Alkahest my heroes have always died at the end

It’s apparently “beat up the economists” week and no one thought to tell me in advance.  Over at Crooked Timber, Daniel Davies posts about Greg Mankiw’s recent NY Times editorial and suggests that the reason economists are so patronizing is bitterness over being stuck in a low paying academic job whose sole purpose is to justify the inequities in a capitalist system.

In Scientific American, we have Rober Nadeau’s editorial on the problems with the views of economists.  Nadeau notes that economics is a social science that tried to pattern itself after physics.  Unfortunately, a) it used 19th century physics and never updated itself as the physics changed; and b) economists never realized that they can’t treat people as elemental particles.  Nadeau goes on to note some of the basic assumptions made in economics that don’t stand up.

In the interests of piling on, I’ll say that I agree with Nadeau, but think that he doesn’t go far enough.  Social sciences are extremely valuable and in a certain sense are much more difficult than the so-called hard sciences like physics and chemistry.  People don’t behave the same way, you can’t always re-run an experiment, etc., etc.  However, in the academic world, the hard sciences have been able to claim greater status because they are more rigorous and because, in essence, they are simpler.   So it’s not surprising that economists would want to claim the status of hard, reductionist, sciences.  However, it’s worse than that.  We expect physicists to explain the world.  We expect economists to make predictions and tell us how to fix things.  We’ve taken them out of the role of reductionist explainers and put them into the role of designers.

In other words, economists are social scientists with physics envy who are called upon to do the work of engineers.  It’s amazing the economy isn’t in worse shape than it is.  🙂

As mentioned last month, the North Carolina Utilities Commission has banned the expansion of Progress Energy’s Balanced Billing Plan and Duke Power’s Fixed Payment Plan. These are the plans that charge you roughly 11% in order to have a guaranteed power bill. Unfortunately, it’s not a full ban, it’s just a prohibition against enrolling any new participants. The reason for the ban? [drum roll please] The plans encourage participants to increase their power consumption.

Last week I was having lunch with a colleague (of sorts) and we were on the topic of the economy, outsourcing of jobs, etc. I mentioned that we were living in, what I’ve taken to calling, a crappy low-rent future*. He pointed out, and I agree, that this is largely because corporations have broken the social contract. It turns out he had been reading Robert Reich’s “Super Capitalism” while I had been reading “The Global Class War.” In their own ways, each of these books tells the story of how corporations from the end of the WWII with the New Deal until the late 1970s were bound by something of a social contract. Corporations recognized that their customer base was their employee base and that while you might not want to pay your employees, not doing so would spiral out of control so that your own customers couldn’t afford your products. Corporations began to slip the social contract in the late 70s with the Regan Revolution. The trend continued in the 80s and 90s as companies began to achieve transnational status: i.e., their customer base and their employee base were no longer the same. NAFTA and the follow-up “free” trade agreements accelerated this trend by allowing companies to shift labor and production to the places where it was cheapest without actually requiring labor or environmental standards that would level the playing field.

These “free” trade agreements began a great race to the bottom. The factory farms of the U.S. put hundreds of thousands of Mexican farmers out of business. Seeking work, these former farmers immigrated to the U.S. to work our farms and to clean our hotels and build our houses. The glut of relatively cheap labor, accompanied by a disgraceful minimum wage in the U.S., led to an increasing large number of people whom have dropped out of the work force. As an aside, don’t be fooled by the unemployment rate. There are two ways to decrease the unemployment rate, you can either increase the number of working people or you can decrease the size of the labor force. Over the past 7 or 8 years, we have not increased the number of working people, but we have decreased the size of the labor force. One simple rule of thumb: every month when the number of new jobs created is less than 150,000 or so (the increase in working age population times the current participation rate), the unemployment rate *should* get worse. If it doesn’t, it’s because more people have stopped participating in the work force.

People often talk about democracy and capitalism as if they were one and the same thing. News flash – they aren’t. For some time, the Chinese have been interested in capitalism as a way to raise living standards in order to keep democracy out of their government. To date they’ve been pretty effective at it, using the tools of capitalism to build instruments of oppression (e.g., the Great Firewall of China). In the U.S., we’ve had both democracy and capitalism for so long that we don’t recognize the differences. However, the founders of the country did recognize the differences. The founders were concerned that naked capitalism would evolve into aristocracy which would kill a new democracy. At times, that prediction has almost come true. That was certainly the case in the first gilded age. Fortunately, FDR’s New Deal pushed back the growth of that aristocracy up until the late 70s. Now we are once again seeing the results of raw capitalism and its ability to direct the efforts of the government to its own end – away from its founding purposes (protecting the rights of citizens).

