The road to Hell is trod by (reduced) Carbon Footprints

The linked article on “The Low-Carbon Economy” is distressing to me, as is anything with the potential to mess up my life.  Not being of the hair-shirted climate change self-flagellate persuasion, I have not bought into the “climate change” dogma prevalent today, and therefore look very closely at anything coming from “experts” (I’m sick of inverted commas already in the first paragraph) that has the potential to affect me.

The Economy is a nebulous phantasm at the best of times, as is anything which deals with abstracts. The abstracts here are trillions of units of fiat currencies, the default reserve currency still (at time of writing) the $US.  Whatever it is, billions and trillions of these notional credit instruments flash electronically around the globe daily, and somehow maintain everyone’s confidence that we know what we’re doing. 

2008 was the most recent time the wheels came off (or the bubble burst, choose your metaphor) but you can expect some sort of serious economic reverse roughly every decade.  I understand in general how this works, but one of the things I understand very definitely is that people supposedly much smarter than me use financial instruments of their own clever devising to manipulate these money flows for their own benefit.

This entire Sci-Am article is a study in rent-seeking, which sums up the entire Carbon Trading and Green Energy industries as far as I can tell.   As I’ve said many times before, a lot of these Greens are really Watermelons (Green on the outside, Red on the inside) and have ridden this bandwagon for all it’s worth as a means of wealth distribution from First to Third World countries.  An example:

Using green bonds and modified insurance portfolios
If the top financial layer includes big institutional investors and banks, then a second tier of untapped finance lies with insurance companies extending policies to the most vulnerable populations in the developing world.

Through the use of mobile phone-based services and micro-credit institutions, a great deal of insurance has already been extended to what Jim Roth of LeapFrog Investments calls the “emerging consumer.” Over the past eight years, the social investment fund has backed a portfolio of companies selling insurance products totaling $40 million, of which $33 million went to low-income consumers in Africa and Asia.

“It’s an optimistic story,” said Roth, noting that the vast majority of those consumers had never owned insurance before.

“A key difference is they have less money. So the kinds of insurance policies they can buy tend to have lower premiums and less benefits.”

Governments in the developing world are also now pooling their resources into sovereign insurance funds that make payouts for climate adaptation programs, said Fatima Kassam of the African Risk Capacity Insurance Co., a specialized agency of the African Union. Niger received a $25 million payout last year, having paid in with a $3 million premium. “Governments are coming together to change the model on disaster management,” said Kassam.

Let’s be clear about one thing to explain why I’m so bent about this sort of foolishness.  The “insurance” is for climate change adaptation/mitigation.  Since “climate change” can mean literally anything at all that weather/climate does, no traditional insurance company (i.e. one which intends to stay in business) would write policies like this. This is very thinly-disguised wealth transfer.

 

The problem is that despite quantitative easing and no physical standard for our notional currencies, “wealth” is a zero-sum game; the wealth has to come from someone.  I am NOT a redistributionist; “law and order Libertarian” is probably closer to the mark, so I object to beggaring ourselves to make African kleptocrats richer.   

Green energy policies in the UK dramatically raised electricity prices as subsidized (to the producers) wind projects were forced into the market. Although this is now easing, it took clawing back the policies that started it, and similar things have happened in other places too.  Coal is the big thing to hate these days (Obama leading the pack) but it has the advantage of being cheap and abundant.  It’s also dirty, but modern scrubbing tech cleans it up quite acceptably, at least as long as you don’t consider CO2 to be pollution. 

This is where activists end up eventually, when all of the low-hanging fruit has been picked.  Back in the 1960s and 70s pollution was a real problem, and people rightly took action to clean it up. With the sulfur dioxide (acid rain) dealt with in the 1980s, North America and Europe ran out of serious, widespread environmental pollution sources.  Coincidentally or not, this is right when Global Warming popped on the radar as the next apocalypse.  Note that we (and both ice caps) are still here, despite all of the doom-laden pronouncements from 1988 onward.  Beware the “green intentions” of any climate lobby, and follow the money to see why people are really doing what they're doing.

Singularity-minded

What is obvious to anyone with a functioning brain is that there are far more people in this world than any plausibly functional model of our “economy” has a use for.  There are only so many “McJobs” and robots, as the linked article re-hashes, will take most of those. 

The question from there is what to do about that.  I do try in these posts to propose solutions, not merely rail against the myriad of “wrong” in the world, but this one poses a problem to even come up with something which would work, regardless of how unlikely it is to be implemented due to standard human failing and venality.  Here we go anyway.

The population problem is the biggest one.  Back when everything we ate came from family farms and c.80% of the population was occupied doing this, there were c. 1 billion people on Earth.  Now (in developed countries) significantly less than 10%  of the population is engaged in producing our food.

This doesn’t cover all “productive” forms of work, but it does bring the productivity gains of modern technology and organization into focus.  During the early stages of the Industrial Revolution everything was done by hand in a very inefficient but manpower-intensive fashion, resulting in rural depopulation as people rushed to the factories for work.  As time went on and clever people designed labour-saving machines to do unskilled work, those least talented were thrown out of work.  This process began in the 18^th Century and continues today.  Remember that women weren’t part of the workforce at that time (although children were); now we have twice as many people we need to find jobs for.

This frames the problem, but the only two solutions I see popping out of this are:

·         Remove the surplus population, or;

·         Smash our technological base and get us all back making buggy whips or subsistence farming.

It is to be noted that the second option will bring about the first, but without the productivity to make things work; in other words, complete civilizational breakdown.

Nature may soon do something about there being so many of us; Ebola is making its’ way out of Africa for the first time.  The ability of mass international rapid transit to vector diseases worldwide first really got attention during the SARS breakout in 2003, and that had nothing like Ebola’s death rate, albeit it spread even more easily.  Ebola comes in different variants with differing lethality, symptoms and incubation periods so we’ll be dealing with this for a while.  Just imagine if SARS came back too…

Getting back on track, we are in what I’ll call a “luxury-scarcity period”.  It is conceivable to feed everyone, and with very local and temporary exceptions this happens.  If you live in a warm climate (Africa, for example) that is most of what you need to survive; good thing too, given the limited to non-existent social and community housing expenditure there. While there are many people in Western societies who struggle to make ends meet, the number of actually homeless are statistically barely significant and are mostly people with serious mental problems who are essentially un-employable. 

The real question if things don’t completely collapse is: what do we do with the jobless?  I do not believe that there is any “self-evident right’ to anything produced by someone else, although many disagree.  My test of these ideals is how much effort it takes to achieve these “natural” rights.  In this case, it takes the coercive power of a government to make people pay taxes, and it has been always thus.  Breathing is about the only thing that I’d call free, everything else requires somebody to do some work.

“Tax the rich” comes out a lot, usually from people who can’t count past 100 but occasionally from hypocrites like Warren Buffet.  That will not work for the fairly obvious reasons that taxing something makes less of it, and that there isn’t that much money held by “the 1%” compared to what a country spends in a year.   Next year that money won’t be there as the (formerly) rich are confiscated from and those smart enough to see it coming (most of them or they wouldn’t be rich in the first place) will relocate.

There goes the Marxist-Anarchist solution, what next?  Expansion of the current welfare state would seem to be out as that “Scandinavian” model has proven itself unsustainable in the last 20 years.  Shorter work week?  The thing that this glosses over is that there is only so much money in a business to pay people.  If there are 40 person-hours per position and you cut that into 2 chunks, each of them will only be getting paid for 20 hours. 

