The Ramblings of An Eternal Student of Life

Friday, January 25, 2008

Current Affairs ... Economics/Business ...

For the past week, the economy has been in the spotlight. Looks as though it’s coming down with something. The federal government is going to be sending most of us some money in a few months, as a remedy. Borrowed money. Unfortunately, borrowing is a big part of what caused the illness in the first place. In the long run, more borrowing is probably going to make things worse.

Unfortunately, the American economy has become more and more like a Ponzi scheme over the past 20 or 30 years. Under the right conditions, the technology and managerial genius of American enterprise causes our economy to grow quite impressively. Unfortunately, we’ve decided to borrow and consume based on the assumption that those right conditions will go on forever. Borrowing and consuming have caused even more growth, which causes more borrowing and consuming, on and on like a snake eating its tail. No one has left any margin for error; not the federal government, not the mortgage market, not Social Security, not the stock market, not the average family . . . no one. No one thought to save for a rainy day, even though we’ve had rain before. It’s not just the real estate sector that has gone through a “bubble”; the whole American economy seems to have taken a bubble bath.

It looks as though the rain is starting to fall now; oil prices have gone up and don’t show any signs of coming down (although if our economy goes sour, they will). Real estate prices finally got so far beyond the underlying fundamentals of supply and demand that prices have stopped rising. Too many families signed big mortgages betting that real estate prices would continue their steady climb. They also bought big cars and lots of consumer goods on credit, thinking that the good times would never end. Now, it looks as if unemployment will start rising again, after remaining at historically low levels for over a decade. Hardly anyone is ready for that.

And then there’s China. China has been in the middle of this. China seems like our friend, selling us all kinds of consumer goods and electronic stuff at prices that are very low, and maintaining our ability to do that by loaning us back our dollars at low interest rates. But are they our friends? I think not. Personally, I think that the Chinese know our bad habits and have been shrewdly exploiting the USA’s frivolous ways to jump-start their own economy. Their population is about 4 times ours, and most of it is quite poor (our GNP is around 9 times theirs). However, if they could capture a big chunk of America’s demand for manufactured products for a few decades (as they are doing), they arguably could convert a large portion of their own population from isolated peasants into middle-class consumers.

If China can convert 1/3 or so of their population to middle-class levels, they will no longer need the USA as a market for their goods; their own internal economy can take over, as it will have gained similar purchasing power. At that point, the Chinese can leave us at the side of the road. Thanks, sucker; oh, and its time to repay all those debts that you owe us, no more new loans from us. Interest rates in the US will soar, and . . . well, things won’t be the same again. Our standards of living will start going down. And that’s going to cause a lot of political angst. It ain’t gonna be pretty.

Well, this isn’t going to happen right away. China isn’t ready to dump us just yet. They will probably act to help us get through the latest crisis, by not messing with our trade balance and continuing to purchase US Treasury notes (thus financing the rebate checks we will soon be receiving). For now, it’s in their interest to give their favorite junkie another fix. It buys them more time to do just what our economy did between the Civil War and the Korean War – convert from rural / agriculture to suburban / manufacturing and trade. This will happen faster for them; we were using canal boats and steam-powered railroads, whereby they are working with airlines and broadband Internet.

But the Chinese still need another 10 or 15 years to get a significant chunk of their nation out of rural poverty and up to western standards. And after that, they probably won’t immediately forget the lessons of frugality and savings and sacrifice, as we have done by now. Because of that, I think that American living standards will not get much higher and will then start to decline. The days of big houses and big SUVs and big spending sprees for the masses will fade. And at that point, the big gap between the rich and poor may finally become a political issue in America. Again, it ain’t gonna be pretty.

