2013—well, that was interesting

The defining image of 2013 has certainly got to be the picture of Pres. Obama yukking it up at Nelson Mandela's funeral.  The last president to actually use some presidential power was probably Nixon.  These days, a president is like a third-rate quarterback who calls the play sent in to him and is terrified to change it.  He doesn't run the economy, he has no influence on foreign policy, he has no control over a legislative agenda.  So his role is to dress up and read his script—and mind his manners for ceremonial occasions.  That he couldn't stay serious for the length of a memorial to one of the more significant figures in African history speaks volumes of how utterly bored he is with his role as puppet.

Notice here how little has changed in at least 40 years.  Of course, that should not come as a surprise—most of the "news" these days concerns the coming and goings of the Leisure Classes—finance and politics, sports and warfare, fashion and entertainment, and the never-ending pursuit of more perfect forms of uselessness.  In the world of the Leisure Classes, any change more profound than a new dance or hairstyle is to be systematically shunned.  If there is any change, it is usually a reversion to some infinitely irrelevant mediocrity.  For example, the political and economic discussions of the first 13 years of the 20th century were several order of magnitude more interesting and important than in the first 13 of the 21st.

Yet even in these days of Leisure Class ennui, they still have the capacity to astonish and entertain.  The Snowden leaks are revealing just what the country bought with its billions spent on "intelligence."  What it bought was the ability to track every phone call and keystroke of every computer on the planet.  Unfortunately, except for scamming the financial markets or keeping up on the sex lives of ex wives, no one seems know why anyone would actually want to collect that enormous pile of data.  But gossip is considered a Leisure Class virtue and snooping around on one neighbors is the essence of gossip so apparently just collecting the pile is an end in itself.

Then there is the matter of a new Pope.  As someone who comes from a clan that pretty much decided to ignore popes since 1517, I am bit detached from how important it is for the Catholic Church to occasionally burp forth someone who is willing to represent someone other than the super-rich right wing thugs that usually dominate discussions.  His most recent shocker was criticizing the beliefs in trickle-down economics.  Not surprisingly, the USA Catholic Right is going ballistic.  The Catholic Church is predisposed institutionally towards a profoundly conservative bent so we can reasonably predict that Francis represents a temporary flicker of light in a very dark place.  No one ever went bust betting on the darkness when the subject is Catholicism.

If more of the same-old from the Leisure Classes was all that happened in 2013, New Year's Eve would be appropriately spent getting roaring drunk.  Fortunately, the Producing Classes had a year that suggests we might not be forever stuck on stupid.

The Tesla Model S.  Whenever I am ghosting down the road late at night swaddled in fine leathers, late Beethoven quartets playing on the too-good-for-my-ears sound system, a climate system coddling me within a fraction of a degree of whatever I specify as perfect, I understand at a primal level why folks were never going to voluntarily give up the internal-combustion engine automobile.  No one in their right mind would trade a Lexus LS for a Nissan Leaf.  Then came the Model S.  Suddenly, that perfect audio environment of an LS sounds like a factory by comparison, that too-smooth-to-be-real V-8 is like a tractor compared to an electric motor, etc.  In the light of a Model S it seems that folks will someday very soon wonder why they ever put up with the fumes and smells, and the mechanical unreliability, of the gasoline-powered car.

Graphene.  If the Producer Classes have an occupation that drives all notions of prosperity and progress, it is clearly the material science folks.  And 2013 provided an example of just what research into graphene can accomplish when the South Koreans announced they had fabricated a super-capacitor from the stuff.  The idea that there is a method for safe, cheap, and reliable electrical storage that can be made from one of the cheapest and most abundant elements on earth is so wonderful, I keep re-reading the article to make sure someone hasn't changed the outcome.

Commodity-priced PV cells.  For years I have wondered how folks were ever going to adjust to the end of the Age of Petroleum.  Now the answer seems to perfectly simple—they'll just go out and buy some solar cells.  Solar cells became so cheap in 2013 they actually triggered trade wars.  In fact, 2/3rds of all solar installations worldwide have occurred in the last 2.5 years.  For the first time in my life, the end of the age of petroleum will not be some enormous trauma but will instead provoke a global sigh of relief.

So Happy New Year.  It is TIME to ignore the fools that have frightened us for so long and start planning for a much better future.

Suzuki on exponential growth

On November 28, Tony created a post that has proven to be one of our most popular ever.  It was a blast at the techno-pessimists and spoke of hopeful possibilities.  It was called Would'ya like a serving of hope for Thanksgiving?

Even though I am not willing to go so far as to claim that shortages are the result of bad economics, his post was quite persuasive.  I want to make this blog more upbeat.  But I also want to keep things mathematically literate.

I already have a highlight post that covers this subject—Elevator Speech #2--Continuous geometric growth in a finite biosphere is impossible.  Look for it on the left side.  But I also found this little gem starring David Suzuki that describes the problem of geometric growth about as well as it can be done.

In short, I want to get more optimistic but I intend to remain firmly grounded.

Buffett on wind power

If you wander over to a financial site like Business Insider, you will discover that most of the folks who are heavy hitters in that world are pure gamblers.  They occasionally talk about the real economy but that is very rare.  The one guy who stands out from this crowd of sharpies is Warren Buffett, who has made a fortune by concentrating on real economic considerations—like does this company make a good product.

So now we see that Buffett has decided to drop a cool billion on wind turbines to be erected in Iowa.  For those folks who believe in "trickle-down" economics and the ultimate virtue of the large investor, this is an amazing cautionary tale.  He is easily the most enlightened rich guy to prowl the canyons of Wall Street, and yet he is a serious Warren-come-lately to this technology.  Siemens and Vestas have already perfected the technology and set up production facilities in the USA Midwest.  The state of Iowa has invested in junior colleges that can crack out people who can keep those big turbines running.  The truth is, if we had to wait for guys like Buffett to provide us with new technologies, we might be waiting forever.

Greider on Yellen

Tony had a hit post over at Dailykos earlier this week where he pointed out, accurately, that Elizabeth Warren cannot save us, and neither can the Pope.  He suggested that left-progressives take a page out of the progressive playbook and start worrying about changing things down-ticket.

Interestingly, because the world's societies need massive infrastructure upgrades, and the Producing Classes can build almost anything that is properly funded, some enlightened new central bankers actually COULD save us.  Now since central banking is a haven for economic reactionaries, this doesn't seem all that likely—but in theory it is at least possible (think Marriner Eccles.)

Here is USA's leading authority on the Fed speculating on whether Ms. Yellen just might be the coming of that new, more enlightened, Fed Chair.  Me?  I'll believe it when I see it.  But then, I certainly did not expect an Argentine Jesuit to become such an enlightened Pope either.

Another warning on energy

It seems as though geologists must retire from big oil before they can talk sense about peak oil and its ramifications.  Of course, even the industry line that we have 53 years worth of oil at current consumption is frightening enough.  Oil is the most convenient, energy-dense substance we have ever found.  Replacing all the infrastructure that relies on oil could easily require 53 years and that assumes we start a crash program to replace it with renewables.  Unfortunately, the official line these days is that fracking (or some such thing) will save us so what's the rush.

100 years of the Fed

The Fed has been in existence for 100 years now. For the vast majority of that time, they have proven to be a disaster for anyone who has to work for a living—and by disaster, I mean Great Depression-level disaster.

The Fed has had exactly ONE director who was even close to acting enlightened—Marriner Eccles. And he was from Utah so came from a background of frontier-style economic development and the political thoughts of the Western political parties organized around money (Greenback, Populist, etc.)

Eccles understood that unless the real economy propers, bankers have no customers who can service their loans—and banks go out of business.

Now if this doesn't sound anything like the thoughts of Greenspan, or Volcker, or Bernanke, its because that useless protoplasm has never even entertained such thoughts.

O Day Full of Grace

Merry Christmas!

For someone who spent at least 40 years absolutely HATING this holiday—mostly because the folks hawking useless junk made it too expensive to enjoy—I find it a little odd to be encouraging the idea that someone should feel joy in the middle of this time of cold and darkness.  (It was -2°F (-19°C) this afternoon at 2:00 when I got back from grocery shopping so it is still occasionally cold at Christmas. And no, the crass materialism has not disappeared.)

Not surprisingly, the reason I feel the need to spread tidings of comfort and joy relates to music.  In spite of the fact that Christmas is now associated with a large body of intensely vile and truly ugly music, there still remains much that is transcendentally beautiful.  And as someone who spent much of my childhood learning to perform this music, it is where I have turned for refuge from plastic Santas singing about Rudolf and other manifestation of bad taste.  And this year, I learned something completely new about my favorite carol that is so wonderful, it makes me giggle.

