Solving the problems of production

I came of age during perhaps the ultimate spasm of the Cold War--the USA invasion of Vietnam.  That insane conflict defined much of my youth.  Ostensibly we were fighting against the ultimate evil in Southeast Asia--Communism.  And because I grew to detest everything about that 'war,' there was a short period when I dabbled in the intellectual underpinnings of the 'enemy' by reading Marx.

That didn't last long.  While I came to understand why Marx's pithy critique of capitalism had become so popular around the world, I soon became disenchanted with his historical analysis of economic problems.  At one point, I read that Marx believed that capitalism was superior to feudalism because that was the stage of economic development where the problems of production had been solved.  Solved?  By that point in my life I had worked enough in jobs like construction to know that there had NEVER been a time when the problems of production were solved--those problems had to be addressed every day!

More importantly, solving the problems of production has nothing to do with one's politics and everything to do with the facts on the ground.  Visits to some Marxist states confirmed for me that people who believed that problems of production were something that had been solved in the ancient past tended to produce extremely shoddy goods.  This made my infatuation with Marxism very brief--it would not survive exposure to something as utterly absurd as a Wartburg (an East German car produced in Eisenach.)

But while history demonstrates that capitalism has been much more effective than other political systems at providing consumers with quality goods, it is hardly without problems of its own.  Take the example of Boeing.  Here is a company that produces arguably the finest commercial aircraft ever made--to the point where there are pilots and passengers around the world who will say "Its Boeing, or I'm not going!"  But in February of 2000, the neoliberals who had infiltrated Boeing management provoked a bitter strike with its union of rocket scientists called SPEEA.  Because Boeing cannot produce aircraft without its rocket scientists (SPEEA's rallying cry was "No Nerds, No Birds") it was forced to settle.  The neoliberals were outraged and so set in motion changes that would make Boeing less vulnerable to labor actions.  It moved its corporate headquarters to Chicago and began outsourcing its work in earnest.

So now, Boeing's war on its workers has come back to haunt them.  Neoliberal management has made it very difficult to produce the latest plane.

Notes on the passing of Joe Bageant

A gift of the Internet.  The chance I would have even heard of Joe Bageant without the Internet is zero.  And yet, I got to read a good deal of what the man wrote.  I loved his stuff because he was one of the few literate men to ever appreciate the character, intelligence, and nobility working people bring to their jobs.  Most guys with educations patronize the Producing Classes--and that's only on those rare occasions when they even notice their existence.  Bageant didn't. He may have not been an original, but there are WAY too few like him.

Getting to green

Today we see illustrations of two of my pet themes from Elegant Technology.

1) You really don't have an economy without manufacturing.  Making money by making things is orders of magnitude more difficult than organizing a financial fraud, but over time doing the very difficult very well is by far the most reliable route to generalized prosperity.

Still headed the wrong way

While it is most certainly true that there are a few folks out there that have have profited massively from the current economic strategies, and it is true that there are plenty of brown-nosing twits who seem to believe that their economic futures are best served by working to promote the agendas of that tiny minority, the fact remains that the overwhelming majority of folks, and the planet they live on, continue to crash and burn from these resulting wrongheaded policies.

Economics as Cultural Warfare

One of the pearls of wisdom in the Christian Bible is "By their fruits ye shall know them."

The United States and Britain have been solidly on the path of economic neo-liberalism since the regimes of Margaret Thatcher and Ronald Reagan. (Wikipedia provides a useful definition: "Neoliberalism describes a market-driven approach to economic and social policy based on neoclassical theories of economics that stresses the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the political and economic priorities of the state.")

What have been the actual results - the fruits - of neo-liberal policies over the past forty plus years? Industry in both the U.S. and Britain has been systematically looted by the financial sector; income inequality has grown to be the worst in human history according to some; the working class in both countries has been destroyed, with a male in his thirties today making near ten percent less than a working class male in the 1970s; real rates of illiteracy - if honestly measured - approaching forty percent; the worst financial crash since the First Great Depression; and an inability to simply maintain our physical infrastructure in good working order.

Why Wisconsin was probably not the best place to try the latest wrong-wing attack

I have been only recently been made aware of William Cronon, history professor at University of Wisconsin, Madison.  Ever since I became interested in Robert La Follette and the Progressive movement he started, I just assumed that folks like Cronon existed at Wisconsin because that is exactly the sort of person La Follette wanted working for his beloved university.

La Follette believed that a state university existed to help make the lives of the citizens better whether it was explaining how to produce tastier honey or how to make the organs of democratic government more effective.  Cronon is an example of the sort of teacher / historian La Follette believed a democracy needs to explain the institutions of government during times of upheaval.

So Cronon is the prototypical cultural wise man of Cheeseland--what does he have to say?  Not surprisingly, a lot of good stuff.

The real debts

Amidst all the talk about the seriousness of various national debts, something very important is forgotten.  The debts that seem to concern everyone are pretty trivial.  They barely even exist on paper these days.  In fact one of the big problems facing the banksters is that they failed to do the appropriate paperwork and now find it difficult to foreclose on mortgages.  Money, as we now know it, exists as pure information stored in a computer somewhere.  Creating and canceling debt using such a system involves a few keystrokes.

The debts we are running up with the planet, on the other hand, are very real indeed.  In fact, we are informed that in one year, we burn as much oil as was created in 5.3 million years.  Our lifestyle cannot be sustained for the simple fact that we cannot consume the earth's carbon "capital" as such rates without soon going bankrupt for real.

To compound the problem, we are allowing the banksters and their trivial debts keep us from addressing our real debts.

