Krug’s feet of clay…

More on the theme of Paul Krugman going off the deep end after serving the country so well.  In a recent blog post of his, he weighs in on the lastest kerfluffle about climate change.  The guys who wrote the best-seller, Freakonomics, have a new book out with a chapter that is somewhat critical of the so-called consenus on human civilization causing the planet to get warmer.  He delivers himself of this ghastly howler, emphasis mine:

…not only that they didn’t check out the global cooling stuff, the stuff about solar panels, and all the other errors people have been pointing out, but that they didn’t even look into the debate sufficiently to realize what company they were placing themselves in.

No, it’s not his placing of the preposition at the end of the sentence that has my blood boiling.  It’s the idea that the way science should be done is by checking out whose on what side of the controversy, and then joining the right team.  That’s politics, and people who can’t tell the difference shouldn’t be writing about this issue.

And by the way, I am trying to still admire Krug a little, but it’s getting hard.

“Feet of Clay,” by the way, comes from the Old Testament (Dan.2:31-32).

Malthus on my mind

It just so happens that I have been reading Thomas Malthus’ Essay on the Principle of Population these days – another one of those famous books that I’d never gotten around to.  And it just so happens that Norman Borlaug died yesterday.  And it just so happens that T. R. Malthus keeps coming up in discussion about consumption, scarcity, the environment, global warming, etc.  Consider this riposte by Paul Krugman regarding feedback on earlier post of his.  It’s all related.

Some would say that Borlaug, the Nobel Prize winner, showed Malthus the door when he ushered in the Green Revolution.  (He rejected that term, though.)  Food supply didn’t have to inevitably fall behind the growth of population.  Except that Borlaug remained worried about population growth throughout his life and feared that if the rate of increase wasn’t checked, his work would have done no more than bought a temporary reprieve from famine to the world.  Borlaug, who seems to have been a deeply compassionate and extremely sensible man (see this address) was also criticized by many for a narrow technocratic approach to the problem of feeding the world – Simple, we’ll breed more productive wheat! – understood the wider context within which agriculture sits.  He wasn’t trying to get the developing world hooked on Western fertilizer and seed products – he was trying to feed the world.  He regarded such critics as elitists who didn’t worry about where their next meal, or their family’s meal, was coming from.

Oh dear, so much comes together here, not the least of which is just how great those 18th century thinkers were.  Did Malthus forsee it all?  Now we associate him with Carlyle’s remark about economics being the dismal science:  nothing but famine, war and pestilence bring production and consumption into balance, that’s the future.  Dismal, yes, but that’s not what Carlyle was talking about anyway. And Malthus was just trying to introduce some hard nosed good sense into a discussion too much dominated by optimistic good feeling of people like Condorcet.  In situating ourselves within Nature, the universe, we have not advanced much beyond Rousseau and Voltaire’s argument of more than 200 years ago.

Krugman’s gripe was with people calling him a (neo) Malthusian when he ranted about congressmen being treasonous to the planet and the sky falling and all that climate change stuff.  But he was way off base, as this commenter pointed out:

“[Krugman wrote] We only think Malthus got it wrong because the two centuries he was wrong about were the two centuries that followed the publication of his work.”

Only an economist could say that with a straight face.

Shorter version: “Malthus was wrong because his theory had zero predictive ability”.

Yes, I thought of that too.  If only Malthus had published his work in 1598, he would be looked upon as an undisputed master of analysis and prediction!   On the other hand, just this evening, here at a conference on water resources and climate change, a speaker remarked that maybe bringing the Green Revolution to India wasn’t such a “wise idea” because a significant consequence has been unregulated and unrestricted pumping of groundwater for irrigation, which is bringing the nation to the point of  massive water shortages.  Maybe Malthus should have written about water supply instead of grain supply, although it comes to the same thing in the end.

Or does it?  The same speaker said we should never underestimate our ability to adapt, an intellectual mistake that neo-Malthusians make a lot.

