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Great news for us old Keynesians

by techno Thu Jul 10th, 2008 at 11:05:15 AM EST

The Associated Press reported (on Friday June 6, 2008) that the International Energy Agency claims a serious effort to combat global warming will cost $45 trillion.  I happen to think this is an underestimate.  But the idea is very good.  And if we run the global economy with sound economic policy, such a project could lead to the greatest prosperity in human history.

Good ol' Diary Rescue by Migeru


Some key quotes from the AP article.

The report by the Paris-based International Energy Agency envisions a "energy revolution" that would greatly reduce the world's dependence on fossil fuels while maintaining steady economic growth.
"Meeting this target of 50 percent cut in emissions represents a formidable challenge, and we would require immediate policy action and technological transition on an unprecedented scale," IEA Executive Director Nobuo Tanaka said.

The scenario for deeper cuts would require massive investment in energy technology development and deployment, a wide-ranging campaign to dramatically increase energy efficiency, and a wholesale shift to renewable sources of energy.
Assuming an average 3.3 percent global economic growth over the 2010-2050 period, governments and the private sector would have to make additional investments of $45 trillion in energy, or 1.1 percent of the world's gross domestic product, the report said.

When I wrote Elegant Technology, the central theme was that job #1 was to use our natural energy capital (fossil fuels) to build a society that could run on the energy income we could harvest from the sun.  I discussed class theory, tool development, industrial conversion of militarized production, and especially political economy.  Everything--social organization, education, finance, political institutions, and other cultural manifestations had to be harnessed in such an effort--so important was this project.

Of course, if humanity is going to attempt to completely rebuild the industrial umbilical chord that sustains our lives, we might was well take care of the other problems of early-stage industrialization--toxic waste, resource depletion, mining the soil for crops, WATER, etc. etc.  No shortage of scope on this project!  (Elegant Technology is about 110,000 words long and I thought I was coming to the point!)

Of course, like any large building proposal, eventually the question WILL be asked, "How much does your plan cost?"  Anyone who has ever bid out a large project will tell you that there really is no way to KNOW the answer to this question--any answer is only an educated guess.  But essentially there are two strategies.  

  1. You can count very carefully all the known parts--tool acquisition, raw materials, labor, etc.  Add up these expenses and multiply by some random factor that reflects the culture--levels of corruption, poor contract performance, haggling, etc. and there's your bid.  Very tedious to do it this way--although CAD/CAM programs that keep track of materials lists have made it simpler.  All the builders I have ever met HATE bidding like this because it requires so much investment of time and energy--with a real possibility you don't even get the job.  

  2. Guys with a lot of building experience usually resort to bidding by analogy.  They look at a set of blueprints and reason--this looks a little like a build we did 5 years ago, it cost us $250 a square foot to build, this building has 100,000 square feet, so my bid will be 25,000,000.
Bidding by analogy has several advantages.  It is quick and reasonably accurate.  More importantly, it demonstrates expertise.  Let's say you are a client.  You have in your hot little hands a set of drawings created at some expense by an architect whose beautiful presentation has you all excited by the prospect of a beautiful new building.  The guy who greets you takes a quick look at your prints, looks to see if there is something expensively unique, punches a few numbers on his handheld computer, smiles and says, "Yeah, we do this sort of thing on a regular basis.  Here's a sheet with the addresses of buildings like yours.  Check them out for building excellence.  Oh, and you should expect to pay something within 20% of 25.6 mil."  The rest of the conversation is just small talk.

Of course, the builder will look at the plans more carefully looking for expensive problem areas so if the contract looks likely, he will do a complete take-apart bid.  But usually an analogy bid is well with the ballpark.  I know builders who never do any other kind--at least until money changes hands.  The reason analogy bidding works so well is that even a take-apart bid has to calculate the costs of random events.  The best advice I ever heard about the historic preservation business was, "figure your project down to the last dime and then multiply the time required by two and the costs by three."

So when the time came to answer the how-much-would-this-cost question for Elegant Technology, I had to make an analogy calculation.  In those days before Google, a take-apart calculation was essentially impossible anyway.  I had spent 10 years of my life learning how to do analogy bidding in the historic preservation business, so I was comfortable with the process.  My big problem was that I had never rebuilt the entire industrial infrastructure of a continental-sized nation, so I was missing the critical element of experience necessary to do a real analogy calculation.

Even so, I had plenty of resources.  I had just spent over 7 years trying to answer the question: Is an environmentally sustainable industrial state even possible?  I had spent much of my life in an industrialized agrarian environment where issues of energy use and economic development were very much out in the open.  I had experienced the USA patent system and understood the long and winding road between an idea and a useable product.  And I had a pretty good idea how large projects are organized.  It may not have been first-hand experience in a real industrial conversion project, but as any inventor can tell you, everything in human history was first produced by someone who had never done it before.  Of course, there must be relevant experience.  But if the Wright brothers could go from making bicycles to airplanes (an astonishing relevant transition of expertise, BTW), I figured I had enough relevant knowledge to take a good swipe at estimating what a total industrial conversion would cost.