I happen to live in a little town that is arguably the center of choral singing in North America.  In 1911, a young musician from Norway established a choir associated with the small liberal arts school his countrymen had formed in the late 19th century. Named F. Melius Christiansen, this musician was handsome, gifted, and charismatic and it wasn't long before his choir was touring regularly showing audiences just how intensely wonderful a cappella singing could be.  Soon he was writing arrangements that would musically challenge his increasingly gifted charges.

One particularly difficult number is entitled O Day Full of Grace which became a beloved Christmas standard for any choir that could actually manage to stay on top of its aural fireworks.  For years I have loved the thing just for the sound but for some reason, this year I decided I really wanted to know the words that are often lost in those soaring musical phrases. Google is your friend and I soon discovered that this little gem was written by a fellow named Nicolai F. S. Grundtvig who had adapted a 15th-century folk song in 1826 to celebrate the 1000-year anniversary of the coming of Christianity to Denmark.

Grundtvig wrote approximately 1500 hymns but this accomplishment of his is rarely mentioned because of his big project in life—the folk school movement.  The Danes are still proud of their folk schools and for good reasons.  The goal of these schools was not only to teach practical skills to rural Danish youth, but provide them with a sufficient appreciation of their history and culture to make them effective citizens in a democracy.  The formula has been amazingly successful—last December I created a post about the role of a folk school in the development of the Danish wind turbine industry.  In fact, it can be argued that the ideas of Grundtvig are still relevant to the modern Danish economy.  Folk schools eventually came to USA and one in Tennessee called the Highlander Folk School helped educate Rosa Parks.

Not surprisingly, Grundtvig is still held in high esteem by many Danes.  In 1927, they decided to build a church in Copenhagen named for him.  Because Grundtvig was associated with innovation, the church would be a monument to modern Danish design—it remains one of the more spectacular examples of Protestant church architecture to this day.  It is built with simple yellow brick—the kind used to build warehouses.

Increasingly extreme weather

Even following my little rule that I refuse to discuss the changing climate except when something happens that is off the charts, 2013 was still a year full of notable events worth mention.  Here John Vidal provides a recap.

What I find especially interesting is that extremely violent weather events don't seem to lead to significant action.  Oh, we are still going to climate conferences where folks point at each other trying to assess blame.  Papers get published.  And polls get taken to see if the great unwashed have finally come to the conclusion that a radically changed atmosphere actually poses a problem.  Fortunately, these Leisure Class activities are not the sum of human endeavor.

We are still stuck on stupid in that bizarro world called economics so necessary changes are still woefully underfunded.  Even so, there do seem to be minor flickers of hope—especially in the world of PV cells.  And IF the graphene-based super-capacitors actually live up to their promise of providing safe, convenient, and affordable electrical storage, we might survive yet.

Haiti and solar power

For years I have been telling people, you cannot save for the future, you can only invest in the future.  I usually get a puzzled look so I would try explain, "The fact that you forego a purchase in 1981 and rack up the old electrons down at the bank is no assurance that when you need someone to change your drool bucket in 2015, that person will be there to do it.  No, you want to invest in social and physical systems so that when the time comes and you have become weak enough to require regular assistance, the economic and social conditions are fair and prosperous enough so someone will want to help you."  At that point, folks will usually ask me to cough up an example of what I am talking about.  And my stock response is, "You will know that folks understand the difference between saving and investing when the 401k plans start investing in solar-powered nursing homes."

Not that I have actually seen one, understand.  The point here is that we need a LOT of investments just like that.  When the time comes for the drool-bucket swap, the person who swaps will have needed reliable and affordable transportation, routine training in the sciences of sanitation, etc.  And since the work itself is essentially unpleasant, the rest of the swapper's working conditions better be first-rate.  Like working in a building that can power its own heating and cooling systems.

And now there is an example of such thinking.  They have built a solar-powered hospital on Haiti.  It is probably not the first such hospital but by all appearances, it is the largest and most sophisticated.  Ah, the irony—the poorest countries in the world have some of the best solar resources.  (And the last shall be first. Matt 19:30)

Saturday toons 21 DEC 13

Transaction taxes

There are very few ideas with which I so totally agree as the concept of transaction taxes on money instruments.

• They are fair—if a poor mother must pay sales taxes on diapers for her child, why shouldn't a hedge-fund trader pay taxes on his purchases in the markets? 
• Even small taxes would dramatically slow the trading in securities that have no real-economic purpose at all.  It would be wonderful if money became as difficult to move around as factories but at least trades held for less than five years should pay a penalty if the world of finance and the real economy are to ever align.
• They would raise a LOT of money needed these days to pay for necessary programs and infrastructure upgrades.

So of course, the banksters intend to fight this idea to the death.  They KNOW, better than the rest of us, that if their activities were limited to useful activities, they would probably make less than the wages of a civil servant.  Transaction taxes are aimed at reducing useless banking by taxing it. Cannot have that, now can we?

One other thing.  The essential principle of Institutional Analysis is to understand that how folks make their living pretty much determines how they behave.  Here we can see German banks, many of which were organized to foster real economic development and were amazingly successful in their duties, now acting the same way as the craziest banksters in London.  "Bankers will act as bankers" smiles Veblen's more interesting insight.

Fukushima cores melted down

The reactor cores of Fukushima Daiichi 1-3 suffered a catastrophic meltdown.  TEPCO has been denying this since the original disaster.  No one I knew believed them. Last Friday they finally came clean.

The only good news is that core meltdowns do not trigger the "China Syndrome."  The rest of the news is just terrible.  And as nearly as I can tell, no one has any idea of what to do next.  The Japanese government has asked for international help.  No one has stepped forward.

Leave the coal in the ground

In the fall of 1962, my eighth-grade science teacher was talking about all the things that could be made from coal—plastics, medicines, fertilizers, etc.  At one point he said, "when you think about it, burning coal may be the stupidest thing you could do with it."

One classmate just exploded in genuine anger.  "Only someone who has never been cold would believe that burning coal was stupid!" he raged.  Both the rest of the class and the teacher were surprised at the anger.  On the other hand, we all agreed he had a legitimate point.

I thought about that exchange today because it encapsulates the essential dilemma of burning coal.  Yes, it would be a good idea to save that coal for some future higher purpose.  Yes, burning coal will destroy the atmosphere.  On the other hand, there is something to be said for doing whatever is necessary to keep warm.  So the trick is to figure out ways to stay warm and power the society without resorting to fire.  And that, folks, will be a LOT harder than it looks.

Iceland sends another bankster to jail, USA has many more crooks but...

The fact that Iceland is treating the banksters like more or less common criminals points to a cultural feature of a small Nordic country.  For example, the small country of Sweden has an large complex industrial culture that encompasses automobile, truck, bus, and ship manufacture, specialty steel, telecommunication equipment, and a host of smaller enterprises that fill in the gaps.  Not surprisingly in a country of only 10 million, everyone knows someone who works for a living doing tasks that are often FAR more difficult than anything they do in the financial world.  Iceland has figured out how to survive a very difficult climate by tapping geothermal resources and other amazing feats with a population of only 321,000.  This fact leads to the cultural question, Why should we treat the financial services business as special and privileged?

This question is fading in the Nordic countries as they slowly lose industrial activity to Asia and the teachings of neoliberalism becomes more mainstream, but there is still enough animus towards the idea that banking is inherently elite to put banksters in jail.  I approve and for those reasons!

China tells pilots: learn to land in smog

This story is almost unbearably sad.  China has begun to admit it has a critical pollution problem.  This pollution largely caused by equipment and infrastructure that is less than 25 years old.  In other words, many of her problems are caused by decisions that have been made since James Hansen gave his famous testimony on climate change in 1988.

As I constantly preach—pollution is a function of design.  What this means is that there is little the Chinese can do about her new pollution problems because the machinery that produces that pollution has now been built. There is precious little that can be done now without replacing this virtually new equipment.  Here is a country that has almost completely rebuilt in the past generation but because they ignored the principles of green design, the work of millions will almost certainly lead to environmental catastrophes.

Talk about missing a golden opportunity to do it right.  So now China is going to find out how expensive it is to build on the cheap.

Pilger on Mandela

I have a friend who is a summer-of-love son of a Mexican playboy who eventually had him come to live in a very large house in Mexico City.  To say this person had a different childhood than mine is a massive understatement.  The very rich in Mexico form a small town where everyone seems to know each other.  Friend is pretty cagey on this subject and usually I cannot tell if he's not telling the whole story or if his father has left out some important details, but he seems pretty conversant on the subject of corruption within the Mexican ruling class.  I value his opinions because USA is clearly moving from being an industrialized republic to a neo-feudal deindustrialized oligarchy like much of the rest of the Americas.

Sample opinions:

"What is so amazing is not that USA politicians are corrupt, but that they are so cheap.  They'll sell out for a $25,000 campaign contribution.  No Mexican president ever leaves office without at least a $1 Billion salted away in secret offshore accounts.  Most people estimate Salinas' loot at over $8 Billion."

