IMF and infrastructure investment

The IMF (yes, that IMF) has decided that the nations of the world are grossly underfunding their infrastructure.  Well, isn't that special.  Of course, their "solution" to this obvious problem is "debt-financed infrastructure projects" so a new enlightened day has not dawned in the corridors of IMF.

It is really quite amazing that the organization that is arguably more responsible for canceling or privatizing infrastructure projects (a main goal of any structural adjustment) has decided to promote what it is has so thoroughly destroyed.  But what choice does it have?  Without performing loans, the IMF is just another failed loan shark.  Because of their criminal arrogance over the years, any country who has ever had an IMF loan wanted to get rid of it—first.  So some bright light decided that if IMF wants to grow its loan portfolio again, it should invest in the infrastructure deficit they created with their backwards policies.

We will know the IMF is serious about infrastructure improvement if they start writing paper with 0.75% thirty year maturities.  Otherwise, they are just trying to jump-start their loan-sharking practices.

IEA ups their solar forecasts

The International Energy Agency keeps revising their forecasts for solar energy.  This latest one is a revision from 2010 and it is quite different for one VERY good reason—PV solar got cheap.  Where PV was long so expensive that its adoption entailed public subsidies and political movements, it has now become arguably the low-cost way to get energy.  And because PV is merely a collection system for an energy source that is free, once the capital costs have been incurred, the rest of the costs become essentially fixed.

IEA has discovered that many people have already discovered the economics of PV.  As they put it, "Since 2010, the world has added more PV capacity than in the previous four decades."  Of course, until significant advances are made in electrical storage, living with the intermittence of solar power is still a major cultural adjustment.  Remember, wind is free too but the overwhelming majority of shipping still happens on boats with fossil-fueled engines.  Convenience and reliability make paying for fuels worth doing.  Sailing is a delightful sport but even there, most folks prefer to motor.  Actually living in a home with the operational limitations of a sailboat is probably a non-starter for most (unless solar becomes ridiculously cheap and fuels become prohibitively expensive.)  And that will be the limiting factor—solar will expand so long as folks are not inconvenienced.  Expansion beyond that will require breakthroughs in storage.

(The original article has some interesting charts.  Click on the "more" link to view.)

On protectionism

There is no economic issue that better clarifies the difference between Producers and Predators than "Free Trade."  Because a successful Producer is someone who can turn an idea / invention into something that others will actually want to buy, and because this process is insanely difficult fraught with hundreds of pitfalls, anything that protects infant industry from the economic storms is welcome.  The greatest threat comes from established competitors which explains why emerging industrial economies will employ a whole raft of protectionist measures.  Protectionism is the only way one nation can overtake another in manufacturing excellence.  Every successful emerging economy has been protectionist including USA, Germany, and Japan.

On the other hand, "Free Trade" is a preferred Predator strategy because it removes the protections surrounding successful industries.  Plunder is so much easier under those conditions.  That USA went into sharp industrial decline with the rise in "Free Trade" practices is no coincidence.

Protectionism is not without its problems and when the emerging industries have emerged, some serious consumer abuse can happen behind those protective statutes.  So as the industrial state matures, support for protectionism tends to decline.  And because academia is so far removed from manufacturing, intellectual support for protectionism flat disappears in the worlds of the higher learning (including think tanks, big media, and government bureaucracies.)

The main trouble with "Free Trade" is that the big economic decisions move from the nation-builders to a gang of thieves.  This is a certain recipe for decline.  And the timing could not be worse.  We have lost our ability to build well just at a time when we must replace our old dirty forms of infrastructure with dramatically cleaner and more efficient versions.  If we are ever going to have a green future, we are going to have to rediscover why protectionism was historically the most popular and successful form of economic thought in USA.

Wall Street whistleblowers

There is something almost painfully sweet in the actions of whistleblowers.  It is the belief that if only the public or political leaders knew the truth and realized how blatantly the public interests were being subverted, things would change and a new and better day would dawn.  And yet, whistle blowing almost never actually changes anything.  The most important leak in USA history, the Pentagon Papers, was published on the front pages of the New York Times, was the subject of an important Supreme Court decision, and was debated in thousands of dorm rooms, and yet the real effects of this leak were negligible.  USA foreign policy barely changed and the military responded by tightening up procedures so that it would become harder to question their version of events in the future.

Even so, there is always some good when light is shined into the dark corners of evil.  Because of Carmen Segarra's latest allegations against Goldman Sachs, we will know more details as to how the vampire squid manages to jerk around the elected governments of the world.  That Goldman is little more than a gang of thieves who will stoop to anything to increase their ill-gotten gains has been pretty generally known since at least the 1930s.  But it is always good to read accounts of how they actually pull off their robberies.

Quite honestly, I have no idea how one actually stops something as obviously evil as Goldman Sachs and its like-minded competitors.  But something MUST be done because the damage the Predators can do to the real economy is simply staggering.  And now we are talking about the destruction of the biosphere.  But if finance capitalism is really just an extra-nasty vice like opium dens, the solution is to wall off those activities so the Predators can have their fun so long as they cannot touch the real economy.  And when the real economy actually needs financial services, it must open its own banks, credit unions, and clearing houses.

I would nominate Ms. Segarra to run a major financial institution in the real economy.  Smart and principled are obviously major Producer Class virtues and she seems to have plenty of both.

Arrest climate change deniers?

Those who were old enough to be politically aware in the summer of 1968 might remember one of the battle cries following the police riot during the Chicago Democratic convention, "There is no situation so dire, dangerous, or hopeless that calling the cops won't make it worse.  Much. MUCH. worse!"

Of course, this is not always true but it serves as a sound warning to those people who believe that the solution to any problem is to pass a law and call the cops. Turns out there are a LOT of problems—most of them in fact—that cannot be solved by appeals to force.  And climate change is probably the poster child for such problems.  In this case, outlawing climate change is an error probably best described in the legendary story of King Canute proving to his lackeys that even kings cannot keep the tides from rolling in.

The other half of this quandary is that even people who embrace the science of climate change are painfully short of meaningful solutions.  When it comes to getting something done, it really is a tossup in terms of who retards progress more between the useless academic sludge in the pay of the coal industry who come up with absurd criticisms of climate science or the folks who build giant puppets to parade through the streets of New York.  Pretending that symbolic actions that goofy will ever lead to lower concentrations of CO2 in the atmosphere is just a more dishonest form of denial.

Something to keep in mind while reading this impassioned plea to call the cops on the climate change deniers.  I DO understand this man's frustration and anger, but I would also suggest that arresting the climate change con men as a plan to solve the problem of atmospheric CO2 is just another form of denial.

Wall Street's black lung disease

The main reason why Institutional Analysis works so well is that it is based on a fundamentally sound idea—if you want to predict how a person or group will act, find out how they make their living.  Not surprisingly, teachers tend to act as teachers, farmers like farmers, bankers like bankers, etc.  The reasons are many but essentially they boil down to—on critical issues, most people shape their opinions to align with those who share similar strategies for survival.  It doesn't much matter how you get off, what name you call your god, or what sort of music makes you tap your toes compared to how well your occupational category is doing in the social order.

The reason that most economists think alike is not that they all got beat with the same stupid stick in college, but that they know that if they want to become disgustingly rich, they better parrot the party lines of the moneychangers.  God help you if you accidentally get interested in the economics of labor uplift or the ramifications of environmental action because you will not get those fat six-figure honorariums.

So Institutional Analysis is highly reliable because it is based on sound operating principles.  In theory, everyone should use it often.  In practice, barely anyone has heard of it.  And there is a good reason for this—while it is easy to say teachers act like teachers, etc. actually determining their core beliefs and action agendas is hard work.