Estimating the time required was the easy part.  It took 63 years from the Wright Flyer until the moonwalk.  Assuming a more focused effort, industrial reconversion, with a great effort, could probably be accomplished in 50 years.  Nice round number.  Go with it.

Estimating the cost was much harder.  I just wanted to be within a couple orders of mathematical magnitude--not be close enough to bid an executable contract.  But even this was hard.  Fortunately during my research for Elegant Technology, I had discovered Veblen's mighty analytical tool--Institutional Analysis.  So these were my Institutional assumptions:

  1. Industrialization was the process of embedding energy consumption into EVERYTHING we do (even sex when you think about it--whether you drive to a fancy restaurant that uses imported ingredients to warm up the night or merely use a condom, you have used some fossil fuels.)  "Everything" is a big universe.

  2. Industrial conversion will be harder than industrialization in the first place--the way that historical preservation is orders of magnitude more expensive than the original project.  (Example, the Veblen farmhouse restoration cost well over $1,000,000--the original, less than $1000.  Even adjusting for inflation, that's a LOT of difference!)  There are manifold reasons why this is so, but the biggest is that existing industrial infrastructure is owned by people who want it to keep making money.  So whatever industrialization cost in the first place, it was going to be MUCH more expensive to replace.

  3. If energy use is embedded into everything we do, it is safe to assume at least 25% of the total economy is the energy part.  That includes the energy cost itself plus the activities and planning required to use it.

  4. Because unused industrial capacity is so widespread, a large project would be beneficial to the global economy--especially if the project included building a way to run the society on energy income instead of depleting the natural capital.  A project that would add 25% to current economic activity could be easily absorbed.

At the time, the USA was about an $8 trillion economy per year.  25% of that was $2 trillion.  2 x 50 years = $100 trillion.  So that was the figure I used in Elegant Technology.  Or would have.  See, a number like $100 trillion tends to give folks the vapors.  It certainly worked that way on my editor/publisher who pleaded with me to cut it.  The evidence is written on the original manuscript.

But blank stares and editorial opposition have not shaken my conviction since then that $100 trillion is still a good starting number.  "Two trillion a year for 50 years" has become a part of my verbal furniture.  So it is with open arms I welcome the IEA report.  $45 trillion is so close to my old calculations, they are virtually identical.  I feel like the cavalry has just appeared on the horizon.

Even though the IEA cost analysis is their version of a take-apart bid, it still must be subjected to some fudge factors.  I believe they would do well to use the rule of thumb of the historical preservationists and multiply their timeline by 2 and their costs by 3.  After all, corruption alone could easily double their cost estimates.  But these are minor quibbles.  

The most important element in solving any problem is to accurately define it.  And crucial to defining a problem is understanding how big it is.  $45 trillion is a good number and proves the IEA employs serious people.  It is time to bury that most pernicious of environmental nonsense--that there 50 easy ways to save the planet.  No, there are not.  Saving the planet will be VERY difficult and VERY expensive.

And for us old Keynesians, that is the best news of all.

Display:
<dance class=little>My copy of Veblen's The Theory of Business Enterprise is in the mail...</dance>

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Wed Jun 11th, 2008 at 06:35:49 AM EST
Heh.  My copy of Elegant Technology is in the mail.  Veblen vaulted several places up the To Read list.

We all bleed the same color.
by budr on Wed Jun 11th, 2008 at 07:37:34 AM EST
[ Parent ]
Can one get a signed copy?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Wed Jun 11th, 2008 at 07:44:05 AM EST
[ Parent ]
Veblen's been on my reading list this summer.

I have a library copy of The Theory of Business Enterprise setting on my coffee table right now.

I've been reading a lot this summer, and I want to try to get as much Veblen in as I can.  I finished Michael Marmot's The Status Syndrome earlier this week and I liked it alot.

Control's the root of the matter, and it's the feeling of not being in control that is the heart of inequality and the origin of the social gradient in health.  (Why low status people are more sick than high status people.)

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sat Jul 12th, 2008 at 05:43:37 AM EST
[ Parent ]
Brilliant Diary, techno. Insights and understanding like yours are rare.

IMHO we need Keynesianism updated for the Internet Age.

To achieve this magnificent "Global New Green Deal" along Keynesian lines we need an entirely new financial system, and moreover, one which we can transition to seamlessly - no small challenge.

Keynes "International Clearing Union" proposal at Bretton Woods is IMHO the correct architecture, but must be created on a networked basis from the ground up, rather than imposed "top down".

The fungible global currency (his "Bancor") which would be exchanged within that Clearing Union (subject to a mutualised guarantee, but that is another story) is of course an energy "Value Unit", and this ties in perfectly with

Energy Accounting

and the Technocracy movement.

