Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Month: October 2019 Page 3 of 4

Open Thread and Preparing for Power Outs

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On October 12, 2019

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My friend Josh Ellis, in response to the California power out, put up a series of tweets on how to prepare. I’m going to repeat those here. This is also an open thread for topics unrelated to recent posts.

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Profit Is Just Another Word for Destruction

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On October 11, 2019

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Here’s the basic proposition of capitalism: If something can be done for a profit, it creates more value than the sum of its inputs.

But here’s the thing: This is an unproven assertion. In fact, in many cases, it is not true.

Worse, over the not-very-long run (a couple hundred years) it is almost certainly false.

You chop down the forests, you kill the animals, you loot and destroy entire cultures, you run your economy on planned obsolesence, and you pollute massively, causing runaway climate change (now effectively unstoppable) and ecosystem collapse.

All the value we have produced will be eaten up by this, and then some. If the carrying capacity of the Earth crashes anywhere between 50 to 80 percent (the current most likely scenario), then what we’ve accomplished is absolutely, almost unbelievably, a huge destruction of value, and nothing we have created is worth it.

Yet that is the current scenario.

It is isn’t all “capitalism,” of course. Communism couldn’t handle industrialization either. Democracy hasn’t handled it. Autocracy hasn’t handled. No one has handled it.

But this is the real situation, the odds that we will run into a collapse scenario are now very high. Because Sanders is the only candidate in the US with an adequate Green New Deal plan (Warren’s is not large enough), there’s only one chance to avoid worst case scenarios, because another four to eight years will put us even further behind. (In Britain, Corbyn is who you want if this is your priority. In Canada, no one is suggesting anything adequate, but Singh is the best candidate.)

Value isn’t just what you create. Value must also be measured by what you consume, what you pollute as a result of that consumption, and what you destroy.

Fools who go on about how this is the best time ever to be alive miss the point, even if they are right (this claim is dubious for billions of people). They are right in the same way as if, you sold everything you owned, then borrowed as much as possible, and then partied until you ran out of money, well, that may be the best time of your life…

Profit is not a proxy for adding value. The correlation is questionable, if it ever held any merit, and since the industrial revolution it has diverged more and more from being true.

We can’t afford “profit” as it is constituted today.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

California Power Company Cuts Power to 800,000 Homes to Avert Wildfires

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On October 9, 2019

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PG&E.

The region’s utility company, Pacific Gas and Electric (PG&E), has warned the shutdown could last several days.

The company’s transmission lines started the deadliest wildfire in California’s history last year.

With weather forecasts predicting high winds, the move is intended to prevent the risk of fallen power lines igniting more wildfires.

So, of course, PG&E could have and should have upgraded their infrastructure so this would not be necessary, but they didn’t. They gave large dividends to their stockholders instead.

PG&E is also, well, bankrupt, because of the previous fires it caused, so it isn’t in a position to make necessary improvements now.

But let’s not pretend this is a one company issue. The US has needed massive power infrastructure upgrades since the 80s. Most of PG&E’s infrastructure is 60 to 80 years old. They need to cut back trees around the poles and they need to replace old poles.

This is also a public issue. San Francisco, for example, has had 12 ballot initiatives to create a public utility and refused to do so.

Image by Admit One

People wanted tax cuts, deregulation and overpriced houses. that’s what they got, and a 5 day power outage is one of the prices.

This isn’t a difficult problem. In the 30s through the 70s, utilities were regulated. They were guaranteed a certain profit and required to spend a certain amount of money on upgrades and repairs. Dividends were fixed, and investors knew what they would get every year.

In other words, they were treated as critical infrastructure which needed to be maintained and built properly, and it was worth a bit more cost do so.

You can do this publicly, you can do it privately, you can do it as a combination but you must regulate and inspect them.

Or you can have “cheap” power until there’s a crisis, like massive wildfires, or brown and blackouts, etc.

Waving one’s hands and saying, “The market fairy will make it all happen by the actions of an invisible hand,” gets the usual results.

As for PG&E, the only solution likely to work is to just have government take it over and pay for the necessary work. Once that’s done, don’t privatize it.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

 

America’s Betrayal of the Kurds

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On October 8, 2019

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So, Trump’s going to let Turkey invade an area of Syria held by the Kurds.

Yes, this is a betrayal of one of the US’s allies.

But no one, no one with any sense, should EVER think that the US is actually their ally.

The US will betray anyone. The US doesn’t even follow its own interests; it has domestic politics bought by large lobbies.

And the Kurds aren’t rich.

There is a story I am fond of. Back in the 80s, the ambassador to Pakistan, talking to his counterpart (paraphrased as I can’t find the original source), said: “I do not know who will be in power in Moscow in 20 or 40 years. But I do know they will have the same interests as we do today, and follow them. That is why you can trust us. But America, America does not work this way.”

Yup.

(Mostly I don’t think the US should be in the Middle East at all. But if anyone has bled and died for the US it is the Kurds.)

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

The Problem with Pharma Research

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On October 7, 2019

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Capitalism is based on the premise that profits reflect work that people want done, which is also worth more than the costs of its inputs.

The problem with this theory is that it often just isn’t so; the work being done involves a misallocation of resources.

Take pharma, for example. It is more profitable to sell someone a pill a day than to cure them.

This is simply inescapably true in most cases.

A man who needs erection pills, a person who needs insulin, are much better customers than someone who needs a single round of the latest antibiotic.

