That damn Riksbank Prize

Even though I almost never read fiction, I got talked into the Stieg Larsson crime thrillers starring a grown-up Pippi Longstocking Goth hacker (Lisbeth Salander) and her link to the outside world—an investigative journalist for a lefty rag (Mikael Blomqvist).  Part of the attraction was the notion that a man named Larsson could write so well.  But mostly these stories partly answered a question that has gnawed at me since I first visited Olaf Palme's Sweden in 1970 "When the Social Democrats were in power for over 40 years, what was the Swedish right wing up to?"  Larsson includes a whole bunch of examples—like the brother who became a Nazi in the 1930s and lost his life helping Finland fight the USSR—a totally believable scenario.

But nothing, but nothing, tops the triumph of the Nordic right wing than their misnamed "Nobel" in economic sciences.  By giving their prize to a wide assortment of crackpots, charlatans, and fools, the Swedes managed to undo almost every bit of progress ever made by the Social Democrats.  The triumph is so total that now even the Social Democratic Party regularly endorses the principles of neoliberalism.

I watched this process but I never really got a handle on how the economics profession got taken over by religious nuts.  But knowing how Scandinavians organize their small groups, I always suspected that there was probably one person with the combination of charm and browbeating who managed to set the agenda.  Well there is now a new book out—The Nobel factor: the prize in economics, social democracy, and the market turn—that describes the process of prizewinner selection and the one guy has a name—Assar Lindbeck.  The neoliberals have had a wide assortment of bad guys from Pinochet's thugs guided by the Chicago boys to Gaidar who helped loot the USSR with the advice of Jeffrey Sachs and the wünderkind from Harvard.  But the real bad guy is Assar Lindbeck because he poisoned the intellectual well.  The neoliberal madness he elevated to international fame will lie around in libraries like so much toxic waste ready to seduce gullible young minds for a very long time.

Moneylenders and their illusory social utility (update)

One of the more popular posts recently was Tony' epic takedown of those who believe that money-lending is an unalloyed good.  That this is not true should be blindingly obvious to anyone who can count.  Tony made sure everyone could understand.

The biggest problem, by far, is the excessive size of the financial sector.  The society simply cannot support such a huge parasitic / Predatory population.

Of course, since the real economy needs nowhere near such a large financial sector, there is almost no way for them to generate enough income from legitimate business to keep the doors open—much less provide for the pay scales the banksters seem to think is their due.  So not surprisingly, eventually all of them resort to fraud. Bernie Sanders made the claim “the business model of Wall Street is fraud.” That was the statement Tony was defending, after all. In fact, as William Black argues below starting at the 17:30 mark, fraud has become the organizing principle of banking—without it, most large banks are unprofitable.

Volkswagen the best?

When Volkswagen was caught cheating on its emissions tests in USA, the vilification was widespread, not to mention expensive.  At the time, I was sure that VW was not the only one cheating.  What I didn't predict was that VW was building the cleanest diesels being sold.  Well, according to the Europeans, that is exactly the case.  Which doesn't surprise me at all.  Nor does it surprise me that Fiat and Suzuki are the worst.

Does Trump have a chance of winning?

That Donald Trump believes windmills are ugly is enough to eliminate him from serious consideration in my mind. Especially considering the ugly structures he has put up. And that's just the beginning.  Even so, he has a decent chance of actually winning this election.  He is running against a woman who has carried a LOT of water for the neoliberal / neocon establishment and most people are FURIOUS at that crowd these days.  So even though he has never held any elected office, makes a political "gaffe" per hour, holds positions that are, at best, partially thought out, and is getting beat up by the cultural elites on a 24/7 basis, he still stands a reasonable chance of winning.

Not surprisingly, two of my favorite writers on political matters have weighed in on this paradox. Pepe Escobar actually believes that there is an establishment faction that doesn't believe that globalization has been good for the country.  And that this group is secretly greasing the skids for Trump.  Now I am sure that there are groups that are uncomfortable with the idea that China now makes parts for the defense industry, and other reasons for economic nationalism, but they have had precious few victories since 1973.  The neoliberals have been on a serious roll so if there is a secret wing of the establishment supporting Trump's economic nationalism, they have been deep underground for the better part of two generations. Losing.  But this essay is by Escobar so it is an interesting idea.

