Thursday, December 25, 2014

And a Happy New Year

Posting will be lighter than normal until Jan 5, 2015.  This blog is a lot of work and I need a break.  My SO thinks I am looking weary.  I'll bet I am.

This blog turned five years old December 5.  I have created over 2100 posts in those five years.  Some of them are still very relevant so if you need a real-economics fix, I encourage you to wander through the archives.

Merry Christmas

...and on earth peace, good will towards men.
Luke 2:14—the absolute central message of Christmas

Yes, I know, there are plenty of people who call themselves "Christians" who are lying, warmongering, thugs who literally worship ignorance.  Those of us who hail from the more enlightened precincts of the faith are truly embarrassed by such creatures.  But what can you do?  Blithering Buffoons like Mike Huckabee (and seemingly the whole cohort of Baptist divines) are useful to the multi-$billion military-industrial complex.  The peacemakers obviously are not.  Huckabee is a regular on TV.  Guys like my dad—not in a thousand years.

In the spirit of peace, some pictures from winters past.  We will have a snow-free Christmas this year.

Wednesday, December 24, 2014

Is there anything more disgusting than a liberal hawk?

In the spring of my first year of at the University of Minnesota, I got to watch the collision of the supporters of Hubert Humphrey and Eugene McCarthy up close.  It was not pleasant.  "How can you turn your back on the man who gave the country Medicare?" demanded the Humphrey crowd.  "Don't you understand that the war in Vietnam is criminal enterprise by any reasonable standards?" replied the McCarthyites.  There are folks who are still furious about this debate.

Between 1967 and 1974, the peak years for military activity in SE Asia, the president of UM was a guy named Malcolm Moos.  His most notable achievement was that he wrote the speech where Eisenhower warned the nation about the military-industrial complex.  When the 60s activists determined that a Berkeley-style Free Speech Movement would be a good thing at UM, they discovered that everything demanded by the FSM had already been accomplished by the radicals in the 1930s.  One could hardly imagine a more hospitable spot for antiwar activists—which the UM was on paper.  In reality, the social sciences were awash in professors with fat Defense Department contracts and that overwhelmingly, the faculty was made up of liberal hawks like Humphrey.

This is one of the many reason I still think of liberals as these morally compromised and ethically confused folks who have given the world a ton of pure evil over the years.  Needless to say, I agree with Parry's takedown of Krugman and Friedman over their hopelessly misinformed ideas about Russia and the Ukraine.

Tuesday, December 23, 2014

Better than a new Cold War?

As someone who can vividly remember some of the more gruesome details of the Cold War, (like when UN ambassador Adlai Stevenson demanded his USSR counterpart immediately answer a question about those missiles in Cuba, "Don't wait for the translation," he shouted) I could do without a rerun of that madness.

The other day, Candy Crowley of CNN interviewed Obama.  In the interview, she gave him a chance to respond to critics who had been praising Putin for his leadership qualities, while mocking Obama for his lack thereof. The implication, Crowley said, was that Obama was a sort of foreign policy nitwit, who had been “rolled” by the Russian president.

Obama then had this to say…
“There was a spate of stories about ‘He was the chess master, outmanoeuvring the West and outmanoeuvring Mr. Obama’ and this and that and the other.”

“Right now, he’s presiding over the collapse of his currency, a major financial crisis and a huge economic contraction. That doesn’t sound like somebody who had rolled me, or the United States of America.”
Ah yes!  Trash talk.  BIG improvement over the Cold War.  And fortunately, this doesn't change anything.  While Russia has been busy shaking up the systems of global alliances, Obama has only managed to team up with some currency speculators.  Mr. Orlov below describes how well Russia is doing in spite of being attacked by the big guns of high finance.  Me, I would much rather have Putin's problems than Obama's.

Monday, December 22, 2014

Water quality—controlling the runoff

It would be easy to assume that Minnesota would not be a place for water problems—either quantity or quality.  I grew up in a state where drinking water directly out of a creek or lake was considered a normal thing to do.  And most municipal water systems regularly top expensive bottled water in most measures of quality—including taste.  But these days, I am hanging out with folks making videos about Minnesota's water problems and the takeaway is: those problems are severe.

The biggest single problem is that agricultural runoff is sending so much fertilizers and irreplaceable topsoil down the rivers that our farms are significant contributors to the dead zone in the Gulf of Mexico.  And while its the urbanites who seem most upset about these problems—and are certainly most organized—the farmers aren't any happier about losing their topsoil patrimony and expensive fertilizers to runoff.  So it would appear that everyone is on the same page. NOT!

From the farmer's perspective, this is a practical problem they would have solved long ago if they knew how and could afford new practices.  But the fact is, it is practically impossible to plant row crops and reduce run-off to zero.  So for the farmer, the whole approach is is to manage the farm using the best conservation practices they can afford.  Some of these farms have been in families for six generation so we are not talking about a slumlord mentality here.  And since the farmers must make all the investment and do all the work, what they believe is extremely important.

The environmentalists believe those (filthy, disgusting) farmers aren't trying hard enough.  They need stricter regulation with monitoring done by drones.  Water quality will magically improve if only harsher laws are written and passed.  How runoff will be actually reduced is not their worry.  They have a set of desired changes that cannot be implemented without bankrupting Midwest agriculture but if anyone fails to try their sometimes expensive fixes, it will only confirm their belief that the farmers aren't trying hard enough.

The last I heard, some farmers are researching the best methods for shooting down drones.  I assume matters will be solved before folks resort to gunfire, but there is a lot of anger out there.  And why not?—it is a perfect example of a Producer-Leisure Class dispute and that battle has been raging since the invention of agriculture.

Sunday, December 21, 2014

Luther was right

On Dec 21, 1943, my parents got married in a big North Minneapolis church.  While it was a large and happy affair, it was not expensive because neither of my parents could afford that.  My father, the photobug, gave his camera to a friend to record the event but friend neglected to take off the lens cap so one of the biggest events in my parent's lives would never make it to the family scrapbooks.  They would make it quite clear to us children that they had chosen the day with the longest night of the year quite deliberately—it was a family joke we all knew long before we had any idea what it meant.

The reason my parents could have a big sprawling wedding without it costing much was because my father was in his last year at a Lutheran seminary and my mother was this highly popular parish worker at the big church.  So we children would be preacher's kids.  This is a difficult life.  Everyone knows who you are and everyone believes they have a right to pass moral judgements on your actions. Personally, I hated every minute of it.  But my mother would make it a point to remind me just how many PKs in Nordic Lutheran history made important contributions to human progress.  This wasn't a lot of comfort but I grew up hoping that this highly stressful childhood could possibly lead to some very successful outcomes.

This leads to a very interesting question.  If becoming a clergyman was a preferred occupational destination for bright young students for the last 2000 years in Christendom, shouldn't there be a difference in outcomes between the societies that removed their clergy from the gene pool and those that did not?  When Martin Luther, a man once sworn to celibacy fell in love, he needed a set of rationales for why Lutheran clergy should marry.  Mostly, he explained, a man without a family is unqualified to understand the problems of parishioners who have families.  And from all accounts, Luther obviously loved his wife and children going so far as to compose music for them.  The Catholics who want to believe that Luther was a great heretic who destroyed the unity of the church often point to his failure to keep his vows of celibacy as proof positive that he was a bad person.

As a practical matter I decided as a child that I could never be a Catholic for the simple reason that if my father had been one, I would not exist.  Buying into my mother's notion that a childhood in a parsonage was this special gift that would lead to making me a significant person in the culture like Ingmar Bergman, was MUCH more difficult to believe when asked to sit on wooden pews through very long devout observances.  I still don't see the link.  Nevertheless, it is quite obvious that the Protestant clergy have far fewer problems with sexual issues like pedophilia.  Yes they have sex scandals, but they are of the regular variety—the preacher has an affair with the organist, etc.  Luther was right!  It is a good thing for the clergy to have normal sex lives—the kind that includes the preacher and his wife bragging to their children (every year on their anniversary) that they chose the longest night of the year to marry and that sex is a gift from a loving God that is intended to make us happy.  My parents had many hang-ups—sex was not one of them.

I see some Australian Catholics have come to agree with Dr. Luther.  And while I would strongly suggest that they abandon clerical celibacy, I would also suggest they look into the question of the resulting preacher's kids.  After all, they can be real troublemakers. They can also become real reactionaries—yes Frau Merkel, I am talking about you.

Saturday, December 20, 2014

Der Spiegel applauds France's new neoliberal finance minister

It's hard not to admire the French—mostly because they excel at those facets of life that are improved by caring, such as food, clothing, or sex.  My first clear demonstration of what the French consider style came during the building of the Chunnel in the 1980s.  This project was, by necessity, a cooperative venture between Thatcher's UK and Mitterand's France.  But while the engineering problems were daunting enough, the real hassles came when Thatcher's neoliberalism (which taught that public investment in large-scale infrastructure projects was a very bad idea) encountered the French Socialists who believed that such projects are just one of the things a government does.  So while the Brits argued about whether the money should be spent, the French enthusiastically subscribed to public shares.  Finally, the big day arrived when the tunneling crews from each side met in the middle.  The last rock is moved and a worker from each side reaches through the hole to exchange flags for the photographers.  The Brit was wearing a standard-issue safety orange outfit.  The Frenchman has on a outfit designed by a Paris fashion house in taupe with some sporty stripes going up the sleeve.  One side had obviously given the outfits for that historic occasion a lot of thought.  The other, none at all.

