Friday, June 20. 2014
I read Jill Lepore's The Disruption Machine: What the Gospel of Innovation Gets Wrong with great interest and a little nostalgia. Her subject is Clayton M. Christensen, who became an instant business guru with his 1997 book The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business. From 1980 through 2000, I worked in a variety of businesses -- two large typesetting equipment manufacturers, a prepress software startup, and an operating systems spinoff -- as a software engineer and product manager. Almost from the beginning, I had unusually close access to top management, in part because I always tried to look at the big picture, at how the business worked and what it needed to survive and grow. In this I was often informed by reading business management books, although I often took them with a grain of salt.
The first big fad book I ran into was In Search of Excellence: Lessons from America's Best-Run Companies (1982), by Thomas J. Peters and Robert H. Waterman Jr. The executives at my company at the time, Varityper, were much taken with the book, taking great pains to list out all the areas where their own management could be rated excellent. There was, in fact, little evidence for their conceit. I spent a great deal of time trying to figure out how they even managed to stay in business, and eventually came up with an understanding of how a company with mediocre products and service could muddle through. But the relevant lesson here was realizing how fickle top management could be, how readily they could fall for the flattery of self-appointed business gurus.
Christensen's book had a similar impact when I was working for SCO much later. Like In Search of Excellence, The Innovator's Dilemma attempts to promulgate a set of general lessons from a handful of carefully selected case studies. Lepore goes back and reviews those cases, showing how arbitrarily they were selected and how systematically they were misanalyzed, effectively demolishing the book's research claims. But like Peters, who parlayed his fame into a lucrative consulting business (and continued to churn out increasingly ecstatic books, including: Thriving on Chaos, Liberation Management, The Pursuit of WOW!, and after Christensen came around, Re-Imagine! Business Excellence in a Disruptive Age), Christensen moved to cash in almost immediately.
The notion of "disruption" made a certain intuitive sense to anyone in the computer industry. The essential fact of electronics since the advent of integrated circuits has been radically falling costs and increasing capacity. The central challenge that high-tech companies faced was to find new markets for newly cost-effective technology, and often as not this was done by startup companies. By definition, their success was innovative, and that contrasted with the staid "cash cow" management strategies popular in "mature" industries. Christensen's innovation was to add the word "disrupt" to management vocabularies, which made him a big hit with managers flattered by this swashbuckling identity.
Christensen's book set off a great snark hunt for "disruption." SCO's business was selling UNIX operating systems ported to Intel microprocessors. They mostly sold OS licenses for about $1000 per machine through VARs, who would combine relatively inexpensive PC hardware, UNIX, and their own applications software into some kind of turnkey system which would be price/performance competitive against offerings from Sun and other UNIX-based "workstation" vendors. You could make an argument that SCO's business model was disruptive, and indeed companies like Sun would lose a good deal of business in the following decade. Moreover, SCO's business plan called for them to continue to profit as ever-faster-and-cheaper Intel chips powered larger-and-larger "enterprise" computers. SCO's management hired Christensen to speak at one of their gatherings, and sure enough he blessed their business plan as "disruptive."
However, when I read the book, I drew a different lesson. I saw that SCO was increasingly vulnerable to Linux, the "open source" UNIX-like operating system that anyone could use and work on for free. Companies that adopted it could add features that they needed. They just couldn't keep those features exclusively, but sharing the code reduced their costs and helped Linux grow rapidly for larger and more powerful computers. (At the time, I often quipped that SCO could sell UNIX to people who were too smart for Microsoft, or to people who were too dumb for Linux, but not both at the same time.) Needless to say, despite their endorsement from Christensen, SCO got disrupted before they could disrupt anyone. They enjoyed record revenues leading up to the Y2K drop dead rate, then collapsed and were effectively out of business a couple years later.
I don't really think that Christensen's original research and thesis were as bad as Lepore makes out. I did get several useful insights from the book: particularly, a reminder of how desperately managers cling to existing margin models. (Not really news to me: I recall Varityper's VP of Marketing explaining to me that he would like to sell a publishing front end based on Apple's $10k Lisa computer but couldn't afford to sell one based on Apple's then-forthcoming $1.5k Macintosh. The former turned out to be an overpriced stepping stone, while the latter turned out to be the desktop publishing platform that ate the entire typesetting industry. We were, by the way, fully aware of DTP start-ups like Aldus, but we were petrified by our business model.) But what I find indefensible about Christensen is how he turned his research into a business, and how easily he perverted that research into paid advertising.
My academic background was in sociology, and my focus there was in understanding how sociological research is perverted to reproduce the assumptions of its practitioners. Happens all the time, even when the researcher isn't the least bit corrupt or deceitful. But sociology at least aims at being a science. The same can't be said of whatever you call what business departments do: like, say, seminaries, they train people to fulfill a function (e.g., CEO) and to that end provide some common cultural information, scattered skills, and contacts. I don't know what all goes into the making of an MBA -- I imagine one popular course would be "Sports Clichés for Managers" but it could be that everyone in the program would test out of that -- but the essential insight MBA programs aim for seems to be that money is everything (at least all that matters). That's the environment that produces con men like Christensen.
Some other posts commenting on Lepore's piece:
Krugman makes the best point, which is that not only does the cult theory of disruptive innovation flatter rich high-tech entrepreneurs, it lets them be more insensitive to the plight of others (the people commonly known as losers. Krugman also recalls how Schumpeter's famous definition of capitalism as "creative destruction" has the same effect, hence its popularity among capitalists.
Friday, May 9. 2014
Last week I wrote a letter to the Wichita Eagle, in response to Dominic Gates: Boeing plans layoffs, transfer of research jobs. The Eagle ran that letter (with minor edits) today:
The Eagle limits reader letters to 200 words, and there are a lot of points to try to squeeze in here. Someone could (and should, just not me) write a whole book about how Boeing's management operates, in what ways it's typical of large American companies and in what ways it's far out on the cutting edge of figuring out ways to screw its workers, its customers, the governments it corrupts, the public, and ultimately itself. For example, one point neither the article nor my letter bothers with is that Boeing's west coast engineers -- as well as Boeing's former engineers in Wichita, an operation they've already shut down -- are unionized. That, of course, has a lot to do with Boeing's desire to move jobs to anti-union states like South Carolina (as does the eagerness of state legislatures to pay Boeing millions of dollars to exploit their workers), but you really should stop and think about this state a bit. It really is very hard to unionize engineers, so try to imagine how badly Boeing must have treated its engineers for how long before they sought the protection of a union. (In Wichita, "right to work" Kansas, even the front office workers wound up joining the union, leading Boeing to shut down the whole plant.) The article does mention how demoralized Boeing's Seattle engineers are, but it's not just this latest move that's got them down. The whole 787 program, for instance, has been plagued by Boeing's decisions -- driven by cost-crunching and rent-seeking -- to sell off ever larger chunks of the design and manufacturing process.
I wrote some more about this piece for Weekend Roundup, but might as well post what I wrote here now:
Lots more can be said about this. But rather than slide down any number of rat holes, I'd like to point your attention to today's Wichita Eagle article on Boeing: Alwyn Scott: Boeing still working to increase production rates:
My emphasis: with all of Boeing's chronic problems, it says much that their prime management focus is propping up the share price. Those chronic problems are hinted at in following paragraphs:
So the only way Boeing can make up for the cheaper workers they hire in South Carolina is to hire more expensive contractors to do their work, or return that work to the higher wage workers back in Washington that they've been trying to get away from. Like I said above, as bad as these problems are already for assembly workers, they'll get orders of magnitude worse with engineers. One of the principles drilled into every engineer is the importance of getting it right the first time. That's evidently not a trait that Boeing expects in its management.
Saturday, April 26. 2014
Several recent articles have pointed out the woeful lack of funding for free software development, particularly with regard to the recently discovered "Heartbleed" bug in OpenSSL -- the "secure sockets layer" that handles encrypted transactions over the Internet, used by nearly every website and browser engaged in activities where security is essential, like E-commerce (e.g., see Nicole Perlroth: Heartbleed Highlights a Contradiction in the Web). OpenSSL is one of many pieces of free software that have become essential building blocks of our infrastructure. There are lots of reasons why we prefer free software for these tasks, and indeed we would be much worse off if some company were able to corner the market for these functions and put tollgates all around them. However, there is a downside: with no company making money off a module, there is a risk that it won't be adequately supported. OpenSSL turns out to be a case in point.
