Sunday, August 31, 2014

When being a Progressive meant something

Back in the early 1980s, I had become seriously disillusioned with the Democratic Party.  This had been a long time coming.  I was still furious with the Cold-War Liberals who never could muster the moral courage to oppose the Vietnam War.  That the architects of the Great Society—Lyndon Johnson and Hubert Humphrey—kept raising the ante on that criminal enterprise had driven a deep wedge between me and my parents.  My mother actually believed that God wanted Humphrey to become President based on his 1948 civil rights speech to the Democratic convention.  Needless to say, she did not appreciate my wearing a "Dump the Hump" pin during the 1968 election.

The Carter administration soured me further.  Suddenly, the economic reasons for being a Democrat just vaporized as Carter would start the party on its big shift to the economically reactionary right.  A few Liberals stood up to this major-league sellout—but not many.  By the time he had lost the presidency to Bonzo's co-star, I decided the LAST thing I wanted was to call myself a Liberal or even a Democrat.

But what?  Fortunately, about that time I had started reading up on the history of the Progressive movements in my corner of the world.  Someone loaned me a copy of Robert LaFollette's autobiography—all 900+ pages of it.  As the man who founded the Progressive magazine and was the 1924 candidate for the Progressive Party, I figured he was probably an accurate representative of the Progressive impulse.   By the time I finished that bio, I was quite certain that could call myself a Progressive without feeling the slightest shame.

Lately, the practice of relabeling oneself as a Progressive has gotten quite popular.  Unfortunately, MOST of these relabelers are still the Liberals that drove me into the wilderness.  They are merely fleeing a label that the right wing successfully turned into a a generic swear word.  They are still susceptible to warmongering of the crudest sort, they still are seduced by reactionary economics, they still believe that a good education is automatically a liberal enterprise, and they still can be easily distracted by hot-button issues.

With that in mind, I saw this piece recently produced for the Minnesota Historical Society about Minnesota's Progressive Era.  It's just a thumbnail sketch that leaves out about 1200 pages of fascinating narrative, but it's not a bad start.  If someone wants to call themselves a Progressive, fine, but they should at least understand the basics.  Besides, it's really good stuff.

Saturday, August 30, 2014

An update on the fighting in eastern Ukraine

Yesterday, I discovered perhaps the most interesting Youtube I have ever seen.  It is a press conference held by one of the main actors who is organizing the resistance to the putsch government of Kiev.  Alexander V Zakharchenko, Chairman of the Council of Ministers of The Donetsk National Republic, is a lawyer with a military background.  He is also historically literate, thoughtful to the point of being profound, and has an interesting grasp on the real economy of the Donbass region.  With limited resources and at most deniable support from Russia, his very determined followers have managed to fight and soundly defeat the Kiev army (plus some mercenaries).

While there are serious advantages to those fighting for their homes over folks who would really rather be home, there is a whole lot more to this than just motivation.  The Donbass region was the site of arguably the fiercest fighting of WW II.  Zakharchenko and his militias are direct descendants of the warriors who defeated the Wehrmacht—the survivors of history's bloodiest battles.  These volunteers are making mincemeat out of a regular army led by men who once graduated from USSR's top military academies.

That battles have become so one-sided that Vladimir Putin called on the Donbass militias to open a humanitarian corridor for Ukrainian servicemen who now found themselves encircled. The call is contained in the Head of State's address circulated by the Kremlin press service on Friday.

The presidential address read as follows:
"I am calling on militia forces to open a humanitarian corridor for encircled Ukrainian servicemen in order to avoid senseless casualties, enable them to get out of the area of combat operations unimpededly and reunite with their families; bring them back to their mothers, wives, and children, and urgently to give medical aid to those wounded in the military operation".
I have been listening to military briefings off and on my whole life and NEVER have I heard anything like this.  About halfway through this one it dawned on me that it is characters like this, who win battles they should never win, who can change history.  Was it possible that this was becoming more than an ignominious end to Victoria Nuland's crackpot plans for the Ukraine?  Could this be the beginning of the end of the American Empire itself?  Here, a some self-motivated man who simply wants to defend his home in a place almost no one has heard of completely outshines the typical military briefing where lavishly funded and exquisitely coached USA officers usually embarrass themselves.  The difference is stark.

Besides, Zakharchenko has moments when he is really funny.  The press conference begins with a report of the battle readiness of the Donetsk volunteers as they prepare to drive the Ukrainian army out of Elenkova.  About halfway through the presser he is asked:
Are there regular Russian units fighting on your side?

If you think the Russia is sending its regular units here, then let me tell you something.  If Russia was sending its regular troops, we wouldn't be talking about the battle of Elenovka.  We'd be talking about a battle of Kiev or a possible capture of Lvov.

Friday, August 29, 2014

Pepe Escobar on the Ukraine

Pepe Escobar tends to get things more right than not.  His knowledge base is extremely broad.  Though Brazilian, he is headquartered in Hong Kong and has worked out of London, Paris, Milan, and Bangkok, among a long list.  When journalists get things wrong, it is usually the fault of a constricted, pinched, provincial worldview.  Escobar most certainly does not have that problem.

So it is of some comfort that he has detected a real note of sanity coming out of the German government.  As someone who follows the big German press organs, I have been worried about this.  Both Der Spiegel and Deutsche Welle have recently published pieces that could have been written by USA State Department neocons.  This right-wing gibberish is so shockingly reactionary, I am tempted to re-evaluate my thinking on the effects of a continuing military occupation by USA troops.  There are also the questions raised by the thorough spying on the German government by NSA.  I mean, why else would the Germans support a Nazi coup in Ukraine to the point where they would be willing to trash their own economy to censor Putin's objections to the new arrangement?  I mean, maybe there are real Nazis salted throughout the German government who go home at night humming the Horst Wessel Lied and approve of the hassle being visited upon Putin by ragtag Nazis in Ukraine, but I seriously doubt it.

Putin's economic shot across the bow of EU over agricultural trade was a masterstroke.  It woke up Europe to the fact that Russia is still a force on the economic world stage.  And since he also let it be known that Russia is quite willing to forego German automobiles, the crazy-talk from Germany is likely to recede fairly quickly.  And now come the murmurings that waiting in the wings is Russia's favorite savior, General Winter.  It doesn't require a genius to conclude that the BIG economic threat—an oil embargo during a nasty winter—is being discussed in the corridors of the Kremlin.

Of course, the possibility of a few Hungarians freezing to death isn't what is driving the USA foreign policy establishment to concoct these huge lies they keep retailing to a public that absolutely could NOT give a shit about Ukraine.  Deep down, I think the real worry is that Putin may just have the skills to unite the peoples of the world who are sick to death of anyone who believes in American Exceptionalism.  The number of these aware is likely to be small because it requires that someone in the foreign-affairs establishment must first question the belief that American Exceptionalism is a good thing.  Escobar has also written extensively about how far along Putin has come in organizing his economic project to create a world where folks can create their own economies outside of the USA's dominance.

Thursday, August 28, 2014

Is the Eurozone ever going to change economic direction?

For those of us who have been predicting that the Euro would be a calamitous failure since the signing of the Maastricht Treaty in 1992, mostly because the currency union was organized around the most extreme crackpot theories of neoliberalism, the summer of 2014 has brought a moment of high schadenfreude as the last giant of the Eurozone—Germany—has finally stumbled over its contradictions.

Predicting the downfall of neoliberalism was hardly the act of great genius.  Those ideas have been discredited at regular intervals since the dawn of the Industrial Revolution.  Neoliberalism has often been called "Classical" economics because it is in fact the product of pre-industrial thinking.  This time around, they tried to dispense with this obvious contradiction by claiming that we had somehow entered into a post-industrial world.  Pre-industrial?—Post-Industrial? it didn't make a lot of difference because what it really meant was that the concerns of those who would and could create the real economy were NOT going to be heard.  The folks who were going to hog the podium were the gamblers, charlatans, liars, usurers, and other Predators who had figured out how to steal everything in sight playing games with electronic money.