"Just remember, the first big investors in Romney's Bain Capital were the ruling families of El Salvador who were looking to invest the money they had creamed off US aid for their dirty little war in the 1980s.  I guess the Mormons are nothing if not ethically flexible.  Well, maybe Bain was a little more ethical than the rich Salvadoran thugs because while they looted and destroyed some towns in the American Midwest, at least they didn't rape and kill nuns or organize death squads."

The reason I bring this up is because of the conversations we have had over what I just call, "The Talk."  I was first made aware of "The Talk" by James Carvelle who was usually credited for being Clinton's economic strategist during the 1992 elections.  He is supposed to have created the slogan "It's the economy, stupid."  Clinton had won the election making economic promises that would have gladdened the hearts of the 19th-century Populists.  By the time he was inaugurated, Clinton had installed an economic team that was certain to break every campaign promise.  Carvelle watched this process unfold and at one point said hopelessly, "In my next life, I want to come back as the bond market."

Clinton's trip from Southern Populist to neoliberal swine was far from the longest political journey.  We saw Bob Rae elected as Ontario's Prime Minister from the left-populist NDP party who became a neoliberal and sold out his union supporters. We also saw Michael Manley of Jamaica, who the State department probably considered a Communist, adopt a neoliberal plan upon his second election in 1989.  Whatever is included in "The Talk", it seems quite effective.

But whenever I want to indicate evidence of "The Talk" I usually come around to Nelson Mandela.  He was a real fighting revolutionary.  The ANC actually got material assistance from Cuba and USSR who were fighting the South African army quite effectively in both SA and Angola. Mandela himself spent 27 years in a SA prison—not an especially fun place to be.  His supporters had organized and died.  Yet Mandela had barely emerged from prison before he had agreed to sell out his supporters and shoulder the debts incurred by his tormentors.

So I am asking my friend his best guess as to what must be included in "The Talk."  He said he didn't know but it was probably some version of "which would you prefer, silver or lead (plata o plomo—slang for money or bullets)?  We have both."  A guy like Mandela was made to understand that his "unconventional" economic theories would cause more misery for his followers.  But if that failed to impress him, he would be made to understand that he had a choice—he could play ball with the lords of international finance and assure his great-grandchildren could afford to attend the finest universities on earth, or he could be targeted for assassination.  All this would be very polite and would stress that all the "serious" economists on earth agreed with the economics of neoliberalism so he could sleep knowing he at least tried to cut a good deal for his supporters.

And so because Mandela played ball, he was accorded a memorial where some of the folks who once had called Mandela a communist and a terrorist (which he was as a young man) came to pay their respects (or at least goof off.)  The most famous picture of the event seems to be David Cameron, Pres. Obama, and Danish Prime Minister Helle Thorning-Schmidt—good neoliberals all—mugging for a smartphone.  The evidence of "The Talk" just seems to be overwhelming.

Saturday toons 14 DEC 13

The light returns

In Sweden, they have a celebration of St. Lucia on Dec 13th.  The oldest daughter in the house dresses up in a white gown and a crown of candles and serves sweetbreads to other members of the house.  As we all know, the solstice isn't until the 21st (about) but when things are as dark as they get in the far north, who can begrudge anyone jumping the gun (a little).

Anyway, the Swedes have a lovely Christmas Carol that has the advantage of being perfect for teaching children how to sing parts.  It is called Jul, Jul Stralande Jul (Christmas, radiant Christmas) and it has become something of the official song of St. Lucia Day.  Just beautiful.

My mother and sisters played the part.  I can still smell my mother's cardamom coffee bread.

U.S. rooftop solar power shatters third quarter records

I am 64.  I have been interested in solar power since 7th grade.  And I still have trouble believing we finally made the collection part work for regular people.  Oh it's still pretty expensive and regular people better have a solid middle-class income stream.  But still, that's a HUGE improvement over the days when PV cells could only be bought by governments trying to power spy satellites.

This is a significant milestone—USA is about to pass Germany in solar installations.  Now Germany got her lead when PV cells were in their pricy early-adapter stage and good German solar sites are much more rare than in USA.  So the German accomplishment is nothing to sneeze at.  But given commodity PV cell pricing and the fact that every square foot from St. Louis to the Pacific is a better solar site than anything they have in Germany, it was probably only a matter of time before there was a leadership change.

And remember folks, this is an energy change.  Economical solar power will alter the landscape of the real economy as certainly as the discovery of oil.

Technology and jobs

One of the truly vicious little lies that keeps getting traction is that the economic problems facing the USA middle classes are caused by the introduction of new (labor-saving) technologies.  Simple observations back such a conclusion—obviously someone with a chainsaw can cut down more trees than someone with an axe.  So a company that cuts down trees armed with chainsaws needs far fewer workers to produce the same output.  Such productivity gains are routinely measured by both government and private statisticians.

Veblen claimed it was a rare labor-saving device that actually saved any labor.  And though I am someone who is a tool junkie who has bought dozens of labor-saving tools from power mitre-box saws and compressed-air finish nailers to some damn powerful computers, I tend to agree with him. And I am quite certain this is not just being counter-intuitive.

Here's why.  Take the automobile industry as an example.  The coming of cars put a bunch of horse-related occupations out of business (blacksmiths, feed dealers, vets, etc.) but the result of this change was an economic explosion that has lasted 100 years or more (roads, urban sprawl, repairs, emergency medicine, oil refining, etc.)  There are good reasons why this happens:

• Better and cheaper technologies tend to create new demands.
• Tools are more often purchased for quality gains than for quantity gains—which is a good thing because quality gains have their own payoffs—even if the new super-output technology sits idle much of time.

The result is that technology and unemployment are only distantly related.  There are a host of reasons that rank MUCH higher on the list of reasons for the decline of the USA middle classes.  There is PLENTY of necessary work that needs to be done.  There are millions of unemployed around the world.  The work that needs doing requires the finest and most sophisticated technologies available. Building the green society ought to keep folks busy for another century.  If the funds to build it became available, global unemployment could plummet to 3% in months—and many of those jobs would come from inventing, perfecting, and producing new technologies.

Die! suburban office parks

As someone who got to see the real estate bust of 1982 up close, I hold a very jaundiced view of the petty real estate speculators and hold a much lower opinion of the the bankers who fund their crazy schemes. Let me explain.

I was living in St. Paul at the time and had been personally involved in a scheme to help restore a gracious old neighborhood by rebuilding a turn-of the century four-unit rowhouse that was vacant and near collapse. I learned a very great deal from that experience about how the "value" of property rises and falls as dictated by political, social, and economic conditions that had very little to do with the intrinsic value of the dwelling itself.

For example, because this was originally a Victorian neighborhood, the perceived value of the real estate was based on how many folks could be persuaded that such a style was sophisticated, trendy, and just plain cool beyond words.  Problem here! Victorian houses originally went out of style for some very good reasons—the best of which is that they are a maintenance nightmare and were designed to run with live-in servants.  So even though a well-maintained Victorian house could be featured in movies and commercials as the perfect embodiment of homeyness, the fact is the owner better get a lot of thumbs-up in life to justify the insane costs of owning one.

Even though the denizens of Cathedral Hill would talk of the need to preserve historically significant neighborhoods and saving an architectural heritage, at the base, they were buying aesthetics.  Now I can go on for hours about how aesthetics is arguably the most important consideration in economics, but what it means in practice is that housing is also part of the fashion industry—and there is NO accounting for taste.

But while it was enjoyable to learn aesthetics from some neighbors with especially refined taste, the lessons learned from the bankers were no fun at all.  I discovered that it was an occupation utterly driven by emulation.  The way bankers reduce their personal risk is to do exactly the same thing as everyone else in the business. The old Soviet Politburo was not nearly so homogenous.  Obviously we were not going to restore an ugly slum to its former glory until bankers got involved, and they had decided as a group to redline the whole area.  At one point we actually threatened one banker with a sit-in (this was 1976) if he refused to stop redlining.  He actually caved to political and social pressure yet in the process became a local hero who also got very wealthy because he essentially underwrote what became one of the most desirable neighborhoods in Minnesota.  They probably still run tour busses on pretty summer days.

Encountering such relentless herd mentality actually unnerved me.  I suppose it should not have—after all, I grew up in a country that worshipped many forms of herd mentality—most especially in pop culture.  Start a trend and you will become rich!  Somehow, I just assumed that when grown-ups had to make grown-up decisions, they were going to be a little more nuanced than wondering if something will ever become "cool."

Some of the other things I learned from the bankers are covered in the article below which points to the economic absurdity of the seemingly endless miles of suburban office parks that surround most USA cities.  These buildings are not especially ugly but they are unimaginative and usually festooned with aggressive signs attempting to fill them up with paying tenants.  If you wonder whose business they are attempting to attract, you are hardly alone.  Turns out there is not nearly the demand necessary to fill those white elephants.  So why were they built?

