Protectionism in the age of solar cells, Part 2

When the Trump administration announced last week that it was imposing tariffs on solar cell panels mostly coming from South Korea and China, it appears that the progressive blogosphere was almost unanimous in condemning the action as an attack on solar energy.

I was dismayed that the neoliberal lies about free trade had apparently been accepted by so many. As Jon Larson wrote on Real Economics, “In certain corners of the economic world, this is a major story—mostly because it flies in the face of neoliberalism's first commandment—Thou shall not condone protectionism!”

The tariffs should be attacked, but not because they are tariffs, not because they are protectionist, not because they may lead to less imports of panels and therefore the loss of jobs of people installing them.

The tariffs should be attacked because they are not accompanied by a robust industrial policy that will help USA manufacturers replace panels no longer being imported, by panels of domestic manufacture.

Protectionism is an issue on which the Democratic Party and the left in general are very vulnerable. Basically, they have forgotten the actual history of industrial development: every single country that successfully industrialized did so behind trade barriers. Many readers may not believe me, but it is historical fact. For a relatively short but full explication of the fact that protectionism works, I point you to James Fallows’ December 1993 article in The Atlantic, “How the World Works.” For an entire book on this topic, the best is probably South Korean economist Ha-Joon Chang's 2007 book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, available as a large pdf file here. An excellent review of Chang’s book, by Chalmers Johnson, is here.

For a brief discussion of how this history was purposefully and deliberately eradicated from American universities and economics courses a century ago, read “Prophet of Prosperity” in a recent issue of The Pennsylvania Gazette of the University of Pennsylvania. The motive? “...landlords and other rentiers were reclassified as capitalists, just ones who invested in land and raw assets rather than machinery, and thereby earned “the increments of value attaching to land,” thus removing the social opprobrium of being exploiters, parasites and usurers. And, more importantly, to allow “money to make money.”

We like to taunt our conservative and libertarian opponents that you are entitled to your own opinions, but you are not entitled to your own facts. Well, the same applies on this issue, and to the neoliberals amongst us: you are entitled to your own opinions, but you are not entitled to your own facts. The facts are clear that historically, countries that successfully industrialized did so behind trade barriers that protected their infant industries, and protected the earning power of their working people. The facts are equally clear that since the imposition of economic neoliberalism and free trade on developing countries, and their enforcement by the World Bank, the International Monetary Fund, and other international NGOs, not to mention the USA government and others, the growth rate of the national economies of developing countries has been LESS than it was before neoliberalism and free trade. Those are the facts, and all the crap you were taught in college economics courses will not change them.

But protectionism alone does not work. There must be a national industrial policy to promote and encourage the development and growth of new industries. As originally developed by George Washington and his Treasury Secretary, Alexander Hamilton, and later in the 19th century by Henry Clay, Henry Carey, Abraham Lincoln (on Lincoln, see one of the best overlooked books on historical political economy, Lincoln and the Economics of the American Dream, by Gabor S. Borit, Memphis State University Press, 1978)., and others, protectionism was one pillar of a three-part program for national economic development. The other two were a national banking system, and internal improvements (what we today call infrastructure).

Protectionism in the age of solar cells

The Trump administration has annouced its intention to slap some tariffs on products mostly coming from S. Korea and China. In certain corners of the economic world, this is a major story—mostly because it flies in the face of neoliberalism's first commandment—Thou shall not condone protectionism!

As two guys who are serious students of industrialization in general and USA industrialization in particular, Tony and I are pretty supportive of some sort of economic protectionism. Tony's approach is very straight-forward—he looks at the historical record and sees that every nation that successfully industrialized did it behind tariff walls.

My take is that because the financial markets are hopelessly corrupt, shortsighted, and technologically illiterate, they are unable to properly value the infrastructure of industrialization. When financialization first started, there were a few protests at the ability of real scoundrels to seize and then cash in on assets they rarely understood, who in the process of their plunder, squandered a system of wealth creation that had taken decades to create. They pissed away USA's industrial crown jewels for a tiny fraction of what they were worth with their get-rich-quick schemes. These protests probably crested with Oliver Stone's movie Wall Street—an effort so excellent, I suspect Stone didn't even know how good it was.

Along with the plunder came the justifications for why this did not matter. Around here, these loony economic expressions for how the world should work, but doesn't, are lumped under the garbage pile we call neoliberalism. And in the world of the neoliberals, there is no greater sin than "protectionism." Yet here we are with a president who believes that tariffs and such are probably a good thing. He's about 30 years too late, but he seems to think USA industry should be protected. One other thing, the Asians have been about as brazen in their theft of intellectual property as anyone—including USA from GB. The Chinese were caught red-handed dumping solar panels. The party injured by this was actually Germany but a couple of USA manufacturers won some settlement with the Chinese. Ironically, both USA victims are foreign-owned—one German, one Chinese.

I have included four essays on this subject after the break:

1. The Asians seem to think this is a major shift in USA trade policy. My guess is that they will figure out ways to adjust to new market realities.
2. Lindorff seems to think these tough new trade rules are a manifestation of an unhappy empire that wants to slap around China and Korea for the crime of wanting a different foreign policy than the folks from Foggy Bottom.
3. Reuters, which always believes protectionism is a bad thing, argues that tariffs on solar panels will most hurt the solar panel installers.
4. The folks at Rolling Stone just assume this is Trump's way of throwing some roadblocks in the way of new green technologies.

All of these folks have a point. And we will probably hear a lot more on this subject. This is a protectionist proposal in a neoliberal world—a world with thousand of economists well-trained and motivated towards shooting this thing down. As someone who participated in the debate over NAFTA, I am very interested to see how this debate will differ.

