Wednesday, December 13, 2017

Robert Kuttner reviews new biography of Karl Polanyi



Long time readers of this little niche of the pixelsphere know that Jon and I do not have much respect for Karl Marx and marxists in general. Jon especially has some entertaining anecdotes he collected from his 1970s travels in Eastern Europe, he uses brilliantly to illustrate and embellish his critique of Marxism. Our alternative to Marx is Thorstein Veblen, who coined the term "conspicuous consumption" in his 1899 classic, The Theory of the Leisure Class: An Economic Study of Institutions. From Veblen's school of economics we get many of the too few economists who foresaw the financial crashes of 2007-2008 and who have been accurate about the state of the real economy, such as James Galbraith and Michael Hudson. Their branch of economics is called institutionalism. Ring a bell?

Another alternative to Marx is Karl Polanyi, who, like Veblen, combined economics with anthropology and sociology to create a deep and incisive critique of capitalism. Marxists may find Polanyi somewhat more palatable than Veblen, since a key influence in Polanyi was his residence in Vienna in the 1920s, when the city was governed by social democrats and democratic socialists who also happened to be competent government administrators of their many socialist and hybrid socialist programs and policies. Hence, the city of that period was knows as Red Vienna. To get a bit ahead of ourselves, and quote from the book review below:
The great prophet of how market forces taken to an extreme destroy both democracy and a functioning economy was not Karl Marx but Karl Polanyi. Marx expected the crisis of capitalism to end in universal worker revolt and communism. Polanyi, with nearly a century more history to draw on, appreciated that the greater likelihood was fascism.
The reviewer is Robert Kuttner, co-founder and co-editor of the USA progressive magazine The American Prospect, one of five co-founders of the Economic Policy Institute, and professor of social policy at Brandeis University.
The Man from Red Vienna
by Robert Kuttner
Karl Polanyi: A Life on the Left by Gareth Dale
Columbia University Press, 381 pp., $40.00; $27.00 (paper)

What a splendid era this was going to be, with one remaining superpower spreading capitalism and liberal democracy around the world. Instead, democracy and capitalism seem increasingly incompatible. Global capitalism has escaped the bounds of the postwar mixed economy that had reconciled dynamism with security through the regulation of finance, the empowerment of labor, a welfare state, and elements of public ownership. Wealth has crowded out citizenship, producing greater concentration of both income and influence, as well as loss of faith in democracy. The result is an economy of extreme inequality and instability, organized less for the many than for the few.

Not surprisingly, the many have reacted. To the chagrin of those who look to the democratic left to restrain markets, the reaction is mostly right-wing populist. And “populist” understates the nature of this reaction, whose nationalist rhetoric, principles, and practices border on neofascism. An increased flow of migrants, another feature of globalism, has compounded the anger of economically stressed locals who want to Make America (France, Norway, Hungary, Finland…) Great Again. This is occurring not just in weakly democratic nations such as Poland and Turkey, but in the established democracies—Britain, America, France, even social-democratic Scandinavia.

We have been here before. During the period between the two world wars, free-market liberals governing Britain, France, and the US tried to restore the pre–World War I laissez-faire system. They resurrected the gold standard and put war debts and reparations ahead of economic recovery. It was an era of free trade and rampant speculation, with no controls on private capital. The result was a decade of economic insecurity ending in depression, a weakening of parliamentary democracy, and fascist backlash. Right up until the German election of July 1932, when the Nazis became the largest party in the Reichstag, the pre-Hitler governing coalition was practicing the economic austerity commended by Germany’s creditors.

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

As Polanyi demonstrated in his masterwork The Great Transformation (1944), when markets become “dis-embedded” from their societies and create severe social dislocations, people eventually revolt. Polanyi saw the catastrophe of World War I, the interwar period, the Great Depression, fascism, and World War II as the logical culmination of market forces overwhelming society—“the utopian endeavor of economic liberalism to set up a self-regulating market system” that began in nineteenth-century England. This was a deliberate choice, he insisted, not a reversion to a natural economic state. Market society, Polanyi persuasively demonstrated, could only exist because of deliberate government action defining property rights, terms of labor, trade, and finance. “Laissez faire,” he impishly wrote, “was planned.”

Polanyi believed that the only way politically to temper the destructive influence of organized capital and its ultra-market ideology was with highly mobilized, shrewd, and sophisticated worker movements. He concluded this not from Marxist economic theory but from close observation of interwar Europe’s most successful experiment in municipal socialism: Red Vienna, where he worked as an economic journalist in the 1920s. And for a time in the post–World War II era, the entire West had an egalitarian form of capitalism built on the strength of the democratic state and underpinned by strong labor movements. But since the era of Thatcher and Reagan that countervailing power has been crushed, with predictable results.

In The Great Transformation, Polanyi emphasized that the core imperatives of nineteenth-century classical liberalism were free trade, the idea that labor had to “find its price on the market,” and enforcement of the gold standard. Today’s equivalents are uncannily similar. We have an ever more intense push for deregulated trade, the better to destroy the remnants of managed capitalism; and the dismantling of what remains of labor market safeguards to increase profits for multinational corporations. In place of the gold standard—whose nineteenth-century function was to force nations to put “sound money” and the interests of bondholders ahead of real economic well-being—we have austerity policies enforced by the European Commission, the International Monetary Fund, and German Chancellor Angela Merkel, with the American Federal Reserve tightening credit at the first signs of inflation.

This unholy trinity of economic policies that Polanyi identified is not working any more now than it did in the 1920s. They are practical failures, as economics, as social policy, and as politics. Polanyi’s historical analysis, in both earlier writings and The Great Transformation, has been vindicated three times, first by the events that culminated in World War II, then by the temporary containment of laissez-faire with resurgent democratic prosperity during the postwar boom, and now again by the restoration of primal economic liberalism and neofascist reaction to it. This should be the right sort of Polanyi moment; instead it is the wrong sort.
Read the rest of Kuttner's review.

Sunday, December 10, 2017

Can the American Left Be Resurrected?


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

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

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

For those poor souls lost in the wilderness of political correctness it is probably time to remind them of the basics of sound government.
1) Governments exist to organize collective action. There are projects that are too complex and expensive for even rich people to afford. From highways and bridges to interstate banking, some things just need collective action. If the people organizing this collective action understand that the goal is to enrich the whole and not some small group of backers, the first big step towards good government has been taken.

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, December 5, 2017

Putin's farmer


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

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

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

Sunday, December 3, 2017

HAWB 1940s-1950s Timeline of computer development shows crucial role of government


HAWB - How America Was Built

Libertarians like to shout their belief that “the welfare state has created nothing.” I wonder if they think the welfare state was not the one in the 1930s through 1960s that funded the basic research, then specific research to create transistors, computers, and the internet. Perhaps they think NASA was somehow not part of the welfare state? Perhaps all the spin-offs of NASA--such as modern medical monitoring equipment--or the Apollo Guidance Computer, which drove forward the technological boundaries of integrated circuits and software development as well as computers in general--do not really exist because “the welfare state” could not possibly have created them? (The libertarian ideology apparently must be kept pure–shades of the doctrinaire Marxist-Leninist!) Perhaps all those spinoffs are just figments of the fevered imaginations of those terrible statists who want to “redistribute wealth”?

People like Jeff Bezos and Bill Gates and Peter Thiel and every single other chest-pounding libertarian CEO of Silicon Valley (it is frankly disgusting that so many people in the industry given such support to organizations like the Reason Foundation) would have NOTHING, absolutely effing nothing, were it not for what the U.S. government did in the 1930s through 1960s that resulted in the creation of computers and the internet. These people owe everything they have to the United States of America. Without those government programs and that government support — and let's not forget the tens of thousands of kids that were educated at public land grand universities — there would be no computers, no software, no internet, no transistors, no semiconductors, no Silicon Valley, no Silicon Valley fortunes, no Microsoft, no Intel, no Apple, no PayPal, no Amazon.

TIMELINE of Government Support for the Development of Computers


October, 1919. The Army and the Navy granted RCA the former American Marconi radio terminals that had been confiscated during World War One. Admiral Bullard received a seat on the Board of Directors of RCA. The result was Federally-created monopolies in radio for GE and the Westinghouse Corporation and in telephone systems for the American Telephone & Telegraph Company. The following cooperation among RCA, General Electric, the United Fruit Company, the Westinghouse Electric Corporation, and American Telephone and Telegraph (AT&T) brought about innovations in high-power radio technology, and also the founding of the National Broadcasting Company (NBC) in the US.

