2013—well, that was interesting

The defining image of 2013 has certainly got to be the picture of Pres. Obama yukking it up at Nelson Mandela's funeral.  The last president to actually use some presidential power was probably Nixon.  These days, a president is like a third-rate quarterback who calls the play sent in to him and is terrified to change it.  He doesn't run the economy, he has no influence on foreign policy, he has no control over a legislative agenda.  So his role is to dress up and read his script—and mind his manners for ceremonial occasions.  That he couldn't stay serious for the length of a memorial to one of the more significant figures in African history speaks volumes of how utterly bored he is with his role as puppet.

Notice here how little has changed in at least 40 years.  Of course, that should not come as a surprise—most of the "news" these days concerns the coming and goings of the Leisure Classes—finance and politics, sports and warfare, fashion and entertainment, and the never-ending pursuit of more perfect forms of uselessness.  In the world of the Leisure Classes, any change more profound than a new dance or hairstyle is to be systematically shunned.  If there is any change, it is usually a reversion to some infinitely irrelevant mediocrity.  For example, the political and economic discussions of the first 13 years of the 20th century were several order of magnitude more interesting and important than in the first 13 of the 21st.

Yet even in these days of Leisure Class ennui, they still have the capacity to astonish and entertain.  The Snowden leaks are revealing just what the country bought with its billions spent on "intelligence."  What it bought was the ability to track every phone call and keystroke of every computer on the planet.  Unfortunately, except for scamming the financial markets or keeping up on the sex lives of ex wives, no one seems know why anyone would actually want to collect that enormous pile of data.  But gossip is considered a Leisure Class virtue and snooping around on one neighbors is the essence of gossip so apparently just collecting the pile is an end in itself.

Then there is the matter of a new Pope.  As someone who comes from a clan that pretty much decided to ignore popes since 1517, I am bit detached from how important it is for the Catholic Church to occasionally burp forth someone who is willing to represent someone other than the super-rich right wing thugs that usually dominate discussions.  His most recent shocker was criticizing the beliefs in trickle-down economics.  Not surprisingly, the USA Catholic Right is going ballistic.  The Catholic Church is predisposed institutionally towards a profoundly conservative bent so we can reasonably predict that Francis represents a temporary flicker of light in a very dark place.  No one ever went bust betting on the darkness when the subject is Catholicism.

If more of the same-old from the Leisure Classes was all that happened in 2013, New Year's Eve would be appropriately spent getting roaring drunk.  Fortunately, the Producing Classes had a year that suggests we might not be forever stuck on stupid.

The Tesla Model S.  Whenever I am ghosting down the road late at night swaddled in fine leathers, late Beethoven quartets playing on the too-good-for-my-ears sound system, a climate system coddling me within a fraction of a degree of whatever I specify as perfect, I understand at a primal level why folks were never going to voluntarily give up the internal-combustion engine automobile.  No one in their right mind would trade a Lexus LS for a Nissan Leaf.  Then came the Model S.  Suddenly, that perfect audio environment of an LS sounds like a factory by comparison, that too-smooth-to-be-real V-8 is like a tractor compared to an electric motor, etc.  In the light of a Model S it seems that folks will someday very soon wonder why they ever put up with the fumes and smells, and the mechanical unreliability, of the gasoline-powered car.

Graphene.  If the Producer Classes have an occupation that drives all notions of prosperity and progress, it is clearly the material science folks.  And 2013 provided an example of just what research into graphene can accomplish when the South Koreans announced they had fabricated a super-capacitor from the stuff.  The idea that there is a method for safe, cheap, and reliable electrical storage that can be made from one of the cheapest and most abundant elements on earth is so wonderful, I keep re-reading the article to make sure someone hasn't changed the outcome.

Commodity-priced PV cells.  For years I have wondered how folks were ever going to adjust to the end of the Age of Petroleum.  Now the answer seems to perfectly simple—they'll just go out and buy some solar cells.  Solar cells became so cheap in 2013 they actually triggered trade wars.  In fact, 2/3rds of all solar installations worldwide have occurred in the last 2.5 years.  For the first time in my life, the end of the age of petroleum will not be some enormous trauma but will instead provoke a global sigh of relief.