Because it is based on pre-industrial assumptions, neoliberalism can also be accurately described as neo-feudalism.  And the new Leisure Classes might argue that after a period of the excesses of industrialization, a little feudalism might be a good thing (complete, I gather, with all the charming features including slavery, child labor, and the right of the first night.)  The only problem with that thinking is by hogging the electronic money, the Predators have foreclosed on a meaningful response to problems like Peak Oil and climate change.  Those problems simply cannot be solved until money gets into the hands of the Producers who can actually change and rebuild the real economy.

When the Predators stop snorting blow off hooker's butts and start getting in the way of necessary progress, they have been transformed from mildly amusing to lethally dangerous.  At that point, the guillotine argument starts making sense.  When rich guys start throwing their financial muscle behind denying the reality of Peak Oil or climate change, the time has certainly come to at least consider violent opposition to their utterly crazy world-views.  These people live in very comfortable bubbles—they probably will not consider changing their course until they feel personally threatened.  At least, that is the POV of the increasingly angry and dispossessed middle classes around the world.

As a lifelong pacifist, I am not endorsing marching around with Lloyd Blankfein or Timmy Geitner's head on a pike.  The preferred response is to put them out of business. Finance simply MUST be run by people who understand that first the real economy must flourish.  Of course, if someone like Blankfein could make THAT happen, not only should we allow him to survive, the Producers would happily cast his likeness in bronze.

Tuesday, August 26, 2014

The German economy stalls

One of the things I learned in Finland was that they had MIXED feelings about the Russians / USSR.  On the negative side, there was the fact that Finland had been a long-time colony of Russia which had treated her like colonial subjects usually get treated, she had suffered great damage at the hands of the USSR in WW II, she had been forced to pay serious reparations to maintain some independence during the Cold War, and she had be VERY diplomatic because she shared this 833 mile (1340 km) border with a superpower.  On the positive side, the "secret" to Finland's high living standards was living next to this huge market with staggering amounts of raw materials to pay their bills.

So when Yeltsin and the neoliberals screwed up Russia's economy in the 1990's, Finland's went into freefall.  But what made this economic catastrophe such a good object lesson for me was watching the Finns chose the prosperity for today over the meaningless luxury of obsessing over the hurts of the past.  Yes there were problems dealing with the Russians but in the end, they were more than worth it because Russia is a serious economic force—simply as a market.

Now it Germany's turn to learn that lesson.  There is a widespread belief in Germany that they deserve to be richer than everyone else because they make better products than anyone else.  Unfortunately for them and their Producer Class arrogance, it doesn't make a whole lot of difference how good your products might be if no one is buying.  German austerity crazies have forced upon the rest of Europe a contracting economy that can no longer afford German excellence.  The Chinese are still buying but even that huge market is finite.  This means the Germans cannot afford to lose the Russian market they worked so hard to create.  With the EU on its back, the difference between a prosperous Germany and one in trouble is pretty damn small—smaller than the size of the Russian market.

Wind turbines and court challenges

One of the more depressing social regressions has been the war over windpower.  I am old enough to remember when all the hippies (at least around here) were enthusiastic advocates of wind power.  It was Minnesota progressives that pushed the big compromise with the giant power utility NSP / Xcel whereby the utility would get serious about wind generation in exchange for a bill allowing them to expand the waste storage facilities at their nuclear power plants.  We have had a major role in Minnesota becoming the fourth biggest windpower state in USA.

Wind turbines have a huge advantage—they actually produce enough power to pay for themselves.  There are not a whole lot of green energy schemes that actually work and wind works very well indeed.  Even so, just as wind became economically viable, many—FAR too many—Progressives turned on wind.  I remember the first time some aging hippy explained how no good person could support windpower and how shocked I was.  I pulled out my heavy verbal artillery (yes I have some) and basically scared him out of the house.  I was PISSED.

My problem with wind's critics is that their criticisms are just not true.  Bird kills are utterly trivial, in most places where they are built wind turbines are by far the most aesthetically pleasing feature on the horizon, and anyone who claims they are noisy are taking the "princess and the pea" syndrome to fictional extremes.  I lived less than a mile from a 1.65 Mw Vestas for several years and never once heard it—not even on sub-zero nights with the wind blowing in the right direction.

I have often wondered why some so-called environmentalists turned on wind.  Truly, I don't even pretend to understand anymore.  I mean, what do they suggest—keeping on burning coal?  And why the big whopping lies?  My only explanation is that the hippies are uncomfortable with the size of the serious wind turbines. When they imagined wind power, they thought of a little thing they could hook unto a corner of the roof and then unplug from the grid and be free.  When it turned out that an efficiently-sized wind turbine would be 30 stories high, their minds were repelled.

Fortunately for the future of green energy, the courts are not buying hippie bullshit as reasons for stopping the construction of wind farms.

Monday, August 25, 2014

Paying to build a sustainable infrastructure

When Jimmy Carter had to confront the great oil crises of 1977, he took to TV to describe the resulting mess, complete with long waiting lines for gasoline, as the moral equivalent of war.  As someone who had studied the ways USA had organized the WW II efforts, I was sure he meant that we would engage the oil problems the same way.

Unfortunately, he wasn't saying economic equivalent of war.  Carter was something of a creature of David Rockefeller's Trilateral Commission / Council on Foreign Relations.  The way USA had funded the WW II war effort was so contrary to what Rockefeller wanted and believed, it probably gave the man a bad rash.  When Carter would appoint fellow trilateralist Paul Volcker to head the Fed in 1979, easily the most reactionary man to have ever held that office, Carter thought so little of the appointment that when he published his memoirs in 1982, he considered the event so trivial he didn't even mention it.

What a shame.  Because the oil crises really WAS the moral equivalent of war and a meaningful response should have been the economic equivalent of WW II (or the the Civil War.)  I have read many accounts of how the war economy was managed and what an enlightened central banker USA was so lucky to have, and never once have I seen where anyone objected to the Manhattan Project or the mass production of penicillin or any of the other major projects because we could not afford them.

So what was different?  The follow article gives an excellent description for why the USA could afford to re-engineer its industrial base in order to fight WW II.  These facts should always be kept in mind whenever someone tells us that we cannot afford to meaningfully address problems like Peak Oil and climate change.  The key is to stop thinking like David Rockefeller and Jimmy Carter and think more like the economists who figured out how to manage the mega-project that was WW II.  I have only copied the first seven paragraphs of a much longer and incredibly well-written piece.  I encourage everyone to read the whole thing.

Saturday, August 23, 2014

The economic disaster in E. Ukraine

One of the unfortunate legacies of the USA Keynesians is that they demonstrated that it was indeed quite possible to fight a major war with resource shortages and still have a high-performance economy.  The real economy of USA was amazingly larger and more sophisticated coming out of WW II than it was going in.  Add to that the incredible advances in basic research and the WW II economic stimulus lasted well into the late 1960s.

Unfortunately, war has historically been a colossal economic loser.  It is said that Germany required 150 years to recover from the damage of the Thirty Years War.  Historically, war as an economic winner has been mostly confined to the Keynesians.  Their example is rare indeed.

In these two articles, we get a glimpse of the economic damage the battles over eastern Ukraine have already cost.  One is a basic toting up of the damages to the part of Ukraine that IMF was counting on as collateral for their loans.  The other is about those cheapskates in Brussels who are tossing 125 million Euros at the 10 billion Euro calamity that EU agriculture is suffering—right at harvest time—from the loss of their Russian markets.  The Eurocrats do NOT give a shit—after all, it's mostly peasants who are suffering and who ever cared about that class of people?