Empirical Evidence That Proves Conservatism is Destroying America

Here is a link to a DailyKos blog in which the writer took the time to assemble the list of the states that perform worse on a number of measurable social indicators. The ten states with the lowest median household income are almost all solidly Republican / conservative states. The states with the worst health-care systems are almost all solidly Republican / conservative states. The states with the highest divorce rates are almost all solidly Republican / conservative states. The states with the highest rates of teenage pregnancy are almost all solidly Republican / conservative states. The states with the lowest ratios college graduates are almost all solidly Republican / conservative states.

Producers vs Predators--the good guys win one

Those of us who subscribe to the Veblenian notion that the world is best understood by concentrating on the conflicts between the Leisure and Industrial Classes were handed a perfect example in Germany this week when a court ruled that a bank had defrauded an industrial company by selling a designed-to-fail product called a spread-ladder swap.

It is almost certain that the banksters will try to get this ruling overturned for one simple reason--the profits booked by the moneychangers these days are simply not possible if they cannot resort to fraud.  In fact, my personal estimate is that if restricted to useful activities--you know, the ones they would rather talk about when confronted with their sleazy practices, the banking sector would be about 1/10th of its current size.

New pics from Messenger, first spacecraft placed in ORBIT around Mercury

It didn't make much of a splash on the political blogs I usually monitor, but I think this is the sort of news progressives should be stressing as we battle to turn back the raging hordes of wrong-wing ideologues trying to create a New Dark Age.

Continuing shocks to the real economy

The trouble with Finance Capitalism is that the crazy money games these folks dream up cause damage to the real economy.  If this were not so, no one would give a rat's ass how many hookers or how much blow is consumed each month by a hedge fund operator.  One of the things that gets damaged is the ability to properly maintain the infrastructure.  And yet most of the time, the front-line guys seem to hold things together with gum and baling wire in spite of the penny-pinchers who run good investments into the ground.

And now we see how heroic the nuke crews can be.

A bankster prescribing austerity for the rest of us

The arrogance of the moneychangers seems limitless.  Considering the whole industry was a charity case in 2008, one could imagine a bit of humility coming from these bandits.  One would imagine wrong.  It is likely that this rubbish is quite common to today's modern bankster--the sort of stuff that passes for conventional wisdom in all the best country-club locker rooms.

What this clown fails to understand is that society simply cannot afford the huge, overpriced Predator Class as represented by him and his remarks.  One thing is for sure--he obviously does not think open class warfare is possible.

About that other form of Predation

Because the banksters caused crises in 2008 that have made whatever crimes done by the military in the name of "patriotism" seem insignificant by comparison, we may often ignore them.  In fact, I make it a policy here at real economics to ignore the comings and goings of the military-industrial complex (MIC).  The way I figure it, those folks get enough attention as it is.  If the MIC isn't looking manly and heroic enough in the news to heat up the blood and testosterone of the 18-year-old male, they can always buy advertising on sporting events or design state-of-the-art video games.

In fact, I would argue that the last thing the MIC needs to do is advertise on TV.  This insight was provided me at a young age courtesy of Mennonites.  They believed that it was totally natural for young men to want to go to war--it was part of the basic package of "original sin."  They believed the only way you can raise a non-warlike young male is provide him with regular instructions in pacifist teachings.  And even that is often not enough because the warlike animus is so strong.  Just remember, Dwight Eisenhower was raised as a devout Mennonite and he became a five-star general.  Just remember, the Social-Democratic members of the German parliament had made a powerful anti-war political statement just shortly before leaving en mass to join the fighting in 1914.

Or as my mother would say, "There will always be war.  Men LOVE war."  Fortunately history provides an alternate example.  My tribe, the Swedes, have an extremely warlike history.  After all, we were a part of the hordes of the north that struck such terror in the hearts of the rest of Europe that they actually prayed to God for deliverance.  (From the fury of the Northmen deliver us, O Lord!)  The Swedes did enough damage during the Thirty Years' War to affect the boundary between Protestant and Catholic Europe to this day.  Swedes figured out a way to get into wars pretty much continuously from the Viking Age on.

And then in 1818, it stopped.  Sweden stopped making war--she hasn't been in a war since.  What changed?  Sweden had a succession problem and so formed a committee to recruit a new king.  They found a handsome officer in Napoleon's army who agreed to move to Stockholm, learn Swedish, and be the new king.  He had the fine name of Bernadotte and his family still makes up the modern monarchy.

Now I am a devout republican.  I do NOT believe in kings.  But if the Swedish monarchy is responsible for turning perhaps the most warlike society in history into a nation that believes the best way to interact with the rest of the world is to turn them into satisfied customers for the goods produced by their clever and industrious population, then there is a least one example of a monarchy being useful.  Cultures CAN evolve!  And it took a military man who was obviously fed up with the lies that have to be told to sustain a military becoming king of a land populated with folks best described as fierce.

And of course, the peacemakers do have the argument that their way is better because a peaceful environment leads to amazingly sophisticated societies.  It makes for better farmers.  And it makes for MUCH better industries.  It is the basis of "soft" cultural power that military minds can only dream about.  This is true mostly because militarism, like most actions of the Leisure Classes, is a primitive response to the outside world.  As the War Nerd, Gary Brecher, points out so well here, there is very little new in military thinking.

Windpower News Roundup

Here's a roundup from the past few weeks, taken from the American Wind Energy Association's "Smartbrief" news summaries

Geithner Trying to Shield $4 Trillion-a-day Forex Market from Regulation

The story of how the Obama administration favors Wall Street over Main Street is getting to be very, very old, and will, I think, become Obama's biggest obstacle to re-election. As I have argued before, the real underlying problem is that Obama is a true believer in the "neo-liberal" economic policies of free trade and free markets. The foreign exchange markets are one of the foremost examples of what has happened since nation states in the 1970s began to surrender their national sovereignty to market forces. Back in the 1950s and 1960s, ALL foreign exchange trading was directly related to either actual trade in goods and services; personal travel; or U.S. military expenditures and aid overseas. Today, foreign exchange trading is over 100 times larger than these three things. In other words. foreign exchange trading today is 99% pure speculation. A one fifth of one percent tax on all foreign exchange trading, as originally proposed by economist James Tobin in the 1970s, would provide hundreds of billions of dollars in tax revenues.