I don't know of any serious work in this area, but I suspect that if economists were to take a good look at the software market, they'd find that it is intrinsically dysfunctional. The root of this is that the marginal cost of reproduction, which is what prices in truly competitive markets converge on, is zero. Therefore the only way to make money on software is to create artificial scarcity around proprietary niches. (The entire history of Microsoft, including the antitrust trials that happened and many more that should, offers a textbook on this. Smaller software companies aim for smaller niches where "first movers" tend to go unchallenged so have less need for such obviously criminal behavior.) Free software turns out to be the only viable alternative to monopoly software. Moreover, it can be developed and maintained for a small fragment of the costs that commercial software companies accrue -- even if you monetize the vast amount of voluntary labor that currently goes into it. The obvious conclusion is that the economy as a whole would be much more productive and efficient if we somehow found a collective way to fund free software development.
The obvious source for such funding is government -- you know, the institution that is supposed to be "of, by, and for the people" -- and not just in the US but everywhere. But in the US there is a peculiar ideological blindness, related of course to rampant corruption, to the very idea of government doing something that would benefit people by bypassing the corporate profit-takers. So some time ago I came up with a "plan B" and now that (at least) some people are talking again about the need to better support free software, I thought it would at least be worth a post to dust it off and air it out.
I had something very specific in mind, but you're free to generalize it or just change the specifics to your own situation: that is, after all, intrinsic to the notion of ideas, unless you try to kidnap one and lock it up behind the legal travesty known as a patent.
My proposal was that Wichita State University's computer science department should create a major in free software development as one option for its BS program (or MS, if it has or wants one). As far as I know, such a program would be unique, and therefore it would start to attract students from all over who are especially inspired by free software. (At present, nearly all of WSU's 15,000 students are local commuters, although they do draw some foreign students into engineering programs, and recently have had a pretty good basketball team.) The curriculum would combine basic computer science classes with practical project skills notably including actual participation in free software projects. So this would benefit free software in two ways: it would provide some volunteer labor for projects, and it would train people in both the theory and practice of free software -- skills that they can continue to use wherever they wind up. (Most software engineers do not go to work for proprietary software companies. Many wind up in IS departments of companies that wind up consuming and customizing rather than productizing software. Others may go into education, or on to MBA programs, or elsewhere where their free software expertise may turn out to be invaluable.)
Needless to say, there is a "first mover" advantage for whichever university does this first. Eventually, I expect that working on real free software projects will be incorporated into nearly every computer science curriculum, even without a dedicated major, simply because it is the most cost-effective way for students to learn from actual real world development. (Most students at present spend their time working textbook problems. As someone who used to hire software engineers, I put very little value on education compared to practical experience. In fact, I rarely hired people with CS backgrounds, preferring those who majored in math or science and learned to program on the side.)
I'd also recommend that Wichita State amplify the major program by creating a Center for Free Software Development, funded with business grants (and whatever they can squeeze from the government -- WSU has something like this already for aviation engineering where the local aircraft companies were very effective at lobbying the state). The Center could make it a point to hire celebrity free software figures, who would divide their time between teaching and research. And since we're talking about Wichita, it's worth noting that the one local company that could make this happen almost instantly is Koch -- note, among other things, that WSU's storied basketball program plays in Koch Arena.
It's interesting to speculate whether the nominally libertarian, notoriously political Koch brothers would take an interest in free software. Several things suggest that it might be worthwhile to approach them on the subject. For one thing, they do spend a fair amount of money on broadly philanthropic causes. (Not, I think, nearly as much as they spend on blatantly political ones, and the latter align much more closely with their business interests than with their more philosophical ones.) Second, there is a pretty strong libertarian segment within the free software community, most vocally Eric S. Raymond (author of The Cathedral & the Bazaar and The Art of UNIX Programming), but you can find it elsewhere, especially in Richard Stallman's insistence on "free as in freedom" as opposed to "free beer." The Kochs often make a point of their opposition to rent-seeking in politics. Proprietary software is nothing but rent, protected only by the legal force of "intellectual property" laws. And the model of building multiple, independent free software foundries, backed by private funding, scattered across the world independent of government bureaucratic meddling should have some appeal. Plus, free software is the best deal businesses can get: not only free to copy but with open source code no one can have a monopoly on supporting it and anyone who wants to adapt or modify it can do so. Virtually nothing else on the agenda of Americans for Prosperity actually offers so much prosperity.
On the other hand, the Kochs in practice have a pretty narrow definition of prosperity: very little of it, for instance, trickles down to their employees, nor do they even have to share it with stockholders. They've created a near-perfect symmetry where their relentless campaign for freedom and prosperity seems designed to benefit exactly a nation of only two individuals. So while they should see free software as a net benefit to the two, it might not be benefit enough to get them to help us. Still, it's not too crazy to ask. Just probably shouldn't be me doing it.
Thursday, April 24. 2014
This letter by Bill Dickinson from the April 28, 2014 edition of the New Yorker is worth repeating:
I've never read about the financial interests impacted by CFC replacement, but this seems intuitively right. Non-CFC refrigerants are most likely made by the same companies that made CFC, and no doubt cost more, are more profitable, and generate an extra amount of replacement business. (I can back this up personally: just last week an HVAC serviceman told me that next time I have to replace the compressor in our AC system I'll also have to replace the condenser because the refrigerants are incompatible.) So, at least among countries that are de facto controlled by special interests -- the US clearly qualifies and is certainly not exceptional in this regard -- those interests were aligned to support the change.
In regard to excess production of carbon dioxide, there can be no such alignment for reform. The interests that depend on continued burning of fossil fuels (coal and petroleum companies, of course, but also nearly all companies involved in transportation, most in electric power, and let's not forget their bankers) will at least look out for themselves -- and note that businesses almost always focus on only their most urgent, narrowly defined profit interests, with little or no concern for long-term consequences to the economy, the environment, or their future quality of life. Needless to say, those interests are huge, and will be for a long time.
Dickinson suggests that the way to counter them would be to promote competing economic interests, and indeed some of that is happening: wind and solar power lobbyists have been able to gain a few favors that only indirectly challenge the fossil fuel powers (not that the Kochs are taking this gracefully). And sometimes you see a CFC-like case of an industry seeing some profit in reform, as when the light bulb industry turned on incandescent lights in favor of fluorescents. Or when the auto industry agreed to increase fleet mileage standards: after years of dragging their feet, you can bet that their turnaround was tied to a new reckoning of their bottom line.
But if reform is only possible when it looks promising for short term profits, we're not likely to get much of it, and what we do get isn't likely to work very well. This is where I could go down a deep rathole trying to explain why, and indeed there are many reasons, and they play out many different ways. Let me just assert that if you can only solve problems by helping the private sector to make more money off them, there are some problems you'll never be able to solve -- inequality, for one, and global warming for another. So Dickinson has a point, but not an answer.
The answer is to reform a political system which has veered so far from democracy that even researchers are treating it as a form of oligarchy. To do this we need first of all to restore the concept of a public interest. This isn't an odd or abstract concept, although it has been rendered impotent by the explosive, unchecked growth of special interest money in political campaigns and special interest lobbyists in Washington. A simple example of a public interest is that everyone has a vital need to breathe air that isn't contaminated with toxins. Private interests often try to gain at the expense of the public interest, so we need to elect representatives who are aware of this and will at least make an effort to balance competing private and public interests.
We also need to re-embrace the concept of countervailing power: this was a founding percept of the New Deal and took many forms, such as encouraging and protecting trade unions to balance against excessive business management power. The key idea is to prevent any position from overwhelming a policy discussion with sheer volume. One simple way to do this would be to provide public funding for public (or in some cases other private) interest lobbying equal to that provided by special interests. (Aside from making policy debate more fair, and more rational, that might inhibit private interests from pursuing especially predatory policies, since they are certain to be publicly recognized as such.)
