The economic upside of a fight against climate change

As regular readers know, the basic intellectual thrust of this blog is that the only meaningful actions to combat climate change will come from the Producer / Industrial classes.  Because this is true, the only way we can survive is if we change the economic rules to provide sufficient money to the Producers so they can do their jobs well.  Lately, I have become especially excited about the what could happen if the Producers actually got their hands on the $100 trillion necessary to build a solar-powered world.

Lost in all my excitement is the realization of what happens if we continue to allow the psychopaths to run the economy and with their untrammeled greed, make certain that everything we do is done on the cheap.  So it was with some interest I saw Paul Roberts write about a new book that proves pretty conclusively that the current economic arrangements guarantee environmental destruction.  In other words, keep the economic status quo and we kill the planet and ourselves.

The Self-Destructive Pursuit of Profit
The Social Costs of Capitalism are Destroying Earth’s Ability to Support Life
by PAUL CRAIG ROBERTS  MARCH 30, 2015
Capitalism’s pursuit of profit is destroying life on earth. more

But back to thinking positive, we see here an interesting reminder that if we don't attack the root cause of climate change (fire) virtually all economic activity will eventually be little more that continuous disaster relief.  Welcome to the club Neslen.

Neoliberalism as porn?

As someone who usually labels neoliberalism as a Predator Class phenomenon, Urie had my attention from the first clause of his title.  I have never referred to neoliberalism as pornography, however, because I actually believe that porn occasionally has redeeming social value—something you could never claim for an economic "philosophy" that regularly destroys the lives of millions of people every year.  But Urie does have a point worth considering because like porn, neoliberalism refuses to admit to the complexities and nuances of most human interactions.

Hardly a day goes by where I don't see someone touting the virtues of simplicity—whether the subject is industrial design or the tax forms.  I have been regularly scolded for not reducing my thoughts so they could appear on a bumper sticker.  And while simplicity certainly has its place, it is hardly an unvarnished virtue.  I grew up around Mennonites who literally preached simplicity from their pulpits.  And while these folk tend to have healthier relationships with the natural environment and are model neighbors, among their many cultural accomplishments, their rejection of complexity seriously limits the potential of their economic enterprises.

Besides explaining the world more completely and accurately, complexity in human endeavor is often just plain fun.  I was communicating with a friend today who thinks we should go to Oshkosh this summer for the EAA fly-in.  A gathering of people who embrace complex explanations to the point where they can actually build their own airplanes celebrates complexity the way the Mennonites celebrate simplicity.  For someone like me who has reveled in complexity my whole life, Oshkosh as a destination almost resembles a pilgrimage complete with a long trek along a 3-mile flight line (and if you don't walk it, there is a chance you will miss some truly breath-taking examples of human creativity and genius.)

And when it comes to the neoliberals and their insane claim that humans are merely market participants, they are a perfect reminder of why simple is the root of the word simpleton.  If they weren't so dangerous, neoliberals might even have value as comic relief—the Laurel and Hardys of social observation.

Well duh! Climate scientists help make the problem worse

In case anyone wonders why it is so easy to discredit the climate scientists, the following two stories should provide a clue.  In the first, a science writer named Eric Holthaus embarrassed everyone by suggesting that flying climate scientists around the world so they can attend climate conferences makes no sense whatsoever.  For advancing such a perfectly reasonable suggestion, poor Holthaus was almost made into a pariah.  He WAS called a "radical." (gasp!)

Once upon a time, getting everyone important on some subject into the same room was a useful thing to do.  When it took four months for a letter to reach Europe and the process of capturing facial expressions required oil paint, physical meetings made sense.  But in an era of instantaneous communication and high-def video conferencing, actual physical meetings are nothing more than the preservation of archaic traits.  And flying to a climate conference is clearly nothing more than a vivid demonstration that the participants don't understand the gravity of the problem—in which case, why are they important enough to invite to a climate conference?

In the second story, we discover that the UN is still funding the construction of coal-fired electrical generation plants.  As there is absolutely NOTHING worse for the atmosphere than burning coal, anyone remotely connected with such a decision obviously flunked climate change 101.

So the question is, who is more dangerous, the climate denying hacks working for the fossil fuel industries or the bureaucrats who profess deep concern for climate change but cannot be bothered to learn the most basic scientific issues?  Both are a profound embarrassment to humanity but in my mind, the climate "scientists" who are unwilling to forego their vacations / conferences are far worse if only because the hack deniers are so much easier to ignore.

Historical illiterates in the House

Yesterday, we got to read the thoughts of former President Valéry Giscard d'Estaing—a respected member of the French establishment.  His take on the dust-up with Russia was calm, rational, and historically informed.  In contrast, the US House just passed a resolution that demonstrated just how absurd historical illiterates can be.

The facts on the ground concerning Crimea are abundantly clear. Yes, Russia DID seize Crimea by force of arms—although the Russian leader at the time was a German named Catherine and the country it was seized from was Turkey in a war between 1768-74.  Over time it would become a major Russian navel base in addition to becoming a major winter destination for the Russian nobility—think of some combination of San Diego and Palm Springs.  Crimea was one of those parts of USSR that was captured by the Nazis after a prolonged and bloody struggle.  The Red Army got it back but only after another long and bloody fight.  Between those two battles, USSR lost roughly the same number of casualties as USA lost in all of WW II.

In other words, Russia was not about to lose Crimea to a bunch of cheap thugs who organized a coup in Kiev.  On the ground, the people who actually live in Crimea must go to bed every night thinking how fortunate they are to be part of Russia with triple the pensions and other manifestations of higher living standards as opposed to suffering under the misrule of the coup plotters in Kiev.  And because the Russians who had populated Crimea since Catherine the Great were so relieved and grateful that the Russians were coming to their rescue, the transfer of power in Crimea was accomplished without firing a shot.

