Tuesday, September 30, 2014

Great Essay on Technology

Here's an excellent article from TruthOut whose themes will be very familiar to readers of this blog - Is Modern Technology Killing Us? It's a very thoughtful and well-reasoned essay that succinctly makes many of the points I've made here over the years (I've added some links to previously featured articles):
The problem with technology is that most innovations have unintended consequences, and those unintended consequences are piling up, causing harm and creating dangers of existential magnitude. We turn a blind eye to those dangers and uncritically presume that, for all but the creepiest technologies (such as animal cloning), the benefits outweigh the risks and that technological innovation is humanity's highest calling.

Global monoculture rarely sees a technology it doesn't like. Working off the tacit assumption that technological innovation can and will solve the most critical threats to civilization - the collapsing environment, poverty, tyranny, disease pandemics and resource depletion - we are quick to celebrate unproven technologies and slow, oh so dangerously slow, to critically examine their safety and utility. It's as though a magical spell has pervaded our groupthink, immersing us in deluded fantasies of meeting human needs with a few swipes of a touchscreen.

If you would like to be the laughingstock of your next dinner party, challenge the cultural presumption in favor of technological progress. Other than a few head nods about how we really should unplug from our hand-held devices for a few minutes a day, you will likely be scoffed at as a backward-thinking loser whose resentment probably lies in your pathetic inability to figure out how to organize your iTunes library.

You might even be called a Luddite, because most people, liberals included, think the Luddites were knee-jerk reactionaries scared of any form of technology when, in fact, they were tradesmen and artisans engaged in a class protest against "all Machinery hurtful to Commonality" (i.e. forms of mechanization that damaged people and uprooted communities by forcing skilled workers to become wage slaves in factories). To be labeled a Luddite today is to be intellectually and culturally dismissed even by class-conscious leftists who have a blind spot when it comes to the politics of technology...

Technology has its place. After all, the alphabet and the magnetic compass were innovations in their day, and I feel pretty confident in asserting that literacy and knowing which way is north are, on balance, good things. What we as progressive thinkers must do - because no one else is doing it - is acknowledge the ways in which technology can serve us, understand the ways in which many technologies have harmed us and develop some kind of rubric through which we can evaluate the merits of existing and emerging technologies. Furthermore, we must be mindful of the ways in which technologies can be used by corporate and government actors to repress and control us and question whether the benefits of using the technologies outweigh the risks.

1. It weakens our resilience.

2. It fuels hyper-consumption.

Technology separates us from the natural world by diverting our focus from natural to human-made wonders. Every day, we are offered a free gift of joy and serenity courtesy of Mother Nature, but we usually opt instead for artificial pleasures like video games. A vicious cycle is born, in which our separation from nature and from each other leaves us feeling empty and compels us to seek more creature comforts to fill the hole, and we then become addicted to the pleasure of consuming and spend even less time connecting with people and nature.

3. It accelerates environmental ruin, resource depletion and resource wars.

Having never known anything but an artificial lifestyle, we have no reason to think that the degradation of the natural world is of any consequence to us. Sure, it's sad that the fish will all be gone in 50 years and, yes, it sure is unusually hot outside, but I can just pop my frozen lasagna in the microwave and turn up the air conditioning. This delusion that we are separate from nature is the perilous essence of the techno-topian myth. The sooner we can shatter it, the better.

4. It carries some seriously scary risks.

Look at cell phones and Wi-Fi, universally adopted despite the fact that 75 percent of non-industry-sponsored studies have found that cell phones damage our DNA and that brain cancer in children has increased 1 percent a year for the past 20 years. On top of this, we bombard ourselves 24/7 with the radiation emitted from wireless networks and cell phone towers with nary a study of health effects. With cancer latency periods of up to 30 years, it will be another 20 years before we know the full extent of the harm. In the meantime, we're all subjects of the biggest radiation exposure experiment in history.

5. It often diminishes rather than enriches our quality of life.

If rates of depression, anxiety and the disintegration of social bonds are our guide, we already have too much technology for our ancient souls to integrate...

6. It erodes our privacy.

7. It deepens inequality.
Much more at the link - Is Modern Technology Killing Us? (TruthOut) 

Friday, September 26, 2014

Dispatches from the class war

In 1988, the typical American adult was 40 years old, white and married, with a high school diploma. If he was a man, he probably worked full time. If she was a woman, she probably didn’t.

Twenty-five years later, Americans are older, more diverse and more educated. We are less likely to be married and more likely to live alone. Work is divided more evenly between the sexes. One thing that hasn’t changed? The income of the median U.S. household is still just under $52,000.

The government’s release last week of income and poverty data for 2013 brought renewed attention to the apparent stagnation of the American middle class — not just since the financial crisis hit six years ago this month, but for much of the decade that preceded the crash. The report showed that the economic recovery has yet to translate into higher incomes for the typical American family. After adjusting for inflation, U.S. median household income is still 8 percent lower than it was before the recession, 9 percent lower than at its peak in 1999, and essentially unchanged since the end of the Reagan administration.

“As a country,” New York magazine’s Annie Lowrey wrote Friday, “we peaked in the late 1990s.”

...middle class incomes haven’t just been stagnant. The middle class itself has also been shrinking.

In 1970, 55 percent of U.S. income was earned by households in the middle 60 percent of the income distribution. More than half of households were in what Pew Research Center has labeled the “middle tier” of households (those earning between two-thirds and twice the median income). In 2013, both numbers had fallen to about 45 percent. In a 2012 report, Pew researchers called the 2000s “the lost decade of the middle class.”
The American Middle Class Hasn’t Gotten A Raise In 15 Years (Five Thirty-Eight) Note especially the "more educated" part. The "more diverse" part is interesting too, perhaps that explains the chart below. Divide and rule:

“The Most Remarkable Chart I’ve Seen in Some Time”: Rich Gain More Ground in Every US Expansion (Naked Capitalism) If the rich getting all the benefits of growth is a "natural law" of capitalism, then how do we explain 1949-1979?

The idea that Americans are "naturally accepting" of inequality is balderdash:
[Michael] Norton and [Sorapop] Kiatpongsan asked about 55,000 people around the globe, including 1,581 participants in the U.S., how much money they thought corporate CEOs made compared with unskilled factory workers. Then they asked how much more pay they thought CEOs should make. The median American guessed that executives out-earned factory workers roughly 30-to-1—exponentially lower than the highest actual estimate of 354-to-1. They believed the ideal ratio would be about 7-to-1.

This is the second high-profile paper in which Norton has argued that Americans have a strikingly European notion of economic fairness. In 2011, he published a study with Duke University professor Dan Ariely that asked Americans how they believed wealth should be split up through society. It included two experiments. In the first, participants were shown three unlabeled pie charts: one of a totally equal wealth distribution; one of Sweden’s distribution, which is highly egalitarian; and one of the U.S. distribution, which is wildly skewed toward the rich. Then, the subjects were told to pick where they would like to live, assuming they would be randomly assigned to a spot on the economic ladder. With their imaginary fate up to chance, 92 percent of Americans opted for Sweden’s pie chart over the United States.

In the second experiment, Ariely and Norton asked participants to guess how wealth was distributed in the United States, and then to write how it would be divvied up in an ideal would. [sic] Americans had little idea how concentrated wealth truly was. Subjects estimated that the top 20 percent of U.S. households owned about 59 percent of the country’s net worth, whereas in the real world, they owned about 84 percent of it. In their own private utopia, subjects said that the top quintile would claim just 32 percent of the wealth. In fact, the ideal looked strikingly like Sweden.

“People drastically underestimate the current disparities in wealth and income in their societies,” Norton told me in an email, “and their ideals are more equal than their estimates, which are already more equal than the actual levels. Maybe most importantly, people from all walks of life—Democrats and Republicans, rich and poor, all over the world—have a large degree of consensus in their ideals: Everyone’s ideals are more equal than the way they think things are.” Theoretically, Americans aren’t exceptional in their views about distribution at all—they have a sense of fairness similar to that of Germans, French, and Australians, and most Americans would be offended if they actually knew the degree of economic inequality that exists in this country.

It’s one thing to talk about fairness in the abstract; it’s another to agree on policies that would address it. Gallup, for instance, has consistently found that a solid majority of Americans believe wealth should be distributed more evenly. But fewer support the idea of imposing heavy taxes on the rich in order to do it...
Americans Have No Idea How Bad Inequality Really Is (Slate) That's by design, of course.

By the way, New York and DC have Ginis reflecting more inequality than what we find in Mexico or Nigeria.  Manhattan and Putnam County, Tennessee have Ginis almost as high as that of South Africa.

New York (Texas and Tennessee) fact of the day (Marginal Revolution)

Tuesday, September 23, 2014

The Labor Market Is Broken

There have been some very good articles worth reading lately about one of our hobby horses, Universal Basic Income:
Conservatives...typically propose policies that would slash social insurance while sharply cutting taxes on the rich. And even fairly liberal Democrats are uncomfortable with programs that straight-up transfer cash unless it goes to retired people; recall that it was President Clinton who "reformed" traditional welfare into a program that helps almost no poor people.

However, it is a mistake to view these attitudes as cast in stone. The idea that work is a bedrock of society, that absolutely everyone who is not too old, too young, or disabled must have a job, was not handed down on tablets from Mount Sinai. It is the result of a historical development, one which may not continue forever. On the contrary, based on current trends, it is already breaking down.