What all of these ideas have in common is a lowering of living standards. Less money means less stuff, full-stop.  I’ve worked part-time, and it’s great for students or stay-at-home parents who want to generate some more household income while the kids are in school. It was a a time in my life when I had no responsibilities beyond myself and I most certainly could not have supported a familiy on that income. Time is traded for money in pretty-much any type of transaction you can name; the value of that time is highly variable, but however you slice it, ΔTime = Δ$.

Any kind of post-scarcity geek (or other) utopia is based on cheap and abundant energy.  With enough cheap (clean) energy you can do almost anything you want, and paying the heat and light bills of non-productive members of society becomes plausible then..  I am partial to the Culture books of Ian M. Banks as far as post-scarcity sci-fi is concerned, but that construct only works because nearly omniscient AIs are running everything.  The suspension of my disbelief for that is far less of a strain than to assume that people with no profit motive (Star Trek Next Gen) could create and sustain such a thing.

In case you somehow missed it, I am a small-r realist, and I do NOT believe in the perfectibility of Man.  “Pretend to pay them, they pretend to work” didn’t work for Communism so any version of confiscatory taxes intended to level the playing field will have a similar effect.  It takes money (or equivalent) to get stuff done, so I remain at a loss as to how to deal with computers taking our jobs.  It happened to me once already, but the consolations were another job and the fact that the program did a far worse job than I had.  These consolations will be in increasingly short supply.

The irony is that developed countries are just that, developed, and their decreasing birthrates are in step with increases in productivity with Japan leading the way in both.  These countries will not remain prosperous if they have to take in millions of unemployable (because there are no jobs) immigrants (Japan again, but an exception to this).  That is another issue, and panicky diseased epidemic migrants could scupper us all even before the robots do. 

POTUSeless

Honestly I don't know where to turn right now, the world is spinning out in so many places. It is of course of no import to the grand scheme whether I'm tracking everything or not, but it is a big deal (it turns out) when the USA can't do it.

I am profoundly unimpressed with the current POTUS, but it is not a partisan or ideological attack I make when I say that he is worse-than useless in his current job. "Worse-than" for a number of reasons, but particularly since leadership of the (still) most powerful nation in the world is a zero-sum game, i.e. if he's occupying the top position nobody more capable can be.

The USA has a number of internal problems, being deeply indebted (mostly to their greatest strategic rival) being one of them, but their ability to project power is still unrivalled. Things would certainly be different on the foreign policy front were G.W. Bush still in charge, but since that can't happen (even if it were advisable and I don't suggest that) would things be any better around the world had Romney won the last Presidential election?

Let's start by enumerating the bigger strategic threats to the US and various other distractions, in descending order.

Threat #3: China's encroachment in the South China Sea and environs

In the big picture this is hugely destabilizing to world trade and the economic development of countries in the region. It is also something only the US Navy can be an effective counterweight to. There was a "pivot to Asia" bruited about recently, but again just saying something doesn't make it true. The Chinese aren't playing around here, and if you want to stop them you’d better be prepared to park a carrier task force over the Spratleys or Paracells, etc. in support of the most legitimate national claim under international law. And use it if push comes to shove.

I rank this one in last place for strategic threats, but it approaches zero if you decide to let the Chinese run the area. There are hundreds of millions of people on that region who would rather that didn't happen, for whatever that's worth.

Threat #2: The Islamic State, formerly Sunni Iraq and eastern Syria

ISIS/L has metastasized into a regional jihadist vortex, drawing in violent Muslim extremists from around the region and increasingly around the globe. They are firewalled in the north by the Kurds and nervously watched from all other points of the compass, the Shia government of rump Iraq and Iran doing the closest thing to heavy lifting right now.

The US didn't want to get involved in Syria, and I don't fault that since we are seeing with the looting of military stores in Mosul a Salafist organization with American military equipment, something widely predicted should the US arm the Syrian rebels. Turns out it happened anyway since the US backed the wrong horse (Maliki) in Iraq.

No however is the time to start whacking those jihadi moles. It's not a free-fire zone but the next best thing which is a great chance to kill a whole lot of assholes the world could really do without. This would be light on boots on the ground but could be used judiciously in support of limited goals, e.g. securing the Jordanian and Kurdish border areas. You support the outposts of civilization in the region but learn the lessons of Iraq and Afghanistan and eschew the nation-building part of it. Killing them there prevents them from coming here.

Threat # 1: The Border

Central America is coming apart and people in desperation are sending their children north to the US in belief (well-founded if not technically accurate) that they won't be deported. Obama is trying hard to bury his head in the sand over this one, but with 350,000+ immigration cases backed up in US courts and upwards of 60K unaccompanied minors this year alone fetching up along the Rio Grande things are well out of hand.

Bleeding hearts who would abolish the border (another pesky "social construct" to be wiped out no doubt) have zero grasp of basic math, but let me put this in the starkest terms I can. There are TOO MANY PEOPLE IN THE WORLD. Specifically, there are too many people in the world with lower standards of living than we (working and middle class Westerners) have, about 5 Billion of them. They can't all come to the developed countries or those countries will cease to function as developed countries, and the whole world will look like Nigeria (failing state) or worse.  Think the L.A. from Elysium without the space habitat.

What to do? Start with enforcing the immigration laws already on the books. Then, dismantle the "War on Drugs" and send all those resources into Central America to clean out the root causes of the panic immigration. Bugger going after the drug distribution networks, just shoot-on-sight anyone on the streets with a gun. Go after the guns and kill with extreme prejudice any of the gang-bangers who want to fight it out. The US can put together intelligence cells to track insurgent groups better than anyone else, and I can make a case that stabilizing Central America (and ceasing to fuck with Mexico) would do more for the medium to long-term security of the US than the Middle East, possibly even China..

Distractions

1. Ukraine is setting into a counter-insurgency phase and at the moment (some rumours aside) the Russians have backed off. As I hypothesized a while back, Putin has taken the low-hanging fruit (Crimea) but realizes that the Donbas is more trouble than it's worth. This keeps things on NATO's radar, but it is now mostly a European problem.
2. Africa. There is a persistent Ebola (variant) outbreak in West Africa which deserves having an eye kept on it, and the continent is still awash in jihadi groups (AQIM, and Boko Haram the most visible) who need pruning.
3. Afghan elections/final drawdown/status of forces. Karzai's out, but the squabbling commences over alleged fraud and run-offs.

The big and the small all require leadership, the sort that believes in what they're doing. Since Obama only objective was to dismantle US power projection he's largely managed that, but it doesn't really get troops or the population rallying around the flag for some dirty work overseas, or even in your own back yard.  Romney is looking prescient for his attitude toward Russia, even if I disagree on the threat Russia really presents to us.  More of a mystery is domestic politics, but we know Romney knos how to run things so I really think he was the President the US needed, but instead they got the one they deserve.  Do better next time America, for you own sake as well as the world.

 

World's not gonna end just yet, Chicxulub willing...