Of course, none of this calculates the obvious economic losses from the destruction of valuable elements of the real economy, from the destruction of homes, to the medical costs of war wounds, to the long-term psychological trauma of having thousands of lives violently upended.  Even (especially?) for the small agricultural producers, watching your crops rot because of the arrogance and stupidity of some geopolitical chess players will leave long-lasting emotional trauma.

The neocons who dreamed up this mess in Ukraine have a LOT to answer for.  Unfortunately, those sorts of people never do.

Friday, August 22, 2014

Merkel vs the economists

One of the most interesting figures from the post USSR / Warsaw Pact era was Vaclav Havel of Czechoslovakia.  This was no ordinary politician / activist.  Witty, urbane, and a genuine intellectual, he had carved out a pretty serious career as a playwright before getting involved in politics.  When he became the first democratically elected President of Czechoslovakia in 1989, I am sure I was not the only person to have very high hopes and expectations for his presidency.  Unfortunately, he would soon prove to be an enthusiastic neoliberal hack.

I have written several times about how promising politicians became neoliberal swine upon their elections.  Many of these folks ran specifically anti-neoliberal campaigns so their sell-out of principle was especially egregious.  But in a case like Havel, there didn't seem to be any sellout of principle involved.  If you grew up in the Eastern Bloc like he did, "capitalism" was taught as this monolithic ideology.  While capitalism was considered this unspeakable evil, it had produced an economic miracle in postwar Europe that was really hard to ignore.  But nowhere in his Marxist indoctrination was he taught that there were wide variations in the way "capitalism" had been practiced so he could not have known that the version that produced wirtschaftswunder in post-war Europe was dramatically different than the neoliberalism he was being asked / forced to adopt.  Hell, I live in a country that got wealthy practicing Industrial Capitalism and then came to an abrupt stagnation and decline when it switched to the neoliberalism of Finance Capitalism in the 1970s—and even with all those real world examples, I find it extremely difficult to explain it to people who actually lived through the changeover.

Angela Merkel's problems with economics are a lot like Havel's—only worse.  Not only did she come of age politically during neoliberalism's ascent, she lives a country that had become so rich and powerful during the age of Industrial Capitalism, it has been able withstand many of the storms caused by neoliberalism's excesses.  She governs a nation where virtually all of the academic economists are good little neoliberal toadies, while the mainstream journalists and the zeitgeist is overwhelmingly conversant in neoliberal talking points.  Germany is prosperous in spite of their idiot economists, not because of them.  So now Europe has suffered six years of economic disaster and only Germany has held its head above the fray.  Merkel may be an economic neophyte but she just has to know such a situation cannot last.  Even the financial press is now writing about the end of wirtschaftswunder.  And if Germany gets into a serious trade war with the folks who supply their energy, the remaining power of her industrial capitalism will surely end.

Meanwhile, Ms. Merkel is asking the economics profession why they keep getting everything so wrong.  If and when she discovers the reasons have mostly to do with academic debates from the 1970s, I will imagine she will be truly miffed because there is no way she could have learned about THAT as a chemistry student in DDR.

Thursday, August 21, 2014

Marching against climate change

The other day, I got an email with the following cheery message:
This September, tens of thousands of people of all walks of life will gather for the largest climate gathering in history to build a world safe from the ravages climate change. Among them will be many Minnesotans! Will you add your voice and join us?
  • What: People's Climate March
  • When: September 21st
  • Where: New York City
  • How: Learn more and buy your ticket here and Minnesota Interfaith Power and Light are excited to send a large delegtion to NYC make the People's Climate March the biggest environmental gathering in the world. Buy your ticket here, check out the Facebook event here. Together we'll call for the world we know is possible; a world with good jobs, clean air and water, and healthy communities. Donations are much needed to help sponsor those who can't pay their full fare. It's important that youth and low-income people can have a voice in this movement, so please donate here if you can.

The People’s Climate March is an opportunity to embody the truth that significant climate action is not a liberal or conservative issue, but for those who want a world for us all to live on. Will you join us in NYC?
Now as regular readers here will attest, I am not the biggest fan of big symbolic gatherings to cope with scientific / technological matters.  But since this email was so damn earnest and provided a working email address, I thought I would attempt to reason with this sincere liberal who wants so badly to be helpful.  So I wrote:
Help me out here.  We are supposed to somehow get to New York to protest that too much carbon is being injected into the atmosphere.  And how much carbon will we put into the atmosphere to get to this gathering?

Well, if I drive my car which gets about 23 miles per gallon the 2400 mile round trip, I'll burn around 105 gallons of gasoline.  A gallon of gasoline burned yields 20 pounds of CO2.  So to get my oh-so-important body to the gathering of concerned climate change folk, I'll add a ton of CO2 to the atmosphere.  CO2 is a very stable molecule with a minimum estimated life of 100,000 years.  I must be REALLY important.

Of course, I am not and neither is anyone like me so the whole point is to gather thousands of us nobodies into a colorful mob large enough to attract the attention of those organized organs of mass ignorance—the TV networks.  Because THEN we as a world will get serious about stopping the process of putting excess carbon into the atmosphere.  I mean, "look at us," say the climate scolds, "we are so serious about the problem we were willing to drop an extra ton of CO2 per head into an already over-polluted atmosphere just to gather and walk in circles carrying signs that just MIGHT make the nightly news."

What am I missing here?  Why would ANYONE remotely serious about climate change even CONSIDER going to New York to participate in an event so meaningless and counterproductive? When are the climate change people going to grow up and realize that this problem won't be fixed by petitioning politicians?  I mean the solution to climate change is blindingly obvious—stop pumping CO2 into the atmosphere.  And we should start by not burning gasoline / jet fuel / diesel fuel to get to a march modeled after a method employed by Gandhi in the 1930s to protest British Imperialism.  It is not relevant.  It redefines the empty gesture.

Worst of all, events like these prove to the world that we are not serious.  Unfortunately, climate change is DEADLY serious—as in, a threat to human existence on earth.
After a couple day's wait, I got this response.  Liberals may be seriously misguided but they are really nice people.
Hello Jonathan,

Thank you for your concerns and feedback on the event. I will pass along your points to fellow organizers for the event.

There is only one point in your email that I may take issue with, which is when you indirectly call yourself a "nobody". To this point I will respectfully disagree. You most certainly are not a nobody, contrary to your suggestion of such. Your voice is deeply important and I hope you will continue to use it in future events.

All the best,
Damn!  The kids are nice.  Here, I am being kindly scolded for my lack of self-esteem (something I really don't have a problem with.)  But again—misguided. Whether one is polite, kind, or just politically correct in some passive aggressive way, it makes absolutely ZERO difference to the debate over how to replace fire.  So I decided to come clean.
Busted.  All right, I am not a nobody.  I have written two books on the economics of environmental renewal and I have a blog called real economics that tracks the progress people are making around the world in the battle to reduce CO2 emissions.  I have had readers, at last count, from 148 countries and I average around 21,000 pageviews a month these days.


The rest of the world is furious at our casual attitude towards a deadly problem.  You see, no matter how important you may think a March Against Climate Change may be, the days for that sort of symbolic behavior were over by at least 1995.  And everyone seems to understand it but us Americans—exceptional us.

Sometimes, being a nobody is not such a bad thing, come to think about it.
The key to understanding this sort of behavior lies in the fact that only a small minority of the people of the earth have anything meaningful to offer when it comes to this problem.  Politicians are not going to invent new methods of electrical storage and environmental activists usually have little to add to the difficult subject of capturing solar energy.  They want to help, but usually all they can offer is moralizing bullshit.  The decision to use fire was made so long ago that anyone who wants to debate the morality of that decision really IS wasting everyone's time—because the real question is, How do we live without it?