The history of nearly universal labor participation is only about a century and a half old. Back in the early days of capitalism, demand for labor was so strong that all the ancient arrangements of society and family were shredded to accommodate it. Marx's Capital famously described how women and very young children were press-ganged into the textile mills and coal mines, how the nighttime was colonized for additional shifts, and how capitalists fought to extend the working day to the very limits of human endurance (and often beyond).

The resulting misery, abuse, and wretchedness were so staggering, and the resulting class conflicts so intense, that various hard-won reforms were instituted: the eight-hour day, the weekend, the abolition of child labor, and so forth.

But this process of drawing more people into the labor force peaked in the late 1990s, when women finally finished joining the labor force (after having been forced out to make room for returning veterans after World War II). The valorization of work as the source of all that is good in life is to a great degree the result of the need to legitimate capital's voracious demand for labor.

These days, capital's demand for labor is looking very, very soft...when you acknowledge that the U.S. is no longer the land of opportunity…. The fundamental bargain of American society is that for anyone willing to hustle, there is a decent job to be found, or one that will at least prevent abject destitution. It underpins our national mythos as the land of opportunity and self-reliance. It has always been less true than anyone wanted to admit, but for an increasingly large fraction of the population–start with the 16 percent of Americans who regularly don’t have enough to eat–it’s a sick joke…. One can easily imagine the historical process described by Marx going in reverse. In today’s labor market, where there are still twice as many job seekers as job openings, the constant conservative carping about the ‘dignity of work’ sounds more jarring and vindictive by the day. As someone with a nice, stimulating job, I agree that work can help people flourish. But in an economy that is flatly failing to produce enough jobs to satisfy the need, a universal basic income will start to seem more plausible–even necessary.
America is running out of jobs. It's time for a universal basic income (The Week) The politics of a guaranteed income get a lot easier when you acknowledge that the U.S. is no longer the land of opportunity. Personally I never understood this "we need jobs to have dignity" nonsense. Going to work does nothing but make me tired and unhealthy and give me suicidal thoughts. Those effects tend to mysteriously vanish when I'm not chained to my desk for eight hours a day.

This article argues that calls for a UBI are actually counterproductive because it is unrealistic and distracts from efforts to reform the system we already do have:
    On Twitter I said: “The basic income movement is an attack on the strongest political pillar of social-democracy: social insurance.” I’ve inveighed against the Universal Basic Income in the past, so here I go again. Another edition of old man yelling at clouds.

    Throughout history, in certain communal settings some variant of the Marxian “From each according to his abilities, to each according to his needs,” has applied. In a naive sense, the UBI is not far off from that ideal. What economists call a demogrant* — a fixed, unrestricted, unconditional transfer payment to every individual (to each according to his needs**) — would presumably be financed by some kind of progressive tax (from each according to his abilities). I have no quarrel with the ideal. The problem is that it’s an utter fantasy that beclouds thinking about more plausible social policies. It’s a distraction from the need to defend really-existing social insurance and to attack the devolution of the safety net (about which a bit more below). ...
In defense of social insurance (MaxSpeak) Steve Waldman, however, disagrees with this:
Sawicky’s view sounds reasonable, if your view of the feasible is backwards looking. But your view of what is feasible should not be backwards looking. The normalization of gay marriage and legalization of marijuana seemed utopian and politically impossible until very recently. Yet in fact those developments are happening, and their expansion is almost inevitable given the demographics of ideology...Within living memory, the United States had a strong, mass-participatory labor movement, and like many on the left, I lament its decline. But reconstruction of the labor movement that was, or importation of contemporary German-style “stakeholder” capitalism, strike me as utopian and infeasible in a forward-looking American political context.

I think that UBI — defined precisely as a periodic transfers of identical fixed dollar amounts to all citizens of the polity — is by far the most probable and politically achievable among policies that might effectively address problems of inequality, socioeconomic fragmentation, and economic stagnation. ..UBI is the least “statist”, most neoliberal means possible of addressing socioeconomic fragmentation. It distributes only abstract purchasing power; it cedes all regulation of real resources to individuals and markets. It deprives the state even of power to make decisions about to whom purchasing power should be transferred — reflective, again, of a neoliberal mistrust of the state — insisting on a dumb, simple, facially fair rule. “Libertarians” are unsurpisingly sympathetic to a UBI, at least relative to more directly state-managed alternatives.

But if “political feasibility” is to be our touchstone, if that is to be the dimension along which we evaluate policy choices, then past existence of a program, or its existence and success elsewhere, are not reliable guides. An effective path forward will build on the existing and near-future ideological consensus. UBI stands out precisely on this score. It is good policy on the merits. Yet it is among the most neoliberal, market-oriented, social welfare policies imaginable. It is the most feasible of the policies that are genuinely worthwhile.
The political economy of a universal basic income. (interfluidity) Here is Max's response.
In general I have no problem with providing unconditional cash money to the poor rather than in-kind benefits. The problem of course is that we have in-kind benefits for food and housing because of the historic, political weakness of free-standing cash assistance. So we need a political environment that would be conducive to some kind of conversion.

I believe SRW’s characterization of the libertarian impulse is wrong. At its root I would say is not some desire for minimal bureaucracy and free choice, but a drive to drown a whittled-down welfare state in the bathtub. If you don’t like bureaucracy, try not to spend much time dealing with private health insurance companies. The Koch-fueled libertarians use UBI to trash existing programs and advocate a wholesale trade. Big government for all its flaws provides some measure of protection from predators that abound in the private sector.

SRW says the UBI is social insurance. It’s America, and we are all entitled to our own definitions. So what exactly is social insurance? It’s not clear. SRW claims the support for a program depends on the extent to which its benefits are general to the politically-enfranchised. Well sure, but what was it about the program that won the support of the politically-enfranchised in the first place? I still think it’s the contributory rubric. FDR thought so too.
Economic security and “the great disturbing factors of life”  (MaxSpeak)
We need only look around us at all the work being done for free, to see that people do choose to work even when not forced to work. Just look at open collaboration accomplishments like Wikipedia and Creative Commons. Look at open source achievements like GNU/Linux and its derivative Android. Look at all of the volunteers in our local communities (every month nearly 2 million volunteers dedicate more than 8.4 million hours of their time to hunger relief alone), or even within our own homes at the unpaid parental labor that raised us. Unpaid labor is everywhere.

It’s important to also not look at the flawed welfare system that exists today and see it as evidence that people won’t work without force. Our current system creates welfare traps where the removal of benefits as income rises results in little to no net gain. Would you work if you were living in poverty and a minimum wage job meant keeping fifteen cents for every dollar gained through your efforts? It is exactly this trap we need to remove by not clawing money back from people who are seen as no longer needing it badly enough.

People work. People will always work. Even when half of our jobs have been entirely replaced by hardware and software at some point in the next 20 years, people will continue to work. The work will just be different and not necessarily involve monetary exchanges. We need not require anyone be involuntarily forced to work for work to be done.
Machine Labor Day (Medium)
To put this in plain English: poor people tend to use money on their basic pressing needs, and then use money in some wealth-building ways. Which is the same way that you, the person very concerned about the profligate spending tendencies of the poor, would probably use it. It's almost as if "poor people" are just people like everyone else and tend to behave, like humans do, by addressing their own needs and trying to figure out ways to provide for their families—things that are infinitely easier to do if one has a base of wealth to help accomplish them.

The popular image of the "Welfare Queen" is one that is seared in the mind of many Americans. No big surprise, since countless millions of political advertising dollars were used to put it there. Nevertheless, evidence shows that the welfare state in the US, to the extent that we have one, works—that giving poor people tax breaks, and social welfare, and, yes, cash aid helps to bring people out of poverty and allows them to lead more bearable lives. Likewise, you might be interested in this story about a Canadian experiment with providing citizens of one town with a guaranteed minimum income, which was a big success, and did not produce any extra laziness in the populace. 
Poor People Do Not Just Blow Any Money They Get (Gawker)

Missing Men in U.S. Workforce Risk Permanent Separation (Bloomberg)

Americans don’t just work longer hours—they also work stranger hours (Quartz)

Americans Won't Relax, Even Late at Night or on the Weekend (Atlantic) On a typical weeknight, a quarter of U.S. employees did some kind of work between 10 at night and six in the morning. So thanks to technology, you're either working 24 hours a day or not working at all. Progress!

Nearly one third of the American labor force works on the weekend (Washington Post)
According to Gallup’s latest annual Work and Education Survey [ht: db],

    "Adults employed full time in the U.S. report working an average of 47 hours per week, almost a full workday longer than what a standard five-day, 9-to-5 schedule entails. In fact, half of all full-time workers indicate they typically work more than 40 hours, and nearly four in 10 say they work at least 50 hours."

That’s because salaried employees work longer hours than hourly workers (49 vs. 44 hours per week, respectively) and because many workers are being forced to take on more than one job (12 percent of full-time workers have two jobs, and 1 percent have three or more). However, even restricting the analysis to full-time workers who have only one job, the average number of hours worked is 46—still well over 40.