I loved P.J. O'Rourke's book All the Trouble in the World , and this Wired article is more in that same vein:

Religious zealots hardly have a monopoly on apocalyptic thinking. Consider
some of the environmental cataclysms that so many experts promised were
inevitable. Best-selling economist Robert Heilbroner in 1974: “The outlook for
man, I believe, is painful, difficult, perhaps desperate, and the hope that can
be held out for his future prospects seem to be very slim indeed.” Or
best-selling ecologist Paul Ehrlich in 1968: “The battle to feed all of humanity
is over. In the 1970s ["and 1980s" was added in a later edition] the world will
undergo famines—hundreds of millions of people are going to starve to death in
spite of any crash programs embarked on now … nothing can prevent a substantial
increase in the world death rate.” Or Jimmy Carter in a televised speech in
1977: “We could use up all of the proven reserves of oil in the entire world by
the end of the next decade.”

Predictions of global famine and the end of oil in the 1970s proved
just as wrong as end-of-the-world forecasts from millennialist priests. Yet
there is no sign that experts are becoming more cautious about apocalyptic
promises. If anything, the rhetoric has ramped up in recent years. Echoing the
Mayan calendar folk, the Bulletin of the Atomic Scientists moved its Doomsday
Clock one minute closer to midnight at the start of 2012, commenting: “The
global community may be near a point of no return in efforts to prevent
catastrophe from changes in Earth’s atmosphere.”

I particularly like Ridley's description of humanity as a "moving target" and strongly encourage you to read the whole article.

A lack of historical (even recent) perspective bedevils efforts to compete with the hectoring Luddites who would hold us back. The "climate change" crowd for example will ignore all "inconvenient" information which would detract from their agenda of dismantling our technological society. Points of No Return are routinely passed without undue incident, increasingly destructive weather events are taken out of context of the development which has occur ed in that area since the last "worst" hurricane, flood, tornado, etc.

I'm picking on the Warmists again, but in this case it's because they encompass all of the goals of Greenpeace, The Club of Rome and all the rest of them, e.g. there are too many people, and bundle that with the dogma of CO2 as the worst thing since dioxin. The problem with all of these people is that they only have influence in First World countries, places where the birth rate has already plummeted, in most cases below replacement rate and what industry that remains has cleaned up far past where it was even during the Acid Rain era of the 1980s.

The hope of this planet to absorb the ongoing population growth of the Third world and the pollution of the Second is the technological base of the First. Technological advances require prosperity, prosperity requires not being straightjacketed by red tape and excessive taxation. If the world does end due to something less catastrophic than the sun exploding, it will probably be something that sufficiently advanced tech and production capacity could have at least mitigated.

There are PLENTY of "world-ending" bolide (asteroid) impact examples to choose from, so let's take the Cretaceous dinosaur killer as a case study. As things stand, one of these comes our way we're fucked; what could change the odds? Enter Planetary Resources, or other private sector asteroid mining outfit. Yay! Capitalism will save us all out of the goodness of its' altruism, right?

Of course not. What they would however do in their self interest is develop the means to get to asteroids whipping around our system and then take them apart. The tech to do that will also include a highly motivated system to find and track NEOs, the essential first step in averting a bolide catastrophe. In warfare it's "Find, fix, strike" and the principles apply here too.

It is an inescapable fact that motivated people accomplish much more than plodding clock punchers, and the best way to motivate most people is money. Making money off of asteroid mining will require the same tech that one would need to have a chance of averting a major asteroid strike. It may also require large thermonuclear devices, currently held as a monopoly by governments, so there is certainly room for Public and Private to work together here.

None of this matters to the malcontent misanthropes who would have us all living in huts, and then complain about all of the trees we cut down to build and heat them. Well fuck them; the rest of us would like to avoid the "nasty brutish and short" lives of our ancestors and we need to fight those idiots to keep things moving forward. After all, if Mankind is to survive

For all but a brief moment near the dawn of history, the word 'ship'
will mean simply - 'spaceship.' (Arthur C. Clarke)

Blank Cheques and the Whirlwind

I am not commenting here on the merits of this particular case, but on the precedent it sets:

In the 5-4 ruling, the Supreme Court ruled on Monday that the Navajo Indians and several other tribes must be paid in full for the services they provided in 1994-2001, including education, environmental protection and security.

It said that it was not the fault of the tribes that Congress had imposed a ceiling on such payments because of the lack of funds.

"The government was obligated to pay the tribes' contract support costs in full," the court said in the ruling.

The federal payments reportedly covered between 77% and 92% of the costs, depriving the plaintiffs of hundreds of millions of dollars.

The verdict is a major victory for the tribes, the BBC's Paul Adams in Washington reports.

But the decision also has implications for contractors in general, as the court said the government has to abide by its promises, our correspondent says.

If a service had been performed, the court said, then it was not good enough simply to say the money was not there.

Emphasis mine in the last sentence. I'm no lawyer, but in all civilized places contracts are taken seriously and they should be. The problem is twofold; promises and expectations

Promises first. Politicians/governments make these as a matter of course, and I don't see any end coming to that anytime soon so I guess I'm done with fold 1. Fold two is really the crux, as democratic governments cater to voter expectations via the promises mentioned above. Again, this case seems pretty straight-forward, but the final sentence shows the road to socialist penury that many nations are already on.

The general consensus (right wrong or wherever in-between) on how the EU PIGS got where they mostly (but Greece and Spain in particular) are today is a tale of unreasonable expectations. It's nice to retire at 50 on a secure pension, but not reasonable since you will not likely have put enough money aside for the next 25-40 years of your probable life. If this is the case, whose responsibility is it to pay your way? On what basis is this liability assigned, your "rights"?

In Canada we like our health care system, at least when we're not complaining about wait times and what it doesn't cover. As a society we have decided overwhelmingly that the taxes required to ensure that people aren't bankrupted by the birth of a child or an emergency appendectomy are worthwhile. You pay taxes (more accurately, are a citizen), you are covered, and nobody, not even cynical contrarians like me complain about it until non-citizens are seen to be sponging services that haven't paid into.

Even that is merely a bug in the system. People get the government they deserve, and if that's the case the Greeks in particular are in aggregate a lazy, grasping bunch. "Austerity" is the buzz-word these days, and people are voting against it all over the place, France most recently kicking Sarkozy and his belt-tightening to the curb in favour of Hollande's socialists. Apparently the French think there is still a vein of other peoples' money to be tapped for their short workweeks.

I am lightly slandering entire countries but have no fear, I don't play favourites and will dish it to my motherland should it become appropriate. At this point I will point out the forgotten detail of Austerity: it is merely living within your financial means.

Who is to blame for the current state of perpetual imminent collapse of the international monetary system (again)? The Rich? They may have influence, but the 1% are still only 1% of the electorate and the ballot box balances that influence, if enough of the other 99% choose to use it. OK then, the government? Pusillanimous politicians and parties only concerned about their political survival indeed heed the siren call of the electorate as long as it'll keep them in power, so I'll lay some blame here.

That incidentally is the best argument for rich people with a sense of national service (hereditary or otherwise) being politicians; if they don't need the money and the pension plan they are more able to make difficult/unpopular decisions. Since that is a fantasy of days gone by, the bulk of the blame for people getting hosed by government policy is indeed the people themselves. Yes, we don't know what's good for us in the long run and suffer for all the easy-credit bubbles and Ponzi schemes.

