February 13, 2013

A few notes on the SOTU Address

After all, it's traditional to say something, and when George W. Bush was delivering these things, they were always good for a laugh.  It's hard to know how to react anymore when listening to the State of the Union Address.  Nothing the President actually says has any importance; the commentators appear to concede that as a matter of course.  It's all about "tone" and "drama" and "framing."  Congress is under no obligation to enact anything the President recommends, of course, but the President has a Constitutional duty to show up from time to time and tell Congress what he thinks they ought to do:

 "He shall from time to time give to Congress information of the State of the Union and recommend to their Consideration such measures as he shall judge necessary and expedient."  Article 2, Section 3.
Like so many things in our made-for-TV American lives, we've naturally turned these events into a once-a-year, highly-stylized affair, sort of like the Oscars.   There's even a Red Carpet: the President's entrance, with the choice positions near the aisle so you can press the Prez's flesh or  maybe score a bro-hug or exploding fist bump. I realize that times change, and it's unlikely that George Washington would have been handing out exploding fist bumps.  Nevertheless, you get the idea from the Constitution that the Framers were actually suggesting that the Executive coordinate with Congress in an effort to get things done, by periodically meeting with them (not necessarily once a year) and giving them his ideas. There's nothing in there about a "speech;" a speech is an empty ritual.  Yet this is so typical of our unserious times.  All surface, no substance.  You can't televise work sessions effectively, so we get a speech in response to Article 2, Section 3.

I look upon these things as a prime-time Reality version of watching a historical reenactment.  In the audience we have lots of ancient white men who have been in Congress forever, as sclerotic now as the institution they represent.  None of them has had a new idea in the past quarter century, which is why they are content with this performance in which the President urges them to do a lot of things they'll never do, such as expanding the reach of the federal government ever farther.  President Obama now wants Washington, D.C. to take over the country's nursery schools, I think I heard him say. 

The actual "state" of the union would appear to encompass negative trends and developments over the last year; so I would think on a fair reading of the Constitution.  However, a literal description of what's actually going on is not allowed, as contrary to the rules of modern politics.  The campaign never stops.  The President did not make any direct reference to the astonishing growth in the use of food stamps, for example.  Nor did he say directly that the actual number of non-farm American jobs, about 132 million, is just about exactly what it was in January, 2000, 13 years ago.  The labor participation rate (the percentage of working-age adults with employment) is stuck at about 62% and has been stuck there more or less forever.

This is my question:  why not simply say so in the State of the Union?  This graph is not from some Libertarian, bunker-dwelling, paranoid-schizophrenic website that rants and raves about the Bilderberg Group or the Protocols of the Elders of Zion.  It's from the U.S. Department of Labor.  Why not bring an easel up to the dais and plop this baby up there?  Wouldn't that at least be the beginning of wisdom?  The State of the Union:  "You know what, folks: it just doesn't seem to work for most of us anymore.  Dunno what's wrong, but the economy just doesn't seem to be happening. Maybe we should try doing something really, really different.  That's what I'm Recommending as Necessary and Expedient."

Instead, we get this kind of thing about gasoline usage:

"We have doubled the distance our cars will go on a gallon of gas and the amount of renewable energy we generate from sources like wind and solar, with tens of thousands of good, American jobs to show for it. We produce more natural gas than ever before, and nearly everyone’s energy bill is lower because of it. And over the last four years, our emissions of the dangerous carbon pollution that threatens our planet have actually fallen."

Yeah, they've fallen because we're too broke to fill up and drive anywhere.  Gail Tverberg's latest chart on the allocation of this "economizing" from her superb blog, Our Finite World:  
About 7% of the savings in petroleum usage results from our cars getting "twice" the mileage; another 25% (almost four times as much) results from a decrease in VMT, vehicle miles traveled.  Americans just aren't driving as much anymore, because they can't afford gasoline.

An even better idea: why doesn't the President just bring Gail Tverberg up on stage with him and hand her the pointer?  I know, I know, Article 2, Section 3 says "He." But we're bigger than that, aren't we? 