The excessive number of hours worked is a real boon to U.S. employers—not so much for American workers. Consider this: more than 9 million people are officially unemployed in the United States and half of American workers who have managed to find and keep their jobs are being forced to stay on the job more than the standard number of hours per week.
47 hours per week (Real-World Economics Review Blog)

Monday, September 22, 2014

Diet Linkfest

Modern Day Flintstones: A Stone Age Subculture Takes Shape in the US (Spiegel Online)

The Paleo Lifestyle: The Way, Way, Way Back (NYTimes)

The caveman dilemma: Why we take such lousy care of ourselves and our planet (Grist)
During the Paleolithic, people didn’t exercise because they wanted to, they exercised because they had to. So being lazy, which we consider one of the cardinal sins — I mean, only a farmer would come up with that definition, right? A hunter-gatherer would say that being lazy is a good thing. It means that you save energy. When you have an escalator next to a stairway — it is a Paleolithic instinct that gets you on the escalator rather than taking the stairs.

And we evolved to store as much fat as possible. That’s because most hunter-gatherers live at the margin of energy balance, right? They get just enough calories to pay for their bodies. And when they have a surplus, they use it to store on a little extra weight, for the inevitable times when there is not a surplus.
The Evolution of Diet (National Geographic)

Paleo Diet and Fire (Social Evolution Forum)

How the American diet has failed (Washington Post)

A reversal on carbs (LA Times)

Why Carbs May Cause Food Cravings (Live Science)

Why eating like we did 20,000 years ago may be the way of the future (io9)

Why you should probably stop eating wheat (io9)

The Rules of Good Nutrition (That Absolutely Everybody Agrees On) Must Read.

The health benefit all fad diets have in common (The Week)
As it turns out, these diets all generally improve the health of participants because they encourage people to avoid processed foods and consume more plants. Whether people take the meat-heavy Paleo route, opt for low-carb options, or go full-on vegetarian, the common benefits are the same.
Why you should starve yourself a little bit each day (io9)

Forget The 5:2 Diet! Here's Why Every Other Day Dieting Is Key To Weight Loss (HuffPo)

Weight-loss shocker: Diet books are lying to you (Salon)
All of these weight-loss diet books invariably claim to have discovered the secret of what types of foods or nutrients to eat or avoid for effective weight loss, or when to eat to them. Yet despite the apparent differences between them, virtually all weight-loss diet books have one thing in common. These books promote a diet primarily consisting of good quality and minimally-processed foods—or “real foods”—and they advise their readers to greatly reduce their consumption of poor-quality and highly-processed foods, sweets and beverages.

Much of the polemic in these books is in fact directed against the highly processed foods that now dominate the modern food supply. These are foods that have often been highly refined, reconstituted, and degraded during processing, and have many refined, extracted and fabricated ingredients added to them. These diet books potentially play an important role in increasing our understanding of how foods are produced or processed, and the potential health effects of these production techniques, thereby enhancing what I call our food-quality literacy.
Sweden Becomes First Western Nation to Reject Low-fat Diet Dogma in Favor of Low-carb High-fat Nutrition (Health Impact News)

Science and Dark Ages

How did the Islamic world fall behind the West in science?
In the book "Lost Enlightenment," historian S. Frederick Starr chronicles the long tradition of scientists, mathematicians, engineers and literary intellectuals that flourished in the Iranian- and Turkish-speaking regions of Central Asia -- the region that encompasses modern-day Iran, Iraq and the “-stan” countries.

What we think of as the Islamic golden age -- lasting from roughly 800 A.D. through 1200 A.D. - was really a Central Asian golden age. It was there that al-Khwarizmi (from whose name we get the word “algorithm”) essentially invented applied mathematics. It was there that astronomer al-Biruni began to invent modern experimental physics and anticipated the work of Copernicus and Kepler. It was there that ibn Sina (Avicenna) wrote the most important books of medicine up to that time, and kept alive the tradition of ancient Greek philosophy -- which would later have a huge influence on Europe. As Starr documents, the region was a hotbed of technological innovation and intellectual boundary-breaking.

Then it all went wrong. After about the year 1200, the region declined, and Islamic science and medicine and philosophy declined with it. Why did this happen? The conquests of the Mongol Empire, which destroyed many of the region’s huge, well-irrigated cities, were part of it. But Starr reveals that the decline had begun centuries before the Mongols showed up. The real culprit, he alleges, was an increasingly anti-science attitude on the part of the Muslim rulers of the region.

One of the most prominent anti-science leaders was Nizam al-Mulk, the unofficial leader of the Turkish Seljuq Empire. In the late 1000s A.D., he established a number of religious institutes, part of whose purpose to combat the rationalism that had emerged in Central Asia. Perhaps the most important figure in this anti-rationalist movement was al-Ghazali, an accomplished philosopher who had written a book attacking his contemporaries. Al-Ghazali used the tools of logic and reason themselves to argue that only faith, not rationalism and science, can offer insight into the truths of the world. Starr believes that it was thinkers like al-Ghazali who enabled Central Asia’s transition from center of global science to fundamentalist backwater.

If Starr’s explanation for Central Asia’s decline -- which was also the Islamic world’s decline -- is true, it’s a cautionary tale for modern America. Rationalism and science have come under attack here as well...
Don't Let the Dark Ages Happen Here (Bloomberg) It is commonly assumed that reason and empirical science are now permanent features of all human societies. But history shows that this is ephemeral as well. Is it possible they will be lost as we enter an age of Endarkenment? Related: How our botched understanding of 'science' ruins everything (The Week)
Science is the process through which we derive reliable predictive rules through controlled experimentation. That's the science that gives us airplanes and flu vaccines and the Internet. But what almost everyone means when he or she says "science" is something different. To most people, capital-S Science is the pursuit of capital-T Truth. It is a thing engaged in by people wearing lab coats and/or doing fancy math that nobody else understands. The reason capital-S Science gives us airplanes and flu vaccines is not because it is an incremental engineering process but because scientists are really smart people. In other words — and this is the key thing — when people say "science", what they really mean is magic or truth.
The first proto-scientist was the Greek intellectual Aristotle, who wrote many manuals of his observations of the natural world and who also was the first person to propose a systematic epistemology, i.e., a philosophy of what science is and how people should go about it. Aristotle's definition of science became famous in its Latin translation as: rerum cognoscere causas, or, "knowledge of the ultimate causes of things." For this, you can often see in manuals Aristotle described as the Father of Science. 
The problem with that is that it's absolutely not true. Aristotelian "science" was a major setback for all of human civilization. For Aristotle, science started with empirical investigation and then used theoretical speculation to decide what things are caused by.
What we now know as the "scientific revolution" was a repudiation of Aristotle: science, not as knowledge of the ultimate causes of things but as the production of reliable predictive rules through controlled experimentation. 
Galileo disproved Aristotle's "demonstration" that heavier objects should fall faster than light ones by creating a subtle controlled experiment (contrary to legend, he did not simply drop two objects from the Tower of Pisa). What was so important about this Galileo Moment was not that Galileo was right and Aristotle wrong; what was so important was how Galileo proved Aristotle wrong: through experiment. 
This method of doing science was then formalized by one of the greatest thinkers in history, Francis Bacon. What distinguishes modern science from other forms of knowledge such as philosophy is that it explicitly forsakes abstract reasoning about the ultimate causes of things and instead tests empirical theories through controlled investigation. Science is not the pursuit of capital-T Truth. It's a form of engineering — of trial by error. Scientific knowledge is not "true" knowledge, since it is knowledge about only specific empirical propositions — which is always, at least in theory, subject to further disproof by further experiment. Many people are surprised to hear this, but the founder of modern science says it. Bacon, who had a career in politics and was an experienced manager, actually wrote that scientists would have to be misled into thinking science is a pursuit of the truth, so that they will be dedicated to their work, even though it is not. 
If you ask most people what science is, they will give you an answer that looks a lot like Aristotelian "science" — i.e., the exact opposite of what modern science actually is. Capital-S Science is the pursuit of capital-T Truth. And science is something that cannot possibly be understood by mere mortals. It delivers wonders. It has high priests. It has an ideology that must be obeyed. 
This leads us astray. Since most people think math and lab coats equal science, people call economics a science, even though almost nothing in economics is actually derived from controlled experiments. Then people get angry at economists when they don't predict impending financial crises, as if having tenure at a university endowed you with magical powers. Countless academic disciplines have been wrecked by professors' urges to look "more scientific" by, like a cargo cult, adopting the externals of Baconian science (math, impenetrable jargon, peer-reviewed journals) without the substance and hoping it will produce better knowledge. 
Because people don't understand that science is built on experimentation, they don't understand that studies in fields like psychology almost never prove anything, since only replicated experiment proves something and, humans being a very diverse lot, it is very hard to replicate any psychological experiment. This is how you get articles with headlines saying "Study Proves X" one day and "Study Proves the Opposite of X" the next day, each illustrated with stock photography of someone in a lab coat. That gets a lot of people to think that "science" isn't all that it's cracked up to be, since so many studies seem to contradict each other. 
This is how you get people asserting that "science" commands this or that public policy decision, even though with very few exceptions, almost none of the policy options we as a polity have have been tested through experiment (or can be)....