Bids to build renewable energy in Colorado point to a bright future

In Colorado, an electric utility's request for proposals to build new generating capacity resulted in stunning evidence that renewables are now cheaper than fossil fuels--even with storage capacity included for when solar and wind are "down."

This merely confirms that there is a boom in renewable energy underway, but judged from the perspective of the task at hand--putting the entire global economy on a renewable energy basis and eliminating the burning of fossil fuels altogether--this boom is merely a blip. Bloomberg New Energy Finance, which has been tracking global investments in the sector for the past ten years, reported that renewable energy investment in 2017 totaled $333.5 billion worldwide, up three percent from 2016. The 2017 numbers were the second highest yet recorded, and brought cumulative investment in renewables since 2010 to $2.5 trillion.

This may sound like a lot of money--and it is--but it should also be viewed in the context of fossil fuels being subsidized $1.9 trillion a year. And that number is from five years ago. According to a report from the International Monetary Fund in March 2013, governments around the world give $480 billion a year in direct subsidies. This is a worldwide amount, and it is not structured as you might expect: most of these direct fossil fuel subsidies are by governments in the developing world and are designed to make petro-products affordable for poor people. The remaining $1.4 trillion, according to the IMF, is the “externalities” cost of  “the effects of energy consumption on global warming; on public health through the adverse effects on local pollution; on traffic congestion and accidents; and on road damage.” A writer summarizing the IMF report noted that by "failing to make fossil fuel companies pay" for these externalities, "governments are implicitly subsidizing those companies. IMF calls this under-taxing of fossil fuels “mispricing,” but it’s easier to think of them as indirect subsidies."
But the amount actually needed to shift the entire world to renewables is $100 trillion. We could achieve that in 15 years with a slightly less than ten percent increase in annual world economic output--which would create the largest and most sustained economic boom in human history. That is an investment of just under $7 trillion a year. So, the $333.5 billion worldwide in 2017 needs to be increased twenty-fold.

This shows that a reliance on the conservative/libertarian/neoliberal ideology of free markets and private enterprise is woefully inadequate to what needs to be done. We need the activist role of national governments promoting and supporting economic activity that promotes the General Welfare, and discourages economic activity that is useless and often predatory, such as speculative trading in stock, bond, futures, currency and derivative markets. Contrary to the myths of conservatives and libertarians, this issue of the government actively steering the national economy in a positive direction was the central focus of the U.S. Constitutional Convention of 1787. The U.S. Constitution, its mandate to promote the General Welfare, and the entire history of How America Was Built, clearly shows that government of, by, and for the people, must supervise the building of an economy  of, by, and for the people.

The decline and fall of neoliberalism in the Democratic Party

If you are snow-bound in USA today, and want something to read, I highly recommend Ryan Cooper's excellent short summary of USA political and economic history since the New Deal, posted last week, The decline and fall of neoliberalism in the Democratic Party

Nations took various roads out of the Great Depression. Every one involved ditching liberal orthodoxy — deficit spending and the abandonment of the gold standard being the key two policies in most instances, which had to overcome resistance from business. In Germany, fascism removed "capitalist objections to full employment," wrote economist Michal Kalecki, by routing all deficit spending into rearmament and by keeping labor quiescent with political repression and permanent dictatorship. 

In the United States, the replacement ideology was the New Deal. After some initial failed experimentation with planning, New Dealers settled on a framework of stimulus, regulation, unionization, progressive taxation, and anti-trust, heavily influenced by Louis Brandeis (to be covered in the next article in this series). To get people back to work and prime the economic pump, vast new public works were built, and millions were directly employed by the state. Business — especially finance — was regulated, above all to prevent concentration. Unions were protected under a new legal regime created by the National Labor Relations Act. Taxes on the rich were sharply increased, both to raise revenue and to deliberately prevent the accumulation of vast fortunes. Finally, world trade was managed under the Bretton-Woods system.

These two paragraphs are an excellent summary of what the New Deal was -- and what was dismantled in a joint project of conservatives, libertarians, and neoliberals. This dismantling is why neoliberals are as much to blame for the rise of neofascism around the world. While conservatives, libertarians and the Republican Party, the past half century, constantly stoked bigotry by "feeding meat to their base," neoliberals joined them in destroying the "welfare state" policies that were enacted after World War Two to ensure that never again would fascism be incubated in a cauldron of economic misery and inequality. 

Cooper includes all the most important points of this history, with the exception of the race to the bottom initiated by NAFTA and free trade. Also, Cooper does not fully grasp that the prosperity of the tech boom under Clinton was mostly the result of the phase shift in the national economy resulting from the 1950s through 1980s build-out of the new technology of computers, which -- like all phase shifts in the economy -- began with government support and promotion of new technologies (in this case, computers are developed in military research programs during World War for ballistics calculations, fire control, aircraft simulation, radar, code breaking, and physics calculation for the Manhattan Project, as covered in my chronology HAWB 1940s-1950s Timeline of computer development shows crucial role of government.)

Cooper's article is the first of a four-part series examining the four major factions in the Democratic Party and American left today. This first part considers the neoliberals, which of course is the faction which currently dominates the Democratic Party leadership, though it is in a dwindling minority. It dominates because it has money, but not votes. 

The second part is The Return of the Trust Busters, the faction around Elizabeth Warren, which Cooper brilliantly traces back to Louis Brandeis. 

The third article is Bernie Sanders and the Rise of American Social Democracy.

The fourth and final installment is The Dawn of American Socialism, which focused on the faction led by the Democratic Socialists of America.

There is no consideration of the historically crucial role of the American School of political economy, which helps explain why Cooper does not include the disastrous "race to the bottom" initiated by NAFTA and free trade.