Which is why I almost never miss an opportunity to read Michel Lewis.  If you want to know just what sort of person wants to be a financial player and what hoops such folks are willing to jump through, Lewis will tell you.  Even better, he describes the common beliefs of those who have made it into the brotherhood of credit default swaps and LIBOR rigging.  So even though I have never heard Lewis describe what he does as Institutional Analysis, he is one of the better IA experts to have ever walked planet earth.

Do the Rockefellers really get it?

Institutional inertia?  What else could possibly explain why energy companies are not leading the charge out of the fossil-fueled era?

Maybe it's the weather, but here in Minnesota there are substantial numbers of activists on energy issues.  In the 1970s, they organized to keep the local utility from building a third nuclear power plant.  In the end, this action saved the utility billions of dollars.  Later, many of those same activists forced the same utility into get serious about building wind farms.  As a result, some of the best people in the wind business now work for a utility that was dragged, kicking and screaming, into making a serious wind commitment.

In both instances, my reaction to the utility's resistance to accepting advice from outsiders was, "Why the hell should they care how their customers want their electricity generated?"  I mean, they are selling something everyone obviously wants, they form the definitive natural monopoly that has been subject to political / government oversight for decades, and their operating methods affect other interests like the quality of the air and water.  Instead of fighting public input, they should be courting it.  What's their problem?

Of course, I have the same feeling about the big energy companies that provide us with natgas and gasoline.  Why do they think of themselves as fossil fuel companies and not energy companies?  They should be the ones best situated to realize that at some point, they are going have to get into new forms of energy collection and generation.  Yes, I understand that there are significant differences between running an oil refinery and a wind farm.  But the similarities are overwhelming.  Both need massive amounts of real investment, the output of both is sold to the same customers, and both need dedicated professionals to operate reliably and efficiently.  In fact, most of the rest of us would be a whole lot happier if the big energy players were leading the charge into the new age.  I don't know about the rest of you, but I would rather big oil was becoming big solar on its own initiative using their obvious technological, financial, and political clout to get this done without all the mess of their dirty secondary fossil-fuel recovery techniques.

So now we see The Rockefeller Foundation is pledging to divest themselves from fossil fuels and invest in green energy.  All I can say is, "What took you so long?"  I cannot imagine old John D. passing on this opportunity for so many decades.  And now the fund's manager is quoted as saying,

“John D Rockefeller, the founder of Standard Oil, moved America out of whale oil and into petroleum,” Stephen Heintz, president of the Rockefeller Brothers Fund, said, saying that if John D. Rockefeller were alive today, he would invest in clean, renewable energy.

John D. spawned several generations of idiot rich kids.  David, the guy who fancies himself a visionary, was the force behind giving the deposed Shah of Iran refuge in USA in 1979—thereby queering the relationship between USA and Iran ever since.  This is far from the only instance of colossal stupidity by a Rockefeller so to have these primitives make such an enlightened decision is something that would engender hope (if it is a decision that sticks.)  And to back up their decision with such sound, historically-informed, reasoning suggests the family has grown tired of being the target of such global hate.  Now maybe, if they could could insist that the University of Chicago stop teaching such utter pre-industrial rubbish in their economics department, it would be a sign they can even feel shame.

More threats to the Euro

Regular readers know I have zero love for the Euro.  I thought it was a bad idea in 1992 and nothing since then has improved my opinion on this badly-designed effort at monetary giantism.  Of course, the Euro might have worked better if it hadn't been introduced just when the madness of neoliberalism was becoming the standard response to all economic dilemmas.

When the southern European economies crashed following the economic meltdown of 2008, it became quite clear that those with the ability to do so were going to shift the responsibility for paying the unpayable debts of the south to places like Germany, Holland and Finland.  Not surprisingly, there were citizens in these countries who objected to these new arrangements and because these countries are parliamentary democracies, new parties arose to make a stink.  And because these were still comparatively rich countries, the protest parties tended to be economically reactionary.

This phenomenon struck last in Germany—probably because when it came to the Euro experiment, the big establishment players are German.  There is a whole infrastructure of academic economists, editorial writers, and party functionaries whose survival is determined by their loyalty to the Euro experiment and especially its neoliberal manifestations.  So when a serious challenge to the the establishment finally got its act together, it is even MORE reactionary than the banksters running the show (yes, it is possible).

One of the more interesting factoids about the Alternative für Deutschland (AfD) movement is that while it is taking members from some very conservative groupings like the Free Democrats (FDP), it is also gaining votes from die Linke Party whose members who are mostly left-overs from the DDR Marxist ruling classes.  People sometimes forget just how reactionary the Marxists were (are) when the subject was monetary policy—so this is a necessary fresh reminder.

Evans-Pritchard tries to write about the similarities between the Euroskeptic British Ukip Party and the German AfD Party.  As you can see, this is something of a stretch—mostly because Germany uses the Euro and UK does not.  Even so, both movements are undoubtably supported by the petty bankster classes who are appalled by the internationalist tendencies of the EU experiment.

The numbers are staggering

Over the years, I have gotten to know a man who spent part of his life managing the big Minnesota refinery that supplies most of the liquid fuels sold in the state.  He is a quiet and very sensible man who now grows flowers in his retirement.  He is just the sort of person you would want to ensure the smooth day-to-day operations of something so large and intrinsically dangerous.  In spite of his calm demeanor, however, he can get very animated on subjects related to energy.  And the subject that really lights him up is huge size of the job to make sure that there is fuel to pump in the morning when the corner gas station opens.  "People don't seem to understand just how much oil we refine and burn in this country," he says sadly.  But he tries to explain.  "At 20 million barrels per day, we consume roughly 585,000 gallons per minute, or enough to fill an Olympic-sized swimming pool or nearly 65 tanker trucks."

Every minute—24 / 7 / 365.

According to the article below, China now has the capacity to generate 378 Gigawatts of renewable energy.  Sound like a lot and it is twice as much as USA and four times as much as Germany.  Unfortunately, 80% of her electricity still comes from burning coal.  Needless to say, these numbers are simply staggering and proof positive that reducing CO2 is NOT going to be easy.

US elites beginning to realize there's a problem

Sorry, I didn't post this two weeks ago, but, frankly, things have been tough so far this year, and I don't get paid to blog. But these are important reflections of how top elites in USA are thinking, so we just have to get around to noticing and discussing them. There were two important articles in Foreign Affairs, the quarterly journal and associated website run by the Council on Foreign Relations. Yeah, yeah, the Council on Foreign Relations and the Trilaterals and all the tin-foil hat stuff notwithstanding, the simple fact is that some very powerful and very influential people have paid some eye-popping amounts of money to be counted as members of the CFR. And Foreign Affairs has a long, and I would even dare say, proud and enviable, history of publishing important articles that signaled major shifts or developments in USA policies, such as George Kennan's July 1947 X article explaining the new policy of "containment" of the Soviet Union. The first article two weeks ago, "America in Decay," was written by Francis Fukuyama, the neo-conservative economics and political science professor whose 1992 book The End of History and the Last Man provided unceasing thrills and pleasure to USA elites by arguing that the collapse of communism in the Soviet Union and Eastern Europe marked not only America's victory in the Cold War, "but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government." (That's what USA elites want to believe, and they get upset when we the people start showing signs that we're not happy with the new corporatist paradise they've constructed for themselves, and locked us in as their supposedly prosperous and cheerful serfs. That's a big reason why the Democratic Party's support for Occupy was so faltering and feeble.) The gist of Fukuyama's article is that it has turned out that Western liberal democracy is not the end point of human political development, and there seems to be more history in the offing, because it has been replaced by - holy unforeseen development, Batman! - oligarchy and plutocracy. Of course, Fukuyama does not use these words, but the idea is clear enough: his subtitle is "The Sources of Political Dysfunction." His online readers certainly understood, and had no qualms about using the words oligarchy and oligarchs repeatedly.
What Fukuyama does writes, for example:

But Madisonian democracy frequently fails to perform as advertised. Elite insiders typically have superior access to power and information, which they use to protect their interests. Ordinary voters will not get angry at a corrupt politician if they don’t know that money is being stolen in the first place. Cognitive rigidities or beliefs may also prevent social groups from mobilizing in their own interests. For example, in the United States, many working-class voters support candidates promising to lower taxes on the wealthy, despite the fact that such tax cuts will arguably deprive them of important government services.