This is no surprise since by definition (Statisticians, leave me alone on the terminology) half of the population is of below-average intelligence by whatever measure you choose to use. Of the right side of the curve, a lot are mentally and/or physically lazy, just plain greedy or entitled because they are too smart for their own good. It is the job of the productive class (crossing IQ divisions) to keep the system going despite various disincentives (e.g. taxes) from entitlement-minded members of the political and electorate class.

The argument for low taxes is that it incentivizes people to live and work in your precinct. To the eternal consternation of commies of all shades, places with low taxes are typically the places closest to a balanced budget. This is because the low taxes mean that the Socialists haven't taken over, and people are still spending their own money, and not other peoples'. Don't give your government a blank cheque that your taxes can't cover. It's your fault if they overspend for more than one term of government, if they sow the wind you'll reap the whirlwind.

Better than all other forms of government, except...

In view of the mob violence which is the increasingly prevalent hallmark of modern "democracy", I saw this and thought it'd make a good counterpoint to the default "Democracy at any cost" school.

Books have been written about it, films have been made about it: Rwanda is best known for a genocide that claimed more than half a million lives in 1994.

But in the ensuing years, quiet changes have taken place there. So much so that "The Economist" magazine now asks: is Rwanda "Africa's Singapore?" The World Bank ranks it 45th in the world for ease of doing business, higher than any African country barring South Africa and Mauritius. And Transparency International says it is less corrupt than Greece or Italy.

A (post-Apartheid) Sub-Saharan society with less corruption than two EU members? I wish it was hard to believe, especially considering that Greece and Italy are "democracies", but something else is at work here. In fact, in Paul Kagame we see a pretty good example of that rarest of good governments, the Benevolent Despot.

"Benevolent" does not mean he's a saint, by any stretch. Considering how he came to power there were and remain a lot of heads to be cracked in a notoriously volatile part of the world, so I'm sure Amnesty International won't be giving him a gold star. The scale to measure a Benevolent Despot against the garden variety ones is much like the scale of judgment in the Egyptian underworld; all the bad you do should weigh no more than a feather (although I hear they used a pretty big feather).

There are a lot of places that could use a BD, and historical precedents are any good king, etc. Tito in Yugoslavia is a reasonably contemporary example. All of these occurrences, rare as they are, must be viewed through the lens of their environment, not some armchair human-rights mouthpiece. The world is what it is, most frequently not what you'd like it to be, especially if you get all of your learning from a narrow range of Utopian politically correct sources. The "Arithmetic" of the Frontier that I model this blog on (and as much of my life as I can) is "whatever works is right".

Let's take a situation which is not currently entirely out of control, Tunisia. This is the epicentre of the "Arab Spring" and as Arab countries go, particularly considering the overall state of the world economy, it was in pretty good shape under Zine El Abedine Ben Ali. There was a fairly reasonable level of corruption (real-world assessment), but no freedom of the press. This is a case of "what have you done for me lately", as for the first 20 or so years of his rule he was voted in with massive majorities, and his policies made Tunisia on of the most vibrant economies in the region.

The problem with Tunisia, like all Muslim(ish) countries is that they have too many kids, leading to "youth" unemployment. This is a deliberate plan as it was for the Catholics until recently to out-produce the infidels, but that's an aside. I will lay a significant sum of money against whatever replaces Ben Ali being better overall than what his system managed.

A surprising number of people with nice comfy lives in soft Western countries consider a free press more important than stability, at least in other countries. If the recent foolishness in Montreal was to persist or even better, escalate, being able to blog about it without the secret police (CSIS, I guess?) kicking in your door will likely be a lesser priority than having enough food in the house and/or getting to work to make a living.

Ideally you have stability and freedom of the press, etc. but if you're in a rough neighbourhood which is more important? I personally think that an inability to tolerate criticism is the mark of an insecure leader, and showing weakness in any regard is dangerous when you're on top. If I were despoting somewhere I would let the press say what they want (as long as it's true and they spell my name right) and not waste my scarce secret police resources on hassling journalists. There are plenty of other people who need visits from them, the ones who advocate violence, and secret police are just what is needed for that bunch.

Keep the gears engaged, the lights on and the food rolling in to the distribution centres; that's what keeps people alive and reasonably comfortable, and that's my measure of success. I would indeed make a few bad actors disappear for that, and I have at least some respect for anyone who can hit those benchmarks. Even (especially, to be honest) if some (deserving) heads get cracked for it. Democracy is indeed only one range of options out of many.

Risk Management and Civilization

The title link is to the oil spill from a pipeline in Alberta in the last week. There is the usual bashing of "Harper" and "Big Oil" but as it came the same week as the following I saw some blog synchronicity:

Japan must restart two nuclear reactors to protect the country's economy and livelihoods, Prime Minister Yoshihiko Noda has said in a televised broadcast.

Measures to ensure the safety of two reactors at western Japan's Ohi nuclear plant have been undertaken, he said.

Since last year's Fukushima nuclear disaster, Japan's 50 reactors have been shut down for routine maintenance.

The crisis fuelled immense public opposition to nuclear power, but Japan is facing a summer of power shortages.

The leftist Utopian mindset is that we should get something for nothing, whether it be services (rioting "students" in Montreal this spring) or "Green" energy. Shit ain't like that, as Newton encapsulated many moons ago. There are reactions to actions, and while these can and should be be mitigated when possible, changing anything from one state to another will have a range of effects, not all of which we want.

That is where the mitigation strategies come in because radical environmentalist cant aside, the era of rampant pollution is past. Air and water are cleaner (in the developed world) than they were 40 years ago, and it's because of improved practices and technology. This brings us to Diminishing Returns and Risk Management.

It's difficult to ascribe priority to one or the other as I can make an argument either way, but for purposes of this post I'll give Risk Management planning priority. I'll also give my own interpretation of RM which is as follows: with a particular end-state in mind (affordable energy, for example) you decide what will do more damage, the various ways of producing it or the effects of not having it.

I'm sure that's close enough for unpaid work (e.g. here) to work with, and the position of the Japanese PM re: reactors is pretty much a textbook example of risk management. With all reasonable (more on that in a bit) precautions taken, the damage to society would be far greater if the power generation is foregone than the risk presented by the possibility of accident in the production of it.

It's NOT about wringing ones' hands about the worst-case-scenario and assuming that (however unlikely it is) will be what happens. In this case, something pretty close to the worst case happened at Fukushima, and as much of a mess as it is NOBODY HAS DIED because of the radiation released from it. This is after an old (and sub-optimally designed) fission reactor was completely overwhelmed by a massive natural disaster which itself killed over 15,000 people leveled a number of small cities and actually changed the elevation of those seaside areas.

There aren't a lot of ways in which that could get worse in terms of what happened in the end result at the reactor complex itself. The Wikipedia link seems (at tme of writing) well balanced, and even the worst-case reputable estimate for lifetime cancer increase amoungst those exposed (100 cases) pales in comparison to the devastation wrought by any good-sized quake in Japan. Fukushima was rated at the same level of "devastation" as Chernobyl which is questionable at the very least from the point of view of fatalities.

Chernobyl was indeed the worst case (see link above) and I notice that the world has not ended, save for the <300 people who died as a direct result of it. Risk Management in the USSR was a very blunt instrument, leading to bad designs like the RMBK reactors. Three Mile Island marked the death knell of the American nuclear power program and NOBODY even got measurably sick from it.