Of course, virtually no one understands any of this because in USA, being an historical illiterate is considered acceptable.  So in such minds, Putin's sky-high approval ratings can only be a product of some sophisticated propaganda techniques—and certainly not because he came to the rescue of his countrymen.  If the US House knew any history about Russia, they would understand that in her history, she has had damn few leaders as smart and capable as Putin.  What is more, the Russians can figure this out for themselves.  A historically literate House member just might consider that since we could not dislodge Castro with hundreds of assassination attempts and other tricks, we are unlikely to cause much damage to a Russian leader that the citizens consider the best one they have had since Peter the Great.

Giscard d'Estaing talks about Russia and Crimea

Valéry Giscard d'Estaing was a centrist politician (by French standards) who had the unfortunate timing to be president from 1974-1981—an era that signaled the end of cheap energy which caused havoc throughout the industrialized world.  The neoliberals had captured the government of Chile and were making significant inroads in the rest of the world, but Giscard was still enough of a Frenchman to believe that such problems required large infrastructure projects to solve.  And so, he launched the big TCV high-speed rail initiative that put France into the lead for such trains.  He also pushed France into a huge commitment to nuclear power.

Handsome, urbane, and incredibly well-bred (he can trace his ancestors to Louis XIV and Charlemagne) Giscard migrated easily to senior-stateman status following his defeat in 1981.  He was involved in the creation of the EU, and for you conspiracy buffs, he is one of the best-known Bilderbergers.  Whatever is the direct opposite of a rabble-rouser, Giscard is it.  He has been a part of the crowd that believes they are born to rule his whole life.

France also has a special place in their hearts for the Russians.  There were times when French was widely spoken in St. Petersburg and it was certainly the language of the nobility.  Russian artists like composer Stravinsky were wildly popular in Paris.  And when the revolution came in 1917, many of the upper classes fled to France.  Throw in Napoleon's ill-fated invasion and the French have interesting and informed opinions on all things Russian.

So it is with some interest I read Giscard's take on recent Russian history.  He is probably as close to a French nobleman as the Republic can cough up these days.  Not surprisingly, he has historically informed ideas on Crimea becoming part of Russia again.

De-dollarization schemes abound

Outside of climate change, the failures of the global dominant economic paradigm is easily the biggest story out there.  Unfortunately, watching neoliberalism crash and burn is not as amusing as I had hoped—mostly because there no one seems to be pushing a credible alternative.  Watching self-described "leftists" muddle their way into deeper disasters (Greece and elsewhere), we can be pretty sure that real solutions are not about to occur to folks that ever treated Marx seriously (virtually anyone on the European left.)  Their street protests at the opening of the new ECB headquarters in Frankfurt have provoked an angry response from one of those German right-wing pigs who show up on occasion to remind us all why that segment of German society is easily the most hated grouping on earth.  He writes:

Apart from this, in choosing the ECB, protesters are also lashing out at the wrong target. They believe the ECB is responsible for austerity measures and "pauperization" in some parts of Europe at a time when it is doing the opposite: it floods the markets with cheap money, it keeps interest rates low, it supports debt-ridden nations instead of pushing them into poverty. In doing so, it reaches the limit - according to many critics, it even goes past that limit - of its core mandate, which is to maintain price stability.

The institution he is describing is largely responsible for towering unemployment throughout the EU.  The middle classes of Europe are being decimated with former homeowners being evicted in droves.  The young have no future.  And this is acceptable to DW's Christoph Hasselbach because "price stability" has been maintained.

In USA, thanks to a law called Humphrey-Hawkins, the Fed is suppose to ALSO enact policies to ensure full-employment—a provision that has been totally ignored but at least the law got passed.  The ECB doesn't even have that requirement.  So while a monetary policy that ONLY targets price stability will ALWAYS lead to catastrophic results, ethical monsters like Hasselbach can console himself that at least he is defending established law.

Here at real economics, we tend to rely on the historical record and the one associated with fiat currencies and an expansionary monetary policy in USA is quite extensive and involved.  We even have, in Marriner Eccles, an example of an enlightened monetary theorist who ran the Fed during its glory days.  The drop from Eccles to a fool like Greenspan is akin to the drop from Lincoln to "Shrub" Bush.  And as a result, no one really wants to be associated with USA economic policies anymore.  And who can blame them?

The big fat target, of course, is the unique privilege accorded the US dollar.  I would imagine it doesn't take a whole lot to get folks in the rest of the world to sign up for almost any plan that would reverse this obvious economic injustice. One of these days—and probably sooner than later—one of these de-dollarization schemes will work and the fallout from will be ugly indeed.  And this all could have been avoided if we had only learned the valid lessons from our own monetary history.

Whose ideas?

Will the next generation of leaders will be any better than the neo-liberal blind ideologues and filthy rich sociopaths we have today? Well, we can guarantee that they won't be better if we don't make sure the ideas for better solutions are around. Milton Friedman and the Mont Pelerin neo-liberal operatives were very much correct: when a crisis hits, you can only prevail if you already have in place your ideas for the solution. Much to our horror, we have seen that this neo-liberal "shock doctrine" does, in fact, work. Which is why Ian Welsh's attempts to reformulate a moral, humanistic philosophy for political economy is so important.

My approach, of course, has been different: point to the founders of the American republic and emphasize those aspects of their philosophy for political economy we no longer follow, and, indeed, barely even tolerate today. For example, it was generally accepted through most of the first century of USA's national existence that any gross inequality of wealth and income was a danger to the experiment in self-government. In An Examination into the Leading Principles of the Federal Constitution, the  second most important book, after The Federalist Papers, in championing the ratification of the Constitution, Noah Webster observed, "Wherever we cast our eyes, we see this truth, that property is the basis of power," therefore, "....A general and tolerably equal distribution of landed property is the whole basis of national freedom.... An equality of property, with a necessity of alienation, constantly operating to destroy combinations of powerful families, is the very soul of a republic."