Division of Opinion

I have been reading The Lamp of Beauty, a selection of John Ruskin’s voluminous writings on art.  The preface states that one reason for reading him is to find the source of so many ideas about art that we take for granted these days, and that’s true.  Even when I come across a theme with which I am familiar as one of his, say, the importance of craft, I am struck by the force of his statements and the depth of his critique of industrial society.

Here’s a little face off between Ruskin, the romantic godfather of the English Arts and Crafts movement, and Adam Smith…you all know who he is.  The topic is the division of labor in industrial production.  For Smith, an unalloyed good; for Ruskin, the source of mental and physical slavery and aesthetic degradation.

from the beginning of Smith’s The Wealth of Nations:

The greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labor.
. . .
In every other art and manufacture, the effects of the division of labor are similar to what they are in this very trifling one [the making of pins]; though in many of them the labor can neither be so much subdivided, nor reduced to so great a simplicity of operation. The division of labor, however, so far as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labor. The separation of different trades and employments from one another, seems to have taken place, in consequence of this advantage. This separation too is generally carried furthest in those countries which enjoy the highest degree of industry and improvement; what is the work of one man in a rude state of society, being generally that of several in an improved one. In every improved society, the farmer is generally nothing but a farmer; the manufacturer nothing but a manufacturer. The labor too which is necessary to produce any one complete manufacture, is almost always divided among a great number of hands. How many different trades are employed in each branch of the linen and woollen manufactures, from the growers of the flax and the wool, to the bleachers and smoothers of the linen, or to the dyers and dressers of the cloth!
. . .
This great increase in the quantity of work, which, in consequence of the division of labor, the same number of people are capable of performing, is owing to three different circumstances; first, to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labor, and enable one man to do the work of many.
. . .
I say, all these things, and consider what a variety of labor is employed about each of them, we shall be sensible that without the assistance and co-operation of many thousands, the very meanest person in a civilized country could not be provided, even according to what we may falsely imagine the easy and simple manner in which he is commonly accommodated. Compared, indeed, with the more extravagant luxury of the great, his accommodation must, no doubt, appear extremely simple and easy; and yet it may be true, perhaps, that the accommodation of a European prince does not always so such exceed that of an industrious and frugal peasant, as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten thousand naked savages.

from The Stones of Venice: The Nature of the Gothic

We have much studied and much perfected, of late, the great civilized invention of the division of labour; only we give it a false name. It is not, truly speaking, the labour that is divided; but the men: — Divided into mere segments of men – broken into small fragments and crumbs of life; so that all the little piece of intelligence that is left in a man is not enough to make a pin, or a nail, but exhausts itself in making the point of a pin or the head of a nail. Now it is a good and desirable thing, truly, to make many pins in a day; but if we could only see with what crystal sand their points were polished, — sand of human soul, much to be magnified before it can be discerned for what it is — we should think there might be some loss in it also. And the great cry that rises from all our manufacturing cities, louder than their furnace blast, is all in very deed for this, — that we manufacture everything there except men . . . It can be met only by a right understanding, on the part of all classes, of what kinds of labour are good for men, raising them, and making them happy; by a determined sacrifice of such convenience, or beauty, or cheapness as is to be got only by the degradation of the workman; and by equally determined demand for the products and results of healthy and ennobling labour.

And how, it will be asked, are these products to be recognized, and this demand to be regulated? Easily: by the observance of three broad and simple rules:

1. Never encourage the manufacture of any article not absolutely necessary, in the production of which  Invention has no share.
2. Never demand an exact finish for its own sake, but only for some practical or noble end.
3. Never encourage imitation or copying of any kind, except for the sake of preserving records of great works.