In my mind, neoliberalism's overwhelming flaw is that it demands doing things on the cheap and makes it impossible to do things with style or elegance.  As I have been arguing since the 1980s, you cannot build an green society without Elegant Technology so anything that disrupts this possibility will be lethal over time.  Building on the cheap is reason #1 why we are heating up the planet.

Right now, the French economy is in serious trouble.  The neoliberalism built into the EU's structure makes being French almost economically impossible.  So the lords of finance have just installed a new economics minister whose job it is is to make France more enthusiastically neoliberal.  If he is even partially successful, the French will probably vote to leave the EU.  My guess is that there is still enough left of French culture to trigger such a revolt.  These are people who believe that if you cannot live with style, what's the point?  The article below is from Der Spiegel.  Germany is pretty enthusiastically neoliberal so they see the appointment of an extremist like Macron as a hopeful sign.  Careful what you wish for folks.

Friday, December 19, 2014

Denying the first essential lesson of history

Denying history is probably the most prominent American habit of thought.  Gore Vidal would talk about The United States of Amnesia.  I was once scolded on this very blog by a reader for discussing Marriner Eccles so casually asking, "Who except you, me, and the lamppost knows anything about Eccles?"  Guy had a good point.  When it comes to history, there are a lot of blank slates out there.

This means that anyone with a plausible story of history can go on record claiming almost anything.  Yes it is true that with the Internet, we have reached a sort of historical nirvana because for millions of issues, we can now access the original documents and read the contemporary accounts.  Satisfying historical curiosity has become the ultimate manifestation of the core Protestant mandate—find out for yourself.  But just as the Reformation did not destroy the market for professional clergy, the Internet will probably not eliminate the need for historians—if only to combat the rampant sort of fraud like in the example below.

Which leads back to the greatest con in the USA's historical description of self.  The Cold War required a really scary enemy.  USSR was first on the list—even though it became the scary enemy while struggling to recover from a calamity that destroyed over 1000 cities and killed well over 20,000,000 including whole age cohorts of young men.  It was like being threatened by a burned-out building.  So to make USSR a threat, they had to make up serious lies.  A whole professional class of "Russian experts" like Marshal Goldman and the Pipes made prosperous careers out of peddling bullshit.  Unfortunately when the Warsaw pact went out of business and the Cold War could no longer be sustained by any rational means, the professional liars didn't just go away.  They had cushy careers to maintain.  And so now we read incredible, unbelievable lies about Russia that are almost identical to the old lies about USSR.  And why would they be different?  After all, the old lies were so effective that the VAST majority in USA don't even know USSR fought Germany in WW II.

Spooky, isn't it. (ht to JL)

Thursday, December 18, 2014

Gloating over the ruble's fall

A guy by the name of Jason Bordoff was on The Colbert Report last night gloating over the economic problems facing Russia because of the crash in oil prices and the speculative run on the ruble.  He seemed overjoyed that Putin was finally in big trouble.  Colbert was mostly happy that gasoline prices were heading below the $2 per gallon mark.

Small problem.  Even though Bordoff has an impressive CV that includes a gig as one of Obama's energy advisors, he has been sucked in by the fracking BS.  He talks casually about how Peak Oil was wrong and that fracking only proves that innovation will become more effective and widespread as oil prices go up.  In other words, a typical neoliberal fool who seems to think what is obviously a speculative attack on the Russian ruble is really a sign that history is changing.  Wow!

Recently, I was working on a post dealing with the rituals of remembering Pearl Harbor (never completed) when I uncovered this photograph.  It was also taken in that first week of December, 1941.  Since the invasion in June, the German blitzkrieg had roared across USSR and were now just a few miles from Moscow.  The occupation forces were incredibly brutal, had inflicted millions of deaths, and had leveled hundreds of cities.  The people of Moscow had a really good idea what they faced.  So an army of 250,000 women went out and dug tanks traps.  They moved 3 million cubic meters of dirt by hand!  The weather was horrible.  This was not exactly people being caught by surprise while relaxing in an island paradise.  The Germans never took Moscow because those tank traps helped take the blitz out of blitzkrieg.

The people of Russia have survived crises almost infinitely worse than a run on their currency.  They have followed leaders like Stalin during these crises who were far more brutal than Putin will ever be on his worst day.  And people should never forget that Putin's mother survived the Siege of Leningrad—which means she was at least as tough as any of the women pictured below.  My guess is that Russia is in FAR less trouble than that smirking Jason Bordoff could ever imagine.

Of course, just because Russia is taking this opportunity to reenforce her economic independence does not mean she won't be making some serious mis-steps.  They just made one when they raised interest rates to 17%.  Someone in Moscow seems to believe that Paul Volcker successfully broke the back of inflation in 1981 by introducing gangster-levels of usury.  Well he night have actually killed off inflation but he did it at enormous costs including the destruction of middle-class agriculture and the massive de-industrialization of USA.  This destruction is felt to this day.  There were dozens of ways to have fought the global inflation of the early 1980s but a central banker settled on usury.  Who would have thunk?

In the very interesting piece below, Sergei Glazyev blasts the actions of Russia's Central Bank.  Glazyev is an interesting guy.  If I heard he was a friend of Michael Hudson, I would not be the least surprised.  He has also made considerable noise about running Russia's Central Bank so we can take this as his plans for what he would do.  Historically, he would probably have enjoyed the company of Marriner Eccles.

Wednesday, December 17, 2014

More bad news for the frackers

It takes two tons of tar sands in Alberta to yield a barrel of oil (300 pounds or 13+:1 by weight).  That's a lot of strip mining to get a low-grade crude that probably sells for less than $50.  Yes there are some serious pieces of mining equipment that move 100 tons per shovelful into trucks that haul 400 tons a trip, but this seems like a pretty risky proposition.  But compared to shale oil, this is an economic slam dunk.  Even so, major players like Norway's Statoil and France's Total are pulling out of tar sand oil.

Which leads to the sicker sister—fracking.  The whole idea is insane.  The energy it takes to fracture underground rock formations is stupendous.  And the tiny cells of oil and gas that are released by this process are very quickly extracted—the average first year decline is 70%.  In the Bakken field of North Dakota, 14,000' (4300 meter) deep wells are not uncommon.  So the idea is to drill this hideously expensive hole in the ground with horizontal branches over two miles below the surface, pump a bunch of expensive mixture at crazy pressures into some very hard rock to crack it, and three years later the show is mostly over.  Sounds like a good idea to me—NOT!

Crazy ideas don't get built without the financial backing of some very gullible money folks.  Junk bonds to the rescue.  Oh this could get ugly.  And when you think of the promises the fracking boosters have made over the years, the investors who got burned will probably resort to lynch-mob behavior.

Tuesday, December 16, 2014

Russia and economic experimentation

As someone who has marveled over the staying power of neoliberalism, I am far from convinced that some new day has dawned for the global economy even though Putin occasionally says something encouraging / enlightened about his plans to steer his country through the economic sanctions imposed for his "crimes" (real or imagined) in the Ukraine.

Below are two essays on how Putin's economic judo is rewriting the global economic map.  Kaletsky points at the treaties and agreements he has signed recently that may enable the folks who have been plundered by the worst manifestations of neoliberalism like India and Brazil to join together to create a BRICS alternative.  Only one problem here—the BRICS development bank is still a starry-eyed dream.  Meanwhile, Brazil's new administration of Dilma Rousseff has just appointed a neoliberal extremist named Joaquin Levy as finance minister while India elected a new Prime Minister named Narendra Modi, a real creature of high finance.  And to bring it all home, Russia's Central Bank just raised its prime interest rate to 17%.  Yes indeed, neoliberalism is far from dead even in places that have incredible incentives to find another economic path.

Michael Hudson points out that Putin is being forced by the economic sanctions to abandon many of neoliberalism's key elements.  Putin has very little choice in the matter (other than rolling over and playing dead which doesn't seem to be part of his DNA.)  The argument for shelving most of the neoliberalism that was forced on Russia during the Yeltsin years actually makes a lot of sense.  Unless the neoliberals who run the big institutions of global finance actually want to permanently throw Putin's Russia out of their club, they may want to rethink their current strategy.  As it stands, their sanctions will almost inevitably force Russia to try an alternative economic game plan.  This is bad news for the neoliberals because almost any version of industrial capitalism is superior to their voodoo economics.

If Putin actually can transform Russia into a Producer State with the best ideas of industrial capitalism, his good example will do some serious damage to neoliberalism as an ideology.  Virtually anyone whose lives have been destroyed by neoliberalism would cheer such an outcome. But first, Russia really needs some new central bank leadership.

Monday, December 15, 2014

The disappointing Lima climate change meetings reviewed

It must be really odd to cover the global climate change debate for German state television.  You live in a country where climate change has been settled science for decades.  Virtually all politicians accept the climate facts no matter their other differences.  The Germans have spent billions of Euros building solar and wind installations in a country almost totally north on the 48th parallel.  These things had to be invented, designed, and engineered and integrated into an existing power grid.  So such people understand that going green is MUCH more than wanting or agreeing to do it, it is a lot of hard, risky, and often frustrating work.