Saturday, December 2, 2017

See oil companies, it CAN be done—floating offshore wind turbines from Statoil


My brother insists that the world's smartest people are found in construction. No one is more innovative when it comes to solving crazy-difficult problems where the risk of doing it wrong can be, quite literally, deadly.

Today we examine the efforts of Statoil to build a wind farm so far offshore that the turbines must float and are anchored to the bottom. Doing something like this makes perfect sense because winds are far stronger and more reliable offshore with the added benefit that turbines in these locations are in no one's back yard. In some places like Japan, the ONLY serious offshore option is floating because their oceans get deep so quickly.

Except that crazy-difficult barely describes such a project. And yet Statoil took it on and it looks like it is working. Statoil has vast experience in offshore oil extraction and it looks like they have brought a LOT of that experience to offshore wind. The designs are very conservative relying on components with serious credentials in waters like the North Sea. These turbines were built by very serious people.

Oh, and one other thing. For years, Big Oil has been ducking the possibility that if they were going to remain energy companies as the Age of Oil runs out, they were going to need expertise in renewables. And yet Statoil seems to be leading the way. This is an oil company partly owned by the Norwegian people and seems to be as corruption-free as the rest of the Nordic societies. The key to making crazy-difficult projects a success is to keep the corrupting Predators out of the way of the master problem-solvers.

Monday, November 27, 2017

Germany to Jump to Russia – U.S. Deep State has Lost


The latest rumblings from Berlin suggest that the SDP is going to cave, once again, and become the junior partner in Merkel's CDU-run government. This comes after the collapse of the so-called Jamaican coalition talks (CDU, Greens, and FDP.) You could smell that fiasco in the middle of North America. But that attempt comes after the SPD and CSU lost significant fractions of their vote in the last election and needed new blood. But Greens and FDP? That would be like Bernie Bros hooking up with the Koch brothers. (It seems to me that any coalition named for Jamaica should be negotiated to the sweets sounds of Bob Marley and good Ganja and the Krauts probably tried it with polka, bier, und schnapps.)

Of course, the interesting question is whether the German government will keep pursuing their hopelessly stupid neoliberal agenda because that is what the crooks at Deutsche Bank want, or will they begin catering to the industrial interests that really keep the economy going. (Producers vs Predators, ja) The problem with running a Producer agenda is that it is exactly what the EU and USA does not want.

My take is that while an economic realignment is seriously overdue, it will face major hurdles. The Neoliberals will not give up easily. On the other hand, there are elements in the German psychic that really like doing business in Russia and so this may lead to Germany abandoning sanctions. Luongo below has thoughts on this.

Saturday, November 25, 2017

The Non-Partisan League dramatized


Based on the diaries of a former Non-Partisan League organizer, 94 yo Henry Martinson, Northern Lights is an exquisite examination of the hardships and challenges of organizing arguably USA’s most successful economically progressive movement. Filmed in NW North Dakota by John Hanson in 1978, it would win the Caméra d’Or award (best first feature) at the 1980 Cannes Film Festival.

Only four of the actors in this film were professional. The rest were locals. As someone who once lived less than 50 miles from where this film was shot, I can assure everyone that they are very authentic. One of my favorite films—EVAH!

(Sorry, they took down the linked video. Apparently there's a reason a copy of this film is so hard to find.)

Thursday, November 23, 2017

This ain't no new fight - The Nonpartisan League, 1919




1919 cover of the Nonpartisan League’s newspaper, The Nonpartisan Leader, portraying “organized farmers and workers” standing tall against big business interests. (Wikimedia Commons).

Something I can give thanks for is the many episodes of history Jon has brought to my attention. One of the most relevant for our time, with our desperate need to reform and revitalize the political system of the USA, is the Nonpartisan League of the upper plains states. The NPL gained political control of North Dakota in the 1910s, and created a lasting legacy which includes the only state owned bank in the country; the largest flour mill in the country, also state owned; and the best rate of internet access in the country.

This evening I found that some scans of the League's newspaper, The Nonpartisan Leader, on Google Books. I thought it would be a wonderful Thanksgiving post, which will hopefully encourage more people to read about the League. A number of pages of Robert Morlan's excellent book, Political Prairie Fire, are also available on Google Books. In July 2016, Bill Moyers' website featured the League in an article entitled, How to Make a Political Revolution, which includes an important description of how the League's legacy is still improving the lives of people today.

The League was heavily slandered, so be discerning as you research more.

Tuesday, November 21, 2017

On Veblen and Puritanism


Well, folks, I keep trying. Someone whose stated qualifications for interest in Veblen was that he had been assigned to read The Theory of the Leisure Class in college, asked me to address his little group of the socially and politically interested called the Minnesota Branch of the Sons and Daughters of the Pilgrims (I am NOT making this up.) Apparently, to be a member one has to be able to trace his or her genetic roots to the Mayflower.

This didn't sound like a good match but I gave the prospective appearance a good faith effort. I drove the event coordinator around the Veblen house and Valley Grove cemetery for almost three hours. Because the meeting site had no AV equipment, I got real 8 x 10 color photos produced. He even informed me I had to wear a jacket and wonders, I found one in a dusty corner of my closet. By this time, I had invested so much time and energy that I arranged for a friend with a NICE camera to record my efforts—a move that was allowed only with great reluctance and promises that the members would not be photographed.

As the proceedings got under way, I began to understand why these good children of Pilgrims didn't want to be identified. They had a quasi-religious ritual that included the Lord's Prayer and the Pledge of Allegiance. I come from a religious background but I had never seen these two combined in one ceremony. Most of the people I know would consider this blasphemy (along with a being a serious violation of the separation of church and state.) It reminded me of the scene in the 2006 movie called the Good Shepard where the Skull and Bones crowd gathered to control the world. They also mixed in Christianity with Angelina Jolie as the Senator's daughter noting that it was first Bones THEN God. I guess it is just easier to run the world if you think that God is on your side.

The guy sitting next to me informed me that he was going to be especially skeptical about my presentation because he was a BIG fan of von Hayek. Oh joy, someone who actually believes that old Hapsburg toady had anything interesting to say about economics. von Hayek was the guy who taught that socialized medicine was the Road to Tyranny. If you want to blame one person for the disaster that is USA medicine, von Hayek is a damn good candidate. I tried not to let this bother me because under any objective standards, von Hayek was not intellectually qualified to wash Veblen's shorts. Which of course, is the main reason von Hayek is treated as a god at the University of Chicago.

It got worse. At the end of my talk, I was subjected to questioning. The event planner asked the final question. He wanted me to comment on the rumors of Veblen's sex life. Veblen wrote 10 books and 100 papers. And this clown wanted to talk about the fact that Veblen lost his job at the Rockefeller-Baptist University of Chicago because he got a divorce. That's Puritanism for you—don't grapple with a man's ideas when you can talk about his sex life. Talk about getting stuck in puberty. It's no damn wonder this nation has become a cesspool of ignorance.

As I prepared to leave, the von Hayek fan made the claim that without government subsidies, Elon Musk (who I had used as an upper-level member of the Producing Class in my talk) would be nowhere. Of course, as Tony could have informed him for days without resorting to notes, virtually ALL scientific and technological advancement in USA was initially funded by the government. In my mind, people with the vision, imagination, and organizational ability of an Elon Musk should be told by the Federal government that we would be providing $20 billion per year to spend on any project he found interesting—especially projects that would help us transition us out of the Age of Fire.

Anyway, I thought I gave a good talk and friend Fabre captured fine video. So while I was busy casting pearls before swine, I think the effort was ultimately useful. Fortunately for me, this blog has readers who are anything BUT swine so I hope you enjoy the effort. I added a 2 minute 40 second graphic animation on my view of Veblen's distinction between business and industry which starts at about the 19 minute mark. This was a LOT of work.


Monday, November 20, 2017

15,000 scientists warn of scientifically predictable global destruction


This is one of those bad-news—worse-news stories. The bad news is that the science on climate change in 1992 was damn near flawless already. And we have gotten a LOT better at it in 25 years. And the science says that without a radical alteration in business-as-usual, we are doomed on this planet. No ifs, ands, or buts.

The worse news is that the brightest minds of the species seem to believe that warnings lead to action. Not without a plan they don't. Preachers have been warning about hell-fire and brimstone for thousands of years and I have yet to see how all that fear-mongering has ever led to a better society. Why is it any better when our best scientists believe that if only their warnings are dire enough, someone in the greater audience will somehow come up with a solution?

We get the point. Climate change is dangerous. Now, oh bright ones, lay out some reasonable possibilities for remediation. I don't want to get all worked up about a problem unless there is something  I can do to help. Otherwise, screaming headlines about the world coming to an end is just meaningless motivation.

