Dismal neoliberalism

In what is perhaps the least surprising news of all time, we read that the economics profession is getting it wrong again—by a LARGE margin.  How could it be otherwise?  These are people who demonstrate absolutely zero interest in the workings of the real economy.  They actually believe that tracking the flow of money will substitute for economic analysis.  In their world, so long as the markets are showing good returns, why should they worry about soil erosion, the conditions of labor, the condition of the atmosphere, the supplies of liquid fuels, or the health of honeybees?  So they don't.  And so their economic analysis only tracks the results of central banks pumping up the world's markets with their infinite supplies of electronic money.

And so a once honorable and useful profession becomes as useless as teats on a boar.  It has become so bad, even places like The Guardian are beginning to notice.

Climate change and the World Bank

Even the World Bank has "discovered" that any meaningful steps to slow or halt climate change is going to be a multi-trillion $/year venture. Of course, they believe that changing some legislation will change the world.  Good luck with that.  Reading what the World Bank believes is actually creepy.  But if they can simply introduce the $trillion figure into the climate change discussion, it's a start.  We are talking about banksters here—that may be as useful as they will ever be.

Ellen Brown on central banks

Imagine if central banks were what they claim to be—public institutions with a goal of sound management of the currency and full employment.  But since they are private banks that have been granted monopoly power over the creation of money, the possibilities for corruption are nearly endless.

So now they have decided to mop up the loose supplies of stocks (amazing how central banks seem to have the same idea simultaneously.)  Since stocks are mostly over-valued, this move will probably put a floor under the prices and prevent an otherwise well-deserved crash.  And since a lot of those stocks are owned by pension funds and other institutions responsible for providing an income stream for retirees, this is arguably a good thing.

My contention is: If central banks can generate money out of thin air for the purpose of propping up the stock markets, what could possibly prevent them from generating the currency necessary to finance the absolutely necessary conversion to a solar-powered future?  The answer is: There is NO reason.

Keep THAT in mind when someone tells you that we cannot afford to solve our most pressing problems.  And if our central banks refuse to do this, they must be nationalized and turned into publicly—regulated utilities.

Trying to figure out the World Cup

There are probably few reasons to even post these days because of the world-class distraction taking place in Brazil.  I think that nearly everyone is taking major time off to enjoy this global gathering around the World Cup of Futbol.  The only exception is here in USA because many of us have NO idea what the fuss is all about.  I was thinking about how culturally isolated I am from this event today when I saw a futbol for sale in a store and realized that I had never so much as held one in my hands.

Of course, it isn't necessary to understand the details of futbol to realize that all the good institutional analysis about sport applies to the "beautiful sport" as well.  That doesn't change.  Veblen said it best when he claimed that "(USA) football is to physical culture what bullfighting is to agriculture."  And when a sport becomes popular enough to become a money-making venture, the teams are soon the playthings of the idle rich.  Sport is already a quintessential Leisure Class activity, but letting the idle rich set the rules pretty much solidifies its role as the purveyor of Leisure Class "virtue."

The organization that stages the World Cup, FIFA, embodies all that is wrong with the useless rich.  Brazil was forced to spend $billions to build a bunch of new stadiums—some located so deep in the Amazon they are really only accessible by riverboat.  FIFA made Brazil change its laws regulating beer sales at games (a law that existed because of hard-won experience) because one of their big sponsors was a brewer.  Not surprisingly, there have demonstrations / riots protesting all the madness.  If Brazil wins this World Cup, some of the anger might die down.  But the economic costs of taking on a bunch of new foreign-denominated debt will cripple the Brazilian economy for years in the form of necessary infrastructure that won't be built.

The Leisure Class is VERY good at staging circuses and this a beaut.  The costumes, the face-painting, the singing, the chants, the nationalism on display, etc. make this worth watching even to those of us who cannot describe the duties of a midfielder or why the refs spray shaving cream on the ground before set plays.  Anyone who has ever viewed the world through the lenses of the cultural anthropologists can only marvel at the human spectacle that is the World Cup.

Here are a couple of excellent videos that explain the social costs of letting some really creepy rich guys from FIFA organize the world's most popular sport.  The first is by a Australian Rap Group that refers to THIEFA's World Coup, followed by John Oliver's amazing list of FIFA's cartoonishly evil behavior.

Frank on Populism

Thomas Frank is most famous for writing a book called, What's the matter with Kansas?  The essential point of this work is that cynical politicians seduce the voting public with promises on hot-button issues like abortion but when they get to Washington, they actually use their political power to sell out their supporters by voting for the interests of the plutocrats.  Being a boy from Kansas, a state with a rich progressive tradition, he tracks how reactionaries first took over his state's Republican Party and then the whole political apparatus.