Yet here is Ms. Quaile of DW TV explaining why the meager outcomes of the climate change meeting in Lima isn't SO bad. Of course, she is right, it really doesn't matter what happens in such meetings—whether climate change is meaningfully addressed will only happen when better hardware is installed.  But it must also be painfully frustrating to watch folks argue about matters the Germans settled for themselves decades ago.

It is interesting to note that third world nations are beginning to agree that they should limit their carbon outputs too.  My guess is that the only reason this is happening now is because solar panels have become so cheap, they are the only way these countries can modernize anyway.  And almost all of these countries have better solar sites than Germany.

Sunday, December 14, 2014

Fracking go broke

Because of its cost structure, the fracking industry is extremely vulnerable to an organized attack.  Now there is no way for me to know who, if anyone, is coordinating an attack on fracking but the collapse in oil prices has already claimed its first victim.  Keep in mind here that fracking has been funded by some high-rollers who expected hedge-fund sorts of returns.  Many actually believed the fracking hype—that it was a game-changer that would usher in a new era of oil plenty and USA energy independence.  How hyper-expensive wells that lose half their output in less than five years would accomplish that is a mystery that no one has ever explained to me.

What OPEC can accomplish with their low-price strategy is significant.  Not only can they drive those pesky frackers out of business, they can cause them to inflict such major losses on the investment community that the high-rollers will never return.  Of course, it isn't just the frackers that will lose out when oil heads below $60 / barrel.  Lots of producing nations will be losing money at that level.  So my guess is that these low prices won't last very long.

Yesterday, I was filling up at the local Costco.  The exit checker who stands near the gasoline price sign in the main store told me that prices had gone down twice just yesterday.  It was $2.29 for a gallon of unleaded at 5 pm.  After a nasty cold start to winter around here, temps had climbed well over freezing and there were patches of ground fog developing.  Between the low gas prices and the unseasonable warmth, it felt like I had fallen into an old movie.  Because low oil prices could also trigger another financial meltdown, I have seen this old movie before and am not crazy to see the rerun.  I did notice that the banksters were in Washington last week covering their butts in case of another 2008-style meltdown.  So enjoy the low gas prices because you probably will get nicked by the bailout.

Saturday, December 13, 2014

Deming on education reform

Perhaps the most significant difference between the Leisure Class and Producer Class management styles is the subject of motivation.  The best example of Leisure Class management is the football coach who screams at his players, "You've got to want it more."  How anyone can claim to be able to measure "wanting it more" is one of life's eternal mysteries.  But millions of people believe motivation is critically important so we don't openly scoff at folks who seem to believe that it is the only important factor in getting to successful outcomes.

The Producer Classes tend to believe there is a great deal more to successful outcomes than merely wanting something.  That might work for simple tasks like sport, but if the project is difficult and complex like say, the construction of a high-powered, fuel-efficient, utterly reliable, yet affordable high-altitude aircraft engine, then a host of other factors become WAY more important than motivation.  These factors include: excellent tools, clear instructions in how those tools can be best operated, a safe and well-lit work environment, intelligent, problem-solving management, and a financial structure that supports long-term projects of improvement. Etc.

Interestingly, even in sport, the management that views their games as a complex puzzle to be solved through attention to detail, clear communication of plans, or intense concern about the health of the employees, almost always wins against the cursing, screaming motivators.  The guys who insist that their players "give 110% on every play" tend to have 3-13 seasons.

W. Edwards Deming was the pluperfect example of a Producer Class management guru.  In fact, one could argue he invented and defined the category.  His most enthusiastic admirers over the years have come from the automobile industry—which makes sense because the automobile is an intensely complex assemblage of parts from computerized engine management to supple seat upholstery.  Add to this complexity the requirement that these products must be produced inexpensively enough to mass market, and the argument that automobiles are the MOST difficult manufacturing problem turns into a slam dunk.  Toyota embraced Deming and his teachings and went on to become the largest car manufacturer in the world—a success story built almost completely on their dedication to build excellence.

So here we have a woman who believes we should embrace some Deming in the operations of our educational system.  Sounds like a good idea to me.  Producing an informed and well-educated individual sounds like a task at least as complex as building a quality car.  And goodness knows, the motivators in education reform are only making things worse.

Friday, December 12, 2014

Hudson on the end of empire

Arguably, the most successful exercise of "soft" power is the intellectual triumph of neoliberalism.  The best current example is that while the West has managed to provoke hostilities to the level of the Cold War, the Russian Central Bank just raised their prime rate to 10.5%.  Seriously!  Now it can be argued that the neoliberals who made this decision are some of the leftover traitors from the Yeltsin years.  But it is just as likely that many who voted to raise rates were loyal Putin supporters who consider themselves serious nationalists who decided to raise rates because they believe it was the right thing to do.  Now THAT is "soft" power!

Interestingly, TASS has reported that there are serious voices who are arguing that this rate hike won't help the ruble and will cause serious problems in the real economy.  This is a small sign that neoliberalism doesn't quite hold the power in Russia as it does in USA—we had a high-interest-rate strategy in USA for decades and I don't remember the mainstream organs of the press criticizing it or claiming it was unlikely to work.  On the other hand, they have a 10.5% prime and we do not, so it can be argued that the neoliberals in Russia's Central Bank are much more enthusiastic than ours.

Of course, part of the reason that the neoliberal impulse has grown weaker in USA is that after 35 years of this madness, there isn't a whole lot left to plunder and destroy.  The middle class, long the envy of much of the world, has been reduced to a shadow of its former glory.  And because neoliberalism has been shown to be mainly a destructive force, its failure in USA will most certainly lead to a failure to project "soft" power.  This is a very big deal because without soft power, all that hyperexpensive military superiority will be shown to be nothing more than another way to wreck things.  It turns out that empires without "soft" power don't last long.  Hudson points out below just how futile USA militarism has become.  It is so clumsy, it has turned Putin into a global celebrity-hero.

Turns out standing up to the USA State department and the small-bore thinkers who designed the absurdities that are the foreign policy plans of the neocons is easy.  Putin will demonstrate he is really a tough guy if he stands up to central bankers who believe that 10.5% prime is a good idea.  Until that happens, his country is still under the spell of neoliberal voodoo.

Thursday, December 11, 2014

Lima climate change conference's record carbon footprint

The first of these conferences, held in Berlin, was actually both promising and exciting.  The German manufacturers of green tech threw a trade show across from the venue.  Helmut Kohl, the Thatcherite conservative PM of Germany showed up to move things along demonstrating that cranky right-wingers could be excellent environmentalists.  But most of these gatherings have been demonstrations of the utter futility of trying to change carbon consumption patterns by holding meetings.  It would be hard to imagine how they could be more useless without turning them into prayer meetings.

The problem, of course, is that you cannot change the machinery that supports life by voting.  You CAN vote to replace this machinery.  You CAN vote to install economic leaders who will figure out how to fund this replacement.  But even if this enlightenment happens and favorable votes occur, the new and greener support mechanisms must be designed and built—and then they have to work!  So at best, a society can only vote to TRY to create a world that doesn't spew thousands of tons of carbon emissions.  So while the world screams at the environmental movement to solve climate change, these guys cannot imagine doing anything more meaningful than holding another gathering.

It may be time to make Leisure Class environmentalism a capital crime.  Because these clowns intend to hold their high-carbon-footprint meetings until the ice of Antarctica has melted and the world's great cities have sunk beneath the waves.  I am reminded of the story Veblen would tell about the king who found his chair too close to the fire.  Rather than suffer the indignity of moving the chair himself and with the help failing to respond to his summons, he actually sat there and allowed himself to roast to death.  Today's kings gather to proclaim that the climate is changing and the change is due to human wickedness.  They then decide how much the people must suffer in order to lower carbon emissions and after much fussy negotiations, proclaim that all people of good will agree to sacrifice to save the planet.  Of course, they personally won't have to sacrifice, because they know how to "offset" their carbon consumption.

One of the definitions of evil must certainly be the transformation of uselessness into a "virtue."

Wednesday, December 10, 2014

Germany and their anti-Russian madness

James Petras is a known commodity.  He has written over 60 books so it is easy to figure out where he stands on things.  In the last few years, he has grown critical of Israel's role in the world so there have been some serious efforts to smear him out of existence.  Even though we are roughly the same age, I have read him only occasionally because he keeps reminding us that his world-view was heavily influenced by Marx.  But anyone who can write 60+ books is at least diligent and so Petras can be counted on to have found important background information.  In the case of a subject like German Imperialism, almost any background information is helpful because what we as Americans are taught about Germany is little more than the detritus of two rounds of war propaganda.

Considering how warlike the Prussians were, Germany has been a bit player when it comes to imperialism.  Their colonial holdings were always pretty meager—it can be argued that tiny Holland was much more successful at long-range plunder.  They spent most of their war-like animus against their neighbors in central Europe.  And when they finally got into the serious business of imperial plunder in 1941 when they invaded the USSR, this decision nearly cost Germany her Leisure Classes.  Prussia was for all intents wiped out—Danzig became Gdansk, Koenigsberg became Kaliningrad, etc.

But in the Western zones, the German ruling classes held onto their power and possessions remarkably well.  So when they grew rich enough to get back their old arrogance, they reverted to form.  The Nazis didn't invent the idea that the Slavs are untermenschen (subhuman).  And it very unlikely that the idea died out so completely during post WW II new Germany that it cannot be easily resurrected.  But I know, this insane Russkie / Putin bashing by German news sources like Der Spiegel certainly caught me by surprise.  I was so caught up in the latest manifestations of the Catherine-the Great model of German-Russian cooperation, I was blindsided by the naked ugliness of this new Barbarossa-level propaganda.

