Sunk costs

In 1972, I talked my dad into buying a Saab 99. Saab was mainly an aircraft company financed by the Wallenberg Bank in the late 1930s to build fighters for the defense of Swedish neutrality. After the War, they decided to take their skills into automobile manufacture. They hired the rising star of Swedish industrial design, Sixten Sason, who would go on to design the Hasselblad camera that NASA sent to the moon on Apollo 11. So a company full of aircraft expertise built a car they believed would be better with a little airplane built in. The 99 was brimming with innovation. For example:

1. The structural integrity of the passenger compartment was superb. Monocoque, stressed-skin design combined light weight with a crazy-strong roof. Saab's early promotion included winter rallying. Their driver rolled his car so often while continuing the race he got the nickname Carlsson på taket (Carlsson on the roof).
2. The cockpit was the first real manifestation of sound ergonomics. The seating and driving position was excellent. The instruments were clear and easy to understand.
3. Four-wheel disc brakes had multiple backup systems.
4. It was versatile with a fold-down rear seat.
5. And it was the only sorted-out front-wheel drive car sold in USA. (In snowy Minnesota, that was a big deal.)

Saab is no more. by 1990, every car-maker on earth had a version of the Saab 99. Some, like the Toyota Camry, had taken all those good ideas and refined them significantly. Cheaper and more reliable is a winning combination.

Right now, Tesla is at least as far out in front of the EV pack as was the Saab 99. Below is an excellent description of the institutional problems facing the established car companies. They have BIG bucks invested in a way of producing a product that is rendered obsolete by fun, comfortable, exciting, electric cars. Yes, they are dragging their feet. But giving what they face, you would too.

The cautionary tale of Saab is a reasonable outcome for Tesla. Yes, its competition will lag. The Germans, Americans, and Japanese may well be hindered by the Institutional inertia. But that leaves the Koreans and the Chinese. Either one has the potential to swamp Tesla.

The Germans have the largest amount of Institutional inertia. But this may be changing. According to DW, they are finally realizing that the future of transport will be electric and are beginning to make serious investments in batteries, etc.

Week-end Wrap - November 10, 2018

Week-end Wrap - November 10, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

2018 Election Night Live Blog/Open Thread
Lambert Strether, November 6, 2018 [Naked Capitalism]

Now, we might ask ourselves what we’re going to get out of all this, should the Democrats win the House (or even the House and the Senate). This question interests me far more than the horserace, and I believe that I’ve shown the answer: “Not much.” This is true for at least two reasons: First, as I have shown, 2018’s left hasn’t got enough institutional power to force the Democrat Party to change direction; indeed, all signs point to a reactionary liberal Democrat desiire for restoration of the November 7, 2016 status quo ante ancien regime(perhaps with an admixture of new faces, as aspirational identity politicians assume new positions). This is clearly true if you make #MedicareForAll your litmus test on policy. Second, as I have shown, the composition of Democrat candidates in key districts is heavily weighted (25%) toward MILOs (Military, Intelligence, Law Enforcement, Other). Further militarizing the Democrat Party says nothing good about policy, domestic or foreign. Now, as usual given the choices on offer, gridlock is our friend, so there’s nothing wrong with Democrats controlling the House; but as far as using or even reconceptualizing government to convey universal concrete material benefits, especially to the working class…. Well, we won’t be seeing anything like that, thank you very much. Which is unfortunate, because if you wanted to arrest the country’s decades-long rightward slide, that would be the way to do it. See under Roosevelt, Franklin Delano.

The Resistance Is Not a Call for Restoration
Robert L. Borosage, November 5, 2018 [The Nation, via Naked Capitalism 11-7-18]

After the midterms, Democrats must embrace the insurgencies that have reenergized the people and the party....

Sustainable developments from Dubai, Australia, and Estonia

I have recently shifted my living arrangements. I now live in a very small Minnesota town that borders on the Mississippi. There is not of energy left at 69 and the move used up what I have. I am regaining my footing but these things take time.

I have also decided that I want to take this blog in a slightly new direction. My core beliefs have not changed but I want to attempt to be more uplifting. Goodness knows, the problems are scary enough without retelling the horrors. But as I sincerely believe that only the Producers have ANY chance whatsoever of providing a path out of the catastrophe that is climate change, I intend to focus on what they can accomplish and how they will do it. I also intend to rely more heavily on video production. One side effect of my move is that I now have a fiber optic connection to the internet so video does not mean crazy-long waits any longer.