For now, though, the immediate crisis will probably come and go, although the impending recession may last a bit longer and go a bit deeper than the last two (1991 and 2001). Things will seem OK again in a few years, but will it last? I think that the intervals between future economic crises will get smaller, and the severity of those crises will get bigger. By 2025, I think it will be clear that the USA is not going back to the economic might that it enjoyed throughout the 1990s and again briefly in the mid-2000’s (and which it may yet taste again in the early 2010s). People then will look back with nostalgia on the Bush-Clinton-Bush-Clinton era, although the scholars will be busy then writing tomes about what went wrong.

But you don’t have to wait until 2025 to read about it. Here are some resources. James Fallows has a good, fact-driven article on the China situation in the January-February 2008 Atlantic Magazine. And for those of you without subscriptions to the Atlantic or who don’t want to schlep on down to the library to study a policy question (another sign of American decline!), here are some other articles available through the magic of the Internet:

1.) George Soros’ view of the current economic crisis, including the China situation;

2.) a reflection on how lack of old-fashioned virtues such as common sense and humility are involved in the current economic mess, by classical historian Victor Hanson; and

3.) a journalist’s report on the Davos conference and the sense of unease there about “America’s ability to right its own ship”.

4.) also, the New York Times has weighed in with a Sunday Magazine article entitled “Goodbye to American Hegemony”.

OK, but before I go, let me get specific and say what I think we’ve done wrong. I blame it on our leaders, but more so on the population in general and especially the college educated population, which should have known better (but are probably the worst offenders). Unfortunately, we get the leaders we deserve, and they’ve done our bidding quite diligently, by:

1.) Letting the gap between rich and poor get so wide; and making it worse by cutting taxes for the rich more so than for the middle class and poor.
2.) Doing away with all economic regulation schemes back in the 1980s and 1990s, instead of being selective about eliminating the anachronisms and extending regulation into new economic realms, while maintaining its flexibility as to minimize impact on growth
3.) Allowing our dependence on foreign oil to go on unchecked, after two clear warning signs in the mid 70s and early 80s; we clearly should have had an energy independence program on the scale of the space program of the 1960s.
4.) Allowing so many fuel-hungry SUVs and McMansions; and even worse, allowing so many sprawling housing developments and offices and shopping centers to be built that are entirely dependent upon auto transport; we’ve locked our nation into high oil consumption.
5.) Allowing our governments to operate at such huge deficits; yes, I am saying that taxes should have been higher, as we can’t slash most government programs; despite some inefficiencies and waste, most government programs have awfully good reasons for their being.
6.) Allowing our public education system to be weakened, and making college level education prohibitively expensive for more and more families (instead of less and less, which would stimulate the economy in the long run).
7.) Allowing our manufacturing sector to be swept away so thoroughly, causing the USA to become so terribly dependent upon the rest of the world for the basic stuff that we need, as well as the goodies that we enjoy. I agree that international trade causes everyone to become richer, when it works correctly; but our world frequently doesn’t work right, so I can’t help but wonder if we should have kept some of those factories and mills going, even though they are more expensive to run than the ones in Brazil and Korea.
[SIDEPOINT: American military and diplomatic policy have become very nationalistic; and at the same time, we have let our economy become extremely internationalized. To me, that sounds like an exposed left flank. Common sense would dictate that we find an equivalent balance between nationalist and internationalist approaches in all three realms.]
8.) Allowing federal subsidy for basic scientific research to continually decline.
9.) Labor unions got too greedy and were responsible for much of America’s decline in the 1970s; but our leaders should have let them learn their lesson and allowed them to become responsible partners with industry, instead of breaking them.
10.) Too much buying on credit and too little saving for rainy days (and maybe retirement)!!
11.) Homeland security costs are a significant drag on our economy, along with the wars in Iraq and Afghanistan. On first blush, the Afghanistan operations and the homeland security efforts seem quite necessary; a foreign enemy attacked us, and they will attack us again if we don’t do something. True. But see point 3 above; energy independence would go a long way towards lowering our vulnerability to radical Islamic jihad. Looking the other way while Israel continued to take the best lands away from the Palestinians didn’t help either. But the Iraq operation was truly self-inflicted injury.
12.) Overall, taking such a short-term, me-first, enjoy-now / pay-later, consumption-based view of life; the nation I would have preferred wouldn’t have been as rich as we are now, living standards would be somewhat lower (although still way above most of our neighbors); but it would have been fairer, more dependable, and more sustainable over the long haul.