And here's the important thing, as far as Fukuyama and elites are concerned:

...liberal democracy is almost universally associated with market economies, which tend to produce winners and losers and amplify what James Madison termed the “different and unequal faculties of acquiring property.” This type of economic inequality is not in itself a bad thing, insofar as it stimulates innovation and growth and occurs under conditions of equal access to the economic system. It becomes highly problematic, however, when the economic winners seek to convert their wealth into unequal political influence. They can do so by bribing a legislator or a bureaucrat, that is, on a transactional basis, or, what is more damaging, by changing the institutional rules to favor themselves -- for example, by closing off competition in markets they already dominate, tilting the playing field ever more steeply in their favor.

In other words, the elites have noticed that their asset-bubble blowing economic schemes just aren't providing enough prosperity to keep everybody happy. And unless they can find some way to keep us peasants from resorting to the pitchforks, their wet dream of a democratic market economy as the end point of human history is in danger. But it gets even more interesting, because at the same time, another article appeared in Foreign Affairs, entitled Print Less but Transfer More. This one was written by Mark Blyth, a professor of international political economy at Brown University and author of Austerity: The History of a Dangerous Idea; and Eric Lonergan, a hedge fund manager living in London and the author of - what else? - Money. The gist of their article is pretty well captured by their subtitle - and no, I am not making this up - "Why Central Banks Should Give Money Directly to the People."

...Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality.

Well, it's hard not to like the idea. Trying to stop the financial crash of 2007-2008, the US Treasury and the Federal Reserve gave $12.6 trillion in direct aid to Wall Street and the banks. That's just under $40,000 for every man, woman, and child in the United States. I don't know about you, but if I had $40,000 more in my bank account right now, there would be a lot of life's petty details I could stop worrying about. What would have happened if the Fed had given each of us $40,000 a few years ago, instead of giving $12.6 trillion to the banksters? Hmm, Goldman Sachs and Citi Group and all the other Too Big to Fail or Jail banks would have been flushed down the toilet bowl of financial history, while a few million of us probably would have moved to Canada or Costa Rica. Of course, you will discover, as you read the remainder of the article, that this idea of throwing coins, albeit lots of coins, to the plebes is not really pure, unalloyed munificence.

To reduce the gap between rich and poor, the French economist Thomas Piketty and others have proposed a global tax on wealth. But such a policy would be impractical. There is another way: instead of trying to drag down the top, governments could boost the bottom. Central banks could issue debt and use the proceeds to invest in a global equity index, a bundle of diverse investments with a value that rises and falls with the market, which they could hold in sovereign wealth funds. The Bank of England, the European Central Bank, and the Federal Reserve already own assets in excess of 20 percent of their countries’ GDPs, so there is no reason why they could not invest those assets in global equities on behalf of their citizens. After around 15 years, the funds could distribute their equity holdings to the lowest-earning 80 percent of taxpayers.

Well, of course! We dare not even think of dragging down the top! Then note what a nice little scheme they propose: the central banks are not really going to mail you or me a check for $40,000 or whatever sum (which I'm sure will be much less than $40,000), but they're going to "invest ... assets in global equities" supposedly "on behalf of their citizens." I'm sure there are plenty of stock brokers and traders whose hearts are all a'flutter at the idea that the central banks of the world are about to start handing them trillions of dollars that are supposed to be invested "on behalf of their citizens." After a decade and a half, more or less, then these "equity holdings" could be distributed. The problem, of course, is the same as privatizing Social Security: there's every likelihood that most of "your" money is going to be gobbled up by management fees and commissions, if not lost to outright fraud and cheating. And then, what are people going to do with that money? Do they actually buy a new car or repair their house? Some will, of course. But how many will immediately book a flight to Vegas, or hustle down to the local convenience store and by arms full of lottery tickets? And even if we could somehow ensure that the money handed out by central banks to citizens was actually used in economically useful and productive ways, there's this big problem the US economy has, called "imports." We don't make our own shoes or our own clothes, or our own furniture anymore. Hell, even when you buy a car that is supposedly "American-made" nearly half its content components have actually been imported. So, much of the economic boost imparted by the "central bank to lowly citizen" transfer scheme is going to be felt by China and Vietnam and whatever other cheap labor hell-hole USA corporate management has found to rip-off and exploit. And why do the central banks have to issue debt to do this? Why not just create money out of thin air? That's what central banks do. That's what they're supposed to do. That's pretty much where much of the $12.6 trillion came from. This is why any talk about how we need to return to Keynes and Keynesianism makes me start to pull my hair out. While Keynes' idea that government has to step in to take up the slack in aggregate demand during a depression or recession is mostly correct, the fact is, other people had the idea before him. Most notably the Mormon banker Marriner Eccles, who Franklin Roosevelt appointed as chairman of the Federal Reserve system.

But the really bad thing about Keynes is that he does not argue that the programs and projects the government funds must contribute to the general welfare. We do NOT want to simply hire people to dig holes and fill them back up again. Nor do we want to just hand everybody 40,000 bucks and wish them luck at the slots or lottery machines. Keynes does not understand or appreciate the importance of republicanism as an organizing principle of political economy. So far as Keynes is concerned, it does not matter whether or not the American Revolution ever occurred. (Much the same critique is applicable to Adam Smith, also). For Keynes, a country ruled by the people, has no intrinsic value over a country ruled by oligarchs. But there are profound implications for economic policy making here: Are you trying to sustain, uplift, and better a country of citizens? Or are you trying to buy off and placate a rabble?

This failure of Keynes is a reflection of his being a British economist, and his natural inclination to oppose and/or ignore the nineteenth century American System of political economy, in which the general welfare is the standard by which economic policies and results are measured. Thus it was that in the 1960s and 1970s, the economists running things failed utterly to discern and oppose the huge flows of dirty money from organized crime that funded the mergers and acquisitions and leverage buy out booms. This was the beginning of the dismantling and looting of the US industrial base. Perhaps even more dangerous, this was this beginning of the process by which USA elites began to acquire and internalize the thinking and morals of criminals and petty tyrants. What happens when a formerly clean, legitimate company making, say, seat belt buckles, is bought out by new owners whose source of wealth was narcotics trafficking, illegal gambling, prostitution, and even arms smuggling? What happens when 10,000 or 20,000 companies a year are bought out by dirty money, year after year, after year? And here's another thing Keynesians blew in the 1960s and 1970s: They never understood and comprehended the technological development of a new industrial and transportation base over the previous half century, and what it all meant. From the beginning of the 1900s to the 1950s, the US economy accomplished an amazing shift from animal power, water power, and steam power, to burning fossil fuels and using internal combustion engines and electricity. Keynesians simply accepted these developments as a given, and never tried to understand them as one specific epoch in the industrial and economic development of humanity. They never attempted to ask some important questions: How long will this technological shift last? What could possibly disrupt this technological mode? What new science and technologies are coming along that might possibly offer better alternatives to burning fossil fuels and using internal combustion engines? Are there frontiers of science and technology that can be effectively promoted and encouraged? You see, true leadership in a republic - statecraft, if you will - demands that political leaders be familiar with the cutting edges of science and technology, so as to be able to steer economic development in such a way as to assure society does not bump up against environmental and resource limitations (the limitations which Jared Diamond explains so well in his book Collapse). Part of the cutting edges of science and technology are always the attempts to identify and demarcate the environmental and resource limitations in which society's economy must operate. In other words, Keynesians were totally unprepared to deal with the 1970s oil shocks specifically, and peak oil generally.

