Keeping up with news of the corn belt drought

Much of the damage to the midwest crops had already been done by, say, the third week in July.  So of course, the rains from Isaac are coming too late for this year's crop.  On the other hand, the total soil moisture is so low that fall rains are a welcome recharge for a severely dried-up land.  The drought-resistant corn varieties are that way because they are more efficient at extracting water from soil (which is why corn that failed to grow ears can still look green.)  So this crop failure could easily be setting up an even bigger crop failure next year.  As a result, very few will be complaining if we actually have a wet fall.

The Predator Class nominates one of its own

There is literally no description so harsh that Mitt Romney hasn't spent of lifetime earning it.  Matt Taibbi is on his case.  Last night, the Republican convention chose as it's theme, "We Built it."  So now they have a standard bearer who could chant, "I wrecked it and got very, very rich."  Difficult to respect people who cannot discern between up and down.

Insurance and climate change

We are beginning to see stories about the rather large losses facing the crop insurance business.  Pretty difficult to place a price tag on this catastrophe but these insurance losses are one way.  Not surprisingly, it has been the insurance guys who have been most vocal about climate change.  These are numbers guys and the numbers look very bad.

Still working on the Volt

In order for electrical cars to become a serious alternative, they MUST be built by serious car guys.  Robert Lutz is clearly a car guy and I still believe his Chevy Volt idea will be the prototype for any reasonable future car.  Still working out the kinks but with guys like Lutz, you have some assurance that the kinks WILL be worked out.

Germany calls time out in race towards renewable future

Thank goodness its the Germans who are trying to convert a major industrial infrastructure to renewable power because there are going to major problems.  But they seem to have the political will and sophistication, and the problem solving skills to see this through.

Apple vs. Samsung

Patents are probably one of the best ideas that almost never work.  The economic advantage of being second is overwhelming.  You don't incur the enormous costs and risks of discovering a new market and building something that fills it.  You have a chance to improve on the original.  Etc.  Knowing this, the government in places like USA stepped in to protect the original inventor by instituting patent laws—establishing the patent office was one of the first things this country did.  But if patents were instituted to protect the honest inventors, patent laws are the territory of some of the more Predatory legal schemers.  Knowing this, many Producers are reluctant to even bother with patents.  Henry Ford, for example, hated the patent system.  Such Producers rely on trade secrets and technological complexity to protect their inventions.

Apple's iPad seems like it would be the perfect example of something that requires patent protection.  The innovation was obviously Apple's.  It was not only their idea but if anyone recalls the jeering that met this product's announcement, most pros didn't even believe it was a good idea.  And while the iPad isn't all that easy to copy, it is easy enough so that Apple surrounded the product with as much patent protection as they could muster.

It didn't take very long before Samsung, a South Korean company with plenty of resources to copy the iPad, and Apple met in court.  The arguments were pretty boilerplate for a patent fight but it was clear from the outset that Apple's position was rock-solid.  In fact, it took the jury less than three days to return a $billion+ judgement against Samsung.

But while the patent implications are fairly clear, the outcome is not.  The Koreans barely acknowledge patents at all and so Samsung will likely shop for a new trial venue.  Apple just happens to be Samsung's largest customer so under the theory of "the customer is always right" one would think these companies could work out some agreement.  But one never knows.  There are complicating issues and patent lawyers really have no reason to ever settle in a fight that guarantees them a long-term income stream.

Me?  Even though I am not an iPad / iPhone user so have no dog in this fight, I find it interesting because it is such a classic Producer-Producer spat.  It demonstrates the various cultural differences over the subject of intellectual property.  It highlights the problems of just who invented what in the world of advanced electronics where such issues are FAR from clear.  And the speed by which a jury reached a verdict in this trial suggests that folks from USA have grown exceeding weary of the Asians copying so shamelessly.

The Eagle has landed

Neil Armstrong died Saturday at 82.  Of all the astronauts, it was Armstrong that I most identified with.  He was the airplane geek. They all were to some extent, of course. But Armstrong was the one who had built the models and read the books.  He wanted to be a designer and got an aero engineering degree from Purdue.  He became arguably the top test pilot for the X-15—a truly scary way to punch a hole in the sky.  And he was chosen to be first on the moon because his engineer's approach to space flight did so much to advance the art.  He was the guy who always wanted to understand just what a craft was capable of doing.  This skill was fully tested when he set down Eagle in Tranquility with 17 SECONDS worth of fuel left.



Hollywood may like to portray pilots as swaggering daredevils.  But it was the guys who made lists and paid attention to the smallest details who put men on the moon.  It is so appropriate that one of those people was given the honor of being first to walk on its surface.

Missing the point completely

Who built what?  Elizabeth Warren vs the outraged right.

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No! There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

I happen to agree with every sentence of Ms. Warren's defense of the social contract—probably because I understand where she comes from.  She grew up in Oklahoma during a period of economic development and one of the undeniable features of that landscape is how utterly reliant people are on each other.  It's true—the more skills you have and the more self-reliant you are, the more you are made aware of your need for outside help.  You may be a damn fine carpenter but you don't make your own nails.  And people with skills know this—which is why they are forever organizing associations for mutual self-help.  Ben Franklin was notorious for this kind of behavior.  Jefferson, who actually could produce nails at Monticello, was such an organizer he eventually would help invent, along with Franklin, the United States.  Very multi-skilled people like the Amish organize themselves so tightly, outsiders often view them as a cult.