So Happy New Year.  It is TIME to ignore the fools that have frightened us for so long and start planning for a much better future.

Suzuki on exponential growth

On November 28, Tony created a post that has proven to be one of our most popular ever.  It was a blast at the techno-pessimists and spoke of hopeful possibilities.  It was called Would'ya like a serving of hope for Thanksgiving?

Even though I am not willing to go so far as to claim that shortages are the result of bad economics, his post was quite persuasive.  I want to make this blog more upbeat.  But I also want to keep things mathematically literate.

I already have a highlight post that covers this subject—Elevator Speech #2--Continuous geometric growth in a finite biosphere is impossible.  Look for it on the left side.  But I also found this little gem starring David Suzuki that describes the problem of geometric growth about as well as it can be done.

In short, I want to get more optimistic but I intend to remain firmly grounded.

Buffett on wind power

If you wander over to a financial site like Business Insider, you will discover that most of the folks who are heavy hitters in that world are pure gamblers.  They occasionally talk about the real economy but that is very rare.  The one guy who stands out from this crowd of sharpies is Warren Buffett, who has made a fortune by concentrating on real economic considerations—like does this company make a good product.

So now we see that Buffett has decided to drop a cool billion on wind turbines to be erected in Iowa.  For those folks who believe in "trickle-down" economics and the ultimate virtue of the large investor, this is an amazing cautionary tale.  He is easily the most enlightened rich guy to prowl the canyons of Wall Street, and yet he is a serious Warren-come-lately to this technology.  Siemens and Vestas have already perfected the technology and set up production facilities in the USA Midwest.  The state of Iowa has invested in junior colleges that can crack out people who can keep those big turbines running.  The truth is, if we had to wait for guys like Buffett to provide us with new technologies, we might be waiting forever.

Greider on Yellen

Tony had a hit post over at Dailykos earlier this week where he pointed out, accurately, that Elizabeth Warren cannot save us, and neither can the Pope.  He suggested that left-progressives take a page out of the progressive playbook and start worrying about changing things down-ticket.

Interestingly, because the world's societies need massive infrastructure upgrades, and the Producing Classes can build almost anything that is properly funded, some enlightened new central bankers actually COULD save us.  Now since central banking is a haven for economic reactionaries, this doesn't seem all that likely—but in theory it is at least possible (think Marriner Eccles.)

Here is USA's leading authority on the Fed speculating on whether Ms. Yellen just might be the coming of that new, more enlightened, Fed Chair.  Me?  I'll believe it when I see it.  But then, I certainly did not expect an Argentine Jesuit to become such an enlightened Pope either.

Another warning on energy

It seems as though geologists must retire from big oil before they can talk sense about peak oil and its ramifications.  Of course, even the industry line that we have 53 years worth of oil at current consumption is frightening enough.  Oil is the most convenient, energy-dense substance we have ever found.  Replacing all the infrastructure that relies on oil could easily require 53 years and that assumes we start a crash program to replace it with renewables.  Unfortunately, the official line these days is that fracking (or some such thing) will save us so what's the rush.

100 years of the Fed

The Fed has been in existence for 100 years now. For the vast majority of that time, they have proven to be a disaster for anyone who has to work for a living—and by disaster, I mean Great Depression-level disaster.

The Fed has had exactly ONE director who was even close to acting enlightened—Marriner Eccles. And he was from Utah so came from a background of frontier-style economic development and the political thoughts of the Western political parties organized around money (Greenback, Populist, etc.)

Eccles understood that unless the real economy propers, bankers have no customers who can service their loans—and banks go out of business.

Now if this doesn't sound anything like the thoughts of Greenspan, or Volcker, or Bernanke, its because that useless protoplasm has never even entertained such thoughts.

O Day Full of Grace

Merry Christmas!

