no alternative to the promotion of electric cars. If cities like Shanghai or Beijing move to ban combustion engines from their city centers in the future, German carmakers will have no choice but to respond -- especially if their diesel vehicles are burdened with a reputation for cheating on emissions test.

Now hardly a day passes without the CEO of a German carmaker presenting himself as a friend of the electric motor and announcing the production of new e-model. Their lobbyists in Berlin also continue to sing the same tune they always have: that they should have the most leeway possible for their fossil fuel-powered cars and the least risk exposure possible in developing electromobility.

Costs vs. Jobs and Know-How

The Chancellery and the Economics Ministry have spent years trying to persuade German manufacturers to establish their own joint battery-cell manufacturing facility. Just recently, Matthias Machnig, a senior official in the Economics Ministry, invited companies to his Berlin offices to champion the cause -- with a modest degree of success. Automobile industry officials don't believe it makes sense to establish a factory that would cost billions to create at a time when storage modules can be purchased cheaply and in vast quantities from Asia. The companies aren't interested in investing until the new battery technologies they are currently researching can be viably produced. There's also a fundamental conflict between the companies and government: The carmakers don't care where they get their supply parts from. Politicians, on the other hand, want to create jobs and maintain German expertise.

That's why Economics Minister Gabriel is now increasing the pressure on carmakers. "We should launch a major initiative to build up independent battery-cell production and research for all European carmakers," he urges. Gabriel would like to see "the participation of all relevant companies." He's also trying to entice them with government money. "The European Investment Fund issued by European Commission President Jean-Claude Juncker could also provide financing for companies," he says.

But it is uncertain whether those companies will bite. They fear creating new financial burdens given that they are already having to pony up to develop new electric and more environmentally friendly combustion engines.

Auto industry lobbyists in Berlin are currently pursuing a contradictory strategy: On the one hand, they want to spur sales of electric cars. At the same time, however, they are also trying to defend their diesel- and gasoline-fueled cars from what they see as overly stringent environmental regulations.

Industry Wants Looser Rules

Matthias Wissmann, president of the German Association of the Automobile Industry (VDA), wants to help ensure that combustion motors still have a long life span ahead of them. After all, his organization claims, gasoline and diesel motors can be operated with emissions levels that are close to CO2-neutral if environmentally friendly fuels are used -- so-called e-fuels, synthetic fuels that are manufactured using a chemical process powered by wind or solar power. VDA is promoting it as a zero-emissions technology. The only problem is that the process should primarily be used for aircraft or ships that aren't really suited for electrical propulsion. That, at least, is the view held by the Environment Ministry in Berlin.

The lobbyists are also urging the timeframe for the enforcement of stricter emissions standards in the coming years to be eased. They have already submitted a proposal to the Economics Ministry that would allow cars to emit more climate-harming CO2 if they are also equipped with environmentally friendly technologies like adaptive cruise control or fuel-saving drive programs. With a mix of technologies, the companies are hoping they can meet fleet emissions targets even with their expensive gas-guzzling models.

Carmakers are also trying to find ways to ensure that their heavy diesel sedans won't get booted from city centers in Germany. Cities like Munich and Stuttgart, where emissions levels are significantly higher than legal limits, are considering bans on the cars in inner-city areas.

In the meantime, Daimler and other carmakers have developed new diesel motors with lower emissions than previous models. And the companies are fighting to ensure that their vehicles will still be allowed in city centers in the future. Their original idea was to develop a "blue plaque" for diesel cars with engines that meet EU emissions limits. In some areas, only cars containing the plaque would be allowed to operate. The industry also managed to score a major supporter in the form of Winfried Kretschmann, a member of the Green Party and the governor of Baden-Württemberg, a state that is home to many carmakers and suppliers.

In the end, the government couldn't come to an agreement on the blue plaque and it is now working on an alternative model that would provide municipalities with greater powers to intervene, with the presentation of the new idea expected by Christmas.

Be it through e-fuels, environmental technologies or blue plaques, it's clear that carmakers are desperately looking for ways to keep their models with combustion engines attractive. They're also counting on the idea that the government has no interest in creating a crisis with its climate-change policies for an industry that is one of the country's biggest employers .

German Transportation Minister Alexander Dobrindt says that the situation is changing fast and that "no one can predict which companies will be among the largest carmakers in the world in 10 years."