Raimondo concentrates on the reasons to believe the global elites are in a full-blown panic.  It is not just Trump, it's Brexit, Marie LePen, and AfD winning more votes than Angela Merkel in her home district in Germany.  I am not so sure the elites have all that much to worry about.  Yes the proles are angry enough to dust off the guillotine but their problem is that they have no alternative plans.  The fact that there are folks actually talking seriously about Marx again only proves there isn't much out there yet to summon the troops to arms (or whatever.)

Tales of conversion—electric cars

Germany has set a goal to have 1-1.5 million electric cars on the road by 2020.  DW sets out to discover just how realistic such a goal is.

• Part One: DW crew of two leaves Berlin in a VW electric car. Discovers the problems of using recharging stations.  Meets up with a convention of hard-core electric-car enthusiasts in Leipzig.
• Part Two: Getting around 100 km per charge, the crew make a four-stop drive to Munich where they swap their ride for a BMW i3.  BMW has sold 25,000 of these—20,000 in USA.  33 kWh configuration starting at $44k.
• Part Three: The possibility is explored that progress towards an electric fleet may hinge on outside actors.  The DW crew visits a promising but flawed effort by the technology students in Munich, a conversion shop swapping electric drivetrains for original IC power-plants, and perhaps amusingly, a shop that electrifies old Citroen 2CVs (last produced in 1990) for around 16,000 Euros.
• Part Four: Stuttgart has a shared fleet of 500 electric Smart cars.  The experience is sampled before a visit to the Bosch battery works.  90% of lithium batteries are already made in Asia.  Bosch isn't going to change much—a typical German auto supplier tied to long-cycle development times.  Daimler has promised to convert their entire line to optional electric.  Actually, they don't have much hardware yet.
• Part Five: The electric Mercedes b-type proves amazingly frustrating.  Short range combined with crazy recharge times made this leg an ordeal.
• Part Six: The DW crew discovers the recharging problems are being caused by the undersized cable provided by the Benz PR department.  One final car swap brings another VW—an electric Golf.
• Discussion of why German efforts at e-mobility are so lame.

Watching this series of short video clips was great fun but it highlights all sorts of problems associated with any serious effort to convert the transportation system to electric power.

• The German automobile industry is not taking the problem seriously.  When your company has been building Bahn-Burners for over 100 years, it requires a huge intellectual leap to start building e-cars.  It shows.  With the possible exception of the BMW i3, all the e-cars provided by the big producers were battery powered conversions of their current IC lines (i.e. the VW e-Golf.) None had a ground up design.
• The charging infrastructure is completely disorganized—to use all 6500 charging stations in Germany requires over 250 different smart cards.  Electric cars are considered urban runabouts—intercity travel has barely registered on anyone's radar.
• The Germans still consider electric cars a low-grade torture device—certainly the trip by the DW crew qualifies as an ordeal.  Cars are a big expense—no one wants theirs to make them miserable.

On the other hand, Tesla...

If it were not for Elon Musk and Tesla, those pathetic German efforts would probably seem like progress.  But they don't because Tesla is:

• Building imaginative and superbly engineered cars that were designed from the ground up to be electric cars.  Before Tesla, no one knew that electric cars could have all sorts of meaningful advantages.  Now anyone interested knows what they are.
• Not building hairshirt cars.  The S and X models can be configured to have supercar performance.  And when not driven at license-losing speeds, this available energy translates into respectable range. 
• Building its own recharging infrastructure.

Like all true Producer Class superstars, Musk is a man of vision.  He clearly sees a possible future where his efforts actually result in a better world.  Below are his comments on the occasion of the opening of phase one of his giga-battery factory.  What is so charming about his remarks is that he has discovered that the facilities to make spectacular products are more difficult to design and execute than the products themselves.  He understands the rationale for vertical integration on the molecular level.  At one point (13:00) he actually babbles about his love for manufacturing.  It's very cute!



If you have watched part five above and cowered with our intrepid DW crew as they toddle along at 80 kph in the right lane of the autobahn in order to conserve battery range, you might enjoy this Tesla's blast down an unrestricted stretch of autobahn in Northern Germany.  As the driver touches 250 kph he is heard to say, "please don't blow a tire—I love my wife."



Just remember, 250 kph is 155 mph.  This is faster than I have ever driven.  Because of Musk, we know that electric cars are the future.  We also know that any meaningful effort to change the atmospheric CO2 levels will only be accomplished with the efforts of such Producer Class superstars.