What bothers me most about this crappy low-rent future is not just that things are worse for people that work for a living; it is the opportunity cost of spending the past three decades increasing corporate profit at the expense of investment in the future. Some of that investment would just have been growing wages at the same rate as corporate productivity, instead of rolling the productivity gains into corporate profits. If we had done that for the past 30 years, you would probably be earning more than twice your current salary. I believe that a true wage increase (instead of just keeping up with inflation) would allow people to think about other important issues such as the environment.

If we had spent the past 30 years focusing on the environment, in particular, developing alternative fuels and higher efficiency cars (or better yet, high efficiency, convenient public transportation), we wouldn’t be seeing the record high oil prices of today. Considering how little (relatively speaking) we’ve put to nuclear, solar and wind power, we have made a lot of progress. I was reading where some engineers have found a way to use ink jet printing technology to print solar cells. If we had been working on this for 30 years, solar power would be cheaper than coal/oil power generation. In just the past 5 years or so, we’ve seen a tremendous increase in the efficiency of wind turbines. They are able to produce power in lower wind conditions reducing the overall cost per kilowatt hour. I also don’t have a major problem with nuclear power, but having sat on our hands for 30 years, it is the Europeans who have all of the experience with it; but if we had spent time and money developing nuclear, we could have had a nice bridge from fossil fuels to renewables. And of course, what can you say about cars. After the oil embargo of the early 70s, we passed the CAFE standards and achieved their goals. But after the crisis passed, we stopped paying attention and as people began to drive trucks and SUVs as personal vehicles, we saw the average fuel economy in the U.S. drop. As an example, K is the original owner of an ’87 Volvo which gets about 25 mpg and I own a 2000 Toyota that gets about 32 mpg. I’ve seen new cars advertised that are less fuel efficient than either of our cars! We developed hybrid technologies in the late 90s and ten years later, there is minimal penetration into the broader car market and about half of the hybrids out there are using the technology to boost horsepower, not efficiency. There is no reason we couldn’t have cars today that get 100 mpg. No reason except that it hasn’t been a concern for the past 30 years.

The world has a limited supply of fossil fuels. We can argue about how large that supply is, but if you don’t think it’s limited, then you haven’t thought it through. That supply of fossil fuels was not all bad. We would have never achieved a technological base without it – it is easy and cheap power. However, we should have used that limited supply and the technological base we built from it to develop new technologies that are unlimited (or at least only limited by the life of the sun). We should have developed nuclear power and hybrid cars in the 70s and 80s as a bridge to completely renewable power and electric cars. But instead we’ve squandered much of the “gift” of fossil fuels and in the process are pumping enough CO2 into the atmosphere to significantly alter the temperature of the planet.

I don’t have much of a point here except to vent about being stuck in this crappy low-rent future. I don’t want flying cars, I want fuel efficient cars. I don’t want billionaires, I want everyone to have enough to eat. I don’t want global warming, I want renewable fuels. And I don’t want trade deals than protect corporate profits, I want trade deals that protect the environment. My guess is that it’s probably too late to avoid many of the problems we can see on the horizon. We’ve got billions of third-world peoples looking for a first-world lifestyle. We don’t have “clean” technologies for them, so we’re going to have billions more people burning coal and oil, making the global warming problem even harder to deal with. The U.S. economy is up to its eyeballs in credit card and mortgage debt, in part due to the lack of wage increases for 30 years. We’re starting to see the effects of this in the mortgage meltdown and the upcoming (ongoing?) recession. I’m sure we’ll muddle through, but that’s about all it’ll be.

In short, welcome to your crappy low-rent future. **

* I blatantly stole the term low-rent future from Shaenon Garrity who was complaining about spam and the “Stupid low-rent world of the future” in her Narbonic director’s cut commentary.

** I’ll try to post some later on possible solutions. For right now I just needed to vent about the problems we’ve caused for ourselves.

Interesting. Shortly after posting about power companies, I received a comment from Progress Energy correcting me about the plans. It seems [pure speculation here] that Progress has some sort of “blog response” team up in Maryland or northern Virginia. Anyway, I misnamed the program that I had been offered, as the comment says, it was indeed the “Balanced Bill” payment plan where you wind up spending some 11% more over the course of the year for the privilege of knowing that your bill will be 1/12th of a fixed amount. There is (apparently) a different equal payment plan which is comparable to what we had with Duke Power. However, it’s not the money maker that the Balanced Bill program is and so it is not heavily advertised. Unfortunately, I can’t seem to find details of the plan online. The closest I can get is here, which seems to be lacking in specifics.