So far, so good.  But then Frank accuses Kansas voters of mistakenly supporting right-wing Republicans in spite of all the evidence that they are selling out their own economic interests.  Now IF FDR was still president, Marriner Eccles was still running the Fed, and Francis Perkins was still Labor Secretary, the argument that Kansas voters should be voting Democratic in order to maintain their economic status would make sense.  But the fact is that when it comes to the economic interests of the Producing Classes, Jimmy Carter, Bill Clinton, and Barack Obama have been three of the absolute worst Presidents in our nation's history.  So voting Democratic to protect one's economic interests hasn't been a real option since 1976.

But one thing is certain, anyone who studies the history of Kansas politics will eventually encounter some of the best writings that lead to the the agrarian / Populist uprising of the late 19th century.  So whatever one may think about Frank's magnum opus, he is amply qualified to comment on what a real Populist is.

Hudson on the death of the "left"

It seems almost impossible that during much of the history of the Social Democratic Party in Germany, it was so radical, members were imprisoned and murdered because of the danger they posed to the social order.  Hitler killed thousands of them.  Today's versions are such enthusiastic supporters of neoliberalism, the idea that they could have ever posed a threat to anyone important seems laughable.  Unfortunately, many of the same criticisms can easily be applied to the French Socialists, the British Labor Party, the USA Democratic Party, etc.

I have been trying to get the Democratic Party to start talking economics since the 1980s and have been fabulously unsuccessful even though I have tried personal lobbying, creation of videos, actual participation in party politics, etc.  But I press on because I know that eventually the left simply MUST embrace progressive economics.  Humanity WILL need it to survive.  And even though I have no personal experience with Populist economic success stories, I know enough history to know we have a winner.

So Michael Hudson explains below why Populist economics was a vote-getter in Virginia.  (I have put the video beyond the break for those who use browsers that fire up videos automatically.  The transcript comes first.)

Populism is NOT Socialism

One of the more annoying characteristic of many who would label themselves "Populists" is that they often arrive at their political position from a background in doctrinaire Socialism.  For example, the Democratic Party's New Populism conference held May 22 featured Senator Bernie Sanders—a guy who has been elected in Vermont as a Socialist.

Since most European Socialists have long ago morphed into neoliberal swine, calling one of them a populist would probably get you into a fistfight.  So Socialists turned Populists is probably more of a USA phenomenon.  Even so, it is certainly worth noting that Marxists and Populists come from very different places.
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Modern Populism—Marxism NOT

In my last essay on Populism, I dipped my toes ever so gingerly into the troubled waters of class analysis. Whenever I do this, I am usually informed  that all studies of class were derived from Marx and that I make fundamental errors because I do not properly understood the master.

Because this is a widely held belief, I believe I need to provide a history lesson on American progressive movements to clear up some confusion.

The REAL issue is industrialization

The French and American Revolutions were about making social adjustments to the trappings of feudalism--including slaveholding, serfdom, and indentured servitude. Of course, there were some rumblings about the conditions of trade and manufacturing, but these were mostly line items on a much larger list of grievances.

In the meantime, there was a very real revolution going on in England. Some may scoff that the Industrial Revolution does not qualify because there was so little armed struggle involved, but it was the most important revolution of all.

Away from the capital and denied the benefits of a proper Oxbridge education, Quakers and other dissenting Protestants combined a love of tool-making precision and a fascination with fire to produce a recipe for generalized prosperity that is still widely copied throughout the world. We call it industrialization.

Of course, the potential for widespread prosperity and its actual realization are two very different things. In a few cases, the new wealth was shared out fairly, but mostly, industrialization made the rich richer, more powerful, cruel, and loathsome.

Inventing the future—graphene

Even though I am a patented inventor (or maybe because) I have been extremely careful over the years to limit my descriptions of a possible future to those that are constructed from devices that have already been invented. Why?

• It is very difficult to come up with significant inventions on demand.  Inventions have historically happened when the component parts are available and then it is usually a rush to assemble them.  For example, even if Bell had not invented the telephone, it would have happened anyway within a few years because the  parts were ready.
• Some things are actually quite impossible to build.  There will never be a Jetsons-style flying car that folds into a briefcase that one person could carry.  This is obvious but many things are not at all obvious and this can only be determined with a serious effort.
• The lag time between a prototype that can be patented and something the public can easily use is usually at least a decade.  Any problem that must be solved right away will necessarily employ existing technologies.
• Inventiveness spans a wide range of human creativity from small but critical things like improved manufacturing methods and fixtures (jigs) to big breakthroughs like the invention of xerography.  It is often nearly impossible to determine which is more important.  In fact I believe that most of the truly important inventiveness never shows up at the patent office and remains an official secret at the heart of some institution's memory.

Then there are the inventions where some clever product of the instinct of idle curiosity appears without filling an obvious need.  The laser is a perfect example.  When it first showed up, it was little more than a scientific curiosity.  My high school science club bought the parts to build a primitive one from Edmund Scientific in New Jersey.  Folks speculated what it could be used for.  I followed those discussion quite closely.  I don't recall one pundit predicting that lasers would be used to play back pre-recorded music and movies—ultimately the most popular application by far.