The simple answer is, "When lenders lend, builders build."  So when the loan committees decided (at roughly the same time) that their banks should lend to suburban office developers, suddenly there were many such projects.  And since their herd mentality meant that a lot of lending committees were looking at the same data which projected a demand for such projects, a lot of these schemes got green-lighted.  There actually may have been enough demand for one or two such office parks but when twenty lenders, looking at the same data, fund a couple of projects EACH...  About three years later, there is a glut of new and usually expensive offices and those demand projections have vanished into the air.  It is as predictable as dawn.  And if it isn't suburban office parks, it is high-end residential developments, or downtown office space, or urban condos, or etc.

Because of my experiences with bankers who cannot even organize something as simple as real estate development, I tend to believe that they are absolutely unqualified to advise societies on more complex economic matters.  And if you think I overstate things here, just listen when the big banksters testify before congressional committees and then ask yourself, Why should anyone give these buffoons the ability to determine the future development of a nation?  Of course the answer is, they should not.

The revolutionary possibility of graphene

About a month ago (Nov 12) I did a post on the amazing experiments in electrical storage using supercapacitors made of graphene. These devices threaten to make even sophisticated batteries like lithium-ion look hopelessly primitive.

In a world where folks wonder why there aren't more political movements that promise revolutions, it is comforting to know that a real revolution that can actually address a problem like climate change will not be formulated in a Paris or Zurich coffee house but in a material science lab.  Those who lament the "missing" revolutions forget that the vast majority of folks who called themselves revolutionaries were nothing but BS artists. The only revolution that accomplished much of anything was the industrial revolution.

This was the revolution that determined what was possible. It determined how large the economic pie could grow. Since the only economics worth organizing a revolution around are the questions of working conditions and the material conditions of life, the thinkers who actually changed things (Newcomen, Bessemer, Edison, Ford, etc.) were the real revolutionaries while folks like Marx, Mao, Robespierre, etc. changed nothing or actually made things worse because they were Leisure Class frauds.

And that is the unfortunate truth—no matter how concerned someone is for the poor, if that person doesn't respect the industrial revolution, his revolutionary rhetoric is just a cheap excuse for senseless murder.  And while you are at it, ask yourself, "Who is more likely to give us a way out of the fossil fuel trap—someone perfecting electrical storage with graphene or some concerned 'activist' chaining himself to the White House fence?"

Progressive thought, the Pope, and rising Producer Class unrest

To watch the academics, preachers, and pundits who make it to broadcast TV or read the "think pieces" they write for the big papers, a reasonable person could conclude the country had been bombed with some powder that makes everyone stupid.

Actually, the reason why establishment thought has become so relentlessly goofy is that it is an example of an end-of-empire disintegration.  The neoliberals and neocons are losing their intellectual grip because their core thinking was discredited at least 150 years ago and their triumphs these last 40 have just been a sad reprise.  In the case of the neoliberals, their discredited beliefs revolve around the idea that moneychangers should run the economy and the more they can extract from the real economy, the more successful their management.  In the case of the neocons, their discredited core belief is that because USA has most of the globe's explosives and delivery systems, we get to run things without even acknowledging the rest of humanity exists.  If you believe either of those impossibly insane lies, it is extremely likely you will get everything else wrong.  But if you do not believe these things, it is almost impossible to be heard or seen in the big established press or get tenure at the expensive colleges.

But if you look very carefully, you just may see the debate shifting ever so slightly.  In my mind, the first breakthrough came when the Occupy people got folks talking about the 1% vs. the 99% maldistribution of wealth.  The next step came when Ken Rogoff, one of the high priests of neoliberalism at Harvard, got caught engaging in academic fraud in one of his books Growth in the Time of Debt.  But nothing beats seeing the POPE condemn trickle-down economics by name.  Hard to beat the establishment credentials of someone who has 1.2 billion followers.  Here is Jon Stewart making great fun of the financial press's objections to a raise in the minimum wage (first clip) and Pope Francis' sermon against neoliberalism (second clip).

Saturday toons 7 DEC 13

Deep Oceans May Be Storing Heat

Back in the early climate-change debate, I heard someone suggest that the whole problem would go away if we only could transfer the excess atmospheric heat to the deep oceans.  This wasn't a solution, understand, because even the deep oceans are finite, but if any part of the planet could stand to suck up the extra energy, it was the nearly lifeless part below where sun light penetrates.  Importantly, deep ocean water is at least 80% of the earth's total and raising the temperatures a few degrees at those nearly lifeless depths would probably improve things.

Unfortunately, this conversation was just idle chatter because it is probably impossible to pump energy into the depths without also warming the shallow waters where small temperature changes would destroy thousands of life forms.  But we should not be surprised, at all, that as we see temps rise in the deep water, some of the predicted atmospheric heat is going missing.

Because we really don't understand this mechanism, I wish the climate scientists would resist the temptation to make future atmospheric temperature predictions.  If 70% (for example) of the trapped energy is going into heating up deep water, this means we may have hit some sort of plateau where the atmosphere cannot absorb much more heat—so it goes into the water.  This makes sense because water can store WAY more heat than air.

The good news is IF that is what is happening, we have some more stable targets to design a new infrastructure.  The bad news is that we have screwed up the atmosphere badly enough already to ensure that we will need to do something huge to cope with the problems that already exist.

The pure evil that is ALEC

One of the more interesting debates is whether we have screwed up the climate so massively, there is literally nothing we can do to avoid environmental collapse.  Most climate scientists are not willing to go that far but it is almost certain that the vast majority of them harbor those thoughts late at night.  Whatever the facts, the time left to do anything meaningful is very VERY short.

The one development that still gives me hope is that PV cells have finally become affordable and that storage in the form of super-capacitors is finally possible.  For the first time in history, we can actually hold the major elements of a possible solar age in our hands.

But the old order does not intend to cheer on these development or to even move aside gracefully.  It seems our old friends from the American Legislative Exchange Council (ALEC), have decided to block the only really good news in a couple of generations.  ALEC has been a one-stop shop for reactionary ideas from repeal of fair labor standards to a relentless assault on anything that smacks of progressive taxation.  These folks are literally bringing the arguments of the Robber Barons back to life in the form of model legislation designed to make life easier for our modern right-wing crackpot.  And now they have come up with a scheme to slow down the introduction of widespread PV installations and with it, the whole concept of distributed energy production.

Getting to green is already a damn-near impossible task.  ALEC intends to make it more difficult by doing what the Leisure Classes have done for centuries—get in the way.  Veblen called such people "industrial saboteurs." These crazy people must be prevented from getting in the way—there is no time to indulge such mega-fools.

Is college a scam?

I live in a town with two small, but highly-regarded liberal arts colleges.  They are both beloved and have intensely loyal alumni.  They both give this little town a degree of elegance, sophistication, and grace that would be sorely lacking without their presence.  And yet there are moments when I come to think of them as elaborate hoaxes whose main function these days is to sell a bunch of great kids into debt peonage.  This outcome is virtually assured for the simple reason that both cost around $50,000 / year.

Now admittedly, this is a mostly a problem caused by 40 years of middle-class income stagnation where the gap between college costs and the ability to pay is made up with paper hawked by loan sharks pushing debt that cannot be discharged.  Yes, the schools are complicit in all of this.  Many of those rising costs are for expensive buildings and winter-break biology classes held on a beach in Belize.  These are NICE places to go to college.  Well, enjoy yourselves, kids—there is a pretty good chance your life will never again be so stimulating and pampered.

At some point, the question must be asked—is there really anything you can teach a 19-year-old, no matter how bright, that is worth $50,000 per year.  I have more than my share of really smart friends and while I am probably out of line to speak for them, I am pretty sure their answer is NO. I know mine is.

What makes this all the more interesting is that this absurd inflation in educational costs is happening when you can now access the sum total of all human knowledge on your smartphones for $50 a month.

My proposed solution to the problem of crazy education costs is to set up a standards system that is rigorous enough to be considered a legitimate measure of one's educational attainment.  It would be like the bar exam except for everything.  The tests would cost a minimal fee—like $100—and could be taken whenever the student felt ready.  Here's the big selling point!  The state or whomever the society wants to entrust with this certification process, would pointedly not care how someone came to know what they do, only that they could prove they learned something somewhere.  So if someone wants to learn in pretty little liberal arts schools in small-town USA and can afford $50,000 a year—fine.  And if someone would rather do in-depth research on the Internet for $50 a month, that's fine too.

When it came to taking the official certification test, everyone would be equal.  But would the $50,000 / year education yield better results than folks, on their own hook, digging up important knowledge on the internet?  I seriously doubt it.

