Taibbi on Hunter S. Thompson

Moving day.  Posting will be sporadic for the next few days—I am not sure how or when my new internet hookup will be operational and I am just crazy tired.

And of course I have signed up to put in a new bathroom right away.  It will be mine and since I am a large man, I intend to have some elbow room.  I want plenty of handholds—I am getting to the age where falls can literally kill you.  But most of all, I want it to be ridiculously easy (even fun) to clean.  I am never going to have servants so if my bathroom is going to be clean, I am going to have to do it myself.  A design problem.  It's what we Producers do.

Meanwhile, here's a link to the Village Voice interview of the guy who, IMHO, is the best writer this country has at the moment.  Not only has he chosen to wade into the most relevant topic going (whether it's a good idea to allow vandals, thieves, and con men have a say in how the nationwide economy is run) but he gets his facts right and makes complexity look easy.

More on the bankster mob

It is impossible to run a meaningful economy when crooks are charge.  IM.POS.SIBLE!  Whether a system controls the moneychangers or the moneychangers control the system is in the final analysis, the only truly interesting economic question out there.

Blaming the victim

The math is obvious.  There is simply no way folks can prosper under a scheme that is as heavily skewed towards strengthening the currency at the expense of all other considerations.  And that is the formula baked into the Euro.  These crazy ideas will obviously first destroy the weak but no one should get complacent—they will eventually do in everyone.  Smart policymakers will ignore the noise and concentrate on what is getting everyone get into trouble.  They should also see that the current crises could be easily seen from the very beginning of the Euro's existence.  Many of us did in fact see it coming.

Introducing new technology

In spite of the fact that change is pretty common, it is nevertheless extremely difficult to displace an existing industrial practice.  Even when the new technology is vastly superior such as when the transistor took on the vacuum tube, there is still a lot of resistance.  The new technology may have infinite advantages but it is untested, usually expensive, sometimes unreliable, and it is up against a mature, highly developed, well-entrenched competition.

Over time, several methods have been tried.  For example, there is emulation.  Plastics gained market acceptance by looking like their more expensive competition such as wood, leather, and stone.  Now that plastics have gained acceptance in their own right, these substitutes like Naugahyde or wood-grained Formica look utterly cheesy—but they once served a valuable purpose in gaining acceptance for a new material.

And so we turn to the electric car.  Such vehicles have been very expensive, not very reliable, and inconvenient to own.  So Tesla has ripped a few pages out of the old playbook by introducing an electric car that looks and is priced like a premium vehicle while having ridiculous performance specs.  The idea is that if an electric car can be made that appeals to the status trend-setters, the rich will help pay to develop technologies that can be used for more down-scale efforts.  Of course, catering to the rich has its own set of problems but this strategy has been widely used in the electronics industries so there is a possibility it might work with electric cars.  In any case, it has been a lot of fun to watch Elon Musk try.

Ever wonder why "liberal" organizations are so economically useless?

Yes!  I have covered the subject of how the Democratic Party in USA went from running the country as a party of economic progress to being an irrelevance that regularly loses elections running on identity politics—a party that has been ignoring important economic issues and enthusiastically throwing labor unions under the bus while drawing a HARD line in the sand over abortion rights (etc.)

So now we have reverted almost to a state of economic feudalism that sells its young into debt peonage in the name of "higher education."  Millions have been unemployed for longer than a year and that doesn't even include the millions more who have dropped out of the job market entirely.  And so on.

Mark Ames has also noticed this trend and has pointed out how for some of the main "liberal" organizations, the abandonment of progressive economics for narrow identity politics has been a decades-long process.  It's a good read.  I have also included a short list of my efforts to describe this process here at real economics.

Monday, May 28, 2012
The Democrats abandon progressive economics

Friday, December 2, 2011
Chris Hedges at Occupy Harvard – feeding plutocracy and why the cops are scared

Thursday, September 29, 2011
Taking it to the streets

Friday, November 18, 2011
This is how reformations begin

Banking as organized crime

Matt Taibbi is doing incredible work trying to explain to the rest of us just how criminal the banksters have become.  I tend to think of the moneychangers as being engaged in practices that most religions have long ago defined as sin, so I tend to rhetorically wonder what's new about this crime wave.  But Taibbi is right—the sociopathic behavior of the banking community has gotten so destructive, and so brazen that in some ways, this really is quite new.

First up, we have an excerpt from his Rolling Stone article on some moneychangers who were actually caught bid-rigging in the municipal bind market.  Then we have him joined by Yves Smith in a Bill Moyers interview.