Also, I am not at all certain it actually requires 15,000 scientists to tell us we are in deep shit. It seems like 500 could monitor our ride in the handbasket so that 14,500 could work on what to do next. Just a thought.

Sunday, November 19, 2017

Five Hundred Million Dollar Negative Yield Bond Issued


I have permission from Mr. Welsh to repost anything he writes after waiting at least a day or two from his original posting. TW.
by Ian Welsh, Nov. 17, 2017

No, central banks aren’t screwing the economy up with their purchases:
Veolia (Paris:VIE) has issued a 500 million 3-year EUR bond (maturity November 2020) with a negative yield of -0.026 %, which is a first for a BBB issuer.
To be clear, central banks didn’t buy those bonds, investors did. But central bank purchases of government debt are a large part of what is causing this issue.

The ECB (European Central Bank) has been buying SEVEN times the issuance of government bonds. Seven times. Seven times.

They are straight up financing governments (which, done right, could be a good thing, but isn’t in this context).

The problem in the world today is the same as it was 15 years ago, before the financial collapse: There is too much money chasing not enough returns. Because there isn’t enough real growth, that money moves into bubbles and fraud, and destroys companies through leveraged buyouts and so on, but it also means that, if there isn’t enough fraud or predation going on, it sits and stagnates and does nothing worthwhile.

What the developed world actually needs is stuff to invest in, high marginal tax rates (higher on capital gains than on earned income), distributive policies to the bulk of the population to create wide-spread demand, and moderate inflation of about five percent a year to get people to actually invest in new businesses, not in financial speculation.

The problem with this solution set is that if it doesn’t also include effective regulation, it can have to environmentally devastating effects; for instance, because solar is not fully online, the above solution set could lead to oil price spikes.

Those problems, however, are not why this isn’t being done. This isn’t being done because current leadership does not believe in high taxes, wide distribution, or regulation. They are neoliberals, and 40 years of neoliberal disasters cannot convince them to engage anything other than neoliberalism, because neoliberalism has made them and their friends very very rich.

But the game is coming to an end. They want to tax the middle class and poor people, sparing the rich but they are now starting to tax the rich through the back door of negative interest rates. Meanwhile, the poor and middle class, especially the young ones, are losing patience and are willing to go either straight-up socialist or straight-up fascist (the Polish 50K rally).

This is going to get a lot uglier before it gets better.

There will be three choices for countries: Fascism, left-wing populism, or dystopic surveillance/police states.

Choose.

Tuesday, November 14, 2017

Trump's New Fed Chairman--Meet the New Boss; Same as the Old Boss



Trumpster's choice as next chairman of the Federal Reserve is Jerome Powell, who is not an economist, but a lawyer. Powell, a Republican, has been on the Fed Board of Governors since 2012 when he was appointed by that paragon of unrequited bipartisanship, Barack Obama.

Actually, I myself missed the news: Powell's appointment was on November 2, 2017. I just learned of it via one of today's postings at Naked Capitalism: Powell’s Federal Reserve, a melange of reactions from various economists, including Kenneth "dangerous debt cliff" Rogoff, and Joseph Stiglitz, one of the precious few high-profile but decent economists in the world, who "wonders whether Trump has captured the Fed." The best line in the piece linked to by NC is "Tho Bishop at Mises Wire argues that with the nomination of Powell the “swamp wins again”." This is one time the libertarians get it right: a quick perusal of Powell's profile on Wikipedia shows that Powell is a swamp creature, a Wall Street financial predator, and nothing else.

Powell started his career clerking for a federal judge, followed by joining the big Wall Street law firm of Davis Polk & Wardwell in 1981. This firm was a central legal player in the leveraged buy outs (LBOs) of the 1980s, which laundered hundreds of billions of dollars of dirty money by taking over and asset-stripping thousands of U.S. industrial and other companies.

In 1984, Powell moved to Dillon, Read & Co., one of the most established of the Wall Street establishment investment banks. A few years ago, a former managing director of Dillon Read, Catherine Austin Fitts, made her public mea culpa by posting details of the firm's involvement in dirty money laundering that will make your eyeballs pop. Dillon Read was involved in what was by far the largest LBO of the time, the $25 billion buyout of RJR Nabisco by Kohlberg Kravis & Roberts in 1988. (KKR has been a top funder of the Republican Party and conservative political infrastructure for decades now). Fitts writes that the RJR Nabisco LBO made no business sense at all, since it was impossible for RJR Nabisco to service the buyout debt piled on it within the limits of its stated cash flow. The LBO only made sense after she read a European Union lawsuit against RJR Nabisco, which alleged that RJR Nabisco was engaged in multiple long-lived criminal conspiracies, including business with Latin American drug cartels, Italian and Russian mafia, and Saddam Hussein’s family. There were literally billions of dollars in additional cash flow, but it was all dirty money.

Monday, November 13, 2017

Porsche admits electric car investment to take on Tesla will be very expensive


Anyone who doesn't understand the role of institutional inertia in the foot-dragging that shows up whenever an industrial company must upgrade its offerings to cope with changing environmental circumstances should pay attention to the tears being shed these days at Porsche. This a company that feels it must get into the business of building electric cars but clearly does NOT want to do it.

Porsche's most fundamental problems stem from the fact that no one has a good reason for owning their cars. They are expensive and downright dangerous to drive at their design speeds. Here in Minnesota it is now a FELONY to drive over 100 mph (160 kph). A Porsche is barely warmed up at that speed. So in USA, all the performance action is acceleration. Unfortunately for Porsche, their fastest accelerating cars are not as quick as a 5-passenger Tesla because electric motors produce maximum torque at zero rpm. Absent this fact, it would be highly likely that Porsche would just keep building what they know how to make.

The other obvious reality is that Porsche is just a minor branch of the very large corporate tree that is Volkswagen. The corporate pooh-bahs have decided that little Prosche should meet fixed profit targets as part of the plans to make VW the kind of conservative investment beloved of pension funds. Unfortunately, a decision to make a completely different type of car involves spending big money. In such a situation, Tesla just eats up their capital because it is a company run by someone who understands that an enterprise is never profitable when it is seriously innovating.

Corporate mandates tell Prosche that they cannot go into a temporary loss situation to finance the tooling for a new line of cars. Sounds like an impossible situation. Either Porsche takes the financial hit, or they don't build electric cars. And if they do not build electric, they won't be the fastest cars on the street. And if they aren't the top dog, they pretty much lose their reason to exist.

Thursday, November 9, 2017

Oh goody—another dirty climate conference


Someday soon, humanity must make organizing and attending climate conferences a capital crime. These things are worse than useless but they grind on because the folks who like these sorts of things are convention planners. It's what they do. This year's climate extravaganza is being held in Bonn Germany. No one knows why or what they hope to accomplish. An estimated 23,000 people are descending on a tiny little backwater that is obvious ill-equipped to handle them—belching thousands of tons of CO2 on their sacred journeys of self-importance.

If anyone suggests that anything important could be accomplished with video-conferencing, the face-to-face crowd reacts in horror. According to them, those who would eliminate these conferences are the worms of humanity—the introverts. Since the only legitimate way to call these conferences a success would be the ability to point at falling CO2 levels, and that clearly has not happened after 23 years of conferencing, a sane person would try something else. But these folks cannot even progress to video conferencing. And since few or none of them seem willing to grapple with the problems of progressing from legislating outcomes to funding outcomes, we can assure ourselves that no meaningful progress will happen anytime soon.

Climate change is a Producer Class problem that will only respond to Producer Class solutions. Climate conferences are extreme manifestations of Leisure Class behavior. Pretty much explains why they are useless. After all, useless is the primary goal, the heaven, of the Leisure Class.

Sunday, November 5, 2017

Ein feste burg ist unser Gott—Luther's Reformation at 500


To perform a good deed once or twice is easy. But to avoid becoming bitter from the ingratitude and wickedness of those for whom you have done good deeds, that is difficult.

If I knew the world would perish tomorrow, I would still plant my apple tree today.

One should not dispute with quarrelers. They won't be bettered thereby, but become all the more furious. They are not seeking truth, but glory and triumph.

Martin Luther
My junior year of high school was just incredibly painful. My nominally Lutheran preacher father had relocated the family to an ugly little oil town in northwestern North Dakota. Now there ARE people who are in love with vast and very bleak vistas of the "Peace Garden" state, but there aren't many of them, and I was certainly not one of their club. The wind howled all the time. Temps of -30°F (-35°C) in the winter were routine and while the brief summers were a lot warmer, the season brought clouds of hungry biting bugs.