Business Insider lowballs the costs to fight climate change

That a serious program for combatting climate change will cost at LEAST $100 trillion is a bedrock principle around here.  Even so, I always look at anyone who is willing to put a number on such a project—even if it hopelessly underestimates the magnitude of the problem.

Rafi Letzter is one of the new young writers for Business Insider—I have never noticed anything by this person before.  And the writing and perspective is pretty damn good—climate change is already well under way and we as a nation have signed on to coming up with a solution.  So now the question is, what will this cost.  And the person chosen to provide this cost estimate is a business economist from Columbia.

Geoffrey Heal has a very impressive academic CV—18 books and 200 academic articles.  He is a member of Columbia's Earth Institute—the very same place where Jeffrey Sachs hangs his hat.  But keep in mind we are talking about an econ professor at an institution at least as reactionary as Stanford or the University of Chicago.  So we expect some routine errors to be baked into his assumptions including:

• It is possible to take the total energy consumption and figure out how much it would cost to build that capacity with windmills and solar cells.  Of course, this is insane because while it (almost) applies to applications like stationary power plants, it doesn't apply to aircraft, agricultural machinery, or ships at sea.  The costs of electrifying the whole infrastructure seems to have been left out of his thinking.
• Corruption! Any project this big will attract the Leisure Class charlatans in their masses.  We are not only talking contracting graft here—we are also talking about the soft core corruption of the endless bureaucracies of the pretty regulators.  Remember, over 90% of Superfund money went for office rents, etc. and less than 10% was spent on remediation.
• Privatized!  Heal cannot imagine any big building project being anything but a private venture.  A big WPA project was not even considered.  I cannot even imagine something this complex without massive public investment.
• There is a virtue in trying to save the climate on the cheap.  Well, Heal, since operating the public spaces on the cheap is what has led to the problem in the first place, suggesting that this could be done for something between $1-5 trillion shows how little you think of a livable planet.

The very next day, Letzter posts another article pointing out the problems with Heal's analysis (also included below).  I will probably read Letzter again.  Heal, probably not.

Historical context for the economics of this blog

Possibly the most stupid, embarrassing, social faux pas I have ever made came when I was in Finland trying to promote a book.  I was introduced by an earnest grad student who claimed I was most like the American Sociologist C. Wright Mills.  Now I happen to be a big fan of Mills.  I am pretty sure that I read no book at the university that was more interesting and important as his Power Elite.  I have read more interesting books since but at 21, Mills hit me like a lightening bolt.  So being compared to Mills was enough to trigger a major humility mode.  I'm surprised I didn't try to dig my toe into the floor.  "Oh no no," I actually heard myself say aloud, "I am not like Mills at all."

The kid who introduced me looked baffled.  As well he should have been.  After all, by merely reading my book he had deduced the Mills comparison.  He had no idea the role the Power Elite had had on my very survival as a student.  In fact, he should have been given an A+ for insight.  Besides, he was merely trying to locate me in the intellectual universe and this reference was a LONG way from misleading.

One of the more interesting intellectual exercises that fascinate the Veblen scholars is the question, "Where DID he get his ideas?"  He didn't learn much from his (very reactionary) economics professors like John Bates Clark and in fact spent the rest of his life refuting their beliefs.   His Ph.D. was on Kant.  So there isn't much there.  The attempts to link Veblen to Marx border on ridiculous.  So we are left with the obvious possibility that Veblen was a genuine original.  Of course, we cannot discount the fact that his original exposure to economics was the struggle by his family and neighbors organizing an economy at the very edge of civilization using the tools that could be hauled in a small wagon.

Veblen would become impatient with "scholars" who did nothing but categorize schools of thought.  One of his more withering criticisms was to call some intellectual pursuit "mere taxonomy."  Of course the people who do organize intellectual pursuits into roots and branches perform a useful service (if done well) but merely naming something explains almost nothing about the thing being named.

With those disclaimers, I must admit I found the following explanation for the various schools of economic thought very interesting.  It was produced by a group (or person) who wrote: SOCIAL DEMOCRACY FOR THE 21ST CENTURY: AN ALTERNATIVE TO THE MODERN LEFT

I have highlighted where I find myself.  This may be mere taxonomy but it is damn good!