(Obviously I couldn’t even be elected as the class hall monitor in a high school).

◊ posted by Jim G @ 11:45 pm Read Comments (3) / Leave a Comment

Monday, January 21, 2008

◊ Brainy Universes: Go Boldly

Brain / Mind ... Science ... Spirituality ...

Last week’s Science Times section of the NY Times made me aware of the “Boltzmann Brain” concept. My goodness, how could I have lived so long and never have heard of it? It’s a huge idea, a bold idea, way out there on the bleeding edge of cosmology and mathematics, wandering off into the field of epistemological philosophy and speculative metaphysics. It’s a Starship Enterprise kind of idea!

It’s actually too big an idea for me to properly explain here (and I probably don’t fully understand it anyway). Nonetheless, just for fun, I’ll try to describe it and make some observations regarding its theological implications. Whether I’m right or wrong, the concept certainly does have much to do with life and consciousness and their relationship to the Universe and to all creation — whatever that is or isn’t.

We know that there is conscious self-awareness in the Universe; as Descartes said, if we know nothing else for sure, we do surely know of our own individual consciousness. We’re also pretty sure from our scientific observations that conscious life occupies an incredibly tiny part of the Universe; it seems like nothing more than a small side show in a big carnival. The Universe is mostly made of thermonuclear-fueled galaxies and gravity-powered black holes and dark matter and vacuum space — incredible volumes of unoccupied space. Oh, and throw in dark energy; lots and lots of dark energy, causing those vast gobs of unoccupied space to expand at an accelerating pace. Relative to the vast Universe, intelligent, self-conscious life (i.e., the human race, and any other intelligent life out there) is like a little barnacle along the side of a nuclear-powered aircraft carrier.

That does strike some people, including myself, as kind of odd. Wasn’t there a more efficient arrangement » continue reading …

◊ posted by Jim G @ 12:56 pm Read Comments (4) / Leave a Comment

Saturday, January 19, 2008

◊ Sorry, Borders . . .

Economics/Business ... Personal Reflections ...

My Friday nights are not exactly the stuff of legend. I usually go to my mother’s house, have dinner with her and my brother, use their washer and drier, then go over to the local Shop Rite for my weekly groceries. Then I bring the food and the laundry home, and if I’m lucky I’ll get another two hours of reading or web surfing until I zonk out. It’s not exactly way up there on the excitement scale.

Last night I decided to change the ritual just a bit by going to the Borders bookstore in Willowbrook. I wanted to pick up a magazine that relates to one of my pedestrian interests, i.e. railroad operations and history. I had read on a hobby site that the latest edition had an article about Paterson, NJ, which is near my home turf. Trains Magazine can be hard to find in most magazine stores, but Borders has a big magazine section and usually stocks it. That’s what I like about Borders – it’s big, and so it has a lot of different books and mags and music covering a wide array of different subjects.

I have a lot of different interests myself, ranging from the sublime (philosophy) to the quotidian (collecting statehood quarters). My mix of enthusiasms is certainly eclectic; it includes theology, monastic spirituality, stamp collecting, hard rock music, vegetarianism, computers and programming, national politics, photography, indoor plants, essential oils, modern physics, the Roman Empire, urban American culture, social justice, the space program, Myers Briggs, economics, jet fighter planes, impressionism, bird watching, microbrewed beer, etc. It’s hard to find someone else with a range of interests even vaguely close to my own. Most people can relate to regarding perhaps two or three of my interests at most. And most small bookstores have materials that cover about the same. Even the local Barnes and Noble stores started to bore me.

