Climate change—the year in review

On Christmas Eve, I did two things I almost never do.  In the afternoon I actually went to see a movie in a theater.  My curiosity about the attempt to make a movie out of Michael Lewis' The Big Short was far too intense to wait for it to show up on Blu-Ray.  And before I attempt to write a review, I intend to see it again because as moviemaking, this thing is beyond brilliant.  The other uncharacteristic thing was that I sat through most of the Midnight Mass from the Vatican.  No matter what what one thinks of those centuries-old rituals, there is no denying that as high theater, it's pretty hard to top the Vatican on Christmas Eve on a stage designed by folks like Michelangelo and built by Producer royalty with bleeding-edge skills.

Not surprisingly, I awoke the next morning with a nasty Leisure Class hangover. I had one about The Big Short.  It is utterly unfair to criticize a magnificent attempt to explain in a little over two hours something as complex as the 2007-8 financial meltdown for what is left out, but I really wish the movie had addressed a few obvious issues.  Such as:

• The movie's heroes are the folks who discover that the hottest investment instrument is constructed on bullshit assumptions.  While this was an interesting bit of sleuthing, the really interesting folks are the ones who dreamed this scam up and managed to get most of the world to believe that garbage mortgages could be packaged in a AAA investment.
• There was no discussion of what causes otherwise intelligent people to believe that such magic as compound interest over a long term is possible.  Our heroes merely confirmed that math works.  That such a tiny sample of the financial business community was actually able to count is scary as hell.
• There was no discussion of what happens when finance grows from 6% to 24%. Just imagine what could have been done with that money spent on useful projects.  I keep beating the drum around here that this money should all go towards building the zero-carbon society but in truth, almost anything that would have shut down the party the banksters threw for themselves would have been a major improvement.
• Etc.

As for the Vatican...Pope Francis made a big splash last summer about climate change as a moral issue.  Apparently that sermon does not apply to the conspicuous waste of his Christmas celebration.  I can only guess at the carbon footprint of the Midnight Mass, but I would imagine it is something on the order of a medium-sized Indian village for a year—especially if one adds in the CO2 loads of the pilgrims traveling to this event.

This Leisure Class hangover proved mostly beneficial, however.  Yes it annoys me that anyone with a realistic agenda for addressing the greatest threat the human race has concocted for itself has to operate in the cultural sewage created by an obviously entrenched Leisure Class.  The Vatican high theater is a harmless amusement compared the rituals surrounding the awarding of the Riksbank Prize (Nobel) to some of history's biggest economic charlatans, conmen, and fools in Stockholm.  When you are glorifying an economics of plunder, it helps if you know how to pull the cultural levers.  These people may in fact be ridiculous but ridiculous people are also extremely dangerous.  As the Pops used to say, "Any jackass can kick down a barn!"  So in the coming year, I will attempt to better understand their crazy.

Of course, leading the fool's procession are the folks who deny climate change is even happening.  This is possible in USA because the vast majority slept through their 7th-grade science classes so they have no tools to separate valid claims from BS.

New Swiss referendum on money creation

The following story is interesting on so many levels, it's hard to know where to start.  So in no particular order:

1) The Swiss are extremely interested in banking and how it is organized.  Never forget that John Calvin, the guy who "legalized" usury for Christians was operating out of Geneva when he did it.  As a result, there are lots of banks and bankers in Switzerland and every Swiss person I have ever met had sturdy opinions on the subject.  However, any time I mentioned some of the monetary theories proposed by the frontier nation-builders, they were dismissed as "cowboy capitalism."  Yes the Swiss can also be very sanctimonious about banking.

2) Now that even the Bank of England admits that virtually all of the money that is created is done by private financial institutions, many people who have never understood this absolute refutation of the basic banking myths are in a state of shock.  And it looks like some Swiss citizens have organized a referendum to force their banks to practice lending as they were taught as children.  As someone who has understood that banks create money since 13, I cannot even remember what it was like to believe the basic banking lie so I find this Swiss response absolutely adorable.

3)  The chance of this referendum succeeding is zero.  If banks can no longer create money, their business model is roughly as profitable as a pizza parlor's.  Banks actually understand this so there will probably be few holds barred in their crusade to prevent this referendum from passing.

And while this crusade to "purify" Swiss banking practices is interesting on a sociological level, the monetary beliefs of the activists are far more primitive than say, the folks who organized the Greenbacks the USA used to fight the Civil War.  I heard much more interesting monetary discussions in church basements in the 1950s and 60s than anything being proposed in this referendum.  Just remember, in large areas of this country, monetary policy was the #1 political topic for almost a century.  Turns out a lot of us in USA were just as interested in banking practices as these Swiss.

Renewables make progress in spite massive confusion in the climate debate

Climate change is easily the most difficult dilemma ever faced by humanity.  It will only be solved by hard work and pure genius nurtured in an atmosphere of honesty and Producer Class virtue.  Fortunately, those members of the Producer Classes that understand this have been beavering away at possible solutions to the point where solar cells are now affordable, net-zero housing has proved doable, and other flickers of hope in a world that still worships ignorance.

Below, Robert Hunziker compares the effective efforts of the Producers with the absurd Leisure Class exercise that was COP21 in Paris.  As someone who has been arguing that climate change was mostly a problem of industrial design since the 1980s, I can only express my joy that more folks are beginning to understand this fundamental reality.  Welcome Hunziker.