Sunday, September 21, 2014

No Growth - How Japan Does It

An old one from the 'drafts' folder, but it seemed appropriate given the past few posts.
[E]veryone and their cat cares about the environment these days, but such concern seems irreconcilable with the ‘infinite growth’ assumptions of most economists. It has long been pointed out by environmentalists, concerned citizens and the sane how, if we are to prevent global warming from melting the planet, we have to put some sort of a ceiling on economic growth and industrial development. This is a truly pressing concern – yet it appears that economists and policymakers simply cannot integrate it into their worldview.

But here’s an uplifting thought: what if History is doing our work for us? What if we are already entering a sort of ‘post-growth’ world?

A few days ago Professor Bill Mitchell – a man who I predict will turn out to be one of the most important economists of his generation – ran a piece on his blog entitled ‘When a nation stops growing’. The piece deals with the sluggish growth of the Japanese economy over the past two decades.

While most economists have been cooking up madcap schemes to reignite growth without end, Professor Mitchell took a far more interesting tack. Instead of concocting fantasies of what the world should be like, he took a glance at reality and asked a very important question: what if the Japanese economy has entered a stage of ‘post-growth’?

In his post Professor Mitchell points out that although the Japanese economy has been growing at a very sluggish rate, employment has been plentiful, incomes have been kept secure and prices have been reasonably stable. I’d also point to the fact that the manufacturing sector continues to be as dynamic as ever – Japan still produces extremely high-quality, up-to-date cars and electronics.

The key to this, Mitchell claims, is simple: public spending. Public spending has maintained Japanese living standards – and without smothering the economy in a web of bureaucratic stasis. 
Philip Pilkington: Beyond growth – are we entering a new phase of economic maturity? (Naked Capitalism)
Skeptics asked how a country with a national debt that was over 200% of gross domestic product (GDP) could be "strong and wealthy". In a Central Intelligence Agency Factbook list of debt to GDP ratios of 132 countries in 2010, Japan was at the top of the list at 226%, passing even Zimbabwe, ringing in at 149%. Greece and Iceland were fifth and sixth, at 144% and 124%. Yet Japan's credit rating was still AA, while Greece and Iceland were in the BBB category. How has Japan managed to retain not only its credit rating but its status as the second- or third-largest economy in the world, while carrying that whopping debt load?

The answer may be that the Japanese government has a captive funding source: it owns the world's largest depository bank. As US vice president Dick Cheney said, "Deficits don't matter." They don't matter, at least, when you own the bank that is your principal creditor. Japan has remained impervious to the speculative attacks that have crippled countries such as Greece and Iceland because it has not fallen into the trap of dependency on foreign financing.

Japan Post Bank is now the largest holder of personal savings in the world, making it the world's largest credit engine. Most money today originates as bank loans, and deposits are the magic pool from which this credit-money is generated. Japan Post is not only the world's largest depository bank but its largest publicly owned bank. By 2007, it was also the largest employer in Japan, and the holder of one-fifth of the national debt in the form of government bonds.

Before the 1990s, Japan was the world's leading industrial and consumer goods innovator. The Japanese public-private model promised a high standard of living and leisure time for all, with much of the work done by robot-driven machines.

But Japan was also the world's largest creditor, posing a threat to other international interests. The Bank for International Settlement (BIS), the "central bankers' central bank" in Basel, Switzerland, demonstrated in 1988 that it had the power to make or break banks and economies when it issued a Basel Accord, raising bank capital requirements from 6% to 8%. Japan's banks were less well capitalized than other banks, and raising the capital requirement forced them to cut back on lending.

Housing in Japan was in a major bubble. The Basel Accord supplied the pin. When credit collapsed, so did the housing market, creating a recession in Japan like that in the US today. Property prices fell and loans went into default, as the security for them shriveled up. A downward spiral followed, ending with the total bankruptcy of the banks. The banking system had to be rescued by the government. Essentially, the banks were nationalized, although that word was avoided to prevent arousing criticism.

The Nikkei stock market crashed and took Japanese industries down with it. By 2001, Western investors were finally able to penetrate Japanese markets that had previously been closed to them, entering the merger-and-acquisition market to acquire crippled Japanese enterprises. Major public companies were at least partially privatized, including the railway, telegraph and telephone companies; but the government resisted letting go of its vital postal service system. 
Japan Post's stalled sale a saving grace (Ellen Brown, Asia Times)

Saturday Night Music

I'm guessing Saor Patrol voted "yes."

Saturday, September 20, 2014

Will a Shrinking Economy Lead to Chaos?

A few years back there was a book published called The Moral Consequences of Economic Growth. You can read a review of that book here. The thesis broadly stated, was that growing economies produce more inclusive social institutions, tolerance for minorities, expansion of democratic rights, lower crime rates, social mobility and justice. In contrast, shrinking economies produce situations where people are angry and fearful and full of distrust. People turn to reactionary politics and look for scapegoats to blame for their reduced circumstances. Social dysfunction occurs as people fight each other over a shrinking economic pie. The undercurrent is that growth has led to better societies in history and is in fact a necessary prerequisite for stable societies and social inclusion.

This idea is commonly accepted in many quarters. The classic case is the Great Depression, where many European countries turned to authoritarian regimes and engaged in scapegoating, of which the Holocaust is the most tragic example. But periods of economic pain have been associated with state failure in many cases before and since.

This has been weighing on a lot of people’s minds of late. We’ve seen over five years of stagnant economies across much of the world with no end in sight (as some of us predicted), and recently the political situation has seemed to be deteriorating rapidly. The fact that this comes in  2014, the 100th anniversary of the First World War, is especially ironic.

There’s the rise of anti-immigrant parties in Europe, along with actual crypto-fascist parties in places like Hungary, where the leader has openly disparaged liberal democracy. In Germany, the chancellor is expressing concern about a rising tide of anti-Semitism amid vandalism of Jewish monuments. The Middle East has seen the march of the Islamic State in the wrecked countries of Syria and Iraq, a movement that seeks to bring about a caliphate united under fundamentalist Sharia law. Russia has annexed territory in the Ukraine under Putin, a move not seen since before the Second World War causing fears of a new East/West split. A majority of people in China expect to go to war with Japan. Violent insurgencies continue to roil East Africa. In the United States, the “home of democracy,” police in Missouri shake down poor communities for cash and show up in body armor and APC’s and deploy tear gas when protests break out over the killing of an unarmed teenager. Secession movements are popping up all over due to disgust over political governance and a sense of powerlessness over out-of-control elites. And that’s before we even get to natural phenomena like California’s historic drought, rising sea levels, antibiotic resistant bacteria and the frightening spread of Ebola.

If you, like me, believe that the long era of expansion is over and that we face a shrinking of the economy thanks to the limits to growth, this is especially concerning. This topic is dealt with in this recent article by 2013 Bank of Sweden (Nobel) prize winner Robert Shiller for Project Syndicate:
The current world situation is not nearly so dire, but there are parallels, particularly to 1937. Now, as then, people have been disappointed for a long time, and many are despairing. They are becoming more fearful for their long-term economic future. And such fears can have severe consequences. There is a name for the despair that has been driving discontent – and not only in Russia and Ukraine – since the financial crisis. That name is the “new normal,” referring to long-term diminished prospects for economic growth, a term popularized by Bill Gross, a founder of bond giant PIMCO.
The despair felt after 1937 led to the emergence of similar new terms then, too. “Secular stagnation,” referring to long-term economic malaise, is one example. The word secular comes from the Latin saeculum, meaning a generation or a century. The word stagnation suggests a swamp, implying a breeding ground for virulent dangers. In the late 1930s, people were also worrying about discontent in Europe, which had already powered the rise of Adolph Hitler and Benito Mussolini. 
The other term that suddenly became prominent around 1937 was “underconsumptionism” – the theory that fearful people may want to save too much for difficult times ahead. Moreover, the amount of saving that people desire exceeds the available investment opportunities. As a result, the desire to save will not add to aggregate saving to start new businesses, construct and sell new buildings, and so forth. 
Though investors may bid up prices of existing capital assets, their attempts to save only slow down the economy. “Secular stagnation” and “underconsumptionism” are terms that betray an underlying pessimism, which, by discouraging spending, not only reinforces a weak economy, but also generates anger, intolerance, and a potential for violence. 
In his magnum opus The Moral Consequences of Economic Growth, Benjamin M. Friedman showed many examples of declining economic growth giving rise – with variable and sometimes long lags – to intolerance, aggressive nationalism, and war. He concluded that, “The value of a rising standard of living lies not just in the concrete improvements it brings to how individuals live but in how it shapes the social, political, and ultimately the moral character of a people.” 
Some will doubt the importance of economic growth. Maybe, many say, we are too ambitious and ought to enjoy a higher quality of life with more leisure. Maybe they are right. But the real issue is self-esteem and the social-comparison processes that psychologist Leon Festinger observed as a universal human trait. Though many will deny it, we are always comparing ourselves with others, and hoping to climb the social ladder. People will never be happy with newfound opportunities for leisure if it seems to signal their failure relative to others.  
The hope that economic growth promotes peace and tolerance is based on people’s tendency to compare themselves not just to others in the present, but also to what they remember of people – including themselves – in the past. According to Friedman, “Obviously nothing can enable the majority of the population to be better off than everyone else. But not only is it possible for most people to be better off than they used to be, that is precisely what economic growth means.”
Parallels to 1937 (Project Syndicate)

Schiller’s article is discussed in this important post from Yves Smith of Naked Capitalism, Are Advanced Economies Mature Enough to Handle No Growth? It asks some very important questions about the ramifications and potential outcomes of a no-growth economy:
Economists occasionally point out that societies generally move to the right during periods of sustained low growth and economic stress. Yet left-leaning advocates of low or even no growth policies rarely acknowledge the conflict between their antipathy towards growth and the sort of social values they like to see prevail. While some “the end of growth is nigh” types are simply expressing doubt that 20th century rates of increase can be attained in an era of resource scarcity, others see a low-growth future as attractive, even virtuous, with smaller, more autonomous, more cohesive communities. Perhaps they should be careful what they wish for....