(Labor historian Steve Fraser has an interesting new book out, which I have yet to read - I'll gladly accept a donation of his book - entitled The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power. A review in the New York Times is here, and in the Washington Post, here.)

One reason for my approach is that, in the end, who you have to convince, above all, are the military and the police: a revolution only succeeds when the people in charge of suppressing dissent begin to refuse to do so. That's why whistle-blowers like Chelsea Manning and Edward Snowden incur such wrath from TPTB. Or why Occupy Marines was quickly followed by the nationally coordinated crackdown on Occupy, and why Anonymous is such a threat. I simply do not believe that you are going to convince American police and military, and the monitors in the employ of the total surveillance state, that Marx or Mao or whoever is the answer. On the other hand, they just might be convinced that the original ideas of the American experiment in self-government have been trampled on and subverted by TPTB - including by the "vast right wing conspiracy" which has been funded and built up by the wealthy since their opposition to FDR and the New Deal.

A Romanian sub-officer gives the victory sign on 31 December 1989, after the fall of the communist 
Ceaușescu regime. He has removed the insignia of communist Romania from his headwear.

A second reason I favor my approach is that the historical record is very clear that socialism, Marxism, communism, and so on DO NOT WORK. At least, not as a way of organizing an entire economy. The actual world is full of examples of socialist programs which work quite well. Germany’s pension system, national health care in Britain, France, Canada and most other countries besides USA, Social Security in the USA, and so on. One of the grand achievements of really great statesmen is to figure out what parts of a society’s economy are best organized along socialist lines and which along capitalist lines, and steer their nation’s economic development accordingly. Any number of honest observers have remarked that the best economies include a mix of socialism and capitalism. You may hate to admit it, but there really are huge advantages to having a market price mechanism. Do you really want to socialize the production and distribution of bath towels and kitchen curtains? But more on this later.

In reaction to Obama's failure to deal with Wall Street since the crash of 2007-2008, there has been a  resurgence on the left of these failed ideologies. Even at DailyKos, there is a regular posting titled "Anti-Capitalist Meet-Up" that draws a decent crowd. I wish these people would read Lawrence Goodwyn,who wrote  what is far and away the best history of the populist movement. What makes it the best? Goodwyn fully understood the Greenbacker critique of the U.S. financial and monetary systems that powered the extraordinary political success of the populists in the 1880s through 1910s. Goodwyn delivered a short speech in December 1989, at a special event in St. Louis on the occasion of the 100th anniversary of the populist People's Party "Sub-Treasury Plan" for financial reform. The speech is here: Democratic Money: A Populist Perspective. After dissecting how TPTB have left no room for serious discussion of a truly democratic system of money, credit and exchange, Goodwyn observed:

Hooray! It's Spring!

We made it through another winter that was surprisingly nasty for the folks out East.  It's also the birthday of J.S. Bach.

Time to get on with Easter.  But first a reminder of what our hearts are capable of.  This is Bach's lesson about the betrayal of Judas Iscariot from the St. Matthew Passion.  A song about a bleeding heart in his version becomes transcendentally beautiful.  The soprano is pretty damn beautiful too.

Blute nur, du liebes Herz!
Ach! Ein Kind, das du erzogen, 
Das an deiner Brust gesogen, 
Droht den Pfleger zu ermorder, 
Denn es ist zur Schlange worden.

Bleed on, dear heart. 
Ah, a child that thou raised, 
That sucked at thy breast, 
Threatens to murder its guardian, 
For it has become a serpent.

Tony at his best

Yesterday, I noticed some extra traffic from Ian Welch's blog so I went to check it out.  It seems as if our very own Tony decided to make a few points on a post.  As usual, they are brilliant.  I have copied the best ones below.

Tony suggested to me in a recent phone call that we should adopt an "either you spend $100 trillion or you die" approach to the problems of climate change and related issues.  It made me giggle.  The problem with us Viking / Scandinavian types is that we have lost our willingness (ability?) to be so blunt. I have been editing a video of the speech I gave last month to the Minnesota Chapter of Citizens for Global Solutions and while I covered many of the same topics as Tony below, I was still very much the choirboy-preacher's kid.  (The video will be up soon so you can see for yourself.)

But it's more than that.  I am the patented inventor and so have the perspective that if people could simply understand the new possibilities, even the greedy Predators could get on board.  Tony has a much more jaundiced view of the Predators and their willingness to destroy things for the pleasure of amassing their petty fortunes.  He isn't much impressed by the idea that even the bad guys can have moments of redemption (or that the redemption would mean all that much—after all, John D. Rockefeller was a Baptist Sunday School teacher into his old age.)  So even though I would rather be back in a workshop beavering away at the fixes necessary for human survival, I am delighted to be associated with someone who is quite willing to shout down evil and stupidity.

Tony Wikrent,  March 17, 2015

I should wade into this issue of “limits to growth” gingerly, but I just don’t have the time or inclination right now, so I am going to be blunt and direct.

The luddite problem is one the left’s greatest vulnerabilities. Chris Macavel is absolutely correct when he argued, in June of 2014, that the Democratic Party in USA started to go off the rails under Jimmy Carter, when Dem elites adopted the idea of “limits to growth.”

” ‘Instead of championing a radical idea of a new society,’ Jacoby observes in The End of Utopia, ‘the left ineluctably retreats to smaller ideas, seeking to expand the options within the existing society.’ ” Source: The Missing Link to the Democratic Party’s Pivot to Wall Street

Another digression here: the other big shift under Carter was allowing Federal Reserve chairman Paul Volcker to institutionalize usury. That was one of the major turning points to deindustrialization and financializtion. I’ve been repeating this for years now, very politely, but now I am going to put this bluntly: if you believe Paul Volcker is a good guy, you are either an idiot or hopelessly ignorant of the economic history of the past half century, and you should not be offering your opinion on anything concerning any issue of political economy.