Today's example is graphene—an invention of such staggering genius that the speculation for its uses are only just beginning.  Last November, I did a post on the possibility for creating graphene super-capacitors which could go a LONG way towards solving the problems of large-scale electrical storage.  In the following, there is speculation on some of the other applications for this latest wonder from the folks in the material sciences.

It also points another feature of new technology—the stage where we know something is possible but we do not know how to mass-produce it yet.  One of the big graphene players is Korea.  Remember when everyone moaned about the near-impossibility of mass-producing perfect flat-screen monitors / TVs?  Well, it was mostly the Koreans who cracked that nut.  My guess is that mass-produced graphene will be a problem solved using largely the same tactics.  In fact, it wouldn't surprise me in the least to discover that someone like Samsung has already figured out zero-error graphene production in one of their skunk works.

We may yet save our miserable butts with inventiveness.  I guess this should not surprise me because one of my favorite sayings is "If you want to predict the future, just go ahead and invent it."

Thanks Mike for a great comment!

Recently, reader Mike provided me with one of the more thoughtful comments I have ever read in response to the post Is the new Democratic Party's Populism fake?. His comment showed up a couple of days after the original post so most may may have missed it.  Here it is on the front page.

Of course, my opinion of Mike's post might have been colored by the initial flattery but the real reason is that I have been thinking for a long time about how folks with Progressive ideas just got more done back in 1880s to 1940s.  My start came when I discovered in 1981 my grandfather's reading list from the 1920-30s.  He had subscribed to the Appeal to Reason and its later version, The American Freeman.  (For example, Upton Sinclair's novel The Jungle was first published as a serial in the Appeal to Reason, between February 25, 1905 and November 4, 1905.)  He also bought as many Little Blue Books as he could afford.

This is how my grandfather educated himself about his new country.  This was a man who had four years of elementary education and had taught himself English as a third language.  If this is how he came to understand USA, then I wanted to read his source material too.  Besides, how hard could those books and magazines be?  It turned out that this material was FAR more difficult than anything I had read as a university student.  I read it pretty diligently for about three years before I felt truly comfortable absorbing the printed matter my grandfather read from cover to cover when it would show up in the mail.

So while I totally agree with Mike's conclusions below, I must insist that he also include the sheer intellectualism that informed the Populists-Progressives when he discusses how they were different than folks today.  These people may have been primitive in their organizing methods, but they were successful because of the clarity of their insights.  They inform my worldview down to this day—mostly because I have not seen anything that remotely competes with it.  To recreate that sort of thinking is why I bother to post every day.

And with that friendly amendment, here's Mike

The death of the American mall

The fully-enclosed, climate-controlled suburban shopping mall was first built right here in Minnesota when the original example opened in the fall of 1956.  My father took us to see the Southdale Center that Christmas season and as a seven-year-old, I was very impressed.  My most vivid memory was of the nearly flawlessly decorated 50' (15+ meter) tree mounted into a rotating base.  Someone had decided that lights on such a tree would be a problem so they had been replaced by strings of mirrors that sparked in the light of small spots mounted around the courtyard.  I was entranced by the sheer magic of it all and was convinced that nothing like that would ever come to our little town.

Southdale never did come to my little town but copies of it were soon built in nearly 1500 locations around the country.  What once seemed magical was now routine.  As my old buddy Frank used to say, "American is where we take every good idea and beat it to death through repetition."  And as it turns out, the shopping mall wasn't all that great an idea anyway.  It taught generations of kids that so long as there were all these cornucopias of plenty, there could be nothing wrong with the economy (because we were put on this earth to shop, after all.)  Soon the children of the malls would be learning that the shopping experience was a metaphor for the whole economy when the academics began to teach us that everything of economic and social importance happened in the marketplace.

So while Southdale keeps chugging along due to its location in a still very prosperous Minneapolis suburb, many of its 1500 copies are not doing well at all.  And with the demise of the mall hopefully comes the realization that there really IS more to life than shopping.  Unfortunately, much of the damage has been done.  People whose whole consciousness has been shaped by these shopping utopias, where every product and display has been expertly designed to induce a lust for new things, will always have difficulty understanding the environmental and social damage required to fill those shelves.  Even more difficult to change will be the minds of those who came to believe that great merchandising trumps every other problem in the economy.  It doesn't and never has.  But with real-life marketplaces failing because people are losing their ability to spend, the worship of the market as a metaphor for the real economy should be failing as well.  So far, this has not happened.