Blowing a Hole in Dodd-Frank
Treasury Secretary Timothy Geithner is close to a decision to exempt the $4 trillion-a-day foreign-currency market from key provisions of the Dodd-Frank Act requiring greater transparency in the trading of derivatives. In the horse-trading over the final conference version of that legislation last year, both Geithner and financial-industry executives lobbied extensively to give the Treasury secretary the right to create this loophole. As the practical reach of Dodd-Frank is defined by the executive branch, this will be the first major decision to signal whether regulators will act to strengthen or weaken the reforms.

Read more.

Wisconsin is just another strategy of the austerity ghouls

While it has been fascinating to watch as my cheesehead neighbors attempt to stand up to an austerity strategy that has caused riots from Greece to England to Egypt (remember prince Chuck getting his limo attacked in London during the attempt to saddle English students with greater education debt?), it is sad and instructive to watch how uncoordinated, ad hoc, and unplanned these responses have been.

Getting Japan back on its feet

On of the more interesting things about a childhood spent around Mennonites was watching how they reacted to natural disasters.  Here in the midwest we have essentially two kinds of disasters that damage infrastructure--flooding and tornadoes.  Of course there are others such as hail, ice storms, or blizzards but these rarely do damage to structures.  Because flooding is somewhat predictable, the response to flood areas can involve long-term planning including rebuilding away from flood plains.  That leaves tornado damage as the disaster most responsive to outside emergency assistance.  So some Mennonites I knew had organized themselves into emergency response teams that would swoop down on a tornado-damaged town and do amazing amounts of good in a short period of time.

While organizing emergency response for tornado victims started out as an act of Christian virtue for my Mennonite neighbors, the reason folks were happy to see them show up had little to do with their religious beliefs.  No, the reason folks in the surrounding area didn't really feel like recovery was under way after a tornado until the Mennonites showed up was because those folks actually made things better when they arrived.  The Mennonites were good neighbors because they showed up with skills, organization, and a willingness to work.  Dangerous trees got felled, roads were cleared, emergency supplies got delivered--along with the notion that recovery was possible.  Watching this coordinated effort was like watching a demonstration that once in a while, virtue is its own reward.

Watching the Japanese organize the recovery from the Kobe earthquake of 1995 convinced me how much larger and more organized than the efforts of the good neighbors of my childhood needed to be to cope with such a mega disaster.  Damn, these guys are good!

Even so, Japan has a real mess on its hands.  Fortunately they have enormous resources to bring to these catastrophes--most emphatically including skills and organization.

Be careful before making snap judgments on Japan's economy

The crises in Japan simply cannot be overstated.  When the damage inflicted by the 5th worst earthquake in recorded history is only the third-worst disaster in the last month, life is exceedingly difficult for the Japanese.

However, the amount of sheer nonsense being written about the effect on the Japanese economy by these events borders on the insane.  And I would believe some of it except most of this has been written before--and it was wrong then.  For example, Michael Lewis' 1989 Article: "How A Tokyo Earthquake Could Devastate Wall Street & The Global Economy" is making the rounds again.  Much as I like Lewis, this article is pure rubbish.

I personally remember making a bunch of apocalyptic predictions about the global economy following the Kobe earthquake--so I am FAR from guiltless on this.  But being so wrong about Kobe makes me extra careful this time.  Here is what we should remember about Japan.

So you think the country's broke? Think again.

The cover of a recent issue of Barron's magazine was presented in a recent post on Financial Armageddon. Please note the text on the cover at the top right of the globe (above the red arrow):



"The dollar's swoon is drawing more investors to the $4 trillion-a-day foreign exchange market."

$4 trillion-a-day, folks. That's just in the forex market. There's trillions more traded in the stock, bond, futures, options, and derivatives markets every day. One fifth of one percent of $4 trillion is $8 billion. Multiplied by the number of trading days in a year, that's $2 trillion.

Budget deficit? Tobin Tax Initiative. Problem solved.

There's plenty of money out there. The problem is, we don't control it. But, what are governments for?

Not Hard to See: American Workers Get Less and Less

Two sentences and one chart from Financial Armageddon:

In recent years, American workers have received an ever-decreasing share of what our economy produces.

Is it any wonder that many Americans aren't feeling so happy about the so-called recovery (assuming, of course, it's more than just smoke and mirrors)?

It's interesting to project where Ronald Reagan and George Bush were elected: their Presidencies were absolute disasters for American workers.

Liberals vs. Progressives

I have been studiously avoiding the label "Liberal" since my college days when I discovered that some of our finest examples of "Liberalism" could be utter monsters on the subject of Vietnam.  This was Minnesota.  I had a mother who was an über-fan of Hubert Humphrey and considered his civil rights speech to the 1948 Democratic convention (youtube, text) to be a sign that God wanted him to be president of the United States (I am NOT making this up).  She was not pleased when I started to chant "Dump the Hump" when he became the candidate of Richard Daley and police riots at the 1968 Chicago Convention.

During this time, I was introduced to economic thinking when I got hold of Galbraith's New Industrial State in high school.  Galbraith is one of the founders with Humphrey of the Americans for Democratic Action (Youtube channel).  Galbraith got Vietnam right.  Galbraith got Keynesianism right.  Galbraith was a delightful writer.  He helped restore some of the lost shine to Liberalism in my mind that Cold War ethical monsters like Humphrey had done so much to destroy.  But it wasn't enough.  I couldn't call myself a Liberal any more--I had to find another label for my political beliefs.