Which brings us back to the articles in Foreign Affairs. Last week, Jon Larson had a blog post on his website showing how poorly insulation was installed in his Minnesota house when it was built in the 1950s, and mentioning that correcting the installation and bring the house up to the highest efficiency standards would cost about $40,000. (Hmm, where have we seen that number before?)

There are 85 million single family homes in the US, and just over 30 million apartment and condo units. $40,000 multiplied by 115 million is $4.6 trillion. Sounds like a lot of money? That is just one third of what the Treasury and the Federal Reserve used to save the useless predators of Wall Street and the banking system over the past six years - and what have we got to show for that?

The Scandinavians build houses that are so well engineered and so carefully constructed that they are beyond efficient. A new Scandinavian house can keep its occupants warm from just their body heat and the heat thrown off by a pc, a few appliances, and the light bulbs in use. That's pretty damn impressive, for being only a couple hundred miles from the Arctic Circle. But they don't build such structures using the cheapest labor they can illegally import. As Larson points out:

There are reasons for shoddy insulation. Installing it can be very unpleasant. The job is usually given to the lowest guy on the totem pole. It becomes just another task to finish as quickly as possible. Worse, [USA] architects take 50 times as much time selecting the bathroom tile than designing insulation systems and rarely design sufficient space for them.

And let's be truthful here - if you were to actually make your house as efficient as possible, meeting the highest USA standards, you would have accomplished more to reduce your carbon footprint than attending a dozen marches demanding action from our corporatist overlords. What are people demanding now to stop global climate change? Cap and trade? Carbon offsets? How about a $4.6 trillion program over the next five or ten years to radically rebuild and upgrade every single damn house and apartment building in America? I want to end by pointing back to something Ian Welsh wrote back in late March:

Political decisions are important: in 1929 Hoover, the Fed, and later FDR did not bail out the rich. They were allowed to lose their money, and thus much of their power. That was a decision: another decision could have been made, and in 2008 it was made: the rich were bailed out. It was made differently in 2008 because the rich have spent the last 80 odd years obsessing over what went wrong in 1929 that allowed FDR, the New Deal and everything which flowed from it. Ben Bernanke’s entire career was “how do we make sure the rich don’t lose their money so that FDR doesn’t happen.” He was chosen to be the Fed Chairman precisely to ensure that the next Great Crash, which everyone who wasn’t an idiot knew was coming, wouldn’t wipe out the rich.

Make no mistake: the articles in Foreign Affairs are clear signs that USA elites are starting to worry that more and more of us are beginning to demand solutions that will, inevitably, have to either take away the wealth of the rich, or take away the power of the rich to create and allocate new money and credit.

The march to save the planet

There is something about this big march to save the planet from the baleful effects of climate change that is unbearably sad.  It isn't that there is nothing people should do about such an obvious impending catastrophe.  It isn't that there isn't a place for people to demand more action from their political leaders.  It's that climate change is a very grownup problem and marching aimlessly around the streets of New York is akin to a bunch of toddlers crying "mommy, make it better."

One person informed me that the great outcome of this effort would be if the UN passed a "meaningful" resolution opposing climate change.  I resisted the temptation to suggest he ask the Palestinians about the effectiveness and usefulness of "meaningful" UN resolutions.  I did ask him how the already existing UN efforts to confront climate change were doing when it comes to CO2 build-up in the atmosphere.  Useless sputtering ensued.

The BIG problem is that anyone who thinks that marches will solve a dilemma like climate change has no grasp whatsoever on either the nature or seriousness of the problem.  Pointing to scientific studies that determine CO2 concentrations in the atmosphere are rising or watching animals die because their habitat has been permanently altered is NOT, by itself, taking the problem seriously.  After all, we are in this mess because after at least 10,000 years of effort, humanity has figured out a technological infrastructure that makes our very survival possible.  Yes there is a lot of waste in the system but even if we eliminated all the frivolous uses for fire, we would still have a big-time problem.

Because marching against climate change is fundamentally absurd, the true believers have already fallen into bizarre forms of bickering over which symbolic gesture will be more effective.  Unfortunately, the real answer is "none of the above."  Only clever design and LOTS of hard work will make even a dent in a problem this size and complexity.  Of course, whenever any prescription mentions hard work, the Leisure Classes are horrified and poof—there would go your largest march in history.

Nevertheless, there have been some interesting developments in the run up to this event.  Probably the most fascinating is the response to Naomi Klein's "horrifying error" in suggesting the climate change deniers may have a better grasp on the problem than the Liberals / Progressives who claim such concern for the environment.  She committed her sin on Democracy Now—a show so politically correct it borders on self-parody.  Well watch it yourself.  She claims that organizations like the Heartland Institute START with the premise that doing anything meaningful about climate change means that many existing businesses from coal mining to the airlines will have to reinvent themselves at great cost and effort or go out of business.  Since they would rather keep doing what they know, they find it cheaper to hire a bunch of charlatans to call the climate change evidence into question.  And while Klein is understandably horrified that such things occur, she seems to find it refreshing that at least SOMEONE is taking the climate question seriously—even if they are the bad guys.  Because goodness knows, the Liberal / Progressive community is still at the "mommy, make it better" stage.

Naomi Klein On Why The Climate Change Deniers Are Right

German infrastructure

Just when I am certain that I can no longer be shocked at the damage caused to the real economy by the neoliberals, another example emerges.  Today, we encounter a piece from Der Spiegel about the sorry state of German infrastructure.  As someone who has watched in horror as this economic madness reduced UK to a pathetic pre-industrial has-been, tore the heart and soul out of USA aerospace, and reduced the American Midwest to crumbling ruins—among many other disasters, I should not be surprised that Germany has now at least partially succumbed to the slumlord mentality of the neoliberals enough so that her world-class infrastructure is now showing noticeable rot.

Yes Germany!  And if this is happening to Germany (and there is absolutely zero reason to doubt that it is) we may safely assume that everyone else's infrastructure is failing.  This is a tragedy on so many levels one barely knows where to start.  By my vote goes for the fact that infrastructure is quite literally, the highest manifestation of a civilization.  And if we don't get these essential building blocks of civilization right, we will literally destroy the planet.

Neither Germany's nor anyone else's infrastructure will improve until we discredit and destroy the slumlord's economic philosophy—root and branch.  It's just too damn dangerous and destructive.  Nothing can be fixed so long as the economy is run by plunderers who wake up every morning determined to launch yet another get-rich-quick scheme that is certain to do even greater damage to the real economy.

Neoliberalism and the Scottish vote

Well, that was disappointing.  The Scots were handed a golden opportunity to strike a clear blow against neoliberalism and chose to pass.  Oh well, someone will do it.  Neoliberalism is a nasty, proven, notorious failure and it simply cannot hang on forever.  But damn!

From my own perspective, I can see so many possibilities for human improvement and social betterment if we only got that nasty philosophy out of the way.  But then, I spent over 30 years of my life studying how the American Progressives organized their better alternatives.  I look at today's problems and wonder why we just don't haul out the programs of the Non-partisan League, the Greenback Party, or the Knights of Labor, etc.  I watch as someone like Ellen Brown try to explain all the benefits of publically-owned banks.  We COULD fix our problems—we wouldn't even have to re-invent the solutions.

Unfortunately, most people have NO idea that politics could ever be so constructive.  They don't know their history.  And what they think they know is mostly wrong.  For example, symbolic gestures and identity politics is not, nor has ever been, a solution for something so monstrous as neoliberalism.

The press and the Scottish independence vote

Now that we Dish subscribers can easily see what the BBC has on its mind 24/7, it is sometimes easy to conclude that their political perspective is essentially a politically-correct, oxbridge-accented version of Fox news.  The class bias is astounding and the arrogance breath-taking.  Deep down inside, there still beats the heart of the Empire.  Cecil Rhodes would be so very proud.