I also highly recommend Cooper's How to Crush Trump from December 27, 2017, especially this paragraph:

Then in 2020, Trump must be crushed at the ballot box. His corrupt administration must be thoroughly investigated, and any criminal acts punished. More importantly, the economic base of Republican plutocracy — Wall Street, monopolist corporations, and idle rich heirs and heiresses — must also be crushed. Monopolies must be broken up, taxes on the rich and corporations dramatically increased, and the size, profitability, and power of Wall Street sharply reduced with cricket bat regulations.

None of Obama's "don't look back, only forward," pursuit of bipartisan unicorns. Criminal activity must be ruthlessly targeted and vigorously prosecuted, ESPECIALLY by our political enemies.

Even the Germans are dropping climate goals

The Germans have been world leaders in pursuing ambitious environmental goals by improving hardware. But their efforts are showing signs of fatigue. The commitment to "clean diesel" has shown pretty conclusively that a vehicle with reasonable fuel economy and performance cannot be built. So everyone started to cheat. Turns out it is easier to raise environmental standards than to comply with them. Especially if the new standards cannot be met because of hard scientific laws.

In addition, the Germans paid for much of the heavy lifting necessary to make solar panels on a commercial scale. And then the Chinese ran off with their markets using the same production technology. This tends to be disheartening. So they are not especially enthusiastic about meeting the climate targets they set in Paris 2015. Throw into the mix that the Germans do not have a government these days and it looks like the targets for 2020 are about to be kicked down the road.

DW takes it from here:

Student Debt Slavery

My little town is home to two liberal arts colleges that cost over $60,000 / year to attend. Both have stellar reputations for what they do. One is more of a music conservatory with solid departments in math and science. The other is a place where high achievers like National Merit Scholars go to see what its like to be in rooms full of high school valedictorians. But $60,000??

In one of the college's student center, I got into an interesting conversation with a 19-year-old who was reading Kerouac and wondering why his professor had assigned the thing. Now I have a bit of sympathy for the professor who probably, like me, read Kerouac on his own initiative back in the day. I read On the Road and was amazed that Kerouac was able to describe anything at all considering the serious drug and booze haze he was in most of the time. Looking back, this book is mostly a tribute to the casual rootlessness that was possible owing to the general prosperity of the times and $0.26 per gallon gasoline. There was so much prosperity that whole subgroups of people like the hippies could survive on the what fell from prosperity's table. There is probably nothing wrong with having the young read Kerouac if only to discover what their grandparents found cool. But $60,000???

Anther encounter with a product of a quarter-million dollar's worth of enlightenment was amazing in another way. This sparkling-sharp young man had gotten his degree in video production who when faced with the task of how to use the sun to light his scene, got completely befuddled because, I am pretty sure, he had never noticed the different times and positions of the setting sun based on the calendar so could not predict where his subjects should be placed if he wanted to shoot them in golden-hour light. Think of that—this guy did not learn something that humans have known about for at least 6000 years, something that was of practical value if he wanted to be a good cinematographer, and he had just spent a $quarter-million on an "elite" education. $250,000! For that sum of money, he could have traveled the world for a couple of years so he wouldn't have that typical "Merikun parochialism, equipped himself with professional-grade cameras and audio gear, and still have plenty left over to fund his video ventures for a couple of years while starting up. $250,000 is a LOT of money.

I have neighbors who have tenure—which these days is an amazing accomplishment. There's probably at least 50 highly qualified PhD s for every tenured position available. And because being a professor is a pretty cushy job, a lot of them don't retire at 65 and open up the job for someone younger. One neighbor finally got tenure at 50. Hard to find fault with them as people. On the other hand, they are part of a system that consigns children into a lifetime of debt peonage / slavery.

Nasty business.

The Shale Oil promise of abundant new petroleum supplies will not be kept

The following from Bloomberg is possibly the least surprising development imaginable. The idea that shale oil was going to supplant oil from traditional wells was just bonkers. For whatever reasons, discovery of oil in traditional formations has been declining—the believers in peak oil have be predicting this for a long time (since about 1970 in my awareness.) Bloomberg does not cite peak oil as the reason for a collapse in oil discoveries—they are true believers that if oil prices would rise, new oil would be found. But then, they are people who worship at the altar of "free" markets—they MUST believe this or they will be drummed out of the economic clerisy for heresy.

The promise of a sustainable energy future was predicated on the hope that humanity would be wise enough to spend some significant fraction of its declining fossil fuel supplies on building the replacement for them. I fervently hope that we have not already screwed up this possibility too.

Graphene—a tribute to Industrial-Class virtue

A big-picture look at the requirements for meaningful action on climate change will always come back to the subject of energy. The human need for energy is what drives the problem. Plus no matter what problem you are trying to solve, from plastics recycling to increased clean-water supplies, the solution WILL require energy.

Running the world on solar supplies alone is probably possible but it will be ridiculously difficult to pull off. Of course, I spent most of my life believing that solar cells would always be so expensive that it would require social subsidies to get countries to make the conversion. And I was mostly right—both wind and solar technologies have been aided by social / political demand and subsidies until now. But now when it comes to solar cells, they have become the low-cost option for electrical generation.

But because they don't work at night, solar cells need a storage system to make them conventionally reliable. Electrical storage has been a primary interest of mine since the 1950s. I had a flywheel phase and a super-capacitor phase along the way. But mostly I ignored the battery stage because of personal experience with their costs and unreliability combined with a series of lavish claims for improved performance that seemed to fizzle on closer inspection.

This time, the key to storage will probably be graphene—a substance first theorized by P.R.Wallace in 1947 while a new hire at Canada's McGill University. This stuff is amazing but ridiculously hard to produce. Not so surprisingly, it's the Koreans who are figuring out how to make commercial quantities—they have set their sights of being world leaders in battery technology and there are a multitude of arguments suggesting they are already there.