Interestingly, the News and Observer ran an article this morning about the Balanced Bill plans and how the state might ban them. Not for the surcharge – how you want to waste money is your own business, but as I noted, they create no incentive to save energy. From the article:

“This is the kind of thing that creates a disincentive for saving electricity,” said NC WARN Director Jim Warren. “This is the old utility business model: maximum sales of electricity and talking green to the public.”

The Utilities Commission could rule on the dispute within 30 days. The commission approved the billing programs for both utilities as recently as 2004, but last year the regulators re-opened the case because of the concerns about energy waste. Critics said customers who pay a fixed bill regardless of usage have no incentive to turn out the lights, turn down the thermostat or otherwise conserve, because they pay the same price, regardless.

Those critics appear to be right. According to data from the utilities, customers who enroll in the program show a jump in electricity use that can approach 10 percent over three years.

10% in three years. Considering that the programs aren’t that old (started in 2002 and 2004 for Duke Power and Progress Energy respectively), that’s a huge increase that could potentially sustained for a longer period of time. It’s good for the power companies – after all, if you use more this year, then next year’s bill will reflect that. And if you use well beyond what they’ve budgeted for you, well, they can always cancel your participation in the plan.

I missed on Sunday, but under the theory of better late than never…

Donald Kerr is the principal deputy director of national intelligence, so presumably he speaks with some authority regarding the government’s view of privacy. In a recent Associated Press article he made several remarks which I find exceedingly scary, misleading or both. First up:

Privacy no longer can mean anonymity, says Donald Kerr, the principal deputy director of national intelligence. Instead, it should mean that government and businesses properly safeguard people’s private communications and financial information.

So if I understand this, privacy, whose definition traditionally includes anonymity and the control over personal information, should now be defined to exclude both. Instead we should trust the government to safeguard the formerly private information. Correct me if I’m wrong, but we have a word for the protection of sensitive information – it’s called confidentiality. What Kerr is saying is that there is no such thing as privacy when it comes to government, all you really can hope for is confidentiality.

I’m not certain it’s possible to express how abhorrent to the constitution the attitude conveyed in that statement really is. Kerr is essentially saying that there is no longer a fourth amendment providing against unreasonable search and seizure.

But wait, there’s more! Now for a limited time, in addition to an anti-constitutional perspective on government, Kerr gives us a bunch of crap to justify it:

Kerr said at an October intelligence conference in San Antonio that he finds concerns that the government may be listening in odd when people are “perfectly willing for a green-card holder at an (Internet service provider) who may or may have not have been an illegal entrant to the United States to handle their data.”

First, let’s get rid of the fear-mongering. Is Kerr suggesting that the U.S. government is giving green-cards to illegal immigrants? That seems exceedingly unlikely. Second, I’m fairly certain that a green-card holder is not going to be able to arrest me in the event that he or she a) monitors my internet traffic, and b) thinks something is a concern. Third, remember that privacy is about the control of personal information. It’s about having the ability to decide who gets to see what information. Having a government monitor all of the information from all ISPs completely strips away privacy. As to the ISP itself, I think that most of us are used to thinking of them as common carriers (like the telephone companies they are descended from). Their status as common carriers suggests that they are not monitoring all traffic. Moreover, there are laws that prevent them from turning over information to the government without having a court order. Of course, these are the same laws that the administration is pushing congress to overturn through retroactive immunity to the telecom companies.

Finally, we have this:

Millions of people in this country — particularly young people — already have surrendered anonymity to social networking sites such as MySpace and Facebook, and to Internet commerce. These sites reveal to the public, government and corporations what was once closely guarded information, like personal statistics and credit card numbers.

“Those two generations younger than we are have a very different idea of what is essential privacy, what they would wish to protect about their lives and affairs. And so, it’s not for us to inflict one size fits all,” said Kerr, 68. “Protecting anonymity isn’t a fight that can be won. Anyone that’s typed in their name on Google understands that.”

Again, another lovely distortion. Kerr is suggesting that the intentional, willing dissemination of information is comparable to the government hoovering all of your communications off of the internet. This is complete and utter crap. Are there things about me on the internet? Of course. There are the public records from Durham and Chatham counties and bunch of emails that I sent to public mailing lists. Oh, and the information that I’ve purposefully posted. With the exception of the public records, all of this is information that I made public. Comparing this to the government monitoring all of my personal communications that I have not chosen to make public is an intentional distortion of the basic concepts of privacy. But then I guess we knew that from the beginning of the article.