From what I can tell, the proponents of a no-growth future have sorely neglected the doctrinal side of their program. If they are right about where we are headed, they need to heed Shiller’s warning. The inertial path is that reactionaries take charge.
The article makes some important points. We are much less self-sufficient than we used to be under the old agricultural economy, with ownership much more concentrated. Now we have an economy where people are dependent upon the labor market for jobs, but the labor market cannot provide enough jobs for everyone. And market fundamentalism holds that everything must be paid for individually in the market out of your own pocket rather than public goods made available collectively to all even as incomes for the vast majority of people are shrinking dramatically. Things like income and life expectancy have actually started to reverse for most people outside the technocratic elite. I'm sure the comments to the article are well worth reading in full.

This article from FireDogLake, Letting the Rich Keep All the Money, makes reference to both of the above posts, and adds:
Shiller talks about Ukraine and Russia, but it works here as well, and may make even more sense. The middle class has been deteriorating for decades, and lately the deterioration is increasing, as the 2013 Survey of Consumer Finances makes clear. Stagnation and insecurity, and the rising cost of things that matter most, food, education and medical care, make people unhappy. Mental doors long closed by social opprobrium reopen, allowing the expression of racism, virulent sexism, and loathing for the poor.

We get a similar approach in the norm-based economics described by George Akerloff in his 2007 Presidential Address to the American Economic Association:

    "Studs Terkel’s Working (1972) captures in a single volume much of the ethnographic findings summarized by Hodson. Terkel interviews people from many different occupations about their feelings about their jobs and concludes that people “search for daily meaning as well as daily bread.” (1972, p. xi). Some of the interviewees are successful in this search: like the stone mason, who cruises his Indiana county and basks in pride as he not infrequently passes his past work. At the opposite extreme is an Illinois steelworker, whose work denies him the dignity he seeks. He takes out his frustration at work by being disrespectful, and, in after hours, by getting into tavern brawls. Most workers are somewhere between these extremes, but in all cases, following Terkel, they have a feeling for how they should behave at work. It’s not just about the money; it is also about living up to an ideal about who they think they should be."
 For further reading, let me suggest this 1985 essay by Alan Brinkley, Richard Hofstadter’s The Age of Reform: A Reconsideration, which examines populism and progressivism, looking at the reactionary content of the former, and Hofstadter’s suggestion that the progressive elites were motivated by a loss of status in the aggressively money-centered capitalism that emerged from the 19th Century.

Taking the two extremes Akerloff describes, the stonemason and the steel worker, it’s easy to see how the miserable state of labor in the US today might tilt many people towards the steelworker’s responses. We can see a huge rise in racism in the responses to Ferguson, where the killer cop raised thousands of dollars to enable him to stay in hiding, and the comments about his activities ranged from acceptance to praise. Liberals rapidly ran away from the overt racism that dominates the lives of African-Americans in St. Louis to a discussion of police militarization which might affect them if their protests moved off Twitter and into action, and the use of courts to fill up municipal coffers with traffic fines, which might affect any of us in our own communities.

The most obvious thing about Akerloff and Shiller is that neither discusses the role of raw economic and political power in the creation of the current morass, not just here but around the world. The interests of the rich have always dominated, but from time to time, their rapacity was tempered to some extent by the forces of democracy or in earlier times, by noblesse oblige. That has rotted away. The justifications for obscene wealth and capture of all of the profits from production have been stripped away as well. Who thinks Lloyd Blankfein is doing God’s Work? Who thinks the jackasses who run any business are doing anything beyond lining their own pockets at the expense of everyone else? Who thinks the toads in Congress care about the day to day interests of the regular people of this country? Who thinks the Supreme Court is anything but a bunch of political hacks bent on protecting the rich at the expense of everyone else? And worse, the status of liberal academics and intellectuals is falling, especially as measured by their pay. If Hofstadter is right, the setting is ripe for trouble.

Hard working decent people can’t make a living, can’t get ahead, don’t benefit from the labor and loss of time that go into work, have no sense of security in their jobs or in their health, and don’t see how their children will have better lives. They want to blame someone, and the social barriers that kept the collective id behind bars have dropped, leaving them free to blame those they’ve always blamed: the poor and sick, the immigrant, and the liberal intellectuals who reject their values and their beliefs. The airwaves are full of Fox News and worse encouraging these prejudices. If Hofstadter is wrong, and economic woes are the moving factor, the setting is ripe for trouble.
Finally, here are some related comments from an interview with KMO of the C-Realm podcast on the Agroinnovations podcast:
Frank Aragona (host): "One thing that I picked up on and you haven't really mentioned this in a while...a while back you were making the comment, and it was almost in passing in some cases that the people who are wealthy in this society, in the United States and elsewhere around the world, are perfectly happy for people like you and I to choose poverty because then we basically become marginalized figures. We don't really have any impact on policy or economics or land management, or anything of significance."

"And so this idea that you're going to drop out and have a Permaculture farm in the middle of nowhere, while it's a lifestyle that many people choose, and I don't think it's a bad choice, it also seems like there are some advantages to that lifestyle for people who are controlling the means of production."

KMO: "Absolutely. I mean if you give up your demand that you maintain the quality of life that your parents enjoyed during the height of the petroleum-fueled expansion, that makes it a lot easier on the people at the top of the pyramid. If you are very vocal in insisting that you do notice the fact that your circumstances are greatly diminished and that you're not happy about it and that you demand that the people in charge or the people with resources do something to correct the situation, and you make a pain of it, you become a pain for them. Well, they would much rather have you go and be a happy voluntary peasant someplace."

They discuss the prevalence of the "walk away from society" attitude in some areas of the Permaculture community and why Frank Aragona thinks it may be not the most constructive attitude to take. Frank asks KMO about the fragmented future we seem to be facing.

KMO: "...In the United States in particular, we have a very strong well-funded, well organized movement to make people stupid. To make them completely ignorant, to put them into a reality tunnel that is really really at odds with the available evidence but because it is tied to people's self-worth and their cultural identities and to some extent their racial identities, they're encouraged to believe it and they're strongly motivated to believe it. And it seems like the longer this goes on the harder it is to remedy, because you get just deeper and... particularly as people become more impoverished and more immiserated they're going to cling to comforting stories which seem to validate their lifestyles and their choices and their cultural traditions and in general it just seems..."

"Like, there's this notion, and this is something that I think you'll encounter in the sort of secessionist people [with a] secessionist mindset, the people who think, 'I'm just going to go start my Permaculture farm, I'm going to drop out of the system, I'm going to radically reduce my expectations in terms of my material standard of living.' There's also an accompanying notion that says, 'the worse things get materially for the bulk of the people, the better that is for those of us trying to prompt some sort of positive transformation.' Marxists sometimes think this. But also somebody who has no affinity whatsoever with Marxism, they just think, you know, we need to transition to renewable energy, we need to transition to sustainable agriculture, we need to transition to a more enlightened mode of just being in the world; they think that as long as the middle class is comfortable that they're never going to make any change. But once they become uncomfortable, once they become deprived, then there's an opportunity for people who are pushing a positive agenda to really get their message across and have more people take it up."

"So there's this idea that as the economy gets worse, as jobs become more scarce, that this is all really good, that this is driving some positive development. And it doesn't really work that way historically. Revolutions tend to come in time of rising expectations. And the labor movement was strongest when the economy was at its best and jobs were well-paying and there were plenty of them."

"So I think it's almost a truism, it's almost not worth saying, but the worse things get, the worse things get, I think. I see a lot of people mobilizing to make change, but as I say in a huge population, a population of 300 million people, a tiny fraction of them, a statistically insignificant faction of them, still is a lot of people and you can immerse yourself in that culture...there are a lot of examples that you can draw from a statistically insignificant fragment of the population."

Friday, September 19, 2014

Stand on ?

Looks like we're going to need a bigger island to stand on:
The world’s population is now odds-on to swell ever-higher for the rest of the century, posing grave challenges for food supplies, healthcare and social cohesion. A ground-breaking analysis released on Thursday shows there is a 70% chance that the number of people on the planet will rise continuously from 7bn today to 11bn in 2100.

The work overturns 20 years of consensus that global population, and the stresses it brings, will peak by 2050 at about 9bn people. “The previous projections said this problem was going to go away so it took the focus off the population issue,” said Prof Adrian Raftery, at the University of Washington, who led the international research team. “There is now a strong argument that population should return to the top of the international agenda. Population is the driver of just about everything else and rapid population growth can exacerbate all kinds of challenges.” Lack of healthcare, poverty, pollution and rising unrest and crime are all problems linked to booming populations, he said.
World population to hit 11bn in 2100 – with 70% chance of continuous rise (The Guardian) New study overturns 20 years of consensus on peak projection of 9bn and gradual decline

Thursday, September 18, 2014

Scots Wha Hae!

