Algorithms and Alchemy: The debate about growth we're not having

I've been following with great interest the feud that has been heating up over the last week between Nobel Prize winning economist Paul Krugman and former Reagan advisor David Stockman. It all began with Stockman's Easter Sunday article in The New York Times. There's no need for me to give a blow by blow description. You can get the general drift of their fight from this Dailykos article:  Not unlike many of the great boxing matches, much of it is 'pay-per-view' behind the Time's paywall (Krugman happens to be a regular columnist and blogger for the paper). If you are like me and are becoming suspicious that this whole thing might be a bit contrived, perhaps we are onto something. There's certainly nothing new here. Using the right algorithms a case can be made to prove both gentlemen correct, or incorrect. Keynesians like Krugman and Neo-classicists like Stockman have been arguing monetary policy, debt, deficits,spending and size of government for decades. The arguments go on ad infinitum, each pointing to their own econometric models, graphs, and models, with the advantage going to one side and then to the other. But neither side can muster a knockout punch. I get the sense they all are getting more desperate and hysterical by the moment.

I think there is an important lesson here. The Keynesians and Neo-classicists are just two sides of the same coin. Real insight into the situation can only be gotten by examining the common outcome promoted by both. Each has their own method of allocating capital, labor, and technology (innovation) in contrasting ways to arrive at the ultimate dogmatic solution on which they both agree, namely GROWTH. But is growth the solution? Or is growth really the root of the problem?  Why is there no public debate about this? Both sides of the capitalist argument have thrown everything they have at the problem and all that has been accomplished is another stock market asset bubble here in the U.S. (as Stockman so aptly describes as being a result of money printing) and a series of severe recessions in Europe (as Krugman describes austerity measures in the Eurozone). We are six years into the biggest global economic collapse in 75 years and nothing is stemming the tide of increased poverty and reduced real wages of the middle and working classes. Not just here, but all across the developed world. With all the cheerleading for the various solutions, blame-gaming, highly contested elections and economic number crunching, governments have for the most part, according to author Chris Hedges, "become unable to respond to the needs of the masses of people". All of which leads me to believe there is something seriously missing in the discussion.

Here is my question, and I assert is the question everyone needs to be asking: "Is sustained growth even possible on a planet with finite resources?" Modern economic models seem to ignore, or at the least minimize, the importance of resources, and in particular, energy resources used as inputs to generate economic growth. The econometric models assume resource inputs to be a given. Economists may allow for temporary shortages and price spikes in their algorithms but often tout some vague"substitution" theory or what they like to refer to as "rational innovation" as being the solution. And any economist who has the courage to ask this important question is quickly marginalized to the fringes. Even Marxian economists, with their emphasis on the labor value function of economy, shy away from attempting to answer with any depth this important query. They just call "profit" surplus labor value and argue for a more equitable way of distributing such value. But when trying to address growth and resource questions Marxists get nervous. I suppose that is better than the incredulous blank stare one gets from capitalists.

Economics is viewed and practiced today as solely a social science. I think this is a serious mistake. It would make better sense to create models dependent on bio-physical science as well. Such a model would include as its inputs real scientific calculation of natural resource inputs (i.e. energy, water, arable land, minerals) and outputs that would not only include goods and services, but waste (CO2, pollutants) as well. If the real costs of these externalities were figured into the equation I doubt that we would be seeing any growth at all. We may be actually seeing a decline. Traditional economic theory has no way to account for these things. One has to go all the way back to the 18th century French Physiocrats and theorists in political economy like David Ricardo and John Stuart Mill to find any meaningful references. The headwinds of resource constraints accompanied by burgeoning populations is a subject economics academics are ill-equipped to deal with, and I think for good reason. Economics is not a hard science at all. It presupposes too many variables and subjects nothing to the scientific method. When you hear an economist say "all other things being equal" prior to hearing his hypothesis you know you are about to be duped.