Still trying to buy Alstom for next to nothing

Four years ago, I was writing about how Siemens had botched another attempt to build a high-speed train that could compete with the TGVs built by Alstom.  Two years ago, I was writing about how how the Italians had chosen Alstom's AGV for its new high-speed service.  Yet because the madness of neoliberalism, Siemens may yet wind up owning Alstom and France's so-called "Socialist" government has barely lifted a finger to stop the plunder of such a national jewel.

The current bidding price of 12-14 billion euros for some parts of Alstom is an insultingly trivial fraction of what it is worth.  Those who believe that "disaster capitalism" is a cynical scheme to seize real assets for next to nothing have been given yet another example of how it works.  The fact that France is allowing negotiations to proceed on this takeover only highlights just how utterly corrupt her "Socialists" are.  But then, the Institutionalists like Veblen could have pointed out that "Socialism" was just another manifestation of Leisure Class thinking 115 years ago—so little has changed.

Coal still smashing consumption records

For all the good news on solar cells, energy efficiency improvements in lighting, advances in electric cars, etc., most of the world's real economies are still overwhelmingly powered by burning carbon.  And the dirtiest, ugliest, most environmentally damaging carbon fuel of all—coal—is still a growing player.

typical coal molecule

The problem with burning coal is not so much that it is mostly carbon, but that we are burning so much, so fast.  If all the coal burned last year were burned in say, 1000 years, the planet could probably adjust.  Now the folks who own coal stocks think growing consumption is a good idea.  But it is not—even for the folks who own coal stocks.  And most certainly not for the rest of us.

Our dilemma is that we need electricity and will buy it no matter how it is generated.  And the utilities have HUGE investments in the machinery that burns coal combined with management and staff that knows how to run this equipment.  Since electrical equipment is something that only governments or corporations can afford to buy, an individual consumer has almost no say on how this power is generated.  It's not even worth writing a concerned letter on the subject (I have tried).

Even political activism is frustrating as hell because a debate over methods of power generation will only attract the attention of a tiny minority compared to the sexier subjects.  Unfortunately, there is no substitute for democratic control.  The countries that have made significant progress on reducing carbon emissions have effective green political movements.  That is why the corruption of democratic institutions and environmental organizations is so tragic.

Did the goal of nitrogen-fixing cereal crops just get closer?

Crops that could grow without lavish and expensive applications of nitrogen would solve a host of problems from the economics of agriculture to the very nasty problem of nitrogen run-off.  Midwest agriculture loses so much expensive fertilizer to run-off that there is a large dead zone off the coast of Louisiana that has been killed by nitrogen washing down the Mississippi.



Some plants like soybeans and alfalfa can fix atmospheric nitrogen.  Unfortunately the major cereal crops like rice, corn, and wheat cannot perform this trick.  Nitrogen is not the only fertilizer necessary to grow crops but it is the biggest in terms of volume and cost (and damage when it ends up in the wrong places.)  The sort of nitrogen that plants fine useful also require vast amounts of energy to produce.  So finding a way to coax plants to fertilize themselves is another vital requirement in any strategy to cope with the baleful effects of Peak Oil.

Environmental neoliberalism

The story that Greenpeace lost over $5 million in currency speculation doesn't surprise me in the least.  Mainstream environmentalists are usually "totebaggers" and such people are often fine on social issues but utter crackpots when it comes to economics.  As regular readers here know perfectly well, I believe that if you get the economics wrong, you will almost always get the environmental issues wrong too.

I have a friend who sat on an environmental board that had a comfortable endowment because they had been paid off to drop their opposition to a major infrastructure expansion.  So their meetings usually consisted of discussing how they should invest and spend their money.  Like most such groups without imagination, they decided they had to choose between holding a conference and building an "interpretive center."  The building project won out because it also had rooms that could be used for small conferences.  It's been open for several years now and is gloriously under-used because there are already many such places where people can go to be hectored about the human scaring of the planet.  The center has a very large parking lot built in anticipation of the curious hordes so the folks who have visited and been given a newly raised consciousness do not have to travel far to find a good example of scaring.

But even if one can argue that this environmental group has its heart in the right place, that argument crumbles pretty quickly when the talk turns to managing their portfolio.  There they engage in all the forms of neoliberal madness including currency speculation.  My friend discovered one night that his organization had a position on a currency swap between the Thai Baht and the Malaysian Ringgit. Instead of purchasing endangered wetlands or somthing close to the mission of the group, they had taken to gambling.  What's worse, when my friend suggested that gambling with the endowment might appear to be irresponsible if not illegal, the rest of the board promptly voted him "off the island."  In their world, a few currency swaps is something that should be included in any "well-managed and prudently diversified" portfolio. (sigh)

Greenpeace is an organization that chugs around the oceans in a fossil-fueled old boat so they can disrupt the activities of the companies tasked with finding their fuels.  So they start out pretty confused, but blowing the donations of roughly 40,000 supporters in the casino means that even if their descriptions of the environmental problems are essentially sound, they are lightyears away from any understanding or strategy that will actually solve something.