So I understand—most people have almost nothing to offer on the subject of climate change but that doesn't mean they should stop trying to do something. I don't want to live that way myself, but I understand it is an only option for some.  Only PLEASE do not confuse the issue by asking people to make the CO2 problem worse by trying to get them to assemble in their thousands (millions?) for a silly symbolic gesture.  At least, get THAT right!

Wednesday, August 20, 2014

Really expensive sanctions

There is something a bit surreal about this article from Deutsche Welle.  On one hand, it acknowledges that the German carmakers are not happy about the threat that sanctions directed at their marketing efforts in Russia would pose.  On the other hand, this article skimps on the explanations for why the carmakers are dreading this looming disaster.  So let me try.
  • Developing a market for expensive cars is a daunting task.  Even if a company like Mercedes Benz shows up with a century's old reputation for excellence, they must still convince their new potential customers that their brilliant cars will operate under Russian conditions (will they start at -40°C? etc.)
  • Selling cars doesn't just mean showing up with a few transporters full of newly-minted vehicles, you must also show up with a parts supply, a local base of operations, and methods for training new mechanics.
  • Germans selling cars to Russians?—lot of history between those two countries much of it unspeakably brutal.
So while having a world-class product opens many doors, it is abundantly clear that the German carmakers have gone to great lengths and put in a ton of work to establish their foothold in Russia.  In fact, Volkswagen has gone so far as to open a Russian factory—which is an even greater commitment to expanding their markets (of course, one of the reasons to do this means they would be able to skirt import bans like the ones being proposed.)

DW seems to imply that German car makers are not all that threatened with permanent damage by a short-lived Russian import ban.  They mention that Russian is threatening to put together a consortium of truck and tank manufacturers to build government-level limousines.  (Implication—the Russians are not seriously going to take on the spectacular Mercedes S-class with truck makers.)  They mention that Asia could fill the gap the Germans would leave behind but then cite a Chinese and South Korean company no one has ever heard of.  (Whistling past the graveyard.)

One should NEVER underestimate the Asians.  For example, Lexus of Russia has just had it's two best years ever.  In the 1990s, Lexus showed up and just blew Mercedes-Benz out of the American market for over a decade.  It turns out that Mercedes' world-class performance is really only an issue on those meticulously maintained autobahns.  Those kind of roads do not exist in USA and they certainly do not exist in Russia.  In those markets, the Lexus advantages of build excellence and reliability are MUCH more important than a car's road feel at 250 km per hour. Lexus customers tend to be very loyal so if Mercedes loses some of their customers to them, getting them back could prove nearly impossible.

I am quite certain that there is genuine anger in the boardrooms of the German carmakers.  Competing in the car business is already insanely difficult.  I would imagine that no one would be at all happy if some two-bit pol threatened all that hard work over a dispute between the USA and Russian governments relating to the political make-up of the Ukrainian government.  If it happens, it would be yet another example of massive Producer Class damage caused by Leisure Class stupidity.

Tuesday, August 19, 2014

Pipeline politics and the conflict in Ukraine

There seems to be nothing so reliably corrupting as oil.  With the possible exception of Norway, every other country with major oil production has massive corruption problems.  And I'll just bet if you ask a Norwegian, he or she will tell you that oil has corrupted Norway too—it just doesn't look that way to outsiders because they started with such a thoroughly honest society.

One explanation for why the awl bidnuss corrupts everything it touches is that this is a business for tough guys.  Drilling for oil in the North Sea or the Saudi desert is not for the faint of heart—either from the viewpoint of those who actually do it or the guys who cut the deals necessary to fund such risky and expensive projects.

But such analysis sort of misses the point.  It isn't the people who run oil rigs or build offshore platforms that corrupt the surrounding culture—its the fight over the easy money their efforts produce.  It is on this stratum where the mega-bad guys like the Hunts, the Kochs, and Dick Cheney operate.  And because they are people who grow rich without work, they are bound by the Leisure Class strategies of force and fraud to achieve their ends.  If lying and theft are your basic survival strategies, it is pretty damn likely you will become very, VERY evil.

Which leads to today's story about the fights over who gets to build the pipelines running between Russian and Europe.  Not surprisingly, this has brought out all the cutthroats and pirates.  You want to get really rich?—control the flow of natgas between Russia and Europe.  Only...
  • The folks who really want these pipelines operating are the consumers.  They need the natgas MUCH more than Gazprom etc. needs to sell it.
  • Gas not sold today will almost assuredly fetch a higher price tomorrow. While the crooks want to get rich right now, it is Russia's national interest to sell its treasures as slowly as possible.
  • No matter how much we have changed the climate, Russia will still have winters and a need to do something to keep warm.  There is a good argument that Russia should never sell its natgas and keep it for themselves because they will probably need it someday.
  • Gas sales by Russia means that Russians are now consuming goods they could easily make for themselves.  If a country really wanted to counter hydrocarbon corruption, the best way, by FAR, is to put people back to work creating the economy they would otherwise just buy with the proceeds of the oil industry.
We will see.  It wasn't so very long ago that Russia was able to produce most of what her citizens needed to survive.  Russia wasn't always very good at this as anyone who has ever sat in a Volga or Moskvitch can attest.  But if this comes down to a struggle for survival or national identity, it is likely the Russians could again be quite industrially self-sufficient.  They might even get their cars right this time around.

Monday, August 18, 2014

Panama Canal at 100

One summer in the early 1960s, our family was visiting the Kansas relatives.  My dad's cousin who worked for Boeing in Wichita and I were having an excited conversation about the space race.  Cousin knew a lot about the hardware being manufactured for the newly announced race to the moon including a lot that wasn't being made by Boeing.  My grandfather and two of his brothers listened to us with bemused looks.  Finally, one of those great uncles announced with some authority, "Going to the moon is just a stunt.  At best, we'll get to see some moon rocks up close.  But even if we do make it to the moon, the achievement will be trivial compared to the building of the Panama Canal."

The Canal opened in 1914 while my father was born in 1916.  It was the accomplishment that so excited my grandfather and his brothers when they were young men.  The Canal was to them what the moon race was to me.  And so they set out to give evidence for why the moon shot would NEVER equal the joining of the Atlantic and Pacific.  They talked about its effects on trade and the organization of USA's navy.  But mostly, they wanted to talk about how USA had successfully completed a project that the French had failed at—miserably.  The French were arguably the world's best canal builders and their engineering was globally famous.  But according to my uncles, they had failed because they didn't know how to properly organize very large projects—like the transcontinental railroads.

What the Americans had done, they argued, was turn the canal project over to the best of the railroad engineers.  The railroad guys promptly started by laying track.  Someone had done the calculations and discovered the project was mostly about moving a large amount of dirt and trains were the way to move it.  Then they decided that such a project was going to require a skilled workforce so the next thing they built was quality housing to keep them well-fed and essentially content.  And most importantly, they launched a serious attack on the diseases that had killed so many of the French construction forces.  As my uncle Karl said, "You get the basics right and the rest is easy."

And that, folks, is how USA once approached major challenges.  Of all the damage caused by the de-industrialization of this nation, the destruction of that can-do swagger is easily the worst.  Yes, humanity currently faces a HUGE challenge.  We have gotten very comfortable with the benefits of fire.  Rebuilding the global infrastructure to do without fire will be exceedingly difficult.  Yet in the back of my mind, I can hear my great uncles chuckling, "Is it possible? Yes? Then what are you bitching about?  Get to work!"