Iceland still has a few Vikings

The Iceland story never fails to make me feel like there is still some hope for humanity.  Their little spat with the banksters managed to get them listed as a bunch of terrorists by the Brits, after all.  Apparently, there is such a thing as institutional memory—"from the fury of the Northmen, deliver us oh Lord" lives on.  Of course, putting a country out of business to pay for the crimes of cheaters must have certainly offended the Viking sense of justice.  I don't think the elders at Althing would have paid off the banksters either.

So now they have a scheme to bail out all their homeowners.  Re-setting the finances is in the interest of every citizen of the island.  So of course, IMF and OECD—those repositories of economic insanity—have informed the Icelanders it is a bad idea.  Of course it's a "bad" idea—organized debt restructuring would end much of the bankster rape of the planet so these organizations which are arms of international banksterism intend to kill this idea in its infancy.

This is quite important to the lords of high finance.  Turns out that if these folks could not cheat and game the system, they don't make any money—and certainly not the sums they think they are worth.  And the rest of us would love to see them go—I don't know anyone who can afford to support this useless protoplasm.  Besides, less than 1% of what they do is of ANY value to the real economy.

Go Iceland!

Germany plans to curb energy transition

I do not even pretend to understand German politics these days.  In the most recent elections, the left parties (Left, Social Democrats (SPD), and the Greens) got the majority of the votes.  But no matter, the conservatives claimed victory and set about looking for a coalition partner.  Fortunately for the conservatives, the SPD is filled with mostly New Labor / New Democrats types and even though being a doormat in a ruling government would seem especially odious, it is far preferable to the sell-outs than actually governing with people who still maintain their leftist views of the world.  So the Social Democrats, a party once thought of as so radical that Hitler sought to murder most of it members in the 1930s, has sold out for what? a return to a small minimum wage?

Which brings us to the issues of energy.  German always acted as if there would be no significant problems from introducing wind and solar to the national grid.  And when renewables were a tiny fraction of the supply, they were correct.  But now they are reaching the point where renewables cannot run the country but are now big enough to cause significant problems for the rest of the players.  Making things worse is that they decided to shut down their nuclear power industry. So now they are in a situation where their high-priced green energy is causing misery for consumers while their no-nukes policies have made them more reliant of coal which pretty much negates the reason for the whole push for wind and solar.

When Herr Altmier became the environmental minister, I was assured by my German contacts that this was not a signal that Germany would backtrack on its commitment to renewable energy.  I wonder what they think now because as this story from DW explains, the CDU / SPD coalition indeed does plan to scale back Germany's plans for a transition to a renewable energy future.  The Frankfurt banksters have won another round—the rest of us who needed the Germans to solve the problems of an energy supply transition have lost.

No "Moore's Law" for wind turbines

This blog has a stylized windmill blade on the header.  Not surprisingly, I am a huge windpower fan and have been for a long time.  Having spent part of my childhood in North Dakota, I have long thought that harnessing the wind was the heart of any strategy for a conversion to renewables.  In parts the world, the winds are relentless and harnessing the winds has been the hallmark of advanced civilizations for most of recorded history.  Wind it is.

On the other hand, solar cells have been so expensive for so long, I never really treated them seriously.  They were the sort of thing that only well-funded  government agencies like NASA could afford.  Even worse, the early solar cells required so much energy to manufacture, they would never produce enough electricity to cover that cost.

The world has changed.  Solar cells are now so cheap that soon, governments will stop subsidizing them.  Turns out that solar cells are finally demonstrating their own version of Moore's Law—the economic principle that makes my desktop more powerful that all the computers in the Pentagon when I was in college.  Wind turbines will never have their own Moore's Law so the day when PV finally passed wind was probably inevitable.

Windy areas are pretty inhospitable.  Very few people want to live in windy places.  On the other hand, most of the world's populations live in sunny places. My guess is that wind is on its way to permanent secondary status in the world  of renewable energy.

Perhaps the time has come to redesign my blog's header.

Saturday toons 30 NOV 13

Would'ya like a serving of hope for Thanksgiving?

Hope is a powerful force. So what I want to bring you for Thanksgiving is hope. Hope that we CAN have cheap, abundant energy. Hope that we CAN have cheap, abundant food – for everyone. We CAN have cheap, abundant clean water – for everyone. Hope that we CAN have cheap, abundant medical care – for everyone. Hope that we CAN provide every living soul on our unique blue planet a decent standard of living worthy of the dignity of being human. And hope that we CAN do all these things while addressing and reversing the widespread environmental damage that the past two centuries of industrialization and mechanization have caused. Hope that we CAN solve global warming.

We are at a history-shattering point of transition, where resources and energy will not be scarce, and will never again be scarce. In the past half century, humanity has developed technological capabilities which are now growing exponentially. The best known example is Moore’s Law: that the number of transistors we can put on integrated circuits doubles approximately every two years. In a cell phone, one person has at his or her fingertips more computing power than NASA used to put astronauts on the moon forty-four years ago. The only things holding us back are old thinking in the Malthusian mold that denies the possibility of technological solutions; and old ideologies of political economy that prevent us from reforming the financial and monetary systems for the common good and to pay for what we need to do.

Economics today is hopelessly confused by a myriad of definitions for “capital”, “wealth” and even “money”. An economy is simply how a society organizes itself to procure, produce, and distribute the material, non-material, cultural, and spiritual goods and services required to sustain and reproduce human life at ever higher levels of happiness, security, and well-being. All else are really superfluities. Therefore, the major concern of economics should be the nurturing and deployment of the human mentation required to find and transform the natural resources required, and managing the scientific and industrial structures required.

In other words, the development of science and technology.

The progress of human technology can roughly be summarized as moving ever further down 1) a spectrum of energy density and 2) molecular and atomic scale. From the rapidly diffused light and heat of burning wood twigs, we have progressed to concentrate fire in boilers, then in internal combustion engines, and are now mastering the techniques of directing and manipulating single molecules, atoms, and even photons. We can now perform surgery on genes, and arrange individual atoms. These technologies are all breathtakingly recent in the context of known human history.

The implications are enormous. Almost every economics textbook I have seen – and I have acquired quite a few and looked at many, many others for just this reason – begins with some definition or other involving the allocation of scarce resources. People who have suffered through an Econ 101 course know that scarcity is central to mainstream economic thinking. In the best selling textbook on macroeconomics, economist H. Gregory Mankiw writes near the bottom of the first page:

The management of society’s resources is important because resources are scarce. Scarcity means that society has limited resources and therefore cannot produce all the goods and services wish to have. Just as each member of a household cannot get everything he or she wants, each individual in a society cannot attain the highest standard of living to which he or she might aspire.

I will put this as simply as possible: Mankiw’s and all other’s arguments that resources are scarce is a smokescreen that prevents us from seeing how rich oligarchs manipulated national economies. (Mankiw was George W. Bush’s chief economist, and earlier this year wrote a piece entitled “Defending the One Percent” – honest, not joking, that’s Mankiw’s title).

The typical environmentalist belief that the planet’s resources are finite falls right into this trap. What we consider as resources is defined by our ability to access and process them – in other words, our technology. As Peter H. Diamandis and Steven Kotler argue in their book, February 2012 book, Abundance: The Future Is Better Than You Think

When seen through the lens of technology, few resources are truly scarce; they’re mainly inaccessible. Yet the threat of scarcity dominates our worldview.

Thus, the most important economic activity human beings undertake is scientific research. But I am here to tell you that no economics textbook I have seen has ever discussed the overriding importance of scientific and technological development and deployment. They all, therefore, lack a sound foundation for actually assisting the human species in our task of surviving and thriving. Aluminum, for example, is ridiculously abundant. It is, after oxygen and silicon, the third most abundant element in the Earth’s crust, accounting for 8.3 percent of the world’s weight. Yet, until relatively recently in human history, the use of aluminum by humans was far more scarce than the use of gold or silver. It was not until 1886 that the Hall-Heroult process was developed, using electricity to extract aluminum from its ore, bauxite, and aluminum became cheap and plentiful. Diamandis and Kotler argue that

technology is a resource liberating mechanism. It can make the once scarce the now abundant.

But many progressives and liberals object that our world is overpopulated, and the planet simply cannot support a high standard of living for nine billion people. We are already using thirty percent more natural resources than the planet can sustain. Diamandis and Kotler explain example after example of new technologies that will solve this problem. Such as nano-engineered filters for making drinking water from the most heavily polluted sources, to new materials that will allow us to build photovoltaics without semiconductors, reducing the cost of solar energy by not one, but several orders of magnitude.