Counter-lobbying would certainly help restore balance to a system that is now perilously tilted in favor of special interests, but even more important is to create institutions with a mandate to sort out all contending arguments and establish viable facts and theories about matters of public import. To some extent this has been done in the past by the media, academia, and public-sponsored institutions (like the NIH), but many of these have been captured by private interests or are being starved of funding at the same time as need for their services increases. More recently this has been supplemented through the (mostly volunteer) efforts of millions across the Internet. Few things we could spend public money on would return more value, but first we have to escape the mental trap (most common on the US right) that sees everything as partisan propaganda and seeks to muzzle the other side.
Saturday, February 1. 2014
I finally got around to reading, as opposed to reading about, billionaire Tom Perkins' Wall Street Journal rant about "the progressive war on the American one percent, namely the 'rich.'" I was under the impression it was an "op-ed" but the header calls it a letter, and it is fairly brief, weighing in at less than 200 words. It cites a WSJ editorial "Censors on Campus" which is behind some kind of paywall and not obviously relevant. Much of what Perkins complains about is hard to gauge. I don't read the San Francisco Chronicle, but I'd be real surprised to find that his charge -- "the demonization of the rich embedded in virtually every word of our local newspaper" -- is true of that or any elite media in the US. (I read enough of the New York Times to recognize that its reputation for liberalism is vastly exaggerated, and that any suggestion that it is even further to the left is plain ludicrous.) Nor do I have an opinion on whether Danielle Steel is a "snob" -- nor do I much care.
Most of the commentary concerns Perkins' attempt to liken the objects of his contempt to Nazis:
I have several points in response. The first is arguable, but I believe that Kristallnacht was very "thinkable" in 1930. The Nazi Part wasn't in control yet but it was gaining traction and power, and anyone paying attention would have noticed both that Nazis were savagely anti-semitic and had built a paramilitary organization of thugs (the "brown shirts") who gloried in violence. Treblinka may have been unthinkable in 1930, but mobs breaking windows and beating up Jews? That sort of thing had happened periodically in Russia and Romania, and the argument that it couldn't happen in civilized Germany was belied by every advance of Hitler.
The second point shouldn't be controversial at all: there is no "progressive war on the American one percent" nor can there be for the simple reason that those most critical of extreme inequalities of wealth and power are very largely the same ones who are most conscientiously opposed to war -- indeed, to violence of any sort. "War" is a word we take very seriously, and war is something that no one should be subjected to, either as victim or as combatant.
You might object that the "war on poverty" and the "war on drugs" were liberal trivializations of the word. Both phrases, the former as farce and the latter as tragedy, derive from a deep misunderstanding of WWII as "the good war." Several aspects of the history conspired to lend a superficial "goodness" to the most horrific six years in human history: the Axis powers were naked aggressors bent on regional (if not world) domination, and the racist brutality of the regimes became all the more glaring when they occupied foreign lands; the US government at the time was the most fair-minded and equitable in US history, so they organized the war as a unifying and all-consuming public good; the US was allied with the Soviet Union, so for once the anti-imperialist left supported the war effort; the war acted as a giant jobs machine which lifted the US out of the Great Depression to unparalleled (and relatively evenly distributed) wealth. Americans were fully engaged in the war, their feelings of satisfaction and moral superiority reinforced by a deluge of propaganda, and it helped that nearly all of the destruction took place elsewhere.
Americans were so enthused by that "good war" that they invented a long "cold war" with their Soviet allies to sustain the high. The same liberals who led us through WWII architected the "cold war" but they lost their bearings, turning against labor abroad (and ultimately at home), allying with tyrants against democrats as well as socialists, trading in their anti-imperialism for visions of world hegemony, their commitment to human rights reduced to economic neoliberalism. During the early days "defense" was cited to justify everything from education programs to building interstate highways. So if you wanted to put an end to something, why not declare war on it?
One catch was that WWII set up a standard for absolute victory that proved impossible to maintain -- either in real wars like Korea and Vietnam, or in metaphorical wars like poverty and drugs, let alone in bizarre combinations like the "global war on terrorism." Another was that these wars, unlike WWII, weren't run by the sort of people who could make the nation feel united, nor the sort who could be depended on to treat a vanquished country right. This was basically why Peter Beinart argued that the "war on terror" could only be "won" if led by liberals, but liberals aren't actually much better, except inasmuch as they're reluctant to get involved. WWII looks good in retrospect less because the US occupation of Germany and Japan was competent and benign than because the former regimes had totally discredited themselves.
But another problem is that war isn't a good solution to much of anything. It is vastly destructive. It perpetuates cycles of hatred and revenge. But even the so-called victors, in the rare cases where there are any, are permanently stained and scarred by the experience. Nor are we only talking about physically and/or mentally maimed vets here. Many of those brought up on violence move to the right, toward parties that institutionalize privilege and order, readily projecting violence.
Of course, there have been instances of armed revolts against the rich: notably during the French and Russian Revolutions. Still, one wonders if either of those revolts would have been so violent had the anciens régimes not been so autocratic and so repressive themselves. Democratic systems are never so brittle: they bend rather than break, and in the past the US has accommodated several waves of anti-rich rhetoric without physical menace (unlike, say, civil rights advocates and labor organizers).
Indeed, take a look at actual program proposals to reduce inequality in the US. The most basic one is to restore or increase progressive income taxation. Do that alone, even at very high levels, and you may narrow the gap a bit, but you'll wind up with exactly the same 1% at the top. Increasing estate taxes might even legitimize the rich by making wealth correlate more with achievement than just fortuitous birthright: so that may shuffle the membership slightly, but there would still be a richest 1% -- just not quite as far out of whack as now. Changing laws and regulations on banking might also affect the composition of the top 1%. Same with intellectual property, which is really just a government-granted license to exorbitant rents. One might also seek to limit rent-seeking by enforcing or even extending antitrust laws -- one gain there would be more efficient markets.
Some of the things on that policy list were previously law before business interests started to effectively band their political power together to obtain special favors from the government. Others are new but not so far fetched, and should result in a healthier economy. On the other hand, I don't know of anyone who is seriously pushing for much more extreme measures, like massive expropriation of property, forced income levelling, or reassigning the children of the rich to random families to prevent them from having unearned advantages. Nor do I have the slightest sympathy for robbing the rich or vandalizing their property. Indeed, I worry that efforts to criminalize poverty will blow back against the relatively rich.
This actually gets to be a rather complicated question. It is easy to establish the facts of inequality, but much harder to understand what they mean. In particular, how does inequality translate into real differences for people? It turns out to be very easy to list many ways: money gets you more options for education and jobs; it cushions you against all sorts of economic hardships; it gets you better advice and therefore makes you more knowledgeable about how the world works, and how best to navigate it. Levelling incomes should make those ways more equal, but there is another approach: to offer services equitably regardless of income. If the costs of education were fully socialized, for instance, the rich would have no advantages over anyone else, nor the poor any disadvantages. Lots of things could work like that, and the more (and more important) that did, the less important it would be to equalize incomes.
So why don't the rich lobby for more social programs that equalize opportunity and such? Actually, they lobby hard for the opposite, and not just because they expect a payback in less taxes and therefore more take-home income. They want less social spending because they want the inequality they benefit from to be more valuable and more of an advantage. That's just one of many points where the wealth of the already rich increases at the expense of others -- overcharging rents, depressing the wage market, and outright theft are others. I suspect that the reason the superrich have gotten so defensive is that they sense they may really be in the wrong here.
Here's an example: Paul Krugman cites a Forbes report that the top 40 hedge fund managers in 2012 took home a combined $16.7 billion, which is to say about the same total income as 300,000 high school teachers. Now, teachers teach, and nearly everyone who has accomplished much of anything can point back to an inspirational teacher. (Even I can point back to a couple who inspired me to drop out of high school, but that's a diversionary story.) But what do hedge fund managers do? Well, they're very adept at finding the loose change that fell into cracks in your sofa, except that they work on bank accounts and they use a lot of leverage, so any loose change they find blows up into substantial amounts of money. They probably contribute some value to the economy in finding that loose change, but everything else is zero sum: they mostly move money from other bank accounts into their own. And they have enough political clout to get special tax treatment, so they wind up keeping more of it (minus their lobbying expenses, of course).