HAWB 1863 - Admiral Benjamin Franklin Isherwood and the Development of Thermodynamics - How America Was Built

A 1984 oil painting by John Charles Roach, depicting the U.S. Navy's fast cruiser USS Wampanoag performing her designed mission, in an imaginary conflict with the British empire. The Wampanoag class was designed by Chief Engineer of the Navy Bureau of Steam Engineering Benjamin Franklin Isherwood during the Civil War as the world's fastest ships, able to interdict and destroy British commerce, in the event British support for the Confederacy led to war with Perfidious Albion. US Naval History and Heritage Command photo # NH 95699-KN

In 1842, Congress enacted a law establishing a Navy engineer corps and directing the Navy to include steam engineers as command officers. One of the people who responded was 20 year-old Benjamin Franklin Isherwood, who had worked as an assistant to civil engineers building the Utica and Schenectady Railroad, and the New York and Erie Railroad. In order to get the experience needed to be accepted as a Navy engineer, Isherwood went to work for Novelty Iron Works of New York City, one of the largest builders of marine steam boilers and engines. Finally, on May 23, 1844, not yet 22 years old, Isherwood was appointed as a first assistant engineer in the U.S. Navy. He served as second assistant engineer on the U.S.S. Princeton, the world's first screw-propelled steam warship, designed by Swedish inventor John Ericsson, then three years later was made senior engineer of the much smaller steam side-wheeler, Spitfire. In November 1852, Isherwood’s former boss at the New York and Erie Railroad, Charles B. Stuart, was appointed Engineer in Chief of the Navy, and immediately had Isherwood assigned as his aide.

From the beginning of his Navy career, Isherwood used his access to steam ships to begin collecting data on their operating characteristics and efficiency, looking for elements and principles of design that could be applied to building better engines. He contributed a number of articles to the leading science and technical magazine of the day, the Journal of the Franklin Institute. His experiments and data on Navy steam vessels would move the theoretical field of thermodynamics onto a solid foundation as a science. And like many scientific pioneers, he was often met with derision and hostility. Despite his detractors, Isherwood went on to play a key role in saving the Union by overseeing the wartime build up of a new U.S. Navy.

A Charlie Brown Christmas turns 50

When Charlie Brown Christmas premiered in 1965, I was a high school junior living in northwestern North Dakota—an exceptionally harsh place to be in December.  I wasn't much of a "Peanuts" fan.  Real life offers enough examples of incompetence—I am not sure why I should be entertained by cartoonish versions of disasters.  Besides, in 1965 my father had become embroiled in another utterly pointless church fight so I was feeling pretty "bah humbug" about the very idea of Christmas.  So I missed the premiere.

I didn't see Charlie Brown Christmas until the 1970s when I had moved to St. Paul.  Charlie Brown's creator, Charles Schultz, had grown up in St. Paul—something the locals liked to remind whoever asked.  His father had owned a barber shop about three blocks from where I once lived.  So out of curiosity, I spent a half hour watching a network program designed to entertain children and found it artistically complex and surprisingly profound.  Like many things that are unexpectedly good, this little masterpiece almost didn't get made and only took it's final shape at the insistence of Schultz.

The 50th showing of Charlie Brown Christmas inspired some interesting remembrances. Scott Collins of the LA Times wrote:

"But two other major creative decisions led to disagreement — and also helped ensure that "Charlie Brown Christmas" remained unique in its approach to the holiday.

Schulz insisted that no laugh track be used. At the time, canned laughter was a virtual requirement for TV comedy. Lee Mendelson pleaded that without it, the special would plod along. But Schulz detested laugh tracks and would not budge, according to the Michaelis biography.

The other standoff involved religion. The script included a climactic speech in which Linus delivered an onstage explanation of the "true meaning of Christmas" by reciting the story of Jesus' birth according to St. Luke. Mendelson argued that religion had to be kept out of prime-time entertainment. Again, Schulz — who according to his biographer was engaged in a lifelong internal struggle over his own Christian beliefs — was insistent: "We can't avoid it."

Now that I have mostly gotten over the absurdities of my overly religious childhood, I try to think about that trauma as a subset of a much larger cultural experience.  After all, stripped of the mystical mumbo-jumbo, religion is mostly just cultural anthropology.  And viewed in that light, the amazing success of Charlie Brown Christmas makes perfect sense.  Let me explain.

As a culture, Christianity has been phenomenally successful.  Yes it has had its tragedies from the Inquisition to the 30-Years War to Jerry Falwell and the rest of the list too long to recount here.  But no other culture was so ready to embrace the scientific revolution—both Newton and Darwin were devout Christians.  No other culture went through such upheavals to rid themselves from slavery.  This was the culture that figured out the Industrial Revolution and its economics just towered over all alternatives.  The social advances did not come in a straight line but in most of the versions of Protestant Christianity women are fully integrated throughout the clergy.  Etc.!

IMHO, perhaps Christianity's greatest single teaching is told at every Christmas service.  It is the story from Luke of the annunciation of the birth of Jesus to the shepherds. This one—the one that Linus speaks in the cartoon.

Luke 2:

[8] And there were in the same country shepherds abiding in the field, keeping watch over their flock by night.
[9] And, lo, the angel of the Lord came upon them, and the glory of the Lord shone round about them: and they were sore afraid.
[10] And the angel said unto them, Fear not: for, behold, I bring you good tidings of great joy, which shall be to all people.
[11] For unto you is born this day in the city of David a Saviour, which is Christ the Lord.
[12] And this shall be a sign unto you; Ye shall find the babe wrapped in swaddling clothes, lying in a manger.
[13] And suddenly there was with the angel a multitude of the heavenly host praising God, and saying,
[14] Glory to God in the highest, and on earth peace, good will toward men.

Yes this tale of angels talking to the shepherds has a high mumbo-jumbo content.  But strip out the magical tale and there is an amazing sociological principle on display.  Because according to the story, when god came to earth as a human baby, the FIRST people who got the news were some poor guys working outside at night.  This foundation story means that Christianity would be a religion that was supposed to respect the people who found themselves at the very bottom of the socio-economic ladder.  Not surprisingly, Christianity was first the religion of slaves in the Roman Empire.  This did not always work—see feudalism—but the principle is restated at least once a year on the one occasion when everyone goes to church.