So as we close in on the Scottish vote for independence and tempers are getting a little raw, we see the BBC coverage of events becoming one of the issues—as well it should be.  After all, it doesn't take a lot of insight to see that for the BBC, a Yes vote is quite literally, unthinkable.  It would be an expression of the crudest form of pre-civilized behavior.  What could possibly be wrong with anyone who would even consider leaving the UK?

Not surprisingly, that attitude has not gone over well with the nationalists and they have resorted to forms of personalized protest.  So now the voice of the British Empire screams "intimidation."  The louts who would vote for independence are really just bad-mannered, you see.  You simply cannot call a journalist a "liar" even when in fact he is one—it's simply not done.

Note to the British upper classes (and upper class wanna-bees): This Leisure Class strategy is getting really old.  Complex manners made for and enforced by the idle rich are nothing more than cultural imperialism.  Yes, you folks will keep that one handy because it is still remarkably effective.  But not so many people are fooled anymore.  BBC—meet the Internet.  Lots of people out there who detest your arrogance and they now have alternative sources of information.  A Yes vote in Scotland would be many things including a repudiation of the Empire's voice.  Couldn't happen to a nicer bunch!

China and climate change

There is something perverse about looking at China during any climate change debate and declaring, "It's your fault!"  After all, the VAST majority of excess CO2 in the atmosphere was put there by Europe and USA and now when China decides that it wants a few light bulbs and a TV set in the home of the average Chinese family, we are supposed to forget that.

Well it is complicated.  While it is undeniably true that virtually all of the existing greenhouse gasses can legitimately be labeled "Made in USA or Europe," China's recent contributions threaten to push the problem from extremely serious to catastrophic.  What is especially tragic about this situation is that so much of China's infrastructure is brand new.  She had a golden opportunity to do things differently and better.  She could have built those sleek new cities powered by the very latest in green technologies.  She could have become a global leader in sustainable development.  But Nooooo!  China became the world's leader in building new coal-fired electrical generating plants.

In some ways, it is pretty easy to understand why China chose a coal-fired building binge.  This technology is mature, reliable, and cost effective.  Green technologies are only starting to become that way.  When China chose coal, she knew what she was buying.  Unfortunately, she was also buying some of the most polluted cities in history.

China is also the world's largest producer of solar panels so it's not like she was totally asleep.  If she were to figure out how to create a truly solar society, she would determine the course of human development for at least a century.  In the meantime, it behooves those of us who live in USA to clean up our own act.  No matter what China does, climate change is still largely a problem of our own making.

Take dynamite and a crane

This Sunday, when all the "important" people of the climate change movement will be singin' songs and carryin' signs through the streets of New York trying to convince the UN that it should take meaningful action on the problem of a warming planet, I will be home trying to fix a serious problem in our house that has contributed to atmospheric CO2 since it was completed in 1958.

Recently, I had the occasion to pull off the plaster in a bathroom only to discover that the insulation did not fill the available cavities and even worse, the biggest gaps were at the top where the heat is trying hardest to escape.  Keep in mind that I live in Minnesota where outdoor temperatures reach at least -30°F a couple of times a winter.  The ONLY way to stay warm in a house with such a crappy insulation package is to run the furnace at full output and hope that that is enough.  If natgas weren't so cheap, no one could afford to be that stupid / careless.



My absolute favorite example of shoddy workmanship is in the cavity to the right of the window.  The insulation batt had to narrowed so it lost one side of the attachment mechanism.  So the installer just held it in place with a roofing nail.  Then, because the top row of the exterior sheathing had been skipped, the batt just flopped out into the overhang cavity. (to see the captions, click on picture to see full size)



With all the insulation removed, it becomes clear that the gap in the exterior sheathing continues to run all the way around the house.  This means that in the majority of places where the wall meets the ceiling, the only barrier between the inside and outside is the layer of plaster.



Lot of lessons to be learned from this example:

• This example is far from rare.  In fact, when Xcel sends the energy bills, it ranks our house against others in the neighborhood and we are usually in the top 25% for energy efficiency.  Look at this mess and wrap your mind around the fact that 3/4 of the housing in the area is WORSE.
• Problems like ours do NOT have simple solutions.  Correcting our mess requires far more than drilling a few holes and pumping some expanding foam into the cavity.  If this problem is solved from the inside, it requires that all the plaster and interior trim must be removed.  If solved from the exterior, all the siding must be removed / replaced and the whole moisture barrier / infiltration control system must be re-engineered.
• There are reasons for shoddy insulation.  Installing it can be very unpleasant.  The job is usually given to the lowest guy on the totem pole.  It becomes just another task to finish as quickly as possible.  Worse, architects take 50 times as much time selecting the bathroom tile than designing insulation systems and rarely design sufficient space for them.

My brother, who used to inspect homes for energy consumption in central Florida, once claimed that 80% of all existing housing should be replaced because there is simply no way to fix their problems without spending WAY more than can ever be justified.  And anyone who actually believes that energy consumption for housing can be meaningfully reduced using unskilled labor toting caulk guns is hopelessly delusional.

Now if real estate were priced rationally, the case for repair / replacement would be stronger.  For example, our house cost about $15,000 new in 1958 and 56 years later, wear and tear should have reduced the market price to about $1500.  At that point, a $40,000 insulation upgrade would be doable.

Fortunately, the majority of the costs of a serious insulation upgrade are in the design and skilled installation areas.  The insulation itself is pretty cheap.  So any homeowner willing to spend the effort necessary to upgrade their skill sets can do this.  So economically, it CAN be done.

Now for the sake of the planet, we can only hope that the Instincts of Workmanship are more widespread than at first glance.  And so to our friends who think that carbon emissions can be reduced by marching in the streets, please go home and learn to do something useful.

Scottish independence vote—what's the point?

The Predator Classes are nothing if not cunning.  All over the world there are people who want to somehow escape the predations of neoliberalism and so far, all exits have been blocked.  Scottish independence has a bunch of issues—most of them sentimental.  But ultimately, this big effort is about who controls Scottish resources—especially their oil.

So guess what?  The "approved" leader of the independence movement has already promised not to abandon the Pound as their currency and wants to continue to stay in the EU—which pretty much means that this independence vote will be ONLY about those sentimental reasons.  So Scotland does not look like an escape from the neoliberal hegemony.

But the attempts at escape are getting more brazen.  In fact, there are serious thinkers who believe the irrational Putin / Russia bashing is being organized to keep him from organizing the jailbreak.  The neoliberal thugs have reason to believe that Putin may be their most dangerous opponent.  Not only did he stop the big neoliberal plunder of Yeltsin's Russia, he actually threw one of their superstars (Mikhail Khodorkovsky) in jail.  Personally, I am not sure the neoliberals have all that much to worry about.  If RT is any indication, there are plenty of neoliberals in Russia with big policy jobs.

So while a "Yes" victory in Scotland will not make much difference to the economy, is will be yet another notification that the neoliberal monopoly on power is opposed by ever greater numbers of citizens.  After all, the "No" vote was supposed to be a slam dunk.

The real costs of economic sanctions (revisited)

Easily the most amazing thing about the sanctions fight over the Ukraine is how pathetically easy it is to get governments to inflict damage on their own citizens over fights that barely affect them.  I mean how exactly do Italian farmers figure into the fight over whether the government in Ukraine is sufficiently neoliberal?  What have they done to suffer the destruction of a year's worth of hard work?

Perhaps that is the ultimate measure of Leisure Class effectiveness—how much suffering can they inflict on innocent bystanders for their own amusement.  These are truly sick people—they cannot create anything so they destroy the creativity of others.  They even enjoy destroying the creation we call nature.