To demonstrate where I am going, I have included three examples of Producer Class, well-executed sustainable development. The first is from Dubai where a small city has incorporated a veritable wish list of green technologies to make living possible in a climate where 40°C (104°F) is routine in summer months.

Week-end Wrap - November 3, 2018

Week-end Wrap - November 3, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Mike Norman

Seven Rules for Running a Real Left-Wing Government

Ian Welsh [ianwelsh.net 10-31-18] 

These are the fundamentals of effective progressive governance. Judge for yourself how far the Democratic Party is from these fundamentals.

Humanity has wiped out 60% of animals since 1970, major report finds

[Guardian, via Naked Capitalism 10-30-18]

Record Low Water Levels Are Causing Chaos in Germany

[Weather.com, via Naked Capitalism 10-29-18]

The great Himalayan thaw

[Nepali Times, via Naked Capitalism 10-29-18]

Changing climate forces desperate Guatemalans to migrate 

[National Geographic, via Naked Capitalism 10-29-18]

Third of Britons have stopped or reduced eating meat – report 

[Guardian, via Naked Capitalism 11-1-18]

How anti-clean energy campaigns create a mirage of public support 

[Grist, via Naked Capitalism 11-2-18]

What genuine, no-bullshit ambition on climate change would look like

[Vox, via Naked Capitalism 11-2-18] 

“[M]ost of those [rosy] scenarios rely heavily on “negative emissions” — ways of pulling carbon dioxide out of the atmosphere…. The primary instrument of negative emissions is expected to be BECCS: bioenergy (burning plants to generate electricity) with carbon capture and sequestration. The idea is that plants absorb carbon as they grow; when we burn them, we can capture and bury that carbon. The result is electricity generated as carbon is removed from the cycle — net-negative carbon electricity. One small complication in all this: There is currently no commercial BECCS industry….. Plenty of people reasonably conclude that’s a bad idea, but alternatives have been difficult to come by.”

Week-end Wrap - October 27, 2018

Week-end Wrap - October 20, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus


Trump’s Continued Collision With the Federal Reserve

by Ian Welsh, October 22, 2018 [ianwelsh.net]

Yes, Trump is the source of all evil and anything and everything he does should be opposed, I know, but bear with me: the Federal Reserve should not be insulated from pressure from elected officials. 

I know that orthodoxy says it should, but the fact is that since 1979 the Federal Reserve has raised interest rates whenever it looked like wages were going to rise faster than inflation. The Federal Reserve, in other words, has crushed wages. 

This is bad. It is at the heart of why we have the rise of the right, and so many other problems. Vast inequality, in democracies, always leads to political instability, and in democracies the purpose of the economy should be to create a good life for everyone anyway. 

Trump ain’t a good guy, but wages aren’t increasing for ordinary people. That means that whatever the nominal unemployment rate is, the US isn’t actually at full employment. If it was, there would be rising wages. It is that simple. To raise interest rates before there are even significant wage increases is malpractice, even by the usual standards of monetary policy—and the usual standards are malpractice. 

Just because one despises Trump, one should not allow the major part of economic management be run by people who despise ordinary people having wage increases, or, indeed, by “independent bodies.” Democracy means elected officials having control over real policy. 

So I hope Trump fires a bunch of Federal reserve members, I hope it goes to the Supreme Court, and I hope that those firings are upheld.

Week-end Wrap - October 20, 2018

Week-end Wrap - October 20, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Dutch court rules that government must help stop climate change

by Quirin Schiermeier, October 10, 2018 [Nature, via Naked Capitalism 10-14-18]

A court of appeal in The Hague has upheld a precedent-setting judgment that forces the Dutch government to step up its efforts to curb greenhouse-gas emissions in the Netherlands. In 2015, a district court in The Hague had ruled in favour of the Urgenda Foundation, a Dutch citizens' climate-change group that filed the lawsuit on behalf of 886 plaintiffs.