As you identify, energy value is only a part - but a very significant part - of an economy, the other key elements being the use/rental value of Land (and its production)- and the productive capacity of the individual ie "Labour", where the concept of "Intellectual Property" and the capitalisation of knowledge has been rendering Marx's analysis pretty obsolete, IMHO.

I digress.

I believe that it is straightforwardly possible through the use of new (partnership based) "frameworks" for energy investment to develop mechanisms whereby the necessary $45 trillion may be funded, and in so doing, to create a new "energy dollar" of global application.

The proposition is quite simple.

Firstly, create an "Energy Pool" legal framework.

Secondly, impose a compulsory levy upon all non-renewables energy transactions (eg gasoline use) which funds the Pool.

Thirdly, use the Pool to invest both in creating new renewable energy projects (MegaWatts) and in energy saving retrofits (NegaWatts).

This "investment" would be in the form of an interest free loan in dollar terms: the "energy loan" would be repayable not in dollars but in energy produced, or the cash equivalent of the energy saved.

Fourthly, the reluctant investor would be given an "Energy Unit" in return for his compulsory investment, and this would be redeemable (at the prevailing energy market price) against renewable energy supplied or against an energy loan obligation in respect of energy saving investment received.

These redeemable Units would have a value in exchange, and would rapidly come to circulate as currency.

The balance of renewable energy - over and above repayment of the "energy loan" - produced by renewable energy projects funded in this way would be shared among citizens as they collectively agree by way of local "energy dividends".

The result is essentially a Value Unit based upon the energy content of carbon, rather than the complete deficit-based bollocks of a Value Unit based upon the carbon in CO2 - a system brought to us by the same people who brought us the Credit Crunch.

The "Community Energy Partnerships" which make this possible and form the basic building blocks of an International Energy Clearing Union can be implemented now, by any community willing and able to do so.

What are we waiting for?

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Jun 11th, 2008 at 07:06:06 AM EST
IMHO we need Keynesianism updated for the Internet Age.

Agreed.  Funny you should mention it.  We were discussing just this issue in Socratic Economics XI National Accounts a week or so ago.  I inquired as to the financial prospects for a from scratch recreation of the General Theory that adapted it to the global economy.  Mig thought it would be a cult classic and said:


What you're looking for is a Feynman Lectures on Economics, so to speak,...

which I found apt.

Why do I suspect that if you were to write such a work you would find yourself practicing economics from Finnigan's Cave?  Or are there still more sinister methods of enforcing "market discipline" on the recalcitrant?

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jun 13th, 2008 at 01:32:03 AM EST
[ Parent ]
Well, actually I think before anyone can write anything meningful about Economics they must have a good look at their assumptions.

As has been discussed on ET ad nauseam, all too often these assumptions bear no relation to the reality of the world in which we live.

ARGeezer:

Why do I suspect that if you were to write such a work you would find yourself practicing economics from Finnigan's Cave?

Me, I'm from the "Zen and the Art of Economics" school.

In particular the

Metaphysics of Value

with which I commenced that rather rambling paper on Knowledge and Value.

I'm summoning up a book which will have a section, probably on "Coarse Economics" (as with "Coarse Fishing")

In fact the book's probably already written out there and I could probably assemble it from the stuff I've posted on ET and elsewhere.

Not easy for an idle bastard like me.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Jun 13th, 2008 at 09:05:04 AM EST
[ Parent ]
I certainly agree about the importance of assumptions.  Those and the level of personal, or, if you will, "ego" development normative in the discipline today are, I suspect, what has given rise to the "Post-Autistic Economics" movement.  If the discipline can be kept close to the level of male adolescent competitiveness it is likely easier for elites to manipulate to their advantage.  God forbid compassion or concern for anything beyond the next quarter or year's profits should concern. Much better to banish such untoward impulses to the realm of "externalities" and deal with them through voluntary efforts.

Thanks for The Metaphysics of Value.  It has been bookmarked for further perusal.  I will await your pending book.  If you, or anyone could make a from scratch update of the General Theory half as accessible as Heilbronner's "The Worldly Philosophers" it would be at once a great public service and probably never out of print.

Meanwhile, deadlines prevent me from being the idle bastard which I so prefer.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jun 13th, 2008 at 10:51:03 AM EST
[ Parent ]
... there has been a governing regime for the US that has been focused on importing unemployment as part of the strategy of maintaining slack employment markets, in order to suppress wage growth and allow megacorps to appropriate the bulk of productivity gains.

Get started on a big enterprise like this, and the slack employment markets go out the window for a substantial transitional period, probably counted in decades.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Jun 11th, 2008 at 10:08:43 AM EST
Incredible diary, Techno. I believe it can be done, technically. And since, as you point out, the key concept that will be the do-or-die element is likely it's plausibility as economic stimulation in a very, very rough time, these guys will likely either BE the gatekeepers, or will have major influence over policy.