For someone who spent at least 40 years absolutely HATING this holiday—mostly because the folks hawking useless junk made it too expensive to enjoy—I find it a little odd to be encouraging the idea that someone should feel joy in the middle of this time of cold and darkness.  (It was -2°F (-19°C) this afternoon at 2:00 when I got back from grocery shopping so it is still occasionally cold at Christmas. And no, the crass materialism has not disappeared.)

Not surprisingly, the reason I feel the need to spread tidings of comfort and joy relates to music.  In spite of the fact that Christmas is now associated with a large body of intensely vile and truly ugly music, there still remains much that is transcendentally beautiful.  And as someone who spent much of my childhood learning to perform this music, it is where I have turned for refuge from plastic Santas singing about Rudolf and other manifestation of bad taste.  And this year, I learned something completely new about my favorite carol that is so wonderful, it makes me giggle.

I happen to live in a little town that is arguably the center of choral singing in North America.  In 1911, a young musician from Norway established a choir associated with the small liberal arts school his countrymen had formed in the late 19th century. Named F. Melius Christiansen, this musician was handsome, gifted, and charismatic and it wasn't long before his choir was touring regularly showing audiences just how intensely wonderful a cappella singing could be.  Soon he was writing arrangements that would musically challenge his increasingly gifted charges.

One particularly difficult number is entitled O Day Full of Grace which became a beloved Christmas standard for any choir that could actually manage to stay on top of its aural fireworks.  For years I have loved the thing just for the sound but for some reason, this year I decided I really wanted to know the words that are often lost in those soaring musical phrases. Google is your friend and I soon discovered that this little gem was written by a fellow named Nicolai F. S. Grundtvig who had adapted a 15th-century folk song in 1826 to celebrate the 1000-year anniversary of the coming of Christianity to Denmark.

Grundtvig wrote approximately 1500 hymns but this accomplishment of his is rarely mentioned because of his big project in life—the folk school movement.  The Danes are still proud of their folk schools and for good reasons.  The goal of these schools was not only to teach practical skills to rural Danish youth, but provide them with a sufficient appreciation of their history and culture to make them effective citizens in a democracy.  The formula has been amazingly successful—last December I created a post about the role of a folk school in the development of the Danish wind turbine industry.  In fact, it can be argued that the ideas of Grundtvig are still relevant to the modern Danish economy.  Folk schools eventually came to USA and one in Tennessee called the Highlander Folk School helped educate Rosa Parks.

Not surprisingly, Grundtvig is still held in high esteem by many Danes.  In 1927, they decided to build a church in Copenhagen named for him.  Because Grundtvig was associated with innovation, the church would be a monument to modern Danish design—it remains one of the more spectacular examples of Protestant church architecture to this day.  It is built with simple yellow brick—the kind used to build warehouses.

Increasingly extreme weather

Even following my little rule that I refuse to discuss the changing climate except when something happens that is off the charts, 2013 was still a year full of notable events worth mention.  Here John Vidal provides a recap.

What I find especially interesting is that extremely violent weather events don't seem to lead to significant action.  Oh, we are still going to climate conferences where folks point at each other trying to assess blame.  Papers get published.  And polls get taken to see if the great unwashed have finally come to the conclusion that a radically changed atmosphere actually poses a problem.  Fortunately, these Leisure Class activities are not the sum of human endeavor.

We are still stuck on stupid in that bizarro world called economics so necessary changes are still woefully underfunded.  Even so, there do seem to be minor flickers of hope—especially in the world of PV cells.  And IF the graphene-based super-capacitors actually live up to their promise of providing safe, convenient, and affordable electrical storage, we might survive yet.

Haiti and solar power

For years I have been telling people, you cannot save for the future, you can only invest in the future.  I usually get a puzzled look so I would try explain, "The fact that you forego a purchase in 1981 and rack up the old electrons down at the bank is no assurance that when you need someone to change your drool bucket in 2015, that person will be there to do it.  No, you want to invest in social and physical systems so that when the time comes and you have become weak enough to require regular assistance, the economic and social conditions are fair and prosperous enough so someone will want to help you."  At that point, folks will usually ask me to cough up an example of what I am talking about.  And my stock response is, "You will know that folks understand the difference between saving and investing when the 401k plans start investing in solar-powered nursing homes."