The idea that action against climate change will ‘destroy the economy’ couldn’t be more wrong 

by Jared Bernstein [Washington Post, via Naked Capitalism 10-16-18]

Microplastics found in 90 percent of table salt 

[National Geographic, via Naked Capitalism 10-19-18]

Week-end Wrap - October 13, 2018

Week-end Wrap - October 13, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Key Global Bond Index Suffered $916 Billion Loss Last Week
By Sid Verma, October 08, 2018 [thinkadvisor.com, via John Claydon]

The value of the Bloomberg Barclays Multiverse Index, which captures investment-grade and high-yield securities around the world, slumped by $916 billion last week, the most since the aftermath of Donald Trump’s election victory in November 2016. 

American high-grade obligations are down 2.53 percent in 2018 — a Bloomberg Barclays index tracking the debt has dropped in just three years since 1976. 

“Bond investors have rarely seen losses like this over the past 40+ years,” Ben Carlson, director of institutional asset management at Ritholtz Wealth Management, wrote in a blog post. “Any further moves higher in rates could lead to the worst year since 1976 in terms of overall bond returns.”

Yesterday’s Stock Market Was Not Normal – And We’ve Been Watching Markets for 32 Years

By Pam Martens: October 5, 2018 [Wall Street on Parade]

A big drop in Dow Jones Industrial Average futures typically portends a negative open for the stock market. That’s what happened yesterday. When the Dow opened at 9:30 a.m., it initially fell modestly and then tanked by 200 points in less than an hour. At its low of the day, it had lost 356 points and by the closing bell was down 200.9 points. The S&P 500 Index was also negative from the opening bell, closing down 23.90 points.
The big losses in the stock market were predominantly attributable to a big spike in interest rates – particularly the benchmark 10-year U.S. Treasury note. That unusual interest rate spike should have meant that the big Wall Street bank stocks would have led the decliners from the get-go of trading. Instead, in the strangest action I have seen in 32 years, the shares of Citigroup, JPMorgan Chase, Morgan Stanley and Goldman Sachs spiked upward at the opening bell and that spike lasted for almost the next half hour. Then, as if someone had pressed another button, all four of the bank titans began to lose ground within minutes of each other. Citigroup and JPMorgan Chase entered their downward trajectory at exactly 9:48 a.m.; Morgan Stanley and Goldman Sachs began their slump four minutes later at 9:52 a.m. (Goldman Sachs closed modestly lower on the day while the other three banks closed modestly higher.) 

And here’s where things really got interesting yesterday. We took a look at two of the insurance companies that were singled out in the 2017 Financial Stability Report from the U.S. Treasury’s Office of Financial Research for having derivatives exposure to big Wall Street banks: MetLife and Prudential Financial. Those stocks not only also spiked at the open but both companies closed in the green yesterday.

A $1 Trillion Powder Keg Threatens the Corporate Bond Market

[Bloomberg, via Naked Capitalism 10-12-18]

“Bloomberg News delved into 50 of the biggest corporate acquisitions over the last five years, and found: By one key measure, more than half of the acquiring companies pushed their leverage to levels typical of junk-rated peers. But those companies, which have almost $1 trillion of debt, have been allowed to maintain investment-grade ratings by Moody’s Investors Service and S&P Global Ratings…. ‘The rating agencies are giving companies too much wiggle room,’ said Tom Murphy, a money manager at Columbia Threadneedle Investments. ‘There’s been some pretty heroic assumptions around cost savings and debt repayments laid out by some borrowers involved in mergers.””

Rev. William Barber - We need to change the moral narrative

Barber delivered a powerful history lesson, explaining that Trump is not a problem, but a symptom of the bigotry and cruelty of the richest and most powerful who counterattacked against the first Reconstruction after the Civil War.

Barber then read a passage from Ezekiel 22: God was angry because priests covering up for politicians who were devouring the poor.

“Your politicians have become like wolves — prowling and killing and taking whatever they want.
And your preachers are covering up for the politicians by pretending to have received visions and revelations; they say this is what God says and I God have not said a thing. And because your politicians are like wolves, and your preachers are covering up for your politicians; extortion is rife; robbery is epidemic; the poor and the needy are being abused; and the immigrants and the strangers are being kicked around at will with no access to justice.”

Week-end Wrap - October 6, 2018

Week-end Wrap - October 6, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

The Era of Near-Zero Interest Rates Is Over
[Bloomberg, via Naked Capitalism 10-2-18]

The era of zero interest rates in the world’s major economies ended with the Federal Reserve’s decision to raise borrowing costs last week. The average interest rate in developed economies weighted for output passed 1 percent for the first time since 2009, according to JPMorgan Chase & Co. 