The secret world of hedge funds

...and men loved darkness rather than light, because their deeds were evil. John 3:19

It is easy to ignore the utter uselessness of hedge funds.  After all, the whole point of being a member of the Leisure Class is to put one's uselessness on display.  And what can be more useless than to get one's living by gambling?  Hedge funds are just modern and very large-scale bucket shops.  As defined by the U.S. Supreme Court, a bucket shop is "[a]n establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in."

These sorts of transactions are zero-sum games.  Since money put into play in bucket shops are not investments, they do not grow the real economy.  So for every winner, there must be losers.  Unfortunately, removing money from the real economy for the purposes of gambling does real damage.  So in truth, the rest of us SHOULD pay attention to the hedge funds.  Turns out, however, that hedge funds operate in secrecy so even if the rest of us wanted to know what they are up to will find it very difficult.  It seems that hedge funds are not merely economically useless, they are downright nefarious.

One of the key provisions of the New Deal was the outlawing of bucket shops.  It seems pretty obvious that any economic renewal these days will outlaw the hedge funds—at least the 99.999% of their activity that has no hedging function whatsoever.  And the rest of us should NEVER be put on the hook for any losses incurred by the folks who participate in this uselessness.

Solar power comes to oil country

One of the benchmark prices for oil is West Texas Intermediate, while oil and Texas have been linked so long in the popular imagination that the culture business has turned the Texas "awl bidnus" into dozens of movies and TV shows.  In real life, the Texas oil multimillionaire has spawned some of the most reactionary politics in the history of USA (Hunt brothers anyone?)

Oil dominance notwithstanding, Texas is also home to some of the best solar and wind sites on earth.  But while wind power has gotten a foothold, solar has gone essentially nowhere.  But that seems to be changing fairly rapidly and the driver of that change is cheaper solar cells.

Now it will probably be a while before they remake Dallas with nasty J.R. Ewing as the owner of a large-scale solar farm, but the changing technology will eventually make such a thing (more or less) believable.  And when some big-time Texas energy players start making money on solar, it will change the culture in important ways.  Such a development could not come a moment too soon.

Musk, Tesla, and patents

The subject of patents is almost endlessly fascinating.  Actually figuring out something new from the infinity of possibilities is already really difficult but figuring out something new that is useful and successful in the markets is nearly impossible.  Compared to making something the first time, copying a successful innovation is almost laughably easy.  Anyone who plays in the world of technology understands this which is why the idea of legally protecting the originator was born. The patent is supposed to reward the originator of a technological idea with a temporary monopoly (seventeen years.)

Unfortunately, while the idea of patents is legally and economically sound, the practice has been sullied by scheming lawyers, patent trolls, and the rest of the Predators who wish to prey on a good Producer Class idea.  Patents were already in ethical limbo back when a lawyer named George B. Seldon was granted a patent on the automobile in 1895.  The idea that someone could patent the idea of a self-propelled four-wheel vehicle is essentially absurd because a real motorcar is a combination of literally thousands of patentable ideas.  So when Seldon decided to enforce his patent against Henry Ford, a man who had actually made a successful car and knew the scope of the inventiveness it required to build one, Ford fought back and eventually beat him in court.  As a result, Ford Motor patented almost nothing while old Henry lived.  He claimed that an original idea was far less important than the execution of the idea anyway.  Not many USA manufacturers followed Ford's lead but we should assume they all knew his viewpoint.

The real blow to the patent idea came when Asia figured out modern manufacturing.  These are cultures that elevate copying to an art form.  Soon it became almost impossible to enforce patents in Asia.  All the advantages of being second resulted in Asian dominance in industries that made highly complex products—cars, cameras, electronics.  Of course, dominance means you have become a "first" just waiting for a new "second" to emerge.  And so we see the South Korean automobile industry slavishly copying the Japanese playbook.

It has become my contention that patents have very little to offer industrial progress any longer and that patent litigation has become this jobs program for lawyers.  Patents will not totally disappear because they are still culturally meaningful to the Producer Classes.  Being granted a patent means that you have become another refutation of the lie that there is nothing new under the sun.  Damn hard to shun such an honor.  It is noteworthy that when Elon Musk recently announced that he would no longer enforce his patents against those who copy in good faith, one of the signs of his seriousness was that his patents that covered a whole headquarters wall were removed from their frames.  But understand, they were up there in the first place.

Nanotechnology comes to solar cells

Solar technology is still in the amazing-innovative stage.  I personally don't even try to follow all the advances in better ways to produce these amazing bits of technology.  There are just too many of them.  There are probably still some amazing breakthroughs in the efficiency of converting sunlight into electricity and lowering the costs (in both money and energy) of producing the cells themselves.  It going to be very interesting to see which of the solar strategies will win out.