One thing you cannot conclude from this data is that there is any just relationship between what one does and how much one makes. You may decide it's not practical to try to regulate incomes, but if you have any desire to live in a society which considers itself fair, you need to do something to reduce the disparities between a socially useful and necessary job and one that is essentially useless but somehow pays 7,500 times as much. One thing you can do is to tax some of the excess away. The other is to reduce the practical advantages of the higher income. Neither approach has to get you all the way there. There will always be differences in how well various people manage their money, so no balancing act can be perfect. Nor need it be, since the intent is more to establish the sense that society and its economic system are basically fair -- i.e., that people don't have legitimate reasons to feel cheated. A schoolteacher may very well feel that intangible rewards of the job, such as the satisfaction of teaching others, may outweigh some difference in wages. But the more the practical difference, the harder that is to swallow.
One fair question is why billionaires have become so sensitive to affronts lately. There was, for instance, a flap a while back by Jamie Dimon complaining about something Obama had said -- odd, considering that Obama had allowed major bankers like Dimon to escape the meltdown unscathed, returning to profitability way ahead of the rest of the economy. Josh Marshall has a piece speculating on why:
It's rather painful for me to read anyone try to defend Obama as a progressive -- Paul Krugman, also responding to Kristallnacht Redux, takes his own shot at it here -- when the most you can say for Obama is that he's not yet prepared to ditch every achievement of the New Deal/Great Society democracy: he didn't even try to bring revenues back to pre-Bush levels, he made no effort to restore Carter-Glass, all he could come up with was Republican think tank proposals for health care and carbon dioxide limits and he couldn't get the latter passed, meanwhile he's let Republicans push him around on spending issues even at the cost of extending a recession, and I can go on and on. He hasn't moved a thing to the left, and doesn't even seem to be aware of that direction. It's only that the Republicans have exited stage right, complaining shrilly about all the distance between them.
Meanwhile, I still blame the cold war, when America allowed itself to become the world's standard bearer not for democracy or freedom but for capitalism. When the Soviet Union collapsed, following the Reagan "greed is good" decade, neoliberal hubris shot sky high, as did the neoconservative fantasy of the US as the world's sole hyperpower. Both delusions should have crashed during the Bush era, but the intellectual rout was so complete that they limp on as zombies, devouring the brains of politicians with remarkable ease.
This is much different from the 1930s when lots of people intuitively understood that capitalism had failed, or from the 1950s when communist economies appeared to be gaining. Under those conditions, enough of the upper class was willing to allow reforms to occur, bending and mending the system instead of letting it shatter. But since the 1980s the rich see no countervailing powers, no challenging ideas, nothing to stop them from running amok, and that's just what they've done. The political system in the US has become utterly corrupt, with the Republican party taking right-wing positions to ridiculous extremes -- unless stopped, they threaten to destroy the very idea of public interest, the basic idea of countervailing powers, even the notion that our system is based on a sense of justice. It's all very scary, the great irony being that the unfettered power of the rich is building a world much poorer not only for us but for them as well.
And what do they have to show for their concerns? Hackneyed historical analogies they don't begin to understand.
Sunday, December 1. 2013
No Weekend Update this week. I want to focus instead on a single article, which appeared on the front page of the Wichita Eagle this morning: Connie Cass: In God we trust, maybe, but not each other. The article cites polls that show that Americans are less inclined to trust one another than they were in the past:
One cannot overstate the importance of trust. It quickly becomes impossible to do anything to do anything in a crowded society without assuming that others will act and react in sensible ways according to commonly understood rules. Those essential rules are moral, and many are codified in law, and enforced more or less coercively by agents assigned that task. One trusts, for instance, that one can go outside, for a walk or for a drive, without the constant risk that there are people out to harm you. One trusts that one can exchange work for money that will in turn can be exchanged for goods, that in turn will be much as one expects -- e.g., food that will nourish and not sicken.
We may be aware of exceptional cases where trust is not warranted, and to some extent we compensate for this by being alert to warning signs. For instance, we are advised to "drive defensively" -- to look out for cars behaving erratically, to consider the possibility that the car in front of you might suddenly stop, or that someone approaching an intersection might fail to yield, but even so you probably trust that other drivers are not suicidal. It's really hard to live in a world under constant threat of malevolence.
So when we read that Americans are losing their ability to trust in one another, what does this mean? It doesn't mean that we've hit rock bottom yet, although trust is so important that even small reductions in it can cause a lot of discomfort, and that can in turn cost us a lot of time and effort. The more dangerous you regard your neighbors, the more guarded your interactions with them, the more defensive they become. The more you rely on the force of law to limit behavior as opposed to expecting that people will act according to common morality, the more difficult it is to ensure moral behavior. Once some number of people move from doing what's right to simply avoiding getting caught, your ability to trust in the law starts to slip. And the situation deteriorates rapidly if law enforcers themselves become corrupt.
Cass' article attributes the lost of trust to various things, like "bowling alone" where individuals give up many of their social networks for solitary pursuits, like watching television. But Cass misses the most obvious problem, which is that we have an economic system that is increasingly based on predatory business practices. We have a lot of experience with the basic capitalist idea, which is one of everyone pursuing their own self-interest, seeking solely to maximize their own gains. And as such we've seen many of the ways such pursuits can cause great harm: the various waves of "progressive" political movements strived to limit the potential for businesses to abuse their powers, in large part attempting to ensure that they produce and sell goods and services according to standards that we can trust. Older still than progressivism were basic moral constraints against abuses such as usury.
But since WWII, and especially since the late 1970s, businesses have made considerable inroads undermining the moral character and social fabric of the nation. This started in the cold war exaltation of capital, with its immediate goal of fragmenting and disempowering labor. By the 1980s the right was destroying the nation's binding sense of equality and was trumpeting a new ethos of greed. Nowhere was this clearer than in the business schools, which trained the nation's future CEOs to grab every possible source of profits: if "greed is good," rent-seeking must be glorious.
The final coup here is the destruction of the idea of commonwealth, indeed of any common interest. Business propagandists used to like the idea, expressed as irony by Adam Smith, that the pursuit of self-interest could result in greater wealth for all. They scarcely bother any more, because they've convinced us that there is no society, no social values, just aggregates of individuals. And indeed, they seem to believe that assertions of common interests -- even things like clean water or air, or a stable climate -- are nothing but encumbrances on individuals. And that individuals should be as "economically free" as possible, even when all that means is free to deceive and defraud everyone else.
This lost measure of trust is a consequence of denying the value of social relationships. After all, to a large extent the economic liberation of individuals has taken place at the expense of society as a whole. You can argue whether this has happened because technology -- suburbs as much as television -- has split individuals apart, or vice versa. But the costs do mount up, and you see them in myriad ways: the explosive growth of prison population, increasing litigiousness, the influx of money into politics seeking special favors, and so forth.
And as the article points out, once you lose trust it's all that much harder to win back.
Curiously, the other big front page article today was titled "Shelter operator's tough question: Can charity hurt?" That's a serious question that I don't have time to go into, but it's also been a harping point on the political right going back to Daniel Moynahan and Martin Feldstein -- to pick on two big names who built their careers arguing against safety nets on the grounds that they are a crutch that corrupts. The fact is that they usually exist only to provide such immediately necessary relief that withdrawing them would be far worse. But sure, charity can hurt -- mostly through the patronizing and demeaning attitudes of the people administering the programs.