Monday, October 30, 2017

The end of Wolfgang Schäuble's evil madness?


Wolfgang Schäuble does not have a fan club around here because he is such a perfect neoliberal. (The list of my criticisms can be found here) But he has been accepted / praised in Germany because he has been the enthusiastic face of the German financial establishment. And what an ugly face that has been. Even by German standards, he is especially homely. If someone was casting a play and needed a devil to scare little children, he would be perfect. And I am pretty certain the Greeks whose lives he was destroying had no problem thinking of him as evil personified.

But the neoliberalism he was pitching was certain to be harming the German economy as well because it is an economic philosophy that causes a great deal of collateral damage. So it is with some pleasure I note that one of the more enlightened of the German economists, Heiner Flassbeck, has produced a stunningly accurate critique of Schäuble's crackpot mismanagement. Unfortunately for the Germans, the neoliberal bench is very deep. There are probably thousands of economists spread over all the political parties ready to make Schäuble look like a kindly old man. But the fact that he has been eased out as the FM may mean that there are corners of the German economic establishment who at least have questions about the "wisdom" of neoliberalism. It is 25 years too late but a turnaround must start somewhere.

Monday, October 23, 2017

Ken Burns tries to explain Vietnam


It turns out there IS something worse than being historically illiterate and that is being historically misinformed. Ken Burns is a master of historical misinformation and his latest effort on Vietnam is truly ghastly. What a tragedy! I often claim that this country's failure to come to terms with that horrible and expensive adventure in late-stage colonialism pretty much explains the decline of this once pretty-interesting nation.

Take, for example, the horror that was Agent Orange. Some "genius" came to the conclusion that because the Viet Cong were so good at hiding out in their native jungles, the "solution" was to remove the jungles. And so 21+ MILLION gallons of the most toxic herbicide ever invented was sprayed on that poor nation killing wide areas of native foliage. Agent Orange was so dangerous that the folks who merely loaded it onto the airplanes used for spraying suffered long-term health effects including having children with birth defects.

Of course, compared to the suffering inflicted on those poor people on the receiving end of all that spraying, the damage to the USA troops was trivial. There are areas of Vietnam where serious birth defects are almost "normal." That does not make the pain suffered by the young mothers who must cope with these cruel reminders of some genius's chemical warfare any easier.

There was a small burst of interest in the problems caused by Agent Orange when they began to surface in the affected veterans. But seriously, the subject has not even begun to be treated on anything but the most superficial level. For me, any serious thinking on Agent Orange would include a comprehensive examination of the wasted genius that led to this horrible war crime. In order for Operation Ranch Hand (the cutesy name for the largest deliberate environmental catastrophe in recorded history) to succeed, thousands of engineering hours were spent designing and building a fleet of aircraft that could haul large loads of heavy liquid poison, designing a herbicide so lethal it could kill jungles, figuring out how to manufacture 21+ million gallons of the stuff, and delivering this massive load of poison to the other side of the planet. It took a lot of people who studied very hard to learn difficult and complex subjects to pull off this feat—people who otherwise looked and acted like regular middle-class citizens who would do things like coach Little League baseball.

Think about this for awhile. Star students are taught the most brilliant scientific facts Enlightenment thinking can produce and then are put to work designing and executing an ethical and environmental disaster. You tell me how this cannot seriously degrade a culture. When I discovered how involved my university was with such ventures, I just wanted to run away from the academic world. My epiphany came the day I discovered that my "favorite" PolSci professor had a big contract to help design the Phoenix Program—a nasty little operation of torture and assassination targeting the rural males of Vietnam for the "crime" of being educated.

I sort of understand why Ken Burns is so diligent about telling small stories while ignoring the big ones. Most probably it is because his worldview cannot even comprehend the big stories. And that goes double for the tote-bag crowd that watches PBS. Plus he gets paid large sums of money to create a kiddie version of history. The problem I have with little Kenny's kinderspiel is that people who are historically curious wind up being more ignorant for watching his efforts.

Monday, October 16, 2017

Wiping Out Puerto Rico’s Debt Without Hurting Bondholders


Even before Hurricane Maria leveled the island of Puerto Rico, their economy was already in a world of hurt. They were attempting to refinance $74 billion in debt when Maria inflicted another $55 billion in property damage and caused $40 billion in lost economic output.

But hey, Puerto Rico is part of USA and we just spent the last nine years wiping out the massive banking losses incurred when the financial system crashed in the 2007-8 recession. The method used was a little gimmick called "quantitative easing." If we can bail out a bunch of crooked banksters, we should surly be able to rebuild an island responsible for a significant fraction of global Viagra production.

Below Ellen Brown explains just how this could be done. Of course, this does not mean it will be done. It's one thing to bail out crooked banksters—it's quite another to help poor people struggling to survive.

Thursday, October 12, 2017

The Saker nails it


The Saker has spent a great deal of time in the last decade writing about what it is like to be on the receiving end of USA / Western economic "wisdom"—the various elements of the wholesale destruction of people's lives. I am especially grateful for his insights because I am personally a victim of the neoliberal madness. I lost a business that I had invested every cent I could lay my hands on plus a seeming infinity of hard work to the depression of 1981-82—one deliberately caused by Paul Volcker and his idea that 21% prime interest rates couldn't possibly do structural damage to the real economy. He probably knew this move would hurt real people—he just didn't give a shit. After all, what is a "great" man except someone perfectly willing to sacrifice real people because someone they respect intellectually will assure him that destroying the lives of the peons is understandable and reasonable collateral damage.

Compared to the Russians and what the Harvard gang did to their economy, I got off pretty easy. The disastrous economics were largely the same but the difference was that USA was a lot richer to start with compared to USSR which was still recovering from the monumental damage inflicted by the invading Germans during WW II.

I knew it was especially bad for the Russians. Even so, Saker's description below puts the carnage is especially human terms. And he explains why the Russians are so grateful that Putin put some serious brakes on the neoliberal destruction of his country. Which also explains why the elites in USA are so furious with him. Suddenly, the baseless and mindless Russia-bashing seems to sound almost rational coming from the country's Predator classes. Putin is hated because he partially foiled one of the greatest thefts in history.

Of course, that is also why V. Putin is so beloved. Those constituting the collateral damage classes tend to admire anyone who makes their lives possible again.

Monday, October 9, 2017

America's Russia-gate Obsession - Sign of a Failing Nation


Can the people pushing Russia-gate possibly believe their own BS?? Was anyone so asleep during junior high math that they could believe that a $200,000 Facebook ad buy could swing an election where billions were spent on political persuasion? But the even bigger question is, How much damage can be done by the exposure of such massive stupidity on the international stage? While USA is clearly still the biggest bully in the neighborhood as measured by its willingness to spend so much money on weapons systems and soldiers in uniform, there are a LOT of ways to exercise power. Unfortunately for USA, these alternate methods rely heavily on the ability to convince the rest of the world that competent people are in charge. Between Donald Trump's inability to organize an effective government and the Democrats willingness to push the absurd storylines of Russia-gate, the illusion that USA is run by wise and virtuous people is taking massive hits below the waterline.

The imperial apparatus looks like it is in the process of collapse. The examples of this collapse are numerous but for me, the biggest sign of the loss of imperial power is the overdue attack on the petro-dollar.  So long as petroleum is traded in dollars, the USA can print as many dollars as it wants without fear of inflation because the world is effectively on an "oil standard." With the petro-dollar, multi-billion monthly merchandise trade deficits are essentially harmless. The petro-dollar advantage is so great that oil countries that attempted to opt out of the system—like Libya and Iraq—soon found themselves being destroyed by USA military aggression.

So now the Chinese and Russia have banded together to make war on the petro-dollar. Russia has a massive resource base while China has become an industrial superpower. Both have nukes and neither likes being pushed around. But probably the deciding factor in their decision to move against the petro-dollar now are the obvious demonstrations that USA is being run by badly-educated, misinformed, wildly-incompetent, fools. Ken Galbraith used to say that successful revolutions are usually a matter of someone kicking in a rotten door. Hard to imagine a door more rotten than one composed of Trump and those buffoons who are pushing the hoax that is Russia-Gate.

Tuesday, October 3, 2017

China and India get serious about sustainable development


My interest in developmental economics was first triggered by my Kansas grandfather. He was one of those farmers who thought science was the path to an easier life and greater prosperity. He was big into water management and had contoured his slightly hilly land already in the 1930s and put in two holding ponds (that grew some VERY large turtles). His father was the immigrant from Sweden (1873) who showed up with two years of university-level horticulture instruction (Lund). So my grandfather was very close to ground zero of the project to transform SE Kansas into productive farms. The successful introduction of agriculture into some quite hostile environments is easily the most poorly-told tale in USA history. This is unfortunate because it is probably the most perfect case study in development economics.