The YouTube below will explain the role of graphene in a possible sustainable future. Spend 6:02 of your life to understand this almost miraculous material.



And here is a little 3 minute clip showing graphene research results from academia. These folks think the a threefold increase in energy density from current lithium-ion battery technology is a conservative number. Who knows, maybe, just maybe, someone will really make a breakthrough is this mostly breakthrough resistant product. Get a 5x improvement and we can start talking about battery-powered flight and serious grid-level storage. Just remember, technological improvement is not automatic even though the computer example has taught a whole generation to believe that next year, the new computers will be cheaper and faster. Battery technology has gone for quite awhile without a breakthrough. So in this sphere, the progress almost everyone seems to believe is automatic has been anything but. Of course, it was never automatic in computers either but rather the outcome of very smart people working very hard.

The Political Economy of Seymour Melman

A reader (KF) sent me the following link about Seymour Melman—which is a good thing because I probably would have just blown it off otherwise. Because when I was first exposed to Melman, I wasn't all that impressed. I had a sociology professor that made us buy one of his books which soured me on the man before I had read a word. But those of us who were anti-war activists knew about him because he was one of the very few professors who were public with their anti-war stance. But because he was an academic, he came off as oddly stiff to those of us for whom being against the war was an exercise in fluctuating between being scared to death and being absolutely furious.

So it is with some pleasure I see that Jon Rynn has penned this excellent description of why Melman embodied that sort of thinking we in Minnesota were supposed to learn. And surprisingly enough—did. The Melman he describes and I share a great deal of thinking. And this is NOT because I read his book—I did not. That was the quarter I started my fight with my local draft board, and almost died from a ruptured appendix—spent three weeks in the hospital with an antibiotic drip and 104°F fever. So Melman and I came to similar conclusions on political economy by really different roots (routes).

There is another possibility here. Rynn may be punching up Melman's ideas because he is such an admirer. That's cool by me. I do the same thing to Veblen. Anyway...enjoy. And thanks again to KF

Dr. Strangelove on climate change

Bill McKibben is one of those who are especially furious about the fact that the oil industry knew about CO2 and climate change as far back as the 1970s. Turns out that they knew far longer than that. As told below, Edward Teller, the father of the hydrogen bomb, the guy who figured out how to make nuclear warheads small enough to be loaded into submarines, the model for Stanley Kubrick's Dr. Strangelove, THAT Edward Teller, gave a speech to the American Petroleum Institute outlining the risks posed to the atmosphere by the burning of fossil fuels in November of 1959. McKibben should absolutely love that because the speech was given a little over a year before he was born.

The reason this story is totally believable is that the people associated with nuclear power have been warning us about climate change in apocalyptic terms for a long time. The guy who taught me how to sail was an electrical engineer who spent his career making critical pieces for nuclear power plants. Not long before he died, he told me, "Climate change is the biggest threat facing the human race...ever. If newspapers treated the threat with the importance it deserves, they would have 144 point headlines on the subject above the fold every single day."

So while it would be possible to dismiss the Teller speech as just another sales job by someone representing nuclear power (which is how the API probably treated it) it is remarkably accurate and prescient.

Protect the Petrodollar

The second most important story after the catastrophe of climate change is the quite related story of: What is the end game for the Age of Fire and Fossil Fuels?

This is no small question. The incredible energy density of fossil fuels has made possible a huge population that will be fighting over the table scraps as these fuels become more rare and expensive. Just remember, any fuel that is not renewable is by definition running out. The role of fuels like gasoline in the food supply is beyond important. And while activities like freezing food for preservation can powered by solar or wind with a few changes, the idea of a battery-powered tractor or combine is still mostly a fantasy.

Here in USA, the end of the Age of Petroleum promises to especially difficult. We have been a net energy importer since about 1970 and while we sold off the country's industrial crown jewels and some prime real estate to help pay the bills, such actions were but a drop in the bucket compared to the massive oceans of oil we import every day. In 2012, the trade deficit in oil was over $300 billion and while fracking has recently lowered that amount to less than $15 billion in 2016, fracking is a secondary recovery technique designed to extract the last remnants of a depleted oil field. Of course, selling off the industrial crown jewels means that we make less of our needs every year—we now make less than 2% of our shoes for goodness sakes.

But the pain has mostly been rendered invisible because of the agreements USA managed to get agreed to in the 1970s when Richard Nixon closed the gold window. The most important plus the USA got by being the superpower was the agreement that the medium of exchange for the petroleum trade would be the dollar.

But we should remember a few fundamentals about money so we can understand why the petrodollar is so important.

The form money takes seems important to some, but in fact this is the most irrelevant issue (sorry goldbugs). The important question is: What makes money valuable?

1. Money is valuable if it can be exchanged for something else you want or need. Monetary cranks insist that paper or electronic money should be able to converted into something more intrinsically valuable like gold. Problem is, gold has very little intrinsic value compared to something like oil so the petrodollar is a FAR more stable store of value than gold could ever hope to be.
2. Money is valuable if you need it to pay off persons who can make your life miserable. As Peter Cooper, the Greenback Party Presidential candidate, would say, "If you can pay your taxes with it, the money is good." Of course, the same can be said for money used to pay off mortgages, etc. Creditors use police powers to enforce their currency rules.
3. The third way money is made valuable is when it is a monetization of human genius. When Japan's PM Abe tried to drive down the value of the Yen in 2012, he discovered that the factors usually blamed for driving down the value of a currency by the monetary pundits didn't work for the Yen. Turns out that if you can trade Yen for a Lexus (or thousand of other perfectly good examples), by gum it is worth something.