Fortunately, I didn't have to look far.  I soon discovered that Minnesota had all these "liberals" because we had a long and interesting history of radical and progressive movements that stretched back to the settlement itself.  Ou forebears gave their movements lots of names.  The best-known was the Peoples Party of 1892 who called themselves Populists.  But Robert La Follette over in Wisconsin believed the state university should be the intellectual foundation of good government and in Madison, it was just down the street.  He combined the politics of the Populists with a world-class university and called his movement Progressive.  When I discovered this in early 1980s, it didn't take long for me to decide that I could embrace the label "Progressive" as defined by the founder of the movement.

Now days, there are LOTS of former Liberals who now call themselves Progressives.  Most of it is just a way to escape the negative associations that have grown up around the Liberal label.  I mean, damn few of these Progressives-come-lately have ever heard of La Follette much less understand what he was trying to accomplish.

Moreover, most Liberals turned Progressives still believe there is nothing especially wrong with Liberalism as it came to be practiced in USA--it is just that slander from the Right Wing has destroyed the label beyond repair.  Here they are mostly wrong--relentless Right Wing assaults on Liberalism are a fact, but Liberals did a fine job of trashing the label on their own.

Here Chris Hedges--a serious old-fashioned Liberal--provides us with a pointed come-to-Jesus critique of what went wrong from the inside.  I believe Hedges is profoundly correct in his assessments.

Fukushima nuclear plant in trouble

Nuclear power generation has been the subject of intense controversy since it was first proposed.  Originally it was sold as a vast improvement over methods for making electricity such as burning coal and a peaceful use of a technology first designed for warfare.  The original boosters of nuclear power claimed it was clean, modern, and in a phrase that would come back to haunt them "too cheap to meter."

Critics of nuclear power would argue that it was incredibly dangerous, created waste products that would be hazardous for thousands of years, and was hideously expensive if all costs were taken into account.

Another look at "Inside Job"

This weekend, I got my first look at the newly-released Blu-ray version of this year's Oscar-winning documentary.  Inside Job is a remarkably important movie because it is likely that for many, it will be the dominant (maybe only) explanation of the 2008 global economic meltdown they will see.  So it is important that Charles Ferguson got it right.  And as I have written previously here at real economics, I believe he got it very right indeed.

This does not mean Inside Job is above criticism.  The Blu-ray version exposes some weaknesses that would have probably gone unnoticed by merely seeing this doc in the theater (at least that is true for me).  The biggest shows up in the little 12-minute "The making of Inside Job" mini-movie tucked in the extras folder of the disc.  Watching it I discovered that Ferguson is FAR from being a bomb-thrower.  In fact, his attitude seems that of a rich man (he sold his software company Vermeer for $133 million in 1996) who is sadly disappointed by the ethical failings of some in the financial services business.  (He might have even lost a large chunk of his nest egg and is pissed by the thieves who stole it.)  His film does not examine the systemic failings of the institutions of finance--rather it looks for (and finds) bad guys.

Nowhere is this concentration on the personalities over institutions more apparent than with Ferguson's treatment of the economics profession.  When I first saw Inside Job, this was by far my favorite part of the whole movie.  This time around, I found it sad and irrelevant.  This does not mean I have suddenly forgiven the Predator Class ravings of someone like Harvard's Martin Feldstein, it's just that I don't find it terribly important that he took money (gasp) to write position papers that supported the crooks who crashed the global economy.  Why?

First of all, while the thousands of dollars that these economists picked up for writing papers for the banksters might seem like a lot of money in the academic world, it is just peanuts in the world of global finance.  If these economists were really selling out, they were doing it for very little.

Which leads to the more important problem that Ferguson doesn't even touch--It is HIGHLY unlikely that it would have made a bit of difference how much the academic economists made for writing a paper for the Icelandic Chamber of Commerce, their conclusions would not have changed much, if at all, had they been writing for free.  These academics have managed to convince themselves that economic deregulation was a good idea.  They are true believers.  This is their lovingly-held worldview.  They have drunk the kool-aid.  This is difficult for Ferguson to accept because it means that the Ph.Ds who run the economics departments of the prestigious universities are not so much corrupt as really, REALLY, goofy.  (I am reminded again of Michael Boskin of Stanford who said as George H. W. Bush's chief economist in response to complaints that we were offshoring critical electronics industries "It doesn't matter if a country makes computer chips or potato chips."  Boskin wasn't being paid or corrupted at that moment to sound like the biggest idiot in the history of economics--he actually thought this was true and will probably defend that crazy sentence to this day.)

Because Ferguson is obviously a bright guy, I am willing to bet that his giving a free pass to academic stupidity is probably more of a class solidarity thing--he has been an academic himself.  And like the truly bright, he seems quite willing to update his information base.  We will see.  Perhaps he has a documentary in the works covering the subject The Dumbing Down of Economics.

And NONE of this criticism detracts from the reality that Inside Job is still one of the great movies.  It is truly remarkable.  And it is a movie one hopes everyone will see.

In the meantime, the unseen hero of Inside Job, Matt Damon, who narrates the film, has already grown past his mindless backing of Goldman Sachs' favorite candidate--Barack Obama.  Someone's evolving!

Time out for some sticks

Between the final assault on the USA middle classes and the terrible tragedies in Japan, it is probably a bit self-indulgent to pay attention to something as "trivial" as boys high school hockey.  But I just got through indulging myself and man, was it fun this year.

Yesterday in Madison

My neighboring cheeseheads turned out probably 100,000 for yet another political rally. It is still winter up here folks. I have NO idea how this will all turn out but anyone who turns out for a political protest on a day when it is grey, windy, and around 20° F (-7°C) is HIGHLY motivated.