One night in the early 1970s, I sat in on a fascinating conversation held by student Indians and Bangladeshis who were my neighbors in that ratty apartment building. What was so interesting is that all the members of this little group were sons of privileged men wealthy enough to send their offspring to foreign universities and quite naturally assumed that they would have a hand in shaping the future of their nations. So mostly they wanted to discuss the best strategies for eliminating the very real pain of underdevelopment even though most of them were computer science majors. I was there because I had shown interest in their pet subject and they hoped I had some expertise on what Minnesota had done right to achieve its level of prosperity. At the time, I really didn't know much, but I have been fascinated by what works ever since so I would gladly revisit some of those bull sessions.

At one point, the most intense of the Indians exclaimed, "Our problem is that we basically have only two sources of energy—nuclear and dung!" Of course, he never even thought of solar because in those days, PV cells were so rare and expensive, only NASA could afford them. Well now they are cheap and India is extremely rich in solar power. And as the video clip below shows, India is becoming very hip to their new reality. My old neighbor is likely overjoyed.

And it looks like China is set to lead the world in fossil-fuel-free transportation. Electric cars seem like a natural fit for them and goodness knows their current automotive fleet is choking her cities so the need is quite obvious. And for my younger readers in USA, you would hardly suspect it by looking around but this country used to routinely create transformative projects like those illustrated below.

Monday, October 2, 2017

A “Meathead” foreign policy?


When the Berlin Wall came down in 1989, I actually celebrated with champagne. I almost never drink anything alcoholic so this was WAY out of character for me. But I wanted to celebrate in a socially conventional fashion because I really thought the Cold War was over and we could FINALLY have "normal" relations with Russia. By that time, I had already begun to understand that USSR was absolutely critical to the history of the 20th century because it was the Red Army that defeated the Germans in WW II—almost single-handedly. Besides, they are, like me, a people of the North and it is quite easy to feel a kinship with such people when it is -20° F—like it gets several times a winter in Minnesota.

So it is with horror that I look on at this latest wave of Russia-bashing. It makes no sense to me at all. This is especially true because Russia is mostly innocent of all the charges leveled at them. In over a year of relentless lying, the backers of the warmongering have offered zero evidence to back their claims. This insanity reached a new low last week when a video, starring Morgan Freeman (the Driving Miss Daisy chauffeur) and produced by Rob Reiner (the guy who starred as the Meathead in All in the Family) appeared on YouTube. In it, Freeman assured us that we are at war with Russia.

Warfare, for the Russians, is a calamity that killed 27 million people and reduced large sections of their country to rubble. Relationships between USA and Russia are strained these days but they are a LONG way from that. The Reiner-Freeman production is so preposterous, that I, like many, considered it a spoof. But since it has become quite obvious that Reiner-Freeman are indeed serious, I probably should start taking these madmen more seriously.

Below are two essays on this current gruesomely evil outburst of Russia-bashing. Both were written by Americans—one from the left and the other the right. I am far from sure either are completely accurate but goodness knows, I am trying to understand this utterly irrational phenomenon. Mostly, I just hope it goes away with the perpetrators feeling shame. That is probably a bit much to hope for because fools who would do this sort of thing define shameless.

Monday, September 25, 2017

Do the Leisure Class pundits know how anything works?


It's a damn chore to keep track of the Predator Class economic arguments. Which is why I am so grateful that Bill Black takes the time and effort to do those ugly chores. That the banksters are a gang of thieves is no surprise. After all, Veblen's core definition of the Leisure Class is that of the people who fasten themselves on the backs of the productive segments of society through force and fraud in the often successful attempt to get something for nothing. These people contribute nothing to society yet fancy themselves extra-smart because by their definition, cunning is the nearest synonym to human genius they have.

The great scene in Wall Street where Gekko gives his "Greed is Good" speech was hardly original. After all, the whole point of Leisure Class intellectualism is to come up with justifications for plunder. But what made that movie moment interesting is the number of movie-goers who actually thought that speech was wise, bordering on profound.

There are many who believe that such as Gekko should be accorded positions of leadership in democratic societies. Wrong! When the casinos are run by greedy crooks, the rest of us don't much care. It we don't want to do business with such people, we simply don't enter their establishments. But when those same greedheads start messing with the affairs of state, then what they do becomes everyone's business. And if these people decide that some easy money can be made by deindustrialization, the whole economy staggers. And if these people decide to rip off the system by deferring maintenance, sooner or later bridges start to fall down.

And if there is a crying need for massive infrastructure upgrades to avoid the calamities of climate change and the greedheads decide this is something we cannot afford, why then the necessary investments will not be made and the planet heats up to the point where human life becomes essentially impossible. Dangerous racket you got there, greedheads.

Saturday, September 23, 2017

Exxon-funded climate science


While most environmentalists tremble in rage over the fact that Exxon knew a very great deal about climate change already in the 1970s yet has funded a serious climate change denial effort since then, I happen to think that this is really a nearly perfect example of what Institutional Analysis can teach us.

IA would postulate that since climate change theory is based on sound science, and since Exxon can afford to hire and pay for the finest scientists on the planet, we should not be at all surprised that their scientists would probably know more about climate change than almost anyone else—including most emphatically the academics. The following is an essay written by one of those super-bright people who had her climate science project funded by Exxon.

Ms. Hayhoe also writes about why Exxon decided to become a climate change bad boy although she spends most of her time grappling with the ethical dilemmas of accepting funding from such a source. This is an interesting question, of course, but I don't believe it is nearly as interesting as the question of why Exxon would publicly deny a science that they deemed so important, it became part of their internal planning.

I have already written on this subject and will probably make several more runs at it. But mostly I believe that Exxon changed their minds when they became aware of how mind-boggling difficult it would be to actually rebuild the world so that finding and burning fossil fuels would become unnecessary (not to mention bad for their core businesses.)

Monday, September 18, 2017

The German auto giants face an existential challenge


A few weeks back, a friend of mine bought himself a used Nissan Leaf. Even though it is fully electric, this car is a long way from being a Tesla—its range is less the 100 miles and quite honestly, it is kind of ugly. Even so, I am pretty sure that no purchase in his life has made him happier. It actually makes him giggle.

Based on this small sample size, I am quite willing to announce the day of the electric vehicle (EV) has arrived. Yes they are still quite expensive although his used 2015 with less than 20k miles on the odometer cost about $11,000. Yes their low range and high recharging times make them still something of a hardship to own. But the upside is a luxuriously quiet ride combined with hiccup-quick acceleration and premium handling due to a very low center of gravity. This is in addition to a seriously reduced need for routine maintenance, lower costs for fuel, and the satisfaction of knowing your vehicle is arguably the cleanest set of wheels around. But just to make sure my friend has plenty to giggle about, Nissan has built in an incredible electronic feature set. His favorite seems to be the announcement of available chargers whenever his range drops below 20% complete with directions for finding them.

But even if EVs are the future, the current reality is that they still constitute less than 1% of cars on the road. And nobody is making money selling them. This leaves the auto giants with a monumental problem. If they spend the big money developing EVs, they will be manufacturing a money-loser that will take sales away from the highly profitable vehicles they already sell—a least for the foreseeable future. And so the temptation to not change anything is very high. This problem is especially acute in Germany where the automakers sincerely believe that they already make the best cars on the road.

Friday, September 15, 2017

Big dirty ships make "free" trade economically possible


Ever since the steam guys figured out that it was possible turn heat into motion, folks have been figuring out the thousands of applications for this possibility. Powering ships was one of the first uses of fire-driven power and it remains an important though small niche market (certainly in comparison to land-based transportation and electrical generation) for fuels. The niche has gotten considerably larger in recent years as traditional manufacturing nations off-shore their industrial base to places like China. All of this has been made possible by building very large ships burning the cheapest petroleum available. And they are astonishingly efficient—1/10 of a horsepower can move a ton of shipping through the water at commercially viable speeds.

Until now, no one has seemed to much care that these mega-ships are filthy when it comes to exhaust because for most of their water-borne lives they are out of sight of land. Unfortunately, it doesn't matter where air pollution originates, it is all being dumped into the same atmosphere. When it comes to building a fire-free world, big shipping will be one of the more difficult problems. Giving up mega-ships burning bunker oil will be extremely hard to do. And one of the problems is that impediments to trade like changing the economics of shipping will be viewed with horror by the serious acolytes of "free" trade.