Turns out folks LIKE the idea that the people at the bottom of the socio-economic ladder deserve respect.  Even better, this belief leads directly to successful and prosperous societies.  And by highlighting this message in Charlie Brown Christmas, Charles Schultz pretty much made sure his Christmas special would be a hit for decades.

I have a personal reason for approving the inclusion of the Luke tale in a cartoon show.  Linus, the character who stands on an empty stage to recite those lines, appears to be about seven years old.  That was the age when I memorized the Luke Christmas story (all 20 verses).  Not surprisingly, my parents much approved and soon incorporated this act into the family traveling salvation show.  I stood up in front of folks in nursing homes and shut-ins who could not get to church and recited it—often many times each Christmas.  I was still doing this act in high school.  And yes, I can still do it.

Merry Christmas!

The Fed explained (well!)

Understand the Fed is extremely difficult.  I have read over 350 books on that institution and its history and have been following the subject since 14 and I am quite certain I still have quite a bit to learn.

• The Fed doesn't want folks to watch them too closely so their official pronouncements are often obscurantist bureaucratese which does a great job of discouraging most folks.
• The folks who DO follow the Fed often have some serious agendas that often lead to really whacko conspiracy theories.
• Virtually all academics writing on the Fed would like a cushy job with the Fed.  Not  surprisingly, they follow the party line as accurately as they can.

Occasionally I am asked to suggest a book that explains the Fed.  I usually recommend Greider's The Secrets of the Temple.  I figure that book would have saved me reading about 300 of those I did read.  So in my mind, it is one of the great intellectual shortcuts in history.  To most, an 800 page book is anything BUT a shortcut.  So then I send them to my chapter on Money from Elegant Technology which is my distillation of what I have discovered about monetary creation from a lifetime of curiosity.

Last Friday, I discover this well-written piece about what is important to know about the Fed.  It is always good to have multiple attempts to explain monetary matters in clear english.  It's always extra nice when someone else starts out with the same Henry Ford quote I used in Money.

Greider on Clinton and Wall Street

Probably nothing demonstrates so vividly the dramatic shift to the right in USA politics as the story of Hillary Clinton and her role in the Democratic Party.  I sort of understand her bellicose hawkishness because I got to know some amazingly militaristic "liberals" during my experience with the anti-war movement in the 1960s and 1970s.  I was living in Minnesota which had an anti-war candidate in Eugene McCarthy and a serious Cold Warrior in Hubert Humphrey.  The Humphrey people could not believe we could part company with him over Vietnam.  I was once asked, "Are you really going to turn your back on the man who almost single-handedly gave us Medicare?  Over Vietnam?"  So while I do not like it, I understand the Democratic Party selecting as its standard-bearer someone who at least half of the world's population considers a war criminal for her actions as Obama's Secretary of State.

But when it comes to economics, I am still shocked at how reactionary a Democrat can be.  Not long ago, I heard Ms. Clinton defend the 1999 repeal of Glass-Steagall, the 1933 banking reform act that drew a sharp legal divide between commercial and investment banking.  This repeal happened on Bill Clinton's watch and many of us blame that misbegotten legislation for the banking meltdown of 2007-8.  Here's something to keep in mind.  Carter Glass (VA) and Henry Steagall (AL) were very conservative southern Democrats who were vitally important in creating the Federal Reserve System.  These were not a couple of radical bomb-throwers.  In fact, such conservatives from the South are usually Republicans these days.  By defending the repeal of Glass-Steagall, Hillary Clinton was placing herself to the reactionary right of those two.  In fact, it's hard to believe there is any space to the right of those two but our Hillary has found it.

Personally, I believe that the election of Ms. Clinton would be an unmitigated disaster.  Climate change is on track to destroy the biosphere for human habitation.  The ONLY way we can get off that track is to invest a lot of money in a new greener society.  And the only way we can ever get the necessary money is to radically reform the global financial system.  We don't need someone who can be convinced that something like Glass-Steagall needs to be repealed—we need visionaries to pass a couple dozen pieces of Glass-Steagall-like legislation that will take the financial system out of the hands of criminal greedheads and put it into the control of people who want to nurture the real economy.

HAWB 1900: Do different systems of government affect workmanship? How America Was Built

Being a committed republican (that's republican with a small "r", in the classical sense of being a republican), it always catches my eye when someone fires a rhetorical shot against oligarchy and monarchy.

Since beginning, just about a year ago, to compile a chronology of USA government policies and programs which encouraged economic development (HAWB How America Was Built), I have come to realize that the actual history of how the United States was built is best understood by paying attention not to the financiers and banksters, not to the Astors and Vanderbilts and Rockefellers and Harrimans, but to the engineers and scientists who actually investigate and develop and confirm the breakthroughs in science and technology and machinery and industrial processes. Usually these engineers and scientists only attract the attention and support of the financiers and banksters after struggling for years to follow their dream. 

One magazine that I often find as historical reference is Cassier's engineering monthly (New York, N.Y.) , which was published from 1891 to 1913. Though written mostly by engineers, the material was actually aimed at a wider audience among the general public. A good analogy might be Scientific American. One wonderful thing about the internet is that there are a few sites which have scanned and made available entire collections of publications such as Cassier's. One of my favorites is HathiTrust, a consortium of major research institutions and university libraries, including the Library of Congress, the New York Public Library, Cornell, Duke, Harvard, MIT, Princeton, Purdue, Stanford, Yale, and most of the major state universities. Here is the HathiTrust page for Cassier's.

Rummaging around in there, I was struck with how different was the public conception of political economy a century ago. One example is below, which I think is notable because it resonates the American School doctrine of High Wages. The article is "Machine Tools In the Mechanic Arts," by Dr. Coleman Sellers, published in Cassier’s magazine, Vol XVIII, May-Oct 1900, page 213.