Europe Finally Has an Excuse to Challenge the Dollar
Bloomberg, via Naked Capitalism 9-30-18] 

A new plan by Germany, France, Britain, China and Russia to create special financial infrastructure to work with Iran could be a credible challenge to the U.S. dollar’s long global dominance.

These 5 Rebel Movements Want To Change How Money Works

A new wave of agitators in the realm of monetary systems has emerged.

By Brett Scott, September 15, 2018 [Huffington Post]

1. Government Money Warriors - Modern monetary theory

2. Bank Money Reformers - Bank money reform groups include the American Monetary Institute, Positive Money, and the International Movement for Monetary Reform.

Commercial banks create new money when they issue loans. The moderate wing of the bank reform movement argues that, because the government grants them this privilege, banks should be subject to greater democratic scrutiny over their lending. The hard-line wing believes bank creation of money should be banned altogether.

Week-end Wrap - September 29, 2018

Week-end Wrap - September 29, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus


Simulcasting The Second International Conference of Modern Monetary Theory (#mmtconf18), Friday-Sunday, Sept 28-30, The New School, New York City [via Naked Capitalism]

Seattle judges throw out 15 years of marijuana convictions

[BBC, via Naked Capitalism 9-25-18] 

“Judges in Seattle have decided to quash convictions for marijuana possession for anyone prosecuted in the city between 1996 and 2010. City Attorney Pete Homes asked the court to take the step ‘to right the injustices of a drug war that has primarily targeted people of colour.’ Possession of marijuana became legal in the state of Washington in 2012.”

Can the US win a trade war?
By Marshall Auerback, September 22, 2018 [Asia Times, via Naked Capitalism 9-23-18]

The Democratic Party response to Trump's trade war so far has been straight out of an Economics 101 textbook, or a briefing paper by the Council on Foreign Relations. Unfortunately, this response is basically a defense of the economic status quo, which has been disastrous for the living standards of working class Americans.

....the US president is probably right in his implicit assumption that the US, not China, is likely to come out ahead in its steadily intensifying trade conflict with Beijing – at least in the short term, until China can wean itself off its export-led mercantilist growth model.

Here I think Auerback is wrong: China has already weaned itself "off its export-led mercantilist growth model." Just look at how far advanced is China's high speed rail system or how aggressive is China's program of building new electric power generating capacity -- which includes coal fired power plants as well as renewables. This is an aspect of national economic development most economists and USA policy makers simply do not understand: at some point in a country's economic development, it is exporting goods not because it is following an "export-led mercantilist growth model" but simply because it has become the producer of the best, most advanced, and/or most cost effective machinery and technology. Alexander Hamilton, the first USA Treasury Secretary, who designed the basic structure of the USA economy, understood this thoroughly. This is the reason South Korea remains, after China, the world's largest shipbuilder, or that Toyota is now a larger car maker than General Motors or Ford.

Trump’s goal is to disrupt this “Chimerica” nexus and induce bringing supply chains back to the US. However, one potentially adverse outcome is that this policy may be inflationary, by creating short-term bottlenecks as the flow of cheap Chinese imports is disrupted. Furthermore, a tariff, like a devaluation, is expansionary as it diverts demand from foreign to home producers, thereby further contributing to potential inflation. 

For Trump, this might be a reasonable trade-off. But if the president is successful in securing these objectives, he might well find himself winning a trade battle with China, but losing the inflationary war.

Oil bites back

Well, the laws of oilfield "gravity" are finally kicking back in. They are:

1. In spite of small motor-efficiency gains, the demand for oil continues to soar. Those people in China and India who finally got a nice car are not about to park it in the front yard and look at it.
2. It has been a long time since the discovery of a major oil field. At some point, maybe soon, demand will significantly outstrip supplies. The scramble will be on.
3. Fracking was a diversion. It cannot succeed because the energy gathered through fracking barely exceeds the energy it takes to frack. It's not easy to rearrange underground rock formations.
4. The sanctions on Iran may prove a significant boost to their national prospects. Keep it in the ground. By the time sanctions are lifted, the price of oil may have doubled or more. In real economic terms, the price of oil can only go up.