Just as important – and as hopeful – as these new technologies, is the fact, demonstrated over and over and over again, that as a society becomes more prosperous, more economically secure, and healthier, the birth rate drops dramatically. In fact, the birth rate collapses. We have seen this happen in Britain and the USA in the mid-1800s, in Japan in the late 1800s, in South Korea in the 1960s, in Malaysia, Indonesia, Vietnam and India more recently. In a number of advanced industrial countries, such as Italy and Japan, the birth rate is now actually insufficient, and the populations of those countries are shrinking. Diamandis and Kotler write:

John Oldfield, managing director of the WASH Advocacy Initiative, which is dedicated to solving global water challenges, explains it this way: "The best way to control population is through increasing child survival, educating girls, and making knowledge about and availability of birth control ubiquitous. By far the most important of these is increasing child survival. In communities where childhood death rates hover near one-third, most parents opt to significantly overshoot their desired family size. They will have replacement births, insurance births, lottery births — and the population soars. It’s counterintuitive, but eradicating smallpox and vaccine-preventable disease and stopping diarrheal diseases and malaria are the best family planning programs yet devised. More disease, especially affecting the poor, will raise infant and child mortality which, in turn, will raise the birth rate. With fewer childhood deaths, you get lower fertility rates — it’s really that straightforward."

What about water shortages? Only 2.7 percent of the water on the planet is non-salty and usable for human consumption. Right now, one billion people have no clean drinking water, and 2.6 billion people lack access to basic sanitation. Dean Kamen has developed a water distiller that recovers 98 percent of the energy it uses and can produce 250 gallons of sterile water per day. The power source is a Stirling engine that really can burn almost anything, such as rice husks. Others have invented machines that process human wastes and turn them into electric power.

Energy? In sub-Saharan Africa, 70 percent of people live with no access to electricity – yet one square kilometer of land soaks up from the sun the energy equivalent of 1.5 million barrels of oil. Deploy enough photovoltaics, and Africa has a huge surplus of energy it can export to Europe. University of Michigan physicist Stephen Rand discovered a way of creating magnetic fields one hundred million times stronger than what the known, accepted “laws” of physics had previously predicted was possible. The result of this research will hopefully be a way of making photovoltaics without semiconductors, reducing the cost of solar energy by not one, but several orders of magnitude.

Global climate change? Diamandis and Kotler describe the SunShot Initiative by the U.S. Department of Energy

….now funded the Joint Center for Artificial Photosynthesis, a $122 million multi-institution project being led by Caltech, Berkeley, and Lawrence Livermore National Laboratory. JCAP's goal is to develop light absorbers, catalysts, molecular linkers, and separation membranes-all the necessary components for faux photosynthesis. "We're designing an artificial photo-synthetic process," says Dr. Harry Atwater, director of the Caltech Center for Sustainable Energy Research and one of the project's lead scientists. "By 'artificial,' I mean there’s no living or organic component in the whole system. We're basically turning sunlight, water, and CO, into storable, transportable fuels — we call 'solar fuels — to address the other two-thirds of our energy consumption needs that normal photovoltaics miss." Not only will these solar fuels be able to power our cars and heat our buildings, Atwater believes that he can increase the efficiency of photo-synthesis tenfold, perhaps a hundredfold-meaning solar fuels could completely replace fossil fuels. "We're approaching a critical tipping point," he says. "It is very likely that, in thirty years, people will be saying to each other, 'Goodness gracious, why did we ever set fire to hydrocarbons to create heat and energy?’ “

And what about the carbon we have already dumped into the atmosphere? Dr. David Keith at the University of Calgary has developed technology that actually removes CO2 from the air. Can the technology be scaled up to actually make a difference and undo the damage already done? With enough cheap energy, it probably can.

Technology is developing so fast, it is hard to keep up. I receive a newsletter on developments in photonics, and here’s a very small sample of recent news: November 23, 2013: Superconducting Detector Measures Single Photons

A new superconducting detector array that can measure the energy of individual photons is seen as a likely successor to CCDs [charge-coupled devices] and other semiconductor-based detectors for the visible and near-infrared regions, which are starting to hit performance limits.
"What we have made is essentially a hyperspectral video camera with no intrinsic noise," said Ben Mazin, assistant professor of physics at UC Santa Barbara, of the array that he and his team developed. "On a pixel-per-pixel basis, it's a quantum leap from semiconductor detectors; it's as big a leap going from film to semiconductors as it is going from semiconductors to these superconductors.

November 14, 2013: Seeing A Photon Without Absorbing It

All current methods of detecting light share a common property: absorption and thus destruction of a photon. It has been a long-standing dream to be able to watch individual photons fly by without absorbing them. A team of scientists in the Quantum Dynamics Division of Prof. Gerhard Rempe at the Max-Planck-Institute of Quantum Optics has now for the first time realized a device which leaves the photon untouched upon detection.

In the experiment, the incoming photon is reflected off an optical resonator containing a single atom prepared in a superposition state. The reflection changes the superposition phase which is then measured to trace the photon. The new method opens up the perspective to dramatically increase the detection efficiency of single light quanta and has important implications for all experiments where photons are used to encode and communicate quantum information. The key elements in the experiment are a single rubidium atom and an optical cavity.

November 13, 2013: Researchers rewrite entire genome, add healthy twist

Scientists from Yale and Harvard have recoded the entire genome of an organism and improved a bacterium's ability to resist viruses, a dramatic demonstration of the potential of rewriting an organism's genetic code.

October 23, 2013: Study Finds Natural Compound Can Be Used For 3-D Printing Of Medical Implants

Researchers from North Carolina State University, the University of North Carolina at Chapel Hill and Laser Zentrum Hannover have discovered that a naturally-occurring compound can be incorporated into three-dimensional (3-D) printing processes to create medical implants out of non-toxic polymers. The compound is riboflavin, which is better known as vitamin B2....

The researchers in this study focused on a 3-D printing technique called two-photon polymerization, because this technique can be used to create small objects with detailed features – such as scaffolds for tissue engineering, microneedles or other implantable drug-delivery devices.

Two-photon polymerization is a 3-D printing technique for making small-scale solid structures from many types of photoreactive liquid precursors. The liquid precursors contain chemicals that react to light, turning the liquid into a solid polymer. By exposing the liquid precursor to targeted amounts of light, the technique allows users to “print” 3-D objects.

This last reminds me of one of the most exciting developments Kotler and Diamandis discuss: the work of tissue-engineer Anthony Atala at Wake Forest University Medical Center, who led a team that modified a desktop laser printer to print with each pass one layer of stem-cell based specific tissue cells and were able to “print” a mini-kidney in a few hours. They don’t write how long the mini-kidney survived in the lab, but did mention that the organ was secreting a urine-like substance.

We are at a history-shattering point of transition, where resources and energy will not be scarce, and will never again be scarce. A truly golden age of economic prosperity and bounty is closer than most of us realize, but we are quite literally killing ourselves by clinging to ideologies that were hammered out when famine was the norm, cholera swept away millions, and the average human being could expect to live only somewhere between 30 and 40 years. . We will soon be at a point that we can give every person on the planet a decent standard of living. Not the wasteful sol of the contemporary USA, but enough that no person, anywhere, for any reason, need experience hunger or cold or deprivation But, we have rich pricks who have poured billions of dollars into promoting and propagating the idea that poor people deserve the hardships and indignities they suffer.

It already is seen as a “structural problem” that our industrial systems are now so productive and efficient, that they cannot be a source of good, steady, well-paid jobs for tens or millions of people. So we’re supposed to now accept that because of this marvelous advance in human know-how and capability, tens of millions of people who can no longer find a well-paying factory job have to settle for the marginal wages of Wal-Mart or McDonalds? I refer people to thereisnospoon on DailyKos a week ago, The glorious, dystopian future envisioned by our libertarian masters, attacking Tyler Cowen who wrote to welcome a possible future in which 15% of the population “succeeds” and the rest must learn to get by on what they are provided by whatever welfare system society devises.

We are at the point where everything we need can be produced by only 20 to 50% of the population, depending on what country and its stage of industrial / technological development. So, we need to develop an ideology in which “structural unemployment” is not accepted as an excuse for hundreds of millions — billions, really — of people being left in poverty. We need, in fact, an ideology which does not accept poverty under any excuse. We have the means at hand to eliminate poverty and privation. Will we allow some the “freedom to believe” in ideologies that prevent us from doing so? I ask in retort: what right has anyone to “trade” hundreds of millions or even billions of dollars when we have such a bright future to build, if only we summon the will to finance it? There have been a few already who have warned about a future in which the rich are able to use new technologies to genetically perfect themselves and their offspring, while the vast majority of the human race is subjugated by new ideologies that will consequently be developed to justify the rule by a small class of the wealthy bio-engineered to be “genetically superior.”