It's a race against time or, as Chancellor Merkel recently put it: Either the industry will succeed in a turnaround or "it will be trumped by others." more

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!

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Carbon taxes and their discontents

Regular readers of this blog know that I am most certainly NOT a fan of carbon taxes.  As a public policy prescription for climate change, they fail on two obvious and disqualifying levels:

1. Carbon taxes assume that if you just make it more painful to use carbon, folks are just naturally going to figure out how to do with less.  And while this idea works when the subject is discretionary use of energy (water skiing, for example), the overwhelming use of energy is for activities that relate to survival—cooking, growing food, keeping warm, work-related travel, etc.  For the necessary activities, the only solution is to replace the energy consumption with new tools and methods that don't require fire to operate.  Unless carbon taxes are strictly used for infrastructure replacement, they are worse than worthless because they lead to problem #2.
2. Carbon taxes are the theological equivalent to the extremely controversial doctrine of indulgences. They allow the rich sinner to pay for the forgiveness of his sins.  While indulgences are mostly a cynical fund-raising ploy, they actually do structural damage to the social contract.  For example, Al Gore believes in carbon taxes.  As a very rich man, they would have minimal effect on his lifestyle in any case.  So after he made a small pile on his movie that was supposed to be a warning about climate change, he spent part of the proceedings jetting around in a very nice bizjet—perhaps the most lavish user of carbon fuels ever invented.  And how does he sell this hypocrisy?  He bought some indulgences—some carbon "offsets" and some political speeches about carbon taxes.

And so in the all-so-enlightened state of Washington, some folks have been agitating for carbon taxes because they have convinced themselves that to pass carbon taxes is to be on the bleeding edge of carbon awareness. And because this is mostly a lefty project, it has to pass all sorts of hurdles of political correctness—which is really a bad idea in the case of climate change because the problem is mostly a physics / engineering matter.  Energy matters are not especially enlightened by pre-industrial ideologies.

The following is a long and complex essay and if you want to find out what happens when stale ideas (like indulgences which were around to trigger the Protestant Reformation in 1517) meets a global society run by fuels that simply can no longer be burned, read it all.  I look at it as just another cautionary tale of what happens when folks try to apply Predator Class thinking to a Producer Class problem.

Iceland and USA vs banksters

Of all the forms of human behavior I have paid attention to in life, the one that continues to baffle me is the "soft power" of the creditor classes.  Yes, they provide essential services, but that is a trivial fraction of their activities.  The rest of what they do is just plain naked money-grabbing.  But to hear them describe themselves, they are paragons of financial, political, and moral virtue.  Then, they surround themselves with the trappings of power—bank architecture is so predictable as to be a cliché.  And it works.  They keep their power and no one of significance goes to jail no matter the outrage.

So far, the only place that has managed to rise above the soft power of international finance is Iceland.  It requires a uniquely egalitarian society to rise above the bankster bullshit and they have one. Part of this come from the fact that it is a country small enough so it is possible to actually know who runs the significant elements.  But part is probably the Viking heritage—during a storm in a longboat, no one escaped the dousing when waves broke over the gunwales.  In such conditions, people who didn't understand the concept of "we are all in this together" didn't last all that long.

And so Iceland has thrown their banksters in jail while in USA, they have been returned to their power to loot and given handsome bonuses for keeping the specter of meaningful regulation and enforcement at bay. Not surprisingly, I much prefer the Icelandic approach.

One of the more recent Wikileaks dumps shows how Citigroup managed to surround young Obama with layers of advisors whose job it was to argue that their naked criminality should not have been a crime in the first place.  Notice how accurate Citigroup's list of cabinet appointees turned out to be and this was written well before the election even happened.  To show how successful this operation was, compare it with the Icelandic outcome.  And so the global economy remains in the hands of criminals who can only destroy.  This simply cannot continue.  Turns out the banksters are so destructive, they are about to destroy life on earth as we know it.  It's possible someone will organize resistance to this madness.