Let's take the example of energy resources, oil in particular. YES, there is plenty of oil. And, NO, we won't ever run out of it. In the worst case it will COST more. That is about as far as any economist will go. But there is a HUGE problem that the economist avoids.. We've used most of the easy to get oil already. At some point the amount of energy required to get the oil that is left will equal the energy we get out of it. According to Professor Charles A.S. Hall, bio-physicist and author of "Energy and the Wealth of Nations", in 1930 for every barrel of oil invested we got back 100 barrels of oil. By 1970 we only got back 30 barrels, and as of today we're only getting back 10 - 12 barrels. Not only does it get more expensive to drill and produce in monetary terms, but more importantly in strictly energy terms. The most likely scenario is one in which we will still have trillions of barrels in the ground but of it being essentially worthless.  Hall further notes that a similar scenario is playing out with natural gas. The known deposits of easy to get conventional gas are in rapid decline. The 'new gas' is mostly coming from the horizontal drilling method known as 'fracking', and despite the giant maps showing it to be so plentiful, most is coming from tightly congregated sweet spots, that while showing high output at first, decline in production rapidly. So what does this all mean? It means that even if we manage to ignore (to our own peril) the unaccounted for costs of fossil fuels like health problems and climate change, it will be impossible within our current model to ignore the unaccounted for costs of a world economy that has lost its primary energy source. And I don't hold much optimism for the success of those who hold to "substitution" theory, the last line of defense for economists. In 1970 seventy percent of the world's energy use was from fossil fuels. In 2012 that figure hasn't changed. It sure doesn't appear there is much "substitution' going on at all.

And if you think energy is the only endangered resource, think again. Our most precious resource, water, is also in danger. We don't even put a price on it. Quite astounding really. Only a bit more than 3% of the planet's water is drinkable and much of it is becoming polluted. The rest is salt water or brine, not much good to drink, not much good to water crops, and fundamentally useless in industrial processes. We could clean up the polluted water and desalinate the salt and brine water but that would cost a lot of money. Oh, and that would require a massive amount of energy too. Is there a "substitute" for water?

 I hope Krugman and Stockman are having fun practicing their alchemy.

Think I'll stick with the scientists..............................

Romney, Ryan, Ayn Rand and the Religious Right: Unholy Alliance

"Father, forgive them, for they know not what they do." (Luke 23:34).

 I don't often have New Testament quotations floating through my consciousness but these words of Jesus Christ as he was being crucified keep entering my mind as I consider Mitt Romney's recent selection of Paul Ryan as his vice-presidential candidate, particularly as it relates to Ryan's lifelong worship of Ayn Rand and his disingenuous pandering to Christian fundamentalists. How is all this possible?

In a now mostly forgotten 1959 television interview by the late Mike Wallace, Ayn Rand, Russian immigrant and author of the novel "Atlas Shrugged", gave Americans a chilling explanation of her self-invented philosophy she called 'Objectivism'. Arguing that reason based solely on self-interest is the only moral required for life, she defines 'altruism'  to be an "evil force". Under pointed questioning by Wallace she describes herself as an atheist who doesn't believe in self-sacrifice for others under any circumstance (a view  not commonly held by most prominent atheists who profess that altruism and moral character are a natural part of human instinct necessary for survival of the species). Using this unique and caustic morality she goes on in the interview to justify and indeed promote the notion that unbridled industrialists operating in a totally unregulated free market capitalist model would be the salvation of man. Obviously anti-socialist (even though she collected Social Security and Medicare in her later years), she goes on to deride most all of the institutions of American democracy, espousing a dangerously narrow view of our Constitution that would make even the most libertarian conservatives of today squirm.

So how could it happen that a self-described atheist (and pro-choice advocate)  become associated with the religious right? Even William F. Buckley, hero of early neo-conservatism, published in his 'National Review' a review of "Atlas Shrugged" by Whittaker Chambers calling it a thousand pages of "lack of goodness" promoting a godless society. How could the ideas of an ant-theist with such scorn for charity become the cornerstone of fundamentalist Christian politics?