Regardless of whether Scotland ends up as an independent country or not, what's interesting is the extent to which this historic referendum is a big "screw you" to the dictates of Neoliberalism and the idea that the only means you have of self-determination is what the banks and markets dictate rather than the needs and wishes of your own people. Maybe that idea is finally starting to crack. If so, that's a good sign.It's also a "screw you" to the new elites who seem to be disdainful of popular democracy, even as they get richer every year while their constituents, the people they are supposedly supposed to represent, grow ever poorer.
Scotland’s push for independence is driven by a conviction — one not ungrounded in reality — that the British ruling class has blundered through the last couple of decades. The same discontent applies to varying degrees in the United States and, especially, the Eurozone. It is, in many ways, a defining feature of our time.

The rise of Catalan would-be secessionists in Spain, the rise of parties of the far right in European countries as diverse as Greece and Sweden, and the Tea Party in the United States are all rooted in a sense that, having been granted vast control over the levers of power, the political elite across the advanced world have made a mess of things.

The details of Scotland’s grievances are almost the diametrical opposite of those of, say, the Tea Party or Swedish right-wingers. They want more social welfare spending rather than less, and have a strongly pro-green, antinuclear environmental streak. (Scotland’s threatened secession is less the equivalent of Texas pulling out of the United States, in that sense, than of Massachusetts or Oregon doing the same.) But there are always people who have disagreements with the direction of policy in their nation; the whole point of a state is to have an apparatus that channels disparate preferences into one sound set of policy choices.

Power is not a right; it is a responsibility. The choice that the Scots are making on Thursday is about whether the men and women who rule Britain messed things up so badly that they would rather go it alone. And so the results will ripple through world capitals from Athens to Washington: People don’t think the way things are going is good enough, and voters are getting angry enough to want to do something about it.
Scotland’s Independence Vote Shows a Global Crisis of the Elites (NYT)
Neoliberalism, in Britain and elsewhere, has not just hived off collective resources into private hands; it has also hollowed out liberal democratic governments, placing large areas of political debate under the sole purview of dispassionate, spreadsheet-wielding technocrats, beholden only to the markets. The result is an ever-shrinking arena for the rest of us to thrash out ideas. Under this type of politics, most of the political landscape becomes ossified and uncontested. We can squabble over whether the government should implement temporary energy price freezes, but never ask why energy production shouldn’t be in public ownership altogether. We can ponder the finer details of banker bonuses, but never discuss why it is that a mammoth, rentier financial industry is allowed to gamble every day with the world’s economic future—pocketing all the profits when it wins and socializing all the risk when it loses. Amid an orgy of material choice, our political horizons have narrowed to near zero.

The message of the pro-union Better Together campaign—which started out with a seemingly insurmountable poll lead, before hemorrhaging support in recent months—has been grounded firmly within those narrow horizons, concentrating on fear of the unknown and the amorphous risk of structural change. While initiatives like Common Weal were going around asking Scots “if you could do anything, what would you do?” slogans on the other side have included “I love my family, I’m saying no thanks,” and, “If you don’t know, vote no.” It’s a narrative calculated to appeal to an electorate uncertain of their capacity to change the world around them, a population content to allow those wielding power under the existing political model to define the safe, limited routes to change within it. “Their whole campaign has been predicated on the idea that people are basically stupid and not interested in politics,” argues McAlpine. “The message is, ‘We know what's good for you, don't ask questions.’ ”
More Than Scottish Pride (Slate)
Perhaps the most arresting fact about the Scottish referendum is this: that there is no newspaper – local, regional or national, English or Scottish – that supports independence except the Sunday Herald. The Scots who will vote yes have been almost without representation in the media.
There is nothing unusual about this. Change in any direction, except further over the brink of market fundamentalism and planetary destruction, requires the defiance of almost the entire battery of salaried opinion. What distinguishes the independence campaign is that it has continued to prosper despite this assault.

In the coverage of the referendum we see most of the pathologies of the corporate media. Here, for instance, you will find the unfounded generalisations with which less enlightened souls are characterised. In the Spectator, Simon Heffer maintains that: “addicted to welfare … Scots embraced the something for nothing society”, objecting to the poll tax “because many of them felt that paying taxes ought to be the responsibility of someone else”.

Here is the condescension with which the dominant classes have always treated those they regard as inferior: their serfs, the poor, the Irish, Africans, anyone with whom they disagree. “What spoilt, selfish, childlike fools those Scots are … They simply don’t have a clue how lucky they are,” sneered Melanie Reid in the Times. Here is the chronic inability to distinguish between a cause and a person: the referendum is widely portrayed as a vote about Alex Salmond, who is then monstered beyond recognition (a Telegraph editorial compared him to Robert Mugabe).

Living within their tiny circle of light, most senior journalists seem unable to comprehend a desire for change. If they notice it at all, they perceive it as a mortal threat, comparable perhaps to Hitler. They know as little of the lives of the 64 million inhabiting the outer darkness as they do of the Andaman islanders. Yet, lecturing the poor from under the wisteria, they claim to speak for the nation.
How the media shafted the people of Scotland (The Guardian) P.S. My friend from work who is from the U.K. (Northern Ireland) is absolutely convinced that this entire referendum is all Mel Gibson's fault

Tuesday, September 16, 2014

Economic Growth is Slowing Down

I found this a few months ago, and I think a good compliment to last time where we saw that innovation is slowing down because the low hanging fruits have been harvested and technology, like everything else, has diminishing returns at the margin.

It basically describes how if you extrapolated the economic growth of the past into the future, you would be seeing growth rates very different than today. In fact, growth is slowing down.
Think back (if you can) to 1979. (I myself can barely do so.) Back then real GDP per capita was double what it had been 28 years before, in 1951. And in 1951 real GDP per capita was double what it had been 28 years before in 1923. Before then growth had been slower: the previous doubling had taken 16 extra years, and takes us back not to 28 years before in 1895 but 44 years before in 1879. And the doubling before that takes us back 49 years to 1830. And my guess is that British settlement in America saw perhaps one more doubling between 1750 and 1830 or so, before which living standards were likely to have been constant. The overall picture is one of accelerating geometric growth since the beginnings of the Industrial Revolution: doubling times of 80 years, then 49, then 44, then 28, and then 28. A techno-realist would have expected a further doubling to $57,388 in 28 years–from 1979 to 2007–as 28-year doubling appeared to be a feature of the modern mass-production research-and-development-based American economy. And a techno-optimist might have speculated that ever-shorter doubling times were a feature of ever higher-tech economies.

They would have been disappointed. 2007 saw American real GDP per capita not at $57,388 but $49,310.6–a 16% gap relative to reasonable expectations as of 1979. And, of course, after 2007 things really went into the toilet: Projecting growth forward from 1923, 1951, and 1979 to 2014 would have led us to expect a 2009-dollar real GDP level right now of $68,246.2. We are going to have $50,295.0–a 35.7% gap.

As of now, the missing growth since 1979–the missing growth, taking no account of distribution, taking an-extra-dollar-for-billionaires-is-as-good-as-an-extra-dollar-for-everybody-else–amounts to more than one-third of the level of our current prosperity. And when we compare the $28,694 real GDP per capita level of 1979 with the $50,295 we have today and the $68,246.2 that is the extrapolated 1923-1951-1979 trend–well, we have had barely as much as half the economic growth since 1979 that back in 1979 we expected.
The Post-1979 Shortfall in American Economic Growth (WCEG)Why 1979? Well, for one thing that was when we had peak per capita oil. Then again correlation does not equal causation...