The signs were wonderful.  Someone over at Dailykos posted a bunch of pictures of the hand-lettered efforts.  My favorites:

This Is What the Class War in the U.S. Looks Like

This hard-hitting graph has been making the rounds on the tubez, abut I first noticed it in greywolfe359's DailyKos diary two days ago: The Must See Chart (This Is What Class War Looks Like). (Update: the original posting appears to have been on February 22,2011, by the Center for American Progress, here.)

EVERY local Democratic Party organization, and progressive group, should be getting this in front of the public in any way possible.

Scientists Build The World's First Anti-Laser

More than 50 years after the invention of the laser, scientists at Yale University have built the world's first anti-laser, in which incoming beams of light interfere with one another in such a way as to perfectly cancel each other out. The discovery could pave the way for a number of novel technologies with applications in everything from optical computing to radiology.

Read more.

Minimally Invasive Surgeries: Laser Suturing

Surgeries with the endoscope are exacting and require special capabilities of the surgeon. The suturing of the tissue and the setting of the knots, in particular, is very complicated due to the lack of space for movement. A new, minimally invasive suturing tool simplifies the procedure. In the future, the suture material will no longer be knotted, but welded with a laser. The device will be displayed at the MEDTEC Fair in Stuttgart, from March 22 - 24, 2011.

Read more.

New Generation Of Optical Integrated Devices For Future Quantum Computers

A research group led by scientists from the University of Bristol has demonstrated the quantum operation of new components that will enable compact circuits for future photonic quantum computers.

Quantum computers, holding the great promise of tremendous computational power for particular tasks, have been the goal of worldwide efforts by scientists for several years. Tremendous advances have been made but there is still a long way to go.

Building a quantum computer will require a large number of interconnected components – gates – which work in a similar way to the microprocessors in current personal computers. Currently, most quantum gates are large structures and the bulky nature of these devices prevents scalability to the large and complex circuits required for practical applications.

Recently, the researchers from the University of Bristol's Centre for Quantum Photonics showed, in several important breakthroughs, that quantum information can be manipulated with integrated photonic circuits. Such circuits are compact (enabling scalability) and stable (with low noise) and could lead in the near future to mass production of chips for quantum computers.

Read more.

Getting the bits right

Yesterday, I saw a report that Sweden must make serious, yet invisible repairs to her most famous tourist attraction--the warship Vasa.  Launched in 1628, Vasa sailed for couple of hundred meters before it rolled over and sank into the mud of the Stockholm harbor where she rested until 1961 when a major effort was launched to raise and preserve her.  Because the harbor is mostly freshwater, the ship's wood was unusually well-preserved but even so, finding all the pieces and reassembling them while arresting further damage would prove to be a monumental effort that required years of highly skilled work.

Now it has been discovered that the bolts used to reassemble Vasa are corroding and will need replacement.

The Republican War on Higher Education: Abraham Lincoln Weeps

Most Americans think Abraham Lincoln was one of our greatest President because he led the country through our Civil War, and still was able to call for "malice toward none, compassion for all," as the war drew to a close. I'm not sure how many Americans realize that even while waging war against the destructive conservatives of his day (you know, the conservatives who would rather tear apart the Union than change or threaten the institution of slavery and the ideas of race supremacy), Lincoln also implemented far-reaching economic policies that basically created the modern United States. Indeed, history professor at the University of Louisville Leonard P. Curry entitled his 1968 book, Blueprint for Modern America: Nonmilitary Legislation of the First Civil War Congress. Among the programs Lincoln and the 37th Congress created are the transcontinental-railroads, the Homestead Act to open the West to settlement, a new tax system, a protective tariff designed to protect American workers and manufacturers. In the next Congress (which Curry does not discuss) the Department of Agriculture was created, to help spread and institutionalize the advance of agricultural science and technology. Anyone who has seen old copies of USDA Farmers' Bulletins knows how effective the USDA was in getting new knowledge disseminated among the nations farmers.

But perhaps the most important new economic program was the Morrill Land-Grant College Act, which created the backbone of most state university systems.

One final note: most of these programs were really not new ideas; but it was only after the conservatives in Congress withdrew as their states seceded - taking their parliamentary obstructionism with them - that the rest of the country was able to actually get enabling legislation passed.

Is the price of oil really rising?

I'm frankly amazed people don't realize this, but while the media trumpets the rise in the price of oil on the speculative futures markets, the actual cost of producing oil remains the same. Does it really cost $30 or $40 more to pump a barrel of oil out of the ground in Texas, or Saudi Arabia, than it did two months ago? Does it really cost more to store that barrel of oil, than it did two months ago? Has the cost of hiring roughnecks, roustabouts, and other workers gone up? Has the price of drilling pipe and drill bits gone up? Have the prices of pumps, gaskets, seals, valves, and pipe gone up? No, the actual costs of production are not really impacted by "uncertainty about what effect the unrest in the Middle East will have."

$100 Oil? Blame Speculators and the Bank Lobby, Consumer Advocate Says

Oil prices fell Tuesday after Kuwait's oil minister said OPEC may hold an "urgent meeting" to discuss the cartel's response to escalating warfare in Libya, where output has fallen by as much as 1 million barrels a day, Bloomberg reports.

Still, crude remains well above $100 per barrel as the rolling protests in the Middle East have raised the specter of another supply shock.

But North America is "awash in a sea of crude reserves, both public and commercial, says Tyson Slocum director of the energy program at Public Citizen, a non-profit organization. "There's no supply-demand fundamentals that are justifying this huge price spike."

Concerns about unrest in Saudi Arabia are overblown, says Slocum, who believes the odds of a disruption to Saudi supplies are "unbelievably low."