These guys are Obama's economics team.

Austin Goolsbee
Things he's written
This guy scares me. Here's just one example why:
"The benefeits of Bozo:Proof that TV doesn't hurt kids
,
not because I disagree with him, as we all know I do, but because the article is intellectually and technically dishonest. It edits the facts to support the conclusions--and we sure have had our share of that lately. I am at a loss as to why anyone with  his CV would write such a clumsy puff job.

Jeffry Liebman
Pension and poverty specialist at Harvard, done intertesting research on EITC-(earned income tax credit)-good program that actually appears to help lower income families a good deal- detested therefore by the current administration;

David Cutler
Dean of social sciences at Harvard.
Things he's written
Actually, he sounds very interesting to me. Though I have not read a thing he's written, I will.

Jason Furman, --a Brookings wonk who thinks Walmart and similar business models are God's gift to the American consumer. Gulp. Veteran of the Clinton white house, and  a man who seems to support the band-aid approach to solving the arterial bleeding of the American medical system. Please! Not again!

A very mixed bag- two and two, I think, but a young one. So there's hope that they can learn. Or, in the case of Keynes, re-learn.  

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Wed Jun 11th, 2008 at 01:33:54 PM EST
You should send this diary to every one of them.
I am absolutely serious.

Capitalism searches out the darkest corners of human potential, and mainlines them.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Wed Jun 11th, 2008 at 01:35:53 PM EST
[ Parent ]
I despair at the economists Obama has surround himself with.  I think we in USA are well and truly f***ed because there are so few political economists left of ANY persuasion--much less the progressive variety.

But Goolsbee.  Oh! My! God! You read his stuff and wonder if he actually walks upright.

Yeah!  It is a mixed bag--dumb and dumber.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Wed Jun 11th, 2008 at 03:09:37 PM EST
[ Parent ]
I posted this over in the open thread.

Fineman: An introduction to Obamanomics - Decision '08- msnbc.com

As he launches out on his first days of true general election campaigning, consider Obama's most recent moves.

His innovative and daring campaign advisors have plotted out an artful game plan, and it's every bit as shrewd as Obama's caucus/internet based bid for the Democratic nomination.

But on the other hand, I just listened to the debut of his newly bulked-up economic team during one of those wonkish conference calls for reporters.

And I have to say, if sweeping change is what Obama is all about, I didn't hear it on that call.



We all bleed the same color.
by budr on Wed Jun 11th, 2008 at 06:39:46 PM EST
[ Parent ]
First, an excellent posting! It validates my analysis of urban mass transit rail in the U.S. costing $3.4 trillion just to build, never mind the rolling stock. Clearly, someone talking billions at this point is a sure sign that they are of the old paradigm of finance-dominated "free market" neo-liberalism - the Anglo disease.

And that's the problem with economic advisers - the old paradigm of finance-dominated "free market" neo-liberalism is so damn dominant now. Even Thomas Palley (who so far as I know was not close to any of the primary election contenders), imho, has stumbled badly in his policy prescriptions the past few months. It is extremely disheartening. In a way, the problem is more cultural than anything else. We have to attack the Anglo disease every opportunity we get. I think one more big financial shock like Bare Sterns, and the Big Crack will begin.  

Btw, anyone interested in how the U.S. bubble economy has managed to keep going since March would do well to read Doug Noland's latest "CREDIT BUBBLE BULLETIN
The cost of credit seizure" at http://www.atimes.com/atimes/Global_Economy/JF10Dj02.html

With Wall Street finance having lost its perceived "moneyness", the ongoing US credit expansion will only be sustained by rampant growth of instruments that retain the perception of safety and liquidity - namely, Treasuries, agency debt and MBS, bank liabilities and money fund "deposits". And, at least for the first quarter, double-digit growth virtually across all these key sectors generated the necessary SAAR $2.036 trillion of non-financial credit and SAAR $3.115 trillion of total system credit to prop up an acutely vulnerable economic bubble. But at what cost? And for how long does today's functional "money" - being inflated at double-digit rates through the intermediation of risky credits - retain its "moneyness"?
by NBBooks on Thu Jun 12th, 2008 at 09:56:51 AM EST
[ Parent ]
NBBooks:
Even Thomas Palley (who so far as I know was not close to any of the primary election contenders), imho, has stumbled badly in his policy prescriptions the past few months. It is extremely disheartening. In a way, the problem is more cultural than anything else. We have to attack the Anglo disease every opportunity we get. I think one more big financial shock like Bare Sterns, and the Big Crack will begin.
I have been googling a bit for Thomas Palley and I found a November 2007 paper criticising Financialisation which would seem to be another name for "Anglo Disease".