OK, now, Malthus. One of the most evil apologists for the genocidal crimes of the British Empire, ever. Period. Anyone who quotes Malthus with approval is, again, either an idiot or hopelessly ignorant of the crucial moral conflict between Great Britain and the United States over the past three centuries. Now, most people can be forgiven for not knowing this history, because, frankly, the British have been winning since they hoodwinked the USA into World War One. “Special relationship” anyone? If you think the British Empire is a thing of the past, please, sit down one evening and begin tracing out the connections on the boards of directors of the corporations that run the world, identified by the Swiss Federal Institute of Technology on October 2011. Here’s the URL: http://www.newscientist.com/article/mg21228354.500-revealed–the-capitalist-network-that-runs-the-world.html#.VQjuH-G6XgY

Guess which is the most powerful corporation in the world. Goldman Sachs? No. JP Morgan Chase & Co. No? Try Barclays PLC. Just go look up the Board of Directors and their profiles on Wikipedia. And for good measure, take a look at HSBC, the old Hong Shang, historically one of the dirtiest banks in the world. Did you know that the former head of British intelligence is on the board of HSBC? Start putting some names and faces on the one percent. Know who they are, or please don’t bother us with your bullshit anymore.

And let me lay this down: do not DARE, ever again, to mention Adam Smith or Malthus or David Ricardo favorably until you have read some of the stuff written by Henry Carey in the mid-nineteenth century. Usually, when I’m dealing with Malthus, I include a nice quote from Carey. I’ve done it dozens of times the past years. Sorry, not tonight. You people are the best humanity has. YOU are the last best hope of the human race. There is not a single elite in elected office anywhere in the world that knows more and has better intentions for humanity than YOU. Barack Obama is a fucking moron compared to you people who read this blog. I have to hold you to a much higher standard. So go read the entire fucking webpage. And follow some of the links to some of the other chapters Carey wrote.
http://www.let.rug.nl/usa/documents/1851-1875/the-harmony-of-interests/conclusion.php 

Anyone who believes there are limits to growth are aiding and abetting the one percent in imposing genocidal austerity on the planet. That’s what Malthus’s role for the British Empire was – to blow smoke up people’s asses so they wouldn’t see how the British Empire was literally starving and destroying entire countries and peoples.

We have the technology to solve ALL the world’s problems. Right NOW. WE HAVE IT, ready to go. We need, minimally, $100 trillion to deploy those technologies on a scale large enough to actually solve those problems. And the only way you get a $100 trillion to do that is to either destroy the fucking wankers that run the world, or terminate their monopoly on the creation and allocation of money and credit. Any other bellyaching about getting people to consume less, or that there are too many people, or technology is bad, is just bullshit that plays into the hands of the one percent.

I wrote this in November 2013: Would’ya like a serving of hope for Thanksgiving?

We are at a history-shattering point of transition, where resources and energy will not be scarce, and will never again be scarce. In the past half century, humanity has developed technological capabilities which are now growing exponentially. The best known example is Moore’s Law: that the number of transistors we can put on integrated circuits doubles approximately every two years. In a cell phone, one person has at his or her fingertips more computing power than NASA used to put astronauts on the moon forty-four years ago. The only things holding us back are old thinking in the Malthusian mold that denies the possibility of technological solutions; and old ideologies of political economy that prevent us from reforming the financial and monetary systems for the common good and to pay for what we need to do….

But many progressives and liberals object that our world is overpopulated, and the planet simply cannot support a high standard of living for nine billion people. We are already using thirty percent more natural resources than the planet can sustain. Diamandis and Kotler explain example after example of new technologies that will solve this problem. Such as nano-engineered filters for making drinking water from the most heavily polluted sources, to new materials that will allow us to build photovoltaics without semiconductors, reducing the cost of solar energy by not one, but several orders of magnitude.

Just as important – and as hopeful – as these new technologies, is the fact, demonstrated over and over and over again, that as a society becomes more prosperous, more economically secure, and healthier, the birth rate drops dramatically. In fact, the birth rate collapses. We have seen this happen in Britain and the USA in the mid-1800s, in Japan in the late 1800s, in South Korea in the 1960s, in Malaysia, Indonesia, Vietnam and India more recently. In a number of advanced industrial countries, such as Italy and Japan, the birth rate is now actually insufficient, and the populations of those countries are shrinking. Diamandis and Kotler write:

John Oldfield, managing director of the WASH Advocacy Initiative, which is dedicated to solving global water challenges, explains it this way: “The best way to control population is through increasing child survival, educating girls, and making knowledge about and availability of birth control ubiquitous. By far the most important of these is increasing child survival. In communities where childhood death rates hover near one-third, most parents opt to significantly overshoot their desired family size. They will have replacement births, insurance births, lottery births — and the population soars. It’s counterintuitive, but eradicating smallpox and vaccine-preventable disease and stopping diarrheal diseases and malaria are the best family planning programs yet devised. More disease, especially affecting the poor, will raise infant and child mortality which, in turn, will raise the birth rate. With fewer childhood deaths, you get lower fertility rates — it’s really that straightforward.”

What about water shortages? Only 2.7 percent of the water on the planet is non-salty and usable for human consumption. Right now, one billion people have no clean drinking water, and 2.6 billion people lack access to basic sanitation. Dean Kamen has developed a water distiller that recovers 98 percent of the energy it uses and can produce 250 gallons of sterile water per day. The power source is a Stirling engine that really can burn almost anything, such as rice husks. Others have invented machines that process human wastes and turn them into electric power.

Energy? In sub-Saharan Africa, 70 percent of people live with no access to electricity – yet one square kilometer of land soaks up from the sun the energy equivalent of 1.5 million barrels of oil. Deploy enough photovoltaics, and Africa has a huge surplus of energy it can export to Europe. University of Michigan physicist Stephen Rand discovered a way of creating magnetic fields one hundred million times stronger than what the known, accepted “laws” of physics had previously predicted was possible. The result of this research will hopefully be a way of making photovoltaics without semiconductors, reducing the cost of solar energy by not one, but several orders of magnitude.