But Borders is different. It has books that relate to almost all of my interests; and more than that, it has worthwhile books. It has the deeper books, the academic and specialty books, not just the coffeetable pieces and best sellers (and all those $2 bargain books that you’d need a lobotomy to actually find interesting and credible). Borders is the kind of place I could go into and wander around for an hour or two and feel comfortable. They don’t go quite as far with the comfort angle as some of the B&N;’s; you don’t have lounge chairs and couches mixed in amidst the book stacks, inviting you to sit and browse (a nice touch, admittedly). But there’s still something about the “twisty” layout of the place that makes it closer to home. I.e., the book shelves aren’t laid out in long rows of geometric order; instead there are “coves” where a general type of book can be found, e.g. computers, history, cooking, home decor, religion, etc. Unless I’m a hurry, I hit quite a few different coves on each visit. (And yes, they keep a pretty good train book selection.)

Or at least they did. After dinner I drove up to Willowbrook and found my way across a harshly-lit parking lot on a cold winters night, expecting the usual civilized atmosphere to embrace me as I walked into Borders. But I soon knew that something was wrong. The bookshelves were in disarray, the magazine racks were empty, and there were these xeroxed pages posted everywhere. And thus the bad news – store closing, 40% off everything. I wandered around a bit, and thought about perhaps taking advantage of the discount. But I didn’t have the heart. One of the few stores that I can actually spend quality time in was in its violet hour. Arg.

What happened? Well, on the way home, it stuck me. Despite my affection for it, I was guilty of putting Borders out of business. I’ve been using the Internet to hunt for bargains on the books that I want to read. I haven’t spent much time strolling the “coves” open to unexpected, interesting “finds”. I never did patronize the Borders coffee bar (although I had intended to do so someday). I didn’t drop by for the special events and entertainment nights. And I guess that too many other people followed my example. So I guess that I shouldn’t be surprised. This isn’t a rage against the evils of capitalism. It’s just a lament for a nice capitalist idea that I was freeloading on, until the financial chickens finally came home to roost.

The rest of the evening was also disorienting. I went to a different Shop Rite on the way back from Willowbrook, as my usual supermarket would require a back-track. And that also threw me off balance, as I had trouble finding the stuff on my grocery list. Of course you’d expect that problem in a supermarket you’ve never been to. But I used to patronize this Shop Rite quite regularly, until they upgraded the one where I now go (which is closer to my house). Since then, they rearranged the parking lot and the store interior (somewhat). Once again, I was getting that ‘you can’t go home again’ feeling; my vague recall of the place only made things worse.

My last stop before home was the local Barnes and Noble, which didn’t usually carry the magazine (or the atmosphere) that I was looking for; well surprise, surprise, they actually did have the mag. So I was finally on the scoreboard; I did finally manage to get the article about the Paterson yards in the old days. But when I got home and skimmed thru it, the ‘home no more’ feeling came right back. The article actually focused more on recent times at the place in question, and the author himself lamented how much the place had changed and how inhospitable it had become since he was a kid. And the rest of the magazine just reminded me once more why I lost interest in modern railroading; it just wasn’t as funky and friendly and informal as it was about 40 or 50 years ago. It was now just a standardized machine protected by barbed wire and post-9/11 security.

Oh well. I’m looking forward to getting back to the Bloomfield Shop Rite next week, and seeing some familiar faces stocking the produce bins and manning the cash registers! Perhaps I’ve now become a supermarket hobbyist . . . yes it is kind of interesting how some stores put the shelled walnuts in the produce section, while others place them in the baking supplies isle, and a few stores do both!

◊ posted by Jim G @ 3:25 pm Read Comments (2) / Leave a Comment

Monday, January 14, 2008

◊ Mike Bloomberg — What If?

Current Affairs ... Politics ...