Enter Paul Ryan and his cadre of faux libertarian manipulators. During the 1940's and 50's Ayn Rand attracted to her 'objectivist' philosophy a number of early libertarians including  Austrian School economist Ludwig von Mises and a youthful Alan Greenspan who was to become the recent Federal Reserve Chairman. They began holding regular meetings in New York becoming what has been loosely termed "the collective", an obvious pun on their anti-Marxist attitudes (Rand participated in the McCarthy era House Un-American Activities Hearings as a protagonist). In spite of her anti-religious stance and other philosophical differences she became the darling of these supposedly 'true' libertarians for her insistence on a totally unregulated form of free market economy (interesting in that no business entity has ever existed outside the legal framework granted to it by a sovereign nation except for piracy and black markets).

Friedrich Hayek, considered the father of libertarianism, founder of the Austrian school of economic thought, and perennial rival of John Maynard Keynes lamented in his later days that there were no 'true' libertarians because they all make exceptions and only use that which serves their own personal agenda. So it is the case with the Paul Ryans of the political world. Paul Ryan who as recently as 2005 said  “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand”, completely ignores the anti-theist, anti-altruist, sterile argument that is the basis of her philosophy. And he can't plead ignorance. The above words were spoken at a meeting of The Atlas Society, a group that promotes the Randian philosophy, at a celebration of what would have been Ayn Rand's 100th birthday. And he told the 'Weekly Standard' in 2003 that he gives out copies of "Atlas Shrugged" for Christmas presents and asks his interns to read it. Conveniently, however, Ryan has denied his connection to Rand just in the last few months. Really Paul, you can't run from your past....you just can't.

What is most remarkable is how right-wing political figures like Paul Ryan have been able to fool the religious right. Somehow they have been able to engender a metamorphosis of fundamentalist Christian values that sees government helping the poor as being evil and any regulation of business a violation of God-given rights. But this is not at all a new phenomenon. Politicians like George Bush, Dick Cheney and their advisor Karl Rove knew early on that their only hope was to get people to vote against their own best interest. They saw the religious right as a low hanging fruit to be plucked....and pluck they did by pandering to them with promises of government intrusion on issues involving 'family values' (certainly not views of a true libertarian) and, in doing so, co-sign Jesus Christ's name to a philosophy of greed and nihilism. In the end many fundamentalists became disenchanted with their alliance when it became obvious that all the Bush/Cheney camp wanted was their vote and the policy efforts they had been promised never materialized.

But apparently memories are short-lived. The 2012 Election has become a replay of the 2000 election, only with a new and more virulent cast of characters. Funded by PACS that could not give a damn about Christian values, the Republican Party has veered toward the far right and become dominated by fake libertarians and conservative corporatists. The self-interest embodied as the keystone of Ayn Rand's philosophy is the underlying theme of their campaign. It could not be more obvious.

When Mitt Romney selected Paul Ryan as his running mate he signed on to this dark and fraudulent philosophy. He has cast aside any hopes of capturing the moderate conservative vote in favor of opportunistic demonization of those who really lack any power... the poor, the elderly, the sick. From now until the election we'll see nothing from them but veiled attacks on gays, women, immigrants, the unemployed, minorities of race and religion, and all done in a manner which appeals to a bastardized and distorted view of Christian values.

It's time that people of faith as well as those who see altruism as the natural instinct that elevates humanity to account for themselves. The alternative is a legitimized barbaric system that pits one man against another so that the few can prosper. In order to accomplish their goal they will have to run from their pasts. Let's not let them.

Romney Headed For 'Tampa-geddon'?

So the question now is what kind of shape will the Romney campaign be in come August 27th, the date of the Republican Convention in Tampa? If the latest polls are any indication, not so good. An average of the CNN, Fox, and Reuters/Ipsos polls show not only that he is behind four to five points, but that overall he is trending downward. This comes on the heels of his gaffe filled trip to Europe and his unwillingness to release more than two years of tax returns for no suggested reason other than "principle".

Could it be that he is starting to lose the all important undecided voters, those who view economics as being most important? The economy was supposed to be Romney's strongest advantage and the center-post of his message, but instead he rolls out a series of ads about "values", specifically concerning Obama's alleged "war on religion". I don't think the undecided voters are much concerned about the contraception argument, and you've got to wonder who he is targeting. The only people to which these ads would be of any appeal would be the Republican conservative base, a group you would think should already be solidly behind their candidate by this time in August.