Japan answers her wake-up call

There is a serious amount of arrogance associated with nuclear power.  The thinking goes something like this: Of course nuclear power is hazardous and difficult which is why only we Americans (French, Russians, Swedes, etc.) are qualified to do it.  When Chernobyl melted down there was a lot of "Well what did you expect?  Russians—especially Russians confused by Marxism—could screw up a two car parade.  So why did they believe they could try their hand at nuclear power?  Of course, we French (Americans, Swedes, Japanese, etc) would NEVER screw up like they did because we are better educated, use better powerplant designs, have a more stable social organization, and are FAR more technologically superior to those bumblers."

The Japanese were especially qualified to make that assumption.  After all, they ARE technologically very gifted—to the point where they began to eat most of USA's industrial lunch.  Moreover, if there was ever a country that had good reasons to embrace nuclear power—it was Japan.  She has almost no fossil fuels.  She has a large population crowded onto a small island that can only survive by being industrially sophisticated.  And compared to some of the technological miracles that happen in Japan on a regular basis, nuclear power generation is actually pretty easy.

And then came Fukushima.  Yes it required a perfect combination of disasters to cripple that plant.  One wag reminded us that the second largest earthquake ever recorded was only the third most serious problem to hit the northern coast of Japan in a 24-hour period.  The Japanese awoke to an ugly truth—a disaster much worse than Chernobyl could befall their nuclear infrastructure!

So now the Japanese have decided to get VERY serious about renewables.  They are going to invest trillions of Yen in easily the MOST difficult renewable scheme—floating wind turbines.  As someone who has developed a serious affection for Japanese technology over the years, I have enormous respect for their abilities.  But Damn!

Well good luck!  If anyone can pull this off, it must certainly be the Japanese.

Saturday toons 23 JUN 12

Another freaking MEETING on the environment

Although Veblen didn't include large conferences in his list of preserved archaic traits, I'll bet he would have if he were still around.  The idea of flying a bunch of people to Rio to tell each other what everyone already knows (or should know) is in itself an environmental obscenity.  But since mass meetings and pilgrimages are what the Leisure Classes do, why should we be surprised that is what Leisure Class environmentalists think will actually solve problems.  I would much rather that resources would go to inventing and perfecting better ways to transmit and store solar energy—but that's just me, I guess.

There was another mega-conference on climate change in Durban South Africa just last December with many of the same participants but I guess some folks need regular booster shots to keep up their enthusiasm for what exactly—meetings?  Thankfully, I am no longer alone in my disgust with these things.

Arresting the banksters

The MOST important step in bringing the wicked bankers to justice is to rise above the barriers of status that the bankers surround themselves.  Those high ceilings and stone columns are there for a reason—they are there to intimidate people.  And they work magnificently.  Try an experiment.  Walk into a bank and begin to point out the architectural features that were installed to intimidate you.  Then begin to laugh uproariously.  See how long it takes before someone calls security to throw you out of the building (for laughing.)

Bill Black has been saying for quite awhile now that we cannot recover from the global financial crises until we throw the crooks in jail.  Banking is too important to be run by hucksters and thieves.  And the politicians who have been corrupted by these crooks have become worse than useless.

Anyway, I wish every country was doing what Iceland is doing.  This must be very hard to do—it seems impossible that only the Icelanders are this upset with their crooked moneychangers.  Or maybe they are just not as intimidated by angry architecture.

The Danes and renewable energy

Once you understand the science of energy and what it can do, the decision to run your society on the most abundant source is a no-brainer.  As it noted below, the Danish decision to convert to renewables is hardly limited to the hippies in Christiana but is supported throughout the whole political spectrum.  A superb education will lead to such an outcome.

Global solar update

Inexpensive solar cells have proven to be extremely popular.  I am of the opinion that the PV industry is now-self-sustaining.  PV (and other renewables) adoption will be slowest in the countries that already have existing electrical generation.  Going from nothing to PV will be a whole lot easier than going from always-available / instant-on convenience to PV.  But just remember, humans throughout most of history have worked with what mother nature provided as in "make hay while the suns shines."  And while these skills have gone missing in the industrialized states for several generations, they probably can be relearned.

Ghawar

The world will be a VERY different place when Ghawar is pumped dry.  When it comes to evaluating the real economy, the state of Ghawar is arguably the most important story of all.

The Great Latvia Success Story - Austerity Works, NOT

Hat tip to Yves Smith at Naked Capitalism for featuring this gem of a video today.

Krugman must be loving this

Paul Krugman sounds like a lot of my old econ profs. This is what someone who taught at a major land-grant institution in Minnesota HAD to sound like to get a job in 1972. After all, the head of the department was Walter Heller—the guy who liked to brag that he taught Keynesianism to Kennedy. But folks, these guys are VERY rare these days so Krugman has an almost uncontested monopoly on sane economics. Give him a Nobel and a column at the NYT, and this guy has turned his most recent book tour into a victory lap. Of course, life has been made infinitely easier because his intellectual opponents are forced to defend calamities of their own making. Krugman just toys with these clowns.