Monday, September 16. 2013
A front page article in the Wichita Eagle this morning is titled "Summers out of running for Fed chairman." I wasn't able to find the article on the Eagle's website, but it is by Kevin G. Hall (McClatchy Washington Bureau), and here's a link. Above the headline, the article pointed out that "women's groups, others opposed nomination." Indeed, aside from some of Summers' fellow economists -- if I recall correctly, Brad DeLong is the one I'm most likely to credit -- the only person who seems to have favored Summers was Barack Obama. This has always struck me as a bit odd: if you read Ron Suskind's book on Obama's economic team, Confidence Men: Wall Street, Washington, and the Education of a President, only Tim Geithner -- who flat-out obstructed Obama decisions against the big banks -- comes off worse than Summers, who comes off as a self-appointed bottleneck making sure that Obama never got advice he didn't pre-approve. Given that things didn't work out so great, you'd think the president would hold some lingering resentment of the stifling adviser, but evidently not. The article quotes Obama:
Say that again, "the kind of progress we are seeing today." As it happens, I just posted a chart at the top of yesterday's Weekend Roundup that shows "What's Up, What's Down" since July 2007, when the economy started to go south. What's up? S&P 500 +8, corporate profits +42%, financial profits +59%. What's down? Employment/population ratio 6.7%. I also cited a piece by Mike Konczal on how the richest 1% of Americans took home a larger share of the nation's income than in any year since 1928. (Key quote there: "the top 1 percent have enjoyed 95 percent of all income growth from 2009 to 2012.") I also cited Jeff Madrick's piece where he argues that unemployment isn't just a bit high, but has metastasized into an entire "jobless generation."
So when Obama talks about "the kind of progress we are seeing today" he must be seeing things than I am not and not seeing things that I am. In the decade before the collapse financial profits had grown to 40% of all corporate profits, something that was only possible due to the predatory behavior of banks. Obama and Summers not only didn't stem that tide. They've increase financial profits even further. Higher corporate profits feed off three main factors: financialization (corporations playing finance games), increasing monopoly rents, and squeezing the labor market. None of those are things that make the economy stronger, let alone things that lead to higher living standards for more people. Yet under Obama and Summers those trends have become even worse. Worse still, under Obama and Summers those trends are counted as "progress."
Hall's article goes on to quote Sen. Bernie Sanders:
Within the narrow confines of what Fed chairmen can do, I don't consider Summers a horrible choice -- he would, for instance, have been better than Ben Bernanke in 2009. (I've long felt that Obama's failure to appoint his own Fed chair was one of the worst mistakes of his presidency.) But there's little in his past to suggest that he wouldn't immediately become a captured regulator of the largest (and most corrupt) banks in America, and there are alternatives that don't carry his brand of arrogance and corruption. (And, by the way, Donald Kohn -- another Obama favorite -- isn't one of them.) But Summers is a relatively known commodity. What's more disturbing here is that Obama's own view of the economy seems to be so narrowly subservient to the bankers' view -- and so far disconnected from what's actually happened to workers in America.
By the way, had a power blackout during last night's storms, and that delayed (and forced a hastil conclusion to) yesterday's Weekend Update post. Also backed up Jazz Prospecting, which will come out late tonight or early tomorrow, unless we have another blackout. Sorry for the delays, but I also wanted to sneak this morsel in.
Saturday, September 15. 2012
There's a very succinct description of how private equity works in Matt Taibbi's Greed and Debt: The True Story of Mitt Romney and Bain Capital:
Under the debt load, with new management planted by Bain who knew nothing about the toy business but knew enough to rubber stamp Bain's dividend, KB went bankrupt. That may have been disappointing to Bain -- the longer KB survived, the more its owners could bleed it -- but Bain's investors and owners had already made a handsome return on the deal. And deals are what private equity is all about, one deal after another, each one a windfall. Back during the S&L crisis someone pointed out that the best way to rob a bank was to own one. Turns out that's true for any business.
But it used to happen less frequently. Several reasons come to mind, the most obvious being that business owners have fewer scruples now than they used to. The most corrosive idea behind this shift is the notion that the sole responsibility of business owners is to maximize profits, especially given that we can only truly measure profits in the short-term. This has always been a latent idea among business owners and (especially) financiers, but for most of our history has been limited both by law and by custom.
For instance, family-owned companies have good reason to take a longer-term view of a business that will be handed down through the generations. Even the case of a broadly held corporation is likely to have a mix of short- and long-term-oriented investors, and need to balance those interests off. On the other hand, when a company is taken over through a LBO, the ownership is narrowed drastically, and the debt overhang all but forces the owners to focus on the short-term.
Other trends add in. When owners live in the same locale as the plant, they are less likely to harm the community. Replace them with outside owners and those scruples go away. When owners are expert in their industry, they are more likely to strike a balance between short- and long-term needs, because they see their whole careers developing within a single industry which has few options should they blow up. Replace them with finance people and those considerations vanish: to a financier, all companies look the same, and there are always more companies around the corner. (Financiers, after all, don't build companies; they buy them -- and usually with other people's money.)
A unionized work force also limits the management's options, so the loss of union protection has made it easier for companies to be looted and plundered. Then there is the law: most of us still believe that business owners are still subject to law, that they are prohibited from criminal activity (significantly including fraud), but the overall trend had been toward less regulation, toward less effective enforcement, and toward less exposure to torts: the result is that business owners need have fewer scruples about their compliance with the law. (Possibly the best example of this was the Citibank-Travelers merger, at the time blatantly illegal, but rather than prosecuting the Clinton administration arranged to change the law, making the merger retrospectively legal.)
The result of all these trends is that we are now plagued by a new breed of businessman: one that's only in it for the money, and willing to take the money from anywhere it's available, using any methods he can get away with. The particular scheme that Romney practiced at Bain is especially odious because even in cases where the extra debt and looting don't kill the business, everyone related to the business (workers, customers, neighbors) except for the owners is much poorer as a result, while only a handful of already rich investors get richer. But they're just the worst of the worst. The whole financial sector has more than doubled in the last thirty years as the business of business has shifted from making products and providing services to making deals with huge payouts to the dealmakers, those profits to be squeezed out of everyone else.
Thursday, January 5. 2012
Boeing announced that they're closing what's left of their Wichita plant. That means laying off 2,160 workers, and not fulfilling any of the promises they've made to Kansas politicos over the last decade while pursuing the great $35 billion tanker scam. The Boeing plant dates back to 1927 when it was Stearman Aviation. The plant greatly expanded during World War II, mostly at government expense, when employment swelled to over 50,000 and Wichita built the B-29s that won the war against Japan, and into the 1950s the B-47s and B-52s that pounded Korea and Vietnam (and still occasionally fly over Afghanistan).
My father worked at Boeing for 38 years, and my brother worked there for 23 years. In my father's day Boeing had several large plants in Washington plus the one in Wichita: all were unionized and the IAMAW negotiated nationwide, so Boeing's workers caught a break in Wichita. Nowadays it seems like they have hundreds of plants. The company isn't much good at building aircraft any more, but they do big business in auctioning off plants to cities and states eager to pay to have their citizens exploited. In 2005, Boeing spun several properties, including most of their Wichita plant, off in a private equity deal to create Spirit Aerosystems, reducing their Kansas employment from 15,000 to 4,500, and they cut more than half of that in the six years since.
It's not that Wichita and Kansas haven't been willing to cut Boeing hundreds of millions of dollars in loans and abatements and other favors, nor that the local politicians ever hesitated to ply their influence for Boeing's benefit -- the tanker scam is only the grossest example. It may be the unions: before Boeing carved up their plant in 2005 SPEEA had organized the office workers, giving the Wichita plant (in right-to-work KS) the highest percentage union representation of any Boeing plant. That's no longer true, but Boeing still claims it costs 70% more to do work in Wichita than in San Antonio, where they have a non-union workforce in a fresh government-built plant. Wichita workers aren't used to thinking of themselves as overpaid, but Boeing has no scruples when it comes to screwing over their workers.
I skipped over the ones searching for reaction from Kansas politicians. About all they had to say was that they were sad or sorry. In the 1940s the government built McConnell Air Force Base across Oliver Street from the plant they built for Boeing. The two have always had a symbiotic relationship. The reason the Air Force still flies 1950s-vintage aircraft like B-52s and KC-135s is that they've been periodically flown into McConnell and rebuilt by Boeing -- in fact, the KC-135 tankers are based here, even though they're mostly used to support fighters in Asia. Take Boeing away and there's no need for McConnell.
For some reason no one noticed how vulnerable McConnell would be once the KC-135s were replaced. Now if those same politicians are finally moved to salvage some jobs here, they'll do whatever they can to kill the new tankers. They never were a good idea, but now for Kansas at least the jobs excuse works against them.