Not that I have actually seen one, understand.  The point here is that we need a LOT of investments just like that.  When the time comes for the drool-bucket swap, the person who swaps will have needed reliable and affordable transportation, routine training in the sciences of sanitation, etc.  And since the work itself is essentially unpleasant, the rest of the swapper's working conditions better be first-rate.  Like working in a building that can power its own heating and cooling systems.

And now there is an example of such thinking.  They have built a solar-powered hospital on Haiti.  It is probably not the first such hospital but by all appearances, it is the largest and most sophisticated.  Ah, the irony—the poorest countries in the world have some of the best solar resources.  (And the last shall be first. Matt 19:30)

Saturday toons 21 DEC 13

Transaction taxes

There are very few ideas with which I so totally agree as the concept of transaction taxes on money instruments.

• They are fair—if a poor mother must pay sales taxes on diapers for her child, why shouldn't a hedge-fund trader pay taxes on his purchases in the markets? 
• Even small taxes would dramatically slow the trading in securities that have no real-economic purpose at all.  It would be wonderful if money became as difficult to move around as factories but at least trades held for less than five years should pay a penalty if the world of finance and the real economy are to ever align.
• They would raise a LOT of money needed these days to pay for necessary programs and infrastructure upgrades.

So of course, the banksters intend to fight this idea to the death.  They KNOW, better than the rest of us, that if their activities were limited to useful activities, they would probably make less than the wages of a civil servant.  Transaction taxes are aimed at reducing useless banking by taxing it. Cannot have that, now can we?

One other thing.  The essential principle of Institutional Analysis is to understand that how folks make their living pretty much determines how they behave.  Here we can see German banks, many of which were organized to foster real economic development and were amazingly successful in their duties, now acting the same way as the craziest banksters in London.  "Bankers will act as bankers" smiles Veblen's more interesting insight.

Fukushima cores melted down

The reactor cores of Fukushima Daiichi 1-3 suffered a catastrophic meltdown.  TEPCO has been denying this since the original disaster.  No one I knew believed them. Last Friday they finally came clean.

The only good news is that core meltdowns do not trigger the "China Syndrome."  The rest of the news is just terrible.  And as nearly as I can tell, no one has any idea of what to do next.  The Japanese government has asked for international help.  No one has stepped forward.

Leave the coal in the ground

In the fall of 1962, my eighth-grade science teacher was talking about all the things that could be made from coal—plastics, medicines, fertilizers, etc.  At one point he said, "when you think about it, burning coal may be the stupidest thing you could do with it."

One classmate just exploded in genuine anger.  "Only someone who has never been cold would believe that burning coal was stupid!" he raged.  Both the rest of the class and the teacher were surprised at the anger.  On the other hand, we all agreed he had a legitimate point.

I thought about that exchange today because it encapsulates the essential dilemma of burning coal.  Yes, it would be a good idea to save that coal for some future higher purpose.  Yes, burning coal will destroy the atmosphere.  On the other hand, there is something to be said for doing whatever is necessary to keep warm.  So the trick is to figure out ways to stay warm and power the society without resorting to fire.  And that, folks, will be a LOT harder than it looks.

Iceland sends another bankster to jail, USA has many more crooks but...

The fact that Iceland is treating the banksters like more or less common criminals points to a cultural feature of a small Nordic country.  For example, the small country of Sweden has an large complex industrial culture that encompasses automobile, truck, bus, and ship manufacture, specialty steel, telecommunication equipment, and a host of smaller enterprises that fill in the gaps.  Not surprisingly in a country of only 10 million, everyone knows someone who works for a living doing tasks that are often FAR more difficult than anything they do in the financial world.  Iceland has figured out how to survive a very difficult climate by tapping geothermal resources and other amazing feats with a population of only 321,000.  This fact leads to the cultural question, Why should we treat the financial services business as special and privileged?