Watch Krugman's Solution to Fiscal Stimulus? It Involves Aliens on PBS. See more from PBS NewsHour.

More on Iceland's economic recovery

This is truly amazing.  Iceland is in the process of emerging from one of the sharper depressions in her history.  Yet while she is still staggering to get to her feet, her central bank somehow believes that fighting off inflation is still a high priority—if not priority #1—EVEN when inflation is probably the last worry they have.  It sort of reinforces Paul Krugman's description of central bankers in action (see his last answer).  Of course, this is pure Institutional Analysis—central bankers will act like central bankers.

Bankster cultural magic at work

Over at Zerohedge, Tyler Durden has calculated that J.P. Morgan gave members of the Senate Banking Committee a total of $877,798 in campaign contributions / bribes.  Folks, that isn't even a million bucks.  In J.P. Morgan's world, that isn't even a rounding error.  After all, the hearing had been called to ask Jamie Dimon what happened to the $2-20 billion that a London-based trader lost during the performance of his job.  For the purposes of this example, let's say Morgan lost $10 billion.  If we are to assume Durden's info is correct, that means Morgan bought the Senate Banking Committee for considerably less that 1 / 10,000th of the trading losses.  And Dimon was using the hearing to reassure everyone that $10 billion was nothing to worry about.

My contention is that this example of money in politics really is as trivial as Dimon (and the math) suggests.  Dimon was accorded this ridiculous amount of respect because he is one of money's popes and the guys on the committee are just lowly acolytes who were in the presence of the presence of their God substitute.  The power of money most certainly IS manifest by a sheriff's sale—but the REAL power is cultural.

The Greek vote—now that was depressing

The Greeks, faced with the choice that could have brought down the whole bankster edifice, chose to vote for the folks who seem in charge of the magic that makes money worth having.

Now it might seem like this would be the time to beat up on the Greek lefties and the Syriza Party for failing to offer the voters much of a choice.  But history tells us, even when the voters actually DO have a valid choice they tend to go with the banksters.  I mean, look what happened to the Greenback and Peoples Parties.

Even more to the point, look what has happened to poor Ellen Brown and her campaign to get states to copy North Dakota and establish a state-owned bank.  She has an example with a nearly 100-year run of success.  The benefits are substantial.  There is literally NO reason why folks shouldn't try this.  And yet for all her trying, North Dakota stands alone as the only state with a state-owned bank.

Too bad the Greeks were not as brave as the Icelanders—which reminds me, there are a substantial number of Icelanders in North Dakota.  Takes more than a bankster to scare a real Viking, I guess.

Oh, and one other thing—just because the banksters won an election in Greece does NOT in any way solve the problems faced by the world's big banks.  And their problems will not go away for a simple reason—their operating assumptions are mathematically insane.  Debts that cannot be repaid, will not be repaid.  Hate to break the bad news to you banksters—math works!

An Institutionalist take on the Greek elections

I am about to move again.  Moving is always difficult but this time, I will wind up living closer to the childhood home of Thorstein B. Veblen than at any time before in my life (less than 10 miles).  So I have been thinking about the political and social forces that shaped his worldview and speculating on how he would view the upcoming Greek elections.

The BIG economic calamity of Veblen's life was the decision in 1873 for USA to go back on the Gold Standard.  Veblen, who had been born in 1857 would have turned 16 that summer.  This monetary decision would devastate midwestern agriculture and his father, who had grown quite prosperous by then would see his economic situation deteriorate over the next 20 years so that by 1893, he would leave agriculture altogether and NONE of his children were interested in the farm. In those twenty years, virtually ALL political activity in the agricultural areas of USA was directed towards reversing the "Crime of '73."  This included the formation of political parties such as the Greenback Party and the People's Party and organizations like the National Farmer's Alliance and the Knights of Labor.  So unlike the Marxists, Veblen's political thinking was formed in the crucible of monetary arguments.

So it has been damn interesting to watch a lefty alliance in Greece with deep historical ties to Marxism attempt to formulate policy responses to a banking crises.  It has also been fascinating to watch how a genuine Institutionalist like Michael Hudson reacts to the various "Socialist" responses to the Euro crises.  Like me, he considers them hopeless—which they sort of are.  Up until now, the Socialists have not (to my knowledge) questioned the basic assumptions that govern the creation of money and who should be paid for that act—the very question that drove a zillion passionate debates in rural USA during Veblen's most formative years.  So whether or not a modern Marxist like Alexis Tsipras wins the election on Sunday is only half of a very interesting question.  The other half is whether he understands the issues clearly enough to do anything meaningful about the terrible situation in which Greece finds itself.