The facts come back to bite RFK…

About a year ago, Robert F. Kennedy Jr. made some statements in an article in Vanity Fair magazine about energy, the economy, and the future of the world.  So many people make predictions, so few are checked.  In the excerpt below, he didn’t fortell – he just assumed the future would resemble the present and the past.  Such statements accumulate in the great dead-letter file of improbable prognostications in the sky .  I have highlighted a few statements that struck me as sadly, or amusingly, out-of-date given the news as it stands in June 2008.

Today, we don’t need to abolish carbon as an energy source in order to see its inefficiencies starkly, or to understand that this addiction is the principal drag on American capitalism. The evidence is before our eyes. The practice of borrowing a billion dollars each day to buy foreign oil has caused the American dollar to implode. More than a trillion dollars in annual subsidies to coal and oil producers have beggared a nation that four decades ago owned half the globe’s wealth. Carbon dependence has eroded our economic power, destroyed our moral authority, diminished our international influence and prestige, endangered our national security, and damaged our health and landscapes.  [I guess he saw the crash coming.  Forget about derivatives, it's carbon's fault.]   It is subverting everything we value.

We know that nations that “decarbonize” their economies reap immediate rewards. Sweden announced in 2006 the phaseout of all fossil fuels (and nuclear energy) by 2020. [Let's take some bets on whether or not they will come close to this goal!]   In 1991 the Swedes enacted a carbon tax—now up to $150 a ton—and as a result thousands of entrepreneurs rushed to develop new ways of generating energy from wind, the sun, and the tides, and from woodchips, agricultural waste, and garbage. Growth rates climbed to upwards of three times those of the U.S.   Iceland was 80 percent dependent on imported coal and oil in the 1970s and was among the poorest economies in Europe.

Today, Iceland is 100 percent energy-independent, with 90 percent of the nation’s homes heated by geothermal and its remaining electrical needs met by hydro. The International Monetary Fund now ranks Iceland the fourth most affluent nation on earth. [Iceland is now bankrupt.  Affluent, perhaps, but not exactly a growth model to imitate closely.] The country, which previously had to beg for corporate investment, now has companies lined up to relocate there to take advantage of its low-cost clean energy.

It should come as no surprise that California, America’s most energy-efficient state, also possesses its strongest economy.  [I believe RFK is related somehow to the Governator, who could give him an earful.]

Crystal Ball

Friedman’s column in the NYTimes today, Mother Nature’s Dow, was typical of his work – filled with “big” ideas, poorly thought out, emotional, enthusiastic, and totally superficial.  One commenter suggested that he was rallying the Global Warming troops in the wake of the article on Freeman Dyson, the world-famous skeptic, that appeared in the Times Magazine and the recent cold weather!  (Hot weather is always evidence of anthropogenic global warming (AGW) – cold weather is just a random variation…)  What really got me was the comments of this sort, which were many:

the skepticism toward climate change never ceases to amaze me. the weight given to climatologists who discount man-made climate change is horribly out of balance with those who are sounding the alarms (and have been for a good decade – with increasing intensity). we are witnessing earth’s change at a rapid rate. we already have irreparable damage to some ecosystems. now is not the time to be an ostrich. and the apathy of many people who do recognize this truth is deeply disappointing.

Yes, the planet is changing, it always is changing.  Yes, many ecosystems are being damaged, mostly by destruction of habitat as a result of human settlement.  And why does the increasing intensity (stridency?) of the “ones who know” mean that they are right?  Often that signals that a person is wrong!

Human Beings and Original (Environmental) Sin

Among the comments I read were many that seemed to stop just short of calling for forced population control.  Humans are a harmful virus, you see.  This is part of the “religion of environmentalism” that Dyson talks about, often sympathetically.  I noticed another example of it on walk through a nature preserve near my house.  Some trees there have metal plates with messages on them about ecology that were done by local school children.  One stated that we are destroying our source of oxygen every day by a given amount (I forget the figures.)  This was a reference, I believe, to deforestation, but were these children also apprised of the growth of oxygen producers in some areas?