This question is fading in the Nordic countries as they slowly lose industrial activity to Asia and the teachings of neoliberalism becomes more mainstream, but there is still enough animus towards the idea that banking is inherently elite to put banksters in jail.  I approve and for those reasons!

China tells pilots: learn to land in smog

This story is almost unbearably sad.  China has begun to admit it has a critical pollution problem.  This pollution largely caused by equipment and infrastructure that is less than 25 years old.  In other words, many of her problems are caused by decisions that have been made since James Hansen gave his famous testimony on climate change in 1988.

As I constantly preach—pollution is a function of design.  What this means is that there is little the Chinese can do about her new pollution problems because the machinery that produces that pollution has now been built. There is precious little that can be done now without replacing this virtually new equipment.  Here is a country that has almost completely rebuilt in the past generation but because they ignored the principles of green design, the work of millions will almost certainly lead to environmental catastrophes.

Talk about missing a golden opportunity to do it right.  So now China is going to find out how expensive it is to build on the cheap.

Pilger on Mandela

I have a friend who is a summer-of-love son of a Mexican playboy who eventually had him come to live in a very large house in Mexico City.  To say this person had a different childhood than mine is a massive understatement.  The very rich in Mexico form a small town where everyone seems to know each other.  Friend is pretty cagey on this subject and usually I cannot tell if he's not telling the whole story or if his father has left out some important details, but he seems pretty conversant on the subject of corruption within the Mexican ruling class.  I value his opinions because USA is clearly moving from being an industrialized republic to a neo-feudal deindustrialized oligarchy like much of the rest of the Americas.

Sample opinions:

"What is so amazing is not that USA politicians are corrupt, but that they are so cheap.  They'll sell out for a $25,000 campaign contribution.  No Mexican president ever leaves office without at least a $1 Billion salted away in secret offshore accounts.  Most people estimate Salinas' loot at over $8 Billion."

"Just remember, the first big investors in Romney's Bain Capital were the ruling families of El Salvador who were looking to invest the money they had creamed off US aid for their dirty little war in the 1980s.  I guess the Mormons are nothing if not ethically flexible.  Well, maybe Bain was a little more ethical than the rich Salvadoran thugs because while they looted and destroyed some towns in the American Midwest, at least they didn't rape and kill nuns or organize death squads."

The reason I bring this up is because of the conversations we have had over what I just call, "The Talk."  I was first made aware of "The Talk" by James Carvelle who was usually credited for being Clinton's economic strategist during the 1992 elections.  He is supposed to have created the slogan "It's the economy, stupid."  Clinton had won the election making economic promises that would have gladdened the hearts of the 19th-century Populists.  By the time he was inaugurated, Clinton had installed an economic team that was certain to break every campaign promise.  Carvelle watched this process unfold and at one point said hopelessly, "In my next life, I want to come back as the bond market."

Clinton's trip from Southern Populist to neoliberal swine was far from the longest political journey.  We saw Bob Rae elected as Ontario's Prime Minister from the left-populist NDP party who became a neoliberal and sold out his union supporters. We also saw Michael Manley of Jamaica, who the State department probably considered a Communist, adopt a neoliberal plan upon his second election in 1989.  Whatever is included in "The Talk", it seems quite effective.

But whenever I want to indicate evidence of "The Talk" I usually come around to Nelson Mandela.  He was a real fighting revolutionary.  The ANC actually got material assistance from Cuba and USSR who were fighting the South African army quite effectively in both SA and Angola. Mandela himself spent 27 years in a SA prison—not an especially fun place to be.  His supporters had organized and died.  Yet Mandela had barely emerged from prison before he had agreed to sell out his supporters and shoulder the debts incurred by his tormentors.