Saturday toons 16 JUN 12

Wind is FAR from dead

Wind projects will continue because wind works.  Get the right site, and a well-maintained wind turbine will make someone very prosperous.  In the case of Vattenfall, they also invest in wind projects because they are FAR more green than their brown coal generation and the aging fleet of nukes.

There is also in institutional influence.  Vattenfall has a corporate division called Vattenfall Renewables.  The company has already accumulated a vast store of expertise in wind—an investment in institutional memory that only pays off if they keep doing wind projects.

The middle class gets crushed

I wrote the following in 1985. It would eventually become part of Chapter Fourteen of Elegant Technology. (pg.180)  So I have been watching the destruction of the American middle class for a long time.  So now that the middle class has been nearly impoverished, some wonder if the class war will end.  Not so long as the middle still has something ($77,300) it won't.

Americans think that the middle class is ordained of the gods. They forget that it was a product of their grandparents, and their wisdom. Many societies exist throughout the world with no real middle class. Like anything else, the middle can be destroyed.

In America, the middle is under siege: the political middle, the economic middle, and even the geographic middle. Charts of American prosperity in the 1980s showed that the 34 states in the middle of the country were in recession during a “growing economy.” Great societies are produced by the middle. An assault on the middle is an assault on the social fabric.

The attack on the middle comes from an odd grab-bag of political bedfellows. From the political right the assault is a combination of Wall Street dealmakers who busy themselves destroying the futures of small Midwestern cities, and their neofeudalist apologists who concocted the utter barbarism known as monetarism. From the political left, the antitechnology, antibusiness, postindustrialists propose rationales for why this destruction does not matter.

Henry Blodget's take on the Federal Reserve's announcement.

The ongoing calamity that is the Euro

The Euro project was flawed from the start.  I have written before how puzzled I am that anyone thought it was ever a good idea.  And as the evidence rolls in that the Euro is mostly destructive to the real economy of Europe, we see its defense become only more loud, desperate, and shrill.  Defending the currency has become a near-religious act among people who think of themselves as just too sophisticated to be sucked in by anything as irrational as religious practice.  One can only hope that saner heads will prevail and this horribly flawed idea can be undone with the least amount of damage to the poor citizens of the Eurozone.  I am not especially optimistic—religious wars tend to get very ugly and pseudo-religious wars over money promise to be ugly times 10.

Soon to be swinging from the Blackfriars Bridge?

Why would the Vatican Bank be different in any meaningful way from the rest of Italy's banks?  One of the great insights of Institutional Analysis is that bankers tend to act like bankers, farmers like farmers, school-teachers like schoolteachers, etc.  In the case of the Vatican Bank, they are faced with the same problem of all the rest of the banks—everyone wants them to get a significant rate of return in a financial environment where there are almost no legitimate loans that return anything.  So they all cheat in some way or another.  The only difference is HOW they cheat.

On 17 June 1982, one of the insiders in the operations of the Vatican Bank by the name of Roberto Calvi was found hanging from the Blackfriars Bridge in London.  It was initially ruled a suicide which was kind of a stretch since Calvi had two gunshot wounds to the head in addition to the noose.  Anyway, you can read the gory details at the link above but suffice it to say, the Vatican Bank (strictly named the Istituto per le Opere Religiose or Institute for Works of Religion) is hardly new to shady dealings.

Kind of hard to imagine that once the mother church preached against the sin of usury, huh?

Cool graphic shows derivatives exposure

Incredibly cool graphic shows the relative size of a human beings standing in front of a $1 million pile of 100-dollar bills; a trillion dollars, and the derivatives exposure of the nine largest banks. Be sure to scroll all the way down to get to J.P. Morgan Chase.

LQD: Daniel Raymond on Corporations and Banks, 1820

Daniel Raymond (1786–1849) was the first person to publish a systematic text on economics in the United States, Thoughts on Political Economy—much of it a critique and refutation of Adam Smith. Raymond argued that the economy of Great Britain was fundamentally crippled by the nation’s organization as an oligarchy, with only the higher-ranking members of that society fully participating in the national economy, while the majority of subjects were forced into brutal, impoverished subsistence work. This difference between an oligarchy and a republic underpinned Raymond’s rejection of Smith’s theory that a nation’s wealth is an aggregation of exchange values brought together by the invisible hand of “the market.” Clearly echoing Alexander Hamilton’s conception of the need to increase labor power through the promotion of manufactures, Raymond argued that wealth is properly understood as the capacity to acquire the necessaries and conveniences of life by the application of labor-and that labor can be made more productive by the application of technology through the development of machinery.

It may be difficult to sort out all the economic arguments, but in the end, the importance of Raymond’s argument to the crises we face today is made clear in one concise statement:  national wealth can only be augmented by industry NOT by parsimony. This, of course, is a direct refutation of the current prescription of austerity and budget balance mania.