Sunday, August 17, 2014

200 years of peace

On 21 August 1810, something truly remarkable happened to Sweden.  Tired of the crazy (losing) warlike nature of the royal dynasty and looking for new blood, the Riksdag of the Estates selected a Marshall in Napoleon's Army by the name of Jean-Baptiste Bernadotte to become the heir presumptive to the Swedish throne

Bernadotte promised to move to Sweden and learn the language and became Crown Prince Karl Johan.  In 1813 he would break with Napoleon and in 1814, he would settle a dispute with Norway.  Little would the Swedes understand it at the time, but this would be the last war Sweden would fight for the next two centuries.  Arguably the most warlike people to have ever walked the planet would become a paragon of pacifist virtue under the direction of a retired Napoleonic Marshall.

The transition from a bunch of blood-thirsy Vikings to a country of peace-loving Scandinavians has not always been smooth.  Pacifism is a philosophy that is sometimes extremely difficult to practice and often warlike neighbors will not leave you alone.  Even when it is working successfully, there is no guarantee it will be appreciated.  The best example is the latter is when a member of the house of Bernadotte, the Count of Wisborg by the name of Folke, was assassinated by the Zionists in 1948 as he sought to mediate the original Isreali-Palistinian dispute while working for the UN.  The leader of the assassins was Yitzhak Shamir who would eventually become Israel's PM.

My Swedish-American grandfathers could have hardly been more different.  One was a hard-working, hard-drinking union man in the dangerous steel industry in Chicago.  The other was this utterly respectable farmer from Kansas who was a deacon in the local Lutheran church.  Every year, he would set aside one forty-acre plot as "God's Land" and the yields were donated to the operation of the church's missions.  Yet when USA entered WW I in 1917 and a national draft was instituted, BOTH men would notify their draft boards that they would refuse induction if called.  More than 100 years of a peace culture had followed them to their new country.

Flash forward to 1970.  I was by now heavily involved with the movement to end the war in Vietnam.  Because of a low draft lottery number and the lack of any obvious reason why I shouldn't be drafted, I chose to apply for a conscientious objector exemption.  The Supreme Court had recently ruled in the Welsh v US that one could be classified as a conscientious objector even without a background in an historical peace religion like the Quakers or Jehovah's Witnesses.  But the ruling was very new and draft boards had a lot of institutional inertia so actually having such a background still helped.  I had been educated in grade school by the officially approved pacifist Mennonites but my father was a Lutheran clergyman—and Minnesota was thickly populated by Lutherans who had no objections whatsoever to the ideas and practices of making war.  In fact, the majority of my local draft board was made up of Lutheran church-goers and that board had never granted a conscientious objector status—ever.

The Mennonite childhood education was a slam dunk—except for my weak link to that sect—because they have been practicing pacifists since 1534.  But what to do about those Lutes.  You could almost hear a draft board member ask, "You ever hear of Prussia?  Lots of armies and Lutherans there."  I was allowed to bring some witnesses to testify on my behalf.  I got a Mennonite clergyman to explain what I been taught in elementary school, and then I asked my father who would argue that while most Lutherans are not pacifists, a serious number of Swedish Lutherans are.  After all, in 1970, Olaf Palme, the Swedish Prime Minister had not only granted asylum to anti-Vietnam activists but deserters from the USA armed forces—all with the complete blessing of the Church of Sweden.

I was asked to leave the room while the draft hearing got information from my witnesses.  As I paced the hallway, I could hear those preachers holding forth on the basis of Christian pacifism.  Mennonites can do hell-fire and brimstone sermons with the best of them—but so could my dad.  I am pretty certain that none of those men on the draft board had ever been exposed to the idea that warfare is inherently sinful by guys who could quote the Bible so gracefully.  But it must have worked because that no-conscientious-objector board not only granted me one, but would soon grant one to everyone who had ever applied.

So here's to 200 years of keeping the peace.  It is a remarkable achievement.  Peace-keeping is a full-time task, and as Folke Bernadotte discovered, a good way to get yourself killed.  But as places like Sweden and Switzerland prove, practicing peace is a very good route to prosperity.  One of the best, in fact!

Friday, August 15, 2014

Kinky jet streams

The latest manifestation of climate change is the phenomenon of kinky jet streams.  Two problems are caused when a jet stream gets its kink on—extreme weather is seen in places where it is very rare and, weather patterns move along more slowly.  Last winter, a major jet-stream kink brought record drought to California while sucking down seriously cold Canadian air to the USA south.  The slowing of weather patterns means that instead of getting a 1.5" rain, there are 6", 12", and more flash flooding downpours.  These have become so common, they barely rate mention any longer except for those poor souls who discover they live on a 500-year floodplain.  The latest big rain dropped over 13" on Long Island.

Here, Jeff Masters explains kinky jet streams better than I. And as usual, the transcript is below the read more link.

Elegant technology as eco-hedonism?

Yes I know.  The phrase elegant technology is about as clumsy as any ever concocted in the English language.  It confuses people because so many start out with the notion that true elegance is a function of massive amounts of Leisure Class conspicuous waste.  But in the dictionary we discover that elegance is also attributed to a mathematical or scientific principle that accounts for all the variables.  And so an elegant technology would be one that was designed for proper resource recovery when its useful life had ended.  And I will continue to use it no matter how clunky it sounds.

A good summation of the idea can be found here.  Unfortunately, when I first understood what the possibilities of such behavior actually entailed in the 1980s, there were almost no real-life example to be found anywhere on earth.  The closest I came were the German attempts as embodied in their design for disassembly laws.

Well, it seems as if a German named Michael Braungart has been working on the idea and coming up with better examples and new descriptions for an industrial state that would be endlessly prosperous because without waste, there should never be a shortage of any essential raw material.  I love his term eco-hedonism even though as an ex-choirboy, I would have NEVER thought of it myself and probably won't use it all that much because it suggests irresponsible behavior.  His cradle-to-cradle description is also just wonderful.  And to finger bad chemistry as the real cause of most environmental problems is a real lightening bolt of insight.

Thursday, August 14, 2014

Eric Margolis on WW I—a warning

One hundred years ago this month, Europe plunged into the most senseless war in recorded history.  Descendants of Queen Victoria who ruled England, Germany, and Russia joined with a bunch of other thoroughly deluded folks in believing that warfare was noble and uplifting and probably even fun.  The culture of warfare, however, lagged far behind the reality of industrialized conflicts.  That courage and determination were no match for machine guns and artillery never really sank into the minds shriveled in places like Sandhurst and so massed charges and associated stupidities ground on until by 1918, there were over 37 million casualties, major empires from the Ottomans to the Russians lay in ruins, and Europe left in such existential shock that all it could really do was try again in 1939 with a new generation of men and weapons.

Here in USA, World War One was openly scorned for the insanity it was with opposition to participating running to supermajorities.  In 1916, Woodrow Wilson won re-election as President on the slogan, He Kept us Out of the War. Lying scum that he was, he had USA declaring war by 1917—on the side of the British Empire, no less.  Expensive British propaganda notwithstanding, this was a deeply unpopular move.  USA was born in a revolution designed to escape that evil empire and the two largest ethnic minorities in the country were German and Irish.  So participating in WW I meant serious repression at home as force would be used to get the nation to acquiesce to this utterly insane decision.

Here in Minnesota, The Commission of Public Safety used the war fever to just trash the state's progressive movements.  So the leadership of the Non-Partisan League was in jail, their publication suspended, and their public gatherings banned.  This repression happened everywhere the country.  German-language schools were banned.  Publications like The American Freeman lost its ability to use the mails.  The driving force behind the Progressive movement, Robert LaFollette, was stripped of his Senate power.  And Eugene Debs was sent to prison.  ETC!

When the manufactured war fever began to subside, folks began to question how we had been pulled into this mega-insanity.  In 1921, Senator Nye convened an investigation into that very question.  They held 93 hearings but finally came to the basic conclusion that what had happened was that the House of Morgan had loaned so much money to the French and British, they would be bankrupted if those countries lost.  And so for hardly the first time in history, a country's military had been mobilized to save some bank loans.  There were other conclusions just as damning to USA's ruling classes—the Nye Commission findings make for fascinating reading.