So while I could certainly do without Petras' Marxian historicism, it was good to be reminded that the Germans have coveted their neighbor's resources before in history.  There are still some pretty good reasons why Germany is hated and feared in many corners of Europe.  Old habits die hard.  Frau Merkel may be the most hated woman on the planet but she still is quite beloved in Germany.  Even so, there were 6200 enterprises that thought the Catherine-the-Great model of Russian-German cooperation was the way to go.  The rest of us can only hope they have enough firepower to win the battle that finally defeats Barbarossa.

Oh, and Petras is very right about one thing—the Russians are not about to roll over and play dead.  And by standing up to USA hegemony, Russia is about to become the most admired nation on earth—count on it.  (The bold-face below was chosen by Petras.)

Tuesday, December 9, 2014

$50 oil?

Energy prices present an perfect example of a Producer-Producer conflict.  While the people who produce energy naturally want prices (at least) high enough to cover the costs of production, the rest of a society's producers want energy costs to be as close to zero as possible.  Over the years, attempts to resolve this dilemma have been tried such as publicly-owned non-profit power generation and treating energy companies as natural monopolies subject to regulation.

Whatever the causes, the dramatic drop in oil prices is coming as an unexpected joy to the overwhelming majority.  It is hardly a stretch to assume that for quite a few, the choice every month is between energy and food.  And because energy is a significant fraction of food prices, lower energy prices will probably translate into lower food costs.  Merry Christmas!

Couple of things to keep in mind:
  1. It is quite possible to lower prices below the costs of production.  Oil companies tend not to tolerate losses for long so low costs will translate into production cutbacks—and sooner rather than later.  
  2. Energy companies still have pricing power—at least as much as anyone has pricing power.  I'll only believe that oil prices have really fallen when they don't go back up again next spring.
My best guess is that this fall in energy prices will be brief and any windfall would best be invested in energy efficiency because the long-term trend is definitely up.  See below.

Monday, December 8, 2014

Chile and neoliberalism

As someone who believes that neoliberalism is one of history's more impressive examples of collective insanity, I tend to look for signs that the era when otherwise respectable and sane people who believe this nonsense is coming to an end.  Unfortunately, I tend to forget that neoliberalism is NOT a set of ideas that won the day because it described reality better than the alternatives—rather it is a set of strategies designed by greedy psychopaths to suck up the humanity's loose (and not so loose) change.  Neoliberalism "won" the day at the point of a gun and the twisted expressions of torturers as they inflicted intense pain.

Chile was neoliberalism's first big "coming out party."  Thousands of people were brutally murdered to bring this stunning new manifestation of reactionary economics to power in what had been an otherwise pretty stable South American democracy.  The University of Chicago has been intensely proud of this "accomplishment" ever since.  So it is with one more glimmer of hope that after 40 years of crackpot neoliberalism, even the Chileans want to rid themselves of this poisonous madness.

Sunday, December 7, 2014

Losing our precious topsoil

These days, I am working on a video that deals with the subject of agricultural runoff.  Not surprisingly since only a tiny minority of the population is directly involved with agriculture any more, the big concerns of the urban populations of USA are mainly about water quality.  Because whatever runs off a field eventually becomes part of the water supplies downstream, folks mainly worry about how many poisons from herbicides, pesticides, and fertilizers are making their way into this absolute necessity of life.  As for soil erosion, this tends to be a worry most leave to the farmers.  After all, this is only mud we are talking about and soil erosion is a phenomenon as old as recorded history.  Lots of interesting cities and civilizations have been built around river deltas.

Turns out that soil erosion may be the biggest problem of them all.  Between row crop practices and the more intense rains from global warming, the problem has gotten dramatically worse in recent decades.  The following was a brief reminder for me that while climate change is by far the biggest problem facing humanity, there are plenty of other extremely serious problems we should not forget.

Saturday, December 6, 2014

New banking laws—the casino gets more brazen

Most of the time, the financial casinos are harmless.  It is mostly a zero-sum game where the winners equal the losers in a high-stakes video game.  But when things go wrong and the losers cannot cover their bets, the criminal strategy is to force the rest of us into making up their losses.  Now these big crashes happen on a semi-regular basis.  The reasons are simple—the players believe neoliberal horse shit and since they gamble on computers, their losses can be essentially infinite.  So there has to be some plan to keep the casino open.

The gamblers have pretty much exhausted the patience and bank accounts of the world's governments and the scheme to get the central banks to roll presses to cover their losses has provoked organized opposition.  So now they have decided to make it possible to cover the losses by raiding their depositor's bank accounts.  This was first tried in Cyprus where the opposition was muted due to the fact that the guys losing their deposits were mostly Russian criminals.  But now the backers of "bail-ins" have managed to get this nefarious scheme approved at the G20 meeting in Brisbane.  Look out, pension funds.

Friday, December 5, 2014

One hundred trillion dollars

That's the official position of this blog and has been since day one.  We believe that until someone understands that doing anything meaningful about climate change will require a capital investment of at least this size, that person cannot be serious about a matter of life and death.

So if you have not read Tony's post below, read it —carefully.  And if you have read it—read it again.  It's time for the grown-ups to take over the discussion.  The facts are on our side.  Any responsible adult who can count should be a potential supporter of solutions that actually match the size and scope of the problem.

Thank you Tony.

Wednesday, December 3, 2014

Dear Dems: Give me $100 trillion and I'll save your sorry ass

So, after the disaster of election 2014, yet more Democrats have come to realize that elections are not won by giving only lip service to middle- and working-class desires for a real economic recovery. If I had a fiver for every time the past three weeks I've read or heard something like, "The Democrats don't stand for anything".....

You want a program? How about this: to stop global climate change and switch the world economy from its dependence on burning fossil fuels, to totally sustainable renewable energies, we need a crash program of $100 trillion in new construction of:
  • 3.8 million 5-Mega-Watt wind turbines;
  • 49,000 300-Mega-Watt concentrated solar plants;
  • 40,000 300-Mega-Watt solar power plants;
  • 1.7 billion 3-kilo-Watt rooftop photvoltaic (PV) systems;
  • 5,350 100-Mega-Watt geothermal power plants;
  • 270 new 1,300-Mega-Watt  hydroelectric power plants;
  • 720,000 0.75-Mega-Watt  wave devices; and
  • 490,000 1-Mega-Watt tidal turbines.
$100 trillion may sound like a lot of money. It really isn't. It's about how much is traded in three weeks in US financial markets: stocks, bonds, futures, options, and other derivatives.

In November 2009, Mark Z. Jacobson, at the Department of Civil and Environmental Engineering, Stanford University, and Mark A. Delucchi, at the Institute of Transportation Studies, University of California at Davis, had an article in Scientific American that surveyed what was required to end the era of burning fossil fuels. In 2011, they posted two pdf files providing heavily footnoted details of their 2009 Scientific American article; the pdfs provide all the details you could want, including discussion of critical material shortages, such as rare earth elements, for a mass, crash program.

Providing all global energy with wind, water, and solar power, Part I: Technologies, energy resources, quantities and areas of infrastructure, and materials

Providing all global energy with wind, water, and solar power, Part II: Reliability, system and transmission costs, and policies.

Here are some excerpts from the Scientific American article:
Today the maximum power consumed worldwide at any given moment is about 12.5 trillion watts (terawatts, or TW), according to the U.S. Energy Information Administration. The agency projects that in 2030 the world will require 16.9 TW of power as global population and living standards rise, with about 2.8 TW in the U.S. The mix of sources is similar to today’s, heavily dependent on fossil fuels. If, however, the planet were powered entirely by WWS [wind, water, solar], with no fossil-fuel or biomass combustion, an intriguing savings would occur. Global power demand would be only 11.5 TW, and U.S. demand would be 1.8 TW. That decline occurs because, in most cases, electrification is a more efficient way to use energy. For example, only 17 to 20 percent of the energy in gasoline is used to move a vehicle (the rest is wasted as heat), whereas 75 to 86 percent of the electricity delivered to an electric vehicle goes into motion.
Even if demand did rise to 16.9 TW, WWS sources could provide far more power. Detailed studies by us and others indicate that energy from the wind, worldwide, is about 1,700 TW. Solar, alone, offers 6,500 TW. Of course, wind and sun out in the open seas, over high mountains and across protected regions would not be available. If we subtract these and low-wind areas not likely to be developed, we are still left with 40 to 85 TW for wind and 580 TW for solar, each far beyond future human demand. Yet currently we generate only 0.02 TW of wind power and 0.008 TW of solar. These sources hold an incredible amount of untapped potential.
Overall construction cost for a WWS system might be on the order of $100 trillion worldwide, over 20 years, not including transmission. But this is not money handed out by governments or consumers. It is investment that is paid back through the sale of electricity and energy. And again, relying on traditional sources would raise output from 12.5 to 16.9 TW, requiring thousands more of those plants, costing roughly $10 trillion, not to mention tens of trillions of dollars more in health, environmental and security costs. The WWS plan gives the world a new, clean, efficient energy system rather than an old, dirty, inefficient one.
This may be hard to wrap your mind around, but this program actually isn't that big. It most definitely is not overwhelming. For example: 3.8 million large wind turbines sounds like a lot, right? But Jacobson and Delucchi counter by noting that the world produces over 70 million cars and trucks each year. Did you even know that's how many cars and trucks are produced each year?