Monday, September 11, 2017

Who murdered the peace movement?


In the essay below, Paul Craig Roberts asks a damn good question, "Who murdered the peace movement?" when discussing the current runaway warmongering in official Washington. As someone who spent a significant fraction of my life before 30 involved in various forms of the peace movement, I'd like to take a crack at that one.
  • Peace movements are automatically the weaker party. It is a thousand times easier to gin up the warlike animus than to teach folks (especially young men) that no one wins wars and that everything from sex to the economy is much better under conditions of peace. Peace movements are only successful when there are highly intelligent and charismatic leaders (like Bertrand Russel) who can make the peace arguments. It also helps to have religious movements (Quakers, Mennonites) that can do the heavy lifting of training successive generations of young men why the peace arguments are superior.
  • The antiwar activities associated with the Vietnam War were notoriously empty intellectually and ideologically. In my experience, a minimum of 95% of the young men who participated in the antiwar movement were merely trying to keep their own asses safe. The day after the first draft lottery I had occasion to visit the Quaker-run Twin Cities Draft Information Center. The place was empty except for the lone woman who had shown up to unlock the doors. 2/3 of their "clients" had gotten their good news and didn't need the help of the dreary folks who liked to stress the moral illiteracy of the warmongers.
  • After Vietnam, the military types learned their lessons on how to avoid the influence, such as it was, of the peaceniks. With their all-volunteer forces and a well-thought-out strategy of spending their money in every congressional district, they would never again lose a political battle over any war they wanted to start. After the last great unsuccessful peace marches opposing the invasion of Iraq in 2003, the peace types realized their situation was utterly hopeless and pretty much gave up.
That's what murdered the peace movement. Which is sort of ironic when one considers that the peaceniks have ALL the good rational arguments. But in the face of the unrelenting propaganda that the warmongers have at their disposal, even people who know and fervently agree with the outcome-based facts of a peace philosophy find it just a whole lot easier to shut up and fume at the unrelenting stupidity of those who still believe that warfare solves anything.

Monday, September 4, 2017

Stone on USA "intelligence"


As hurricane Harvey dumped up to 52" on parts of Texas, our elected officials ponder the grave and soul-searching question "Is my hatred for Russia pure enough." The latest sanctions bill against Russia passed the Senate 98-2. That folks is the Gulf of Tonkin vote. 2% is also about the percentage of folks with a minimal clue compared to the 98% sheep who will believe almost anything and must follow their emotions because their intellects were never properly developed. I mean, seriously, are their any sentient Americans who want to risk nuclear war over Crimea, or Syria, or Iran. And yet the vote was 98-2.

And of course, while we fight over Confederate-era statues and other forms of utter irrelevance, the big problems like climate change go unaddressed. This is absolutely insane. And Oliver Stone and Paul Craig Roberts cannot figure out why there is so much insanity. Of course, they are part of the awareness 2% so they cannot intrinsically understand.

Monday, August 28, 2017

McCoy on the CIA


McCoy is a Yalie who not especially surprisingly got involved with the intelligence services. Skull and Bones is at Yale and the bright and well connected often join forces to become what has lately come to be called "the deep state." McCoy is not well-connected but as can be seen from his beautiful writing, he is obviously very bright. This combination has often led to some scathing outsider critiques and McCoy's here is a doozy.

I have two comments on his expose:
  • McCoy is appropriately outraged that during the Vietnam War, the CIA moved so much heroin into South Vietnam that an estimated 34% of USA forces became regular users. Well yes, wartime profiteering in hard drugs probably doesn't have a lot of support. But I had a neighbor in St. Paul who was one of those users. He was a poor farm kid from northwest Minnesota who had managed to get a degree in French from a St. Paul college. The army turned him into a translator who was assigned to get information from captured Viet Cong. The guys doing the actual interrogation were South Vietnamese army but he was in the room when the torture took place. He never really recovered from that experience and halfway through his tour, the army realized their mistake and reassigned him to Saigon where he spent the rest of his time making sure the hookers with USA clients got their regular shots. This wasn't much of an improvement as he became witness to another wartime-related form of human degradation. Soon he was consuming the readily available heroin. His favorite method involved a regular cigarette that had been soaked in a heroin bath and dried. He reported that the advantage was that he could consume his drugs in the presence of his commanding officers and no one seemed to notice because they looked and smelled like normal cigarettes. In his opinion, heroin was the only reason he survived Vietnam without going insane and committing suicide. So strange as it may sound, getting smack to USA troops may have been one of the more virtuous acts in CIA history.
  • McCoy has done us all a serious service by telling us what some of our taxpayer money has been spent on. On the other hand, one can only wonder at what might have become of such a talented person if he hadn't wasted his life chasing the bad guys. It is MUCH better than being one of the bad guys, of course, but in the end it is still just mostly Leisure Class silliness.

Tuesday, August 22, 2017

The total triumph of the idiot classes


The absolute WORST feature of Identity Politics is that it trivializes everything. There are BIG problems like climate change, the fact that folks with schoolyard bully mentalities have access to doomsday weapons, the general collapse of the biosphere, and the reality that the global economy is being run by sociopathic lunatics. Yet there are those who believe that I should be most concerned about the sort of statuary found in obscure parks in mainly the Old South. Now I understand that this sort of symbolic posturing is about all most people can muster as a public gesture. And I know it is WAY beyond the abilities of your typical mainstream journalist to write about anything more complex or important than transgender bathrooms. But sooner or later, we must address the big problems or humanity will cease to exist on the third rock from the sun.

Perhaps the best example of a culture run by excessively trivial dimwits is the current outbreak of Russia-bashing. To listen to these cretins, we are supposed to hate the Russians because they annexed Crimea after the anti-Russian coup in the Ukraine. The Crimeans, who have considered themselves part of Russia since Catherine the Great, wanted to rejoin Russia so badly that their vote to become part of the Russian Federation was well over 90%. Crimea was also Russian by virtue of a LOT of spilled blood. Between the Nazi invasion, the siege of Sevastopol, its surrender and the pitched battles to recapture it, the Red Army and civilians, mostly Russian, lost over 500,000 in the battles for Crimea during the Great Patriotic War. That's more than the totals for all of WW II for the French, British, and USA combined. The idea that Russia was going to give up Crimea over a chickenshit coup in Kiev is beyond preposterous. Yet Crimea is reason #1 given for the current round of Russia-bashing.

Monday, August 21, 2017

Neoliberalism—the catastrophic idea that won the day despite being wrong about everything


1973 turned out to be the major economic watershed year for most people alive today. Because that was the year that the pro-growth assumptions of the Keynesians were run out of town.  I was in college when it happened. It was a college known for its Keynesian perspective. The head of the economics department, one Walter Heller, had been JFK's top economic advisor and liked to brag that he taught the principles of Keynes to the President of the USA. In fact, almost anyone who ever had Heller for a class, or had even just met him professionally, had heard this boast. I actually enjoyed his JFK stories because he told them to illustrate the point that even "mere" politicians could understand a set of ideas that had a well-deserved reputation for being difficult.

The University of Minnesota had been "Keynesian" since Alvin Hansen became a full professor in 1923. Actually, calling Hansen a Keynesian is more than a little bit misleading. The USA midwest had only recently been settled so there was a constant stream of political agitation for an economics that represented the world views of people who were attempting to claw a civilization out of some very empty places. Hansen grew up in Viborg South Dakota among people who were attempting to grow row crops and other agricultural pursuits on grassland that had never been plowed. For such people, economic plans that emphasized development were the only ones that would possibly interest them. He studied these ideas under Richard Ely and John Commons at the University of Wisconsin—another new and developing state. So Hansen already was a believer in pro-growth economics long before Keynes ever published his General Theory in 1936.

That Hansen was obviously a "Keynesian" before he ever heard of the man was not unique to him. Marriner Eccles, hands down the best central banker the USA has ever had, was "accused" of being a Keynesian because of his guidance of the Fed during the Roosevelt years. No less a figure than Ken Galbraith called Eccles the most important Keynesian in the land. And yet Eccles claimed to his dying day that he had never read Keynes. For men like Hansen and the Mormon from Utah Eccles, calling them Keynesians was merely a label used by lazy academics and journalists who weren't about to go to the trouble of understanding why folks from frontier settlements might have independently developed pro-growth economic ideas.

Below is a Guardian article that explains how the feudal / imperialist economics came roaring back when the Keynesians faltered in 1973. Their story is about the battle of ideas between Keynes and Friedrich Hayek. My story is that the Keynesians lost because by 1973 their profession had far too many Leisure Class hacks (like Paul Samuelson) and far too few giants like Hansen and Eccles who understood the importance of the Producer Classes and their interests (no matter how they were labeled).