The truth is Romney now has to find another way to win. He has backed himself in a dark corner where if he campaigns on his business ability the questions about Bain Capital and more importantly his non-disclosed tax returns slam him in the face. What he is hoping for most is that his current bus tour will be more successful than his European trip and that his already delayed VP pick will distract from some of the more difficult issues dogging him.

If his campaign's poll numbers don't uptick a bit before the convention he'll be in serious trouble. Romney already has the unenviable task of dealing with the sure commotion from the Paulite delegates who will be in Tampa. And if he polls any lower we'll start seeing Republican defectors, particularly House and Senate candidates who will want to distance themselves from their candidate.

August is a long month indeed.........especially for Mitt Romney.

The Romney Campaign: Chaos Revisited?

Something is amiss in the G.O.P. the last few weeks and it begs the question as to what may be going on behind the scenes. I can't help but notice that the Romney campaign is stumbling off-message, and at a point in the race you would expect the Republican Party old-line to be coalescing behind their candidate there are appearing cracks. In a word this is "startling".

 From the outset of Romney's candidacy in the Republican primaries it was properly noted by political experts that he was the most likely nominee in that he had a highly organized team of "boots on the ground" staff with extensive campaign experience. The one thing you could say about Mitt was that he possessed an uncanny ability and discipline to stay on message. Ultimately it was this consistency that helped him prevail against the onslaught of ultra-conservative and libertarian candidates. After the Palin debacle of 2008 there was nothing party regulars wanted more than "careful and deliberate".

 Which makes the events of the past several weeks even more curious. With less than 100 days until the election your candidate is doing reasonably well in the polls, you're outspending your opponent two to one with ads that seem to be effective and are winning the fund-raising battle, and your party convention is right around the corner with all the free news coverage you could ever hope for. And what happens? Your candidate makes what proves to be a disastrous trip to Europe and Israel spreading gaffes like confetti everywhere he stops. Who advised Mitt to take THIS trip at THIS time anyway? Uncharacteristic of Romney or his organization. It would be bad enough if this were just an isolated mistake. But it's not. These gaffes are starting to look like a snowball gaining momentum, beginning with the "retroactive retirement" statement, one of the most ludicrous explanations I've ever heard.

 I suppose a case could be made that these current troubles all began with Romney's refusal to release more tax returns. I would have expected some of the new Tea Party types to hurl some criticism. But Chuck Grassley? Haley Barbour? Doesn't make sense. Why would old-line Republican party regulars join the Democrats hail-storm of demands for transparancy at this time? Similarly I would not have expected the cutting commentary from pens of conservative journalists Billy Kristol and George Will. They could have easily just kept their mouths shut. But they didn't.

 I believe there are some serious unknowns here. Could it be that Romney received the government amnesty in 2009 for his now closed Swiss bank account? If he did, there are legal questions as to whether a person can hold high office if he received amnesty for what would have been a felony. Or could it be that he really did lie to the SEC about his involvement with Bain Capital? Or did he pay no taxes at all in 2009? Someone out there knows the answers to these questions. Are Republican regulars aware of this person that could potentially let the cat out of the bag? Will we see a melt-down at the Republican Convention?

 Stay tuned.......

Is Romney paying these kooks?

As a youngster my grandmother advised me that having silly ideas was
permissable as long as you kept them to yourself. At this point in the
calvalcade of amateurish stars being rolled out onto the Republican stage you would guess that the RNC chairperson is dishing out this same advice, at least behind closed doors. Herman Cain's dalliances aside, the statements he made alone were enough to see him not make it out of the traing camp debates. Rick Perry opened his mouth one too many times, even for the nerves of some of his most loyal followers. And after a series of commercial breaks funded by conservative PACs, Gingrich's weekend surge to the front collapsed, followed by a none-too-smart and none-too-researched comment regarding blacks, jobs, and food stamps (a comment he is sticking to). To his credit, Ron Paul doesn't need to make any new comments to qualify with the fringe right (or fringe left I'm afraid to add). He and his now senator son have made a whole YouTube channel's worth in the past. If there is one ray of sunshine to come out of the dark abyss of the Iowa primary it is the retirement of Michelle Bachmann from this boorish contest. And I just don't have the stomach to recount her yearlong diatribe of foolish statements and faux pas.