Sunday, September 14, 2014

Innovation Is Slowing Down

It's not often when a billionaire libertarian sociopath does my homework for me, but such is the case with Peter Thiel, who has a standard rap about how progress has slowed down in the late twentieth century. His presentation is so good and well-researched, it makes a lot of my points for me. Broken clocks and all, I guess. Take it away, Petey! (all emphasis mine):
"Look at the Forbes list of the 92 people who are worth ten billion dollars or more in 2012. Where do they make money? 11 of them made it in technology, and all 11 were in computers. You’ve heard of all of them: It’s Bill Gates, it’s Larry Ellison, Jeff Bezos, Mark Zuckerberg, on and on. There are 25 people who made it in mining natural resources. You probably haven’t heard their names. And these are basically cases of technological failure, because commodities are inelastic goods, and farmers make a fortune when there’s a famine. People will pay way more for food if there’s not enough. 25 people in the last 40 years made their fortunes because of the lack of innovation; 11 people made them because of innovation."
Yes, consistent with Neofeudalism, money is made by ownership of the the things we all need rather than making things better for everyone. Note that this is as much of an indictment of the capitalist economic order as it is of a lack of inventiveness. After all, none of these people actually put those natural resources in the ground, did they?
"Real oil prices today exceed those of the Carter catastrophe of 1979–80. Nixon’s 1974 call for full energy independence by 1980 has given way to Obama’s 2011 call for one-third oil independence by 2020. “Clean tech” has become a euphemism for “energy too expensive to afford,” and in Silicon Valley it has also become an increasingly toxic term for near-certain ways to lose money."
Is Thiel aware of Peak Oil? Does he care? Does he realize this also undermines the eternal-growth paradigm implicit in the economic doctrines he worships? One wonders. Also, note the swipe at Carter, who took Peak Oil seriously. Unfortunately, the 1980's Oil Glut had the unfortunate side of effect of (incorrectly) providing a a justification for Reagonomics, even though it has been subsequently failing for decades. Fracking has failed to have the same effect outside of a few boom (and soon to be bust) towns. And also note that the "Carter catastrophe" was really caused by the Arab Oil Embargo, which ultimately derived from political chaos in the Middle East. But after all, it's not like the Middle East is politically chaotic nowadays, right? Right?
"One of the smartest investors in the world is considered to be Warren Buffett. His single biggest investment is in the railroad industry, which I think is a bet against technological progress, both in transportation and energy. Most of what gets transported on railroads is coal, and Buffett is essentially betting that after the 21st century, we’ll look more like the 19th rather than the 20th century. We’ll go back to rail, and back to coal; we’re going to run out of oil, and clean-tech is going to fail."
So the "Sage of Omaha" is betting against technological progress, eh? He's even smarter than I thought. Perhaps he read Profit From the Peak. Maybe he's been listening to Chris Martenson or Jeremy Grantham or Robert Gordon. Maybe Thiel should try doing that sometime. Maybe then Thiel will stop thinking "innovation" is a substitute for real resources like fossil fuels, arable land, fresh water, ores and minerals.
"There was a famous bet in the between Julian Simon, an economist, and Paul Ehrlich in 1980 about whether a basket of commodity prices will go down in price over the next decade. Simon famously won this bet and this was sort of taken as evidence that we have tremendous technological progress and things are steadily getting better. But if you had to re-run the Simon-Ehrlich bet on a rolling decade basis then Paul Ehrlich has been winning the bet every year since 1994 when the price of this basket of goods has been getting more expensive on a decade-by-decade basis."
This is an excellent admission, since the Simon-Erlich wager is usually trotted out by Cornicopians to justify the "innovation/technology will save us" rap. Thiel correctly points out that in the longer run Erlich (who wrote The Population bomb) was basically right. And what's Erlich saying today? Hmmmm...
"Consider the most literal instance of non-acceleration: We are no longer moving faster. The centuries-long acceleration of travel speeds — from ever-faster sailing ships in the 16th through 18th centuries, to the advent of ever-faster railroads in the 19th century, and ever-faster cars and airplanes in the 20th century — reversed with the decommissioning of the Concorde in 2003, to say nothing of the nightmarish delays caused by strikingly low-tech post-9/11 airport-security systems."
This would be a good time to point out that trains run slower today than they did the 1920s. Oh, and by the way, the world's largest cargo ships are travelling at lower speeds today than sailing clippers such as the Cutty Sark did more than 130 years ago (although this guy disagrees). Not only that, just one of these massive tanker ships gives off as much pollution as fifty million automobiles. In fact, sixteen cargo ships emit as much pollution as all of the world's automobiles. So it's even worse than Thiel talks about, since that pollution is not accounted for in the economic calculus, but the results from increased asthma rates to climate change are paid for by all of us.

As he points out, the space shuttle has been mothballed as has the Concorde. Economics is a bitch. The fastest humans have ever moved was the Apollo spaceflights of the 1970's. Manned missions to Mars and warp drives remain pipe dreams.
The record for the greatest distance from Earth has stood for more than four decades. In April 1970, the crew of NASA's Apollo 13 mission swung around the far side of the moon at an altitude of 158 miles (254 km), putting them 248,655 miles (400,171 km) away from Earth. It's the farthest our species has ever been from our home planet.

The crew of NASA's Apollo 10 moon mission reached a top speed of 24,791 mph (39,897 kph) relative to Earth as they rocketed back to our planet on May 26, 1969. That's the fastest any human beings have ever traveled.
The Most Extreme Human Spaceflight Records (Space.com)

And even automobile miles per gallon is slowing down:
In the end, it looks like the "peak mileage" of the late 1990s is the real one. In the future, the a combination of factors which led to the peak will never return. Oil depletion is destined to make oil less and less affordable, even though market oscillations may hide this phenomenon. Wages are unlikely to grow in real terms after having been static for the past 40 years. And technological miracles are unlikely. Even the Toyota Prius, technological marvel of our times, can only bring us back to where we were 15 years ago in terms of mileage per hour worked. As long as we remain within the paradigm of "road vehicle powered by a combustion engine" we have reached the limit of what we can do.
Peak mileage and the diminishing returns of technology (Resource Crisis)
"The cruder measure of U.S. life expectancy continues to rise, but with some deceleration, from 67.1 years for men in 1970 to 71.8 years in 1990 to 75.6 years in 2010. We have one-third of the patents approved by the FDA as we have 20 years ago."
It's worse than that Pete (may I call you Pete?). We are actually running out of antibiotics, due to their abuse by private industry. It's so bad we're trolling the bottom of the ocean to find new ones. And drug companies don't like to develop antibiotics because they do not treat chronic conditions. You take antibiotics and they actually, well, cure you (although we are increasingly finding that they are having negative effects on our health), whereas drugs that treat chronic conditions like heart disease have to be taken for the rest of your life, which means more profit. And that tidbit about less patents is precious, since the economic calculus has drug companies investing in "me-too" drugs. Oh, and let's not mention how much government (which you hate, Pete) has footed the bill for biomedical innovations, yet reaped none of the profits that taxpayers paid for. No, instead taxpayers are mercilessly gouged thanks to patents for drugs - Americans pay hundreds of dollars for the pills that are keeping them alive.
[T]he respected Northwestern economist Robert Gordon reiterated the conventional view in a talk at the New School, saying that he was “extremely skeptical of government” as a source of innovation. “This is the role of individual entrepreneurs. Government had nothing to do with Bill Gates, Steve Jobs, Zuckerberg.”...Fortunately, a new book, The Entrepreneurial State, by the Sussex University economist Mariana Mazzucato, forcefully documents just how wrong these assertions are...Gordon called the National Institutes of Health a useful government “backstop” to the apparently far more important work done by pharmaceutical companies. But Mazzucato cites research to show that the NIH was responsible for some 75 percent of the major original breakthroughs known as new molecular entities between 1993 and 2004.
Innovation: The Government Was Crucial After All (NY Review of Books)

I've made this point before. The smallpox vaccine was made using eighteenth-century technology and reduced infant mortality dramatically. The discovery of the link between clean water and illness thanks to John Snow and the Broad Street Pump was another leap forward (and opposed by conservative business interests).

Today we spend six figures and deploy space-age technology to keep eighty-year-olds alive a few more months. Diminishing returns indeed. We also deploy millions of dollars and high technology to keep extremely unhealthy infants alive, ensuring that human health will only get worse in the future

Oh, and those life expectancy figures are only valid if we lump ordinary people like us in with billionaire oligarchs like you, Pete. In fact, for the poorest Americans, life expectancies are in decline. That is, our lifespans are getting shorter unless we're in the upper class making six or seven figures (which does not include most of us). So we're even less enamored with progress than you are. Let's move on.
"The reason that all the rocket scientists went to Wall Street was not only because they got paid more on Wall Street, but also because they were not allowed to build rockets and supersonic planes and so on down the line. Space has always been the iconic vision of the future. But a lot has gone wrong over the past couple of decades. Costs escalated rapidly. The Space Shuttle program was oddly Pareto inferior. It cost more, did less, and was more dangerous than a Saturn V rocket. It’s recent decommissioning felt like a close of a frontier."
Yes, the lack of space travel is a major retort to where we were supposed to be, as John Michael Greer has pointed out numerous times. Note that space travel was traditionally paid for by governments, the same governments who are cutting back social benefits and drowning in debt for bailing out investors like Mr. Thiel. Maybe that has an effect? Haven't people like Thiel and their ideological allies called for drowning the government in a bathtub?

Instead we get private "space tourism" from  billionaire oligarchs like Richard Branson (serving other billionaire oligarchs in an economic circle-jerk that the rest of us don't get to participate in). Branson's scheme is perennially years away as this post points out, and his schemes, while ostensibly "private" are of course dependent upon generous tax breaks and subsidies from our supposedly "broke" governments. Neoliberalism and space travel seem to be at odds with each other.
"The fading of the true Green Revolution — which increased grain yields by 126 percent from 1950 to 1980, but has improved them by only 47 percent in the years since, barely keeping pace with global population growth — has encouraged another, more highly publicized “green revolution” of a more political and less certain character. We may embellish the 2011 Arab Spring as the hopeful by-product of the information age, but we should not downplay the primary role of runaway food prices and of the many desperate people who became more hungry than scared."
Bravo, Mr. Thiel for pointing this out. The diminishing returns to the Green Revolution have been pointed out on this blog numerous times. Of course, you can only increase yields so far, and when you do, you face unintended consequences such as increased drawdown of aquifers, pollution dead zones and superweeds. Normal Borlaug himself warned against seeing his work as a magic "solution" that did more than buy time. Incidentally, at least part of that food price increase has been exacerbated by financial "innovation":
...[A]fter 1999 and 2000, when sections of the Glass-Steagall Act were repealed and President Bill Clinton signed the Commodity Futures Modernization Act into law, investment banks and other financial actors began to bet on commodities as speculation, not as insurance. “Where we used to see something like 12% of the market made up of financial players, since deregulation, this number has now jumped to over 60%,” says Heidi Chow of the World Development Movement, a U.K.-based campaigning organization.