Even Robinson Caruso needed Friday!

But these perfectly accurate remarks have set off a storm of outrage.  And it's for one simple reason.  Yes, you need collective action to build roads, have homes with windows, span your rivers with steel bridges.  Yes, you need schools so we can have surgery and the Internet.  Yes collective action is a good thing.  But these support systems are essentially available to everyone, yet only a few take the required action to build a successful business.  Collective action is necessary for survival but individual initiative is still required for progress and innovation.

For me, what is actually painful about watching this debate is that Producers OWN both sides of it.  OWN them!  And yet this debate is based on some deeply-held ideas.  And why is that?  Because for most of the history of industrialization, we have been told that societies must be organized around the idea of individual rights or of collective power.  These extremists have given us Mao's Communist China and Margaret Thatcher's England.

The CORRECT Producer understanding of this "debate" is that it is utterly irrelevant.  A well-run social order isn't always collective action or always individuals operating on their own—it is a mixture of both.  Always!  Now an interesting debate can be had over which part of the society should be a haven for individualism and which should involve group decision-making, but those who have believed that one side or another should always prevail created some truly ugly societies.  So please count me in the universe of those who believe we should have good roads and public schools but also laud the solitary geniuses like Steve Jobs who can find a new way to utilize the gifts of the social order into a new organization that changed the landscape.

The answer is BOTH!  ALWAYS!

Doing things differently

It seems rare, but virtue often triumphs.  We should remind ourselves of this fact more often.  Here we have another study that seems to prove that those countries with good governments, schools, and honest business practices wind up at the top of yet another business ranking.  If course, the real reason this is true is because honesty and trust allow a group of people to accomplish much more difficult tasks than one made up of liars and crooks.  Virtue is an economic good.

Saturday toons 25 AUG 12

Rollin' on the river

Spent part of yesterday being carted about on a perfectly lovely tourist attraction dolled up to look like a mini riverboat called the Magnolia Blossom.  The purpose of the outing was to get some interested parties in the same place to discuss ways to minimize the sediment runoff of the Minnesota River Watershed.

The nature of the problem is pretty clear.  Water is running faster down the tributaries and the main channel of the Minnesota.  This faster-running water can carry more sediment and causes more bank erosion.  This sediment is filling up the upper end of Lake Pepin—much to the horror of those who consider it to be one of the more beautiful places on earth.  And then there is the other problem that Minnesota farmers are sending WAY too much of their expensive fertilizers down the river—the dead zone off Louisiana is ghastly and to their credit, this group seemed genuinely dedicated to finding solutions.

But while there was genuine consensus of the nature of the problem, this did not mean there was any agreement of what to do.  Start with the dilemmas of who causes what?

The problems of fast-running water are largely those associated with urban sprawl.  The more land you cover with roads, roofs, and parking lots, the more water you have to move away every time it rains because it isn't soaking into the ground.  This problem is generally caused by real estate developers building on the cheap because there usually are much better ways of managing runoff—only they happen to be expensive.

The "dead zone" dilemmas are exacerbated by the nature of agriculture.  Farmers change their growing methods only after considerable care and firm evidence that what they are doing doesn't work any longer.  Change is difficult and usually expensive.  The term "bet the farm" was coined to cover this economic resistance to change.

And so because doing the right thing by nature is difficult and expensive and everyone is broke and up to their eyeballs in debt, we see folks making certain we know about what the other side is doing to destroy mother earth.  And the whole idea behind this exercise it to get someone else to pay the bills.  That this slum landlord mentality has crept into the minds of some of the more sensible people I can imagine speaks volumes for the evil insanity that is neoliberalism.

Talked with a guy from the DNR who was straight out of central casting.  Just the sort of person one would want managing the public's resources.  And yet at one point, he ventured the notion that the problem with agriculture was insufficient regulation.  When I suggested that maybe the best way to get farmers to change is to suggest a believable alternative and then offer to pay for some of the capital expense, his response was, "but the State has no money."  Which is true.  And that is the problem he has never considered—WHY doesn't the state have any money?  After all, the creation of money is perhaps the easiest thing humans do!  And so because he cannot ask the obvious question, he must suggest an absurd "solution"—telling farmers they have to do something in the public good without providing the resources to do it.  Because the folks at DNR aren't really about solving problems—their role is to make rules and hope someone else can solve them.

[sigh]

How the drought will impact the global economy

Pretty difficult to hide a drought that covers nearly 65% of the agricultural land in USA.  So of course, the Predators are circling this disaster look for ways to make a quick buck.  Here's the view from Hamburg.