What about the $100 trillion price tag? Sure seems staggering at first. But only because we have internalized the decades of propaganda promoting neo-liberalism by the one percent and the banksters. It is actually well within our capability: the entire world economy produces $71 trillion in goods and services each year (of which the U.S. economy produces around $16 trillion). $100 trillion over 15 years is just under $7 trillion a year. That’s just a ten percent increase in world output, right now! Less than ten percent with a 20 or 35 year program. That would make for the longest sustained world economic boom since the rebuilding of Europe and Japan after World War Two.

But where do we get $100 trillion? Well, the financial markets in the USA alone trade over $5 trillion each and every day in stocks. bonds, options, futures, swaps, and other derivatives. And, there is over $50 trillion sitting around in the world’s offshore hot money centers, which the one percent are hiding from tax authorities. To fund $100 trillion in new infrastructure we can either take that money away from the one percent, or take away their control over the creation and allocation of new money and credit, which they are misusing for speculation and usury. We can just create the money needed out of thin air. That is, in fact, the way money has always been created.

We have the technology. We have the means. We have people desperate for good jobs. What we don't have is a financial and monetary system that will provide financing to do what we have to do. So, the real fight is to destroy the political power of Wall Street and the one percent, so we can get on with the task of financing a real economic recovery. In Britain, according to,
...between 2000 and 2008, the amount of money and debt in the UK economy doubled as a result of money creation by bank lending. This created the debt fueled boom that ultimately led to the financial crisis. From 2011 to 2014 just 8% of new loans were made to businesses. The majority of new loans are directed to financial markets and mortgage lending.
I would be very, very surprised - shocked even - if the statistics in the USA did not also show a similar skewing of lending toward financial markets and real estate speculation.

The need for $100 trillion in investments to totally transform the world economy is why it is so important to back Senator Elizabeth Warren's opposition to Obama's nomination of Antonio Weiss, the head of investment banking for Lazard, for the senior post of Under-Secretary of the Treasury for Domestic Finance. It is very unlikely that anyone who has been a "success" in banking and finance the past few decades has the understanding, willingness, and integrity to help lead the nation in the radical transformation of the financial and monetary system we require. I don't think even Senator Warren is as fully aware of what is at stake as you, dear reader, are, now that you have read about the $100 trillion program to build an entirely sustainable economy. Senator Warren is merely saying there are too many Wall Streeters in positions of power right now. I'm saying even one Wall Streeter is one too many.

That, of course, is a stretch. Of course we need people with experience in the banking and financial system to help achieve the dramatic shift we need. But, if you really are truly concerned about the future, this is the hard core attitude you need to take to anyone with a background in banking and finance at this point. In a post at Hullabaloo, Gaius Publius writes that there are already signs that exactly such a hard core faction is emerging in the Democratic Party. Gaius Publius calls it the "Hell No" caucus. Gaius goes directly to the central issue by posing the question that a lot of rank and file Dems are already pondering: In opposing the President's nomination,
"Has Warren joined the nominal enemy (Republicans), or has she taken the fight to the real enemy that controls both parties — the "billionaire class"?
Gaius Publius posits that what position Democrats in Congress take on the Weiss nomination will be crucial test of the "Hell No" insurgency. Another important test will be "what Harry Reid does." A third test will be the nomination of Loretta Lynch for Attorney General. She may be the first African-American women nominated for the position, but she is entirely cut from the same mold as Eric Holder, so it is extremely doubtful she will abandon "Too Big to Jail" and actually start to go after the criminals at the top of our banking and financial institutions. You really need to go read the entire post because it is the clearest statement yet of the possible paths the Democratic Party can take after the 2014 electoral defeat. There are also a large number of links to important articles and postings throughout. If you are blessed with an extended holiday this weekend, you should spend at least an hour or two reading this material. Please trust me, it's worth it.

"$100 trillion to build a new economy" will be another test, but one that we need to impose over the coming two years. It can completely transform what issues are defined, and how, for the 2016 election. We need to get general public awareness of the need for "$100 trillion to build a new economy" - and how doable it actually is. Once we do that, it will be a relatively simple matter to determine if someone is serious about solving the problems we face. The next time we meet someone who is a leader in the Democratic Party, mention the fact that we need "$100 trillion to build a new economy" and watch carefully how they react. If they are hopeless neo-liberal water carriers for our would-be corporatist overlords, they will recoil in horror, or try to argue that such a huge amount is simply preposterous. Anyone who is stuck talking about programs of a few billion, or even a few hundred billion dollars, is simply completely uninformed about the problems we face - or just not willing to face reality - because reality is that we can no longer afford to let Wall Street play funny money games. We must figure out how to impose new laws and regulations that force banking and finance serve the general welfare, not just private gain.

Remember, $100 trillion really isn't too much to wrap your mind around: it's less than ten percent of world economic activity each year over the next 15 years. And, it's less money than Wall Street and the Chicago futures market shuffle around every month. Wall Street and the Chicago futures market are not doing anything socially useful with all that money. We have much better uses for it. So give me $100 trillion.

Besides, we can create money out of thin air any time we want. That's what the real fight is about: Who controls, and who benefits, from the creation and allocation of new money and credit?

Otto von Bismarck advises Frau Merkel from the grave

In 1889, North Dakota became a state and chose as its capital a railroad / river town named for Germany's leader.  These days, it is difficult to remember when the Germans were so numerous in the midwest that they could choose the name of a state capital but it was true then.  Germany was on a roll in 1889 and some North Dakota boosters probably believed that this bit of cheap flattery would result in some investment.  More importantly, however, Bismarck had just enacted the first true version of Social Security for Germany and there was a strong argument that the conservative Prussian aristocrat was was the most enlightened leader in Europe.

But German unification and national Social Security aside, Bismarck was probably best remembered for his skills as a diplomat.  Yes indeed, a Prussian had reinvented himself as a peacemaker.  So with tongue firmly in cheek, Mr Sedov writes what he believes Bismarck would tell Frau Merkel—the most backward, arrogant, and belligerent German leader since 1945.  Sedov wants to remind us that there was once a German who actually believed that diplomacy could achieve more than threats and bullying.

Tuesday, December 2, 2014

Thomas Frank on Wall Street's tease

Populism is an endlessly fascinating topic.  There is historical Populism—the political ideas that were distilled into the organizing document of the People's Party at the Omaha convention of 1892.  These are some of the best political ideas the USA ever produced—and that includes the Declaration of Independence and the Federalist Papers.  Because historical Populism had such good political ideas, it spawned the concept that the common man could have uncommonly sound ideas (there's as good in the ranks as ever came out of them). Populism's great political ideas have often been forgotten—but the strategy of flattering the common man persists.  Populism as a sales strategy has been embraced by an infinity of charlatans.

But nothing has ever been as truly cynical as Wall Street 'populism.'  In the eyes of the 1892 People's Party, Wall Street was the very embodiment of evil.  A good historical Populist could recite the "rats in the corncrib" / Jesus threw the moneychangers out of the temple critique of a Wall Street that enriched itself by fastening itself to the back of honest labor through force and fraud.  But Wall Street 'populism' would preach that if finance were only released from the shackles of elitist government regulation, everyone could join the party and get something for nothing just like the big boys.

And the suckers believed it.  They watched shows like Wall Street Week on public television and actually took hucksters like Rukeyser seriously, they elected Wall Street Democrats who promised to vote to eliminate the shackles that were strangulating the animal spirits of American Capitalism, and they congratulated themselves on their virtue for buying a house that was doubling in price every five years.  They actually believed that everyone could die rich through the magic of compound interest.  Worst of all, they believed this nonsense because they believed that if they faithfully mouthed the platitudes of Wall Street, they would eventually become members of the ultimate in-crowd—the Leisure Class.

Monday, December 1, 2014

The Top Five Hits of Globalization

It doesn't seem to matter that the history books are stuffed with examples of why classical economics will never produce generalized prosperity.  Because since the 1970s, this thinking has ruled the day in almost every corner of the world.  It has been so thoroughly sold that the current manifestation of classical economics—neoliberalism—is now usually treated as a force of nature.  Or as Margaret Thatcher would say, There. Is. No. Alternative.

Now when someone running a hedge fund or teaching economics at the University of Chicago spouts neoliberal gibberish, this make total sense.  But neoliberalism would have not come to dominate if it had not been embraced by people who should certainly know better.  I personally know a guy who could quote Marx in German in the 1970s and yet is now an enthusiastic neoliberal who believes those who question the legitimacy of the EU are dangerous political extremists.

No, I don't even pretend to understand how something like this happens.  I will defer to the insights of Veblen—there is nothing so irrational as the actions of someone trying to be respectable.  Neoliberalism / globalization appeals to the great unwashed mostly because it is the philosophy of the upper Leisure Class orders.  Mr Martin here has some ideas of how globaloney came to dominate.  Consider them valuable friendly amendments to Veblen.

Sunday, November 30, 2014

The Great War and its discontents

Every once in a while I get pulled into a friendly debate about who was the worst president in USA history.  This seemed to happen quite often during the administration of W. Bush because he was cartoonishly dim but the question is actually pretty good.  There are some valid candidates out there—Buchanan for making the Civil War inevitable, Grant for making government corruption commonplace, Truman for the nukes and the national security state, Johnson for Vietnam, or Reagan for turning loose an era guided by crackpot anti-industrial economics and other assaults on facts and reason.  But for me, the hands-down WORST president was Woodrow Wilson.