So I am asking my friend his best guess as to what must be included in "The Talk."  He said he didn't know but it was probably some version of "which would you prefer, silver or lead (plata o plomo—slang for money or bullets)?  We have both."  A guy like Mandela was made to understand that his "unconventional" economic theories would cause more misery for his followers.  But if that failed to impress him, he would be made to understand that he had a choice—he could play ball with the lords of international finance and assure his great-grandchildren could afford to attend the finest universities on earth, or he could be targeted for assassination.  All this would be very polite and would stress that all the "serious" economists on earth agreed with the economics of neoliberalism so he could sleep knowing he at least tried to cut a good deal for his supporters.

And so because Mandela played ball, he was accorded a memorial where some of the folks who once had called Mandela a communist and a terrorist (which he was as a young man) came to pay their respects (or at least goof off.)  The most famous picture of the event seems to be David Cameron, Pres. Obama, and Danish Prime Minister Helle Thorning-Schmidt—good neoliberals all—mugging for a smartphone.  The evidence of "The Talk" just seems to be overwhelming.

Saturday toons 14 DEC 13

The light returns

In Sweden, they have a celebration of St. Lucia on Dec 13th.  The oldest daughter in the house dresses up in a white gown and a crown of candles and serves sweetbreads to other members of the house.  As we all know, the solstice isn't until the 21st (about) but when things are as dark as they get in the far north, who can begrudge anyone jumping the gun (a little).

Anyway, the Swedes have a lovely Christmas Carol that has the advantage of being perfect for teaching children how to sing parts.  It is called Jul, Jul Stralande Jul (Christmas, radiant Christmas) and it has become something of the official song of St. Lucia Day.  Just beautiful.

My mother and sisters played the part.  I can still smell my mother's cardamom coffee bread.

U.S. rooftop solar power shatters third quarter records

I am 64.  I have been interested in solar power since 7th grade.  And I still have trouble believing we finally made the collection part work for regular people.  Oh it's still pretty expensive and regular people better have a solid middle-class income stream.  But still, that's a HUGE improvement over the days when PV cells could only be bought by governments trying to power spy satellites.

This is a significant milestone—USA is about to pass Germany in solar installations.  Now Germany got her lead when PV cells were in their pricy early-adapter stage and good German solar sites are much more rare than in USA.  So the German accomplishment is nothing to sneeze at.  But given commodity PV cell pricing and the fact that every square foot from St. Louis to the Pacific is a better solar site than anything they have in Germany, it was probably only a matter of time before there was a leadership change.

And remember folks, this is an energy change.  Economical solar power will alter the landscape of the real economy as certainly as the discovery of oil.

Technology and jobs

One of the truly vicious little lies that keeps getting traction is that the economic problems facing the USA middle classes are caused by the introduction of new (labor-saving) technologies.  Simple observations back such a conclusion—obviously someone with a chainsaw can cut down more trees than someone with an axe.  So a company that cuts down trees armed with chainsaws needs far fewer workers to produce the same output.  Such productivity gains are routinely measured by both government and private statisticians.

Veblen claimed it was a rare labor-saving device that actually saved any labor.  And though I am someone who is a tool junkie who has bought dozens of labor-saving tools from power mitre-box saws and compressed-air finish nailers to some damn powerful computers, I tend to agree with him. And I am quite certain this is not just being counter-intuitive.

Here's why.  Take the automobile industry as an example.  The coming of cars put a bunch of horse-related occupations out of business (blacksmiths, feed dealers, vets, etc.) but the result of this change was an economic explosion that has lasted 100 years or more (roads, urban sprawl, repairs, emergency medicine, oil refining, etc.)  There are good reasons why this happens:

• Better and cheaper technologies tend to create new demands.
• Tools are more often purchased for quality gains than for quantity gains—which is a good thing because quality gains have their own payoffs—even if the new super-output technology sits idle much of time.

The result is that technology and unemployment are only distantly related.  There are a host of reasons that rank MUCH higher on the list of reasons for the decline of the USA middle classes.  There is PLENTY of necessary work that needs to be done.  There are millions of unemployed around the world.  The work that needs doing requires the finest and most sophisticated technologies available. Building the green society ought to keep folks busy for another century.  If the funds to build it became available, global unemployment could plummet to 3% in months—and many of those jobs would come from inventing, perfecting, and producing new technologies.

