Archive for the ‘ Economy ’ Category

Our Historical Nightmare

In reading a book about Foucault, I find this quote from Max Weber:

The mighty cosmos of the modern economic order..the iron cage [in which] specialists without spirit, sensualists without heart [are] caught in the delusion that [they] have achieved a level of development never before attained by mankind.

A footnote says this is from Weber’s The Protestant Ethic and the Spirit of Capitalism.

I would only add that he was referring to the post-modern world – since he wrote this in 1905. However this difference would not become apparent until after WWI. And would accelerate after WWII. And eventually lead to an economic (and moral) collapse.

Which has already happened – although the full impact of this has yet to be felt.

A Grim Life

I marvel when I look back on my working life – how grim it was. It was focused on two things – making money and spending money! That was a grim existence.

But we were absolutely convinced that was the only proper life. Destroying the world by making money off of it. Any other kind of life was unthinkable.

Not that we did much thinking. We lived by our instincts alone – and they were all about money, in one form or another. Living for any other reason was treasonous – and was punished by a fate worse then death – being unemployed and unemployable. Which meant not being able to live at all.

Having been in that condition – and recovering from it – has been the story of my life. I am very much a person of the 21st Century – marveling at my life I led (if I could call it that) in the 20th Century. It was as weird as any life could possibly be – but to us it seemed perfectly normal.

Here I have to make my usual disclaimer – and remark on the huge difference between conscious and unconscious behavior. This, it seems to me, is the one thing we need to get clearer on. We went through a big change when we went from Modern life to Post-modern life – a change that happened sometime between the mid-19th Century and the mid-20th Century – marked by WWI and WWII.

We become a different kind of people – a kind we did not like – so we moved these people into our unconscious – individual and collective. Where they could operate autonomously – allowing our conscious selves to claim themselves innocent of their horrible behavior.

Any recovery (if there is any) will have to acknowledge this very basic fact. The fact that we have become liars on a vast scale – and have become unable to notice this.

We even have a technology that allows us to embody this – we have become our computers – a complex of hardware, software – and the Internet and the Wireless networks. And the industry that serves them – which I was in for 20 years. We have insisted that they take over our lives. Just as we had insisted that our cars take over our lives.

We have insisted on being helpless. A grim life indeed.

Shocking News – Congress is not Dead

NY Times  - Make Wall Street Choose: Go Small or Go Home

Senators Sherrod Brown, Democrat of Ohio, and David Vitter, Republican of Louisiana, are members of the Senate Banking Committee.

In 2008, at the height of the financial crisis, the government stepped in and decided which Wall Street banks were so large and interconnected that they would receive extraordinary help from the government to enable them to survive. They were deemed, to use a now ubiquitous phrase, too big to fail. Meanwhile, smaller banks in communities across the country, including Cleveland and Covington, La., in the states we represent, were allowed to fail. They were, evidently, too small to save…

Our proposal also curtails the expansion of the government safety net for Wall Street by limiting taxpayer support to traditional banking operations. Under our legislation, financial institutions would be prohibited from transferring nonbank liabilities — like derivatives, repurchase agreements and securities lending — into federally supported banks that benefit from deposit insurance. This would ensure that the government safety net protects only the commercial bank, not the risky investment-banking arms of the megabanks. If the megabanks want to remain large and complex, that’s their choice — but Americans should not have to subsidize their risk-taking. If they fail, their executives and investors — not taxpayers — should pay the price.

We expect a full-throated effort by the megabanks to resist our proposal. The good news is that there is a real and growing bipartisan consensus around our approach. It has drawn support from key regulators like Thomas M. Hoenig, a conservative who is vice chairman of the F.D.I.C. and a former president of the Federal Reserve Bank of Kansas City, and Daniel K. Tarullo, a progressive regulator and a member of the Fed’s board of governors. Our banking system — and the broad economy — will be the stronger for it.

And Congress will be stronger too.

Managed Democracy

We take it for granted anymore that democracy must be managed by the better kind of people.

This is not a new idea at all – the Founding Fathers were careful to establish a republic – not a democracy – which was modeled, frankly on the British model. There were some ardent democrats among them – Thomas Jefferson, for example. But economic concerns predominated – Americans became more concerned with making money than with freedom.