Especially notable is Raymond's treatment of the rich, which should be taken as solid historical evidence that the wrong-wing is dead wrong about class warfare—it is very American. It is not well known today that along with a standing military, the Founders recognized the rich as a grave threat to the republic. Madison's Federalist Paper Number 10 on political factions notes that economic interests—i.e., the rich—are the most usual cause of factions. Raymond confronts this issue head on. 

In his important book, Lincoln and the Economics of the American Dream, Gabor Borritt points to the influence Raymond had on the American System economists, such as Henry Carey, who were favored by Lincoln.

In the excerpt below, Raymond identifies two types of corporations: political, and money. By money corporation, Raymond means all business corporations, but he has some particularly strong words for banks in particular, which may confuse some people who think “money corporation” means only banks, when it does not.

The failure of economics

George Soros made his BIG pile ($billion) shorting the British Pound on 16 September 1992 thereby driving it from the European Exchange Rate Mechanism.  It is estimated the speculators eventually cost the British taxpayers over 27 billion Pounds.  So now he occasionally makes an attempt to prove he isn't really a thieving soulless bastard by funding some lefty human rights organization.  On other occasions, he will try to prove he isn't being held captive by the same ideas that have recently caused so much financial chaos.

Having a BIG pile tends to absolve someone of many sins so Soros is still thought of as a financial expert.  And once in awhile, he actually gets something right.  This time, he is writing about the foolishness of economists trying to portray their business as a hard science like physics.  I could hardly agree more.  Over the years, I have done my best to ridicule the notion that economics is more of a hard science that the other social "sciences" like sociology or cultural anthropology.  Let me explain why.

Scholarly investigation involves two phases—digging up the facts and communicating them to others.  Economics tends to appear more "scientific" right out of the gate because many of its facts tend to be numbers already.  So you have hard data to use—like housing starts and factory utilization.  As most of us were taught in junior high, math is the language of science so manipulating these numbers using complex formulas makes economics LOOK scientific.  But appearances are indeed deceiving because it takes more than a lot of numbers to prove a point—something most economists wish the rest of us would ignore.

Here's the big problem.  Any communication involves getting an idea from one brain to another.  For example, writing encounters difficult problems because to make communication happen, the writer must choose his words carefully and formulate his sentences and paragraphs well.  Then, the reader must have a vocabulary at roughly the same level as the writer and be skilled at extracting meaning from print.  As we all know, this process often fails and even when it does work, its uses are limited.  It is impossible to construct a building from a written description so architects use drawings.  Musical notation was invented to communicate the ideas of sound.

When used correctly, math communicates ideas in ways that are extremely powerful because math works!  But like writing and musical notation, math has its limitations too.  For example, when describing a regular shape like a sphere, a mathematical formula is so powerful, you can take it to a machine shop and construct a sphere to extremely precise tolerances.  However, using math to describe an irregular shape like a car fender is much more difficult.  In fact, when using computers to instruct machine tools to make such an irregular shape, you wind up using the brute force of specifying thousands of Cartesian coordinates.  The folks who make animations have discovered it is almost impossible to mathematically describe the motion path of a running human so the preferred method is to affix data points to a real human and record them.

The point here is that if mathematical formulas cannot describe something as simple as irregular shapes or motions, what makes the economists believe that their mathematical models can describe something as complex as human behavior?  The truth is, their complex-looking models cannot predict much complexity and so they tend be be vast over-simplifications of reality.  These models might be more interesting than the formula for a sphere—but not by much.  And it is utterly amazing what economists leave out of them.

My favorite example is aesthetics.  That appearance is economically important is beyond rational debate.  Beautiful whores make much more money than ugly ones, seashore properties sell for much higher prices than properties next to a landfill, Apple computers sell for a significant premium simply because they are created by industrial designers with a lot of talent, etc.  From eyeglasses to sports cars and a lot in between, looks make a significant economic difference.  Yet TRY to reduce this economic fact to a mathematical formula.  It simply cannot be done.  The best an economist can do is tell you to check out the data generated by the market.  Well duh!  By the time something has been evaluated by the markets, virtually all the work necessary to create a product has been done.  The best an economist can tell us is that aesthetics is merely an add-on that commands a premium over what something would fetch according to his "law" of supply and demand.  So by leaving out aesthetics and how beautiful things are generated, the economist describes only about 15% of economic reality—the boring 15% at that.

We have reduced the economics profession to a bunch of math nerds who somehow believe that by using ever more complex formulas, they can describe reality.  It doesn't work like that.  Yet we still follow these charlatans over the cliff because they have convinced us their complex math makes them as scientific as physicists.  Maybe they should try musical notation (just kidding!!!)

Anyway, Soros gets it on some level that modern economic theory has failed and gives some pretty sound reasons for his analysis.  However, if you read his whole speech it winds up concluding that the Euro is dead unless Germany spends its wealth to save it.  So the man proves that even starting with some good insights, he comes to a bogus conclusion simply because he cannot escape the trap of his thinking as a currency speculator.