Bitcoins meet none of these criteria. Therefore its value is quite ephemeral. On the other hand, the petrodollar IS backed by force. The big problem is that it isn't easily-bullied pipsqueaks like Iraq or Libya challenging petrodollar supremacy. This time it's Russia and China. And while the Petrodollar is so powerful that it can withstand a bunch of shocks, it also has a bunch of enemies. Bringing down the petrodollar would make much of the world's population very happy. So while it is still powerful and backed by murderous people with insanely destructive weapons, the petrodollar is no longer invulnerable. We should all keep an eye on this story. There isn't a LOT of good writing on this subject but I found three articles worth reading.

The hidden truth about Christmas

One of the peculiarities of my childhood was that I was raised in a home where we were taught that lying about Santa Claus to children was a sin. However, we were also coached not to tell our friends that Santa was just a hoax. In other words, we were taught that Santa was a lie but instructed to keep the lie alive in homes where it was taught. Considering how important "sin" was to our worldview, this contradiction was stunning.

Below, Lee Camp gives an absolutely hilarious explanation for this contradiction, and argues pretty persuasively that the Santa lies are FAR from harmless.



I loved this because it really did remind me of my childhood. And yes, massive lying to children is probably a serious drag on their mental and cultural development. However, in my case I tend to think the Santa lie was condemned by the religious types mostly because it distracted people from the stories they were telling. I won't even get into the debate of whether the flying toy-giver or the birth-by-virgin tale has caused more social damage.

Merry Christmas

The Higgs boson and the purpose of a republic (repost)

The following was first posted July 31, 2014. It was a hit back then so it is being reposted at Tony's request for those who might have missed it.

Tony Wikrent

Two years ago this July, the scientific team at CERN, the European Organization for Nuclear Research, used the Large Hadron Collider (LHC) to confirm the existence of the Higgs boson, the most important "missing" particle of the Standard Model of modern particle physics. The work of the CERN team was filmed by theoretical physicists Mark Levinson and David Kaplan, who used over 500 hours of film footage to create a 99 minute documentary, Particle Fever, which was released in July 2013.

The film is a joy to watch.

I especially liked the use of the chorale movement of Beethoven's Ninth at the moment on 4 July 2012 that the LHC provided evidence of the Higgs boson. If you need a lift; if you need a break from all the mayhem and madness of today's politics; if you want to weep tears of joy, watch the film.



A computer generated map of the particle paths generated by a collision of two sub-atomic particles traveling near the speed of light. Source: CERN Press Office Photo Selection.
 
But that's not what I want to focus on this evening. Near the beginning of the film, Kaplan is shown addressing people in an auditorium somewhere, explaining the search for the Higgs boson, and how its "discovery" will validate the theories of the Standard Model. At 20 minutes into Particle Fever, a member of the audience gets up and asks:

“Let’s assume you’re successful and everything comes out OK. What do we gain from it? What’s the economic return? How do you justify all this?”

Then, as if to strike terror into his listeners -- or perhaps to validate his own importance in the face of a superior intellect of a, you know, actual scientist -- the questioner adds, “By the way, I am an economist.”

Now, I can't decide if Levinson and Kaplan have done a greater service to humanity by providing a popular and entertaining explanation of the quest for the Higgs boson, or by allowing some unnamed arrogant economist, in a few short breaths, to show us quite precisely what is fundamentally wrong with modern economics as a discipline, and the whole cult of conservative / neo-liberal economics thinking that demands everything be justified solely by its ability to create a "profit."

Again, you have to watch the film to see how perfect is Kaplan's reply.

After the nervous laughter of the audience reacting to the sudden self-revelation in their midst of a high priest of money, Kaplan broke the tension by replying, “I don’t hold it against you.” Then he leaned toward the audience, and said, “It’s a very, very simple answer.” The audience hushed expectantly, and Kaplan gave them the big scientific zinger:

“I have no idea. (pause) We have no idea.”

When the laughter subsided, Kaplan continued. “When radio waves were discovered, they weren’t called radio waves, because there were no radios. They were discovered as some sort of radiation.”
“Basic science, for big breakthroughs, needs to occur at a level where you’re not asking what is the economic gain, but where you’re asking: What do we not know?” And, Where can we make progress?"

The infuriating irony of libertarians' wet dream, Bitcoin and cryptocurrency

I suspect that most people do not understand bitcoin and cryptocurrencies because they also do not understand how money is "created." The reality that money can be created out of nothing is so ludicrously simple that most people simply cannot believe it. John Kenneth Galbraith observed that "The process by which banks create money is so simple that the mind is repelled."

I am going to go out on a limb and assert that if you do not understand the creation of money, you cannot be truly progressive on economic issues. You can support progressive positions on economic issues, but until you understand how money is created, you will always be vulnerable to being herded into a veal pen for slaughter by financial oligarchs.

If you want an explanation of money creation, in January 2015 I posted Creating money out of thin air on DailyKos. If you want examples of so-called progressives freaking out because they refuse to believe money is created out of nothing, read the comments. The hostility and arrogance of certain imbeciles is part of what pushed me away from DailyKos.

Cryptocurrencies, of which Bitcoin is now the best known example, with the highest market capitalization -- $217.8 billion the minute I write this -- are nothing more than computer programs creating their own units of money. Libertarians love it, because it is money that is NOT being created by governments. No small number of libertarians also hate the big banks almost as much as they hate government. So, I think cryptocurrencies are going to be more than a passing speculative fad simply because they are a libertarians wet dream. Nothing will happen to knock cryptocurrencies that libertarians won't shake off as they cling to their anti-government, anti-"crony capitalism" ideology. 

The infuriating irony is that one of the things libertarians hate most about governments and central banks (which are often quasi-government entities controlled by the very financial oligarchs who control the big banks of Wall Street and the City of London) is that governments and central banks issue fiat currency that is backed by nothing. Libertarians insist on a return to the gold standard, so that government-issued money has "value." What about cryptocurrencies, though? I have yet to hear any libertarian denounce Bitcoin or any other cryptocurrency because it is not backed by gold, or backed by anything else of "value."