Global climate change? Diamandis and Kotler describe the SunShot Initiative by the U.S. Department of Energy

….now funded the Joint Center for Artificial Photosynthesis, a $122 million multi-institution project being led by Caltech, Berkeley, and Lawrence Livermore National Laboratory. JCAP’s goal is to develop light absorbers, catalysts, molecular linkers, and separation membranes-all the necessary components for faux photosynthesis. “We’re designing an artificial photo-synthetic process,” says Dr. Harry Atwater, director of the Caltech Center for Sustainable Energy Research and one of the project’s lead scientists. “By ‘artificial,’ I mean there’s no living or organic component in the whole system. We’re basically turning sunlight, water, and CO, into storable, transportable fuels — we call ‘solar fuels — to address the other two-thirds of our energy consumption needs that normal photovoltaics miss.” Not only will these solar fuels be able to power our cars and heat our buildings, Atwater believes that he can increase the efficiency of photo-synthesis tenfold, perhaps a hundredfold-meaning solar fuels could completely replace fossil fuels. “We’re approaching a critical tipping point,” he says. “It is very likely that, in thirty years, people will be saying to each other, ‘Goodness gracious, why did we ever set fire to hydrocarbons to create heat and energy?’ “

And what about the carbon we have already dumped into the atmosphere? Dr. David Keith at the University of Calgary has developed technology that actually removes CO2 from the air. Can the technology be scaled up to actually make a difference and undo the damage already done? With enough cheap energy, it probably can.

Either you have faith in what humanity can do, despite the obvious propensity for evil and mass lunacy. Damn, try to have some historical perspective: three hundred years ago we didn’t even have plastic bottles, let alone aspirin and other meds to put in them. 300 years ago I would have to wait weeks or months for you to finally have in your hands what I’m writing right now. I’m not saying things are not screwed up. I often say, unguardedly, in conversations, things are TOTALLY screwed up. And they nearly are. But we, humanity collectively, know how to solve all these problems. The only obstacles to employing those solutions are the damn ideas of political economists of the fucking British Empire from 300 years ago! more

Jeff Madrick on the conventional economic wisdom

There is so much utter BS involved with "free-market" economics, it is amazing that any rational / sentient being could believe any of it—especially the part where the marketeers tell us that their ideas can lead societies to something that resembles prosperity.  I am reminded of the classic ice-hockey play called dump-and-chase.  The legendary Herb Brooks called dump-and-chase, "not only the stupidest play in hockey but probably the stupidest play in all of sport.  It would be like a basketball team heaving up a low-percentage shot as soon as they crossed the center line and then going on a full-court press when they miss."  Brooks believed that you should never voluntarily give up possession of the puck—a strategy that helped win him the Gold at Lake Placid in what USA fans still consider the greatest sporting event of the 20th century.  35 years later, there are still only a handful of "puck-possession" teams in the NHL (Detroit, Chicago, and a few others) even though they are remarkably successful.  Free-market economics is like dump-and-chase—it almost never works but it is a plan that actually makes sense to those confused by complexity.

So it is with some pleasure I read Jeff Madrick asking the most pertinent question in all of economics—why do folks keep trying ideas that have never worked as advertised, and will never work because they're insane?  Madrick performs a useful service here by taking apart the free-market economic assumptions point by point.  I must admit I don't have nearly the patience for such an effort—my response to such obvious fools as the marketeers is to snort and roll my eyes.  I mean these clowns have been teaching their nonsense with disastrous results since the 16th century—why must we be bothered to refute them.

Thanks Jeff for taking on such an onerous task!

The EU versus math

A lot of the wishful thinking that brought the EU into being is actually quite profound and remarkable.  After centuries of blowing each other to smithereens, who wouldn't cheer the creation of an organization dedicated to bringing cooperation to the blood-soaked continent of Europe?

Unfortunately, when it came time to create a common currency, the economic thinking of the West was utterly dominated by the crackpot theories of neoliberalism.  Saddled with a reactionary Euro, the EU was mathematically certain to crash and burn.  And so, it did.  Anyone with even the tiniest bit of economic historical perspective could have predicted the current catastrophe even before the ink was dry on the Maastricht Treaty in 1992.

So here we see some smug German interviewer browbeating some poor official who still wants to see the EU succeed as an institution.  The German seems to believe that the Greeks would be better off if only they would adhere to the crazier ideas of the neoliberals.  After six years of social and economic catastrophe the Greeks want to try something else.  The German response is to shout, "But you promised!"  Of course, those Greek promises were made by corrupt little toadies who were convinced to sell out their country for next to nothing.

If you are doing something demonstrably insane, trying harder will not make those efforts succeed.  And it abundantly clear that the folks who believe in austerity are mathematically insane.  Note to those fools, math works.  And as Michael Hudson says so often, "Debts that cannot be repaid, will not be repaid."

Has renewable energy reached some sort of critical mass

Remember when solar boosters spent a large part of their energy pushing for mandates and tax subsidies to encourage the adaptation of renewables like solar?  It wasn't that long ago.  In fact virtually all of the solar installations in Germany were installed based on some sort of political incentive.

But it is beginning to look like those days are behind us as solar becomes the low-cost option for generating electricity.  I remember when my brother first described his solar installation as costing less than his neighbor had spent for a new pick-up.  And while his first 5 kw was partially subsidized by the state of Florida, his second 5 kw purchase was not.  The point is, as the message gets out that solar is the first technology that pays you to own it, things are going to change very rapidly.  And so we see that the folks who keep track of the growth in renewable energy installations are now having a hard time just keeping track.

As Veblen would tell us, there is nothing quite like status emulation to change the behavior of large groups of people.  Installations levels not expected to be seen until 2040 will be reached in 2015.