I sent the following squib to the Eagle's Opinion Line:
The Eagle is asking for stories telling them "what impact has Boeing had on you and your family over the decades?" They provided a living for my father, although it's also likely that the leukemia that killed him was rooted in the chemical he was exposed to there. They turned into a nightmare for my brother, firing him for being too pro-union and for being a medical insurance liability. By then they liked to brag that "this isn't your father's Boeing." Indeed, they're not. They haven't just tracked the moral rot of the nation; they've repeatedly been the cutting edge.
UPDATE: One more Boeing article: Boeing misses deliveries target; Airbus beats goal. This just reinforces my argument above that in redirecting its business to maximizing its political clout and using that to extort income and financing from government and profits from workers, Boeing has lost its fundamental competency at building airplanes. It used to be that Boeing would build entire planes in one factory, with a great deal of vertical integration. If the advantages of doing so aren't obvious, look at the accompanying picture, which shows a 787 fuselage being loaded into an even larger airplane to be flown to the final assembly plant. As Boeing added more properties (to gain more political angles), and started to do more subcontracting (mostly to screw their workers, although wide supplier networks also helped build political clout), the manufacturing process became vastly more complex, while Boeing's quality control has declined. You see all this in the 787 program, which is about five years (and counting) behind schedule.
The contrast to Airbus should be instructive. You'd think that Airbus, with its government bureaucratic control forcing work to be spread over multiple countries, and its unions not only pushing labor costs up but effectively co-managing the company, should be much less efficient than Boeing, but at least Airbus can concentrate on actually building planes. And while Boeing is constantly whining about how urgently they have to cut labor costs to remain competitive, Airbus not only pays higher wages, they do so in Euros which are much more expensive than dollars. But in the end the ability to deliver planes makes all the difference.
Tuesday, November 29. 2011
Tony Capaccio: Overrun Forecast in Boeing Tanker Work: Well, that didn't take long. The overrun is $500 million over the first $4.8 billion chunk of $7.1 billion in "development funds" -- the first actual aircraft, based on Boeing's now-obsolete 767 airframe, aren't scheduled for delivery until 2015. Moreover, the widely touted $35 billion program is now described as "planned as a 179-aircraft, $51.7 billion program that includes research, production, and aircraft support." Unlike the golden age of cost-plus-10% Air Force contracts, Boeing's on the hook for the overruns -- which is good news, unless you work there, in which case it just becomes more fuel for Boeing's psychotic efforts to squeeze its workforce, and to scam all of the political jurisdictions that think Boeing is doing them a favor by exploiting their labor. We've already seen the first of that with Boeing's threat to close its Wichita facility -- i.e., the one plant Boeing has that has almost all of the company's experience maintaining the Air Force's KC-135 tanker fleet. Still, despite all its attention to cost, delays and overruns have plagued Boeing's management for decades now. They've become so adept as scamming the system they've forgotten what got them into the game in the first place: the skills to build airplanes.
In another sense, the cost overruns are Boeing's fault: it was widely felt that they deliberately underbid the tanker contract to counter EADS. They had lost the previous competitive bid in large part because their numbers were way out of line, and only got the contract rebid through their lobbying clout. I wouldn't be surprised to find they found the right numbers through their revolving door contacts: they've had one VP go to jail for trying to fix the deal, and it would be surprising if the graft ended with her.
I keep returning to the Boeing tanker story because it seems so central to what is sick with America today. The tankers themselves are the platform upon which the American military empire is built: you can't project power to the far corners of the globe unless you can find a gas station when you get there. Any time some fool calls for a "no flight" zone, they're not only calling for the fighters and bombers to shoot down contraband flights, they're calling for the tankers to keep those fighters and bombers in the air over their targets. Making a $51.7 billion investment in new tankers shows us that the imperial command has no plans to back down from America's commitment to bully the world. On the other hand, if you do accept the need for the US to roll back its armed forces, the first place to cut funding is this $51.7 billion -- plus the untold billions it will cost to maintain and fly those planes if and when they ever get built.
On the other hand, stopping the new tanker program leaves the old one in place, and that KC-135 fleet has gotten the US to where it is today. Indeed, there's no reason why those planes can't stay in service for many more decades. They've been repeatedly rebuilt, periodically refitted with new wings and/or engines. They fly in spaces where they don't need to worry about being shot down. The main people who have emerged as opponents of Boeing's tanker scam have either been anti-graft imperialists like Sen. John McCain, or pro-graft ones like Sen. Richard Shelby who want more of the booty for themselves. So while opposing new tankers is one step, opposing the old ones is another. The main reason to shut down the old ones is to make it harder for the US to get involved in foreign wars -- most obviously the air-focused ones like Kosovo and Libya, although the ability to maintain the "no fly" zones in Iraq was what kept war with Iraq on the burner, making the 2003-11 war virtually inevitable.
But then there are a whole other set of reasons for opposing the new tanker program: those rooted in the management culture of Boeing, their vast political lobbying network, their revolving doors in and out of the Pentagon. For a while Boeing could market itself as a national treasure as America's number one manufacturing exporter. They may still be, but they've turned into a national disgrace. They've become poster boys for the collapse of business ethics that plagues the entire country. It used to make sense for the public to support corporations that in turn made useful things that built up the public's standard of living. That they made a profit in the process was tolerated, in large part because it was taxed -- another way corporations gave back to the society, and to the nationhood, that supported them. Now, however, they've become rackets, predators, out to suck as much profit as possible any way they can get away with it. Nor are they merely part of a bad trend: Boeing is an innovator here, a model for other companies to follow. This isn't so much because anyone at Boeing was all that clever. It's more because ever since WWII Boeing has been nursed by the Defense Department, a training that they wound up taking as their entitlement. Moreover, they built their commercial business the same way, through one crooked, cross-financed deal after another. Most notoriously, to sell planes in China, they agreed to build some of them there, and they went further and lent out their lobbying subsidiary to promote China's "most favored nation" trading status. (If you factor in the subsequent trade loss to China, Boeing no longer looks like much of an exporter.)
Some of this may be inevitable in the airframe business. Europe wound up nationalizing its various aircraft companies, consolidating them into Airbus. Airbus has two advantages over Boeing. One is that they can draw on public funds for development expenses -- actually, not that big of an advantage given how Boeing has been able to scam the US military and so many states and cities across the country for just that purpose. The other is that while Airbus has to break even to stay in business, it does so for the sake of the industry, its workers, and the nations that own it. It isn't compelled to strip and scavenge the way Boeing does. Those actually seem like good reasons to nationalize Boeing: run it as a unionized non-profit, allow it to borrow cheap through the Fed (even to finance sales, given sane regulation), cap the executive salaries and get rid of the crooks.
If I had much more time and patience than I do, I'd start a website dedicated to squashing the tanker program and smashing Boeing; maybe nomoretankers.org. It would be one way to start a reevaluation of what companies are good for in America, and a realization of what they are no good for. And armed forces, too. The tanker deal is a "teachable moment" -- and Boeing is an object lesson.
Sunday, November 27. 2011
Crowson's editorial cartoon in the Wichita Eagle today, on Boeing's tanker scam bait-and-switch. In their big PR push to dislodge EADS's winning bid and rejigger the $35 billion contract in their favor, the PR flacks at Boeing had upped their usual 1,000 job promise to 7,500 -- counting all sorts of multiplier effects, something Republicans never believe in unless they hear it from a defense contractor. Now that the deal is done Boeing's decided maybe they don't need Wichita after all -- although there's always the suspicion that they may just be angling for yet another bribe, something they've repeatedly done in the past.
Molly McMillin has another article on Boeing in the paper today: Analysts: Loss of Boeing Would Hurt City, Region. Not much new there. One thing the analysts didn't factor in was the extent to which Boeing's presence corrupts local politics, but that was the subject of an anonymous Opinion Line comment:
Probably no Weekend Roundup today, but I do hope to get something else up this evening. One Kansas-themed story likely to lose out in the shuffle is Brownback Complaint About Student Tweet Lands Kansas Teenager in Principal's Office. As someone who's been there for doing something like that -- admittedly, long before Twitter made it easy to do and easy to get caught -- I can only applaud Emma Sullivan. Also, quote another Opinion Line commenter:
By the way, driving around Wichita a couple nights ago, I came upon several small roadside signs proclaiming "Christmas Doesn't Suck!" If Brownback's concerned about language, well, that horse has left the barn.