Rather than geopolitics, Slocum says "speculators on Wall Street" are to blame for the recent spike in energy prices. "This is a case where speculators are driving the market rather than end users like refiners. [Speculators] use any excuse to push prices up beyond supply-demand fundamentals."

While it's impossible to specifically quantify the impact speculators have on prices, commodity speculation has risen dramatically in recent years thanks to the popularity of commodity-focused ETFs and institutional benchmarks like the S&P Goldman Sachs Commodity Index (GSCI). The net long position of non-commercial speculators hit an all-time high this month, according to the Commodity Futures Trading Commission.

Read more.

Speculators Gone Wild?
At the risk of becoming involved in the ongoing Paul Krugman/Yves Smith debate regarding the influence of speculators on commodity prices, I direct readers to Colin Barr at CNN Money:

The surge of speculative money into the oil futures pits shows that big financial players are expecting the price of WTI crude to surge well above the recent $105 or so seen last week. If they are right, it will bring $4 gasoline a step closer….

…"It does not get any clearer which way Wall Street is trying to take oil," says Stephen Schork, who writes the Schork Report energy markets newsletter in Villanova, Pa.

Schork notes that speculators now own nearly six times as many barrels of oil – 268,622 futures contracts representing nearly 269 million barrels – as can be stored at the WTI trading hub in Cushing, Okla. And since the CFTC numbers released Friday only go through last Tuesday, they likely underestimate the degree of speculative fervor building in the energy markets.

Money appears to be flooding into energy markets to chase a sure thing, with potentially severe consequences for a global economy still on the mend.

Read more.

Libya, Gas Prices, and the Big Payday at Your Expense
by Michael Collins on Mon, 03/07/2011

The average price for a gallon of gas rose 30% from $2.69 in July 2010 to $3.49 as of March 6. Most of that 30% has come in just the last few days.

We're about to embark on another period of let the markets take care of it. The Money Party manipulators are again jerking citizens around in the old bottom-up wealth redistribution program. Their imagineers are writing the storyline right now.

The conflict in Libya is causing the spike in oil prices over the past ten days or so according to the media script. Take a look at the chart to the right. Can you find Libya among the top fifteen nations supplying the United States with crude oil?

Read more.

By the Numbers: A Revealing Look at the Mortgage Mod Meltdown

By the Numbers: A Revealing Look at the Mortgage Mod Meltdown

by Olga Pierce and Paul Kiel
ProPublica, March 8, 2011, 12:37 p.m.

For the past year, we've been digging into the administration's fumbling efforts [1]. We've crunched a lot of numbers along the way, and now we're sharing what we found – including loads of previously unreported data.

Using new Treasury Department figures, previously unreleased documents obtained through Freedom of Information Act requests, and new analyses of state and industry data, we have assembled the most detailed look yet at how the the mortgage industry [2] and the government's main effort, the Home Affordable Modification Program (HAMP), have failed homeowners. It provides crucial context to the ongoing government investigation into mortgage servicing practices, which might lead to reforms [3] of how banks and servicers handle homeowner requests for modifications.

Here's what we learned:

• Only a fraction of struggling homeowners are getting help.…
  
• Mortgage servicers are only reaching a small fraction of struggling homeowners.…
  
• The largest servicers, especially Bank of America, have left most struggling homeowners in limbo without either modifying or foreclosing.
  
• HAMP itself hasn't made much difference: It hasn't led to an increase in modifications.…
  
• Just over one in five homeowners who applied for a HAMP mod have received a permanent modification…
  
• And in one quarter of rejections, mortgage servicers - notorious for losing documents - have cited missing documents as the reason.
  
• Here are your overall chances of getting a mod with each of the top servicers.
  
• Treasury claims servicers are improving, but its own data show otherwise.
  
• When servicers offer a mod, it's generally more affordable than mods used to be.…
  
• But instead of mods, servicers have recently been offering more repayment plans, which actually increase struggling homeowners' payments.
  
• In the end, most government funds set aside to help homeowners are still unused.

There are many great graphics in the rest of the article. Read more.

Yes, you CAN arrest banksters

Thank goodness for Iceland.  She proves that citizens can say no to the banksters AND get them arrested for high crimes.

About the food supply

It is damn difficult to worry about the food supply in USA--to the point where only a tiny fraction of the public has ANY idea where food comes from or how it gets to them.  When someone claims that milk comes from the local convenience store (rather than a cow), you are dealing with a typical level of food ignorance.

Even more telling here in Minnesota is the incredible abundance of food.  Not only is it grown by the boxcar in much of the state, here in the Minneapolis suburbs food is distributed through a dizzying array of outlets from tidy farmer's markets to supermarkets that range from very nice to opulent.  Our biggest employers spout names like General Mills and Cargill.  And best of all, food is so cheap one wonders how anyone stays in business.  Yesterday, I paid $1.98 for a gallon of milk--someone is working for free (or less) in that supply chain.

So it is hard to convince anyone around here that a shortage of food is even possible, let alone a subject worth starting revolutions over.  Ironically, the folks MOST likely to worry about the food supply are those who still work in agriculture or food processing.  I have known farmers all my life and some of them wonder darkly when this whole system will collapse in the face of a hungry planet.

Big Pharma's megaprofits were supposed to bring new drugs. They didn't.

Another conservative myth bites the dust. Over the past decade big pharmaceutical companies have been among the most profitable entities on the planet. Supposedly, all this money was going to lead to a new wonder age of wonder drugs.

Well, it's not turning out that way. The New York Times reported that just in the next year, the drug industry faces the expiration of patents on more than 10 "megamedicines" that alone account for almost $50 billion in sales, about seven percent of the industry's world wide sales. And the kicker is - despite all the tens of billions the industry raked in the past decade, there are no new drugs that can be introduced to replace the massive revenue streams from the "megamedicines" with expiring patents. Instead, the industry repeatedly cut back its research and development staff, no doubt to become "more profitable." Though, of course, the New York Times correspondent lists a host of other problems afflicting the industry, such as "over-regulation."