The story below was sent to me by KF.  The nano-tech story is probably WAY more interesting than this breathless article would make it.  But then, there have always been goofy predictions about new inventions so why should that stop?

Is David Brat a target?

One of my little hobbies is when confronted with a political debate, I will sometimes respond the way a 19th-early 20th Century Progressive or Populist might.  I've read enough about the progressive political movements in the upper midwest to do a pretty authentic imitation of the real thing.  I don't use the old phrases but I DO use the old ideas.  I get the most positive responses from farmers and construction workers when I introduce, say, concepts from Veblen's Instinct of Workmanship into a discussion of labor relationships.  On the other hand, the professorial classes have so much invested in the conventional wisdom that hearing the arguments first put forward by the National Farmer's Alliance or the Greenback Party bewilders and frightens them.

So I am not at all surprised that the professional pundit class is all over the map trying to describe Dave Brat.  He is obviously no Sarah Palin—he writes books she cannot read.  He is a Protestant yet he is not a looney like the denizens of Westboro Baptist.  He is a Calvinist capitalist in a country that no longer even knows what that means.

Yet because he knocked off such a fat target, Brat will probably be targeted because otherwise, he could start a movement.  This is important.  Chris Hedges in his scathing critique of electoral politics claimed that the single biggest problem was there was no way to vote against the interests of Goldman Sachs. So Brat bases his campaign around his opposition to crony capitalism and knocks off Eric Cantor with roughly 1/40th of the budget—proving, I guess, that when people think there is actually a way to vote against GS, they will do it.

So there are already pundits who believe that Brat will be targeted because he might otherwise set a good example.  Paul Craig Roberts is such a man.  I repost his essay because it is a good example for what passes as serious thought in the wake of such a political earthquake.

Update on Cantor's defeat

David Brat, the econ professor who knocked off Eric Cantor, turns out to be a far more complex story than it first appeared.  So here's what we know about Brat.

He graduated from Park Center High School in the very humble Minneapolis suburb of Brooklyn Park.  His dad was a doctor who was fine with sending his son to a pretty blue collar public school.  Dad was right—his son was hardly hobbled by such an education.  David has a CV most of us would envy.

One of Brat's degrees is from Princeton Theological Seminary.  I am really curious about this story.  For much of the history of USA, the Protestants ran things.  They were called the WASP (White Anglo-Saxon Protestants) establishment.  Many of the Ivy League schools were started as Protestant seminaries—a throwback to the days when the most thoughtful and scholarly young men in a family were routinely sent to seminaries.  Those days disappeared in the late 19th century as there were more opportunities for smart kids (in science and technology, most especially) to have outlets for their intellectual curiosities.  But the remains of that era still stand and the Princeton Theological Seminary is certainly one of them.

How a Catholic kid from Minnesota comes to graduate from Princeton is probably a very interesting story.  But considering he lists John Calvin as one of his economic heroes, (see Tony's post below) it is safe to assume he actually paid attention in class.  While I personally find Calvin's influences to be damn negative, I am certainly in agreement that they are extremely important.  And Keynes?—Ah yes, Church of England and Cambridge, wot.  So here's a guy in a Protestant corner of Virginia who is completely uninhibited in discussing economics using quotes from the Bible and the so-called left, who have been trained since the 80s—when lunatics like Jerry Falwell became regulars on TV—to believe that Protestants are drooling morons, cannot possibly comprehend why this guy is so popular with his students.

My guess is that this is a guy worth watching.  And whatever the man thinks of usury, he has demonstrated that he is quite comfortable discussing the problem.  Haven't seen THAT in about 40 years.  What's more, he is openly critical of the econ's profession's scientific pretensions—a real throwback to the days when economics was considered a branch of moral philosophy.  The more you know about theology, the more you understand why economics is STILL a branch of moral philosophy.

It would be fun to debate the man—maybe he could be convinced to replace Smith and Hayek with Franklin and Veblen in his list of economic heros.  I'd even like to discuss with him why Luther's followers built more successful societies than Calvin's.  Nah!  Let's not be greedy.

Eric Cantor's Very Bad Night

The Majority Leader in the U.S. House of Representatives, Eric Cantor, was crushed in the Republican primary in Virginia, despite outspending his completely unknown Republican opponent 40 to one. It is the first time since the creation of the position in 1899 that a sitting House Majority Leader was defeated in his own party's primary election.

The USA establishment news media (well, the Wall Street Journal, and the Washington Post, the two establishment media stories I read; I simply do not watch much news on TV) quickly formulated the line that Cantor's defeat was caused by an uprising of extreme right-wing Tea Party insurgents, unhappy with Cantor's support for some form of immigration policy reform.

Solar panel trade disputes

The Chinese solar story only gets more interesting.  USA slaps a serious tariff on Chinese solar panels over accusations of dumping.  But China hardly blinks because it looks like they intend to use up their production capacity on themselves.  And to show how serious they are, they have announced a real carbon cap.