Hillary's "deplorables" and other fun things about 2016

The presidential election of 2016 is SO damn ugly, I mostly just want to look away.  When I worked as a surgical orderly as ordered by my draft board for the "crime" of refusing to participate in their war crimes against the Vietnamese people, I got to see a lot of mindbendingly ugly stuff. My personal "favorite" involved a young motorcyclist who had managed to dribble his head along the pavement without a helmet for a hundred yards.  I got an especially long look because when I arrived to transport him to surgery, the folks from neurology were still debating whether his brain waves had been flat for the required 24 hours.  Meanwhile transplant was screaming a wide assortment of doctor-level curses at them because they had already prepped recipients who were NOT going to be happy if the brain jocks lost the donor. (Which is exactly what happened.  The rules and technologies have changed since then. For example, improved preservation techniques have extended the time available between harvesting and transplant. In 1971 they still needed a "live" donor.)

In my mind, this election is THAT ugly.

And because politics has strayed SO far from its intended objective of presenting alternative solutions to the problems of the day, it has become actually worse than simply useless.  I believe the absurdity of this contest can be summed up when the party of the Kennedys and Bill Clinton resorts to calling out a known womanizer for his sexual appetites.  At least Donald Trump hasn't driven anyone off a bridge yet.  But let's not quibble.  Discussing sex is what politics has come to.  And here I am wondering when the adults will start insisting on how we are ever going to confront the serious matters like climate change and the other environmental disasters.  Our schools are a disaster and serve no function other than to deliver the young into debt slavery.  Our main channels of communication have been seized by skilled liars who stupefy the public with insane propaganda.  But we can still talk about sex so we aren't quite the brain-dead donor material we should be by rights.

My world is especially conflicted because I have to assume that the vast majority of my pet Producing Classes are Trump supporters.  They are the ones who have been on wrong end of neoliberalism for over a generation and are looking for someone, anyone, who will speak for their economic and social interests.  Trump may have his flaws, goes their reasoning, but he is the closest thing to what they are looking for in MANY election cycles.  At least he has built something.  It may be as useless as another golf course, as ugly as an Atlantic City casino, and as socially destructive as overpriced housing for New York's mega-Predators, but it is something!  We can fill in the blanks later, say the Producers who are hoping for somebody to represent their world-view.

And so the party of the so-called working class is represented by a woman who utterly loathes the Producing Classes.  She actually has called them "deplorables."  And Hillary, I hate to tell you this, but you ARE going to need these people to succeed.  And while the great success of neoliberalism has been to lower the life expectancies of the Producers, they probably are not all going to go gently into that good night.  If you manage to win this election, your problems will have only begun.  Which is an amazing thing to contemplate considering you are already the most hated woman in the history of the planet. And we know this for a certainty because you have surrounded yourself with some of the most deplorable people to have ever set out to "serve" the public.

Paul Street provides a short list of some of Ms. Clinton's most deplorable advisors.  Read it and weep.

About that "recovery" since 2008

Of all the dangerous beliefs in magic / the miraculous, the belief that debt will lead to prosperity is arguably the most wrongheaded.  But it persists for a simple reason—for the creditor classes debt is a very good idea indeed.  Turns out it is still better to own slaves than to be one.  So to keep the idea alive that debt is a good idea, the creditor classes have bought up almost the whole economics world.  The escapees from this ideological prison are very few indeed.  I have been following this issue for most of my adult life and would hard-pressed to name 20.  Two of my favorites are Ellen Brown who concentrates on the question "Why should the simple act of issuing money automatically lead to debt?" and Michael Hudson who wonders why the creditor classes get to write all the economic rules.  This concentration on debt is extremely important now that debt has soared to levels never seen before in history.

Once, while in Florida, I met a man who had relocated from Buffalo New York—a place notorious for its huge lake effects snow storms.  "Couldn't handle the snow?" I kidded.  "Snow?" he responded, "I LIKE snow.  What I couldn't get around was the fact that Buffalo never recovered from the recession of 1957" (this was 1989.)  I remember this crack often because without some major economic course corrections, societies don't really recover from the big recessions.  I am occasionally prone to this sort of thinking myself—I remain convinced that USA has never really recovered from the recession of 1981-82 and can speak to that point for several hours without notes.

So here we have Mr. Hudson making a pretty strong case that the world hasn't really recovered from the recession of 2007-2008 and that even the most establishment / reactionary organizations like the IMF are finally admitting that nothing has been fixed to prevent almost exactly the same thing from happening again only this time with Deutsche Bank acting in the role of Lehman Brothers.  In fairness to Hudson, he is probably the king of the long-term perspective and will often recall something the Sumerians did in 3000 BCE.  So of course he is correct about not having done anything about the structural problems that made the collapse of the let's-pretend economy in 2007-08 mathematically inevitable.  I am pretty sure he uses this example because more people remember that economic disaster a lot better than anything the Sumerians did.