Drug Firms Face Billions in Losses in ’11 as Patents End
by Duff Wilson

At the end of November, Pfizer stands to lose a $10-billion-a-year revenue stream when the patent on its blockbuster cholesterol drug Lipitor expires and cheaper generics begin to cut into the company’s huge sales.

The loss poses a daunting challenge for Pfizer, one shared by nearly every major pharmaceutical company. This year alone, because of patent expirations, the drug industry will lose control over more than 10 megamedicines whose combined annual sales have neared $50 billion.

Read more.

Will oil prices trigger an economic meltdown?

Well I think so.  Here's another take.

The Harrowing Chart The Shows How Close We Are To The Oil Spike That Caused The Last Recession

Gregory White | Mar. 7, 2011, 8:48 AM 

Oil prices are rising and taking up a larger amount of U.S. GDP, in a similar way to how they did in 2008, according to Lazard Capital Markets.

And now they're in the 5 percent of GDP range, which has the potential to destroy demand.

From Lazard Capital Markets:

Oil prices likely to go higher but entering demand destruction range; time to get more cautious. In contrast to the 2008 superspike, where oil prices spiked on runaway emerging market demand, the latest spike has been driven by supply issues as Middle East instability worsens. With unrest spreading from Egypt to Libya and Oman (and concern over possible unrest in Saudi Arabia), we believe oil prices could go significantly higher from current levels. Our price elasticity models indicate oil prices could spike to $160+/Bbl if we lost all Libyan production and one half of Saudi production.

That said, we are near levels where the market begins to worry about negative impacts on the economy (~ 5% of global GDP), which we believe warrants a more selective investment stance based on our analysis of the prior oil price spike cycle in 2008. more

The Moral Underground: How Ordinary Americans Subvert an Unfair Economy

Every so often, there is an article I find that shatters the doom and gloom of our new oligarchical, robber baron era, and gives me hope that at some basic level, most people remain decent and caring, trying their best to prevent or avoid the infliction of bureaucratically decreed nonsense, pain, and humiliation. This is one of them: an recently posted excerpt from one chapter of a 2009 book by Sociologist Lisa Dodson, The Moral Underground: How Ordinary Americans Subvert an Unfair Economy.

I will not quote from the excerpt here, just urge you to go read the entire piece. But, here are two sentences that moved me to tears:

. . . when everyday institutions and ordinary rules harm people right in front of you, that provokes a kind of soul searching, looking for what some called their “roots” or their “true self.”

I heard a murmur of history, voices from generations who taught that the survival of tomorrow’s children matters more than rules or laws.

Read the entire post. And, keep in mind Chris Hedges' articles about the need to resist the corporatist state.

Someone else notes that Tyler Cowen sucks scum

Tyler Cowen and 'something amiss'

by Mike Kimel
Cross posted at the Presimetrics blog

I really don't understand this post by Tyler Cowen. He begins by noting:

The median earnings of full-time Canadian workers increased by just $53 annually -- that's right, $53 annually -- between 1980 and 2005.

He then links to two documents, one of which says this: A more likely explanation is that the rich have used their clout to get governments in the United States, Britain and Canada to change the rules, redirecting economic benefits to themselves

The quote goes on for a few more paragraphs, then Kimel gives you the kicker:

The very next sentence Cowen writes: This is one reason why I do not adhere to some of the progressive or "class struggle" explanations of relative stagnation in median income growth. Canada is not ruled by the so-called Republican Right.

(Jonathan here.  No Canada was NOT ruled by the Republican Right.  However, this makes absolutely ZERO difference because economically, it was ruled by the same neoliberal foolishness that has informed all of the governments of the English-speaking world since about 1975.  Example, Bob Rae of the so-called "far left" New Democratic Party became the Premier of Ontario and yet was a thorough-going neoliberal.  His supporters were roughly as horrified to discover this as Obama's were to discover that Larry Summers would guide economic policy.  Of course since Cowen is one of the bloggers for The Economist--the house organ of neoliberalism-- he is paid to NOT understand the critiques of his magazine's official position and clearly, he does not.)

Ronald Reagan points out how authoritarian Gov Walker's proposals are

Barry Ritholz shines a light on an alternative to the current meme on public sector unions:

In a Labor Day address in 1980, Ronald Reagan said:

"These are the values inspiring those brave workers in Poland … They remind us that where free unions and collective bargaining are forbidden, freedom is lost."

Reagan as above, in video.

(Hat tip to Dan Crawford at Angry Bear.)

The sociology of Predation

For anyone who wonders why even manufacturing companies that NEED to embrace the whole Producer Class value set (most emphatically including honesty) in order to succeed, sometimes look indistinguishable from any other Predator Class enterprise, Scott Adams provides us with this insight.

Michael Moore in Madison

His whole speech from the steps of the capital 3.5.11.  VERY uplifting.  Sound economic arguments.  Morally astute.  Cannot be missed.

Public investments near 60-year low

From the Economic Policy Institute two weeks ago, we get a very short article and one graph showing that public investment in infrastructure is at its lowest level since the end of the Second World War. What I want to point out here is that it is exactly public investment in infrastructure that we need to create a real economic recovery that will be felt by all Americans, not just the rich and the political elites. More importantly, it is exactly public investment in infrastructure that we need to address the problems of global climate change and peak oil, as well as breaking out of our current petroleum price trap in which any uptick in economic activity causes and increase in demand for petroleum, which causes an increase in price, which has to be paid out of shrinking incomes, leading to a collapse back into "recession."