I have written about Hansen and the USA "Keynesians" before:

Wednesday, June 3, 2015
Frances Perkins and the fight for decent working conditions


Sunday, November 6, 2011
Waking up to the relentless idiocy of neoliberalism

Neoliberalism: the idea that swallowed the world

The word has become a rhetorical weapon, but it properly names the reigning ideology of our era – one that venerates the logic of the market and strips away the things that make us human.

Stephen Metcalf, 18 August 2017

Last summer, researchers at the International Monetary Fund settled a long and bitter debate over “neoliberalism”: they admitted it exists. Three senior economists at the IMF, an organisation not known for its incaution, published a paper questioning the benefits of neoliberalism. In so doing, they helped put to rest the idea that the word is nothing more than a political slur, or a term without any analytic power. The paper gently called out a “neoliberal agenda” for pushing deregulation on economies around the world, for forcing open national markets to trade and capital, and for demanding that governments shrink themselves via austerity or privatisation. The authors cited statistical evidence for the spread of neoliberal policies since 1980, and their correlation with anaemic growth, boom-and-bust cycles and inequality.

Neoliberalism is an old term, dating back to the 1930s, but it has been revived as a way of describing our current politics – or more precisely, the range of thought allowed by our politics. In the aftermath of the 2008 financial crisis, it was a way of assigning responsibility for the debacle, not to a political party per se, but to an establishment that had conceded its authority to the market. For the Democrats in the US and Labour in the UK, this concession was depicted as a grotesque betrayal of principle. Bill Clinton and Tony Blair, it was said, had abandoned the left’s traditional commitments, especially to workers, in favour of a global financial elite and the self-serving policies that enriched them; and in doing so, had enabled a sickening rise in inequality.

Over the past few years, as debates have turned uglier, the word has become a rhetorical weapon, a way for anyone left of centre to incriminate those even an inch to their right. (No wonder centrists say it’s a meaningless insult: they’re the ones most meaningfully insulted by it.) But “neoliberalism” is more than a gratifyingly righteous jibe. It is also, in its way, a pair of eyeglasses.

Peer through the lens of neoliberalism and you see more clearly how the political thinkers most admired by Thatcher and Reagan helped shape the ideal of society as a kind of universal market (and not, for example, a polis, a civil sphere or a kind of family) and of human beings as profit-and-loss calculators (and not bearers of grace, or of inalienable rights and duties). Of course the goal was to weaken the welfare state and any commitment to full employment, and – always – to cut taxes and deregulate. But “neoliberalism” indicates something more than a standard rightwing wish list. It was a way of reordering social reality, and of rethinking our status as individuals.

Friday, August 18, 2017

A German (DW) update on climate change


Climate change is a BIG issue around here—not that you would know it from the paucity of reporting on the subject. My excuse is that there is more than enough evidence of climate change—and far too little on the subjects of how we got to this place where almost everything everyone does only adds to the problem. Turns out that the technological problems caused by the total domination of fire-based economies is almost trivial compared to the cultural expressions that support them. So much so that any suggestion that the world must move to fire-free societies is greeted as the most radical form of madness imaginable—even though such an assertion is utterly true.

But since not a lot is getting accomplished towards this necessary goal, we still need reminders of how serious the problems caused by a warming planet really are, and that ignoring these problems will not make them go away. This little reminder from DW must do for today. After all, we simply must get back to the "serious" problem of where we site monuments to Confederate War "heroes." (NOT)

Monday, August 14, 2017

Donald Trump confronts the War Party


David Stockman is the sort that can easily inspire conflicting emotions. He is obviously very bright—he was the boy wonder head of Reagan's Office of Management and Budget who soon got into trouble by pointing out that Reagan's budget numbers were, at best, a hoax. Worse he explained it all to William Greider who wrote up the story in the Atlantic. As history so often reminds us, telling the truth is a hazardous occupation and Stockman's venture into honesty quickly transformed him from Rising Republican Star into a political pariah overnight.

While brazen honesty is an admirable and often amusing trait, it does not transform Stockman into a political genius. While his analysis is often excellent, it is usually colored by the same neoliberal assumptions that have led both major political parties (and most of the world) dangerously astray. So when he gets things wrong, he does so in boringly predictable ways.

But being a neoliberal on economics does not necessarily make someone a warmongering neoconservative—it certainly does not in the case of one David Stockman. In the following he writes about what he believes motivates the attempted establishment coup against the constitutionally elected government currently under way in Washington.

Impeaching Trump is going to be a lot harder than impeaching Bill Clinton for a sex scandal—mostly because both houses of congress are controlled by the Republicans. While not all Republicans are Trump supporters, all can remember how easily he dispatched the field in his run to the White House. Voting to impeach Trump would anger a wide slice of their political base and since elections are often won with slim margins, few wish to find out just how angry their base would get.

And yet the war on the Trump administration continues in spite of its seeming futility. Many, myself included, wonder why anyone would bother trying to remove this man from office. So the following explanation offered by David Stockman—that Trump's real "crime" is that he has threatened the War Party (a powerful group that has mostly gotten its way along with the lion's share of the state's wealth since at least 1916) actually makes a lot of sense.

Wednesday, August 9, 2017

China and rare earths


Perhaps THE most annoying thing about the economics profession is that they are extremely bright people with extraordinary math skills who unfortunately know absolutely nothing about the real economy. That they could makes excuses for selling off the crown jewels of USA industrialization for pennies meant beyond any doubt that they had absolutely NO way to accurately value those crown jewels. The biggest single reason is that economists, as a group, are techno-cretins. Any tool more complex than a fork is borderline magical and having to assemble something from IKEA is an "ordeal" (yes I have actually heard one of these geniuses use the word ordeal).

So today's lesson is about how USA economic leadership never figured out how to value rare earths and what a serious problem that will be if we ever get serious about building the post-petroleum society. I think the time has come to make such abject stupidity a capital crime.

Monday, August 7, 2017

Sanctions—economics at its most destructive


Using economics to destroy is perhaps the sickest manifestation of the dismal "science." This is mostly because sanctions only really work when the target is weak. As the world is fast finding out, the Russians may no longer be a superpower but they still have the tools to counter a few sanctions. In fact, the economic adjustments forced on the Russian Federation with the latest round of sanctions may have done their economy a world of good. They have discovered that lots of folks want what they can make, grow, and sell.

The Russians have also discovered that their own economic weapons are quite effective. European agriculture is still staggering from the loss of their Russian markets while Russian agriculture is arguably doing better than at any time in the past century. And as Tom Luongo points out below, their presence in the market for the fuels that run the world's nuclear power plants is quite significant.

But lost in all the discussions of who can do what to whom is the fact that all these sanctions and counter-sanctions diminish everyone's economic possibilities. Building the sustainable civilization will be an act of cooperation—NOT confrontation. And the biggest loser of all is very likely the USA—the biggest sanctions bully on the block.

Sunday, August 6, 2017

Elon Musk on education


Producer Class superstars are sort of a freak of nature. The overwhelming majority of folks who become rich and famous are resolutely Leisure Class. There are a multitude of reasons for why this is so but mainly it's because the Leisure Classes hold all the cultural levers.

Ask yourself, When was the last time you saw a movie or TV series starring an engineer or someone who builds skyscrapers (as compared to lawyers or cops or soldiers)? When was the last time you saw a competition between student architects or solar designers (as compared to football players or musicians)? Who controls the real levers of economic power—scientists or financial players?

Our schools reflect this reality. Math and science whizzes tend to be social outcasts while the captain of the football team dates the captain of the cheerleading squad. Of course, that sort of thing is forgivable and understandable. What is not so forgivable is that the academic curriculum is designed and administered by folks who absolutely cheer for all things Leisure Class.  So even if they don't know why, budding Producer superstars are going to hate such an environment. In the clip below, Elon Musk admits that he HATED school—which is odd when you consider how much he obviously loves learning.

The general public quite likes their Producer Class heroes so we shouldn't waste much time feeling sorry for the man. But even so, he has a problem—he has five sons he would like to see educated to higher levels with less pain than his own experience. People who love to learn shouldn't hate school. So he decides to create his own school. He hires a certified teacher who agrees with his goals and methods to run it. And then he invites a few other children to join in the fun.

There are some recognizable features of his school. For example, he has eliminated grade levels thereby recreating the best feature of the one-room school. Some of his innovations aren't really that odd when you think about them. For example, Musk believes that when kids understand why they should learn something, all the other problems of motivation disappear. Well, duh! But ask yourselves, when did any teacher ever give you a believable reason for learning something (beyond, you need this to get into a good college, that is)?