So of course, Woodrow freaking Wilson had been telling the country / world that WW I was being fought to make the "world safe for democracy."  He would eventually go to Versailles to promote his "idealism"—which accomplished little but served as a convenient distraction for the usual gang of thieves carving up the world for their own benefit.

Wednesday, August 13, 2014

Putin and the real economy

History teaches us that the vast majority of wars and revolutions have been driven by economic reasons.  There are those who will argue that religion and race have a pretty good track record of fomenting conflict but even such an obvious case as the Thirty Years War—which was fought between Protestants and Catholics—had a huge economic component.  Protestants certainly did not enter this protracted struggle because they believed in "Salvation through Grace alone" even IF that is what some claimed.  Protestants defended Protestantism because it was a cultural shift that led to greater prosperity.

The developing conflict over Ukraine has puzzled me because I was trying to answer the question, "Except for the people who live there, why would anyone actually want Ukraine."  I mean Ukraine has some prime agricultural land but seriously, who fights over farmland anymore?  Besides, there are millions of hectares of prime agricultural land in neighboring Russia that is not being farmed right now with Russia offering incentives to anyone who wants to come and work the land.  Yes there are vast natural resources in the East of Ukraine but the big one is coal and humanity is now trying to stop its consumption (burning).  Economically in fact, Ukraine is a basket case with crazy levels of corruption, massive external debts, unpaid energy bills, crumbling infrastructure, and now a civil war.  With a lot of vision and progressive leadership, it could become a marvelous country but right now, it is not exactly worth fighting over.

I am finally coming to the conclusion that the battle over Ukraine is in fact about economics but it has almost nothing to do with Ukraine itself.  Those folks are mostly innocent bystanders caught in the crossfire of a MUCH bigger war.  It is a war being fought to preserve the neoliberal Washington Consensus.  Vladimir Putin has decided to take on the West economically—so he must be crushed.  When you think about it, this seems like a lot of trouble to go to over economic rules, especially when one considers how neoliberal the governments of the BRICS nations actually are.

My new theory is that this is really a manifestation of "Putin's Revenge."  Little guys don't survive very long without learning how to stand up to bullies.  He has probably figured out that any nation that routinely elects buffoons and staffs its foreign office with such vacant suits as Condi Rice, Hillary Clinton, or John Kerry is a nation ripe for a good beating.  He is in pretty good shape going in.  His country has minimal external debt and has the one product everyone wants and needs—energy!  He starts out with an incredible 87% approval rating at home and in spite of vicious smears in the western media, growing approval abroad.  Turns out folks have a fondness for little guys who stand up to bullies.

His job won't be easy.  The economic institutions of the EU are staffed, top to bottom, with vacant neoliberal toadies.  If one of Putin's goals is to drive a wedge between the EU and USA, he faces a titanic struggle simply because the toadies cannot imagine another world.  Moreover, it doesn't seem all that clear that Putin himself has an alternate economic vision.  I think he is simply pissed off that he was backed into a corner, wants to torment his attackers, and has settled on economic warfare because he believes this is one he can win.

Mike Whitney believes he can win it too.  And if he can create an alternative to the global dollar economy, the USA will be the BIG loser.  (See also, The end to petrodollars?)

Tuesday, August 12, 2014

Robin Williams—R.I.P.

Watching the great comedians at work is one of the pleasures of my life.  Of course, I have a distinct preference for the comedians who are funny because they are clever.  And of the folks who are funny because their insights are so good, Robin Williams was one of the very best.  He was literally breath-taking to watch.  Ten minutes of Williams at high speed and I was more than happy to take a break.

And that was, perhaps, Williams' big problem.  If ten minutes can exhaust a listener from the sheer joy of keeping up, listening intently because no one wants to miss a word, and laughing so hard, what can the energy demands possibly be like for the guy on the production end who can sometimes go on for a hour?  

"How does he possibly do it?" I would ask my friend and fellow Williams fan.  Because his energy was so superhuman, there would be speculations on chemical enhancement.  But mostly we figured he just knew how to dig more deeply into his energy stores and run his vital life forces at a deficit.  The problem with such a strategy is that it usually shortens your life.  This morning, I had a very sweet email from my friend explaining what Robin Williams had meant to his own sometimes-troubled life.  It ended with:
George Carlin, Hunter Thomson and Robin Williams...not much to look forward to.
And then I found this lovely comment by the man who played Williams' old college roommate so skillfully in Good Will Hunting (one of my all-time favorite movies.)  I especially loved his description of Williams' energy as "It was like he had three brains which were constantly revving."

Yup, that about covers it.

On not taking climate change seriously

Back in the 1980s, I had a friend who was working for a Mpls. / St. Paul network-owned TV station as its weather producer.  Because so much of Minnesota industry is science-based and because weather forecasting was the nearest most TV stations came to doing real science, we had the brainstorm that for sweeps weeks, his department should produce some locally-themed science programming.  His first ten-part series would set the tone—it was about the different strategies wildlife employed to make it through our brutally cold winters.  From there the programs rotated through subjects of local interest such as the water quality of Minnesota's famous 10,000 lakes, soil erosion on the corn belt prairies, how to manage energy in an energy-poor region of the world, etc.

Finally it came time to tackle the subject of atmospheric sciences.  This was after James Hansen's blockbusting testimony in 1988 so of course, we assumed that the main effort should be directed at the emerging science of climate change.  Suddenly, after nine series of critically acclaimed science programming, the on-air weatherman / narrator began to object to the scripts.  I will not speak for my friend but I was absolutely shocked.  After all, our science research was just as careful as before.  We soon discovered that in the world of on-air weathermen, the word had spread that talking about climate change was not a career-enhancer.  Our on-air talent was a Mormon with like nine kids.  He had a nice reliable job that he in no way wanted to jeopardize.

It didn't take long before climate change denial became the default position of most practicing weatherfolk. Weather forecasting, the one area where climate change could have been discussed on a daily basis, became a haven where scientists (who should clearly know better) would sell their souls for a good make-up artist.  And my friend, the guy who made science a fascinating ratings winner for a network owned and operated station, was reorganized out the front door.

Only just now are weatherfolk talking about climate change—more than 25 years after Hansen.

See Transcript after the break

One of the truly discouraging things about the climate change debate it that there are so many people who seem truly convinced that climate change is a problem—only NOT for them.  So Al Gore flies around in a Gulfstream, somber climate change conferences are held in remote places where everyone has to fly in, and leading climate scold, Bill McKibben, actually encourages people to travel to Washington to protest all the carbon being pumped into the atmosphere.

Here we see that in a world where we should be cutting the flying around at 10,000 meters to its bare minimum, there is an explosion of low-cost airlines whose principle beneficiaries are people looking for a cheap holiday.  Climate change might be a problem, such people argue, but it's not so severe that I should forego my vacation in Jamaica or my scuba diving on the Great Barrier Reef (after all, coral reefs are dying so I should see them now.)

Monday, August 11, 2014

Climate change and transportation

Not so surprisingly, it seems the products of human creation are somewhat like the fixtures of the natural order in that they come complete with an operating range of environmental conditions.  Yes, that operating range can be quite wide indeed as a well-designed car can operate safely in temperatures ranging from -40° to 140°.  (BTW, this is the same range of temperatures as exist between the freezing and boiling points of water.)

But such creations are very rare.  Many parts of the transportation system have a far narrower range of operating temps—outside of which they can suffer catastrophic and very expensive failures.  Some recent studies have been done to demonstrate just how expensive these failures can and will be, proving once again that inaction on climate change is probably the worst option imaginable.