Solar-panel "oversupply"

If you ever needed a reason to condemn Leisure Class bankers and the way they are mismanaging the economy, this example will do.  The planet is in critical need to replace its trillions of fires with solar power.  And yet we see a Chinese company teetering on the brink of collapse because they have "excess" production capacity for a product the planet dearly needs to avoid destruction.  We don't have an oversupply of solar panels, we have an acute undersupply of customers with some money.

The Green revolution will NOT be easy

Everything the Producers do is a LOT harder than it looks.  That is why I want to strangle the hippies who try to tell us there are 50 easy ways to save the planet.  No, there are not.  In this incredible article, we see some of the problems caused because "green" electricity isn't as reliable as the stuff that comes from burning coal.  I happen to believe these problems can be designed around.  But it is NOT going to be easy and only a tiny handful of people have any idea how difficult it will be.

IMF admits they were wrong!!!

In some ways, this is one of the more interesting stories I have read in a LONG time.  Because IMF has been one of the bigger causes of human misery since at least the 1980s when the idea of "structural adjustments" became the most evil concept since the fall of the Third Reich or the failure of The Great Leap Forward, I have always assumed that anyone who worked there HAD to be utterly numb to human suffering.

The reason is simple—if you are even remotely interested in stimulating an economy, Rule #1 is the maximum amount of the stimulus must go to the lowest income groups.  And why is this Rule #1?  Because, if you pump the money into the bottom, that money will show up as economic activity at every level on its seemingly inevitable rise to the top.  If you pump the money into the top, it barely gets used once.  Most likely the rich guy will put his new-found wealth into a hedge fund where it will spend its days trading financial instruments that have no practical usefulness whatsoever.  That's why the expression is "A rising tide lifts all boats" and NOT "A rising yacht lifts all tides."  Since the IMF redefined its mission as protecting foreign bondholders above all else—certainly above the well-being of the society they were "adjusting"—they have been in violation of Rule #1.  Whether this was out of pure malice or utter madness has been one my life's most persistently annoying questions.

So now we see that the IMF—the EVIL IMF—the insane IMF—has been forced to admit that Iceland got it right.  When you look at little Iceland, it's kind of easy to blow off their accomplishments post 2008.  They prosecuted the criminals who had taken over their banking business and applied their economic cure to the lower and middle-income folks who had been placed in dire straights by those thieves.  It was the blindingly obvious solution to their problems—so what's the big deal?  The big deal is that Iceland is still the only example of this enlightened behavior.

Why I think the drought is an important story

In these days of infinite psychobabble, I am sure I stand accused of "obsessing" over the corn belt drought.  I probably am.  But the reasons make a lot of sense to this blog.

• This is a Producer Class story.  Farmers are the archetypical Producers and in a year when they broke all planting records, a whole bunch of them are not getting a crop.  This is the primary story here.
• This is about climate change.  Global warming is no longer a prediction—it is the new reality.
• The global response to this loss will test the limits of Producer cooperation.  Their efforts will be assaulted and looted by the banksters.  This catastrophe will test just how far we allow the banksters to intrude upon the real economy.
• I have primary sources for my material.  I happen to like farmers and have an intense interest is how they do what they do.  I am meeting more of them these days as well.
• This is historical.  If the corn belt doesn't raise corn, this will mean a HUGE change in how this country is organized.  Historically, civilizations have fallen over less provocation than losing a food source the importance of the USA Midwest.

I could probably think of some more reasons why I should devote a lot of effort to this story.  But this is enough for now.

The drought picture becomes clearer

Famine, one of the more frightening disasters that can ever threaten humanity, hovers over this fall's harvest like an ancient specter.  This is one of the disasters we thought we had figured out how to avoid.  The USA has never had anything that remotely resembles famine so there are no historical precedents to guide us. But we are going to discover soon enough just how well we can cope.

This first essay is by one of those market types who think that this drought is mainly a matter of how well you adjust your portfolio.  He is pretty cold about it too.  It is also a reminder that this drought is going to affect FAR more than the 1.5% of the economy directly tied to agriculture.

Saturday toons 18 AUG 12

The pork producers on the drought

From our friends the pork producers.  A big hog operation is already making money the hard way but when you're losing money, you are paying for the privilege of doing this difficult and dirty work.  Pork is about to become a delicacy.

It is sort of ironic that these right-wing Republicans are damn quick about becoming New Deal Democrats.  Hey, I love Producers but I have never claimed that are always politically enlightened.  We remember the enlightened stuff because it was historically rare.  Well this is pretty damn good and concerns the balance between energy and water—an INTERESTING subject indeed.

The return of rational economic thought?

I am not so certain that the problem with economists is corruption,  Even so, it is not at all surprising that Chinese economists sound a lot like the ones working for the Federal Reserve in USA.  In fact, Institutional Analyses practically demands that this is true.

Remember, drought has ravaged many agricultural areas

Russia, India, Australia, and North America.  That a LOT of agriculture that is hurting at the same time.  And while Badkar makes the typical error that because so few people are directly involved in USA farming anymore, somehow our drought is going to be less dangerous.  I don't know about that—food shortages are food shortages, no matter where they show up.  The global food system is tightly linked.  Note also that India's economy is still staggering from the baleful effects of tight monetary policy from the last time they had a bad harvest (my boldface).