The word for the reaction to all of these events is "panic". I'm not a fan of panic, but there are times when some healthy caution is in order when things go wrong. It breaks, you fix it, you carry on. You do it with your car (or bike if you're a real Green hardcase), you don't say "OMG, it broke and it could fail catastrophically, cars/bikes must be banned!"

Back to the oil spill. These have happened thousands of times in the last 100+ years and again, the world has yet to end as we know it or otherwise. I am not a fan of industrial accidents, but a certain failure rate is the price of doing anything that accomplishes anything. We take reasonable precautions, the state of "reasonable" being a moving target depending on time and perspective.

Enter Diminishing Returns. Of course if we have no rules we see all sorts of short-term gain behaviour which is why unbridled capitalism is a bad idea. That said, the "worker's paradise" of the USSR and satellite Commie states made a MUCH bigger mess of the environment than the Evil Capitalist West. At a certain point in trying to improve something you will hit that point when a further 1% improvement in x will require increasingly more effort past the diminishing returns point than what led to it.

It happens with schoolwork, it happens at work and it gets to the point where further improvement is either impossible or would be uneconomical in effort or expense. Zero-defect is what we seem to expect these days, and that 's not the way things work. The key to keeping the wheels on is to not getting bogged down striving for perfection, but to keep moving forward as best we can.

Cheap clean energy is the key to the future, and the dividing line on the global warming/climate change seems to involve the definition of what is cheap and what exactly is clean. Right now natural gas seems to split the difference with only radical anti-CO2 wingnuts having a problem with it. The supposed "environmentally friendly" sources of wind and solar are anything but, and hydrocarbon based energy will be with us for the foreseeable future. As we will also be around for the (by definition) foreseeable future, we have to do the best we can to not "shit where we eat".

The best we can do will never completely eliminate human error or materials failure. We can however keep improving things as long as we keep things in perspective and keep the people who are producing what we need honest. People aren't good at thinking rationally about stuff so we'll make a mess of it, but in the meantime we'll keep the lights on and our food coming to us by making as few errors as possible while not making it impossible for people to do the things we need them to. Mistakes will be made, but clean them up, learn the appropriate lessons and keep moving forward.

Battle of the Bulge

Today I'm aiming in the general direction of the future of Western countries, staying close to home (Canada, specifically Quebec) to look at the demographic imbalance and expectations for the future.  In other words, wherever this takes me.  According to Statistics Canada, deaths will start to outnumber births in Canada c. 2030, i.e. the near future.  A quarter-century after that the population is projected to be about 42 million.  Here looks like a good spot to wander into the minefield of immigration policy so I shall start there.

It is obvious to sensible people (a rare breed, alas) that we need immigrants, but not just anyone.  Criminals, the mentally or seriously ill, the just plain stupid, we can grow our own, we don't need to import them.  We are looking for people with some kind of skill and/or a good general education including a functional knowledge of English or French (but really English for anywhere outside of Quebec, let's face it) and a desire and ability to go where the work is.

I remember a university class over 20 years ago where this subject came up, and I said something to the effect of the above.  I was promptly branded a "racist" for wanting people with education and skills, the accuser's (stated) assumption that these people could only come from Europe.  As I said not word one about source country, who exactly is the racist here?  I dismembered her quite handily in the brief debate which followed but I'm sure she's running some government department or molding young minds somewhere these days.

The young (and not-so-young) minds marching around Montreal right now are looking into the yawning chasm of the Boomer- Gen X - Gen Y crossover and those working on useless Humanities degrees (the bulk of the ones on the streets) are wondering what's in it (the system) for them.  Good question, but I don't think rampaging through the streets and getting yourself a criminal record is going to improve your prospects.

They are bafflingly getting more support these days, and I suppose we can lay this at the Premier's feet.  The "emergency law" they passed was redundant and just gave the protesters something to rally against.  These things need to be dealt with firmly from the get-go and the vacillation of the government in the early days allowed things to get out of hand.

That however is tactical, and it's the strategic situation which needs looking at.  There is currently a bulge in the population creating an oversupply of labour.  However, just like the bulge which a snake's meal creates, this will eventually pass.  The question is "when" and the answer is not encouraging for these "students".  The tail end of the Baby Boom hit 15 years old (entry to the workforce) in 1981, which means they won't hit the new retirement age of 67 until 2033.

Ouch.  This is not to say that there will be no labour mobility in the next 20 years, but with the general shift in the economy to less labour-intensive modes of production will mean that expanding economy or no, the job opportunities will not be there for many for quite a while.  What do I know, things could change, right?

If I could make accurate economic forecasts I wouldn't be writing my anonymous blog for almost no audience so we can assume there are things I don't know.  Regardless of the accuracy of my model, I would like to see what exactly these protesters intend to happen.  Don't like Bill 78? I've scant sympathy as there is nothing in that "excessive" and "abuse of power" law which will inconvenience anyone who's not invading classrooms and blocking traffic.  The government is corrupt?  No shocker that, but we have a mechanism for throwing the bums out every 4-5 years, so build up a party and get your platform of free education and unicorns for all elected in Charest's place.

All of these movements are problems without viable solutions.  If any of these people can look around at Europe (Greece et al) and remain under the illusion that there is an inexhaustible supply of other peoples' money to pay for their free tuition it's just as well they're not in school right now since education is wasted on them.  Education to me of course means information containing facts, not the hippie/radical feminist/Marxist bullshit the Gender Studies etc. faculty teaches so no wonder expectations are so divorced from reality.

One can rail against the preceding generations for stacking things in their actuarial favour but I fail to see what good that will do the following generations.  Mine (X) is the generation which will bear the brunt of this as we expected to retire at 65 or earlier and now won't be able to.  Life's hard, and we will reap the whirlwind.  It will be a LOT worse for those following us if things aren't reined under control now, and running huge deficits will not accomplish that.  As sad as it is to say, we all have to accept that the skies are not as blue for us as they were for our Boomer parents and grandparents.

Solutions?  Not exactly, but a repeal of the rampant credentialism and grade inflation which has entrenched since the 1960s would be a start.  If it is made attractive once again for companies to hire apprentices or "mail room" level people straight from Secondary school a great deal of money and student debt could be saved.  The days of a "Company" job for life are gone, but something like that could come back with advantages (stability for those who want it) for Labour and Capital.  If it worked before, a version of it could work again.  Banging pots in the streets is not going to help anything unless it by itself can smarten up people and therefore the government that supports it.  I'm not betting on that.

Pusillanimity and the Oakland Soviet

A recent conversation with my father-in-law resulted in him saying that all of these "Occupy" people are "communists". This is fundamentally accurate, and not a surprising reaction from a retired businessman; if the "Death to Capitalism" banners weren't enough to give the game away I don't know what is.

People are starting to get fed up and again hardly surprising given the hijinks in Oakland in the last few days. I don't know if there has been a sifting out of participants so that the most radical are the ones who are sticking it out, but the novelty has definitely worn off even when they're not destroying property and trying to kill public servants. The whole thing is devolving rapidly, the worst example being Oakland. The others (especially in Canada) are varying degrees of useless and just plain squatting, but they are certainly now doing more harm than any possible good.

This means that the continued presence of these communes in business areas is killing small businesses in the vicinity through intimidation, deliberate vandalism, and effective blockade of customers. These people are not fans of the crony capitalism that got the U.S. in the mess it's in, and are certainly NOT in the much maligned (with some cause, some of the time) "1%". One problem (there are many) with not having a set "aim" is the inability to see when things are going badly off-track, as they obviously have done now.