Ah yes, Institutional Analysis—my nominee for the official language of economics.

Underfunding green energy

Friday, I put up a post about how the guy who manages a $558 billion sovereign fund for Norway was complaining about how there is nowhere to invest.  Well, boo freaking hoo.  The whole world needs $trillions of investments in a sustainable infrastructure.  In fact, without such investments, the human race is probably doomed.  But you see, this guy isn't interested in investing.  He only wants to buy some paper guaranteed by some fraudulent ratings agency that returns 7% compounded.  He doesn't know how to invest in green infrastructure because he is too damn lazy to figure out how to invest in something new.  I am surprised he wasn't invited to the Bilderberg conference—he sounds like just the kind of anti-elite elite they want at their gatherings.

Saturday toons 9 JUN 12

The "sad" fate of the large investor

Because the crooks and speculators have done such a thorough job of trashing the real economy over the past 35 years, the folks who want old-fashioned, steady investments are mostly out of places to invest.  I would have some sympathy for them but the truth is, when the hot-shots were coming up with all those crazy speculative financial instruments, they said NOTHING.  When folks like me were trying to tell everyone that "poor poor people make for poor rich people", we were told that prudent investors could easily expect 14% rates of return and we shouldn't worry our heads about those people falling off the prosperity wagon because they were just losers anyway.

So when I see articles like the one below, I must really work to suppress the urge to shout, "I tried to tell you!"  And seriously, there is nothing I can do to suppress my schadenfreude.

Germany's energy revolution—an update

There is no alternative.  It gives me great pleasure to watch a country with as many intellectual resources as Germany attempting to solve the insanely difficult problem of transitioning out of a fire-based and nuke-powered economy.  The truth is, humanity really doesn't have a choice in this matter—either we solve this problem or we perish.  And there really are only a couple of industrialized countries that have any chance of success so I have chosen to watch the Germans try.  Unfortunately, like all efforts on the leading edge, this project will run way over budget and trigger secondary problems that will cause frustrating delays.  Got to cover these as well—because the ultimate advantage of being second is that these are the costs and delays the copycats can avoid.

What follows here is a description of the social costs of expensive green electricity that is increasingly unaffordable to the society's poor.  Such problems must be solved just like any of the other technical problems of conversion.

On Wisconsin

Living next door to the Badger state is endlessly amusing.  Those folks are at LEAST 10x more interesting and colorful than we Minnesotans—a fact I first discovered during the glory days of the Minnesota - Wisconsin hockey rivalry in the 1970s.  500 fans from Madison would show up in Minneapolis and make more noise, raise more hell, and had a lot more fun than 7000 Minnesota fans.

In politics, we owed a LOT to Wisconsin because between achieving statehood 10 years earlier and the massive influence of Robert LaFollette, they had invented many of the progressive ideas we tried to perfect and implement.  I am absolutely convinced that quite a few of Thorstein Veblen's more interesting political thoughts were developed while in Madison off and on starting in 1880.  He got involved in some Scandinavian identity politics that included booking speakers from the Nordic countries.  Scandinavia was beginning to industrialize about that time—an event that would destroy Nordic feudalism and give rise to labor unions and the Social Democratic parties.  One can only imagine the interesting political debates during that period.

I have been absolutely horrified by the recall effort mounted against Wisconsin Gov. Scott Walker.  While I was fascinated by the protests that led to the recall and reveled in the idea that the ghost of Robert LaFollette was again walking the Badger state fighting for a better deal for the Producing Classes, I lost all interest when the best the Democratic Party of Wisconsin could come up with to oppose the Walker madness was Milwaukee Mayor Tom Barrett, the same guy who had lost to him less than two years ago.  And what a gruesomely awful campaign Barrett ran.  Because of our proximity to western Wisconsin, Barrett ads ran on Twin Cities TV.  They were nothing more than predictable reminders of what a vile little worm Walker was.

What a waste!!!  Those ads did nothing to address the big issues in everyone's mind: Why should we even have public sector unions when we already have civil service rules? Why should we even have unions at all? and perhaps more importantly, Why is a recall election necessary—didn't we just have an election two years ago?  What is so sad about all this is that Barrett could have probably found a good LaFollette quote to respond to all these concerns so the poor dork wouldn't even have had to come up with his own ideas.  Even worse, Barrett passed up on a golden opportunity to educate the voters on why unions are economically essential.  He either does not know these talking points or he doesn't believe them—or some combination of both.  Yes Barrett was outspent by a wide margin but this only made it more imperative that his ads be effective.