Thursday, June 2. 2011
Michael Lind kicked off an argument on energy and climate policy. Andrew Leonard was taken aback, and Lind tried to regroup. The three pieces:
Lind's basic point is that fracking will save our energy-intensive way of life:
Lind skips over the two basic problems with nonconvential hydrocarbon extraction: the cost, especially as measured in energy, and the side effects, which include pollution and climate-altering carbon dioxide created when those hydrocarbons are burned. Lind doesn't deal with cost factors at all. Lind handwaves evidence that fracking pollutes, attacks Greens for promoting uncompetitive renewables, and dismisses climate change as "low probability" -- if it were probable that would be all the more reason for going nuclear, but since nobody wants nuclear the climate change risks must be negligible.
He goes further to blast conservation:
Leonard doesn't get into costs either, which I suspect is the real limit on how much nonconventional hydrocarbons we actually extract, but he does note the pollution externalities -- a word which attempts to translate oft-ignored intangibles like pollution into costs. And while he concedes that it would be nice to have more cheap energy to fall back on, he sees this as buying time, not carte blanche to act like the world's problems aren't our own.
Lind at least tried to put some distance between himself and the industry propagandists:
At least Lind didn't reiterate the relatively underdeveloped smears against conservation and renewables from the original article. I'm one of the first to admit that windmills have a downside -- the cemetery where many of my ancestors are buried is towered over by the things, creaking eerily in the sky, destroying an atmosphere that should be serene. But even if the upper limits of wind and solar power fall short of current, let alone future, fossil fuel demands, every kilowatt they shift extends the available reserves. Same for local food, for public transit, for tighter cities. It makes no sense to dismiss an alternative because it doesn't solve everything.
As for nuclear, Lind is either attempting to scare us, or he naively believes in utopia. There is a lot of uranium scattered about the crust of the earth, and quite a bit of thorium too. But it's not clear how much can really be mined and refined efficiently enough to produce more power than is consumed along the way -- a way that necessarily includes whatever you wind up having to do to safely dispose of the waste. Plus we don't have an especially good record of understanding the risks and accounting for their costs. Lind may be happy to suffer "an occasional Fukushima or Chernobyl" but most of us are more cautious, especially near our own backyards. I'm not hardcore anti-nuclear, but I don't see how this works.
I'm also not a global warming crank, but I can see a lot of real bad things happening short of turning Earth into Venus. Again, even if the little things that are doable prove inadequate, I don't see the logic of ridiculing them: can't hurt, and maybe they buy you a little time and flexibility to grapple with the big problems. Lind, however, rejects any moderating effort until we snap, at which point all he can offer us are horrors: martial law, conscripted business, an accident-prone nuclear power industry, God knows what else. He immediately rejects the first principle of progressivism, which is, hey, let's stop a minute and think about this, so we can plot out a course that does what we want to do.
But let's go back to the beginning here: fracking. I saw the movie Gasland recently. It's hard to tell from one personal take whether gas fracking is always destructive to the environment, but the movie does make the case that sometimes it is, and that there needs to be more trustworthy oversight so we can understand when things go wrong and what can be done about it. One thing that is clear is that the fracking fluid is deadly poisonous. Another is that industry standard practices of drilling gas wells and hooking up pipelines and infrastructure are not as safe and reliable as they should be. Another is that the profit-seeking gas companies have powerful incentives to hide rather than to face up to problems. It also isn't clear how economical it is to tap into shale gas: the deposits are thin and often poorly sealed; the horizontal drilling and fracturing are expensive and difficult. This raises questions: how densely do you have to drill? how quickly do the fields loose pressure? how much gas is actually recoverable? Unless all of this can be done by spending much less energy than is returned it will prove uneconomical.
The same basic questions apply to any tight oil or gas source. Until fracking was developed gas shale was uneconomical. Now, how far have we move that equation. We've known for a long time that there is a lot of oil shale in Canada, but it's always been real expensive to extract it. For now, all we can do is to strip off the shale closest to the surface, heat the rocks up to extract the oil, and dump almost everything as waste. Every step along the way uses up a significant fraction of the extracted oil, so you don't wind up with much profit. Tar sands are even tougher. When oil was $20/barrel people speculated that tar sands would be profitable at $40/barrel, but we've still never hit a price that works: it just takes too much energy. And everything else in the industry works that way. The biggest conventional oil finds in recent times have been deepwater offshore fields, and the real costs of drilling them just took a sudden leap in 2010.
And now Lind just waves his hand and we'll be able to process massive amounts of gas hydrates. All we have to do there is sink robots to the bottom of the ocean, have them dig off the sediment, then pick up little clumps of ice and methane and shuttle them back to the surface. Good news is that once you got them, the chemistry is pretty simple, but getting them is something else.
I don't doubt that eventually we'll pump every recoverable barrel of oil out of the ground, that we'll suck up all the gas we can afford, and that we'll mine all the coal we can get to. Nor do I doubt that we'll convert almost all of that carbon into carbon dioxide because we'll want to use all of the energy packed into those molecules. And we'll dump most of that carbon dioxide into the atmosphere, where it will trap solar energy and make the planet hotter and hotter. We've spent the last century doing just that as unthinkingly as possible, and if Lind has his way we'll just keep on doing just that, assuming that any problems that do crop up will miraculously solve themselves.
What bothers me about all this is its unthinking nonchalance. I don't doubt that if we really did think about it we would wind up burning all that fossil fuel. But we would recognize the benefits of slowing down the pace, both of the burning and of everything else that depends on that energy. Slow down the pace and you'll postpone the reckoning. Slow down the pace and you'll reduce the concentration of carbon dioxide and lessen its warming effect. Slow down the pace and you'll have more time to think about what you really want to do. In particular, you might think about how much consumption is enough for human happiness, and narrowing the band between not enough and too much to develop a more equitable society that leans more to cooperation than to competition, and therefore reduces conflict, allowing us to slow down further, and stretch out the time before we face the end of our fossil fuel endowment.
On the other hand, Lind doesn't want to slow down. He wants to keep racing on until we hit a wall, then start a big fight over whatever's left. Reminds you he never was a real progressive. He just got a lot of credit for turning on his fellow neocons and opposing the War on Terror. But here he is, dumb again.
Bonus link: Bill McKibben: Obama Strikes Out on Global Warming: Tom Engelhardt's intro reviews the latest climate news, before McKibben gets to what's bugging him:
Needless to say, this is just a small subset of Obama's handling of energy and environmental issues since taking office. You might recall that he had just unveiled a huge giveaway program to open up deep water oil drilling in the Gulf of Mexico and up and down the Atlantic coast when BP's well blew up. And he had just announced another round of incentives and subsidies for the nuclear power industry when Fukushima melted down. Time and again he's tried so hard to follow in GW Bush's footsteps, championing the crony capitalism his predecessor(s) worked so hard to advance. And time and again he's tripped himself up. That's not change you can believe in. That's the same old story you voted against.
Friday, May 20. 2011
Henry Farrell: Count Me In With the Unsophisticated Six Year Olds: Starts by quoting a Kindred Winecoff attack on Krugman, arguing that things like the Bush tax cuts, the Medicare D program, and the housing bubble were actually cases of popular will at work in a democracy, not (as Krugman argues) the results of intense lobbying by self-interested elites. Farrell writes:
The Medicare D example is worth exploring a bit. Adding some sort of drug perscription coverage to Medicare was a very popular proposition. Most health insurance plans provide some sort of coverage. Originally it was a relatively cheap benefit, but under its cover pharmaceutical companies were able to push prices way up, which made the omission all the more glaring in Medicare. It was one issue that Democrats seemed to have some traction with, which is basically why Karl Rove felt the need to sweep the issue away. Once Rove and the Republicans decided to do something, the actual legislation was pure giveaway to the industry. So popular demand wanted the benefit, but not the law as written. In particular, the prohibition against the government negotiating drug prices had no popular benefit -- it greatly increased costs, some of which were passed to seniors in forms like the "donut hole" and the rest fobbed onto taxpayers. The law was clearly an inside deal, but it is true that if the benefit hadn't had such broad popular support it wouldn't have been pushed or passed. So in that sense Medicare D wasn't purely the work of ensconsed elites. On the other hand, the Iraq War was.