Which brings me to my criticisms of Diamandis and Kotler. I see three problems with their book. First, they are completely wedded to neo-liberal market solutions, and appear to have no desire to challenge, let alone change, the status quo in the industrialized west which is increasingly under the boot of, as Pope Francis recently said, the new tyranny of capitalism. Any economic system must be run to benefit the general welfare. This was well understood at the time of the American Revolution, but it is now lost knowledge. Did you know that the words “capitalism”, “capitalist” and “capitalistic” do not appear anywhere in The Federalist Papers, let alone the U.S. Constitution? (There is a website where you can search the text of these documents, and I’ve done the searches).

Rather than challenging the rise of the global corporatist state and its inverted totalitarianism of manufactured consent, Diamandis and Kotler promote the charity work done by what they call the technophilanthropists, the info-tech billionaires like Bill Gates, who are funding much of the work of deploying these new technologies in underdeveloped countries, and who are also approaching the charity work they do from a largely neo-liberal market perspective.

Second, Diamandis and Kotler simply do not comprehend how large and ugly are the problems of greed, economic rent, regulatory capture, and the grasping rich. For every technophilanthropist trying to do good, there is probably more than one Jamie Dimon or David / Charles Koch doing no good (i.e., evil, according to the definition by St. Augustine). Diamandis and Kotler simply are not attuned to the fact that a new oligarchy has arisen that is destroying democracy and representative government. As the president of the New York Federal Reserve Bank, William Dudley, recently shocked Wall Street in a speech, there is an

important problem evident within some large financial institutions—the apparent lack of respect for law, regulation and the public trust. There is evidence of deep-seated cultural and ethical failures at many large financial institutions.

Finally, Diamandis and Kotler do not understand or simply did not discuss the problem, of who controls the creation and allocation of money and credit. The control of money and credit by a small clique of oligarchs, centered in Wall Street and the City of London, but including other centers such as the futures markets in Chicago, is the major obstacle to making forward progress against these existential problem. Simply put, our financial and monetary systems must be reorganized and reformed to serve the general welfare, instead of private gain.

An article in Scientific American two years ago projected a total cost of moving the world’s economies entirely off of fossil fuels at $100 trillion. There is enough solar energy hitting one square kilometer of desert in Africa to supply all the electricity needed - in all of Europe as well as Africa.

All we need to do is build the new industrial economies to harvest and harness this energy. The only things holding are back are old thinking in the Malthusian mold that denies the possibility of technological solutions; and the problem of paying for what we need to do. And to pay for what we need to do, we simply need to stop the speculators and usurers of Wall Street, the City of London, and the futures pits of Chicago, from misusing some $5 trillion in financing each and every day.

So, what future do you want to build? One in which we spend $100 trillion over the next decade or two to give everybody on the planet freedom from starvation, poverty, and illness? Or one in which financial elites are allowed to play games with $5 trillion every day? Do you want to build a future for which our children, and their children, will thank us, or curse us?

Global outrage at dirty coal

My friend has a brother who has worked most of his life in the western coal industry.  He supervises an open-pit mine in Gillette Wyoming that can load up to three trains an hour.  Their machinery is so efficient that the trains literally do not stop moving as they are loaded.  Because Wyoming coal is considered low-sulfur, he is loading coal that complies with the Clean Air Act.  Yet every ounce of coal he loads will eventually become CO2 and contribute to global warming—and he loads tons of it every second.  It takes a LOT of coal to keep the nation's electrical generators running and his crew is a long way from digging out 16 tons a day with a pickaxe.

There is literally no way that we can continue to burn Powder River Coal and not destroy the atmosphere.  There is just too much of it.  And that's the problem—those folks invested in this coal want it turned into profits.  And they are not about to back down without a fight.  There are actually people who benefit from not doing anything about climate change.  Fortunately for the rest of us, there are not so many of them.

Solar power grows up

One of things we learned from the aircraft industry was that all the great innovations were driven by improvements in powerplants.  The reason is obvious.  If the new motor is lighter and more fuel efficient, the same airplane using the new propulsion source will lift a greater load and fly farther.  The most famous example was Charles Lindbergh who realized that the then-new Wright J-5 Whirlwind could lift off with enough fuel to fly him from New York to Paris with range to spare.  Because the Whirlwind was so light, efficient, and reliable, long-distance flying like he demonstrated would soon become routine.

So now we see that the essential technology area in a possible all-electric society is going to be storage.  And so Elon Musk of Tesla is being taken seriously by the other carmakers because he has demonstrated that storage has now reached the stage that an electric Lexus / Corvette is possible.  He hasn't done mind-blowing things but he has seized on the potential offered by the lithium-ion battery.  In the article below, we are seeing that Tesla could wind up making a bunch of money selling or leasing their battery packs to homeowners who want to even out the output of their PV cells.

Or not.  Once Musk proves that a lithium-ion battery pack combined with PV cells will allow Californians in the near future to unhook themselves from the public-service utilities, there is absolutely nothing that would prevent someone else from manufacturing and leasing such installations—including the local utility.  The truth is my electric company is extremely reliable and obviously buys quality equipment.  So if the numbers were comparable, I would rather have them install and service my lithium-ion / PV set-up.

Even though we are getting close to a major change in how homes are powered, we still face large hurdles.  Utilities are cautious—and for good reason—they have a huge bundle invested in doing business the way they are doing it right now.  Furthermore, lithium simply MUST be a limited resource.  So if batteries could be replaced by supercapacitors fabricated from carbon, buying a bunch of expensive, slow-charging lithium batteries will look pretty silly.

Shake-up at the Minneapolis Fed

If I am making too much of this story, chalk it up to wishful thinking.  I am quite aware of the link between academic economics and the economics divisions of the various world's central banks.  Regular readers around here know I have covered this link quite extensively.  The most telling link, of course, is that the "nobel" prize for economics is actually awarded by Sweden's Central Bank—which is why that award's official name is the The Sveriges (Sweden's) Riksbank (Central Bank) Prize in Economic Sciences in Memory of Alfred Nobel (who would be utterly horrified that his name has been attached to such a gang of scientific illiterates).

In 1981 when Paul Volcker jacked up the prime interest rate to 21%, the main message was that the world's central banks were decriminalizing usury.  The reasons usury has been the object of censure by virtually every culture in history are many and legitimate, but the main economic reason is that high interest rates act as a perpetual drag on the real economy.  So the Fed was acting against the historical, cultural, moral, AND economic sanctions against high interest rates.  And to get this crime against the economy in motion, the central bank—at the point of a capital strike—forced the repeal of thousand of anti-usury laws nationwide.  Some states were even forced to change their constitutions.

In order to justify this economic attack on the real economy, the Fed's economists had to come up with "justifications" that ranged from outright lying to institutional corruption to insanity.  Politicians being mostly historical and economic illiterates usually bought these insane lies—not that they had a lot of choice in the matter.  During this cultural upheaval, there were a few voices that tried to remind their fellow citizens that controls on the creditor classes were essential in the operation of the modern economy.  Those voices were very successfully marginalized and because they were now outsiders, many indeed turned to some crackpot theories in their critique of the Fed.

Many would probably admit there are moments when they would love to launch drone attacks against the word's central banks and send anyone whoever worked for them as economists to re-education camps where they could be taught a useful trade.  But in the cold light of day folks must admit that central banks perform a useful function and part of their operation is to measure the performance of the economy. So even if we were to destroy the central banks, something very similar would have to replace it.  And yes, they would need to employ economists.

Since we Lutherans are by cultural education, reformers, it should not surprise anyone that I believe that since we actually need central banks, we might as well fix what we have.  With this in mind, we see a public drama being played out at the Minneapolis branch of the Fed.  The head of the branch, a fine fellow named Narayana Kocherlakota, decided the some of the old guard who had spent their careers mouthing the neoliberal party line had to go to make way for new policy positions.

We don't know a lot about Kocherlakota except that both he and his wife are University of Chicago Ph.Ds and that he has a pretty solid record on the subject of neoliberal purity.  So there are several possibilities here:

1. Kocherlakota is an evil prick who cannot get along with his colleagues (not likely), 
2. He woke up one morning and realized that the laws of the land required that the Fed pursue full-employment policies and decided he didn't want to die as an economic criminal (possible), 
3. After three decades of crushing austerity, the world's central banks have decided that they might need to remove their boot from the necks of the real economy and so want to change the direction of monetary policy. This means the defenders of the old order must be eased out and Kocherlakota was just following orders (I certainly hope so!)

I must apologize for the Minneapolis Tribune.  This is what happens when you try to cover a major economic story while adhering to the strictures of Minnesota Nice—"less collaboration" indeed.  Note also the chest-pounding.  Now even though the Minneapolis Fed is important to the real economy because of its role in midwest agriculture and the commodity trades, everyone I know is well aware that compared to New York, we ARE the backwater.  So we must claim something and here it is the quality of our research (Minnesota, the brainpower state.)