So, while the speculative frenzy of Bitcoin and cryptocurrencies is bad, the one good thing is that it is teaching people that money can be created out of nothing. I suspect that's why Dimon of JP Morgan hates Bitcoin and cryptocurrencies so much. Either that, or Dimon is just talking them down to manipulate the price.

(A note on why the speculative frenzy is bad. Because it is a misuse and misapplication of society's talents and resources at a time when the only frenzy should be building the Tesla and electric car recharging stations, wind turbines, solar energy arrays, geothermal generating plants, urban mass transit systems, and upgrading and replacing every man-made structure on the planet to, to transition as quickly as possible away from burning fossil fuels and worsening climate change.)

Ultra High Voltage Direct Current from ABB

ASEA, Brown, Boveri is a Zürich-based electrical engineering company. They have vast experience in large electrical infrastructure projects. ABB is the product of a merger between Swedish-based ASEA (founded 1883) and Brown, Boveri & Cie (founded 1891 in Baden). Both were leaders in the production and installation of heavy electrical machinery. ASEA, for example, built much of the systems that powered the Swedish rail lines and built 9 of 12 of her nuclear power plants. These days, the company is concentrating of the sort of hardware necessary for sustainable energy.

China has a very large desert that could be paved over with solar cells. The problem is that these cells are a LONG ways from the big population centers. So China has to move all that energy without incurring large transmission losses. Alternating Current, the preferred technology for heavy-duty electrical transmission for a host of very good reasons, has one major flaw—it's not efficient for long-distance. As a side issue, it is almost useless for underwater power cables which becomes very important in places like Japan and Indonesia.

Enter Direct Current transmission. More expensive and not as flexible as AC but it is really the only solution for long-distance and underwater. No one has a lot of experience in DC transmission but ASEA once built a link from mainland Sweden to the isle of Gotland in 1954 that's still working. And now, ABB has announced the completion of successful tests for transformers and key equipment for world’s first 1,100 kilovolt (kV) project in China.

1100 kV. Scroll down to see what kind of equipment is required to "go solar."

The sun STILL never sets on the British Empire

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” ― Sun Tzu, The Art of War

I have been openly questioning, in sundry forums around the pixelsphere, why Rupert Murdoch and Fox News have never been treated the same way RT is being treated now--forced to register as a Russian agent of influence because of a flood of suspicions regarding to what extent RT is controlled by Russian intelligence, or even Putin personally. Why have Rupert Murdoch and Fox News never been even considered as British agents of influence? I should have seen it coming, but I did not, yet come it did, on--where else?--DailyKos. Someone informed me that I was wrong: Murdoch is not British, but Australian.

Well, OK, I should try to be more understanding that Americans have not really had first hand experience with the strict social and political hierarchy of Britain and the countries of the British commonwealth, and probably do not understand that Australia, when push comes to shove, is still under the thumb of the British monarch. The same is true for Canada and a bunch of other countries. The British monarch is head of state of 16 countries: Antigua and Barbuda, Australia, Barbados, Belize, Canada, Grenada, Jamaica, New Zealand, Papua New Guinea, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Solomon Islands, The Bahamas, Tuvalu and the United Kingdom. Note how many of these are hot money centers.

The head of government, usually the Prime Minister of the country, can be dismissed by the British monarch, usually acting through the monarch’s representative, the Governor-General. This happened in Australia in November 1975, after Prime Minister Gough Whitlam of the Australian Labor Party (ALP); began to prepare to break from the financial stranglehold of the City of London by reaching out to the Saudis and other oil states for financing. Governor-General Sir John Kerr dismissed Whitlam as Australian PM, and made the Leader of the Opposition, Malcolm Fraser of the Liberal Party, the new Prime Minister. This is still a really big deal in Australia. It created a constitutional crisis that is called "The Dismissal". A series of movies have been made about it, and a number of books published. In the national memory of Australians, it is comparable to Watergate for Americans.

When I started searching the internet to verify a few details (for example, I had forgotten the names of Whitlam and Kerr), I found controversy over The Dismissal has been rekindled in Australia by a court fight to force Queen Elizabeth to release to the public her private files regarding The Dismissal. The court case apparently was initiated by a scholar after she found a handful of extracts from Kerr's letters to the Queen's private secretary in Kerr's journals. According to an Australian Broadcasting Company posting:

A handful of extracts from Kerr's letters to the Palace quoted in his own journal show that from as early as September 1975, the Governor-General had raised the prospect of him sacking of the Government, and of his own dismissal by Whitlam. "The moment he set that out to the Queen she was already involved because the Queen from that point had options that she could take," Professor Hocking said. "One of the options was to alert the prime minister Gough Whitlam to the fact that the Governor-General was speaking about these very extreme possibilities ... Now, from all accounts she chose not to do that."

This past November, ABC posted an article on the anniversary of The Dismissal: The facts of the Whitlam dismissal are more important than ever.

Are the climate scientists finally "getting it" about conferences

There are many reasons why a lot people (not all of them drooling morons) believe that climate science is a hoax. But at the head of any list of reasons is the perfect example—the vast majority of climate scientists live their own lives as if there isn't really a problem so why should anyone heed their warnings. The following is the tale of one climate scientist who decided he wasn't going to, by his actions, continue to discredit his scientific conclusions. Of course, the blindingly obvious didn't occur to him until he had flown 50,000 MILES (80,000 km) in ONE year.