As industrialization became more powerful, America quickly sorted itself into the haves and the have-nots. In Marxist terms – the Capitalists and the Workers. But even here – the managers – the company men who kept the wheels of progress lubricated – were not hard to find.

But eventually – with the advent of mass communications – something even more radical appeared – the masses and their managers. The people who watched their televisions – and the much smaller number that managed what they saw on them.

The model for all of this was the Organization – Business, or the Corporation – which was a blend of a hierarchical control structure (top-down control) and total conformity – control from the bottom up.

No one found this the least bit unusual – that was just the way things were. When in fact – it was highly unusual – and should have set off all kinds of alarm bells.

Why did this not happen? Evidently, because people had become overwhelmed by too many changes – caused by too many and too powerful technological changes.

These changes were noticed – how could anyone not notice them? But their effects on people were not noticed at all. Or only by a few – and these were ignored as alarmists. People were convinced that a new era had dawned – where everything was new (and better) including them.

When, in fact – they had been managed into oblivion.

Public Citizens

These were people who devoted their lives to improving the lot of their countries – with an eye to improving the lot of all mankind.

In America, the Founding Fathers immediately come to mind – a breed that died out early in the 19th Century. Being a public citizen often interfered with the other parts of their lives – being a good spouse and good parent, for example.

But great leaders did sometimes occur later – Abraham Lincoln being an example. However, in the last part of the last century, they disappeared almost completely.

After these introductory remarks, I want to turn the clock back to a crucial point in American history – the Constitutional Convention. This nearly failed – which would have meant no United States of America. It only succeeded because of public citizens such as George Washington.

And no doubt because the business men of the various states could see that a strong central government was necessary to promote a strong central economy. This was no easy awareness – it involved sacrificing regional interests to the interest of the whole – or The Union. They all had to be Public Citizens – in effect.

Something now no one can imagine.

James Madison’s Part in Early American History

I am listening to James Madison: The Founding Father, and can recommend it. It has taken over two hundred years for good biographies of the Founding Fathers to appear. The reviews of this book on Audible are good, if you want to know more about it.

James Madison’s part in making a United States of America from a weak confederation of states is well-worth reviewing. Because in our time conservative forces are trying to reverse this process – and limit the government to defense only.

I align myself with Jeff Madrick in The Case for Big Government. Bigness is always a problem – but necessary, for us to operate in a big (or global) world.

Which is where we are – whether we like it or not.

The Age of Cheap Energy is Over

From the April Issue of Scientific American – The True Cost of Fossil Fuels, page 59

Scientific American does not have a good online presence. Perhaps they do not want their industry-hostile material to be assessed too easily.

This article is based on a new metric – Energy Return on Investment (EROI). It indicates the ratio of energy that fuels provide to the energy spent producing them. The chart on the next two pages should be widely distributed – instead of being carefully hidden. It explains a lot about the future of our energy-dependent economy – which is not bright.

At the top of the page six fuel sources are shown – but only two (oil and ethanol from sugar cane) have an EROI above the minimum of between 5 and 9 required to support the functioning of an industrial society. The EROI of Tar Sands is only 5. That of ethanol made from Corn is only 1.4!

The title of this posting was taken from a talk given by Nabuo Tanaka in 2011 when he was the International Energy Agency’s executive director.

Human Societies Never Last Very Long

Most species last for something on the order of a million years. But for our species this is meaningless because we live in collectives, or societies that come and go with amazing speed – in geological terms. The lifetimes of empires are measured in terms of hundreds of years – although some (such as the Third Reich) last much less. And in Silicon Valley, where I spent much of my life, companies come and go with a speed that no one wants to admit to.

This contrasts with our assumption that our present situation (whatever we call it) is somehow permanent. When it clearly will not last too much longer – perhaps a hundred years. The collapse of any society is usually faster than anyone expects it to be – and it looks to me that we are now looking over that precipice.

People comfort themselves by saying “If things were this bad, we would surely know about it.” When this has never been the case. People have never known how bad things really were – when things were really bad. But I should correct that – there are always a few who do – and who save their asses while they still can.