The lefties and fellow travellers pooh-pooh the conservative/capitalist concept of having some idea what the hell you're doing and trying to accomplish, but most of us aren't nihilist anarchists and we like Order. Civilization requires some structure and certainly some common ideas about how things should work, and certainly requires enforcement of basic concepts. The occupiers are discovering, like it or probably not, that when you get more than three people anywhere you start needing organization if you are sticking around.

Supplies and security come right after shelter (often before) and they don't just happen. They require organization and leadership, and you won't have the former without some version of the latter. Now as is my wont, I circle back to the original point.

Oakland's civic reaction to this, specifically that of the Mayor and City Council, has been and to the time of writing continues to be inconsistent, and therefore a guaranteed and de facto disaster. The police have been whipsawed by contradictory orders, and one of the predictable results of this is certain Black Bloc elements in the protest will exploit the resulting chaos, as happened last night (main link). Another is a drop in morale of the police as they realize that their bosses don't have their backs, and no good can come of that.

So, the Oakland Soviet has blockaded the third-busiest port in the U.S. and to "press time" it is shut down. It has been pointed out that this hurts all of the workers who depend on the port for their livelihood; this is where the true colours of the Occupy clowns is shown. It's not about "the 99%", it's about their vague concept that things should be "different". Different how, exactly? I've asked this class of person that question before, and as much as they don't like what's happening the only coherent answer you'll likely get is some variation of "revolution".

So far it's a polyglot of signs about all things except making money and paying taxes, but the black flag has already been flown; how long until we see the red?

Down with the evil everythings, or something.

There is more to say about the trend of these events, but this is a good start:



These "Occupy Wall St" things are dragging out and starting to propagate, but it eludes me, and any thoughtful commentators I've seen, what precisely these people want.

Some visitors here get the superficial impression that I'm a big booster of capitalism, corporations etc. This is superficially true, as I am a fan of progress, and innovation is best fostered in a competitive environment. Profits are a good and necessary part of doing business, and making money makes your life better, or at least you have less pressing things to worry about than if you'll eat this week or how to replace your or your children's worn out clothes.

Greed however is still greed, and I must concur that it should be classed as a sin, or in a secular world, a character flaw. I have a serious problem with companies which are "Too Big to Fail", and avoiding that sort of thing is why monopoly and anti-trust laws were created and enforced.

So, if this was some sort of grassroots campaign to restore some balance in banking and corporate law I could get behind that. However, it seems to be an incoherent hodge-podge of disaffected "progressives" and anarchists out to disrupt and occupy other peoples' property. This sort of disregard for private property I have a serious problem with, especially when it seems to be for no useful reason.

Action without purpose is chaos, and there is enough of that in the universe with out us adding to it. Civilization, especially technological civilization, is about resisting entropy, not encouraging it. The TEA Party had an agenda: too much government means too many taxes, therefore they want less bureaucracy and smaller government. This is coherent, and despite the obsession of lefty media and individuals of accentuating the kooks at the margins of this inherently conservative movement it has had political success.

The same lefties are falling over themselves to praise the "Occupation" (at least when Israel's not doing it) but I can't see this going anywhere, except geographically. The Democrats in the US are now looking to see if they can do some sort of TEA Party thing with these rallies, but they already got their dream candidate in office for four disappointing years. I don't know what they could mould out of this to replace that bid for Hope and Change, but if it's even possible it would be a political Frankenstein.

That makes me think about the whole Keystone XL pipeline imbroglio, so perhaps (no promises) I'll look at that next time.

Obama and Other Peoples' Money

Nothing really new here, but what I really want to get at here is the whole idea of "fair share'.

In a combative set of remarks, the president vowed to veto any package that cuts into Medicare without raising "serious revenues" from wealthy Americans and corporations. He effectively dared Republicans to follow through on their no-tax-hike pledge as the deficit committee works under a strict timeline to find at least $1.2 trillion in deficit savings by Thanksgiving.
"We can't just cut our way out of this hole. It's going to take a balanced approach," Obama said. "It's only right that we ask everyone to pay their fair share."

Emphasis mine. First, ask this question: why does the government constantly need more money? There are a few reasonable answers, mostly involving inflation; the rest are all about the growth of bureaucracy and thus the size of government itself.

Next, define "fair share" in society. This is not commonly questioned, and most people (2/3 of Americans according to some poll I glanced at) support fleecing "rich" people. I "quote" the word rich because that's slippery these days too, and for tax reasons the definition will be arbitrary.

Put these two concepts together and it leads you in the direction of asking what people are expected to pay for, and (hopefully) why? Is my misfortune yours, and if so, what are the limits on that? People get (rightly) bent out of shape when some connected business people get bailed out by government, meaning by your tax dollars. Of course, in the US right now we have something different, businesses being saved for the unions employed there, but this elaborate vote-buying scheme still uses taxpayer money.

If you work in the ever-shrinking private sector, do you want your taxes going up to preserve bloated union salaries and benefits which have driven work out of your country and damaged your prospects? A bit less evocative than the Robin Hood-esque desire to despoil the rich, but no more "fair" than bailing out magnates.

All over the world, the Socialist state is in trouble, and has been for years. It has been proven that the welfare state is not sustainable (you'll eventually run out of other peoples' money), but Obama seeks to imprint that on the US. Here in Canada the fight continues, but we have realized that we must periodically purge the Public Service to prevent the service creep that would bankrupt us a la Greece.

I'm not sure what I think is fair, but flat-rate taxes combined with consumption taxes on non-essentials comes close. Say a minimum 5% and maximum 25% Income tax rate and a 15% VAT; rich people tend to spend more and can better afford to lose 25% of their income, but how fair is that?

If you make a household income of <$100K (most people) you don't have a lot of margin these days, and there is limited blood in a stone. Thus the temptation to squeeze the better-off, but what are they being asked to contribute to? Infrastructure, Public Health (as opposed to Health Care), Research and Defence are common goods, certainly, but do rich people use them any more than anyone else? Next, health care; do rich people have preference in a Public health care system? I bloody hope not, and if not why should they pay more for it? It's "rich people" paying for the best available treatment which advances medicine, not the stretched Public system, but that's not on most peoples' radar.

In case there was any doubt, I am significantly less than rich and have no vested interest in the top marginal tax rates, but the underlying principle at work here concerns us all. That principle is Expectations.

What is reasonable to expect of government services? Canada is founded on "Peace, Order and Good Government", which is pretty vague but not fundamentally different from the Preamble of the US Constitution:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

People get the (democratic) governments they deserve, so I suppose the People are the arbiters of "fair". Of course, the way these things work, a mere plurality of votes will establish who's in charge, so a LOT of people will be potentially discomfited by decisions as the rest are swept along by dangerous simplifications. The second and third-order effects of tax and policy decisions are never the concern of the short-lived government, but they should concern you, the tax-payer, as you'll be living with the (mostly) unforeseen consequences when the chickens come home to roost.

OBL's Bleed to Bankruptcy vs. FDR and The Giant Sucking Sound

This is from Slate (link) and is so blatantly half-assed and short-hindsighted that it begs me to challenge it, so I will in my own half-assed way which at least remembers things that happened more than 10 years ago.