The question becomes, what exactly do the rest of us do about their waste and destructiveness?  Like most of you, I have feelings of wanting to swing those pigs from the lamp posts.  But there are two problems with that—the Leisure Classes maintain their position in the social order by being very good at lying, cheating, and killing people, and even if you could organize a revolution to displace them, how exactly would your new regime differ the one you removed?

In my mind, the only solution is to culturally shun the Leisure Classes.  Since they are at their best when organizing displays that attract attention to themselves, actually ignoring these loudmouths is really difficult.  But ask yourselves, is shunning destructive barbarians really harder than winning a revolution?

Some serious thoughts on the coal debate

The following is a very thoughtful piece on coal—written by a Montanan.  There are major coal deposits in Montana—most of it exactly the kind preferred by electrical utilities.  It is a state that has long based much of its economy on resource extraction and is linked to the rest of the country by major rail links.  The coal seams are easily accessible and mining operations are extremely efficient using huge machines.

So while one could logically assume that the coal interests of states like West Virginia and Kentucky would dominate any debate over the future of coal burning in USA, ground zero for the debate is in places like Montana and Wyoming.  So it is gratifying that there are some Montanans who understand that neither they nor the rest of humanity can continue to burn coal.

Unfortunately, these decisions are probably out of the hands of the locals who actually understand more clearly the costs of coal burning.  China has a bunch of brand-new coal burning electrical power plants, they hold a lot of USA debt, and can probably afford  to pay whatever those good folks out west are going to charge.  So even IF Montana, the West, or anyone else objects, there is still going to be serious pressure to mine western coal.  Same coal will be sent into the same atmosphere—only at a different location.

Carbon loading of the atmosphere gets worse

Of course CO2 emissions are up.  We are still building coal-fired electrical generating facilities, for goodness sakes.  If ever a change in technology was so necessary and obvious as the complete halt to making electricity by burning coal, it would be difficult to imagine what it would be.  And yet, we cannot even pull this one off.

So the UN releases another report that measures the climate catastrophe in greater detail.  While I tend to pay attention to such things, I am getting to the stage where I want to scream "All right, I get it.  I can see the evidence of climate change every time I walk out the door.  Pointing out that we have a problem one more time will probably not educate the slow ones anyway.  Let's move on!"

The problem with moving on is that the people who are most successful at highlighting the climate problem are not very good at solutions.  On SEP 21, we are going to see what is being advertised as the largest global demonstration against climate change ever.  Actual smart people are lending their good names to this enterprise—even though its damn hard to imagine how such marches differ in any meaningful way from praying.  When church is over, the work is still waiting.

Solutions are hard.  Alternatives are even harder—especially when there are millions of man-hours of distilled expertise in turning coal into electricity, the tools are paid for, while governments and customers mostly understand what they are getting.  Selling a credible alternative to business-as-usual has always been difficult and with climate change, it must be done twice—first to create a new technostructure and then to resurrect the Producer Class economics necessary to pay the bills.  Both are insanely difficult.  In fact, the only reason to believe it can be done is that it has been done before.

Will Scotland choose independence?

The predictions for how Scotland will vote on independence are currently very close.  On one hand, it is almost impossible to believe that the Scots wouldn't be thrilled to leave the UK—especially after all the damage Thatcher caused them.  On the other, the institutional inertia after 307 years of being part of UK is pretty damn hard to overcome.

Economically, the case for independence is also something of a wash.  While it certainly seems that any way that folks can distance themselves from the megacrooks in London's City would be worth trying.  But the question still remains, "Can anyone really escape the baleful effects of those crooks without leaving planet earth?"

As someone who lives in USA, I am especially sensitive to the retarding effects a reactionary south has on the possibilities for development.  They are a drag on awareness, culture, education, economics, and politics.  Without the South, Minnesota would be much more like Canada or Scandinavia in countless ways.  Instead we are saddled with a national government of true knuckle-draggers like Ted Cruz, Mitch McConnell, Newt Gingrich, Bubba Clinton, and Jimmeh Carter—to name but a few of them.  So my sentiments are with the Scots who actually have an opportunity to hack loose the drag of their reactionary south.  Independence may not change a whole lot, but not having to take seriously or pay for disgusting twits like David Cameron or the royals has to be worth something.

Right?

On neoliberalism

The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.
John Kenneth Galbraith

Neoliberalism is easily the most serious subject on the planet.  In the name of this belief set, the ecosphere has been almost terminally damaged, billions of people have had their lives shortened, their social relationships destroyed, their means of gainful employment shattered, and the very concept of having a life worth living reduced to a hideous joke.  It is believed by religious leaders, editorial writers, academics, and most certainly by the tote-baggers.

We are told that this ugliness is actually a science.  It is not.  It is perhaps the most thoroughly discredited con job in the history of the human species.  There are tried and true methods of managing an economy that are proven to have much higher levels of generalized prosperity.  Compared to the insanity of neoliberalism, WW I was an exercise in deeply rational thought.

Neoliberalism — a self-serving con

31 August, 2014

If neoliberalism were anything other than a self-serving con, whose gurus and think tanks were financed from the beginning by some of the richest people on earth … its apostles would have demanded, as a precondition for a society based on merit, that no one should start life with the unfair advantage of inherited wealth or economically-determined education. But they never believed in their own doctrine. Enterprise, as a result, quickly gave way to rent.

All this is ignored, and success or failure in the market economy are ascribed solely to the efforts of the individual. The rich are the new righteous, the poor are the new deviants, who have failed both economically and morally, and are now classified as social parasites.

The market was meant to emancipate us, offering autonomy and freedom. Instead it has delivered atomisation and loneliness. The workplace has been overwhelmed by a mad, Kafka-esque infrastructure of assessments, monitoring, measuring, surveillance and audits, centrally directed and rigidly planned, whose purpose is to reward the winners and punish the losers. It destroys autonomy, enterprise, innovation and loyalty and breeds frustration, envy and fear.  George Monbiot  more

The end to sanctions against Russia?

If you don't think that ideas are important, consider this: current president of the European Commission, José Manual Barrasso was a Maoist in his youth.  He's still just as doctrinaire, but now he is a loyal neoliberal.  And so is most anyone who has an important job in the EU.  And then there is a matter of those scary-smart educated elites that seem to lie thick on the ground throughout Europe.  The most vivid memory I have from my 1970 summer in Europe was that for the first time I could remember, I wasn't the smartest guy in the room—not. even. close!  I remember one night in Berlin when some guy I had just met went off on a geopolitical rant, in English, late at night with alcohol and hash mixed in, that was at least 10 times better than anything I had ever heard even (especially?) in formal university settings.  So how do people who went to great trouble to become as radical as possible in their youth, wind up as these clueless little neoliberal droids?  How do people who have had the benefit of elite educations aimed at the top 2-5% of the population wind up being conned by an idea set that has been so thoroughly discredited as the neoliberal descendant of classical economics?

The EU is now in its sixth year of an easily preventable economic depression because they want to believe crackpot ideas will work.  Force does not keep the herd in line.  Obviously neoliberalism does not win the day because of its towering brilliance.  No, the reason that neoliberalism wins in Europe is simple, old-fashioned status emulation.  The problem is universal but it affects the smaller countries the most.  When they are asked to join the EU, its like WAY better than being asked to join an exclusive country club.  And if all the rich and cool folks believe that neoliberalism is the only way to think, why then they will too even if there is a voice inside calling out, "this shit is crazy!"

So now, in addition to the lunacy of neoliberalism, we see the EU go off to commit economic suicide in the name of sanctions against Russia—the provider of their energy and a VERY important trading partner.  And over what?—the question of whether or not Victoria Nuland's engineered putsch will be allowed to stand?