Let me start by repeating the obvious: this is a big year for national politics. It’s already off to a roaring start, given the interesting outcomes of the Iowa caucuses and the New Hampshire primary. By the end of this week, two more states will add their results into the presidential candidate mix (Michigan and Nevada). And then two big southern primaries will follow in close order (South Carolina and Florida). There’s plenty of political commentary being cranked out in the newspapers and blogs, to which there’s not that much I can add. But for what little it’s worth, I’ll make this observation: the national parties have or are just about to bring it down to two sets of candidates (sort of like where the NFL playoffs stand this week). Those would be Hilary Clinton and Barack Obama on the Democratic side, and Mike Huckabee and John McCain for the GOP.

The Democrats will choose just how they wish to make history. Will it be the wonky old woman, or the young black orator? The Republicans will also slug it out over two groundbreakers: the new Christian fundamentalist versus the old master of independence and integrity. Wow – choose your virtue, choose your poison. No two alike! Each would take the country in a unique direction. But more than that; just the election of either one would make a bold statement. Clinton – women finally have their day. Obama – true racial equality can still be achieved. Huckabee – a man of the cloth should be in charge (hmmmm, haven’t they tried that in the Middle East?). McCain – a politician should try not to be so political, at least once elected (now there’s an idea – if he can pull it off).

And it would all go totally off the map if Mike Bloomberg decided to run, especially if he picked a running mate that made him worth considering (my choice for that role would be Colin Powell). The iron-clad rule is that third party candidates for the Presidency are never taken seriously. But 2008 is starting to look like the year when all the rules have flown the coupe. So what would a Bloomberg victory say? Something like this: who needs political parties when CASH IS KING.

Don’t think it can’t eventually happen.

◊ posted by Jim G @ 7:59 pm Read Comments (3) / Leave a Comment

Saturday, January 12, 2008

◊ ON THE PASSING OF AN OLD FRIEND

Personal Reflections ... Practical Advice ...

Just before Christmas, I got a card from a guy who I worked with at my first professional job after graduating from college. That was way back in the 1970s. The guy in question, Charlie Spencer, was quite a bit older than me. Actually, he was the same age as my mother. And he came from the back woods of Pennsylvania, quite different from the urbanized realms of northern New Jersey from which I hailed. And yet, despite the age and cultural differences, we got along quite well during the time we worked together.

Charlie and I teamed up on a number of productivity improvement projects, and during the breaks we talked a lot about our lives and interests and viewpoints. We were actually friends. Despite being as old as my own parents, and having a son of his own, Charlie never treated me “like a son”. And that was a good thing, in my book. I didn’t need another parent; but as an introvert living in a new town, I did need another friend. And Charlie was able to do that; he was able to put his own age on hold, and also the realization that he knew more than I did about life and how things really work. (Now that I’m just about the age that Charlie was when we met, I realize that I know a lot more about life and how things actually work than any 24 year old does; and I also know that in another 30 years, those 24 year olds will figure this out for themselves). In working with Charlie, I started to see that he had something that I didn’t – i.e., this wisdom of old age. He just knew how to get things done with people, even though he didn’t have a college degree like I did. So I learned to respect him and just watch and pick up some tricks from him.

After two and a half years out in the working world, I was able to get into law school back home in New Jersey. So Charlie and I bid each other adieu. Oh, we promised to get together again; I said that I would come down and visit, maybe stay over with him and his wife. But of course I never did. The years went by, the 1980s and the 1990s zoomed along, and Charlie and I pretty much forgot about each other.

But actually, Charlie didn’t forget about me. Sometime in 2000, out of the blue, he called me up. It was good to hear from him. He had retired and was living down in Florida. So we swapped e-mail addresses and he invited me down to Florida for a visit. Unfortunately, my own mother was beginning to falter and would need more and more financial support for her home care. So the years went by and I kept telling Charlie that I hoped to get down to see him; but again it never happened. My brother and I had pretty much agreed that neither of us would make any road trips given my mother’s increasingly frail and unpredictable state; we agreed to respond to anything within an hour or so. Still, I kept Charlie and his Florida home on my list of places to go after my mother passes.