I knew a Jewish family once who got away from Germany before Hitler made that impossible – and spent the War safely living in South America. But most Jews kept telling themselves things could not that bad – hadn’t they been loyal Germans for a very long time? Even Freud lost most of his sisters (all in their late Seventies) to the Nazis.

Perhaps people do not want to see the coming collapse because it will probably be a big one. But on the other hand – this time it might be different. We might wise up – realize drastic changes are required – figure out what they are – and do them.

Stranger things have happened.

Why America Did Not Grab Iraq’s Oil

Greg Palast

I had never been able to figure this out. Until Palast dropped this in my inbox. Here are his important parts, culled from his purple prose:

I was uncovering that the US oil industry was using its full political mojo to prevent their being handed ownership of Iraq’s oil fields.  That’s right: The oil companies did NOT want to own the oil fields – and they sure as hell did not want the oil. Just the opposite. They wanted to make sure there would be a limit on the amount of oil that would come out of Iraq.

There was no way in hell that Baker’s clients, from Exxon to Abdullah, were going to let a gaggle of neo-con freaks smash up Iraq’s oil industry, break OPEC production quotas, flood the market with six million barrels of Iraqi oil a day and thereby knock its price back down to $13 a barrel where it was in 1998.

And that’s how George Bush won the war in Iraq. The invasion was not about “blood for oil”, but something far more sinister: blood for no oil. War to keep supply tight and send prices skyward.

Oil men, whether James Baker or George Bush or Dick Cheney, are not in the business of producing oil. They are in the business of producing profits.

And they’ve succeeded. Iraq, capable of producing six to 12 million barrels of oil a day, still exports well under its old OPEC quota of three million barrels.

The result: As we mark the tenth anniversary of the invasion this month, we also mark the fifth year of crude at $100 a barrel.

Makes sense!

But you won’t see this on your friendly television station.

Group Intelligence

The are two schools of thought about this. One believes that as more people work on a problem, the more likely they are to solve it – these are the optimists. The pessimists see it differently – most successful group interactions, they observe, are the product of small numbers of people. Large organizations are stupid, by definition. And for that matter, most small ones.

There is even another approach – the one described by Evgeny Morozov in To Save Everything Click Here. He calls this Solutionism – but his reasoning is too subtle for most – although, for the most part, I have to agree with him.

The human race is capable of great intelligence – but also great stupidity. In practice, there is usually a mixture of both.

What we have to ask ourselves now is “How well is our global society working?” The answer is clearly pessimistic – which is not a good thing – but what is even worse – we refuse to acknowledge this.

Since no one else is saying it, I will say it – our global society is doomed.

You may object – and say there is no global society. In a way you would be right – our global economy (which is a fact) is not a society in any sense of the word. It creates global problems (global warming, for example) – but no global solutions.

And the biggest problem of all is our inability to see that we have these problems. We are citizens of a global world – but are only passive spectators – if even that much.

Most people work hard at not noticing anything at all – in other words – at being stupid. And consider this intelligent behavior.

Allow me to get personal – and talk, of all things – about software.

I never cease to be amazed by how people ignore this – when their lives are being run by the stuff. The world is being run by software – that run the networks – that run us. Directly or indirectly.

The end result – the products (or applications) we produce and use – are a disgrace. I recently got to know an engineer who works for Boeing – whose latest airliner has just this problem – which I discuss in A World Too Complicated to Work. She was a mechanical engineer – but she absolutely refused to think about software. Her mind would stop working whenever she thought about it – so she didn’t think about it.

And the Federal Aviation Agency – where I worked for 12 years – is no smarter. I nearly went crazy working there – everyone was determined to do things wrong – when I wanted to do things right. And no one could understand why I was so upset.

But I am getting off the subject – I started to talk about software. Which is in a strange, conflicted state. What is going on there is largely determined by companies that produce garbage software in enormous quantities. I ought to know – I worked in that world for twenty years myself – and I could tell you stories.

But there are software developers (and some companies) who are determined make better software. One of my personal projects is getting to know about this new, improved stuff. As I talk about in Cloud Computing.

This is the perfect example of high group intelligence. Unfortunately, this is restricted to software – and is unlikely to produce anything like high political intelligence – which seems to have reached an all-time low.

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