Wilson was SO bad it would require hours just to list his flaws.  From his Virginia-cracker racism to his Princeton arrogance, this was a thoroughly unpleasant person.  He was the very sort of person who was just smart enough to be dangerous.  But by FAR the worst thing that Wilson did was turn his back on his campaign promises of 1916 and took the USA into WW I.  This country was on its way to becoming a pretty neat place to be and this one act stopped all progress and turned a democratic experiment with interesting potential into an Empire with its finest intellectuals and political leaders in jail.  Worst of all, USA's entry into WW I made WW II inevitable.

And when the war "ended," Wilson went to Versailles to bestow on the power players of Europe his Gentleman C-level Princeton intellectualism in the form of the 14 Points.  The result was a catastrophe for Europe and the world.  It led to the Great Depression in a straight line.  Keynes predicted the coming disasters made certain by the Versailles Treaty in his Economic Consequences of the Peace.  It was pretty hard on the British upper classes.  Veblen got around to reviewing it and basically claimed Keynes was not nearly hard enough.

Understandably furious that they had been tricked into fighting a war to save the British Empire, the USA government would hold hearings into how this catastrophe happened.  The most important investigation was chaired by Republican Gerald Nye of North Dakota and in the end, it fingered the usual suspects—the banks and the munitions industries.

That war started 100 years ago.  We would like to think that we have learned something in the last century but there isn't a lot of evidence for that.  And as someone who has spent a fair amount of energy reading up on the Progressive movements of the early 20th century, I can say with a great deal of assurance that we lost a LOT.  The people who call themselves Progressives these days can't hold a candle to the Progressives of 1912.  And that's a damn shame.

Saturday, November 29, 2014

Will Germany phase out coal consumption?

Coal deposits from the Ruhr powered the German Industrial Revolution.  The European Coal and Steel Community would eventually grow up to become the European Union.  It is almost impossible to overstate the importance of coal mining to the development of the modern German economy.  And yet, she is seriously considering phasing out coal as a fuel for electrical generation.  Coming on top of the decision to close down nuclear power plants following the disaster at Fukushima Japan, this would pretty much leave the German economy at the mercy of her abilities to run an advanced industrial state on renewables.

"Well, Toto, it looks like we aren't in Kansas anymore."

Kansas is home to Koch industries and is probably the last place on earth that would suggest such a radical abandonment of this most basic of fossil fuels.  Even more astonishing, the suggestion that Germany try to get by without coal-powered electricity is coming from the environmental minister of Germany's most right-wing government in recent memory.  In fact, the loudest objections are coming from the Social Democrats (SPD) who worry about blue-collar jobs in the coal fields.  Anyone who imagines this isn't a big deal should try to imagine a USA where the Republicans are the more serious party when it comes to reducing greenhouse gasses and the Democrats are dragging their feet to save the coal mining business in West Virginia, Kentucky, and downstate Illinois.

Friday, November 28, 2014

Germany starts to feel the sanctions' bite

Well, this was like predicting the dawn.  The German Leisure classes have been surprisingly enthusiastic about inflicting sanctions on Russia.  In that, they are almost identical to the USA Leisure Classes.  In fact, there have already been accusations that some of the extreme right-wing garbage that has emerged from an otherwise fundamentally sound German media has in fact been written by the CIA.

What is especially interesting about this is that Germany had become an almost perfect prototypical Producer Class state.  Up until WW II, Germany had been a pretty even mixture between her phenomenal industrial power and her historical Prussian militarism.  After the war, Germany's militarism pretty much disappeared under a serious program of de-Nazification and her industry was forced out of military production.  Then in 1969, the Social Democrats won an election and the immediately began a program of trade with the USSR they called Ostpolitik.  Suddenly, it was official government policy to trade with the East.

However, as neoliberalism started to make its comeback in the 1970s, the institutions of militarism and the other Leisure Class manifestations of force and fraud began to make a comeback too.  And so, there was a fertile climate for starting Cold War 2.0 in the non-industrial elements of German society.  However, Ostpolitik and similar social /political movements had resulted in a situation where there were now 6200 enterprises doing business in Russia. For many of them, their Russian business was the difference between making and losing money.  Not surprisingly, these people are furious over the sanctions.

Anyone who has any doubt that the most significant class conflict has always been between the Leisure and Industrial classes need only look at German politics these days.  This conflict threatens to sink the Merkel government and redraw Germany's political landscape.  If the German industrial classes prevail on this one, it will be a mighty victory in the struggle against neoliberal insanity.

Thursday, November 27, 2014

William Black on economic illiteracy at NYT

To call neoliberals economic illiterates may seem a bit harsh.  But what else can you call people who subscribe to a set of ideas that have been so thoroughly discredited on a regular basis since at least 1873?  The historical record demolishes any claim they may have that their economic beliefs will benefit anyone except a hyper-tiny minority.  And IF the USA government had allowed these people to fail as their own "rules" demanded instead of bailing them out, even the 0.01% would have become victims of neoliberal stupidity.

The crazy noise put out by the New York Times—along with the the rest of the big players of USA "journalism" like the Washington Post—have been so consistently wrong about just about everything for so long, the only reason they exist anymore is because the useless rich enjoy owning loud voices that are anxious to glorify their greatness.  They don't care if such a venture loses money.  There are mobs to distract and disarm, after all.

Unfortunately for planet earth, it will not survive on a diet of neoliberal bullshit much longer.  Fortunately, we do not have to reinvent the wheel to find a better alternative.  The economic thinking that brought about the greatest prosperity in human history may have disappeared into dusty book collections, but it has not gone away. I try to celebrate that wisdom every day on this blog!  The lies of the neoliberals may be relentless but they're still utterly wrong and following them is mathematically certain to create regular economic catastrophes.  Of course we can do better.  People no more sophisticated than our great-grandparents brought FAR better ideas into existence than ANYTHING they have taught at Harvard or Chicago in the past 25 years.

Wednesday, November 26, 2014

Do people really want Cold War 2.0?

With all the talk about a new Cold War, I recently found myself looking at something I wrote in 1993 expressing my profound disappointment that Cold War 1.0 had never really ended.  It turned out that the lies necessary to keep that madness alive had embedded themselves so deeply in the USA consciousness, they still affected public policy long after they outlived any reasonable ability to describe life in USSR or its satellites.  Not surprisingly, there was NO ONE who would predict the fall of the Berlin Wall or the dissolution of the Warsaw Pact in spite of $Billions spent collecting "intelligence."

Well, its 21 years later and folks are being told the same lies about Russia they were once told about USSR.  And why not?  They still work.  It takes a long time for people to alter basic beliefs.  It required over 300 years for Christianity to absorb the Protestant Reformation, after all, and it didn't even touch on any really important belief differences.

There are two essential reasons why an essay this old holds up so well.  1) Not much has really changed when it comes to global thinking on the part of the USA elites, and 2) Institutional Analysis forces us to look at the really important forces moving societies.

An interesting historical note here: The talk about Cold War 2.0 comes roughly 22 years after the supposed end of Cold War 1.0.  This is also approximately the interval between the end of WW I and WW II in Europe.  Same war—different weapons.  The people pushing Cold War 2.0 are every bit as insane and dangerous as the folks who thought the World War I had to be fought to its blood-drenched conclusion.  They deserve every bit of any contempt the rest of us can muster.

Tuesday, November 25, 2014

Watching neoliberalism crash and burn

Any American who does some international travel with anything like an open mind will soon discover that most people in the rest of the world have better educations because they worked harder in school, speak more languages, and have a better grasp of their place in the world because they know more history and geography.

I remember the night I had this reality hit me in the face like a bucket of ice water.  It was early July 1970, Ostend Belgium.  I had been in Europe for about three hours and was spending my first night in a youth hostel.  I was nervous and pumped in my determination to not be an ugly American.  I figured our war against the Vietnamese pretty much covered that topic—I certainly did not want to add to the problem.  I wandered down to the common room where young travelers from around the world had formed several informal discussion groups.  The topics seemed to include getting by on the cheap and potential interesting destinations.  And there was one on world events with a heavy doses of the sexual, music, and cultural revolutions, 1968, and the biggie—Vietnam.  Yes indeed, I chose to join the group debating world events.  Since I had spent nearly two years trying to figure out an appropriate response to USA warmongering, I thought I could bring some insights from the peace movement.

As someone who had spent most of my life being the most informed guy in the room, I had few doubts about holding my own.  But within minutes it became abundantly clear that in this room, I was the village idiot.  At first I didn't like it at all.  (In fact, I disliked it so much I would spend the next forty years reading a least three serious books a week trying to "catch up")  Then it dawned on me that if I really intended that this trip was going to be a learning experience, I should be delighted my "teachers" were so smart and informed.

That summer, I spent a lot of evenings in youth hostel common rooms marveling at the creatures who had obviously taken their high schools more seriously than anyone I knew.  I already knew MY high school experience had been a grotesque waste of time—now I saw the results of all that goofing off.  And yet, I came from the superpower.  Our economy was so powerful it meant that if one was careful, it really was possible to tour Europe on $5 a Day, as the book claimed.  We were the folks who just put men on the freaking moon.  And yet, students my age were not responsible for any of that greatness.  Whatever had allowed our forebears to rise to the top of the economic pile was not in evidence in our American Graffiti behavior.  If what was on display in those common rooms that summer was typical, there was absolutely no reason why our stay at the top of the heap was going to be anything but short-lived.