Having just finished reading about Cotton Mather and his role in the Salem Witch Trials, and having my head filled with thoughts about Old Time Religion, the plaque seemed a lot like an old fashioned religious motto intended to make you feel bad and remind you of your essentially sinful nature…so you could think of this occasionally after you go back to your normal life.  Yes, walkers will see this plaque and shake their heads:  “How true – out of the mouths of babes…”  And they will climb  back into their cars (maybe a Prius) and drive away.

Let’s get real.  I make a few predictions and such:

• Human population will continue to grow for a long time, although the rate of increase is likely to continually slow.  This population will need lots of energy.  I suspect that coal, for good or ill, is going to provide a lot of it.
• Saving energy is good for all sorts of reasons – why waste it or anything else?  But we are not likely to be 100% energy self-sufficient here in the USA, not if we don’t want our economy to grind to a halt.  Priuses and coiled light bulbs, and more efficient homes and transit will use vastly less energy, if everyone used them now, but they don’t, and by the time they do, if they do, there will be more of us.  So at best, we can hope for a slightly decreasing rate of increase in our energy consumption in the near term.
• Stopping population growth won’t happen, and isn’t a realistic goal for any near-term, unless we are willing to resort to a police state.  At least that would have the added benefit of putting the lid on our consumer culture so that the fewer people wouldn’t continue to consume more, but I’m not looking forward to it.
• Everyone says nice things about “sustainability” but few really think it through.  What does it mean?  How much are we willing to NOT have as we move through the 21st century?  How thoroughly can we rework our societies, and not have massive civil unrest, in our search for clean energy?  Not much, I think.  After all the “cosmetic” green stuff is worked through, short of social breakdown or revolution, we will need more energy.  I bet coal supplies a lot of it throughout the world.  Coal can produce electricity, and electricity can replace oil.

Not too pretty, eh?

Pointy-head…

Readers of my blog will recall that I have great admiration for Paul Krugman and the service he has done our body-politic with his commentaries in the NYTimes.  However, like all things, he is not perfect, and today’s column shows him in full form as an out-of-touch, intellectual crank with a tin ear for the realities of politics. 

Obama didn’t say everything he would have said, so he’s obviously got it all wrong.  He expects the new prez to deliver a policy-wonk speech to welcome us to his administration.  As for the remarks Obama made about how we Americans didn’t make the “hard choices” necessary, and how we all share some blame for our problems, how about interpreting that to mean that in the past we were content to vote for politicians who told us we could get everything without paying for it, especially if the we give a lot back to the rich…which is what all of us would be if we would just cut taxes.  Krug’s remarks are similar to his silliest columns during the primary race for the nomination.

Put a sock in it Paul, and wait a bit before weighing in with both guns blazing.

Isaac Newton – Granddaddy of the Quants*

Today, in the NYTimes, Joe Nocera reflects on the history, psychology, and inevitability of bubbles.  That is, as long as there is some freedom to speculate.  He begins with a melancholy quotation from the great Newton, the original “master of the universe.”

“I can calculate the motions of heavenly bodies, but not the madness of people.” — Isaac Newton, 1721, after the South Sea bubble burst.

Poor Izzie lost big time, but he was comfortably off with several government sinecures, nevertheless.  This contemporary economic magus quoted by JN wasn’t so lucky:

On Friday, Mr. Shiller [an economist] told me of a conversation he had with an economist friend of his. The man had spent his entire career advocating the efficient market hypothesis, which posits that all known information about a stock is already priced into it. But with the market in collapse, the economist sold all his stocks. “I feel like a Christian Scientist who has come down with appendicitis,” he told Mr. Shiller.

I wonder where Nocera had his money!  Did he see it coming?