William Greider: Is Hillary Ready for Us?

William Greider is an old populist warrior, whom I greatly admire and respect. He used to be a national political columnist at the Rolling Stone in the 1980s and 1990s, which of course was the position of the legendary Hunter Thompson in the 1970s, and the wonderfully acerbic Matt Taibbi in our times. In 1987, Greider published Secrets of the Temple: How the Federal Reserve Runs the Country, an exhaustive history of the Federal Reserve, with a strong forewarning of the twin problems of deindustrialization and financialization that were already well underway at that point.

Unfortunately, not many people seem to have read the book, because if they had, I very much doubt if Paul Volcker and TPTB would be able to continue their charade that Volcker is one of the "good guys."

In December 1989, Greider was one of two speakers at a special event in St. Louis on the occasion of the 100th anniversary of the populist People's Party "Sub-Treasury Plan" for financial reform. The other speaker, Dr. Lawrence Goodwyn, was the author of what is far and away the best history of the populist movement. What makes it the best? Goodwyn fully understood the Greenbacker critique of the U.S. financial and monetary systems that powered the extraordinary political success of the populists. The two speeches, by Greider and Goodwyn, at the event are available online, and if you have not read them, you are missing important interpretation on a key issue of economic reform we still face today: Democratic Money: A Populist Perspective. You especially need to read these speeches if you are wondering what the Greenbacker critique is.

The other night, Meteor Blades at DailyKos highlighted a recent article by Greider at The Nation, But Is Hillary Ready for Us?. I think the article is important enough that it merits bringing your attention to it again. Greider expresses skepticism about the recent conversion of Larry Summers and Hillary Clinton to economic populism.

...the message is: Hillary gets it. She’s ready to confront the inequality thing. She will bring fresh ideas to the campaign on how to reverse the deterioration of middle-class American life. Her list includes everything from parental leave to care for newborn infants to equal pay for women and paid vacations for all working people. The CAP agenda, among many sound ideas, opts for stronger labor unions, worker ownership of corporations, faster growth and full employment, a reformed global trading system that for American working people will become a “race to the top” instead of the bottom. What’s not to like?

But Greider points out that what Summers and Clinton are now talking about, is nothing more than the focus-group tested populist rhetoric of Bill Clinton’s 1992 campaign. Pointing to Summers' recent remarks about avoiding "a politics of envy," Greider argues that it is going to be nearly impossible for Clinton to actually follow through on her new-found populist rhetoric because of "the practical problem of which political constituencies Democrats must be prepared to abandon this time—working people or financial contributors."

Greider then offers an observation that I do not remember seeing anyone make before. I think it explains in no small part the shocking electoral weakness of Democrats in running against Republicans whose policies the majority of Americans actually revile.

The trouble is, the [Clintonite] New Dems are now the Old Guard. Their center-right program—financial deregulation and “free market” globalization—has not only run out of gas but is rightly blamed for laying the groundwork for financial catastrophe. Yet the New Dem wing still holds the high ground, with big money and loyal supporters as well as Clinton clones populating the key governing positions. The labor-liberal insurgency has a weak bench because for a generation its promising young people were excluded from governing ranks—systematically screened out by both Clinton and Obama administrations—if they showed telltale signs of leaning leftward or embracing non-conformist ideas that resonate with the party’s New Deal values. By contrast, Republican regimes since Ronald Reagan have always made a point of appointing thousands of young right-wingers to second-level government posts as the training ground for long-term governance. Dems still invoke sentimental rhetoric from the New Deal era, but the practical reality is that the party’s economic policy makers went to school on Wall Street, either before or after their public service (sometimes both).

Russia's golden era?

The other morning, I took partner's car to get two months of winter road crud washed away.  Unfortunately, the warmup after a long nasty winter had many people thinking the same thing so I found myself in a long line trying to find something interesting on the radio.  A different car meant different radio presets and I was soon confronted with a female voice spouting utterly absurd opinions about Russia.  At first I guessed from the content that this might be the infamous Victoria Nuland.  The only time I ever heard her speak was her infamous "Fuck the EU" telephone conversation which was not a clear enough recording to get a good fix on her voice.  So it could have been Nuland and I wanted to get caught up on her latest evil plans.

Turns out, it wasn't Nuland after all.  It was Samantha Power, USA's ambassador to the United Nations.  Minnesota has had more than it's fair share of UN boosters over the years.  Former "boy governor" Harold Stassen was one of the signatories to the UN charter.  My local high school hosted a model UN every spring where students pretended to represent the interests of various member nations.  My parents were pro-UN and our big family trip to New York in 1962 most emphatically included a visit to the UN headquarters.  I was given murdered UN Secretary-General Dag Hammarskjöld's Markings to read while still in high school.  So to listen to someone with such a prestigious job rave on about the state of the world in a state of such remarkable delusion was actually painful.

Powers reminded me of that long 1970 summer in Europe when I was first exposed to some of the rest of the world's youth.  What was most impressive was that in most countries, kids actually learn subjects of importance while we spent high school cruising main street and cheering on the basketball team.  Many of my countrymen didn't notice the gap.  I did.  And I found it painfully embarrassing.  Power's prideful ignorance brought it all back—enough to almost ruin a nice spring day.

When I got home, I noticed the following article written by William Engdahl.  In it, he describes the classically rigorous education all Russians can have.

The education they received in the schools and universities was still largely dominated by the classical Russian science. That classical Russian science, as I have verified from many discussion with Russian scientist friends over the years, was of a quality almost unknown in the pragmatic West. An American Physics professor from MIT who taught in Moscow universities in the early 1990s told me, “When a Russian science student enters first year university, he or she already has behind them 4 years of biology, 4 of chemistry, of physics, both integral and differential calculus, geometry…they are starting university study at a level comparable to an American post-doctoral student.”