Being rich makes you lazy.  And careless.  And while there was plenty of poverty in USA, 1970 was a year when USA was as historically rich as any nation in history.  If I the son of an impoverished rural clergyman could be making a three-month grand tour of Europe, then we were rich.  We were so rich we didn't even have to think about why we had it better than everyone else.  We didn't have to think about anything serious at all.  We would become the first generation in history that thought a meaningful life could be had by indulging in an infinity of entertainment and play.  Veblen's Leisure Classes had become nearly universal.  We goofed off in high school because we had come to believe that goofing off was life's goal.

Unfortunately, the real economy does not do well goofing off.  And so the fall from economic grace gains speed.  Remembering what I saw in 1970, I am not the least bit surprised.

Monday, November 24, 2014

Why George W. Bush and Barack Obama had almost identical presidencies

Or, Why ignorance is rational (see last paragraph)

I spent much of the summer of 1966 in Washington in the home of a young couple who were determined to become permanent, highly-paid public employees.  Listening to those two recount their day over supper made me highly aware that their choice of career paths was going to be a success or failure based on how much critical, "insider" knowledge and influence they could accumulate.  Because they so obviously enjoyed the process of understanding how the permanent government actually worked, it was pretty easy to guess that they would soon be high-level civil servants.

Contrast these folks with your typical newly-elected official.  Dazed from a grueling campaign, he or she arrives in DC with ideas of how they want the government to work for their constituents—but without even a basic idea of how to organize their new office or even where they should park their car.  Not surprisingly, they are WAY in over their heads when it comes to doing something difficult like changing a long-established policy at the State Department.  The folks at State are not exactly sitting around waiting to implement new policies proposed by a freshman Senator—they are trying to minimize any disruptions from the outside.  The contest is so unequal that it really isn't even a contest.  The politician loses.  That he or she loses isn't a matter of some vast conspiracy to thwart the people's will—it's simple Institutional Analysis.

Which is really, REALLY bad news if the times demand new thinking or a change  in public policy.  The unfortunate reality is that when change is super necessary, that is when the holders of conventional wisdom really dig in their heels.  Instead of bursts of innovation, we get more extreme versions of what caused the problems in the first place.  So we see the EU make ever more extremely ignorant economic decisions.  We see USA / NATO make even more aggressive moves against Russia because Cold War thinking is all anyone in the permanent government knows.  I discovered how true this was back in the early 1980s and yet I thought in 1991 when the Warsaw Pact went out of business that the Cold War had come to an end.  Unfortunately, it has taken my whole life to appreciate the staying power of the conventional "wisdom."

Sunday, November 23, 2014

The preservation of archaic traits—monetary thinking

One of the great frustrations caused by the contemporary practices of economics is that while the world has actually converted to a fiat / electronic money system that would have utterly delighted the most loyal members of the Greenback Party, the people who run monetary policy and vote on publicly financed programs think and act as if we are still on the gold standard.

I once watched Ron Paul describe his thinking on money and his related critiques of the Federal Reserve.  He was surrounded by acolytes who were nodding their approval.  At one point, Paul said ominously, "the problem is that the money the Fed creates isn't backed by anything!"  (What makes money valuable is the issue the Greenbackers—and similar—addressed for years and is the primary focus of my chapter on money in Elegant Technology)  One follower started nodding so vigorously that it looked like he might literally lose his head.  This crowd was suffering from a theological attachment to the gold standard that was so irrational, anything that smacked of fiat money to these believers was certain to provoke the wrath of God himself.  In their minds, not only did they have reason, but virtue, on their side.

Well no!  The reason there is no more actual gold standard is that reasonable people have long understood that it is a primitive and incredibly stupid way to run an economy.  Smart people like Ford and Edison once said as much in public.  If reason actually prevailed, Paul and his acolytes would be escorted back to their padded cells.  But reason is a minor consideration compared to the arguments over virtue.  Gold standard thinking even in the absence of a real gold standard is the primary reason why the EU is absolutely crippled these days by people who actually believe that austerity leads to growth.  A whole generation of young people are being sacrificed on the alter of primitive monetary thinking and the ghouls who believe this ridiculous tripe are causing catastrophic levels of human misery.  These people are FAR from virtuous.

Veblen often bemoaned the preservation of archaic traits—human responses to the world that may once have been a part of a successful survival strategy but now just get in the way.  Pretty hard to top the attachment to primitive, pre-industrial thinking on money as a prototypical archaic trait.

Saturday, November 22, 2014

BND and the North Dakota fracking boom

Oil booms tend to be messy and chaotic.  They tend to attract too many get-rich-quick artists who soon overwhelm the local infrastructure.  Suddenly there are not enough housing units or schools and the enormous movements of heavy equipment tend to chew up roads.  In the case of North Dakota, its population is only in the 600,000 range so while local governments tend to be largely uncorrupted, there are rarely enough police to cope with the problems that show up with rootless groups of mostly lonely and unattached men who are making decent incomes without a lot of places to spend it.

Outsiders look at an oil boom and usually envy those close enough to make money from it.  But for most of the locals, it merely means sky-high prices for basics like food and housing, over-crowded schools, increases in crime, and traffic jams of very large trucks causing delays and depleting funds set aside for road maintenance.  Not surprisingly, the locals grow to resent the oil outsiders very rapidly.  In places like Ecuador, this resentment has roared past lawsuits and political movements to open conflict involving weapons.

North Dakota has handled the chaos and disruption of the fracking boom amazing well—all things considered.  The climate is so harsh, only the hard-working and diligent tend to stick around.  The fracking itself happens in very deep wells far below the aquifers which tends to minimize the environmental conflicts.  The sparse population means there is room for a lot of development without crowding anyone out.  But it also has an economic ace in the hole—the State-owned Bank of North Dakota (BND) that has minimized the problems caused to the state's physical infrastructure.  It is a development bank which means expanding infrastructure is one of its primary missions—one that has been successfully exercised for decades.

Ellen Brown, the BND's biggest booster looks at how it has coped with fracking and discovers a public bank with better returns than Goldman Sachs—not bad for an institution created by hard-pressed farmers who were barely surviving the economics of the early 20th century.  The agrarian Progressives had a laundry list of demands going into the election of 1916 but at the very center was their demand for a democratically-run bank.  It is why I argue that the Non-Partisan League was, hands-down, the most successful progressive political movement in USA history and arguably the history of the world.

Friday, November 21, 2014

Escobar on G7's neoliberalism

As one of the world's preeminent journalists, Pepe Escobar has for a long time covered the crazed, destructive actions of the large neoliberal institutions as they organize the looting of the global south.  In spite of the fact that there must be moments when he has seen too many victims with ruined lives, he keep pressing on with surprising amounts of humorous scorn which he heaps on the smug, self-satisfied economic lunatics who clearly have NO idea how much damage they cause or if they do, clearly do not care.

The only thing that keeps driving someone so aware has to be a flicker of hope that someone, or a group of someones, will someday be able to stand up to such evil and ignorance.  With the rise of China and the re-emergence of Russia, that flicker of hope these days seems a bit brighter that a group of someones will finally be able to stand against the destructive economic bullies.  Whether that will happen is still very much an open question, but Escobar's hope is grounded in the reality that the bullies are currently "led" by some of the more inept, lazy, and careless creatures to have ever been allowed near the steering mechanisms of a great empire.  The Obama-Merkel-Camerons of this world may be soon discovering that greed and cruelty, death and destruction, are not enough to thwart the life forces of the world's over 7 billion inhabitants.

Unfortunately, there doesn't seem to be a well-thought-out alternative to neoliberalism.  And as pleasant as the destruction of neoliberals and their whacky ideas might be, getting rid of them will leave a very large hole to fill.  As someone who has spent much of my time and energy learning about the movements formed to combat the defenders of colonialism, feudalism, slavery, and the rest of the manifestations of classical economic thought, I am fully aware how hard such tasks really are.  Not impossible, but very, VERY difficult.