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Thu Jun 12th, 2008 at 10:13:29 AM EST
[ Parent ]
Btw, anyone interested in how the U.S. bubble economy has managed to keep going since March would do well to read Doug Noland's latest

"CREDIT BUBBLE BULLETIN
The cost of credit seizure"

Any chance that someone might be kind enough to translate the column into English?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 12th, 2008 at 10:33:27 AM EST
[ Parent ]
Thanks for your vote of confidence.  $3.4 trillion JUST for urban mass transit sounds like a good starting number.

As for Palley.  I say let's cut him some slack.  Here is why I say this.  Even though economists have familiarity with large numbers, they have--as a general rule--NO experience with building anything so they don't have the background to estimate either the time nor the cost for such policy prescriptions.

My editor / publisher is a VERY smart guy and as a professor of Institutionalism, his progressive credentials are impeccable.  Even so, he had me cut my $100 trillion estimate because he was afraid of appear to irresponsibly radical.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Thu Jun 12th, 2008 at 11:43:04 AM EST
[ Parent ]
Copy & paste from Krugman blog:

Jason and the Obamanauts
OK, this furor over Jason Furman's appointment is silly, on two levels.

  1. Furman is a very good guy, with a solid track record as a progressive. You can disagree with him about Walmart -- and I do -- but his heart is clearly with those who want more social justice and a stronger safety net.

  2. He's not, despite what the story says, Obama's chief economic policy advisor -- he's the economic policy director, which is a process job: basically, he organizes other people to provide advice. Obviously there could be a real problem if the policy director steered the candidate away from progressive advice, but Furman is, as I said, a solid progressive, and well suited to the job of honest broker.

Maybe I'm wrong, but my sense is that Jason Furman has become a proxy target for some Obama supporters who, now that the Great Satanness has been defeated, are suddenly starting to have the queasy feeling that their hero might be a bit of a .... centrist. I'm tempted to say I told you so; in fact, I guess I just did. But that's all in the past now.

Anyway, lay off Jason Furman, a good guy who will do his best to defeat a candidate who gets his economic advice from Phil Gramm.

by kukute on Wed Jun 11th, 2008 at 04:32:43 PM EST
[ Parent ]
I want the social safety net re[aired as well.  But as you can see from the above, my BIG issue is whether or not projects that require immediate attention are going to be funded at necessary levels.

And no, I don't see anything remotely like that from the official economic teams of either candidate.  For that matter, I consider Krugman hopeless.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Wed Jun 11th, 2008 at 05:26:29 PM EST
[ Parent ]
I have a good deal of respect for Krugman, so if he thinks Furman has Cojones and a brain, I will read more.
But we shouold all read the

Walmart piece itself,

and some other things he has written- got links, kukute?- and then let's discuss it.
Personally, it strikes me as incredibly short-sighted, much like the things Goolsbee writes.
Goolsbee is a catastrophe, and has been there a long time- longer than anyone.
It is possible that Obama has assembled a team that is politically "electable", and will make a progressive turn after McCain has been laid to rest, but his team so far offers me (or the US) no hope.

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Thu Jun 12th, 2008 at 02:40:45 AM EST
[ Parent ]
I have the same hope, and the same feeling that it ain't gonna happen. I don't mind Furman so much given the job he's suppposed to do, but the fact that Goolsbee was his first go to guy was a very bad omen. Actually the article I read on the Furman issue gave made me feel slightly better. They mentioned which economy policy types Furman was reaching out to - Rubin, Summers, Stiglitz, Jared Bernstein, and Jamie Gailbraith. The first two are of course the high priests of DLC centrism, albeit of a pretty competent sort. However, the other three are all decidedly to the left and have routinely engaged in full frontal attacks on the economic consensus. The first group was inevitable, the second not so much. But that's still a pretty thin reed, I've not seen any indication that Obama is inclined to try to really sharply change things on economic policy - whether that's due to his own beliefs or his assessment of the political realities is unknown.
by MarekNYC on Thu Jun 12th, 2008 at 03:29:29 AM EST
[ Parent ]
I have met Jamie Galbraith and have read virtually everything written by J Kenneth Galbraith.  JKG was guy who introduced me to Veblen and was responsible for starting the historic preservation effort on the Veblen homestead.

Now you may consider these men lefties, but the truth is that JKG was one of the founders of Americans for Democratic Action--a group who sponsored a movement dedicated to combating the extremism of the American Marxists.  He wrote for Fortune Magazine and was personally hired by Luce himself.  He taught at Harvard for most of his career.