The Sept. 11, 2001, terror attacks by al-Qaida were meant to harm the United States, and they did, but in ways that Osama Bin Laden probably never imagined. President George W. Bush's response to the attacks compromised America's basic principles, undermined its economy, and weakened its security.

Boilerplate, but I take exception with "in ways that OBL probably never imagined". This indicates that the opposition had a pretty good idea of the economics involved in sucking the Americans into wars to ruin their economy. The rest of it is blatantly partisan (vs. Bush and the GOP) and mind-bogglingly simplistic and superficial in attribution of the USA's current economic malaise.

Example: Today, America is focused on unemployment and the deficit. Both threats to America's future can, in no small measure, be traced to the wars in Afghanistan and Iraq. Increased defense spending, together with the Bush tax cuts, is a key reason why America went from a fiscal surplus of 2 percent of GDP when Bush was elected to its parlous deficit and debt position today. Direct government spending on those wars so far amounts to roughly $2 trillion—$17,000 for every U.S. household—with bills yet to be received increasing this amount by more than 50 percent.

I won't quibble about the numbers, but the emphasis above is mine as it is evidence of an axe to grind at the expense of the big picture and gutted fundamentals of America's post-industrial society and economy. Perot came up with "giant sucking sound" in 1992 about American jobs moving south, but we can look back on NAFTA as the "good old days" in terms of North American employment. The Rust Belt started to decline in the 1970s and the US has been hemorrhaging jobs ever since. To sum up after Mexico, all those manufacturing jobs moved to Asia and show no signs of coming back.

THAT is NOT Bush's fault, and if I had to blame anyone it'd be FDR with his "New Deal" back in the 1930s. That is not meant to be a comprehensive policy statement, but the culture of Entitlement which that swept in led to the high cost of doing business in the US, and the Environmental and Litigation lobbies which were waiting in the wings and always there (respectively) knocked the US economy to its' knees and put the bullet in the nape of its' neck.

The thing to do when you get into a hole is to stop digging, and American politicians as a group have no concept of actually DOING it, even if they'll mouth words about restraint. Regardless, history didn't start in 2001, and the system which has brought America to the current pass didn't pop up mushroom-like overnight (though it is fertilized much the same way). My message to Mr Stiglitz: if you're going to ascribe causes to profound issues in huge systems, make sure there's some depth to your simplification for the casual reader. Most Slate readers won't question your cant, but we're not all so ignorant that you can slide such sloppy journalism past us.

Debt, equity, and the virtuous Joneses

The linked article is longish, but it deals with certain economic and social fundamentals of the USA. Uncle Sam being my neighbouring elephant I can't ignore his thrashing about, and there are some things which have wider application.

The basis of any real democracy is the Middle Class. Starting from there it follows that what strengthens the middle class strengthens democracy, what weakens it has proportional deleterious effect. The modern economic age of the middle class followed WWII with the economic expansion and near-universal lifetime employment, or at least the expectation of it. It's pretty obvious that those days are over and that there has been a seismic shift in our consumer society; what is not so obvious is where it's trending now.

In the end it all comes down to debt and the management thereof. This bit struck home for me:

The transformation of Americans from a nation of savers and entrepreneurs in the era of the family farm to a nation of consumers in the last eighty years was a fateful one. Our ancestors thought that debt was shameful and a burden; we’ve come to think of cheap debt as part of our birthright. The American Dream as we’ve known it entailed a lifestyle based on permanent debt. The growth of the American economy depended on growing debt at every level from federal Keynesian stimulus to credit card and mortgage debt.

"Shameful" is a bit harsher than I see it, but embarrassing is close enough for government work, and "burden" is bang-on. The choice faced by most people is to have more stuff and wonder (I hope) how to pay for it all but look good to their peers, or to have less gadgets and fail to keep up with them, but not have the sword of Debtmocles hanging over their finances. Most people are sheep, and even the ones that aren't don't want to lose what status they have, so they all buy new cars and plasma TVs and their kids get the newest iPhone.

Few of us are immune to this, and even I am only resistant to it. What separates me (and presumably you, my readers) from most people is that I think about how it all works and ties together, and I DO NOT assume that it'll all sort itself out no matter what I do. Yes, that nasty, non-PC word: Consequences.

Thinking is not doing of course, and you'll only get as far as you're willing to go. Much could be accomplished by once again making a virtue of restraint, but the Economists would have a fit contemplating the impact of that on our current economic model. If people stop buying things the economy takes a tumble (happens; think of those reports on "consumer confidence") and I don't pretend to have a solution to that.

There's the rub of course. We are officially encouraged to buy things, primarily national, but things in general, to keep people employed (in China?) and sales tax revenue rolling in. Building houses employs a lot of people, so buy houses too. That last bit is handled much more responsibly in Canada than the US, but the basics are the same across the 49th //.

We can't of course blame the government, as it's a tiger created by our fevered dreams of cradle to grave security and services, but those expectations will not allow us to dismount. In the end the whole thing comes down to Expectations, and those need to change.

Our standard of living is already decreasing, a thing in itself which is directly counter to what we were raised to expect. I've ridden this hobbyhorse from the direction of energy costs, but it's bigger than that. Our system is as prone to entropy as any other, and what we're trying to keep afloat has run out of steam. Unless there's some fundamental change we're all going to have to get used to a lot (or at least a bit) less. For the record, even the most charismatic politicians are Change, not change, e.g. superficial; replacing our entire economic model is almost beyond me to envision, but I'm open to reasoned suggestions...

Power madness

Germany's coalition government has announced a reversal of policy that will see all the country's nuclear power plants phased out by 2022.

The decision makes Germany the biggest industrial power to announce plans to give up nuclear energy.

Environment Minister Norbert Rottgen made the announcement following late-night talks.
Chancellor Angela Merkel set up a panel to review nuclear power following the crisis at Fukushima in Japan.

There have been mass anti-nuclear protests across Germany in the wake of March's Fukushima crisis, triggered by an earthquake and tsunami.

This is first and foremost a huge mistake. Germany gets 23% of it's power from nuclear and this will need to be replaced. The biggest problem is that I hear about "sustainable" and "green" replacements, but I've not heard a plan yet, let alone one that uses existing tech.

Next, it's panicky nonsense; this economic policy fiasco was precipitated by the recent disaster in Japan, but apparently geology/geography is not taught in German schools. Central Europe is in a low-tectonic activity zone (certainly compared to Japan) and all but the Baltic coast is totally immune to tsunami. This is the radical Greens at work, as there is no rational reason to completely junk such a large part of their energy production.

The costs of this (increased energy costs leading to decreased economic competitiveness, etc.) have implications throughout the Euro zone, and if Greece etc. need bailouts down the road, who will be able to do it? The death knell has yet to sound for the Euro, but the ringers are limbering up. Death pool for the Euro anyone?

The Futurist is Now

I will start by saying that I don't hold much faith in those who predict the future. That disclaimer out of the way, there are some things in Gerard Celente's interview (link) worthy of discussion.

Soaring unemployment, cuts to pensions and benefits, rising fees for diminishing services, across-the-board value-added tax increases and declining minimum wages are all common factors to some degree, he says. Combine those with the numbers of young people who are still living with their parents, struggling to find work and not seeing much hope for the future, and Celente says you've got some powerful reasons to not only get angry over the growing gap between rich and poor, but to do something about it.