In the meantime, while this 19th century geopolitical chess plunges forward, the people who could actually do something about it are distracted from some really serious problems like climate change.  Interestingly, one of the countries speaking out against the stupid EU sanction proposals are the Finns.  And why not?  Without a prosperous Russia on its border, Finland literally dies.  With the disaster at Nokia, Finland cannot afford any more major economic problems these days.  Unfortunately, Finland does not see the problems of neoliberalism quite so clearly—one of her most famous politicians, Olli Rehn, is such a doctrinaire neoliberal he is best thought of as a neoliberal "moonie."

"Limits to growth"—groundbreaking book plus 40 years

A university professor assigned Limits to Growth in 1973 and so I read it.  I was impressed—so much so that I barely listened to the criticisms of it or the Club of Rome that commissioned it.  And wow! did the criticism get heated.  The Club of Rome was deemed elitist and probably fascist.  The idea that growth had limits was considered anti-poor and pessimistic.  But the big sin was that Limits was a major shock to the belief systems that postulated that "positive thinking" was necessary for positive outcomes.  In that world, claiming that growth had limits was a sin akin to suggesting that suicide was a good thing.

But unfortunately, continuous growth within a finite biosphere is flatly impossible.  Knowing this is not pessimism.  Rather it is to acknowledge a reality one would assume would be understood by any sentient being.  When I wrote Elegant Technology, my biggest problem was how to finesse the limits of growth.  Growth was necessary or we would damn billions to grinding, hopeless poverty.  Further, there was no way we could stay at the current stage of industrialization so it was clear we needed a whole pantheon of new ideas and rapid growth in the systems that could produce those better solutions.  So my proposal was to limit growth in those things that were obviously finite (clean air, fresh water, sweet crude oil, fertile topsoils) while concentrating growth in environmentally net-zero impact solutions.

So was it really necessary to take seriously a book that was being damned from editorial pages to pulpits?  Should have I altered Elegant Technology to reflect the conclusions of this work with such an iffy reputation?  Well, I am glad I did because some Australian researchers have recently checked out the Meadows' predictions in Limits to Growth after four decades and have essentially given them an A++ for foresight.  Once again, the evidence has shown that math works.

So can there be growth in a finite biosphere?  Yes!  But only growth that begins with the proposition that the biosphere IS finite.

Autumn is coming—projects must be finished

This summer, we are trying to fix a persistent, ongoing leak to the bathroom (we knew there was a problem when we bought the house—we did not know how bad it would be).  Also, widen the door for the coming age of walkers, build a new insulation package, install new wall and floor coverings, etc.

I am getting a little old for such projects but Producers will be Producers, I guess.  Might miss a few posts in the next couple of weeks because this rehab takes a bunch of energy.

Pictures below
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Roberts on Ukraine

This blog is supposed to be about the bits and pieces necessary for a green sustainable future, and the economic thinking that will allow this future to be built.  So, I actually try to avoid discussions of war and geopolitical maneuvering because compared to the threats posed by the end of the Age of Petroleum and climate change, most wars are trivial events fought for trivial reasons (of course, they are not trivial for those whose lives are devastated by the death and destruction.)  But with the battle over Ukraine, I find myself distracted by gunfire and intrigue.

My rationalizations for getting off topic include:

• The battles in Ukraine are merely a sideshow over the big fight over how oil will be priced.  Oil is still the prize but the even bigger prize is to own the methods for increasing the supply of money that oil is priced in.  The shootdown of MH17 happened exactly one day after the big BRICS agreement was signed.  I believe it was a warning just how far folks were willing to go to prevent the end of oil dollarization.
• There is a cultural angle to this I find utterly fascinating.  As someone who grew up around religious pacifists, I keep watching to see how Putin is responding to some pretty serious provocations.  I am reasonably certain I could find a good Mennonite from my youth who would declare Putin a "man of peace."  There was an announcement a few years back the Putin had gotten religion and it is true that every shirtless photo of him since then has shown his baptismal cross nestled between his pecs.  If he is an example of how good Russian Orthodox Christians behave under provocation, I am impressed.
• After the insanities of Marx and neoliberalism, Russia has a chance to get it right economically for the first time in her history.  In fact, the sanctions of the neoliberal West may be forcing her in that direction.  I only hope that somewhere in her vast academic institutions, Russia has at least a few good Institutionalists who understand the difference between Industrial and Financial Capitalism.  If those ideas get out and spread, Russia could be in for a blossoming of prosperity not seen since Wirtschaftswunder in Germany.
• I am furious that at 65 someone is still trying to sell me cheap lies.  USA spends, by her own admission, $5 billion to destabilize Ukraine and then has the temerity to blame this crises on Russia and Putin.  Worse, I live in a country still so culturally shell-shocked by the lies of the Cold War that there are significant numbers of people who believe this horseshit.

Anyway, it is good to see that Paul Craig Roberts is just as furious about the USA shocking treatment of Ukraine as I am.  Oh, and here's to the cease-fire holding and not be just a reason to reload.

Does the WEF actually approve of import substitution?

Those who believe (like me) that people who design and build things are much more interesting—and prosperous—than those drones who merely shop, must be a little startled to discover that such a neoliberal free-trade organization as the WEF agrees with us.

The Liesure Classes might define reality in real and meaningful ways with their depressions and wars, but at the end of the day, serious countries are defined by their Producer Class accomplishments.  If you can build the very difficult, very well, folks tend to notice.  The Soviet Union might have built some really crappy cars, but they were seriously world-class in aerospace, sub manufacture, etc.  Not only were the citizens of the SU proud of their accomplishments, it was something that impressed outsiders.

Then the neoliberals showed up during the Yeltsin years and de-industrialized Russia—turning it into a Leisure Class paradise where conspicuous consumption paid for by oil exports replaced pride in accomplishment.  My guess is that not a few Russians miss the feeling of being world-class.  And probably more are furious that some cheap thugs in the world's banking centers are actually able to threaten them because they have forgotten how to make the necessities of life.

Institutional analysis would suggest that the Producer perspective is being heard these days in the halls of the Kremlin.  The sanctions from USA / EU have highlighted just what Russia should do to insulate themselves from the bullying of Leisure Class thugs.  And the first act is to go backing to making the basics—to stop importing things that can easily be made in Volgograd.

What is absolutely certain is that if Russia does embark on a serious program of import substitution, they will have a very different economy in a few years.  Could they become South Korea with an oil industry?  That's a tall order but in theory, it could be possible.

Shay's Rebellion and the wars on Producers

One of my favorite examples of the real differences between Producers and Predators concerns Shay's Rebellion.  While it is true that USA would become one of the more hospitable places for Producers, it is also true that the folks who knew how to rip off the peasants were also very well represented in all their forms.

The American Revolution was largely fought by farmers.  It could hardly have been otherwise as the majority of the males in colonial North America practiced some form of agriculture—including much of the leadership of the revolt like Washington, Jefferson, and John Adams.  But while Washington and Jefferson were slave-owning plantation owners who were deeply interested in the emerging applications of Enlightenment sciences to agriculture and rarely touched the tools of their enterprises, Adams was an small-sized owner-operator who had a life much more consistent with the farmers who marched to the beat of the Revolution.

Not surprisingly then, the farmers of Massachusetts thought the Revolution was about them.  But soon they discovered that it wasn't enough to have fought the Revolution, now they were supposed to pay for the damn thing.  And the guys getting rich were folks who had barely lifted a finger for the cause.  Now typically, farmers will just roll over and suffer but these guys were different—they had had military training.  Suddenly, Massachusetts had a genuine peasant's revolt on their hands.  The Predator Classes were quick and ruthless in putting down such a revolt what with at least 5000 years of experience with such matters.  Nevertheless, the tale of Shay's Rebellion lives on because their demands were perfectly legitimate.