Now in the USA of final days W, such folks could be considered leftists.  But by ANY reasonable definition, they are relentless centrists.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Thu Jun 12th, 2008 at 03:41:47 PM EST
[ Parent ]
just curious, what do you consider the SPD and the PS - raging right wingers?  JKG was a standard issue left wing Democrat in the fifties and sixties - i.e. to the left of the current mainstream European left. Stiglitz, Jamie Gailbraith, and Jared Bernstein would be on the left wing of any European leftist party today except Die Linke (and their economic views would fit in fine there). By your definitionat best ten percent of the continental Western European populations support 'leftist' policies. And yes, JKG didn't like dictatorships or full fledged state owned planned economies (ADA was a group of left wingers who opposed American communists) - is that really your definition of true leftism? That's not what I'd call anything near a 'reasonable' definition
by MarekNYC on Thu Jun 12th, 2008 at 08:09:20 PM EST
[ Parent ]
Keynes himself was a centrist.  He managed investments for Cambridge, and speculated in currencies.  When Alvin Hanson started teaching Keynes at the University of Minnesota, the Farmer-Labor Party stalwarts like my grandfather thought him a sell-out.  (He was.  Keynes would not come to agree with the Farmer-Labor Party until towards the end of his life.)

You are probably young.  But here's a factiod you should never forget.  Tricky Dick Nixon was a Keynesian.  He believed in wage-price controls. He proposed a minimum income scheme.  He gave us regulatory agencies like EPA and OSHA.

I am old enough to remember when Republicans elected to high office were economically FAR to the left of say a Bill Clinton or a Tony Blair.  Now YOU may have moved so far to the right that JKG was a "standard issue left wing Democrat" but I certainly have not.

I would also suggest you re-examine some of you economic ideas.  Folks who have ideas like yours have horribly mismanaged the economy.  We can have $515 trillion in utterly worthless derivatives, but the heavens would fall if we spent $2 trillion per year on projects that are necessary to the survival of humanity?  And then you show up on my comment thread to give me cheap lessons on how markets are supposed to work in applications that are, at best, irrelevant, or who the hell is a left-winger.

You seem like a bright guy.  If you actually grow up, you might some day have something remotely interesting to say.  You are not interesting--I can hear the tripe you spout 24/7 on any number of cable channels.  And folks like you have created multiple catastrophes.  Perhaps, just perhaps, you guys are just plain wrong!

This will be the last time I debate with you.  I have no time for people who think they are clever because they can debate definitions.  I thought that shit was boring when I was on the Jr. High debate team.  Whether you think JKG was a leftist and I think he was a centrist doesn't change one damn word of what he wrote.  But you debate definitions all you want with whomever finds this interesting--I have historical evidence on my side.  And on this turf you may be entitled to your own opinions, but not to your own facts.

sheesh

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Thu Jun 12th, 2008 at 11:22:26 PM EST
[ Parent ]
Not old enough to remember those Republicans, but that was sort of my point. As yoou point out the spectrum has moved sharply right on economic policy, yet back before it did, Gailbraith was a mainstream liberal Democrat on economic policy - i.e. a mainstream leftist in a much more left wing environment.  As far as the three you are calling centrists, again, read some of their stuff - their views are standard issue for the left wing of left wing continental European parties today. Of course they are also way to the right of the official doctrine of pre WWII socialist parties. But for the present day, your definition makes no sense. Lets take Germany. If we follow you the left wing of Die Linke is left, the right wing of Die Linke, the left wing of The Greens, and the left wing of the SPD are centrist, and everybody else is right wing. By 1960's definitions that's true, but so what? I also would find it silly to use todays definitions and  call Ludwig Erhard a member of the German right or Ed Heath of the British right or to call Brandt right wing because he was far to the right of the Weimar era SPD (in theory at least, in practice it was a different story - what would you call someone like Hilferding).

And FWIW I'm pretty damn sure I have a much better idea of at least European policy positions and debates in the fifties, sixties, and seventies than you do (reading every goddamn issue of Spiegel and Die Zeit, plus a random fifth of the FAZ issues from 1945-1975 sort of helps with that. I'm also pretty sure I have a better idea of how the planned economies of Eastern Europe worked - lots of books, and hundreds of thousands of pages of archival documents give me a certain insight). I have far less knowledge of America in that period, but easily enough to know the sort of basic stuff about Nixon's economic policies.

On the other thread for some reason you troll rated me for disputing the idea that regardless of whether the price of diesel is two Euros/l or 20 there would be no difference in the total vehicle miles of freight trucks and for suggesting that labour costs had a good deal to do with the shift of the textile industry to low wage countries.  

As for what my ideas are and their impact, I'm not quite sure how the notion that we should have an economic system like Germany in the sixties and seventies - (i.e. a little bit to the left of America in the sixties) led to this disaster. Perhaps you might care to elucidate. Or perhaps not, that's your perogative, just as it is mine to make what comments I wish. It is not your right, however, to troll rate what you disagree with.

by MarekNYC on Fri Jun 13th, 2008 at 01:35:57 AM EST
[ Parent ]
As far as the three you are calling centrists, again, read some of their stuff - their views are standard issue for the left wing of left wing continental European parties today.