How about this?  Instead of extolling the wonders of increased mileage in autos, and how Americans are determined to save the planet by going broke and leaving their cars in the garage, why don't we build some fricking railroads?  How about suggesting that the able-bodied ride bikes?  Or walk?  You know: how about some ideas

February 12, 2013

Meanwhile, Back in the Biosphere

Writing about columnists at the New York Times (and I blame Bob Somerby and his superb line, "We are where we are because of these people" for the digression) is certainly amusing and diverting, but it's not really consistent with the Mission Statement of this blog.  Although there is no such Mission Statement.  If there were, however, the Mission would relate to the very title of the blog and to the analytical method and style of thinking of Henry David Thoreau, who anticipated most if not all of the problems that Industrial Civilization would face as the age of specialization advanced, as humans became cogs in an economic machine, and as we pushed the ecological limits of the world to the point of our own extinction.  I mean, it's all right there in the pages of Walden.

 What I find fascinating about my own years of life is that my span happened to overlap the transition from borderline sustainability of Homo sapiens as a primate (not Papal, the ape kind) to clear unsustainability.  I mean, it was bound to happen sooner or later, given the technological proclivities and aptitudes of this ape form which is, as Craig Dilworth wrote, Too Smart for Our Own Good.  If humans had the intelligence and rugged, natural "lifestyle" of chimpanzees or gorillas, for example, you might expect to find about 100 million of us roaming the surface of the Earth.  We would, at this level, be pushing the limits of the environment's ability to sustain our numbers, and natural cycles (droughts, diseases) would periodically cause a die-off of our numbers down to some equilibrium point.  Or we might, as the Norway rats did in the crowding experiment near the beginning of Professor Dilworth's book, utilize certain adaptive instincts to control our own numbers (some of which the Republican Right would find sacrilegious).

We're at this point because of the exponential growth function of population (as Paul Erlich tried to warn us) and the technological breakthroughs giving rise to what Dilworth calls the Vicious Circle Principle (VCP): faced with limits imposed by our burgeoning numbers, we devise breakthroughs (the Green Revolution in agriculture, for example) which allow us, temporarily, to go on multiplying and pushing the ecosphere to a new crisis point.

The last couple of books I've read on the subject of modern civilization at the crossroads were by Jeff Rubin, a Canadian economist:  Why Your World Is About to Get A Whole Lot Smaller and The Big Flatline.  Both are mainly about the limiting effects of expensive and increasingly scarce petroleum, a "master resource."  Petroleum is intimately connected, for example, to the ongoing success of the Green Revolution.  Oil shortages and a related problem, global warming,  are both growth-limiting factors as we move forward.  For example, despite a massive fall-off in petroleum usage in the United States over the last several years (a lot of it related to decreases in miles driven), the prices of West Texas Intermediate and Brent Crude oil remain stubbornly high, confounding the usual supply and demand analysis.  The growth of GDP in the American economy (and elsewhere) is inextricably related to the price of petroleum on the world market.  Simply put, the price is now too high to allow growth, and what appears to be "growth" since 2008 occurs only because the United States (a) borrows 40% of what the federal government spends, yet nonetheless (b) GDP includes government spending.  This is a way of saying that the American economy, net of borrowing from the future, has been contracting for the last 5 years.

This is what I don't see reflected in the analysis of "New York Times" columnists.  The presumption underlying the call for deficit spending, borrowing and printing money is that the American economy will revert to its "trend line."  This is necessary to make all of these monetary games work out, of course, because debt is an exponential function (Dmitry Orlov does a wonderful job with a parable on this very subject in his post today at cluborlov.com).  As we pile on debt with payable interest (even with the very low interest rates of the ZIRP environment), the accruing interest also generates interest and outruns any growth except growth which is no longer attainable, given resource and environmental constraints.  Stated another way, economists such as Paul Krugman (regardless of his beneficial motives) are arguing that historical "cycles" will once again assert themselves despite the underlying changed circumstances which make such reversion to a previous trend line impossible.

Meanwhile, the "globalized economy" has engendered a race by the developing nations (such as Brazil, Russia, Indian and China) to attain the level of (former) affluence enjoyed in America.  China, for example, has become the world's number one market for new automobiles.  It is bringing on-line a new coal-fired electrical generating plant about every five days, and yet its energy use per capita is only about one-tenth of the American usage.  I don't think their energy usage is ever going to match the American standard, because energy is a zero-sum game on a finite planet, and the climate implications will not allow it.  Even James Inhofe would admit he was wrong about the "hoax" of global warming before we reached that point.