Unfortunately, that trip isn’t going to happen. In his card, Charlie said “send me some e-mail”. Actually, I was swapping e-mails with him back around 2002 and 2003, but he started swamping me with those unfortunate “pass this on to everyone you know” e-mails, some of which contained questionable attachments (dangerous to your computer). I started deleting his e-mails and stopped sending my own personal ones because of this, and we lost touch again — other than the annual Christmas cards. But hey, I thought, let me start the e-mail thing again. Charlie had lost his wife back in 2005, and said that he was lonely. So sure, I attached some pix of myself and my mother and brother and shot them down to him. About 10 days later, I saw a reply from his address. But instead of what I expected (“thanks for the pictures, glad to see what you look like today, etc.”), the message said “this is from Charlie’s son and his computer teacher Steve; sorry, but the bad news is that Charlie passed away on New Years Eve. He took a nap during the afternoon and never woke up …”

Now I feel an emptiness, and I’m sad about not putting more energy into staying in touch with Charlie. I don’t even have a picture of him. With certain people, they come and go through your life and you take it in stride. But with a special few, it’s like an iceberg; their significance to you is very real but is well hidden. You’re not fully conscious of what they mean to your life until they’re gone. As with my late Uncle Bruno. And as much as I respect her, I don’t stay up nights thinking about my ex-wife; but I’m still a bit hung up on the memory of a girl in high school who tried to get past my Asperger’s-like barriers to make contact with the super-nerdy kid that I was (and still am, in various respects). Well, she never did get past my immature suspicions and fears, and I haven’t seen nor heard any references to her in the 37 years since I graduated from high school (not even Google or classmates.com have helped; but that’s probably just as well). Even now, though, I still think of her. As with Uncle Bruno. And now, Charlie Spencer.

So watch out for those “iceberg” people in your life. Do what the Titanic did, even though it shouldn’t have; get close to them and keep close. Real icebergs will sink ships, but relationship icebergs are good for the soul.

◊ posted by Jim G @ 7:39 pm Read Comments (2) / Leave a Comment

Monday, January 7, 2008

◊ CORPORATE AMERICA, TIME FOR A TIME-OUT

Economics/Business ... Public Policy ...

Back in the late 19th century, there was a national political movement called “Progressivism”. People were a bit upset with big business, so the politicians of the day sought to appease this displeasure by setting up regulation schemes as to reign in the abuses of cowboy capitalism. Federal and state agencies were set up with the power to tell critical industries such as banks, telecommunications, railroads, power companies, insurance companies, etc. what they could and could not do. There existed a variety of academic rationales for such regulation, but the chief political concern was – or should have been – protection of the little guy. (Arguably, some of the business moguls themselves liked the stability that government oversight bought; it toned down the competition while guaranteeing some profit).

The era of regulation seemed to correspond with a more level economic playing field. By the 1960s, there was a broad middle class in America. The super-rich were quite rare, and the “generally wealthy” (doctors, lawyers, corporate leaders) weren’t all that much wealthier than the local supermarket produce manager. There were still a lot of poor people, but the “War on Poverty” begun by the Johnson Administration and continued by Nixon actually did shrink the poverty rate significantly.

But things changed. After 1980, with Ronald Reagan’s election, business regulation became a dirty word. “Deregulation” became the mantra of the young and hip economists. Regulation was found to be wasteful and outdated. Along with labor unions, they were found to be slowing the growth rate of the economy. They admittedly had choked certain industries to the point of bankruptcy. They had to go. And go they did. Within a few years, the walls of federal and state regulatory bureaucracies came tumbling down. And once oil prices came down from their peaks in the early 80s, the economy really got into gear.

But now we see that there was – and still is – a big problem with unfettered capitalism. I.e., the “pie” of economic growth has been cut quite unevenly. The rich have gotten the lions share, the middle class have barely gotten a taste, and the poor have to be content with the crumbs.