It also lives on as yet another cautionary tale of what most revolutionaries actually think about the Producers, no matter how big their lies about their concerns for the conditions of the peasants.  Hell, in Russia the Bolsheviks didn't even bother to wait until their Revolution was over to start shitting on their peasants.  The real peasant party, the Social Revolutionaries (SR) was one of the first to be purged from the revolutionary government.  The Bolsheviks would go on to commits atrocities against their agricultural classes including starvation of millions of them during Stalin's Reign of Terror followed by collectivization of agriculture into mega-farms run by political hacks like Nikita Khrushchev.

Has Germany gone berserk?

I have been more or less counting on Germany to do the right thing with the crises in Ukraine.  After all, she has absolutely nothing to gain and a whole lot to lose by engaging in economic warfare with Russia.  Yet on Monday, President Gauck went off and visited cloud-cuckoo-land when he claimed that Russian actions in Ukraine means that RUSSIA has effectively severed its partnership with Europe.  Seriously??

• The Ukrainian forces in the east who are indiscriminately blowing up high-value civilian targets like hospitals, libraries, and schools are real Nazis.  Some even sport the insignia of the 1st Galician (Ukrainian) division of the Waffen SS.  Tell me, Herr Gauck, do you really want to rip the scab off that wound?
• Putin has shown incredible patience with a situation he did not create and in fact did quite a lot to avoid.  He has a major refugee crises on his hands.  Winter is coming and without some major emergency repairs, that crises could end up as a serious humanitarian disaster.  The alternative to propping up the self-defense militias is to encourage everyone to die bravely.  Every nationalist in Russia wants to prove what's left of the Red Army is still a fighting force.  Gauck, you are a Lutheran preacher yet your "bad guy" is demonstrating far more Christian forbearance than you would (and all the Christians in USA, for that matter.)
• Speaking of Lutherans, the biggest cultural benefit of that religious practice is the ingrained respect for honest work.  Over 6000 German companies have invested a whole bunch of honest work in getting their Russian operations running.  Explain to me, Rev. Gauck, how putting those efforts in jeopardy is showing respect for honest work.
• Oh, and Gauck, you were once a man of courage willing to stand up to freaking Stasi.  Yet here you are, selling out your soul for some cheap neocon lies.  Are you really telling us the USA is more frightening than the Stasi?  If so, then we really owe the police state of DDR an apology.

Here's the report of Gauck demented ramblings.

Russia has "effectively severed its partnership" with Europe and wants to establish a new order, German President Joachim Gauck said Monday.

"We want partnership and good neighbourly relations (with Russia)" but on the condition that Moscow changes its policies and that there is a "return to respect for the rights of nations", Gauck said at a ceremony in Gdansk to mark the 75th anniversary of Germany's invasion of Poland that set off World War II.

Evoking the "miracle" of post-war reconciliation between Germans and Poles, Gauck said he was disappointed with the turn of events in Russia.

"We believed and wanted to believe that Russia too, the country of Tolstoy and Dostoevsky, could be part of Europe."

"It was a shock when we were confronted with a new conflict on Europe's borders. An armed conflict aimed at establishing new borders and a new order. It's a fact, stability and peace on our continent are once again endangered," he added.

Following the end of the Cold War, "the EU, NATO and major industrialised states developed special relationships with Russia and integrated it in different ways. Russia has effectively severed this partnership," he said. Polish President Bronislaw Komorowski, who spoke before Gauck, called for "courage and determination" in opposing "those who threaten the international order, peace and freedom".

This is charming.  Some ex USA "intelligence" types have decided that if they explain things politely enough, Frau Merkel will come to her senses and stop believing neocon bullshit.  Well good luck with that.  They make a good case here but unfortunately, the German government and press have decided to play "follow the leader."  Unfortunately, the "leader" this time is the crazed right wing of USA foreign policy institutions.

Committed carbon—the REAL threat to climate stability

Perhaps the most frustrating aspect of the climate change debate is how easily most activists on the subject home in on the fuel suppliers as the bad guys.  And while the oil and coal companies have more than their fair share of bad guys, concentrating on them is to wildly miss the point.

So what is the point?  The point is that the real engines of carbon emission growth are the folks who purchase technology that needs carbon-based fuel to operate.  When someone make the decision to purchase a car, they are also deciding to buy large amounts of 87-octane fuel for as long as they intend to operate that car.  Their decision to pollute is literally baked into the decision to operate a motor vehicle.

There are those who claim that we as a society are "addicted" to fossil fuels.  Anyone who has ever studied the medical aspects of addiction must cringe at the misuse of the word.  Because we are not at all "addicted" to fossil fuels.  Rather we made serious purchases that require us to buy very specific forms of fuels.

The best current example of this misunderstanding of a technological imperative is the celebrity cause of stopping the Keystone XL pipeline being built to transport Alberta Tar Sands.  And while no reasonable being can be anything but horrified by the environmental implications of mining the tar sands, fighting over how it is transported trivializes the problem.  Face it, if they cannot move the tar sands in a pipeline, they will ship it by rail because there has been nothing done to diminish the DEMAND for the fuels those sands contain.

In this essay, Tim Radford explains how this concept works when the subject is a new coal-fired power plant.  Build one of those, and you have increased the demand for coal for at least the next 50 years.  At that point, the coal mine operators are are merely good businessmen supplying a social need.  If you REALLY want to make a dent in the carbon-emission problems, you must somehow get access to the room where the decision is made to build a coal-burner in the first place.  This action will probably not be nearly as sexy as watching Daryl Hannah get handcuffed at a pipeline protest, but it would accomplish a whole lot more.

Sergei Glaziev—Putin's economic brain

Since the EU seems determined to push Russia outside of the neoliberal world, she has the possibility to try something more enlightened.  The opportunity is certainly there.  Russia has a highly educated populace and an embarrassment of natural resource riches.  So in theory, there is not much that stands in the way of historical levels of prosperity.  In practice...

In this Youtube, we hear from Sergei Glaziev who is advertised as Putin's primary economic advisor.  And he most certainly has an interesting POV.  He is not, however, without his analytic weaknesses—the most obvious of which is that he understands capitalism from a Marxist perspective.  He starts off with analysis of cycles and structural overlaps. Then he asserts that technology transformations have typically come from war, but this time, we have humanitarian technologies in the wings so we can avoid the war stage.  He proposes a trade zone from Lisbon to Vladivostok and reminds us that the state can provide demand.

Moving on to a more specific historical analysis, Glaziev claims that WW II and Cold War were good for USA, and that what is different now is we are moving from American cycle of capital accumulation to an Asian cycle.  To combat this, USA is fomenting war in Europe to maintain their hegemony in battle against China (Asia) by getting cheap assets in the resulting chaos.  Russia is the victim of this policy while Ukraine is weapon of choice.  Brzezinski is the theoretician behind this geopolitical madness.

Ukraine and Russia share their scientific and industrial complex, but Ukraine's association agreement with EU has ceded economic control to Brussels of everything important.  So it is now a colony.  Effectively the Kiev government is now Nazi whose sole goal is to inflict as much damage as possible on east Ukraine.

The current economic warfare will cause the EU to lose a trillion Euros from sanctions scheme demanded by USA.  Cold War anti-USSR turned Russophobia is making European leaders act against its own self-interests—Germany to the tune of 200 billion Euros.  Glaziev hopes new young leaders will be more pragmatic.

Suddenly the interview gets very interesting.  He claims the Russia must stop external dependencies.  He points out that while Russia has grown to depend on foreign investment, rich Russian investors are taking capital out of the country—losing $100 Billion each year.

And shades of the Non-Partisan League, Glaziev then claims:

• We must take control of our financial and monetary systems.
• We must restore our capacity for strategic planning and long-term programs.  
• We must build new technological systems.
• We must build our own sovereign macro-economic policy.

So is this the man who can advise Putin on a quest towards full economic potential?  Who knows.  But I am reasonably certain that his advice is significantly better than anything any USA President had heard since at least Jimmy Carter.