Just when I thought it couldn't possibly get any worse along comes one more, a self-proclaimed "Jesus Candidate", with comments that would make campaign advisors of ANY party cringe. Rick Santorum. The following are a few of the statements I've heard from him in the last three days. You just can't make this stuff up.

Rick Santorum statements (already):

1. Gay marriage is like polygamy and beastiality.
2. Social Security benefits should be cut immediately.
3. Gay soldiers are bad for the Army.
4. People with pre-existing conditions like cancer should be charged more for health inurance.
5. Contraception is the same as abortion.
6. He will immediately bomb Iran.
7. As President he would abolish federal courts he didn't agree with. (Okay. He stole this one from Gingrich)
8. Better to have a father in jail than two mothers.

I don't believe Mitt Romney has anything to worry about at this point. Do
you?

Largest Contributors to 2008 Presidential Campaign

These are the top contributors to both candidates last presidential election. As you can see, the banks lobby both sides of the aisle. So do the oil companies. It is important to note these are all legal contributions, and in and of itself do not prove any malfeasance. However I would not think these organizations would give these amounts if they did not expect to receive some sort of preferential treatment by the successful candidate. I would also point out that UBS AG and Credit Suisse Group are American subsidiaries of foreign corporations.


The organizations themselves did not donate , rather the money came from the organization's PAC, its individual members or employees or owners, and those individuals' immediate families. The information below is a matter of public information available to anyone. That is, to anyone who cares to look.



Barack Obama - Largest Contributors to 2008 campaign:

University of California $1,648,685
Goldman Sachs $1,013,091
Harvard University $864,654
Microsoft Corp $852,167
Google Inc $814,540
JPMorgan Chase & Co $808,799
Citigroup Inc $736,771
Time Warner $624,618
Sidley Austin LLP $600,298
Stanford University $595,716
National Amusements Inc $563,798
Wilmerhale Llp $550,168
Skadden, Arps et al $543,539
Columbia University $541,002
UBS AG $532,674
IBM Corp $532,372
General Electric $529,855
US Government $517,908
Morgan Stanley $512,232
Latham & Watkins $503,295


John McCain - Largest contributors to 2008 campaign:


Merrill Lynch $375,895
JPMorgan Chase & Co $343,505
Citigroup Inc $338,202
Morgan Stanley $271,902
Goldman Sachs $240,295
US Government $202,929
AT&T Inc $201,938
Wachovia Corp $199,663
UBS AG $187,493
Credit Suisse Group $184,153
PricewaterhouseCoopers $169,400
US Army $169,020
Bank of America $167,826
Gibson, Dunn & Crutcher $160,346
Blank Rome LLP $155,226
Greenberg Traurig LLP $147,437
US Dept of Defense $146,356
FedEx Corp $131,974
Lehman Brothers $126,557
Ernst & Young $114,506

There is NO association between "OccupyWallStreet" and the hacker group 'Anonymous'

Let it be known that there is a group known simply as 'Anonymous' that according to YouTube postings is planning a DNS (denial of service) hacking attack on Wall Street computers some time in the next few weeks. They are asking that you download a hacking program so that your computer can be used in this illegal action. I wish to make it clear that although I have associated myself with the "Occupy" movement, I in no way condone any of the activities of the 'Anonymous' group whatsoever. My position is that beyond being illegal, such action flies in the face of the 1st Amendment, is a form of defacto censorship, is a bastardization of the term "civil disobedience", and is counter-productive to the cause of the "Occupy" movement. "Anonymous" has publicly supported the "Occupy" movement. So have other political groups, unions, politicians. However, the "Occupy" movement does not endorse, promote, or associate itself with any of these groups or approve of any of their actions. Nor do the words or actions of any individual member of the movement garner such endorsement. The purpose and goals of "Occupy" are clearly stated in their official releases, and only after a consensus of their General Assemblies held daily.