Coleman Sellers was the younger brother of Charles and George Escol Sellers, of the Sellers family of Philadelphia. Their uncle had begun William Sellers & Co., which was one of the largest makers of machine tools and general millwrights in the USA in the first half of the nineteenth century. In 1850-1851, Coleman designed and supervised construction of locomotives for the Panama Railroad, then became foreman of the Niles locomotive works in Cincinnati. In 1856, Sellers moved to Philadelphia, where he became chief engineer of the family firm, William Sellers & Co.

Coleman Sellers patented over 30 inventions of his own, including an 1857 patent for a coupling device for shafting, which design remains an essential factor in modern systems of interchangeable shafting parts.

While in Philadelphia, Sellers became closely involved with the Franklin Institute, the most prominent center of science education and development in the United States in the nineteenth century. He served as president of the Institute for five consecutive terms, 1870-1875. He also served as president of the American Society of Mechanical Engineers.


As I already noted, this excerpt is redolent of the Doctrine of High Wages. And, I should also note, Veblen's Instinct of Workmanship.

.... the difference in the character of American workmen and work-men of the same trades in Great Britain was wholly due to the better education of the Americans who are fully two generations ahead of the others. It is perfectly evident that it is impossible to raise the standard of work by means of labour-saving machinery unless the workingmen themselves will see the advantage derived from their ability to do more and better work, and thereby obtain better wages. This is particularly the case when they are called upon to operate machines that do not require constant attention, but where it is possible for one man to attend several ma-chines and earn higher wages than he possibly could if compelled to stand idly watching a machine that required but a small portion of his time to operate. There would be no inducement to contrive automatic machinery unless those who use such machinery are able, without prejudice, to take advantage of the saving in labour attainable thereby.

Some of the leading engineering journals have taken up the question of the advance made in manufacturing in America as compared to European practice, with endeavour to determine the truth of assertions as to such superiority in the American output, so that if such conditions are proved to exist the reason for them might be discovered.

The writer has followed this subject with interest, but can only say at the present time that the greater amount of work done by each workman in America under the best circumstances does not apply only to American workmen, but holds equally with good work- men of foreign birth. An incident was lately brought to his attention by a manufacturer in Berlin seeking the solution of this problem by personal observation in America, who stated that in iron foundries in Germany where the most improved moulding machines had been employed, a skilled moulder could set up eighty snap flasks in a day, while a German work-man not yet three years in America, and without the aid of the tools that had assisted the same class of workmen in Germany, was, to his knowledge, setting up 50 per cent more flasks in a day. There is something, therefore, in the spirit that animates workmen in a free country, where there is a closer friendly relation, if not with their employers, at least with those directly over them and a healthy ambitious spirit is fostered by the certainty of earning higher wages and using their earnings to better advantage in a land where the workman may become a more important factor in local and national politics than seems possible where the monarchical system of government exists.

Matt Taibbi on Trump

Donald Trump is a real estate speculator with perfectly horrible taste who loves to splash his name on buildings in giant letters.  Not content with his continuous war on all that is beautiful and well-designed, he has decided to bring his wisdom to politics.   And since politics is a game where anyone with enough money can play, the folks who have bought his wretched garbage over the years have now financed some pretty wretched political theater.

Except.  Political actors outside the mainstream political organizations have brought some of the more interesting ideas to light since at least the 1960s.  And after months of sheer buffoonery, even Trump is proving he can make the debate more interesting.  Two things stand out.  1) Trump has now pointed out that USA spent in excess of $4Trillion on wars in Iraq and Afghanistan and only have chaos, war wounded, and diminished international standing to show for it. He thinks we would have been better off spending that money on infrastructure. (I could not agree more!  The Military-Industrial-Complex could not agree less!)  2) Trump has now stated openly that we could solve a bunch of problems if we would team up with Putin's Russia.  Even Putin thinks this is a good idea.  (Personally, I could forgive D Trump his butt-ugly buildings if these two ideas start to gain some political traction.)

And there is one other reason why even those who find D. Trump frightening and disgusting should be extra worried—he's good on television.  The other night, I watched his performance on Jimmy Kimmel Live.  Kimmel has made some pointed jokes at Trump's expense in the past few months so there was a possibility that Trump could have come out swinging—at least metaphorically.  He didn't.  Instead he treated Kimmel as someone who had done him a world of good by making him appear more lovable.  At the end, Kimmel brought out an utterly brilliant "children's" book he had ghost-written to show that Trump was a hopeless egomaniac.  Trump responded as if this assault on his character was just adorable.  Most politicians these days are pretty good on TV—Trump is brilliant.

Enjoy the book.  And while you are at it, read why Taibbi thinks that Trump's appeal is based on his insights into how TV has changed the culture over the years.  And while Trump still frightens me for what he is and stands for, I now must admit that compared to "mainstream" DC "think tanks" like the Brookings Institution, he is the soul of enlightenment.

Ellen Brown on alternative ideas for banking

Tony summed it up best in last Sunday's post when confessing he had been wrong (he had been low on his earlier estimates) about the $100 Trillion needed for a serious attempt at a meaningful fix for climate change.

We, really, really need to break through these psychological and ideological barriers that are preventing us from doing what needs to be done to save this planet. We have the technology. In hand. Ready to go.

All we need is the money.

Except for that "tiny" detail, we are ready to rock and roll.  "Tiny" my frog-belly-white butt.  To maintain the status quo, the banksters have in just the past 40 years resorted to industrial sabotage, military coups, crushing austerity measures, the wholesale corruption of the economics profession, and the bankrupting of whole nations—to mention just a few of the measures the monetarists and neoliberals have been willing to employ to keep a grip on their awesome power.  In fact, my calling these slime "banksters" is such a massive understatement that it borders on adorable.