If you do have an actual cure, since you can’t keep charging forever, you want to charge as much as possible for it. So you raise the price for a Hep C cure (the majority of the research actually having been done with public money) to six figures, when it costs about a $100 to produce.

And a lot of people die or suffer who don’t have to.

The profit motive is a very blunt instrument, and it’s unnecessary for a lot of work. To be sure, no one wants to pick up garbage, but plenty of people want to be medical researchers, because it’s interesting work which does good for humanity, and a lot of people want to do good. Give them a salary sufficient to support their family and a lab, and most of them will be fine with that.

The actual manufacturing is not so fun, but that could easily be done by a range of contracting companies or even by the government.

And in such a situation, suddenly the emphasis is on cures.

If you must have big payouts, make them bounties: “Cure X, and we give you a billion dollars.”

Pharma does do a lot of research, but it wants a pill a day, it wants extensions of already profitable drugs, or it wants hugely pricey cures. It wants to create new forms of addictive drugs, like opiates, rather than just using, oh, morphine and various other forms of painkiller which work perfectly well and already exist and which can’t be patented.

None of this is hard to figure out. There’s a place for private pharma, to be sure, mostly to act as a cost check on public pharma, but as it exists now, what it’s doing is massively misallocating resources.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

 

Week-end Wrap – Political Economy – October 6, 2019

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On October 6, 2019

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by Tony Wikrent
Economics Action Group, North Carolina Democratic Party Progressive Caucus

Strategic Political Economy

How Bill Clinton and American Financiers Armed China
Matt Stoller [BIG, via Naked Capitalism 10-2-19]

A must-read for all the details of the policy follies of the past four decades, and for the quotes from speeches at the time by such elites as Larry Summers.

Chinese power today is a result of a large number of incidents similar to this one, the wholesale transfer of knowhow, technology, and physical stuff from American communities to Chinese ones. And the confused politics of China is a result of the failure of the many policymaking elites who participated in such rancid episodes, and are embarrassed about it. As we peer at an ascendant and dangerous China, it makes sense to look back at how Clinton thought about the world, and why he would engage in such a foolish strategy.

Broadly speaking, there were two catastrophic decisions Clinton made in 1993 that ended up eroding the long-term American defense posture. The first was to radically break from the post-World War II trading system. This system was organized around free trade of goods and services among democratic nations, along with somewhat restricted financial capital flows. He did this by passing NAFTA, by bailing out Mexico and thus American banks, by creating the World Trade Organization, and by opening up the United States to China as deep commercial partners.

The Clinton framework gutted the ability of U.S. policymakers to protect industrial power, and empowered Wall Street and foreign officials to force the U.S. to export its industrial base abroad, in particular to China. The radicalism of the choice was in the intertwining of the U.S. industrial base with an autocratic strategic competitor. During the Cold War, we had never relied on the USSR for key inputs, and basically didn’t trade with them. Now, we would deeply integrate our technology and manufacturing with an enemy (and yes, the Chinese leaders saw and currently still see us as enemies).

The second choice was to reorganize the American defense industrial base, ripping out contracting rules and consolidating power into the hands of a small group of defense giants. In the early 1990s, as part of the ‘reinventing government’ initiative, the Clinton team sought to radically empower private contractors in the government procurement process….

The empowering of finance friendly giant contractors bent the bureaucracies towards only seeing global capital flows, not the flow of stuff or the ability to produce. This was already how most Clinton administration officials saw the world. They just assumed, wrongly, that stuff moves around the world without friction, and that American corporations operate in a magic fairy tale where practical problems are solved by finance and this thing called ‘the free market.’ In their Goldman, McKinsey and Boston Consulting Group-ified haze of elitist disdain for actually making and doing real things, they didn’t notice or care that the Chinese Communist Party was centralizing production in China. They just assumed that Chinese production was ‘the free market’ at work, instead of a carefully state-sponsored effort by Chinese bureaucrats to build strategic military and economic power.

China: How science made a superpower
[Nature, via Naked Capitalism 10-2-19]

Three Big Things: The Most Important Forces Shaping the World

[Collaborative Fund, via The Big Picture 10-5-19]
The biggest is World War Two–and it’s a very persuasive argument. For example:

Or why Europeans have different views on social safety nets than Americans. John Maynard Keynes predicted countries wrecked by war would go on to have a “craving for social and personal security,” and indeed they did.

The rest of the article’s premise: 

The three big ones that stick out are demographics, inequality, and access to information.

The Carnage of Establishment Neoliberal Economics

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Open Thread

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On October 5, 2019

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As usual, feel free to use the comments to discuss topics not related to recent posts.

The Simple Truth About Libya and Syria

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On October 4, 2019

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Whatever one thinks of the pre-war regimes of Assad and Qaddafi, the majority of people in Syria were better off before the wars. This so completely undeniable, that anyone who claims otherwise is delusional or a liar (and hopefully on a payroll).

War should have the highest bar of all because, as was noted at Nuremburg, it includes all other crimes, from rape and murder on down, within it.

“We came, we saw, he died,” said Hilary Clinton. Evil. Beyond evil. Anyone with two brain cells, after seeing Iraq and Afghanistan, could predict that the Western allies couldn’t rebuild Libya and that it would be far worse off afterwards.

While not all of Europe’s refugee crisis is Libya- and Syria-related, a lot of it is, and Europeans (who, remember, pushed hard for regime change–especially the French) and Americans are morally, and should be legally, responsible for those refugees. Rather than refusing them, in a just world, they would be required to house and feed them, having been complicit in destroying their countries.

All of this is so obvious it should be beyond question to anyone remotely sentient.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

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