Sunday, August 10, 2014

Trying to make some economic sense of the mess in Ukraine

The totally unnecessary crises in Ukraine is leading into uncharted economic territory.  I have been a serious student of economic history for at least 40 years and I have seen nothing that rivals it.
  • There are those that point out that one of the big goals being pursued by the Kiev government / IMF is a strategy for energy independence based on massive fracking in the Donets region.  Yes, one of Ukraine's big problems is that without Russian gas, she freezes in the dark.  No, fracking is not likely to solve her problems.  Yes, there will be people in eastern Ukraine who believe fracking is so against their interests, they will be willing to shoot folks to make their point.
  • Russia is caught intellectually between the wretched neoliberal excesses of being an oil-rich country and her memories of being a superpower.  Russia won WW II because she was able to keep making tanks (and 1000 other similar efforts).  There is something very empowering about industrial self-sufficiency and I am sure there are nationalists who want it back.
  • Putin's understanding of economics is extremely interesting.  On one hand, he is surrounded by layers of oligarchs who stole their fortunes under the flag of neoliberalism.  RT economic shows are quite neoliberal.  But his moves on economic sanctions shows he believes that he and his new BRICS friends can end the most egregious economic injustice—the role of the dollar.  This is a very non-neoliberal goal and will only succeed with non-neoliberal ideas and methods.
The Russian ban on food imports from the EU demonstrates that Putin's game plan is damn serious.  Because food is perishable, the path between farmer and consumer must be quick and trouble-free.  Hold up shipments of most food-stuffs and they go bad on the loading docks.  Because this is true, great efforts go into making shipping, contracts, supplies, and demand as reliable and predictable as possible.  So if Putin really has closed off food shipments from EU, those producers who have gone to great trouble to secure a portion of the Russian food markets will be hurting in just days.  The EU has an expensive structure of subsidies to prop up their agricultural sector.  If their successful food export businesses suddenly lose markets, those subsidies are likely to become VERY expensive.

Meanwhile, Russia has a whole raft of folks (such as most of Latin America) who will be delighted to take over someone's markets they pissed away over a distant dispute with highly dubious (f**k the EU) rationales.  But that doesn't mean the transition will go smoothly.  Soviet-era lines may be possible before the kinks are worked out.  But Putin holds ALL the cards in this dispute and he could wind up with a much more self-sufficient and environmentally friendly food supply as a side bonus.  Just remember, there is ZERO reason why Russia couldn't feed itself—lavishly.

Unfortunately for the Ukrainian people, their dreams of the revolution last spring are now in the hands of economic crackpots who have on their list of "accomplishments" the de-industrialization of USA.  As this reality sinks in, there are grumblings—according to The Guardian—of the need for a New Maidan.  This time, we can only hope that if they spot Victoria Nuland handing out cookies, they will smell a rat.

Saturday, August 9, 2014


As someone who grew up in a USA that was extremely proud of its aerospace industry, I was taught that our #1 status in the community of nations was a given because we made the best airplanes.  And I learned a very great deal about airpower because I had relatives who worked on some of the best aircraft ever built.  And one story I was told was that World War II was started with a sneak attack by the Japanese and finished when we dropped a couple of nukes from high altitude using B-29s.  Never did I hear anyone ask if these bombs were justified or remotely ethical.  It was pretty simple—someone started a war with primitive aircraft and we finished it with sophisticated ones.

So when I was assigned to write a senior thesis for an AP English class, I chose "Hiroshima and the Decision to Drop the Bomb."  I figured I knew all the interesting facts about this story (mostly, about the airplane that carried the bomb to its target) so I wouldn't have to work so hard.  Yeah right.  It only took a few days of research to realize that there was nothing remotely simple or obvious about using nukes on civilians.  Another few days and I was utterly horrified—not only about the act of nuclear murder but the casual acceptance of it by everyone I knew.

But even this effort didn't get around to the destruction of Nagasaki.  Even IF someone could make the argument that Hiroshima answered useful questions, there is no justification whatsoever for the nuking of Nagasaki.  So on this 69th anniversary of arguably the most barbaric single act in recorded history, John LaForge retells this tale of barbarism for all those who missed the real story about the time high science and advanced technology combined with the warlike animus to become irredeemably evil.

Friday, August 8, 2014

More predictions for the BRICS banks

It is really hard to predict what may become of the BRICS development bank.  In theory, this is just what the doctor ordered.  In practice, it could EASILY become just another bank run by unimaginative neoliberal drones.  Like all such human institutions, the outcome will be almost solely be determined by the beliefs and practices of the people who work for it.  Just remember, the World Bank and IMF were both the creations of very progressive and idealistic people—and look what they have become.  Since it is almost impossible to become a banker without first proving one's loyalty to the theology of neoliberalism, there's a damn good chance most of the folks who staff important position at the BRICS development bank will be neoliberal honors students.

One of the things that gives hope is the sad fact the when it comes to ideas, bankers really ARE a bunch of sheep.  As was recounted in yesterday's post about the life of Marriner Eccles, someone with a compelling vision can recharge some dull and very conservative institutions.

What follows are some predictions about where the BRICS bank could be headed.  Most of it sounds pretty rational.  Like me, Mr. Campbell is excited by the possibilities of this bank while worrying about its neoliberal bias.

Thursday, August 7, 2014

Is the Fed REALLY out of bullets—Eccles and Depression history

One of the very few assertions of Heiner Flassbeck that I disagreed with was his idea that because the central banks have lowered interest rates to essentially zero, they have run out of ammunition they can use in case of another 2008-type financial meltdown.

Not so fast, Flassbeck.  There are in fact lots of things the Fed could do to fix the economy.  They could start by dropping the requirement that all economists who will be taken seriously by the Fed must FIRST be neoliberals.  Requiring that people believe utter bullshit as a requirement for employment is hardly the best way to attract deep thinkers.

Then they could make certain that everyone understands that while raising interest rates can most certainly cripple the real economy, merely lowering them cannot, by itself, repair the damage.  The public and its agencies must become the motors of fiscal stimulus and since everyone is hopelessly in debt, the first item on the agenda is debt restructuring.

Finally, the real economy must be rebuilt.  Pumping up the balance sheets of the speculators with electronic money might make a few people feel better about themselves, but even the super-rich must eventually understand that they cannot prosper if the real economy cannot cope with problems like climate change.

Once upon a time, there was a central banker in USA that understood such issues.  He was a Mormon from Utah who got to run the Fed for Roosevelt.  He knew there was more to central banking than tinkering with interest rates.  So of course, we do not see anyone like him anywhere.  The Fed isn't out of bullets—it's out of ideas because it doesn't remember its own history.  So here is a short history of Eccles as told by Utah's biggest paper in 2011.

Wednesday, August 6, 2014

Heiner Flassbeck on the search for an enlightened capitalism

Flassbeck and I share some important understandings of how the real economy works.  We grew up a long ways from each other but economically, we had a similar background.  He grew up in the American sector of post WW II Germany.  My background was rural Minnesota / North Dakota.  So how could these be possibly linked?

Well!  Minnesota was the destination for many Nordic people.  The most radical of the bunch were the Swedes—some, like Congressman Lindbergh with direct ties to the Swedish Social Democratic Party.  Keep in mind that one of the great issues of the Swedish Social Democrats under Branting were the differences between Socialism (good thing) and Communism (terrible idea.)

The depressions of 1873-93 hit Minnesota very hard—with agriculture being especially hard-hit.  The political response was informed and persistent.  By the 1920s, progressive politics in Minnesota produced the Farmer-Labor Party, with Lindbergh as arguably the most important founder.  Keep in mind that the Farmer-Labor Party was built on the ashes of the Minnesota branch of the Non-Partisan League—an organization that took over North Dakota politics in the 1910s and passed the most progressive economic program ever in USA.  The leadership of the Minnesota NPL was thrown in jail in the wave of political repression that followed the USA entry in WW I, its publications banned, and its supporters threatened.  It took several years to recover from that catastrophe.