So it entirely possible that we as humans will allow arguably the most incompetent "profession" on earth to demand we do nothing meaningful about an impending calamity like climate change.  In the meantime, the rest of those who think about monetary matters are dusting off some of the ideas that have worked in the past.  Here Ms. Brown describes some of them.  (Of course, the world's central bankers could always do the right thing by the real economy and avoid all these challenges to their rule.  And with a large enough power source and control surfaces, it is also possible to make pigs fly.)

COP21 in Paris—did they save the world?

The champions.  Don't laugh—these guys just saved the world...NOT



There has been a bunch of self-congratulatory bilge coming from the major participants of COP 21.  Considering the task, there was almost no hope that anything meaningful could have happened in Paris.  Setting targets is a LONG way from marshaling the resources, plans, and organizational ability to accomplish a task and unfortunately, Paris was about setting targets.  How those targets would be met in a world where the economic rules are set by criminals and every honest citizen is a target of those crooks never seems to be mentioned.  And so 40,000 people climb into jets and go home to wonder just HOW real reductions of CO2 can be had.

It's not like we haven't seen this act before.  I was especially incensed by the sheer goofiness of the Durban conference in 2011.  They also had a picture of self-congratulatory joy.



Just a quick reminder of what that conference accomplished




There were other critiques of COP21.  Lots of agendas out there and Paris offered plenty of grindstones for the various axes.

The German middle disintegrates

It is hard to believe that Germany's economy isn't hurting.  Their European customers are in a major austerity lockdown, trade with Russia is subject to sanctions, and one of their industrial crown jewels (Volkswagen) is under concerted attack from the most predatory occupants of planet earth (the USA legal system.) What's even more frightening is that because they have been the most successful nation-state under the rules of neoliberalism, they seem to believe that the same economic BS that has taken down virtually every country in the world is somehow going to spare them.

The wise course for Germany would have been to ask, "Is there something systemically wrong with neoliberalism that can even bring down the economic 'master race'?"  Of course there was—it is impossible to prosper as an export nation without prosperous customers—but that would have required a humility that is not a widely shared characteristic of German elites.  Watching Wolfgang Schäuble lecture the Greeks last spring on economics was ugly beyond words.  As a result, if Germany now stumbles economically, the rest of Europe will quiver with schadenfreude.

In the meantime, those hard-working Germans who have kept the economy afloat in spite of the rampant incompetence of the neoliberal elites, are becoming very angry—as in, let's-start-a-civil-war angry.  So last Friday, we had a long piece by the elite writers at Der Spiegel who are utterly horrified by this pre-revolutionary fury.  Much is directed at them, after all.  Because they are so handicapped in the issues department, they are reduced to slandering the messengers.  After all, this worked pretty well when the protesting folks were a bunch of drunken skinheads.  Unfortunately, the new politics is being organized by folks with roughly the same credentials as the clubby elites—only as outsiders.

In spite of a lot of Fox News goofiness, this essay is just stunningly informative.  I have now read it three times because it explains so much.  I could do without the dripping condescension and ad hominem attacks but even those tell the tale of what German insiders are expected to believe these days.

Well, I was wrong about $100 trillion . . .

I just posted this at DailyKos,, where there are a lot of so-called liberals and progressives who get a bad case of vapors when someone mentions that realistic policy proposals no longer come in billion dollar sizes. So, the edginess of my writing is directed more towards them. I thought readers here at Real Economics would enjoy it nonetheless. 

Oh, and a big THANKS! to Jon for catching and posting about the IEA report early last week. 

Well, I was wrong about $100 trillion . . .


but I am not apologizing.

Because, a $100 trillion price tag to stop and even reverse climate change is too low.

The International Energy Agency estimated in a recent report that the world needs to spend $359 trillion between now and 2050 to avoid catastrophic climate change.

All you jerks that contend mentioning such numbers just scares people away, please stfu, and read this instead: Nothing is possible so don't even try.

We, really, really need to break through these psychological and ideological barriers that are preventing us from doing what needs to be done to save this planet. We have the technology. In hand. Ready to go.

All we need is the money — and it’s not that much if you keep your wits about you. World GDP in 2014 was US$78.28 trillion. And the growth rate of world GDP has been around 3.4 percent annually for a number of years. Project the growth of world GDP out to 2050, add it all up, and you get US$ 5,630.5 trillion.

$359 trillion is only 6.4 percent of world GDP over the next 35 years.

So if you’re not mature enough to think straight when a number like $359 trillion comes at you, please focus on the 6.4 percent number before you start hyperventilating and embarrass yourself.

And it will probably be less than 6.4 percent, because once we get serious about doing this, world GDP is going to boom! We’re more likely to see growth rates of five or six percent a year. Maybe even double digit growth rates, like China achieved for much of the 1990s and twenty-naughts. We’re going to replace every vehicle with an internal combustion engine. Every vehicle on the planet. We’re going to build a whole new distribution, wholesale, and retail system to support electric vehicles. We’re going to build tens of thousands of kilometers of urban rail lines, in every major city on earth. We’re going to build hundreds of thousands of wind power turbines, and two or three billion small, independent solar power systems, all over the world. We’re going to tear down and replace, or remodel and insulate almost every single building and dwelling on the planet.

There is so much work that we must do, there will be massive shortages of labor and skills. There will be plenty of work for everybody, from the people in the funny clean suits in the big chip plants churning out photovoltaics, to the carpenters and plumbers and electricians doing all the replacing and remodeling.

It’s a bright future! It’s a glorious future! It’s a good future!

All you have to do is realize that the only obstacle is in your own mind. For example, you’re thinking, Where’s the money going to come from?  Well, we just create the money, just like money has always been created. Was there $4 trillion in U.S. dollars in 1787? No? Then where did it all come from? Did it fall to earth on an asteroid?