Musk's most prominent Producer Class feature is a nice little habit of saying, "I just want to be useful" whenever confronted with the inevitable "What motivates you?" sort of question. Hard to top that response as a refutation of the ultimate goal of total uselessness that seems to rule the Leisure Class. Apparently he wants to assign usefulness as the goal of his school. To me it sounds like a heaven for those who enjoy learning.

The clip below is from Chinese television. It covers more than his school but the school conversation is in the first three minutes.

Wednesday, August 2, 2017

The Circular Economy—still one of the great ideas


One of the lightening bolts of insight that staggered me as a man in his 30s was the idea that because there is no "away" the throwaway society is ultimately doomed by simple physical reality. It is quite impossible to dig up raw materials to be sent on a journey to the landfills forever. Either you run out of resources or you run out of places to store the waste, or both. The only way out of this dilemma is to make products so they can be reprocessed into new things when the time comes for the original product to be replaced.

Yeah.

This is one of those ideas that would require about a million times more effort, cost, and inventiveness to do than to dream up. After all, not only are most things designed and built without the slightest consideration for disposal, large numbers of products are designed to be disposed of after only one use. Designer junk, if you please. I once gave a talk at 3M, a company that has made their primary mission the production of designer junk. I chose to talk about design for disassembly, and other proposed schemes to create a less wasteful world. The assembled 3M folks were not amused. Needless to say, I wasn't asked back.

The idea of the circular industrial society is still one of the better notions to have crossed my mind so I included it in Elegant Technology. It can be found in Chapter Ten: Do Producers Have a Plan? Of course, no one ever reads a book to Chapter Ten so I might as well have never written it at all. But when I saw someone discussing this idea the other day under the title The Circular Economy That Could Save Countries Thousands, Reduce Waste (reprinted below) it made my heart glad. But first, I have decided to reproduce the section from my Chapter Ten called Closing the Loop. I hope that you readers will understand why this was the idea that made me believe a sustainable world was possible. I also hope no one minds that this was first written in 1985.

Monday, July 31, 2017

Globalisation: the rise and fall of a truly terrible idea


There is a certain beauty and nobility about the idea that we are the world and wonderful things happen when we think of the rest of humanity as our brothers and sisters. Unfortunately, some very cynical people can take this beautiful idea and turn it into empire building. The sun never sets on the greatest civilization, you know.

Of course, the Roman or British Empires were harmless play-actors compared to the ruthless plunder available to those who can control the hydraulics of electronic money. And to keep the looting of the electronic money boys on track, the world needed some philosopher-pundits to convince the suckers that usury was harmless and the "structural adjustments" that threw whole classes of people into abject poverty were necessary for growth and prosperity. And to give the practitioners of empire building with electronic money a patina of beauty and respectability, they named their wickedness "Globalization" and "Free Trade" and "Reform."

In spite of the fact that none of these schemes benefitted very many people, the Globalists kept at it because the very few it did benefit became rich beyond the dreams of avarice. But pretty predictions advanced by the expensive think tanks couldn't cover the fact that these global schemes never work.
  • Big mass markets simply cannot work without a giant middle class with money to spend. Unfortunately, the primary goal of the money plunderers is to reduce the size and income of the middle classes.
  • The money boys tend to lack all respect for manufacturing and other forms of useful work. Ship those factories to China or Bangladesh where desperate brown folks will work for $10 a day. The de-industrialization of the formerly industrial countries has triggered some of the greatest calamities in human history. These moves were deliberately undertaken by hopelessly thoughtless people.
  • While we may all be brothers and sisters sharing a big blue marble in space, the realities of life are dramatically different from one region to another. One of the things builders quickly realize is that construction practices often don't travel very far. A house built for the blazing heat of the USA Southwest will be damn near worthless during a North Dakota blizzard. In macroeconomics, the same economic scheme that works well in Sweden may not work nearly as well in India or Egypt. Yet the money boys used their institutions to enforce economic orthodoxy from Ecuador to Korea and dozens of stops in between.
So now we are seeing some of the philosopher-pundits of Globalization coming ever so slowly to the realization that they have been selling some aromatic bullshit. Not all of them, mind you. The economics profession is mostly made up of very conventional people so they have no tendency to abandon their conventional wisdom. But some, apparently with the capacity to feel shame, have recognized that the vast majority of Globalization's major theses are just plain wrong and have formulated critiques. What follows is a damn fine article written by someone who has at least seen a brief flash of light.

Monday, July 24, 2017

The economics of waste


There is no particular reason to believe that Charles H. Smith is a Veblen scholar or that he has even read The Theory of the Leisure Class (TOLC). Nevertheless, if someone had been assigned to summarize TOLC, the following would rate an A+ because these are exactly the points Veblen was trying to make. For example, Veblen includes a whole chapter on why the Leisure Classes believe that waste enhances their status, entitled Conspicuous Waste.

This essay is short and sweet, and the reader isn't required to learn a bunch of arcane terms as is the case with a reading of TOLC. Several times in my life I have been asked to "translate" TOLC into modern English. Because I am terrible at such tasks, I have begged off. But I DO think it is a good idea. And however Smith came to write the following, it will be an excellent substitute until someone actually reworks Veblen's classic.

Friday, July 21, 2017

Re-upping my Producer Class credentials (again)





The main reason for do-it-yourself home repair is that you can have something in your life that is unaffordable any other way. Pictured here is my new rest-and-towel-off area built on the site of one of the nastier basement bathrooms ever seen or imagined. Among its many features it has an ADA-approved low-slip tile floor, knurled, high-grip, stainless-steel grab bars, an ergonomically excellent bench, and an LED lighting system that delivers almost 100 lumens / sq. ft. It is safe, comfortable, and aesthetically quite pleasant. And best of all, it was built with some of the lowest-cost materials sold in the big-box building supply store in my little town—for example the ceramic wall tile only cost $1.52 / sq. ft. ($16.36 / sq. meter).

But for me, this sort of building is also (and probably mainly) an epistemological exercise. Building teaches many important lessons including:
  • Careful and extensive planning is essential.
  • There is absolutely no substitute for getting it right the first time
  • Inexpensive materials can be made to look spectacular if used with imagination
  • The instinct of workmanship works best with good tools
  • Nothing disrupts a time schedule like a non-standard design or application
No one changes the world quite like the builders. And when the builders got really serious about their applied art, they produced the Industrial Revolution. The greatest errors in economics stem directly from a deep ignorance of the tool-users and what their role in society really is. So I build because I never want to lose touch with these people. It is what separates the economic thinking of this blog from virtually every other economics site on the internet. Unless one categorizes Ben Franklin and Peter Cooper as economists, there are no historical examples of economists who were graceful tool-users. Of course the greatest political economist of them all, Thorstein Veblen, built simple things—which mostly proves my point about how rare it is for the tool-users to be even mentioned in economic debates.

Even so, I look at my rebuilt bathroom and am filled with the calm assurance that very likely no other political economist in history could have built it. And this fact alone significantly explains why so many got so much horribly and disastrously wrong. It is impossible to accurately explain human society without accounting for the tool-users. Moreover, tool-using constitutes a knowledge that is rarely found in books—this is something you must do.

I must admit that most of these lessons had been learned long ago. But this time around, I thought a lot about the intersection between competence and honesty (mostly inspired by the hilarious debate in the movie The Big Short over whether it was fraud or stupidity that drove the housing bubble that crashed in 2007-8). Besides cost containment, my main goal was to have a well-made outcome. Like any such project, there were many jobs I had not done before. When that never-been-done-before job appears, the most important assignment is to take an honest and thorough inventory of the possible assets that can bring this task to a successful conclusion.
  • Is there a Youtube of someone doing the same thing? 
  • Do I have the right tools for fabrication? 
  • Can I purchase suitable raw materials? 
  • Is the planned method within my skill set? etc.
Of course, when there isn't a relevant example to copy, you are thrown into the world of invention where all these steps must be repeated with a lot less help. In these situations where outcomes are less certain, the margin for dishonest self assessment drops to ZERO. Turns out, once again, that the most important core ingredient of competency is honesty.

Unfortunately, this will be my last such project. I recently turned 68 and physically I cannot do it anymore. Especially if only to prove an epistemological point. This project was conducted in a cellar which means everything had to be hauled down a flight of stairs. Some construction materials are pretty damn heavy and clumsy. But I DO enjoy my repaired bathroom. The details of how it was done can be found by clicking the Read more button below.