No one denies that popular opinion limits what elites can do, nor that it can provide a wedge for one set of elites to campaign against another. However, the latter happens very infrequently, in large part because there are rarely serious splits between elite opinion. One finds, for instance, that both parties hire Treasury officials from the same sets of Citibank and Goldman-Sachs executives. The defense and foreign policy establishments are nearly as integrated. For some 30 years now the US relationship with Israel has been hamstrung by the Dennis Ross-Elliot Abrams tag team, who are nothing more than foreign agents, yet they've managed to pin down what we like to think of as a popular democracy.
When popular opinion demands health care reform, Obama consults with the usual industry lobbyists and comes up with a right-wing think tank plan. The Democrats response to global warming, which quite a few people are seriously worried about, is yet another right-wing think tank scheme. The right then abandons both plans to move the debate even further right, even further away from the issues people actually care about. Working through these charades you wind up with a disaffected populace that doesn't even bother to vote -- it's not like there are any candidates anyway.
: Later on I see Henry quoting Krugman on this:
Emphasis added. The other budget-busters were sold to the public, and you can cite some polls showing that the selling was successful, but not ones that show that the people who were sold to understood what they were buying.
Winecoff later argues that most Americans don't want a healthcare system run by the government, then tries to broaden "anti-government ideologues" to include those masses. In fact, very few Americans have any major problems with the healthcare systems that are actually run by the US government -- Medicare, Medicaid, the Veterans Adminstration. It's only imaginary ones they object to, which makes you wonder if they really know what they are opining about.
This, in turn, is followed by 262 comments. Some are worth quoting.
An examination of the character of Karl Rove is all that is required to support Krugman's thesis of irresponsible and incompetent elites. This "Mayberry Machiavelli" could in no way be described as a public servant. He was a cynical manipulator of public opinion relentlessly pursuing the the political agendas of his patron(s). To suppose that a creature like Rove was simply responding to the wishes of the public is lunacy.
Kindred Winecoff :
I pretty much gave up on Winecoff's frequent comments after here. At one point he argues that elite opinion is divided then gives Krugman as an example of an elite who disagrees with various Bush policies. In fact, I wound up stopping near the point where Winecoff wrote, "The consensus here seems to be that I should shut up."
Area Man :
Martin Bento :
Jim Harrison :
Regarding the presence of evil in political leadership, there is a simple test. Knowingly making false representations to achieve goals that are harmful to the general electorate, but beneficial to one's patrons, is evil. People who regularly do this to advance their political careers are evil. [ . . . ]
There is a valid criticism of Krugman to be made in particular as regards the financial crash -- while it was of course made possible by deregulation, that deregulation was a necessary component of the financialisation of modern capitalism that in turn is a response to the problems of the tendency of the rate of profit to fall and the surplus absorption problem. Seen this way, it IS indeed simplistic to blame the actions of elites, as in, individual members of the elite, for it.
This is one that could use some unpacking, but even if you regard financialization as an inexorable law of capitalism -- David Harvey wrote a Marxist take on this, and Kevin Phillips wrote a non-Marxist one -- it still comes down to actual, well-moneyed elites to grease the wheels and make it happen. If it was just surplus absorption, one could find plenty of poor workers to distribute that to -- but the bankers had other ideas.
You know, that's enough for today. Only got to the 193rd comment, one from Henry, which sent me off on a tangent. This comment was mostly a quote from Banjamin Wallace-Wells' New York profile What's Left of the Left: Paul Krugman's Lonely Crusade. We can close on this quote, which says something about Krugman's contention that his politics is driven by his understanding of the data:
A lot of things fall out of this observation. One, for instance, is why Krugman regards Ron Paul as an ultra-rightist instead of as someone who has some very favorable traits, especially his steadfast opposition to using American military force abroad. It also shows why Krugman is always able to find a rationale to favor a Democrat over a Republican, even if he can say nothing else nice about the Democrat. Also helps explain why he consistently views Clinton as better than Obama -- there's even a bizarre section where he imagines the Democratic Party revolting to nominate Clinton in 2012 (he gives that the same odds as Michele Bachmann winning the election).
Not as good a profile as one might hope for. Still worth quoting the best line, in a back-and-forth section on Larry Summers:
One more, an insightful lesson from Argentina that many others missed:
Thursday, May 19. 2011
Somehow I got way behind on Paul Krugman's twice-weekly New York Times columns. Rather than clutter up the Weekend Roundup with them, I thought I'd kick out the salient points here. Actually, although the columns are always well thought out and tightly crafted, most of my many Krugman quotes come from his blog, where he strays wider from his basic themes and strikes things at more interesting angles. In the columns he tends more to harp on the same points, not that they don't deserve some harping.
People read this stuff and get the silly idea that Krugman is some kind of radical, but he's nothing of the sort. He qualifies as being on the left because he thinks that a more equitable society is a good thing; that people should be able to feel more secure, and that we are all better off when people have more opportunities and freedom, but he's no utopian: he's pretty happy within the bounds not just of most modern social democracies but within the exceptionally modest one we enjoyed from the New Deal through the Great Society. He's really moved very little since he worked for Reagan 30 years ago. What's scary is how far the right has slid past him, how dogmatic and intractable they've become. Even so basic an idea as that the government should provide deficit-financed countercyclical spending to lessen the damage caused by recessions is now fought tooth and nail by a party whose own presidents (as late as G.W. Bush) were first in line to open the tap.
Thought I might do a post about Krugman as a bonus, but it's taking me too long to sift through the comments (which are worth sifting), so maybe tomorrow.
Thursday, May 12. 2011
Just got a piece of email from Craig Aaron at freepress.net. I get a lot of mail like this but this is the first time I've just copied it verbatim:
Baker's new position is actually Senior Vice President of Government Affairs, working directly for Comcast. Baker was appointed to the FCC by Obama, assuming office July 31, 2009, and has been an opponent of "net neutrality" ever since she landed. She's listed as a Republican, married to the son of Reagan-Bush consigliere James Baker. I have no idea how she got appointed, but this is a question that anyone who thought that Obama might actually change anything important needs to contemplate.
Whether this is the most blatant corruption ever is something we can debate. When Boeing paid Pentagon procurer Darleen Druyun off with a Vice President job, she (but not the Boeing execs who hired her) wound up in jail. When Billy Tauzin pushed the Medicare D bill through the House -- the one that prohibited the government from negotiating prices with pharmaceutical companies -- he didn't even bother to finish his term before cashing in as President and CEO of PhRMA, the pharmaceutical industry lobbying conglomerate. Those are two of the more blatant cases I can think of, but there are many more. On Obama's watch, the biggest one thus far has been Peter Orszag, who served as CBO Director before landing the job as Citigroup's Vice Chairman of Global Banking: you can say that was less blatant, but Orszag was an important peripheral figure in the bank bailouts and the new job is worth millions.
I'm sure we'll be hearing much more about this over the next few weeks, including numerous campaign quotes from Obama about how he was going to clean up the stench of corruption that smells just like this.
Don't have any new links, but the NLRB ruling against Boeing for building a new aircraft assembly plant in South Carolina is heating up. Boeing is acting dumbfounded, as well you might expect given how little flack they've gotten for their anti-union activities in the recent past. (Among other things, when the office workers in Wichita unionized, Boeing sold off the plant in a private equity deal, then managed to decertify the union from the tiny rump group they kept for military work.) What I find even more disturbing than the anti-union aspects of the South Carolina move is that they got the state to fork over $900 million in bribes to build the plant. Even there, only the size of the booty is surprising: for quite a while now Boeing has made a practice of selling jobs to state and local politicians, both in the US and abroad. Their whole business swims in an ocean of corruption: that they can't deliver new aircraft like the 787 and that they aircraft they do sell like the 737 have been turning up to be defective is a side effect. Like all good US corporations, their real business is making money for investors (and upper management), and their products hardly matter.