It was created. And we can create more. A few rich pricks have somehow convinced you that they, and only they—because they run a bank—can create money. Well, so can governments! In fact, that’s how we won the Civil War. That’s the plain historical fact: the United States won the Civil War with money created by the government, instead of private banks.

Still not convinced that the only obstacle is in your own mind? Let me lay this on you. This has been bothering me for weeks now, since the bombing in Paris. How do we defeat ISIS? How do we defeat radicalized Islamic militants? For that matter, how do we defeat radicalized Christianist militants? You defeat them by giving people hope for a better future. If people don’t have that, lots of times a gun-waving radical is going to sound like a sensible person to them.

Now, here’s the particular point that bothers me: in all the discussion about ISIS and what to do about it, it is now common wisdom that the United States lost the wars in Afghanistan and Iraq.

The fact is, the we won those wars. Both of them. Yes, we won both wars. What we lost was the peace.

Nation building failed. That’s what I read. And it was on a liberal, progressive site, too: Hullaballo. They used that exact phrase: “nation building.” According to them, we tried it. We tried “nation building,” and it failed.

I want to scream: WE NEVER EVEN TRIED NATION BUILDING in Afghanistan and Iraq. Oh, we tried to build some schools, and a few hospitals, and repair some bombed-out power plants and water plants, and pave the roads better.

That was all part of our counter-insurgency strategy. That was not “nation building.” If we were doing nation-building in Afghanistan and Iraq, then point out the cross-country rail lines that were built. Point out the four- and six-lane highways poured along new routes that tied together one end of those countries to another. Point out the thousands of wind turbines and new electric power distribution grids that were built. Point out the millions of new solar panels that were installed and connected to the new grids.

No, we didn’t even try to do any of that, did we? Why? Because those ideologues in the Dubya administration were all “free market” zealots. Governments aren’t supposed to build rail lines and erect wind turbines and install solar panels. “Free enterprise” is supposed to do that. No, sirree, what the dickheads in the Bush regime did: they built stock markets. Because, how can you possibly have “free enterprise” without a bunch of speculators providing liquidity while they strive to corner and rig the market?

We have the science and the technology and the knowledge needed to provide a decent, dignified and sustainable life for every single person on this planet. And don’t hide behind the “there’s too many people” excuse. That’s not the problem. The problem is we allow a small bunch of sociopaths to control the financial and monetary systems of this planet.

We thus have here, first, a system that is unsound and unnatural, and second, a theory invented for the purpose of accounting for the poverty and wretchedness which are its necessary results. The miseries of Ireland are charged to over-population, although millions of acres of the richest soils of the kingdom are waiting drainage to take their place among the most productive in the world, and although the Irish are compelled to waste more labour than would pay, many times over, for all the cloth and iron they consume. The wretchedness of Scotland is charged to over-population when a large portion of the land is so tied up by entails as to forbid improvement, and almost forbid cultivation. The difficulty of obtaining food in England is ascribed to over-population, when throughout the kingdom a large portion of the land is occupied as pleasure grounds, by men whose fortunes are due to the system which has ruined Ireland and India. Over-population is the ready excuse for all the evils of a vicious system, and so will it continue to be until that system shall see its end…  --Henry C. Carey, The Harmony of Interests: Agricultural, Manufacturing & Commercial (1851)

The Power to Govern (1937) now available abridged and annotated

The Power to Govern: The Constitution -- Then and Now
by Douglass Adair and Walton H. Hamilton
W.W. Norton & Co., New York, NY, 1937
Abridged and annotated by Anthony K. Wikrent, November 2015

It is now available on Amazon as a Kindle ebook, here.

From my Introduction:

In 1937, when The Power to Govern was first published, the response of the United States government to the economic devastation of the Great Depression had been crippled by the economic doctrine of laissez faire. This doctrine holds that government “meddling” in the economy is not just wasteful, but actively harmful. Treasury Secretary Andrew Mellon—who held the post almost 12 years under Harding, then Coolidge, and finally Hoover—had advised against intervening to save busted banks and failing businesses: it was best to follow laissez faire and let nature take its course to “purge the rottenness out of the system.” And when the new Roosevelt administration made it clear it had no desire or intention to follow this crumbling path trod by the previous Republican administrations, a very small number of extremely wealthy citizens funded a massive national campaign, led by the American Liberty League, which convinced about a third of the citizens that the national government had no power under the Constitution to outlaw the employment of children, or the payment of low wages, or even the unsanitary handling of meat, poultry, and milk.

Despite these well-funded efforts at conservative proselytizing, the party of laissez faire—the Republicans—had been overwhelmingly repudiated at the ballot box in 1932, and again in 1934, and yet again in 1936. The voters had unambiguously given control of the government to Franklin Roosevelt and the Democratic Party: the 1934 mid-term election is one of the few in the past two centuries in which a sitting President’s party gained seats in both the House and the Senate.This was clearly a broad popular mandate for Roosevelt and the Democrats to wield the power to govern to remediate and repair the economic devastation of the Great Depression by reordering and rearranging the economic affairs of the nation. It was a mandate Roosevelt—after some hesitation in his first year or two as President—grasped with vigor and relish. But the conservative justices of the Supreme Court, with a series of increasingly unpopular decisions, continued to cripple the national government, ruling that a number of Roosevelt’s New Deal programs were unconstitutional.