Marek, there's no contradiction there. Even Europe has moved so far to the right it's scary. It also means that at least some of the "left wing of left wing" are not as out to lunch as they are made to appear.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Fri Jun 13th, 2008 at 03:33:37 AM EST
[ Parent ]
The change has been entirely political. It's about attitudes, not economics. The pre-Carter attitude was that the working classes had a certain inherent dignity and deserved a seat at the table.

The post-Reagan consensus was that the working classes - and that includes white collar working classes, who would usually think of themselves as middle class - were only worthy of abuse and contempt.

The two remaining political positions in the US is the far right fuck-em-all position, which glories in the abuse and contempt. And the less far right throw-them-a-bone position which accepts that some strategic concessions may be necessary, as long as they're kept to a minimum.

The idea that workers have an equal place both in democracy and in the economy has been eradicated.

This isn't an arguument about economic theory, but about enlightenment vs aristocracy. The enlightenment view of the inherent equality of all individuals is considered a quaint piece of history by the US political classes, and not a living principle.

So - it's unlikely that policy will change until this point of view is changed. Rational forward planning can't happen as long as there's more interest in abusing and taming the majority of the population than in creating a culture in which it's possible for everyone to flourish.

Perversely, for the aristocrats, destruction of the environment is a valid end in itself, because it's one of the way they can demonstrate their specialness.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Jul 10th, 2008 at 11:52:09 AM EST
[ Parent ]
Quite a lot of the enlightenment thinkers, at least the French ones, would pretty much agree with the current aristocracy that the workers don't deserve much...

Un roi sans divertissement est un homme plein de misères
by linca (antonin POINT lucas AROBASE gmail.com) on Thu Jul 10th, 2008 at 12:49:22 PM EST
[ Parent ]
Too much personal attack in that, IMHO.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Fri Jun 13th, 2008 at 03:35:27 AM EST
[ Parent ]
There is, but we all have to let off steam sometimes.

Great rant, I reckon.

The discussion is absolutely reminiscent (not surprising bearing in mind the Minnesota background) of how in Norway even the Conservatives are on the "Left".

It's only the Progress party (who get about 20% of the vote and are frozen out by all the other parties) who are identifiably on the Right, and even then only in some of their positions (eg immigration and taxation).

Keep on rockin' techno: you're one of my heroes!

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Jun 13th, 2008 at 08:51:52 AM EST
[ Parent ]
And then you show up on my comment thread

This is a repeated misapprehension around here: You do not own the comment threads under your diaries. They belong to everyone here.
by Colman (colman at eurotrib.com) on Fri Jun 13th, 2008 at 03:52:07 AM EST
[ Parent ]
We can have $515 trillion in utterly worthless derivatives, but the heavens would fall if we spent $2 trillion per year on projects that are necessary to the survival of humanity

I think -- without having given a great deal of thought to the subject ;-) -- the difference is between a Closed and Open analytical/praxiological environment.  Derivatives are Closed under CAPM as they 'fall-out' of well understood mathematical constructs¹ developed within a generally accepted intellectual stance².  Public spending for the Public Good is Open in that fundamental questions, e.g., what is the Public Good, are uncertain, dependent on the interpreter, and controversial.  Another way to look at the difference: Closed allows one to pretend to be 100% objective while Open, by its nature, precludes that pretense.  

¹ How congruent these constructs are to Reality is another topic!

² How congruent the generally accepted intellectual stance is to Reality is another topic!  ;-)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Fri Jun 13th, 2008 at 11:38:21 AM EST
[ Parent ]
I was thinking of your comments in another thread on the shift in the Overton Window while looking at some of this earlier.  That is one of the most serious problems we currently have, IMHO, as it makes any significant attempt to address our current problems easy to characterize as being "extreme left wing crazyness."  Wasn't it Nixon who said "We are all Keynsians now?"  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jun 13th, 2008 at 01:59:08 PM EST
[ Parent ]
In a rare move for me, I have just cross-posted this at the Great Orange. (10:20 CDT)

http://www.dailykos.com/story/2008/6/12/11620/5281/329/534623

I am certain it will scroll to oblivion very quickly, but I think this one is worth trying to post in our favorite USA=based political free-for-all.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Thu Jun 12th, 2008 at 11:25:25 AM EST

I am certain it will scroll to oblivion very quickly,

In less than 12 hours it was well more than 250 posts down.  Probably more like 350 to 450.  I got tired of looking.  I wish my toilets worked that well!  It was well received in its brief time on the site.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 12th, 2008 at 09:54:03 PM EST
[ Parent ]
Yeah.  The only reason to post a serious paper on Kos is that some day you may need the link.  A former student hosts my site for free but I don't want to take advantage of him so I offload server needs whenever possible.  A lot of my video stuff is at YouTube, for example.

Plus, when I want to quote from this in a comment on Kos, it's nice when an internal page comes up.