The Russia that Samantha Powers was describing is simply not the Russia that exists.  And because we are attacking them for no good reason, they have responded like the citizens of Leningrad who held out against the Nazis.  With proper motivation, these are people capable of achieving great things.  And to read Engdahl, they are highly motivated these days.

I also checked some stats.  This blog has gotten a fair amount of traffic from Russia lately.  I am sincerely flattered that such people have chosen to read what I write.

Ellen Brown on Greek debt

Anyone who has wandered into the deep thicket that is monetary theory soon realizes something quite profound—no matter how important these debates may be, the overwhelming majority of people find them BOOORING!  Which is a damn shame because those who set the monetary rules set about 95% of the rules that matter.  So long as central banking is by law and tradition independent of political control, the rest of government is left to argue about matters of sexuality or other cultural matters.

What is more, many of the country's founders understood the nature of an all-powerful central bank.  The Bank of England had been established in 1694 and its obvious baleful effects were already well-known to the nation-builders like Ben Franklin.  Serious scholars have argued over the years that BoE was one of the primary causes of the American Revolution.  Those founders were some of the first to discover that revolutions against the power of central banking is necessary because the banksters WILL happily kill you.

Well, pay attention folks.  The Greek government promised to to get a better deal from the European Central Bank.  We are now getting a demonstration of what happens when the empire strikes back.  The ECB can crush Greece without working up a sweat.  The ONLY leverage Greece has is a complete default and Syriza wants to stay in the EU club too badly to risk that.  This means Greece has effectively no power at all.  And the ECB is filled with sociopaths who have no qualms about destroying Greece down to its last bit of rubble.

Florida officially denies climate change

Easily the most annoying feature of the culture of USA is its infatuation with the notions of motivation.  The most common manifestation, of course, comes from  religious practice—as in, "If you believe in your heart and in truest purity, your fondest wishes will be granted by a loving and benevolent god!"  The other Leisure Class occupations have also jumped on this bandwagon with both feet.  Athletics is a perfect example.  American football is mind-bogglingly complex complete with fat playbooks, high-tech scouting, and trainers with advanced degrees in sports medicine.  ESPN has exactly TWO on-screen talents (Trent Dilfer and Ron Jaworski) covering the sport who are willing to describe the building blocks of winning teams.  The rest are full-fledged members of the "you gotta believe—want it more" school of sports reporting.  Their idea of thoughtful coverage is speculating on why the death of some player's mother was responsible for a surprise victory.

Unfortunately for the rest of us, this refusal to learn the details and concentrate on the magic of having correct wishes is NOT confined to religion and devout observances.  The whole idea of cutting unemployment benefits is driven by the belief that folks will be driven to find non-existence jobs if we would only make their lives more miserable.  The almost useless "debate" over climate change is a tug of war over competing versions of motivation (and missing the point.)  The lefties believe that if you would just alter tax incentives for consumption and pass a carbon tax, you could force a solution to fall from heaven.  The righty denialists seem to believe that if we just don't talk about something, it will cease to exist.

And so we have a story of Florida and their official climate change denial systems.  In some ways, it is quite understandable that a state economically driven by petty real estate speculation would want to avoid discussing how much of the state will soon sink beneath the waves.  Real estate speculation lives off of wishful thinking but it is really amazing that there are not some more rational heads within the business who realize that they, more than almost anyone, have a lot to lose from climate change.  Rick Scott, Florida's governor recently responded to a question about man-made climate change by saying that he "is not a scientist."  No, Rick, you are not.  That is why you cannot understand a science-based problem.

Bob and Victoria—foreign policy by sociopaths

Whether Victoria Nuland and her husband Robert Kagan are "liberals" is an open question.  They certainly could be—after all, my youth was spent being thoroughly disgusted by Vietnam "hawks" who called themselves liberals.  Whatever they are called, they are truly a couple of sick and twisted folks who have managed to ruin the lives of thousands of innocent bystanders who had the misfortune to get in their way in places like Iraq and the Ukraine.  Both are part of Hillary Clinton's posse so we face the very real possibility that when the Democrats try to pass themselves off as the lesser evil in 2016, we can be quite certain that the lesser evil will still be very evil indeed.

These days, I am spending much of my time working on an argument that addresses the very real and important problem of climate change.  This really is a life and death matter that will require the cooperation of the vast majority of we humans if we are ever make progress towards a solution.  The very last thing we need is some self-righteous and self-important people running around trying to stir up trouble in the name of their self-described "noble" goals.  Of course, they have a point.  The ideas of Bob and Vikki are indeed "noble" in the sense that most "noblemen" of history got their positions by becoming the most ruthless and bloodthirsty Predators on the block.

Since everything these people touch turns to shit, the question becomes—are they crazy fanatics, hopelessly stupid and ignorant, or merely self-serving con artists living off the credulous herd.  I am pretty certain it is some combination of all three but if Nuland's famous "Fuck the EU" phone call is any indication, it is mostly the latter.  In their world view, it doesn't matter if Iraq or Ukraine is destroyed if the result is good for them.  It is up to the rest of us to ignore their brazen lies.  "Fool me twice—shame on me!"

No improvement in the Greek economic mess

Regular readers know I am pretty skeptical about the whole idea of lefties making much progress on a subject like debt restructuring and monetary policy.  There is a reason for this—monetary and debt matters are much more important to consumers of credit like farmers, builders, and other small businessmen.  These folks tend to be Republicans and lefties often refer to them as the petit bourgeoisie (which is not their idea of flattery.)

Because monetary theory is not so very important to the left, they tend not to know a lot about it.  I have met Marxists who could dazzle me with their theoretical understanding of class struggle and other pet hobby-horses, but were helpless when I shifted the conversation to the role of the central banks in influencing the economic orthodoxy.  Deep down inside, most lefties believe that even talking about monetary policy means that somehow "capitalism" has won, and they surely do not want that.