The position of USA is very precarious. For over a generation, this nation has waged war on the middle-east oil nations. Spilled a LOT of blood in the process. Mostly to prove that oil was forever. Well, it's NOT. And the people who can control the global production of oil come from places where people seethe with anger at the very mention of our name. No one owes us any favors. And even with fracking, we are still net importers of petroleum products.

Now IF we had put this problem—one that was already well-defined by 1973—on a WWII footing as Jimmy Carter suggested when when he called the energy problem "the Moral Equivalent Of War," the coming events would be so much easier to manage. Instead, official Washington took to calling his quite reasonable suggestion MEOW. Oh Jimmuh! you were such a pussy. Carter discovered that rational argumentation just wasn't butch enough.

Week-end Wrap - September 22, 2018

Week-end Wrap - September 22, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

The Spider’s Web: Britain’s Second Empire
[Naked Capitalism 9-22-18]
Until I saw this new film on Saturday, I had the following story -- on how the effects of climate change is now causing an increase in global hungry -- as the lead. But I long ago concluded that it is the financial and economic pressure imposed on companies and countries by predatory financiers -- including but not limited to budget austerity -- that is the fundamental obstacle to solving climate change, and most other problems. Thus, the number one task must be confronting the banksters and financial powers that be. The USA was originally founded in opposition to the economics of the British empire, but American School economics has been almost entirely repressed and replaced by its British free trade nemesis. This also corroborates the lead of the Sept 9. wrap, How the City of London created Eurobonds, destroyed the Bretton Woods world financial system and saved crooks, criminals, and dictators from the rule of law.

The theme of the fight between the British and American schools of political economy is whether a national economy should be controlled by the richest economic elites to suit whatever ends they select, or by the people, to promote the General Welfare. You will see echoes of this theme in most of the stories below.

See also Mainstream Economics Has Become a Celebration of the Wealthy Rentier Class, by Michael Hudson.

Global hunger is no longer decreasing, and is now increasing, because of the effects of climate change
By Charles Benavidez, September 19, 2018 [Safehaven.com, via Naked Capitalism 9-20-18]

Week-end Wrap - September 15, 2018

Week-end Wrap - September 15, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

“Best Ever” Economy? How much credit does Trump deserve for the current state of the economy?
by Invictus, September 10, 2018 [The Big Picture]
Conservative windbag Eric Bolling cited six economic indicators that purportedly show how great the USA economy is doing under Trump:  Unemployment Rate, GDP, Wage Growth, Number of Blacks Employed, Number of Hispanics Employed, and Number of Women Employed, but provided no graphs nor data.

Well, let’s have a look at all six of the items Eric Bolling chose to highlight — all in one handy chart. The St. Louis Fed’s FRED service let’s us do this very easily. We can index all six metrics to 100 at January 2009, when Obama took office, and see how they’ve been doing since. If there’s been a significant improvement (or even reversal of a undesirable trend) since January 2017, it should be easily visible....

Have a look at this chart — it’s un-doctored, except I hid the x-axis labels showing the years. Can you determine when Trump took office? When his policies went into place? Where the Trump economic surge is? ....

The claim that Trump Economy is all that different from the Obama economy — for Civilian Unemployment, for Employment levels of Blacks or Hispanics or Women, for Real GDP or for nominal hourly wages — is unsupported by the actual BLS and BEA data. For the budget deficit, on the other hand, CBO reportsthe deficit is noticeably wider under Trump than what he inherited from his predecessor, and likely to get even worse.

Elevator Speech econ #3—Producer vs Predators

I have been reviewing my old posts based on number of pageviews. The readers of this blog are exceedingly perceptive. I also found a potential post that never got the publish button. Interesting because the "elevator speeches" got significant hits. In fact, they will be included in a minor page redesign.



If you are of the mind that the study of economics should concentrate on the actions within a society that provide for the material needs in life, eventually it becomes clear that the most important distinction in life is that there is an enormous difference between talking about a problem and solving one.  Understand this, and the rest of life is details.

(note about this illustration) I came across Thorstein Veblen's famous distinction between business and industry in 1982 and was just dazzled by the implications.  I was living in the American Midwest where the examples of the difference between industrial genius and financial maneuver were just everywhere.  While collecting all these examples, I discovered that this blinding flash of insight wasn't even Veblen's—it belonged to the agrarian radicals who were trying to solve the problems of settling previously untilled lands.  Veblen's father was a particularly fine example of one of those pioneer agrarian problem-solvers so he came by understanding as a child.  (Sure am glad I discovered this idea via Veblen, however!) For a more detailed explanation of the history of Producer-Predator thought, see Chapter Three of Elegant Technology.