To suggest that I don't understand why people fly long distances to conferences in order to present papers that could EASILY be posted and discussed online, is to belabor the obvious. I understand that these get-togethers have something to do with personal professional marketing but like door-knocking in politics, I am not sure what. And since only insiders can possibly understand the significance of the typical CV entry of those presenting papers, I would suggest that the climate change community start out by highlighting more relevant qualifications. And they could start by insisting that the minimum qualification to be taken seriously by anyone, especially outside of the clique of paper and speechmaking climate change experts, is that their CVs BEGIN by listing the efforts they have made to make their own homes and offices Net-Zero when it comes to carbon emissions.

And yes, I AM quite serious about this. I remember my reaction to Al Gore's An Inconvenient Truth. The first half of the movie was a splendid presentation of the current facts of how the climate was changing and then Al, looking as serious as a heart attack, starts suggesting ways we can all help avoid the catastrophe. The suggestions were so lame I personally felt embarrassed for him. I wanted to yell, "Al baby, didn't you even watch your own movie?" Suggesting that we should all hang our clothes out to dry was just so meaningless after watching the evidence that the polar ice caps are melting. Of course, it was soon discovered that Gore had recently built a McMansion that used energy at approximately 10x the rate of a standard family dwelling, that he was now carrying his message around on a Gulfstream, and that his most "serious" proposal was for Wall Street to sell more carbon offsets. If Al Gore's new house had been a demonstration of the incredible possibilities of Net-Zero constructions practices, it is unlikely he would have become a lightening rod for critics of climate science and scientists.

Anyway, my dream CV entry for a climate scientist would include:

• Before and after pictures of his or her dwelling,
• A detailed expense accounting for how much their efforts cost,
• A discussion of the problems of financing,
• An analysis of what methods were especially effective,
• A table of what sources of advice actually helped the project,
• A timeline of how long this took,
• And maybe some additional relevant details like how many times some family member sobbed about how unhappy living in a construction zone had made them.

And why would this be helpful / important? My guess is that if 25,000 scientists had actually gone to the trouble of reducing part of their carbon footprint to zero, there would a greater awareness about how something symbolic (and mostly useless) "actions" such as like passing a resolution at a climate conference really is. After all climate change will only be meaningfully addressed when people make significant changes in their lifestyles. If arguably the best-informed people on the subject cannot at least give up their goofy carbon disaster conferences, what is the prospect of cooperation when others are asked to make changes.

Just a thought.

Robert Kuttner reviews new biography of Karl Polanyi

Long time readers of this little niche of the pixelsphere know that Jon and I do not have much respect for Karl Marx and marxists in general. Jon especially has some entertaining anecdotes he collected from his 1970s travels in Eastern Europe, he uses brilliantly to illustrate and embellish his critique of Marxism. For example, astonished at the poor quality of post-war construction he observed in East Germany, Jon wryly notes, "It must a really, really bad economic doctrine that can get Germans to forget, in less than one generation, a basic skill like pouring concrete."

Our alternative to Marx is Thorstein Veblen, who coined the term "conspicuous consumption" in his 1899 classic, The Theory of the Leisure Class: An Economic Study of Institutions. From Veblen's school of economics we get many of the too few economists who foresaw the financial crashes of 2007-2008 and who have been accurate about the state of the real economy, such as James Galbraith and Michael Hudson. Their branch of economics is called institutionalism. Ring a bell?

Another alternative to Marx is Karl Polanyi, who, like Veblen, combined economics with anthropology and sociology to create a deep and incisive critique of capitalism. Marxists may find Polanyi somewhat more palatable than Veblen, since a key influence in Polanyi was his residence in Vienna in the 1920s, when the city was governed by social democrats and democratic socialists who also happened to be competent government administrators of their many socialist and hybrid socialist programs and policies. Hence, the city of that period was knows as Red Vienna. To get a bit ahead of ourselves, and quote from the book review below:

The great prophet of how market forces taken to an extreme destroy both democracy and a functioning economy was not Karl Marx but Karl Polanyi. Marx expected the crisis of capitalism to end in universal worker revolt and communism. Polanyi, with nearly a century more history to draw on, appreciated that the greater likelihood was fascism.

The reviewer is Robert Kuttner, co-founder and co-editor of the USA progressive magazine The American Prospect, one of five co-founders of the Economic Policy Institute, and professor of social policy at Brandeis University.

Can the American Left Be Resurrected?

The reputation of Garrison Keillor is beyond my power to attack or defend. Around here in Minnesota among a certain age group, he has been the culturally dominant figure of our lives. This is certainly true for me. I started listening to him back on the early 1970s and was immediately intrigued because of our shared backgrounds. We both went to the University of Minnesota as impoverished students. We both came from small towns. And we both had WAY too much religion in our childhoods. And these themes informed his worldview. Like a lot of smart kids from small towns, the surprise that never exhausted itself was that citizens of big cities were not automatically smarter or better-read or harder-working than we were. In fact, it was usually the opposite. And there are so many of us that we kept his show alive and well and his books on the best-seller lists for decades.

And yet, within the past few days, Keillor has been written out of our culture by some suits at Minnesota Public Radio for the "crime" of making a clumsy pass many years ago. They have pulled down his extensive catalog of shows from their website. Seriously? Political correctness has come to this?

Part of the problem is the Minnesota Inferiority Complex. (Minneapolis went through a stage where some marketing genius wanted to call their fair city the "Minne-Apple" like a junior version of New York—the Big Apple, get it? I am still embarrassed by how lame that was!) In this case, the state that never voted for Ronald Reagan still wants to be considered the cutting edge of Progressive thought. Politically, that impulse ended when Paul Wellstone died. We now have two doctrinaire neoliberal Senators (although who knows how the Al Franken fiasco will end.) So since Democratic Party activists have decided they won't contest the neoliberal agenda in economics or foreign policy, they will go all in on political correctness to the point where the mark of a gold-star liberal is to redefine a clumsy pass into harassment / rape.