Well, if you’re not having enough fun yet, delve into the history of the South Sea and Mississippi Bubbles, and the Ur-Panic of them all, the Tulipomania by skimming through this Victorian classic:

That’s Extraordinary Popular Delusions & the Madness of Crowds, which you can buy for pennies in used book stores on the Net.  Or you can buy this antique edition…might be a good investment!  That’s John Law on the cover.  He’s the subject of a popular biography, Millionaire, that tells of his ill fated inteventions with the French economy a generation or so before the Revolution.  Seems he was fond of risky securities.  The plot of the novel, Manon Lescaut – adopted for opera, plays, television? – is connected with the John Law schemes:  it is the device by which the star crossed (numbskull) lovers are united in the New World, temporarily free from the oppression of class society and debt.

Gleeson seems to have a preoccupation with financial alchemy:  She has another book, The Arcanum, that describes an early case of industrial espionage regarding the secret of turning dirt into  retail gold, procelaine, that is.

Are we having fun yet?

*For those of you not in the know, “quants,” short for “quantitative analysis,” is the nickname given to Wall Street nerds doing computer model predictions of the market’s behavior.

 

Bailing Out

The talk in Congress about the financial mess is very interesting in the way it obscures some basic ideas.  People act as though this is strictly a practical matter, a non-partisan, non-political, time-to-stop-arguing, let’s fix it now! question of simple financial mechanics.  In other words, there’s no ideology, no politics involved – just not relevant.

Well, a few criticisms of the plan that I’ve heard, particularly the comments of a former Secretary of the Treasury and one excellent letter to the NYTimes today, make me think otherwise.  The basic question is this:  If the problem was brought on by speculating in sub-prime mortgages, why not prop up those mortgages?  Pour money into the bottom, not the top.  Subsidize Main Street, not Wall Street?  If we bail out financial service firms, and home prices continue to drop, the USA, that’s us, will be left holding the empty bag. 

Could it be that it is more efficient to pour money in the top, to stabilize the markets, to restore confidence, to unfreeze the credit realm, and thus benefit all Americans by making the economy function again.  Could it be that time is of the essence? 

Or could it be that guaranteeing mortgages would also send a salutary shock into the system that would achieve the same thing, but it offends so many, especially Paulson and GWB, because it is bypasses Wall Street?

One person said that bailing out Wall Street this way by pouring in money is like filling a leaky bucket.  The bad mortgages are what’s draining the bucket.

Meanwhile, check out this wonderful animated tour of the Subprime Mortgage Mess.

Resentment Politics…

Yeah, so, Krugman has a column today about the skill with which the Republicans manipulate feelings of resentment – or shall we say resentiment? – in our body politic.  Isn’t this the fuel that fed the fire of Hitler’s rise?  The simmering anger of the better-off-than-workers-but-not-well-off-enough-not-to-be-worried class? 

The key to this feeling in politics is that it isn’t logical.  People feel pissed off, pissed on, and treated unfairly – and they are!  But not by the people they think, necessarily.  I mean, Romney, a gazillionaire and former governer of Mass. railing against the Eastern Elite?  Pleeeezzzz… 

So why do Republicans get away with this?  Because they play dirtier politics?  I think not.

The best rejoinder to the politics of resentment is to tell it like it is.  You feel spat upon, well THIS is who is to blame.  And here’s why…It’s not hard to lay out the facts, and people aren’t stupid.  For instance, it is a dirty little secret that the Republican party has wanted to eliminate, not fix, Social Security from the day it was implemented.    And they very much like reducing taxes on the top 1% of the people, especially when everyone else will pick up the slack.  And that estate tax that all those regular folks are upset about even though it doesn’t apply to them, they’ll be happy to see that go too.

Why don’t the Democrats say more of this flat out?  I think it’s because when they do, the Republicans accuse them of fomenting “class warfare”.    The Republicans fear that, rightly, as they have NO answer to it.  And the Dems…they usually pull back because, after all, they get a lot of their money from the same people as the Republicans.  We’ll see what happens this time…

Art by the numbers…

Today, in the New York Times, there was an article about an economist who has reordered the canon of art history by using market statistics and counts of the appearance of works in standard texts.  After his quantitative ranking is done, what will know about art?  That is, will it deepen or alter our appreciation of the works?  I think not, though it may have some interest as cultural history.  As Arthur Danto pointed out succinctly,

“I don’t see the method as anything except circular. The frequency of an illustration doesn’t seem to me to really explain what makes an idea good.