Meanwhile, from 1919 over at the University of Minnesota, a guy named Alvin Hansen was teaching the ideas of Keynesianism to increasingly enthusiastic students.  He was soon the most important Keynesian in the country so in 1937, he took his by-now polished ideas to Harvard where he taught Keynesianism to a generation.  It is important to remember that Hansen learned much of his economics at the University of Wisconsin under Richard Ely and John R. Commons who were of the same school of thought as Veblen.  So Hansen's Keynesianism was really a hybrid of actual Keynes and the Midwest Progressives.

Soon the students of Hansen started commuting to Washington to organize and the staff the agencies of the New Deal.  And with the end of WW II, some of these people went to Germany to help with the reconstruction effort.  And unlike the Harvard clowns who went to Russia to teach neoliberalism to Yeltsin's cronies, the Keynesians actually knew what they were doing.  Soon after they arrived, the Germans were calling their economy Wirtschaftswunder.

Flassbeck is a year younger than I and grew up on a different continent, but we came of age in almost identical economic milieus produced by people who learned from the same teachers.

And as for finding that elusive enlightened capitalist, I believe the answer is to change the political zeitgeist so that people will accept nothing less.  After all, it worked in the 1950s-60s.

Transcript after the break.

Tuesday, August 5, 2014

The inflation hawks and incomes

Yes I know I have been writing about the remote possibility that jobs and incomes just might become a more important issue to the central banks and their professional toadies—the economics profession.  Then along comes Dean Baker to remind us that the VAST majority of central bankers and economists only know one pure evil—inflation.  They have no knowledge whatsoever on the subject of incomes policy and zero sympathy for anyone trying to survive on the pathetic wages most earn.

So after my last two posts suggesting that there might be a ray of enlightenment in the corridors of financial power, here is a dose of reality.

The Bundesbank calls for higher wages

The idea that the Central Banks may be waking up to the error of their ways is actually quite remarkable.  But here it is.  The Bundesbank is calling for higher wages across the Eurozone.

Heiner Flassbeck—the need for an incomes policy

So at last, Flassbeck come to his central issue—wages.  Good choice!  The reason wages are central are many but they include:
  • Wages have stagnated since 1973 in spite of massive increases in productivity.  The Producing classes clearly have EARNED a big fat wage increase.
  • Lack of purchasing power just dooms the rest of the economy.  The numbers of businesses that fail from simple lack of sufficient customers is positively frightening.
  • The minimum wage is clearly not enough to live on.  Someone who works full time should be able to purchase the necessities of life.  Under current circumstances, this is obviously not true.
Of course, Producers have known all along that the real battle is over wages.  When Henry Ford introduced his $5 / day pay rates in 1914, he was acting on ideas that Populists and Progressives had been harping on since at least 1873.  But remember, this is the act that turned Ford into a legend—Producers would defend the man who had acted on their favorite idea to their last breaths.  PBS's American Experience recently ran a documentary on Ford.  They showed footage of the lines waiting to walk past Ford's bier.  PBS claimed 100,000 people showed up.  Like Ford's assembly lines, the line of mourners moved pretty past the coffin.  The on-camera historians tried to explain that long line but failed miserably.  If you don't understand Ford as a Producing Class hero, the line makes no sense whatsoever.  Lincoln may have freed the slaves, but Ford gave the common man a good-paying job and put thousands of those slaves' descendants on his payroll.

So Flassbeck is in fine company.  His only problem is that he is up against the whole economic establishment that defines economic success as keeping to wages flat for 40 years.  A herd that defines intellectual brilliance as being able to list more details of the conventional wisdom.  It is nothing less than a neoliberal monoculture.

Transcript after the break.

Monday, August 4, 2014

Beyond energy efficiency

As the new realities of affordable renewable energy come online, folks are scrambling to make sense of it all.  I know I am.  Here's the deal.  The prosperity enjoyed by the western nations following WW II was a combination of a lot of factors—the pent-up demand from the war years, a more enlightened economic thinking that was associated with the followers of Keynes, etc.  But by FAR, the biggest factor—at least in USA—was the abundance of cheap energy.  The oil companies were practically giving gasoline away.  I remember "gas wars" where a gallon sold for less than $0.20 (or 19.9 cents as it was priced at the pump).  Even without gas wars, the price rarely exceeded $0.35 before 1970.  And this price included enough taxes to build the interstate highway system.

Because it was so cheap, we learned to flagrantly waste it.  Remember those scenes in American Graffiti where kids just mindlessly drive up and down the streets—screeching tires, hurling insults, honking horns, arranging drag races, and trying to position themselves for some possible sexual stimulation?  Well that isn't exactly how I remember it because I was living in North Dakota during part of my high school years.  Yes we drove up and down the streets trying to get the girls to join our rides.  But our big selling point wasn't how fast our cars were (because the roads were covered in ice and snow anyway) but how good was the heater.  In the winter it was often colder than -30°F (-35°C) so this was no small matter.  We even had a different way to prove our macho.  Someone with a really good heater would load up his car with the unsuspecting in the back seat.  We'd cruise for awhile with the heat cranked up until people started shedding their heavy coats.  Then the driver would go out on the highway and accelerate to at least 60 mph (100 kph) when the cry would go up "Freeze Out" and everyone would roll down the windows.  Amazing how cold it got in just seconds!

Everyone could afford to live so ridiculously because energy was so cheap.  Cheap energy drove design decisions—the most important of which was urban sprawl. Soon energy became a part of everything we bought—especially food.  So when the oil embargo of 1973-74 doubled energy prices, the prosperity brought by cheap energy just went poof.  The Keynesian economists who thought their brilliance was responsible for the global economic miracle, saw many of their presumptions go poof as well.  There are few recorded instances of a profession going from running things to irrelevance is so short a period of time.

It is possible we may soon see such a sea change again.  Cheap solar cells promise an almost infinite supply of cheap energy like back in the 1960s.  Cheap energy changes everything!  For example, say the climate really has changed the water supplies so significantly that California needs a crash program of desalination plants.  Up until now, the cost of energy has made these things available only for specialized needs.  By contrast, if energy gets cheap again, California could build so many desalination plants they could even supply (some) agriculture.

So anyway, here are a couple of essays intended to think deeply about the new energy strategies.  One postulates that such innovations as LED light bulbs will lead to so much demand destruction, utility companies are at risk.  I am pretty sure that while demand for power to run lighting is mathematically certain to dive, there are plenty of other end users to pick up the slack.  This is especially true if we intend to electrify transportation and water purification.  The second essay is an interesting exercise where an academic figures out that California could eventually replace all the power supplied by fossil fuels with renewables.  While this analysis is really interesting and useful, it leaves out the very real problem that there are many things that now require fossil fuels to operate (heavy trucks, farm machinery, airlines, etc.)  Getting all this equipment to run on electricity is going to require an explosion of innovation.

It's a start!

Saturday, August 2, 2014

Heiner Flassbeck—the Fed moves to contain the collapse of 2008

Flassbeck recounts the issues that caused and deepened the financial catastrophe of 2008.  Why doesn't anything challenge the dollar?  Why didn't the Eurozone do a better job of containing the crises? etc.  Flassbeck claims the compared to Germany, the Fed didn't do SUCH a bad job of things.  This may sound counter-intuitive but recall, with Wolfgang Schäuble as their finance minister, it is almost impossible to imagine anyone doing a worse job. And so the Eurozone staggers on with Depression levels of unemployment.


Friday, August 1, 2014

Heiner Flassbeck on the neoliberal race to the bottom

In this episode, Flassbeck describes how the Keynesian post-war economic consensus fell apart in the face of the problems posed by the oil shocks of the 1970s.