So the vile little worm keeps his job.  The Republicans will be even more brazen in their plans to crush the Producing Classes.  And the Democrats proved once again that they are utterly incapable of advancing the economic interests of the people who desperately want to vote for them as an alternative to the interests of the 1%.

Why Keynesianism isn't enough

The only reason I ever identify myself as a Keynesian is that many more people have some notion of who Keynes was while almost no one understands what an Institutionalist (which is a MUCH more accurate description of my views) believes. I am hardly the first "reluctant" Keynesian.  For 1920s and 30s progressives like my grandfather, Keynes represented the extreme right of the range of acceptable beliefs.  Keynes was about as good as a British currency speculator was ever going to get—but let's not get too excited!

The big problem for modern Keynesians is that the world has become a very different place from the one found in the 1930s.  The problems of reduced demand are the same as then, but the 1930s Keynesians had abundant supplies of petroleum and other natural resources to work with, they didn't have to deal with environmental constraints like climate change, and industry had been experiencing an explosion of innovation when the Great Depression hit and only needed a jump start to resume.

The reason I chose Institutionalism over Keynesianism when I was writing Elegant Technology is that by 1980, USA had passed domestic Peak Oil production and de-industrialization had already become apparent.  In fact, the failure to respond to the oil crises of 1973 and 1979 with creative policy prescriptions is probably the #1 factor for the precipitous decline of the Keynesians.  (Remember folks, the Keynesians RAN THINGS in USA as late as 1973.  My university economics department had a fairly wide range of political opinions but they were ALL Keynesians.)  But when I had determined by 1982 that domestic Peak Oil and deindustrialization had become the dominant economic dilemmas of the day, I chose the principles of Institutionalism because these were the ideas of economic development.  Folks who were interested in the problems of how a social grouping transforms fertile soils, water, a handful of plants, some interesting ore, and a supply of fuels, into cities served by jet aircraft, probably had something to offer on the economic problems of phasing out fire and solid wastes, etc.

So enjoy this take by someone probably much younger than me who probably never met a practicing Keynesian in action and has only read about them in obscure texts.  He's got a pretty good handle on the Keynesian flaws.  I have boldfaced those parts I find especially accurate.  About the only part I disagree with is his assessment of the effects of automation.  Good Stuff!

Unnecessary pain

Watching the incredible economic pain being inflicted upon the overwhelming majority of the world's inhabitants probably brings a smile to the sickos who are into such things.  But for those who aren't into S&M, the current economic chaos is mostly a reminder of how much pure suffering is the result of believing utter bullshit.  I had economics professors in the early 1970s who assured us that we had learned our lessons from the Great Depression and that no one in their right minds would ever make the sort of mistakes that brought on that catastrophe.  How wrong they were—not about the policies required to produce generalized prosperity but about their optimism that humanity would never return to the ignorance that creates economic disasters.

Bilderberg 2012—a gathering of the mega-Predators

One of the enduring advantages the Predators have over the Producers is that their gatherings have an actual purpose.  Nefarious plots are best hatched face to face.  Since everyone in the room is a lying thief at heart, there are actual advantages to making deals while looking the potential co-conspirator in the eye.  By contrast, when Producers collaborate, the information to be shared is usually so complex that honest intellectuals strain to make themselves understood using drawings, 3D illustrations and animations, etc., in order to better reveal their most important thoughts.  And folks, you can do all that through the mails and over the Internet.  So when Producers gather, everyone knows they are wasting their time and that is usually the whole point—a paid vacation where kindred spirits show up to prove that they are not alone in their pursuits.

To listen to the conspiracy buffs talk, the gathering of the Bilderbergers is the ultimate gabfest for the global elites.  According to them, it is at these meetings that the globalists gather to hatch their plans for running the world.  This year, the meeting was held in Chantilly Virginia about 20 miles from the CIA headquarters so tongues were really wagging.  And to top it all off, for the first time ever, the Bilderbergers themselves leaked the list of invited guests.

If this is someone's idea of a global elite and they really are running the world, we are truly doomed.  I have taken the trouble to google the USA attendees (of course, many of them are widely known.)  What I have discovered is that with rare exceptions, these folks are a LONG way from ANY reasonable definition of an elite.  (For the full list of attendees, click here)

For example, Fouad Ajami, a man who regularly embarrasses himself on TV as a political expert, was invited.  The ONLY reason I could discover for his invite is that he is an "Arab" (Lebanese) who supported the invasion of Iraq.  For giving aid and comfort to the neocons, he has been elevated to elite status.  And then there is Peggy Noonan, a woman who is usually wrong about nearly everything, designated as an elite because as one of Ronald Reagan's speechwriters, she made him sound less senile that he really was.  I suppose Charlie Rose was invited for his services in dumbing down those who watch PBS.  John Kerry, the most unoriginal politician EVAH, was probably invited for throwing his chance to be President.  Why Dickie Gephart was invited is literally beyond comprehension.