All I can say is, "OK hotshots, show us what you can do.  You want to show us why China was sometimes thought of as the Middle Kingdom, well now is the time."

Sticker shock

One of the things Ellen Brown does very well in her campaign for public banking is avoid the discussions of who said what first in some monetary debate.  These debates can seriously sidetrack the important issue of how the creation of money can be arranged to facilitate great things.

Having said this, I should point out that her complaint—that financing infrastructure improvements with borrowing needlessly makes them more expensive—is a theme that none other than Thomas Edison made in a NYT piece written in 1921.  Nice crowd you travel in, Ms. Brown.

Of course, banking is just aggressive, self-serving bookkeeping.  Even with an unlimited supply of interest-free money, the new world still has to be built with excellence and imagination.  Nevertheless, it would help a LOT if the moneychangers were not Predatory monsters who consider industrial sabotage a primary way to enrich themselves.  Because building the sustainable society will be hideously expensive—even IF solar cells have become inexpensive.

And for those who are getting sticker shock over the price of the vitally necessary new and improved infrastructure, I can only say—Get. Over. It!

China asks how much will it cost to make solar cheaper than coal?

This may be the best news I have read in a long time.  China, it seems, it going solar in a BIG way.  If this article is true, they are actually going to substitute solar for coal-fired power plants very soon.  Since China is a bigger problem for the climate than even USA, this is good news indeed.  Throw in the fact that China doesn't have to overcome a legacy of colonial relationships, what they figure out will probably soon spread to Africa and elsewhere.

While it has been easy to criticize China for her "screwdriver" industrial policy, we must also understand that she can accomplish very large projects.  Shanghai has been essentially rebuilt in the last 20 years—which is the equivalent of building Chicago in the same time period.  And while there are still problems facing solar (like storage) that seem almost insurmountable, the rest of us most certainly welcome China to the problem-solving party.

Energy is the key.  With enough energy, almost all the other problems of industrialization can be solved fairly easily.  Go China!

Populism—a matter of class

Real Populism has a wide assortment of advantages over many of the other "lefty" organizational schemes.  The most obvious one is that, unlike the Marxists for example, a new believer doesn't have to spend tons of energy explaining why people who called themselves Marxists were such murderous failures.

Marx was deeply grounded in Hegel while the Populists were practicing pragmatists in the traditions of Charles Sanders Peirce.  But to my mind, the biggest difference between Marxists and Populists is based on their descriptions of how the industrial state came to be.  Marx learned what he knew reading in the British Museum while the Pops learned economic development from trying to do it.

Not surprisingly, the Pops tended to separate the world into those who actually tried nation building and those who only read about it.  This led to a completely different class analysis from the versions concocted by Marx and his followers.  So if folks wants to call themselves authentic Populists, it helps to understand the Pop class analysis.  It really is fascinating.
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Solar and the electrical utilities

It is quite amazing how disruptive solar power can be to the standard electrical utility companies.  They have a way of making money from existing technologies and by gum, solar isn't part of that plan.  Now part of the problem is that making and selling electricity is a job perfectly suited for boring and unimaginative people.  In fact, seeing as a continuous power supply is a good thing for the vast majority of the buyers, boring is an almost unvarnished virtue.  It is also a virtue in the eyes of the pension funds that invest in electrical utilities.  Unfortunately, solar is not only disruptive, it is by definition unreliable in that such energy is much more likely to show up at 1500 in July than 0300 in January.  So it's not especially surprising to hear utility executives whining "Gee, do we hafta?" when the subject is solar.  In fact, Institutional Analysis would suggest that such executives are normal.

This reality suggests that public policy must address the problems caused by the new disruptive technologies.  And the public policy solutions must understand that while it is in our long-term benefit to go solar, it is also in our interests to have the same old unimaginative execs managing power companies.  So let the policy discussions begin with the realization that ultimately, environmentalists and power company executives must end up on the same side.

Made in USA—it's harder than it looks

The most significant life experience I ever had was being a part of a start-up that tried to turn an idea into a commercial product.  The effort was not successful.  The overwhelming majority of such efforts are not.  The few that do succeed are so rare they should be treasured like the precious jewels they are.  Which is why the foremost evil of neoliberalism was the notion that financial bandits had the right to acquire those successes and break them up for the parts.  I remember sitting next to some smug little twerp on an airline in the 1980s who casually informed me that breaking up companies was a great way to release the latent value that was hidden by corrupt and incompetent management.  I almost slugged him.  Here was a guy who couldn't organize the production of birdhouses suggesting that the folks who could organize the production of the complex and difficult were somehow morally corrupt because they thought (correctly) that an ongoing concern was far more valuable than a collection of parts.