Moreover, the public investment in infrastructure required is massive. Obama's $700 billion stimulus package of two years ago is a joke compared to what we actually need. It might have been a good down payment - if it not half of it had gone for tax cuts, which provide very little economic stimulus, and if it had been part of a national commitment to a huge, bold national goal, such as getting 100% of our electricity from renewable sources within twenty years. Such programs easily come in with price tags measured not in billions, or even hundreds of billions, but in trillions of dollars. The May 2008 U.S. Department of Energy report "20 Percent Wind Energy by 2030," estimated the U.S. needs to invest $2.4 trillion to meet projected electricity demand of 2030 - and note, that is on our current pathway of continued dependence on fossil fuels. In December 2009, I sketched a national infrastructure program that would create over 14 million new jobs, but which requires nearly six trillion dollars in funding.

Who Drives Innovation? The crucial role of government funded research

Republicans like to argue that private companies are responsible for technological breakthroughs, but that's not true.

Last month, many of us heard the story of Brett Hallman. Hallman's mother was early in her pregnancy when she learned her son would have spina bifida, a neurological disease that affects the spinal cord's development and, in the worst cases, makes children with the disorder unable to walk and have brain damage. But the Hallmans enrolled in a trial that allowed doctors to operate on Brett in utero. The procedure had already used on newly born babies, but doctors found that babies who had surgery before they were born had dramatically improved effects with no increased risk. When Brett was 17 months old, he took his first steps, and doesn't have any of the serious problems usually associated with spina bifida.

The trial was funded through a grant from the National Institutes of Health, the largest provider of public funding for medical research. Each year, the NIH issues millions of dollars in grants to universities, clinics and research outfits around the country, funding research that private, profit-seeking companies wouldn't want to do because of the lack of immediate financial gain.

NIH funding is just one of the components on Republicans' budget chopping block. Obama's budget proposal would increase NIH funding by $1 billion, but the Republican plan to extend federal operations through the end of the year would reduce total funding for the NIH by nearly 6 percent, and cut funds for research grants by as much as half.

Read more.

The Conservative Tradition of Attacking Teachers and Education

So, Republicans and Tea-baggers today, after giving tens of billions in tax cuts to millionaires and corporations, are demanding steep cuts in state budgets, including for education. They are especially targeting teachers’ pay.
Some people just can’t wrap their minds around how utterly destructive the conservatives’ agenda is. A few days ago, daveinchi tried to get a grip on this with his DailyKos diary, DESTROY EVERYTHING: Nihilism on the "Right".
But what is really hard to comprehend is that the conservative attack on education is actually a quite coherent part of conservative ideology. To understand this, you first have to understand that the conservative ideology is intended to create a society based on strict class lines. As Philip E. Agre wrote in his classic August 2004 essay, What Is Conservatism and What Is Wrong with It?: "Conservatism is the domination of society by an aristocracy."

Today, conservatives hide their true anti-democratic oligarchic agenda behind the rhetoric of balanced budgets and budget cuts. But, back in the period right after the Civil War, conservatives were much more honest and forthright in explaining why they attacked education and teachers.

The revolutions must bring better economics or they fail

While the folks who brought down the Mubarak regime in Egypt are probably still happy with their handiwork, most are probably wondering by now if the new boss isn't just like the old one.  Like Obama supporters in USA, they must certainly be wondering why all their hard work merely resulted in more sell-outs to the values of the Predators and the dictates of Big Money.

Scaling back the financial sector

The problem of banks isn't that they aren't occasionally useful.  They are.  The problem is that less than 1% of what they do is actually useful--the other 99% is downright destructive.  And now this destructiveness accounts for over 40% of what we now jokingly call the economy.

What we need as a society are banks that specialize in the useful stuff.  Banks that are interested in the growth and prosperity of the real economy.  Such banks would operated as a regulated utility and have civil service pay grades.  They would be the only banks backstopped by the taxpayers.  The private "banks" that insisted on operating as casinos would be on their own.

Ideas like this have been around awhile here in USA.  In fact, much about the real economy that still works is based on them.

The 2011 revolutions will spread because they are caused by real economic problems

As the real economy fails for billions of people around the globe, the fuels for revolutions in the street grow by the day.  Expensive food and energy will not make folks happy and they are already furious about paying for corruption.

"Inside Job" wins an Oscar

Charles Ferguson's Oscar Speech Rips Wall Street: 'Inside Job' Director Levels Criticism During Acceptance

02/28/11 11:54 AM

"Inside Job" won the 2011 Academy Award for best documentary on Sunday night. The film's director used his acceptance speech to deliver pointed criticism of Wall Street and the financial industry. more

Once again, the most interesting movie to win an Oscar sunday night was a documentary.  As someone who promotes non-fiction video at every opportunity, the rise of the documentary is a welcome alternative to the utter tedium of the movies that have but a passing nod at any reality any of us could ever experience.  It is not that I have religious objections to fiction--it is just that I want my storytelling to be believable.

While a good documentary should have professional-level photography, sound capture, and editing so as not to distract from the idea that the videographer is trying to convey, these elements have become essentially commoditized.  One of the reasons we seem to have entered the golden age of documentaries is that the cost of making one has become almost trivial.  With the playing field leveled, the great docs are distinguished by superior content.

And so it was with Inside Job--the most recent documentary to win an Oscar.  In roughly two hours, the financial meltdown of 2008 is essentially explained in a way even the thickest of us can understand.  Doc maker Charles Ferguson is so thorough, he even covers the roles played by the academic economists, those frauds who manage to transmute their uber-nerd understanding of the world into policy positions that have triggered economic calamities.

Inside Job has been on my radar for some time.  In fact, it or Ferguson have appeared six times on this blog since last July.