For those poor souls lost in the wilderness of political correctness it is probably time to remind them of the basics of sound government.

1) Governments exist to organize collective action. There are projects that are too complex and expensive for even rich people to afford. From highways and bridges to interstate banking, some things just need collective action. If the people organizing this collective action understand that the goal is to enrich the whole and not some small group of backers, the first big step towards good government has been taken.

2) Honesty. This one is easy. It impossible to do great things with liars and corner-cutters making important decisions. This is ESPECIALLY true if we are ever to escape the energy trap that has caused the climate to change

3) Competence. In spite of what we may believe these days, political correctness is NOT a substitute for knowing what you are doing. It is impossible to make wise decisions on transit policy or land use or pollution control without a fundamental historical and technological literacy. I seriously believe we should have qualification tests in these areas before anyone is allowed close to a collective decision—and this applies to private real estate developers and charter schools as well as elected officials.

British Preparations for War with the United States, 1861-1863

One of the most astonishing comments I ever read at DailyKos was some historically ignorant bloviator arguing that the United States and Britain never differed all that much. Their comment was a reaction to my mentioning there was almost a war between the two countries during the U.S. Civil War, which this ignoramus thought was a lie.

Well, unfortunately, I have found that there is, in fact, widespread ignorance about the historic enmity between the United States and Britain. This ignorance, I believe, has crippled the ability of people to understand that there was once a great chasm between the political economies practiced by the two countries. No, Adam Smith's ideas were NOT the foundation on which the American economy was built.

And this ignorance is also reflected in the inability of people to understand what it means for the U.S. to be a republic. Perhaps it is easier to understand what a republic is supposed to be by looking at what a republic is not: not a monarchy, not an oligarchy, not an aristocracy, and not a despotism. If you read a lot of history, this fight between a republic and the other forms of government keeps coming up in one way or another. For example, after the famous battle of the Monitor and the Merrimack in March 1862, the Monitor's inventor, John Ericsson, wrote to Assistant Secretary of the Navy Gustavus Fox, that if the Navy proceeded to arm the monitors then being built with heavier ordnance, "we can say to England and France, leave the Gulf [of Mexico]. We do not want your Kings and monarchical institutions on this continent."

How many people even know what Ericsson's reference to the Gulf of Mexico means? The powers of Europe--all run by oligarchs and monarchs who had been trained since birth to rule over subject peoples--had never ceased dreaming of eliminating the American experiment in self-government one way or another. When the U.S. Civil War broke out, Britain, Spain, and especially France landed troops in Mexico and the Caribbean, and imposed a monarchy on Mexico. The British began landing troops in Canada, preparing to crush the Union in a pincers, and basically force acceptance of the Confederacy, breaking the United States in two.

It is easy to be confused by American history, because at the same time that the new American System of political economy was being built and practiced, the British system was competing with it for control of the domestic economy and polity, as well as internationally. A reasonably accurate summary is that the British system was dominant in the slave South, and fought for free trade in opposition to the American System’s protective tariffs. Compare, for example, the North's Doctrine of High Wages, with the South's Mudsill Theory. Another example--which is crucial to understand why today's Republican Party and conservative/libertarian movement are so destructive, is the South's rejection of a Constitutional mandate to promote the General Welfare. More than anything else, rejecting the concept of the General Welfare is what marks today's conservatives and libertarians as neoconfederates. And, more than anything else, rejecting the concept of the General Welfare is how today's conservatives and libertarians are ripping apart the social and economic fabric of the United States. It is ironic that the economic thinking of conservatives and libertarians today is based on the work of two Hapsburg Austrian economists: the "Emperor" imposed on Mexico was the younger brother of  Hapsburg Austrian emperor Francis Joseph I.

As I recently explained to someone, a big part of the problem with American elites is that they have been indoctrinated and trained to think more like British and European oligarchs than as American citizens. A century ago, that would have been a very damning, and damaging, indictment to level at someone. Today, I would say the American republic is barely a memory at this point. Americans should be outraged that Rupert Murdoch and his media empire, including Fox News, were never at least forced to register as foreign agents, like RT Television recently was.

The following timeline is very incomplete, but I think, and hope, there is enough here to shock most people, and leave them with a lot of questions. The timeline is taken primarily from:

"British Preparations for War with the North, 1861-1862," by Kenneth Bourne, The English Historical Review, Vol. 76, No. 301 (Oct., 1961), pp. 600-632, available in pdf here.

Clad in Iron: The American Civil War and the Challenge of British Naval Power, by Howard J. Fuller, Praeger, Westport, Conn., 2008

The Cause of All Nations: An International History of the American Civil War, by Don H. Doyle, Basic Books, New York, NY, 2015.

Putin's farmer

This is a story about a German farmer named Stefan Dürr who has taken his considerable skills to Russia where he has organized enough agriculture to have become one of Putin's goto guys on the subject. We last met Dürr in 2012 in a post on Catherine the Great and her policies that lured German farmers to Russia beginning in the 1760s. Apparently Putin believes that this was one of Catherine's better ideas (it was).

Well, now this story has not only made it to Deutsche Welle (an eminently establishment German broadcaster) but they have seen fit to post it to Youtube. The reason seems to be that because of Dürr and folks like him, Russia has not only weathered sanctions to their food supply, but they have upped their agricultural game to the point where she just had her best harvest IN HISTORY.

In other words, Russia is beginning to prosper because a former KGB agent has by plan, or sheer dumb luck, or some combination, executed a Producer Class economic maneuver of the first order. Import substitution is hard to do and yet they have done it. And it is all based on the recognition of the incredible value of German agricultural practice. Apparently, Putin learned a great deal while stationed in Dresden.