Fracking and "Saudi America"

For most of the history of oil exploration, someone would drill a hole straight down and if they were lucky, they would eventually hit an underground pool of oil in mostly porous rock.  They would set up some pipes and a pump and then remove any crude that flowed towards the business end of the well.  At some point, the recoverable oil would stop flowing to the well opening and the well's life would effectively end.  Most of the big oil finds of history worked like this.  If you punched your way into a large formation, the oil would flow for many years.

Fracking doesn't work this way.  The oil and gas are trapped in a shale formation in little cells.  A well is drilled down to the level where oil and natgas are found and then holes are drilled horizontally through the shale.  When these holes are completed, a mixture of chemicals, sand, and water is forced into those holes at a very high pressure which fractures the shale.  The gas deposits are released and then recovered.

If all of this sounds insanely difficult and expensive, it is.  Drilling horizontal holes deep underground is hard and so is forcing fluids under enough pressure to fracture underground rock formations.  The forces are enough to actually trigger earthquakes.  Worse, much of the nation's drinking water is also stored in underground rock formations so fracturing rocks to find oil can very often ruin water supplies.

It would one thing if this sort of oil exploration yielded large new supplies.  It doesn't.  The deposits being found are not large which leads to notoriously high decline rates.  Certainly flow rates are high when the well is new but they can decline by half in less than five years.

Fracking is obviously a recovery technique that has only come into play because we stopped finding those big conventional oil deposits decades ago.  But all these problems have not stopped the boosters from claiming that fracking will turn USA into Saudi America.  Of course, comparing a megafield like Ghawar to the micro deposits trapped in shale formations is utter madness, but then most PR hype is.  Even the International Energy Agency is sounding warnings.

Climate change responsibility

When it comes to climate change, I like to stick to the facts because playing the prediction game is pretty hazardous when the conditions being created haven't been seen for thousands of years.  But I will hazard one here—the "agreements" reached in Warsaw yesterday will NOT show up as a reduction on the CO2 charts published by the Mauna Loa Observatory.  And the reason I can make this prediction is that the sort of people who attend those sorts of conferences are light years away from understanding the problem.  They actually believe that if people of good will just agree that climate change is a problem and that we agree to do something about it, the problem will go away.

The ghost of King Cnut is probably laughing his ass off.

Henry of Huntingdon, the 12th-century chronicler, tells how Cnut set his throne by the sea shore and commanded the tide to halt and not wet his feet and robes. Yet "continuing to rise as usual [the tide] dashed over his feet and legs without respect to his royal person. Then the king leapt backwards, saying: 'Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth, and sea obey by eternal laws.'"

There is a REASON why the energy companies have incredible power—they are providing the human race something they want and NEED to survive. Furthermore, the job they do is insanely difficult (you try drilling in the North Sea if you think it's easy) so coming up with a competition for these methods of powering human civilization will be massively more difficult than agreeing to some promises made in a convention hall. The ONLY way we can address climate change is to address the demand side—in other words, figure out a believable substitute for fossil fuels. The reason why protests and petitions and demonstrations accomplish nothing is that they do not give us a serious strategy for changing demand. 

But that does not change the minds of the folks who want us to believe that climate change is caused by a handful of bad guys who in their naked greed are going to destroy the planet for the rest of us innocents.  The following is an almost perfect example of this sort of thinking.  To give you an idea of how nasty this problem is, just look at the cast of characters here—Goldenberg and The Guardian, Al Gore, Michael Mann etc.  These are supposed to be the people who are doing the heavy intellectual lifting on climate change in the English-speaking world. This time the heavy lifting has been employed to reduce the number of bad guys to the number of passengers on a couple of buses.  If only it were that simple.

Saturday toons 23 NOV 13

Crackpot economics under fire in Britain

It wasn't much fun watching the crazies take over the economics profession in USA.  At first is was shocking to see that the Chicago boys were going to be able to put their crackpot theories into practice in Chile at the point of a military coup.  But between Watergate and the Fall of Saigon, VERY few Americans had any idea it was even happening.  Then neoliberalism became somehow respectable as Jimmy Carter set about to install the ideas of the Trilateral Commission such as economic deregulation.

During this reversal of fortune, I sort of held out the hope that somehow Britain would be able to mount a defense against the neoliberal tide—after all, Keynes was a Brit and his abilities to make money for Cambridge sort of made it what it was.  Surely they would draw the line in the musty halls of British academe. But with nasty old Margaret Thatcher at the helm, economics in Britain would not only regress to something pre-Keynes, but revert to the ideas of Alfred Marshall and the rest of the Victorian imperialist crackers.

Well, according to The Guardian, a brief flicker of light has emerged in the darkness that is Brit economics.  The spark is being fanned by students who believe, absolutely correctly, that their education is missing a LOT.  Apparently, one can get an advanced degree in economics without learning about the Great Depression, etc., or learning about the alternative thinking from Keynes, the role of heterodox thinking in political economy, or why the economic theories they are learning were not especially useful in predicting or understanding the crash of 2008.  And now that students are having to pay serious money for their educations, they are rebelling against such an inferior (worse than worthless) instruction.

Paying for climate change

Anyone want to talk about a big, nasty number? Try $5.8 billion. Now that may not seem like much in the world of aircraft carrier shopping but for a poor country like the Philippines, this estimate for the damage caused by typhoon Haiyan must seem like a crazy-large fortune.  And the $5 million the UN has pledged for disaster relief seems like an insult. In a country where a typical dwelling probably costs about $1000 or so, this number demonstrates just how widespread and massive the destruction was.

The costs of extreme weather

The main reason I cover climate change issues so relentlessly is because any meaningful solution to this problem will cost big bucks and the current economic environment will not allow us to spend that kind of money.  So obviously, the economic thinking needs to be changed.  Lobbying for such changes is the main reason I write this blog.

But once in a while, I am reminded that the costs of doing nothing are also enormous.  So we find ourselves in the situation where an economic brain-lock prevents us from spending the money we need for remediation while at the same time, we are forced to spend the money anyway to clean up the damage.

Pretty much sounds like complete insanity to me.

NAFTA on steroids—Stop TPP!

Recently, I got an email from someone I met in the struggle to stop the passage of the North American Free Trade Agreement (NAFTA) back in 1993.  He was ahead of most of us in that he had actually written a book outlining the impending catastrophes that would result from this piece of economic extremism.  We had lost touch in the past 20 years (mostly my fault I am sure) so I was glad to hear from him.  And he inspired me to create this post.

One of the things we activists did that spring was arrange a political rally for our congressman who while a Democrat was clearly one of those "third-way" types that thought it was a fine idea to allow Wall Street to give money and help set the agenda for the party. Even so, we were his constituents and we held out the faint hope that a big turnout would convince him to see the flaws in the proposed legislation.  So our congressman was treated to a string of speakers who outlined how major elements of our economy were about to be sacrificed to the chance to buy socks for $2 a dozen.  We could have been talking to a wall—he voted for NAFTA in support of President Clinton who was making a big push to pass it.

I went home from the rally and wrote what I considered an impassioned plea to scuttle this obviously terrible idea that had somehow gained the support of the party of the people.  And while this critique of "free" trade has been on the Elegant Technology website since it first went up and has proven fairly popular over the years, this effort basically marked the end of any attempt by me to influence electoral politics.

Essentially my objections to these sorts of free trade agreements are due to my extensive reading of how economies developed which showed pretty conclusively that in nation after nation, advanced economies came into existence behind high tariff walls.  This is how industrialization came to Britain, USA, Germany, Japan, etc.  In fact, the idea of free trade only became popular when the Brits discovered that this was a perfect cover for the ruthless exploitation of their colonies and that it also had the delightful side effect of preventing places like India and China from developing a competing industrial system.

I had come to hate the free-trade argument precisely BECAUSE it was anti-development and as I had argued in Elegant Technology, the only way we could meaningfully address the growing environmental crises was to develop a whole new green infrastructure. And the best way to accomplish that was to employ the economic methods that had allowed the economy to develop in the first place.  A short summary of that argument can be found here.

So now the neoliberal swine who gave us NAFTA, etc. have a new scheme to offer. Like NAFTA, it is being negotiated in secret and will be subject to fast-track approval when it finally comes to Congress.  But I am personally not concerned that I don't actually know what is in the proposed Trans-Pacific Partnership (TPP) because I would be astonished if there would be anything I could support.  These things tend to look pretty much alike.  Even so, I am delighted to see that WikiLeaks got ahold of and published the part that deals with intellectual property.  And while I am not especially concerned with this issue, there are many serious people who are including some with awesome intellectual clout like the Electronic Frontier Foundation.

The folks behind the TPP are used to getting their way because they have the enormous power of unlimited funds behind them.  But this time they may not and this leak may be the event that upsets their best-laid plans.  While I am not predicting a defeat this time, I think it inevitable that their demise cannot be so far off.  Because the free-traders have a fatal flaw—their economics are catastrophically wrong and there are only about 250 years of economic history that proves it.