Thursday, November 20, 2014

Putin interview for German television

Though it may feel like not much is happening in the news these days, I get the sense that behind the relentless business-as-usual reassurances that come from the big corporate media here is USA, some big things are rumbling to life and I intend to watch them closely.  They include:
  • While the real economy has been in a major decline since the crash of 2007-8, the world of finance has done quite well.  This disconnect cannot be maintained and there is a large chance that the big monetary authorities like the Fed and the European Central Bank will do something monumentally stupid which will crash the electronic money economy down to the level where people are hopelessly in debt, cannot find a decent job, and generally live in a world without hope.
  • Climate change is about to get worse at the same time the deniers like Inhofe will chair the Senate Committee on Science and Technology.  True science does not depend on who believes the evidence.  So even as the facts change, guys like Inhofe will cling fiercely to their pre-enlightenment worldviews.  He can never make things better—only worse.
  • And as preposterous as it may sound, we may be witnessing the final days of the American Empire.  Yes, USA can bring incredible firepower to parts of the world far from it shores, but it is rapidly losing its legitimacy and soft power.  Not only has USA lost its overwhelming industrial dominance, its economic power is severely diminished by its ridiculous levels of debt.  If that weren't enough, Vladimir Putin is demonstrating to the world that when it comes to producing a coherent worldview, USA doesn't seem to be intellectually up to the task.  And while the widening gaps in awareness between USA and China / Russia seem obvious to most sentient beings on planet earth, the citizens of USA seem to believe that W. Bush and Obama and the State Department notwithstanding, this is still a country with elite thinkers.  "We're the essential country, the rest of you have to listen to us."  (Hey, they believe the same garbage in UK and they haven't been a serious empire since the 1940s.)
Below you will find a transcript of a Putin interview conducted by German TV (ARD) conducted last Thursday (broadcast Sunday).  What is especially remarkable is how deeply Putin has thought about some very important topics.  We just went through an election here in USA and I personally saw ZERO evidence that any of the politicians asking for our votes could stay with Putin on any subject for five minutes.  This is scary.  USA is about to get run over by some very big problems—it would be helpful if some folks had Putin's level of awareness.  In the second half of this interview he discusses economics—I have boldfaced the paragraph that I believe shows he really "gets it."

Putin's Sunday Interview on German TV (Dubbed + Transcript)

  • In the last decade US has grown its network of military bases close to Russia and expanded NATO
  • Even when Russia had grounded its bomber aircraft, the US continued to fly nuclear-capable bombers in the vicinity of Russian borders
  • Due to existing deals, the EU-Ukraine Association Agreement would have enabled EU goods to enter Russia tariff-free
  • Germany, France and Poland did not stick by the February 21st Agreement they had imposed on Yanukovich
  • Crimea follows the precedent of Kosovo
  • Ukraine has a future as a large, European country, but for that all its inhabitants must feel at home within its borders
  • Russia does not want special responsibility for Ukraine. Ukraine is independent, free and sovereign
  • Concern that Ukraine tolerates people fighting under SS emblems, fear of possible ethnic cleansing
  • The fundamental cause of conflict in Ukraine is that in the wake of the coup the new central authorities in Kiev sent the army against people who did not recognize them instead of attempting dialog
  • A negotiated way out of the deadlock in East Ukraine is still possible
  • Sanctions have been harmful for Russia and everyone else, but there were some positives as well and the Russian economy has grown regardless
  • "Today there is fighting in eastern Ukraine. The Ukrainian central authorities have sent the armed forces there and they even use ballistic missiles. Does anybody speak about it? Not a single word. ... This points to the fact, that you want the Ukrainian central authorities to annihilate everyone there... we won't let it happen.
  • "Russian banks have currently extended a $25 billion loan to the Ukrainian economy. If our European and American partners want to help Ukraine, how can they undermine the financial base limiting our financial institutions’ access to world capital markets? Do they want to bankrupt our banks? In that case they will bankrupt Ukraine."
  • Russia will not call in loans, wants Ukraine to get on its feet
  • Germany ostensibly wants the conflict in Ukraine to be solved, but has been reluctant to influence its clients in Kiev to this end
  • "We are told again and again: pro-Russian separatists must do this and this, you must influence them in this way, you must act in that way. I have always asked them: "What have you done to influence your clients in Kiev?"
  • Russia and Germany have established a great friendship in the last 10-15 years that it would be a shame to lose.

Wednesday, November 19, 2014

The lessons from a little screw

The first time I encountered cement tile-backer-board was about 1980.  A friend's brother was attempting to remodel a house and gotten himself in way over his head.  So we went to give him a hand and the job of the day was laying floor tile.  The recipe was backer-board over plywood and subfloor, then thinset, and then tile.  The ply was already well-screwed down when we arrived so installing backer-board was the first order of business.  Keep in mind that this product is essentially a thin portland cement slab wrapped in a fiberglass envelope.  This makes it very heavy so it usually comes in a 3' x 5' (92 cm x 153 cm) sheets, unlike drywall that comes in 4' x 8' (or 12') [122 cm x 244 cm (or 366 cm)]  Since most framing in USA is based on 2' centers, 3' x 5' material doesn't match all that many spaces.  So to install cement backer, you will soon need to make a bunch of cuts.

The instructions at the time assured us that we could install backer using the same methods as used to hang drywall—utility knives and screws.  Supposedly, if you scored the sheet through the fiberglass layer, if would break just like drywall.  And drywall screws would snug up just fine.  Well, no.  Between the fiberglass and the cement underneath, a knife blade lasted about two cuts and the cement had a tendency to crumble at the break line.  The latter problem was so serious, any cut less than 2" (5 cm) from the edge of the material was effectively impossible.  I took one look at the cutting problem and volunteered to screw the pieces down.  Turns out that was problem two: drywall screws are not strong enough to countersink their bugle-shaped heads into a slab of cement.  You would just about get the screw to set when the head would twist off—not such a tragedy if it broke off well below the surface of the backer-board but a major headache if it snapped just above the surface.  Then the problem was somehow backing out the busted shaft with nothing to grip.

When I discovered that the plans for our project included cement backer, I cringed at the memory and determined that I would only proceed if there were better solutions for both the cutting and screwing parts of the installation.  As for cutting, the folks at Bosch have developed a carbide-tipped blade for their hand-held jig saws designed especially for backer.  They wanted over $20 for the thing but as my Bosch jigsaw is one of my favorite tools, that decision was easy.  The better screws were also a revelation.  Apparently, I am not the only person who cursed drywall screws for backer installation because someone has devoted an incredible amount of clear thinking to the problem.

The local supply store devotes a whole aisle to specialty screws.  There are stainless steel screws for fastening outdoor treated-wood decking and different screws for composite decking.  There are finish screws that actually replace finish nails. And hiding in this vast array of goodies were the backer screws.  They are teflon-coated to ease their way through the fiberglass layer.  They have square drives which transmit torque without all the down pressure required to keep phillips screws engaged.  And best of all, they have little ridges on the underside of the head which "drill" their own countersink holes.  Yes they wanted $9 for a box of 150 and a drive point, but considering how well they worked, they would have been a bargain at five times the price.

One of the reasons I do projects like this is that they remind me of just how different the Producer Classes really are.  Here are two excellent examples of how they create prosperity.  Cement backer-board is by far the best mounting surface for ceramic tile.  Yet because it was so difficult to work with, there were probably many projects that created seriously expensive waste, and in the case of DIY projects, some were probably abandoned because the going got so tough.  And yet a simple blade and some truly innovative screws turned this irksome task into something that smoothly built to a satisfying and morale-building conclusion.  It is clever little designs like this that are the true engines of human progress.

And if you really want a nice tile job, it should look like this at some earlier stage.  The house framing was still remarkably square after 58 years which is good because tile is very unforgiving when it comes to getting it straight.

And yes, the insulation disaster has been fixed.  2" ridged foam was cut to create a force-fit between the framing and then 50-year silicone caulk was used to compensate for any future problems caused by expansion / contraction.  On top of that, a layer of aluminum-backed foam was placed at a 90° angle to provide a thermal break on top of the studs.  Not surprisingly, even though it was already below freezing outside, the room got dramatically warmer as it was buttoned up.  Hopefully, long hot baths will stay longer and hotter.

Sunday, November 16, 2014

Can a New Silk Road road live up to its hype?

One of the few bits of worthwhile news to emerge from the APEC Summit in Beijing was about the serious commitment that China was making towards a project dubbed, "The New Silk Road."  The original trade route called the Silk Road ran from about 115 b.c. until 1450 a.d. so this is hardly a new idea.  The original route went out of business because of competition from sea traffic.  The new link is often thought of as the rail route between Chongqing China, the largest city in the world and Duisburg Germany, world’s largest inland port.  Rail shipments are twice as fast as transport on the sea route, but only half as expensive as air freight (see: Think RailwaysFurther development of the modern Silk Road linking Germany and China).

The big news is that China is about to spend real money on infrastructure outside its border.  And while the mainstream press pretty much ignored this story, the business press found it at least a little interesting.  Examples include:
Of course, none of this might not mean all that much to the bigger economic picture.  Why? The world may have maxed out on trade.  There are finite advantages to more concentrations of production facilitated by hyper-efficient transportation methods.  Seriously?  Do we really need better methods for shipping auto parts from China to Germany.  Maybe some of that production would be better sourced in Germany.  Besides, sea transportation is already very efficient—so efficient we in central USA can easily afford to buy bluejeans assembled in Vietnam or Bangladesh because shipping costs are measured in pennies.  Just remember, it was called the Silk Road because it mostly trafficked in luxury goods like silk.  It had to—those old transportation methods were VERY expensive.

One of the more interesting things I learned from my brushes with city planning issues was that transportation decisions drive a great deal of economic development.  Part of the attraction of the Silk Road idea is that big links like this change the way people interact with each other.  Not only do they tend to bring peace and prosperity, they change the cultures that touch them.  The original Silk Road certainly did.  And so part of the promotion of this idea is that a hard link between China and Central Europe will bring these people closer together—especially if that hard link include high-speed rail and fiber-optic communications.  Because of my enthusiasm for big infrastructure projects, I have been running into Silk Road partisans since the 1980s.  I met one in Stockholm (1995) who gave me an impromptu hour+ lecture on why the world needed a new Silk Road.  In his telling, a new Silk Road would certainly foster world peace.  He was so enthusiastic, it was quite infectious.  Such folks must be very happy these days.