So far this isn't crystal ball stuff; economies around the world bubbled to unsupportable levels and have now imploded to greater or lesser degrees. A key problem is expectations, and those can be explained by history and human nature, things I have more confidence in figuring out.

The BabyBoomers had the Golden Age that for some reason everyone today thinks is the norm for human existence. There were very specific conditions which led to that suburban Shangri-La:
When the war ended in 1945, millions of veterans returned home and were forced to integrate. To help the integration process, Congress passed the G.I. Bill of Rights. This bill encouraged home ownership and investment in higher education through the distribution of loans at low or no interest rates to veterans.

Returning G.I.’s were getting married, starting families, pursuing higher education and buying their first homes. With veteran’s benefits, the twenty-somethings found new homes in planned communities on the outskirts of American cities. This group, whose formative years covered the Great Depression, were a generation hardened by poverty and deprived of the security of a home or job. Now thriving on the American Dream, life was simple, jobs were plentiful and babies were booming. Many Americans believed that lack of post-war government spending would send the United States back into depression. However, consumer demand fueled economic growth. The baby boom triggered a housing boom, consumption boom and a boom in the labor force. Between 1940 and 1960, the nation’s GDP jumped more than $300,000 million. The middle class grew and the majority of America’s labor force held white-collar jobs. This increase led to urbanization and increased the demand for ownership in cars and other '50s and '60s inventions.

"The middle class grew" is the giveaway snippet in that excerpt; if it grew, it was previously smaller. Unrest in developing countries is due to educated people being denied that opportunity, and in the declining developed ones people see their chances to belong to the comfortable middle class being eroded away.

Enter democracy. If you already have it and the middle class (backbone of good government) declines, you have what we see in the USA where access to entitlements "buys" votes (ACORN, other "community organizations") from the poor, and as there are more people in that group the power of the party that controls those votes becomes entrenched. See demagogy on where that leads.

The middle class is what allows a stable democracy to exist and flourish; the more people have a stake in the country, the more they will care how it is governed. This of course is well known, but even the soundest principles can be horribly subverted by those with Good Intentions. The housing boom and collapse in the US was due to government policy which forced banks to make loans to people who couldn't afford them with the laudable goal of encouraging home ownership. We see today how well that worked.

Owning a house is very expensive, and generally requires a good and steady income. There are those who argue that it's not a good investment and that you're better off renting, and this can certainly be true. An effective democracy needs a population which has a stake in how the country is run, not merely a mob which bays for bread and circuses. These days I guess that would be union jobs, welfare, and a "right" to high-speed Internet. Politicians are largely self-interested and short sighted, so a responsible electorate is the only way to have them look past the next election.

Energy costs are driving up the price of everything, which when coupled with the unemployment caused by "outsourcing"everything to the cheap-labour developing world you disgruntle a lot of people. The rampant credentialism of the modern workplace forces anyone who wants a job into debt bondage via their student loans, resulting in a latter-day feudalism which eviscerates the middle class. This is where we are right now.

My prediction? It's going to get worse, and by worse I mean decreased prosperity for the bulk of the population. We're already there, and it gets worse every week. Gas prices go up (for no good reason, I'll add) and the demand for that being non-elastic means less disposable income. This in turns means either less consumption (the prudent course) or increased debt, with knock-on effects throughout our interconnected world.

As for "hanging the rich", the big problem is the politicians who rig the rules for them. Governments need to regulate capitalism effectively to prevent unhealthy monopolies while maintaining the profit motive to foster innovation. The dystopian future of soulless Multinationals and co-opted or irrelevant governments can be avoided. I'm fairly certain that a day of reckoning with public sector unions is coming, and will hit in waves throughout the First World (started already). The quarter-century of Boomer prosperity (roughly 1945-1970) can be looked back at as a gilded age of employment and home ownership, but current and upcoming generations will have to modify their expectations. That however isn't much of a prediction, because it's already here.

Peace, Order, and Not Wiping out the Middle and Working Class.

The Middle Class is an endangered species as is the Working Class, the people who once made things, and were thus the basis of our productive economy. For both groups, the discretionary income which formed the basis of our consumer society is on a curve that not only approaches zero, but with credit and inflation can cross well into negative territory.

It's not an original thought, but the production/manufacturing base of our economy is very likely not going to recover. Of course the Americans have been hit even harder than we have, which will compound our problems. Just saying we'll trade more with the Pacific Rim countries doesn't make it happen since geography does count.

This means a reduced tax base for governments, which means less services and/or more debt. That typically leads to more taxes as they try to wring more blood from the stones, which is a vicious circle of increased costs to businesses and individuals leading to less start-ups and innovation, as well as the flight of talent and capital to less oppressive regulatory locales.

Now, belt tightening and retrenchment can happen with reasonably clever government and there is some sign of that happening in Canada overall, although the power shift from Ontario to Alberta is noticeable. Ontario is a good example of the creeping collapse of the tax base, and here's the worm's eye view of how.

It's a one-two punch of taxes (HST) and energy costs. It can be hard to separate the other two, as anything the government does that costs you money is a tax in my books, but I'll try to maintain some separation.

Like any tax amalgamation (think GST) the price savings that are supposed to come to consumers are never passed on, thus the HST increased the cost of pretty much EVERYTHING in Ontario, gasoline in particular. Besides jacking the cost of personal transportation, this increases the cost of everything that needs to be transported which is, well, everything. So everything costs more, but most people aren't making more. This equals less spending of less disposable income which squeezes businesses, who are facing increased costs of their own.

Now for energy costs (as far as they can be separated from straight taxes), and Ontario will be the case in point. The Provincial government's "Green energy" agenda is hitting below the belt, and it also affects everyone. By subsidizing inefficient wind and solar projects this policy has raised electricity costs across the province.

Some of this is being realized (of course) belatedly by the provincial government, but my crystal ball for the future continues to function best as a paperweight or doorstop. One does not however need a clairvoyant to see unintended secondary and tertiary consequences; it just takes some thinking it through.

Idealists are by nature pretty much incapable of thinking past what they'd like to see happen, with dire consequences for us all. It's not even necessary to pull the precise outcome from something; if you can deduce a point where something bad happens due to "good intentions" you have a grasp of the process.

Going into 2011 I hope to be able to keep my family fed and the lights on, but like a lot of other people there won't be a whole lot else going on. Modest goals are the key to survival, as taking things in bite-sized chunks is sustainable, and should disaster befall a chunk or two, survivable. The idiots I've encountered who wished for $3/L gas may eventually get their wish, and if they do God help us all because the pie-eyed idealists in government will have hell to pay when the former middle class can't afford food.

First though, it'll flatten the working poor who are already being priced out of living space by rapacious condo development in many urban centres as well as ever-rising electricity and fuel costs. Can't have food riots here you say? Tax revolts and overstretched food banks and soup kitchens are more likely in the medium term, but there is still hope to avoid being pushed even that far.

You make your own luck with governments and I have some hope that things can still get better, at least at home. Another key to maintaining some control over your life is knowing that things can almost ALWAYS be worse than they are. We need leaders who can remember their mission statement: Peace, Order, and Good Government. Prosperous citizens are happy citizens, so I hope to see policies that encourage that in the New Year. The best of 2011 to anyone who still reads AotF.