And how about that old war criminal Henry Kissinger?  Yes he has caused a world of trouble and somehow keeps getting the ear of the filthy rich but does that really make him one of the world's elites?  I would imagine that the real elites are those who pay his bills.  And then there are those billionaire banksters who are in reality the world's biggest welfare queens running financial institutions that only exist because of taxpayer bailouts.

I could go on but what's the point?  Outside of the token Producers like Eric Schmidt of Google, none of the attendees has done anything brilliant, creative, or uplifting with their intellectual gifts.  And only Alexander Karsner has done anything that would remotely address the problem of the end of the Age of Petroleum (and he was offset by an invite of Daniel Yergin, a notorious Peak Oil denier.)

There is not one serious problem facing humanity, from climate change to the collapse of the Euro, from overfishing the oceans to over-pumping the aquifers, from Peak Oil to overpopulation, that these Bilderbergers are qualified to address.  If their meeting had been hit by a drone, no one would seriously argue that humanity's ability to govern itself had been diminished in any way.  Quite the contrary.

In reality, the Bilderbergers constitute a sort of anti-elite—who probably believe that that real problems facing the planet are not going to affect them.  They are WRONG!  Whatever policies they decide on are probably the very last options the human race should pursue.  And if we cannot find a way to arrest and convict these people for their crimes against humanity, the very least the rest of us can do is ignore their crazy ideas.

More fallout from neoliberal madness

I have been working on a post about the gathering of the Bilderbergers (maybe Monday or Tuesday).  I have NO idea if my list of attendees is correct, nor do I imagine this group somehow runs the world.  But as I analyzed the list I had, it struck me just how narrow was the intellectual monoculture it represented.  For example, the only folks representing traditional industry were young slash-and-burn-style CEOs.  The up and comers were mostly represented by software execs.  Of course, there are plenty of evil banksters along with academics, think tanks, and politicians who support their worldview.

Well sorry folks, it doesn't much matter how much power you have (or think you have) if the best you can come up with is some minor variation on neoliberalism.  Because that set of ideas is just as big a failure as Marxism—and look how happy people were to see Marxism go.  Actually these twin failures are not really a surprise as Marxism AND neoliberalism are variations on Predator Class thinking.  Bilderberger cluelessness reminds me of Chekhov's Three Sisters who cannot imagine why people are so pissed off at them.  By their own standards, these are highly accomplished and very self-satisfied people.

Saturday toons 2 JUN 12

US Manufacturing: "Worse Than the Great Depression"

This morning, I read a bit of Bill Neil's most recent exegesis, The Costs of “Creative Destruction”:  Wendell Berry vs. Gene Sperling (unfortunately not available on the tubez just yet; email me if you would like a copy). Neil provides a devastating critique of the economic thinking of Democratic Party elites, using Sperling's speech before the National Press Club on March 27, 2012, entitled “Renaissance of American Manufacturing.” (Sperling is Chairman of President Obama’s Council of Economic advisors.)

One of the first links Neil provides is to a stunning March 2012 report, Worse Than the Great Depression: What Experts Are Missing About American Manufacturing Decline, by the Information Technology and Innovation Foundation, which refutes the common wisdom that the loss of U.S. manufacturing jobs is because of gains in productivity.

Was solar collection the easy part?

Considering how very difficult it has been to get photovoltaics to work and be produced at prices that staggering economies can afford, or considering the hassle it has been to bring significant windpower into existence, it is sort of depressing to think that these may have been the easy tasks.  The hard jobs will include integration into existing power grids and storage, perhaps the hardest one of all.

As an old-time sailor, I should not have been surprised.  After all, the biggest difference between sailors and motorboaters is their different approaches to the availability of power.  Guys with motorboats only worry about the level of fuels in the tank.  If you have the right fuel, there are essentially no other considerations.  You go when and where you want.  Sailors, on the other hand, constantly fret about the speed and direction of the wind.  Schedules are, at best, provisional.  In short, there are a host of reasons why sailing is now only done for recreation—and why sailboats almost always come with motors to get you home when the wind has died.

Powering a society with renewables will be a LOT like going back to sailing.  Yes it is possible.  But yes, it will be difficult.  This added complexity is what makes sailing fun but when it comes to powering societies that operate on schedules, this complexity will mostly make life more difficult.  And renewables will only be a serious source of power IF there are ways to connect the areas where the sun is shining and the wind is blowing with those areas where it is not.  Smart grids and storage folks.

Climate Armageddon: How the World's Weather Could Quickly Run Amok

I tend to avoid these sorts of predictions and try not to make them myself.  When it comes to climate change, what we know beyond reasonable debate is already frightening enough.  But this little doomsday prediction appeared in Scientific American—a magazine with a long tradition of respecting facts.