Die! suburban office parks

As someone who got to see the real estate bust of 1982 up close, I hold a very jaundiced view of the petty real estate speculators and hold a much lower opinion of the the bankers who fund their crazy schemes. Let me explain.

I was living in St. Paul at the time and had been personally involved in a scheme to help restore a gracious old neighborhood by rebuilding a turn-of the century four-unit rowhouse that was vacant and near collapse. I learned a very great deal from that experience about how the "value" of property rises and falls as dictated by political, social, and economic conditions that had very little to do with the intrinsic value of the dwelling itself.

For example, because this was originally a Victorian neighborhood, the perceived value of the real estate was based on how many folks could be persuaded that such a style was sophisticated, trendy, and just plain cool beyond words.  Problem here! Victorian houses originally went out of style for some very good reasons—the best of which is that they are a maintenance nightmare and were designed to run with live-in servants.  So even though a well-maintained Victorian house could be featured in movies and commercials as the perfect embodiment of homeyness, the fact is the owner better get a lot of thumbs-up in life to justify the insane costs of owning one.

Even though the denizens of Cathedral Hill would talk of the need to preserve historically significant neighborhoods and saving an architectural heritage, at the base, they were buying aesthetics.  Now I can go on for hours about how aesthetics is arguably the most important consideration in economics, but what it means in practice is that housing is also part of the fashion industry—and there is NO accounting for taste.

But while it was enjoyable to learn aesthetics from some neighbors with especially refined taste, the lessons learned from the bankers were no fun at all.  I discovered that it was an occupation utterly driven by emulation.  The way bankers reduce their personal risk is to do exactly the same thing as everyone else in the business. The old Soviet Politburo was not nearly so homogenous.  Obviously we were not going to restore an ugly slum to its former glory until bankers got involved, and they had decided as a group to redline the whole area.  At one point we actually threatened one banker with a sit-in (this was 1976) if he refused to stop redlining.  He actually caved to political and social pressure yet in the process became a local hero who also got very wealthy because he essentially underwrote what became one of the most desirable neighborhoods in Minnesota.  They probably still run tour busses on pretty summer days.

Encountering such relentless herd mentality actually unnerved me.  I suppose it should not have—after all, I grew up in a country that worshipped many forms of herd mentality—most especially in pop culture.  Start a trend and you will become rich!  Somehow, I just assumed that when grown-ups had to make grown-up decisions, they were going to be a little more nuanced than wondering if something will ever become "cool."

Some of the other things I learned from the bankers are covered in the article below which points to the economic absurdity of the seemingly endless miles of suburban office parks that surround most USA cities.  These buildings are not especially ugly but they are unimaginative and usually festooned with aggressive signs attempting to fill them up with paying tenants.  If you wonder whose business they are attempting to attract, you are hardly alone.  Turns out there is not nearly the demand necessary to fill those white elephants.  So why were they built?

The simple answer is, "When lenders lend, builders build."  So when the loan committees decided (at roughly the same time) that their banks should lend to suburban office developers, suddenly there were many such projects.  And since their herd mentality meant that a lot of lending committees were looking at the same data which projected a demand for such projects, a lot of these schemes got green-lighted.  There actually may have been enough demand for one or two such office parks but when twenty lenders, looking at the same data, fund a couple of projects EACH...  About three years later, there is a glut of new and usually expensive offices and those demand projections have vanished into the air.  It is as predictable as dawn.  And if it isn't suburban office parks, it is high-end residential developments, or downtown office space, or urban condos, or etc.

Because of my experiences with bankers who cannot even organize something as simple as real estate development, I tend to believe that they are absolutely unqualified to advise societies on more complex economic matters.  And if you think I overstate things here, just listen when the big banksters testify before congressional committees and then ask yourself, Why should anyone give these buffoons the ability to determine the future development of a nation?  Of course the answer is, they should not.