But dividing the world into the problem-solving Producers and the Predators who make things worse by talking things to death while cornering the community's resources is much more than a cute parlor trick.  Turns out that the biggie problems facing the planet such as peak oil and climate change exist because of former problem-solving efforts gone wrong.  ANY meaningful plan to address these enormous dilemmas must understand HOW the Producer Classes solve problems so that our next attempts can yield a better outcome.

This idea that only a more enlightened breed of Producers could ever solve the BIG problems would drive the writing of Elegant Technology.  That's what Elegant Technology is—the social and economic support necessary to train and employ the Producers who can solve things like the end of the Age of Petroleum.

Week-end Wrap - September 8, 2018

Week-end Wrap - September 8, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

How the City of London created Eurobonds, destroyed the Bretton Woods world financial system and saved crooks, criminals, and dictators from the rule of law
by Oliver Bullough, September 7, 2018 [The Guardian, via Naked Capitalism 9-8-18]

Bullough is the author of an interesting new book, Moneyland: Why Thieves And Crooks Now Rule The World And How To Take It Back. It appears that Bullough confirms that it was, once again, the British empire, that imposed massive pain on millions of people worldwide. It is always important to recall that in the 19th century, the political economy of Britain was seen to be a hostile competitor to to the political economy of the United States.

Note also that the British have historically specialized in the banking, hiding, and use of dirty money, with the role of the Hong Kong and Shanghai Bank in the 19th century opium trade particularly notorious. The Hong Shang is today HSBC, which has been fined a number of times by USA and other authorities for assisting and directing the laundering of dirty money for a seemingly endless list of shady clients. Among the directors of HSBC is Jonathan Evans, Lord Evans of Weardale, former Director-General of the British Security Service, the United Kingdom's domestic security and counter-intelligence service, proving that the domination of the world's financial system by criminal means is a matter of state policy for the Brits.

The article is an excerpt from the book, and may be a bit of a slog at first, but this is really crucial information for anyone who wants to know who really runs the world, and how.

Are the Saudis

In the fall of 1974, I took what was easily my most interesting course at the University of Minnesota. It was named Energy and Public Policy and was taught by the infinitely curious, snoose-using, balding Minnesota-Swede named Dean Abrahamson. He was a Physics Ph.D., medical doctor, and had also collected a degree in public policy from the soon-to-be Humphrey Institute. He had been pursuing the question "just how dangerous are nuclear power plants?" He thought at first it was a physics question, then a medical question, and finally came to the conclusion that it was a collective public policy question. Along the way, he realized that if nuclear power really was too dangerous to use, he would have to know about the competing energy alternatives. Acid rain dominated the environmental news those days and he judged coal burning as a close second to the dangers of fission. But since the Oil Shock of 1973 was fresh in everyone's memory, Dr. Dean spent a lot of time lecturing on middle east oil.

If that wasn't enough, we had a genuine Saudi student in the class. I paid special attention to his remarks. He rigorously defended the Saudi oil embargo and had a pretty legitimate list of grievances against the oil imperialists. He wasn't overly happy about the cultural imperialism that resulted in young Saudi men imitating the pickups, belt buckles, and boots of the Texas / Oklahoma oil guys. And he thought that oil prices were far too low.

Oops. NOW we are talking. Since the Industrial Revolution had produced a million clever things that needed petroleum to run, folks could get really desperate if they got cut off from their sources of energy. In some applications, such as the fuels needed to run the machinery of a harvest, diesel fuel is extremely time-critical. In real-world terms, that fuel is priceless. Before oil shock #1, such diesel fetched about $0.25 at the pump. Because while this fuel is priceless, the farmer wants to pay as little as possible. Our Saudi student may have had no inkling just how valuable oil is to folks who live in cultures where nearly everything has become powered. But he did know that Saudi Arabia deserved a bigger slice of the pie.

The following story tells the tale that the Saudis are still trying to come to grips with their big but dwindling oil deposits. Those who wanted to take Aramco public still thought it was a good idea to trade oil for paper or reprogrammed computer chips. Those who block this move obviously have different thoughts about the value of oil. Personally, I think it would have been insane for the Saudis to take Aramco public.