Little did I understand at the time that the twerp was part of a larger cultural phenomenon.  He was, in fact, merely spouting some version of the convention wisdom.  So conventional that Oliver Stone put it front and center is his 1987 movie Wall Street.  Bud Fox has attached himself to a raider named Gekko by giving him inside information about Blue Star Airlines (a company his own father helped build.)  One day Fox stumbles into Gekko's chop shop where Blue Star was being dismantled for its parts.  Fox thought he had an agreement that while Gekko was going to acquire Blue Star, he wasn't going to dismantle it.  Fox charges into Gekko's presence totally enraged by the betrayal which leads to the following exchange:

Bud Fox: Why do you need to wreck this company? (Blue Star Airlines)
Gordon Gekko: Because it's WRECKABLE, all right? I took another look at it and I changed my mind!

The insane arguments of the neoliberal "free trade" crowd are beginning to prove themselves political losers.  Yesterday, Der Spiegel published an interview with Marie Le Pen who gave several excellent examples of why her political party just destroyed the ruling Socialists in the recent  EU election.  One telling quote "The problem is the total opening of borders and allowing the law of the jungle to prevail: The further a company goes today to find slaves, which it then treats like animals and pays a pittance, without regard for environmental laws, the more it earns."

It's no wonder the political classes of Europe, steeped as they are in the conventions of neoliberalism, so loathe someone like Le Pen.  Turns out it doesn't take a whole lot to expose the utter insanities of their economic positions.



This picture from another collection of scenes from the rust belt where the physical damage caused by the crackpot theories of neoliberalism is so apparent.  And now we are seeing that Wal-Mart! is discovering that it was a whole lot easier to wreck the industrial economy of USA than it will be to try to recreate a small part of it.  As the old Pops used to say, "Any jackass can kick down a barn but it takes skills to build one!"

The best of times. The worst of times.

These are the best of times. These are the worst of times. The times we live in give us great hope. And, the times we live in crush what little hope we have.

We have hope, because we know what to do to solve the problems that now threaten our very existence. But we lose hope, because implementing these solutions seems politically impossible. Too few people with too much money would have their financial interests hurt or even destroyed by these solutions, so the media they own obscures the solutions behind false equivalencies, and the politicians they own  dismiss the solutions as "too expensive."

The recent EU elections show that citizens in a number of countries are not happy with this state of affairs. RT.com notes that "For the first time since 1906 a party, other than the Conservatives or Labour, garnered the most votes in a national poll in the UK [Great Britain]." In the state of New York, it is now possible that the Republican Party will lose major party status. These things give us hope. But in too many instances, citizens are giving their support to right-wing extremists, who often misdirect popular anger against immigrants or minorities, rather than targeting the neo-liberal banksters' dictatorship which has seized control of the world's economy the past half century. This gives us fear.

Size matters

One of the more interesting things one learns when building scale model aircraft is that not everything scales.  This is not important when building static models but if the model is supposed to fly, the fact that airfoils and tail sections behave differently in the air as the size changes must be taken into account.  There is a subsection of fluid dynamics that covers this phenomenon and the calculations are assigned Reynolds Numbers.  In practice, this means that scale models of high-performance fighter planes barely fly and are nearly uncontrollable unless the control surfaces are roughly 20% larger than mathematical scale.

It turns out that fluid dynamics is hardly the only phenomenon that doesn't scale in a straight line.  This is even more true of social organizations.  Ideas that work magnificently when the group has 20 members usually have problems when the group is 20,000 and are usually unworkable at 20,000,000.  The very notion that there are good ideas that apply to all circumstances is usually proven wrong quite quickly.

One of the main attractions of Populism is that for one of the few times in political thought, folks began to discuss the possibility that there should be different rules for different sized organizations.  Turns out, this is astonishingly obvious once it is understood that economic thinking would do well to have Reynolds Numbers too.

Is the new Democratic Party's Populism fake?

In a recent post, I gave the Danish People's Party a 9.5 authentic rating for their version of Populism.  The USA's New Populism Conference reported on here two weeks ago could use a similar rating.  Shamus Cooke in the post below doesn't think much about this latest effort at Populism and makes some good points.  In fact it appears he believes that the Democratic Party, having endured the conversion of both "liberal" and "progressive" into a word of slander have now turned to "populist" without all that much concern of what it means to be a real Populist.

Although I agree with much of what Cooke writes, I also know that the original Populists had a pretty wide mixture of brilliant and pedestrian.  The conference of May 22 had two excellent examples of a Populist potential.  Elizabeth Warren understands the structural damage caused by deregulated bankers while Sherrod Brown from Ohio has a deep understanding of the damage caused by de-industrialization.  The rest of the participants do not have much of a track record that could be termed Populist.

So even though the USA is where Populism was invented, the current versions have some serious catching up to do to accomplish what their Danish counterparts have already.  If the Danes rate a 9.5 out of 10, the recent efforts of the Democratic Party to go Populist rates, at best, about a 4.8