WW II style mobilization on climate change?

World War II levels of mobilization to combat the problems of climate change seems to a be goal mentioned once again in a country that has been ignoring the problem for far too long.  I confess, I use the comparison myself.  When one looks at the incredible accomplishments of the WW II generation in terms of producing new things in a very short time, this is the model whether the project was nuclear power or the mass production of antibiotics (penicillin.) Unfortunately nothing, but nothing gets accomplished so fast these days.

Of course, this speed points to the big problem facing those who who propose we just do that again.  For example, arguably the best fighter plane of WW II was the P-51 Mustang.  From the time the contract was signed to build this plane until it first flew was 151 days.  By contrast, the F-35, the lastest fighter plane to be built for the USA military had its first development contract signed 16 NOV 1996 and it isn't ready for service yet in 2016.

Jimmy Carter addressed the massive problems caused by the crises in fossil fuel in a speech given 18 April 1977.  Like the ex-Navel officer he was, he called those problems "the moral equivalent of war."  We are using more petroluem now than in 1977—so much for war-time problem solving. Sounds more like a F-35 boondoggle.

So here we have Stan Cox talking about a WW II-style mobilization to counter the effects of climate change.  I mostly agree with this analysis.  What I wonder is—do we still know how to mobilize for big projects?  I got to meet some of those giants of WW II production.  I don't meet people like that anymore.

That damn Riksbank Prize

Even though I almost never read fiction, I got talked into the Stieg Larsson crime thrillers starring a grown-up Pippi Longstocking Goth hacker (Lisbeth Salander) and her link to the outside world—an investigative journalist for a lefty rag (Mikael Blomqvist).  Part of the attraction was the notion that a man named Larsson could write so well.  But mostly these stories partly answered a question that has gnawed at me since I first visited Olaf Palme's Sweden in 1970 "When the Social Democrats were in power for over 40 years, what was the Swedish right wing up to?"  Larsson includes a whole bunch of examples—like the brother who became a Nazi in the 1930s and lost his life helping Finland fight the USSR—a totally believable scenario.

But nothing, but nothing, tops the triumph of the Nordic right wing than their misnamed "Nobel" in economic sciences.  By giving their prize to a wide assortment of crackpots, charlatans, and fools, the Swedes managed to undo almost every bit of progress ever made by the Social Democrats.  The triumph is so total that now even the Social Democratic Party regularly endorses the principles of neoliberalism.

I watched this process but I never really got a handle on how the economics profession got taken over by religious nuts.  But knowing how Scandinavians organize their small groups, I always suspected that there was probably one person with the combination of charm and browbeating who managed to set the agenda.  Well there is now a new book out—The Nobel factor: the prize in economics, social democracy, and the market turn—that describes the process of prizewinner selection and the one guy has a name—Assar Lindbeck.  The neoliberals have had a wide assortment of bad guys from Pinochet's thugs guided by the Chicago boys to Gaidar who helped loot the USSR with the advice of Jeffrey Sachs and the wünderkind from Harvard.  But the real bad guy is Assar Lindbeck because he poisoned the intellectual well.  The neoliberal madness he elevated to international fame will lie around in libraries like so much toxic waste ready to seduce gullible young minds for a very long time.

Moneylenders and their illusory social utility (update)

One of the more popular posts recently was Tony' epic takedown of those who believe that money-lending is an unalloyed good.  That this is not true should be blindingly obvious to anyone who can count.  Tony made sure everyone could understand.

The biggest problem, by far, is the excessive size of the financial sector.  The society simply cannot support such a huge parasitic / Predatory population.

Of course, since the real economy needs nowhere near such a large financial sector, there is almost no way for them to generate enough income from legitimate business to keep the doors open—much less provide for the pay scales the banksters seem to think is their due.  So not surprisingly, eventually all of them resort to fraud. Bernie Sanders made the claim “the business model of Wall Street is fraud.” That was the statement Tony was defending, after all. In fact, as William Black argues below starting at the 17:30 mark, fraud has become the organizing principle of banking—without it, most large banks are unprofitable.