The statistics are impressive: the German NGO Foodwatch points out that investment in food commodities has jumped from $65 billion to $126 billion in the past five years. Perhaps a more revealing statistic is that speculative investment in these commodities in 2011 amounted to 20 times more than the total spent on agricultural aid by all countries combined.
Betting on Hunger: Is Financial Speculation to Blame for High Food Prices? (Time)

Instead, we need to "innovate" by deploying sustainable, agricultural farming techniques. Too bad the people actually doing this are barely staying afloat or only selling to wealthy patrons thanks to the "bigger is better" models of innovation promoted by people like Thiel. Farms with a million cows pumped full of whatever antibiotics are left and milked by robots are the model for the future promoted by the progress cultists, along with insect ranching and meat grown in vats. Progress!
"Think about what happens when someone in Silicon Valley builds a successful company and sells it. What do the founders do with that money? Under indefinite optimism, it unfolds like this":
  •     Founder doesn’t know what to do with the money. Gives it to large bank.
  •     Bank doesn’t know what to do with the money. Gives it to portfolio of institutional investors in order to diversify.
  •     Institutional investors don’t know what to do with money. Give it to portfolio of stocks in order to diversify.
"Companies are told that they are evaluated on whether they generate money. So they try to generate free cash flows. If and when they do, the money goes back to investor on the top. And so on. What’s odd about this dynamic is that, at all stages, no one ever knows what to do with the money."

"10-year bonds are yielding about 2%. The expected inflation over the next decade is 2.6%. So if you invest in bonds then in real terms you’re expecting to lose 0.6% a year for a decade. This shouldn’t be surprising, because there’s no one in the system who has any idea what to do with the money."
This is in may ways the most amusing part of the speech, since finance was thought to be the one place where "innovation" was rampant in the first decade of the twenty-first century. Of course, this pretty much impoverished everyone besides oligarchs like Mr. Thiel. And acknowledging that no one knows what to do with the money is interesting since we're constantly told that burdensome taxes are all that stands between us and prosperity. Corporations are constantly militating for lower (or even zero) taxes, and we are told to give the rich ever more money in the hopes that prosperity will trickle down to the rest of us (well, something is trickling down all over us...)

In fact, all that money goes into bubbles, which are constantly inflating and popping. It also goes to expenditure cascades meaning that the prices of things like cars and houses are so high that people can no longer afford them (since everyone is trying to maximize their profits by selling to a tiny sliver of insanely rich people)

Here's an idea for what to do with the money - rebuild our crumbling infrastructure and provide jobs for the unemployed. All this money is sloshing around the world and parked in tax havens even as we're told we can't afford Social Security.
"We have 100 times as many scientists as we did in 1920. If there’s less rapid progress now than in 1920 then the productivity per scientist is perhaps less than 1% of what it was in 1920."

"The Empire State Building was built in 15 months in 1932. It’s taken 12 years and counting to rebuild the World Trade Center."

"The Golden Gate Bridge was built in three-and-a-half years in the 1930s. It’s taken seven years to build an access road that costs more than the original bridge in real dollars."

"When people say that we need more engineers in the U.S., you have to start by acknowledging the fact that almost everybody who went into engineering did very badly in the last few decades with the exception of computer engineers. When I went to Stanford in the 1980s, it was a very bad idea for people to enter into mechanical engineering, chemical engineering, bioengineering, to say nothing of nuclear engineering, petroleum engineering, civil engineering, and aero/astro engineering."
Gee, maybe the low-hanging fruit has been harvested. Ya think? Notice how some of the largest symbols of innovation in America - the Hoover Dam and the Golden Gate Bridge (and the Tennessee Valley Authority and the Great Plains Shelterbelt and ...) were built during the Great Depression under the so-called "socialist" president Franklin Roosevelt, the most leftist administration we've ever had in this country to date. The moon shot was initiated under Democrat John Kennedy (back when the highest tax bracket was 50 percent).

Compare that to today when all government spending is bad. Remember how Tea Party governors killed high-speed rail, the stuff that every other developed country in the world has and that China just built to be the fastest in the world? Remember how a Republican governor and presidential candidate favorite killed an infrastructure project in order to extract political revenge? Corruption plays a role here, too. And besides, we can't even afford to maintain the infrastructure we have now, much less build new.
While Democrats and Republicans traded charges yesterday over Gov. Chris Christie's decision to cancel the Access to the Region's Core (ARC) rail tunnel that would have been the nation's largest public works project, the bottom line is clear: No new rail tunnel will be built under the Hudson River for at least a decade, and the new tunnel will end up costing a lot more money when it is finally built.

A report issued by the nonpartisan U.S. General Accounting Office yesterday revived the debate over whether Christie cancelled the ARC project because he was worried that New Jersey would have cover [sic] billions of dollars in potential cost overruns or because he could avoid raising the gas tax by using billions of dollars originally earmarked for the tunnel to refinance the state's Transportation Trust Fund, as he did three months later.

"This was the most important transportation project of our time," said U.S. Senator Frank Lautenberg (D-N.J.), who requested the GAO study. "New Jerseyans who commute into New York City already face near daily struggles with an overburdened rail system and jammed highways, bridges, and tunnels. We are at capacity, and our only hope for relief in this decade was ARC. Construction had already started and thousands of workers were about to be hired when the governor killed the project. The future of New Jersey's commuters was sacrificed for the short-term political needs of the governor."

Christie, whose refusal of $3 billion in federal funds for the ARC Tunnel helped make him a national Republican folk hero, spurred GOP gubernatorial candidates to promise to turn down federal money for rail projects in California, Florida, Ohio and Wisconsin. He was still taking political credit for the decision in a speech to the George W. Bush Institute in New York City yesterday.
Tunnel to Nowhere: New Rail Tunnel At Least a Decade Away (NJSpotlight)

Oh, and by the way, about that scientist statistic, see When Scientists Give Up (NPR)
Ian Glomski thought he was going to make a difference in the fight to protect people from deadly anthrax germs. He had done everything right — attended one top university, landed an assistant professorship at another. But Glomski ran head-on into an unpleasant reality: These days, the scramble for money to conduct research has become stultifying.

So, he's giving up on science.

And he's not alone. Federal funding for biomedical research has declined by more than 20 percent in the past decade. There are far more scientists competing for grants than there is money to support them. That crunch is forcing some people out of science altogether, either because they can't get research funding at all or, in Glomski's case, because the rat race has simply become too unpleasant.

Instead of helping society improve its defenses against deadly anthrax, he's starting a liquor distillery, Vitae Spirits. He's actually excited about that. It's a big challenge, and it allows him to pursue an idea with passion, rather than with resignation.

Meanwhile, Randen Patterson is not passionate about his post-science career as a grocery store proprietor...
And what of the lone bright spot of all of this stagnation, computers?
"Even if you look at the computer industry, there are some things that aren’t as healthy as you might think. On a number of measurements, you saw a deceleration in the last decade in the industry. If you look at labor employment: It went up 100% in the 1990s, and up 17% in the years since 2000. (If you ignore the recession, it’s gone up about 38% since 2003.) So it’s slower absolute growth, and much lower percentage growth."

"If you measured the market capitalizations of companies, Google and Amazon (the two big computer companies created in the late-nineties) are worth perhaps two or three times as all companies combined since the year 2000. If you look at it through labor or capital, there’s been some sort of strange deceleration."

"We have a large Computer Rust Belt that nobody likes to talk about. It’s companies like Cisco, Dell, Hewlett Packard, Oracle, and IBM. I think that the pattern will be to become commodities that no longer innovate. There are many companies that are on the cusp. Microsoft is probably close to the Computer Rust Belt. The company that’s shockingly and probably in the Computer Rust Belt is Apple. Is the iPhone 5, where you move the phone jack from the top of the phone to the bottom of the phone really something that should make us scream Hallelujah?"
This article is a good confirmation - Silicon Valley Has Officially Run Out Of Ideas. Apparently the most "disruptive" idea at this event was a bunch of Harvard Business School Grads with a business proposal to hire the rest of us technologically unemployed as butlers and servants for 99 bucks a month (dubbed "Alfred"). I swear I am not making this up. This is especially interesting since fancy widgets in phones has been used as the main counterpoint to declining living standards for the last forty years or so.

Notice how  the technological slowdown almost perfectly coincides with the rise of Neoliberalism and the subsequent decay of common social institutions, the gutting of the middle class, the bankrupting of governments, the financialization of the economy, and the rise of the corporate oligarchy.

Now, of course, Thiel (who has a new book coming out, of course) no doubt means to argue that all we need to do is get rid of burdens like government regulations and popular democracy (which he is openly hostile to), to unleash the god of innovation and all our problems will be solved.

But the alternative view - that there are diminishing marginal returns to technology and real resource limitations means that we need to seriously think about social arrangements and the fundamental underpinnings of our debt-based, highly unequal, eternal growth productivist economy. And that is something that powerful oligarchs like Thiel will do anything to make sure we don't think about, since if we do, people like Thiel and his ilk might find themselves bemoaning the lack of progress even as they are escorted onto the solar electric powered tumbrels.

Why Is Peter Thiel Pessimistic About Technological Innovation? (Dan Wang)