So what will we actually do?  Probably react to events in a perpetual pattern of crisis-mode, is my guess.  Promise technological fixes to bail us out one more time, in the spirit of the Vicious Circle Principle.  I suppose we could sustain the world's population of 7 billion using solar and wind power (which are both forms of solar power) supplemented by the dregs of fossil fuels at levels safe (and available) to use.  But the question the "deep ecologists" ask is:  at what level could humans be sustained using only natural cycles?  That's the missing part.  Probably not at a level where Paul Krugman could appear on "This Week" every week and pronounce on the state of the "recovery."  Another "thought experiment" we might pose for ourselves is this: gorillas essentially survive on solar power.  Would planet Earth support 7 billion of them?  You might say no, because they're not as smart as we are.  Which takes you into a labyrinth you might call Vicious Circle Reasoning.

February 10, 2013

Mr. Krugman's Science, Part 5: the Reconciliation

While Mr. Krugman is certainly annoying and highly misleading (as Bob Somerby said about other New York Times columnists, "We are where we are because of these people."), I certainly bear no animosity toward Paul Krugman.  I actually think his approach is "right;" it's just that I don't think any of the reasons he advances are the true rationale for following his advice. 

We should keep the Potemkin village of the American economy going for as long as possible. Printing money, letting the Federal Reserve "buy" up the "debt" of the U.S. Treasury (the government agency which keeps its checking account at the Federal Reserve), and pumping hallucinated money into the stock and housing markets in an effort to reinflate the Bubbles.  The "transmission mechanism" the Fed uses to move money into the economy only indirectly and partially reaches the American commoners, and this is the reason that inflation, as measured by the Consumer Price Index, remains "muted."  Hyperinflation is the great fear of the central banker who begins playing games with a fiat currency, and Bernanke (a kind of financial mad scientist) believes that he has found a way to confine inflation where he wants it, in the stock and housing markets.  I believe he's dead wrong, and that there is an underlying financial "thermodynamics" based in the interlocking fiat currency system of the globalized economy which is far too complex for the central bank of one country, even the country with the largest economy and the site of the "reserve currency," to control indefinitely. 

Mr. Krugman's putative approach, that we should keep printing money and "borrowing" (largely from ourselves), and then balance the books "later" is the purest kind of moonshine.  Mr. Krugman says such things so that he can be regarded as one of the Very Serious Persons he spends his time lampooning.  You can't be taken seriously if you urge the party crowd in the main ball room of the Titanic to keep dancing and swilling champagne as the bow of the ship tips ominously downward; you have to advise the government to maintain the status quo "for now" until the "recovery" is complete.

That's where Mr. Krugman loses touch with reality. There isn't going to be any recovery to some mythical "trend line" derived by drawing a ruler through data points created by previous bubbles.  What Mr. Krugman apparently can't see is that the American economy has been sagging relentlessly (like a birthday balloon found two weeks later on the floor behind the couch) since about 1973, when we first began losing control over our domestic energy sources (meaning: oil), and subjected ourselves to the global economy (that monstrosity that Tom Friedman has always been so excited about, in his moronic way: "We are where we are because of these people...").  Now we're in a life and death struggle with the developed world (Europe, Japan, Canada, Australia) and the rapidly developing world of China, Russia, India, Brazil, South Korea, Southeast Asia, and they all want the same things we want: an opulent living standard just like America.  The world cannot support that, and we have placed our fate at the mercies of these competitors who intend to use every edge they can find to overtake us.

Mr. Bernanke is using his hole card, the reserve currency, and he's going all in, hallucinating money like a man possessed of strange visions.  And why the hell not?  Does he think there is actually a pot of gold at the end of this rainbow he's painting in the sky?  I doubt it (he's much smarter than Krugman).  But if we can derive a few more years, or whatever time, maintaining our Potemkin existence at something like its present level by means of these machinations, why shouldn't we?  As Mr. Krugman is fond of saying, the economy is "not a morality play."  Is this a somewhat sociopathic statement?  You can look at it that way; the point, however, is that we're going to get to that point of collapse one way or another, so why would we hurry it along with a premature act of self-annihilation?

If we suddenly withdraw 40% of the funding from the federal government, and stop goosing the stock and housing markets with hallucinated money from Bernanke's asshole corner computer,  we will bring on pandemonium.  This crazy wish to be all "tidy" and "balanced" is nuts.  Do what Krugman says,  "kick the can" down the road (his very words on Friday).  Mint that "trillion dollar coin."  Play any game you can think of to keep the party going.  You put on another stack of CDs and roll up the carpet.  I'll go out and buy a few more cases of Veuve Cliquot.