In response to the continued obstructionism of the Supreme Court, Yale Law professor Walton Hale Hamilton and Princeton University history professor Douglass Adair, wrote The Power to Govern. Their goal was to show that the Founders fully intended to create a national government with broad and far-reaching powers to ensure that all economic activity was channeled and directed to national development and the promotion of the general welfare. Hamilton (1881-1958) is remembered as “a vigorous critic of legal formalism,” who argued that legal concepts could not be properly understood, let alone applied, outside the specific historical and social contexts in which they developed. Adair (1912-1968) had conducted important research in determining the authorship of various Federalist Papers, and insisted that the Founders had been guided by the Atlantic intellectual tradition known as republicanism, beginning with ancient Greece, and running through the Roman republic, the Italian city-states, and the Glorious Revolution of England.

The American Revolution, Hamilton and Adair write on page 38, “had left the creation of a nation half-accomplished; the Constitutional Convention was its necessary complement.” To understand, then, the Constitution and the power to govern it created, we must understand how the Founders conceived of the task of building a nation.

Banking as an act of war

One of the lasting lessons of the early 1980s economic catastrophe was that for much of USA, local law enforcement didn't have much to do besides throwing good honest farmers off their land.  After awhile, Nancy Reagan's War on Drugs would give the local shire reeves something else to occupy their time but in 1982, I remember a Minnesota sheriff explain that except for farm foreclosures, his department had only made four arrests in a whole year.  That's when I first learned how little "law enforcement" had to do with protecting the average citizen and everything to do with protecting the interests of the usurers.

Of course, if I had already heard of Smedley Butler and his idea that the USA military was merely muscle for Wall Street, the 1980s war on agriculture would have not come as such a shock to me.  As a multiple-decorated Marine Colonial, his thoughts tend to have weight.

So now we see Michael Hudson explain that the IMF has become little more than muscle for the current crop of banksters and warmongers.  It could be argued, of course, that the IMF has never been anything else.  Which is a damn shame because if the financial system were to be run by other than crooks and liars, maybe it could come up with the $318 Trillion the IEA says we will need to do something meaningful about climate change.

Iowa takes on climate change

Because of their position in the Presidential selection system, Iowa tends to get more attention than would be typical for such a small state.  Unfortunately, because most Iowa Republicans are flat-out goofy, some of that attention makes the state look insane.  Fortunately for those of us who live next door, Iowa is filled with eminently sensible people who are hard-working, enterprising, and educated.  So it is not at all surprising that when it comes to alternative energy, the state does well in many categories.

Wind is the alternative energy of choice.  While Iowa doesn't have the premium wind sites of say, North Dakota, they have plenty of very good sites with an excellent network of roads.  Even better, the economics of wind are quite similar to the economics of large-scale farming—a modern 2 mw turbine costs roughly the same as three combines for harvesting corn and beans.  Farmers that size don't wait around for approval so a lot has been accomplished.

James Hanson, the NASA scientist who first warned the nation about climate change in 1988, is a Hawkeye—so they have been bleeding edge for some time.  And maybe they SHOULD have their first caucus status.

Small nations making powerful climate change statements

Small countries tend to be very interesting for a wide assortment of reasons.  If they have a small language like Holland or Denmark, for example, their citizens tend to be better at foreign languages.  But by FAR the biggest advantage is that small countries tend not to think themselves as the center of the universe so are far more open to learning from others.  And as we can see from the response to climate change, small countries that are also exposed to large fossil-fuel energy bills can make bolder strides towards actually solving the problems they have been causing,

Today, we see several small-country initiatives on climate change that border on  the truly enlightened.  In Sweden, we see the results of the work that Volvo has made on perfecting the battery-powered municipal bus as part of their program to become fossil-fuel free by 2030.  And while most small countries don't have the services of world-class transportation engineers like Sweden has with Volvo, this has not prevented a country like Uruguay from enacting a major renewable initiative.

In some ways, Uruguay's accomplishment may seem like little more than smart shopping.  They have some prime wind sites and looking around, discovered that that Germans were already far advanced with windpower installations.  Sign a few contracts and 10 years later, 94.5% of their electricity comes from wind.  This may sound easy but so far, no one else seems to have pulled it off.  It seems that this small country benefits greatly from an enlightened government.  So in many ways, Uruguay's accomplishments may seem just a happy accident but it helps a lot that when the happy accident of a good government comes along, the small institutions they run are unusually flexible.

The world isn't spending nearly enough to combat climate change

The easiest way to determine if a government or organization is serious about solving the problems of climate change is to look at how much money they think it will require to make meaningful improvements.  Regular readers know the baseline number around here is $100 trillion but I am willing to consider higher numbers.  The biggest problem with our modest number is that I am assuming that the money quickly gets into the hands of honest, low-corruption Producers.  And in places like Holland, Germany, and Scandinavia, that is a reasonable assumption.

But since that sort of Kantian honesty is not a universal social characteristic, $100 trillion is probably the minimum.  One of the details that emerged in the austerity debates between Greece and Germany last spring was the factoid that roads cost more than double to build in Greece as in Germany.  Not surprisingly, a Producer culture yields higher economic performance.  So if your goal is the well-built and sophisticated infrastructure necessary for a green society, it helps a LOT if you already have an advanced Producer culture.

The International Energy Agency is now saying we need to spend $7 Trillion per year to build the low-carbon society.  The world spent 391 $Billion in 2014 so spending, according to IEA, needs to ramped up by a factor of nearly 20.

Sounds right to me.

Paul Krugman on Challenging the Oligarchy

This past Sunday, Stirling Newberry noted that the latest New York Review of Books includes a review by Paul Krugman of Robert Reich’s new book, Saving Capitalism: For the Many, Not the Few. It is an excellent review of what promises to be a seminal book on crucial issues of political economy. Remarkably, Krugman review is entitled, simply, Challenging the Oligarchy. Read on if you’re wondering why that title is so remarkable.