But in spite of not coming from a culture that was conceived in monetary debates like USA, Yanis Varoufakis is pretty damn good.  He is still a long way from being as theoretically sound as say, was Nestor Kirchner of Argentina, but he seems to get it.  At least he seems to understand that his economic problems are Europe-wide, and I think he understands that the flaws in the Euro were written into the Maastricht Treaty.  All of which is a damn fine start but the fact remains, he only has the weapons available to debtors and right now, he is fighting a lonely battle.  The Finance Ministers of places like Spain and Portugal have sold their souls to the banksters so are quite happy to betray the Greek FM—even if they would be lightyears ahead by expressing a little solidarity.

It's a big fight with big stakes.  Yanis Varoufakis will be lucky to change much—even though almost anyone who has any idea what he is trying to accomplish wishes him well.  Actually we need thousands of folks who think like him so we can begin to change the economic debate.

Whatever became of (real) economists?

When the economic facts on the ground contradict the theories taught by our crackpot economists, what happens?  Well mostly, they simply ignore the bad news.  After all, it is usually happening to someone else.

We had a perfect demonstration of this phenomenon the other day.  There was an important meeting between Greece's Finance Minister Yanis Varoufakis and his German counterpart Wolfgang Schäuble concerning the tiny possibility that official economic policy could be slightly modified so that the truly horrible conditions in Greece could be slightly improved.  As reported in Der Spiegel, Schäuble treated his Greek counterpart with contempt.  The arrogance was just stunning.  And the Der Spiegel reporter treated the whole dust-up as an example of an upstart discovering what happens when you challenge the big boys / conventional wisdom.  Der Spiegel takes comments (although they are moderated and can take three days to show up) so even though I usually reserve my writing energy for this blog, I decided I had to respond.  I wrote:

This is beyond ugly
02/28/2015

Wolfgang Schäuble is part of an economic system that has plunged the EU into economic chaos. Some countries have over 50% youth unemployment, and the list of other failures stretch on toward the horizon. And that arrogant clown believes he has been a success. It is delusional behavior like this that has made people hate the Germans over the years. Schäuble has now permanently eclipsed Heinrich Brüning as the worst economic actor in German history. Oh well, he can still beat up on little Greece so there's that. Disgusting. The days of Schäuble and his neoliberal hacks are soon over because they are actually insane. I have NO idea what comes from such behavior, but it won't be pretty—it never is.

It was published.  And I have NO idea how Germans respond to someone who brings up the fool, Brüning, whose mismanagement of the economy was so disastrous, the Germans chose Hitler to save them from his madness.  But the comparison is not so crazy.  Just remember, if Varoufakis and the Syriza government cannot achieve some economic stability, there is a real Fascist party by the name of Golden Dawn waiting in the wings.

ND shale boom gone bust?

As someone who grew up in some remote and empty places, it comes as quite a shock to see one of those little towns mentioned in a Forture article (illustrated by the legendary George Steinmetz).  I suppose it was inevitable considering that USA has had a long-standing fascination with boom-towns and Tioga North Dakota is an active spot in the Bakken oil field.

Back in the mid 1960s when I lived out there, Tioga was a burg of approximately 2000 well-chilled souls.  It claimed to be the 13th largest population center in the state and because it was on the main Great Northern tracks between Minneapolis and Seattle complete with regular passenger service, it was sightly more cosmopolitan than its tiny size and remote location would indicate.  There was a very large refinery at the edge of town that smelled of sulfur oxides when the wind blew from the east (which fortunately was not all that often.)

Western North Dakota has legendary winds—the kind that can literally drive people insane (see Ole Rolvaag's Giants in the Earth).  They can also be extremely dangerous.  One morning my father offered to drive my brother and I to school because it was -30°F.  About 3/4 mile from home on a road completely exposed to the northwest wind blowing over 30 knots, a tire on the car cracked open from the extreme cold and deflated.  All three of us knew how to replace a tire so we rotated our efforts.  We did not have Arctic gear so two would try to warm ourselves in the car while the third would try to make a bit of progress on the tire.  It took about 15 minutes but when we finally drove on, we all had been thoroughly frightened for our lives.

And yet, this part of the country is where desperate folks are flocking to get jobs promised by fracking.  And now that low oil prices have threatened the whole fracking venture, we get to find out how a boom in one of the more inhospitable places on earth goes bust—or al least slows down a whole lot.

Who thinks for USA

As someone who truly believes that the ideas that drive us are possibly the most important part of our intellectual architecture, I have spent serious time in life contemplating how some ideas become so powerful.  My first brush with such ideas came as the result of growing up in a parsonage.  I soon learned that religious ideas are not only passionate, they have far too often become a matter of life and death.  This is even true when the distance between the basic ideas and the practice can be measured in light-years—try going from the Sermon on the Mount to the Spanish Inquisition, for example.

But for me, the big amazing example of how a powerful idea can quickly sweep away anything in its path was the Gulf of Tonkin incident that led to such a dramatic escalation of the Vietnam War.  I was still pretty young and so I had no defenses against this story.  I believed.  But I was still astonished how the Gulf of Tonkin could go from being a place virtually no one even knew where it was to a subject on which everyone had an opinion.  How do they do that? I wondered.  I knew religious missionaries who worked years to obtain a handful of converts—how do you change the minds of a whole nation in a few hours?

Of course, the big topic of my life—the wholesale rejection of the economics I was taught at university by professors who who believed that Keynesianism was the perfectly logical and enlightened thing to believe—is an even greater example of the power of ideas and how quickly they can change.  And it doesn't seem to matter that the Friedmanite replacement for Keynesianism is quite literally killing people.  For example, we have a pretty good idea how we could technologically address climate change but because our economic ideas will not allow it, we cannot do anything meaningful.

What follows is an interesting look at think tanks—those institutions funded to set the intellectual agenda for the world.  The subject here is USA-Russia relations but the operating principles are the largely the same for a wide assortment of subjects.