Week-end Wrap - September 1, 2018

Week-end Wrap - September 1, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

The trans-Atlantic elites appear to have settled, in the past few weeks, on their response to Trump's simple minded trade protectionism. The elites' core argument is that protectionist measures threaten the "global value chains" -- the complex web of world suppliers that provide parts and components for almost all manufactured products.

Conspicuously missing from this core argument is the question, "value for whom?". The USA working class did quite well, thank you very much, when USA industrial companies made everything "in house." The most famous example was Ford's River Rouge plant, which old Henry designed and built to swallow ship loads of taconite, coal, limestone and other raw materials at one end, and spew forth each day a gusher of fully assembled automobiles out the other end.

Of course, it was not a bed or roses for the working class. But making everything "in house" gave organized labor a single -- hence very vulnerable -- pressure point to lean on and threaten. Break up the assembly process into a "global value chain" of four or five hundred or more suppliers scattered about the globe, and the United Auto Workers can only make semi- informed guesses as to where is the best place to picket and strike.

Lambert Strether, in his "Water Cooler" each weekday at Naked Capitalism, has done a great job of rounding up news and articles about Trump's trade war. LS's Sept. 1 front page report on the Council of Foreign Relations report was especially excellent, with some pointed comments.

Trade wars won’t fix globalization. Here’s why 

[Council on Foreign Relations, via Naked Capitalism 9-1-18] 

And a child shall lead them

The wolf also shall dwell with the lamb, and the leopard shall lie down with the kid; and the calf and the young lion and the fatling together; and a little child shall lead them.
Isaiah 11:6 King James Version (KJV)

Most of the scientists I rely on for climate change news are old codgers like myself. They are folks who have devoted their lives to finding the most accurate information their precision instruments can reveal. Great people but there is a bit of "whew, we aren't going to have to deal with the end game ourselves—but folks, it will be really ugly" in their approach. So to read about the young Swedish activist who believes that she has most of her life ahead of her and doesn't want fools to screw up her possibilities, is like breath of fresh air.

I have boldfaced the parts I believe are especially perceptive. There may be hope for the next generation, after all. It is the job of us old codgers to give the young the best roadmap possible for what has, and has not, worked in the past when it comes to social change. And yes, I take this as a mandate. Go Greta!

Sweden's waste to energy, and other advanced problem-solving

The various schemes to make societies less carbon intensive fall into two categories—conservation of resources, and capture of alternative energy sources. When I wrote Elegant Technology, I was quite enchanted by Sweden's waste disposal system that provided most of the heat necessary to warm their homes during those long dark winters. So it is interesting to see how things have turned out—as seen through the eyes of an Australian documentarian. I am not so enchanted by this waste-to-heat solution as I was 30 years ago—I am pretty much down on fire these days. OTOH, I have not seen a better scheme anywhere else.

Aug 20, 2018



This documentary was done during the run-up to the Copenhagen Climate Change Conference. The most interesting part of this doc is probably the claim that Denmark did not decide to reduce their need for fossil fuels as a reaction to climate change, but as a response to the 1973 oil embargo. This means they have a 45-year head start on most countries—esp.USA.

2009



This is from PBS. It concentrates on Samsø island in Denmark—which has nearly reached the target of complete sustainable energy generation. You will notice there are  tractors in use so they are still importing some petroleum.

Dec 12, 2015

Going up the Country

Spent time in Edgar Wisconsin seeing Tony in action. I really like his customers. The majority are probably working farmers or were when they retired. These are the people of my childhood and it is fun to get back into that long-unused social milieu. Since I only interact with these folks rarely, I usually haul out the practices of the Non-Partisan League organizers. They were attempting to politically organize farmers who had a lot of other demands on their time. They were strangers selling a farmer agenda to people who generally agreed that all politicians were crooks. So these were the "rules" of engagement:

1) Realize the farmer you have just met has a bundle of problems—almost all economic. Prices for their products are too low, the cost of their inputs are too high, and the railroads are cleaning up on the traffic both ways. Ect. Discover his story and modify accordingly. Show some empathy.