Both Reich and Krugman are generally regarded as liberal stalwarts, but the fact is that both were dangerously neo-liberal in their beliefs in the 1990s and early 2000s. I think the multiple failures of the Dubya administration, especially the 2007-2008 financial crash, caused them to rethink some basic beliefs and assumptions. But what especially forced them to rethink their economics was the brutal and shameless way Bush and the neo-cons used their political power to drive us into the Iraq War. They seemed to have had nagging doubts regarding the issue of how political power impacts economics, but by the end of the Bush Jr. regime, both Reich and Krugman were openly discussing how political power was shaping economic results.

I particularly remember an article by Krugman, sometime before the elections of 2008, in which Krugman admitted that the economic effects of NAFTA were not what he had expected, and explicitly wrote that he had reluctantly concluded that it was the political power of large trans-national corporations that was driving U.S. trade policy. I can’t find Krugman article right now, but for those interested, here is  William Greider in The Nation in April 2013:  Why Was Paul Krugman So Wrong?

What Krugman and Reich think about the role of political power is crucial, because we no longer have an economy shaped by “free markets,” but an economy shaped by a corporatist oligarchy, which Sheldon Weldon has explained as “inverted totalitarianism”:

Inverted totalitarianism is different from classical forms of totalitarianism. It does not find its expression in a demagogue or charismatic leader but in the faceless anonymity of the corporate state. Our inverted totalitarianism pays outward fealty to the facade of electoral politics, the Constitution, civil liberties, freedom of the press, the independence of the judiciary, and the iconography, traditions and language of American patriotism, but it has effectively seized all of the mechanisms of power to render the citizen impotent.

Economists generally don’t want to deal with the messy issue of politics at all—which is completely opposite the preoccupation with “political economy” which characterized economics in the nineteenth century and well into the twentieth. (For those interested, Michael Hudson has written some excellent articles tracing this “defanging” of economics.) Indeed, even political scientists dislike discussing the problem of economic and political power becoming so dangerously concentrated that they begin to threaten the very nature of what is supposed to be a democratic republic. So when in May 2009 former chief economist of the International Monetary Fund Simon Johnson used the word “oligarchy” to describe how Wall Street and the finance industry had effectively captured the government (“The Quiet Coup,” The Atlantic Monthly,) it made quite a splash.

The Big Short reviewed

Movies can be important—even if most are not,  The Big Short has the smell of an important movie and since the story of what happened to the economy in 2007-8 has barely been told and even more rarely understood, there is a huge awareness gap that needs filling.  Whether that actually happens I don't know and won't have an opinion until I actually get to see it myself.  But I hope.

There are conceptual problems with this book / movie.  The biggest is that the protagonists are a bunch of short sellers—easily the most useless flotsam floating on the seas of finance capitalism.  I am already certain that this movie will inspire many a young greedhead to seek out a career in short selling.  But since there were no good guys in this sordid tale, making the short sellers who were betting against perhaps the greatest corruption in banking history the somewhat lovable protagonists is about as close to heroic as the author and movie-maker could find.

Of course, the real story is about the millions who did their small parts to make the original property boom happen.  Veblen used to claim the the main job of civic organizations and governments was to increase the value of the real estate.  Considering USA was a continent-sized real estate project, it can be easily argued that petty real estate speculation was the #1 occupation from day #1.  And it was this foundation fantasy that was being corrupted by the folks who were now bundling and dividing home mortgages.  Yet people wanted to believe.  They wanted to think that their homes had somehow magically become more valuable because of their personal good judgement and virtue.  They did not want to question why a house that was built for $20,000 in 1961 was now "worth" $1,400,000 even though it was now 50+ years old and and a lot of expensive systems were ready to break.

So one of the reasons 2008 doesn't came up that often is because it was an economic event that challenged a whole lot of people's belief systems.  The Big Short will not fail if it doesn't mention all the true believers who got burned.   Because from the sounds of things, this is a movie about people who were aware enough to realize their core beliefs were flat wrong.  And if this awareness is well explained, this will be an important AND great movie.

China and climate change

In 1970, I was in Finland and needed to do some shopping for a very young niece.  I spotted a nice little stuffed toy I thought she might like.  I bought it because with Finland's neutrality, it was the first consumer product I had ever seen made in China.  (She nor her parents were impressed and wondered if I had broken some Cold War trade law.) Now 45 years later, it is almost impossible to buy anything NOT made in China.  And it isn't just stuffed toys anymore—my SO's iPhone 6S is about as sophisticated and well-assembled as anything I have seen.

This is a long journey to make in such a short time and not surprisingly, China has skipped more than a few steps.  The most obvious one was a concern for the environment.  Somehow they came to believe that environmental matters were something that only concerned those weak, lazy, decadent, Western losers.   The poor tend to be less concerned about polluted environments—that is something only the rich can afford—and China had been poor for centuries.

Well the Chinese are now discovering that even with amazing advances in economic performance, you still need to breathe.  They are also discovering that even with a large fleet of brand-new coal-fired electrical generating plants, they also have the world's largest solar-cell manufacturing facilities.  So just as they have become arguably the world's biggest polluter, they may be having second thoughts and could just become a serious player at Paris COP21.  The Germans aren't exactly convinced but that is what comes of trying to solve these sorts of problems for decades.

"Time to Choose"

Charles Ferguson, whose documentary of the crash of 2007-8, Inside Job won an Oscar, has a new one out on climate change called "Time to Choose" and it can be watched for free today, Dec 1, 2015.  Now let's see what the pols can come up with in Paris.  I'm still betting: Not Much.

El Niño coming

This winter looks to be an odd one because of the arrival of another massive El Niño.  Here in Minnesota, we are getting our first snow and it already December—and they are predicting that it will be gone by this weekend.

The good news is that this weather system may in fact do something to fill all those empty reservoirs in California.  But generally speaking, this will, at best, be some temporary relief from the ongoing climate problems.  And as we see in the second article, this is going to cause all sorts of havoc to the real economy.