“Somewhere along the line you’ve got to find answers to why it’s so interesting.”

If you’re interested in art, that is…

Unmentioned in this article, is the fact that it seems to reverse Marx’s comment on history playing out twice:  first as tragedy, then as farce.  This economist is engaging in a travesty of thought, a tragedy of …well, maybe it’s just farce all around, but the farce certainly came before him.  Has he not heard of Komar & Melamid?  These two tricksters did extensive polling – market research – to discover what art people want and then they gave it to them!  That’s art by the numbers!!

Electioneering Food for Thought

Some new statistics on the distribution of wealth in the USA.  I think those in my previous post on this topic are somewhat out of date.  As Lester Thurow pointed out years ago, 40% of the non-residential wealth (i.e., not your home values) is controlled by about 400 people and families in our democracy.  Lately, there has been a lot of huffing and puffing about the estate tax, known to Republican killjoys as the Death Tax.

Right now, the estate tax is on a downward path to zero, and then after 2010, it’s supposed to go back up to its original level.  This creates a rather queer situation for those deciding when they should kick off.  Aside from that, the idea that the estate tax is something that ordinary people have to be upset about is one of the more remarkable successes of Republican political propaganda.  

In 2006, about 23,000 tax returns kicked in the estate tax.  The top 5% of those estates held 40% of the wealth taxed.  (Forget about what wasn’t taxed!)  In other words, a restored estate tax would fall most heavily on those with more than $20 million.  That’s the target of the policy, not the small estate holders near the threshold of $1.5 million.  But no – give the feds a chance, and they’ll go after that fat middle, the $2-$5 million estates that comprise nearly 60%  of all taxable estates, but hold only 30% of the value.  Yes, that’s the conservative line.  We must protect the rights of the SUPER rich because WE will be next.  An interesting twist on an old idea…

Of course John Lennon had a nice twist on another old idea:  “You’re all fuckin’ peasants anyway…”

Schadenfreude Anyone?

It’s hard to restrain oneself from chuckling with glee at the ci devant masters of the universe at Bear Stearns as they contemplate their fortunes turned to dust in the twinkling of an eye. Surely the ghost of J. P. Morgan is heaving his paunch and laughing heartily somewhere, up there? down below? Still, at the banking firm of Bear Stearns – should we just call it BS? – where the culture was to buy the stock of the padrone, quite a few of very ordinary folks will go down with the ship. Secretaries, mail-room workers, lower level admin and research staff, etc. In terms of percent of the people affected, they will be the majority, and they are royally screwed.

In a crisis, they say, you see what people are made of, and so too, a system. Without trust, there can be no business, and trust is dwindling a bit these days. “Come to think of it, just how were those people making all that money?” Why, when you examine the entire business, it does seem a little like a shell game, a Ponzi scheme, don’t it?

It’s all fine as long as the stock is going up. If you aren’t getting rich, it’s your fault, your genes, your backbone, your sorry moral state. The elect and the masters are chosen by The Market, and the words of the Lord are written in the annual reports (doctored, it’s true, but every deity needs an interpretor, a prophet). Now, once again, we hear the words of Captain Renault from the film, Casablanca: “I’m shocked, shocked to find that gambling is going on in here!”

Oh well, damn the torpedoes, full speed ahead and socialize the risk, privatize the profits! See the recent NY Times editorial on this that sums it up well.

Meanwhile, consider this snippet from a day or so ago in an article about the collapse of Bear:

“In this room are people who have built this firm and lost a lot, our fortunes,” one Bear executive said to Mr. Dimon with anger in his voice. “What will you do to make us whole?”

Why the hell should anyone care about making this troglodyte “whole?”