2) Make sure you cover the social importance of farmers. They are most certainly NOT stupid peasants. If you can grow grain in North Dakota or run a dairy farm in Wisconsin, you can certainly run your own government. A government run by farmers in their own interests is not only possible, but highly desirable. Show genuine interest in how the farmer attempts to solve his particular set of production problems and file them away for future reference.

3) Have a well-thought-out agenda. Explain what a farmer-run government could do to better his economic lot. NPL had a laundry list of things they intended to accomplish including, most importantly, a state-run bank. Amazing how much farmers know about credit problems so this was always an idea that demonstrated daring. And since that bank is still being touted as the runaway success that it is by Ellen Brown to the point where California and LA among a host of others is considering one, the NPL can rightly be considered as this country's most successful progressive movement ever. EVAH!

To anyone who despairs at the rotten state of USA politics, these methods still work. My favorite encounter was with a soon-to-be-retired dairy farmer. He milked 80 cows and sold to, yes, a cheese factory. When I was a child, dairy herds were considered substantial at 40. So he has a lot of work twice a day. His wife is over being a dairy farmer's spouse and wants him to quit. But he claimed that both he and his father plowed back everything in upgrading his farm—lots more than money invested here like pride, effort, planning. This is what we imagine when we hear of the virtues of "family farming." Not many of these folks left. And they are getting old. And if there were still 40% of people farming instead of 2%, I could get elected to high office using the NPL methods exactly the way they used them 100 years ago.

Of course, these methods DO work outside of agriculture. Ask any student about the importance of debt reform. Ask anyone who was left to rot when some Wall Street scam artists bought the town's main factory, looted the pensions, and shipped the machinery to China. Ask someone who got a heart attack and for-profit medicine handed him a $100,000 bill to ensure his heart problems got worse. Ask anyone who despairs at meaningful progress on climate change. And have an agenda that makes sense.
(Pictures)

Week-end Wrap - August 25, 2018

Week-end Wrap - August 25, 2018
by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

We can still avert climate disaster with a “wartime footing” of switching to renewable energy, but neoliberal economics stands in the way 

by Kate Aronoff, August 14 2018 [The Intercept, via Naked Capitalism 8-19-18]

BY SHIFTING TO a “wartime footing” to drive a rapid shift toward renewable energy and electrification, humanity can still avoid the apocalyptic future laid out in the much-discussed “hothouse earth” paper, a lead author of the paper told The Intercept. One of the biggest barriers to averting catastrophe, he said, has more to do with economics than science.... (The actual title of the paper, a commentary published in the Proceedings of the Natural Academy of Sciences, is “Trajectories of the Earth System in the Anthropocene.”)

....Asked what could be done to prevent a hothouse earth scenario, co-author Will Steffen told The Intercept that the “obvious thing we have to do is to get greenhouse gas emissions down as fast as we can. That means that has to be the primary target of policy and economics. You have got to get away from the so-called neoliberal economics.” Instead, he suggests something “more like wartime footing” to roll out renewable energy and dramatically reimagine sectors like transportation and agriculture “at very fast rates.” 

....Contra much of the apocalyptic coverage around “Trajectories,” runaway climate change of the kind described in Steffen and his co-authors’ paper is very likely preventable. The ways to prevent it just happen to go against the economic logic that has dominated the world economy for the last half-decade, to scale back regulations and give major industries free reign. 

....The paper itself put it in fairly direct terms. “The present dominant socioeconomic system,” the authors wrote, “is based on high-carbon economic growth and exploitative resource use. Attempts to modify this system have met with some success locally but little success globally in reducing greenhouse gas emissions or building more effective stewardship of the biosphere. Incremental linear changes to the present socioeconomic system are not enough to stabilize the Earth system; these include changes in behavior, technology and innovation, governance, and values.”

Exclusive: Some Arctic Ground No Longer Freezing—Even in Winter
[National Geographic via Naked Capitalism 8-23-18]

Germany Has Proven the Modern Automobile Must Die
by Emily Atkin, Augiust 21, 2018 [Wired, via Naked Capitalism 8-22-18]

In 2007, the German government set a goal of reducing Germany's greenhouse gas emissions by 40 percent by the year 2020. So far, Germany has reduced its emissions by 27.7 percent. That is one of the most significant reductions in the world, but it now appears Germany will not achieve the goal set in 2007 in the next two years. The major obstacle that has emerged is the reliance on automobiles for transportation and mobility.