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Thu Jun 12th, 2008 at 11:30:42 PM EST
[ Parent ]
Great diary, Techno.

I would suggest putting it on your Elegant Technology site under "Application."  I had read your site over a month ago but didn't apprehend what you have done from that brief read.  Probably just that I am unusually dense, but the diary electrifies.  I would already have had the book had I read this.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 12th, 2008 at 09:31:44 PM EST
I am not certain what you mean by "application" and I have some projects to complete before I learn.

But thank you for the compliment.  I let myself get sucked into an economic debate with a member of the Leisure Class tonight.  Not fun!  So I am extra happy that someone "gets it" (see below).

"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Thu Jun 12th, 2008 at 11:45:48 PM EST
[ Parent ]

Even though the IEA cost analysis is their version of a take-apart bid, it still must be subjected to some fudge factors.  I believe they would do well to use the rule of thumb of the historical preservationists and multiply their timeline by 2 and their costs by 3.  After all, corruption alone could easily double their cost estimates.  But these are minor quibbles.

The father of a friend of mine in L.A. in the '70s had a PhD in Chemistry and was a Senior Scientist for Xerox.  He had developed the selenium drum for the first Xerox machine and had made the first epoxy printed circuit board manufactured on the west coast in the oven at home.

Charlie had the "rule of two and a half."  Everything takes twice as long, cost twice as much and is only half as profitable as originally estimated.  Having made a fool of myself more than once on estimates, I have always appreciated the rule. My question has always been: after I have applied the rule of two and a half, does it still apply?

I hate having to estimate my own work, which I always must.  If you really want to do something, there is a temptation, and considerable pressure, to tailor the estimate to fit the budget.  From the contractor's point of view this becomes, in the words of the first contractor for whom I worked, "Do you want the job?"

Too often I have wanted the job.  Fortunately, I enjoy my work and currently have a job underway on which I am about at my estimated hours.  Unfortunately, it is only about three fourths done.  For that reason I will not be able to further follow up on you excellent diary for a few days.  At least on ET I can always find it on your homepage.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 12th, 2008 at 10:23:10 PM EST
I LOVE the rule of two and a half!!!

I collect these these sayings.  It is the actual philosophy of the upper reaches of the producing classes.  I'll bet Charlie was VERY good at what he did.

Good luck on your project.  When you get it done, I'd like for you to see the class theory that evolves when you take the Charlies of the world seriously.

http://elegant-technology.com/18-ET_Class-Analysis.mov


"Remember the I35W bridge--who needs terrorists when there are Republicans"

by techno (reply@elegant-technology.com) on Thu Jun 12th, 2008 at 11:40:10 PM EST
[ Parent ]

I'll bet Charlie was VERY good at what he did.

Well, without the selenium drum Xerox would not have had nearly so nice a photocopier and without P.C. boards they would have been much more expensive.  He was their "go to" guy, especially for materials science.  And Charlie, I hope still is a great guy.  The last time I saw him was , perhaps the mid 70s and his youngest daughter was about 16, his oldest child was mid-twenties.  His son and I did audio projects together.  I haven't been in contact since the mid '90s.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jun 13th, 2008 at 01:07:38 AM EST
[ Parent ]
Interview: 'Nicholas Stern' by Alun Anderson | Prospect Magazine July 2008 issue 148
Stern's report was attacked for being alarmist when it came out in 2006. But now he is going for a new global environment deal in Copenhagen next year. What are its chances?

The Stern review on the economics of climate change irrevocably altered the climate debate when it came out in October 2006. For the first time, environmentalists who had shouted loudly about the dangers of climate change were joined by an apparently hard-headed economist, commissioned by a government and with a team of 15 economic analysts and modellers at his command.

Nicholas Stern, a former World Bank chief economist, was working at the treasury when he was asked to look at the economics of climate change. The conclusion of his 700-page report--that the world must act quickly or face devastating consequences--was not new, but the language it used was.

Stern has moved on since his review. He became Lord Stern of Brentford last year. No longer in government, he is a professor at the LSE and recently became chairman of the new Grantham Research Institute on Climate Change and the Environment, a result of a grant from philanthropist Jeremy Grantham, the biggest the LSE has ever received.

The climate change world has moved on too. Discussions at Bali in December 2007 produced a consensus to try for a major agreement at a summit in Copenhagen in December 2009. By then, a new US president will have been in office for less than a year. The clock is ticking, but Stern believes a deal is possible. For the last couple of months he has been talking to the Danish, Indian and Australian prime ministers, as well as serving on committees around Europe and advising the British government. He is going out to the Democratic convention in Denver in August, and expects to testify before the US congress for the second time. He recently published "Key Elements of a Global Deal on Climate Change," perhaps the first paper to try to map out the overall structure of a possible world deal.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Thu Jul 10th, 2008 at 12:24:26 PM EST


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