So it was with great interest that I read a recent article in the NY Times entitled “The Free Market: A False Idol After All?” It turns out that a lot of thoughtful people are now having second thoughts as to whether America is better off without some government oversight of the capitalists. I doubt if we are going to see Bolshevik-style five-year plans anytime soon. But if the Democrats take the White House back later this year (which is still an extremely iffy proposition; McCain might just make a comeback, and then all bets are off), we may see a bit more government involvement. Will that slow the economy down? Yes, it will. Would anything good come of that? Perhaps we could avoid future Enrons and sub-prime mortgage crises and accounting scandals and HMO’s that refuse to pay legitimate medical bills.

Also, maybe we could share the economic pie more fairly. The challenge is to figure out how to minimize the drag on the economy and maximize the benefits of fairness and stability. America had almost 100 years of extensive regulation experience, and can hopefully learn from that what worked and what didn’t work. We can’t just bring back the FCC and ICC and FAA and FPC as they existed in all their dusty, bureaucratic grandeur back in the 1940s. There would have to be innovation, some way of keeping the regulators from becoming a hidebound institution (as many of those agencies had become).

Despite the heavy drag placed on the economy by the regulators and labor unions of old, the American economy still did quite well in the 1950s and 1960s. I think I know why. Back then, our government was making it easier and easier to go to college. In New York City, a citizen had the right to go to college for free (at CCNY). Millions of young guys returning from WW2 and Korea got generous loans and tuition payments from the GI Bill. And states built and expanded their college systems and charged tuition rates that weren’t much more than pocket change.

Well, guess what. All those college graduates kept IBM computing and Pan Am expanding and AT&T innovating, and got our space program into orbit and then onward to the Moon. Subsidized education fueled economic growth despite the bureaucratic drag, and regulation (along with labor unions) helped the middle class and working class to get their share of it. I was around in the last decade of it, and it really wasn’t so bad (although the regulators and labor unions really did milk it at the end and got what they deserved — Ronald Reagan). I hope that Hilary or Barack or John E. will consider taking us back in that direction, should they get the chance – but help us do it better this time. We won’t get fooled again. We hope.

◊ posted by Jim G @ 10:27 pm Read Comments (2) / Leave a Comment

Friday, January 4, 2008

◊ Can the USA get its spinach back?

Economics/Business ...

With oil prices at $100 per barrel, equaling the all-time high price reached in the early 1980s (in inflation-adjusted dollars), I wanted to get some info and perspective on what’s going on in the energy market – and what the implications will be for the American economy. I found some interesting web sites on the topic: www.theoildrum.com, www.cera.com (Daniel Yergin’s organization), www.platts.com, and i-r-squared.blogspot.com. Here are some points and possibilities behind the current situation.

>>> It’s possible that the same speculators who caused the internet stock bubble in the late 1990s and the real estate price bubble in the 2000s are now flooding the commodities markets with “silly money”, thus pushing the price of oil above its real value based upon irrational expectations of future demand. If so, then the bubble will burst at some point; but it could take years, or a severe economic depression, or both.

>>> Why are China and India still buying oil up so rapidly if it has become so expensive? Well, in terms of American dollars, oil is currently very expensive. However, the American dollar is at a low point relative to other nations’ currencies. To other countries, oil isn’t quite as expensive.

>>> As oil prices started shooting up three years ago, energy expert Daniel Yergin predicted that prices would start coming down within 18 to 20 months, due to new sources of oil coming on line. Sources such as deepwater fields and the Canadian tar sands would become profitable to pump at such high prices. Well, we’ve gone twice that time period now, and although world oil production has increased somewhat, the dramatic increase predicted by Yergin has not occurred. Why not? Actually, Yergin’s own website gives a big clue. The real cost of finding and pumping oil from newly found oil sources has shot up in recent years; it has doubled since 2000, with rapid acceleration since 2005. If that’s true and the overall trend continues, then the speculators actually have good reason to speculate (as if the accelerating expansion of the middle class in China, India, Asia and the Middle East weren’t enough).

>>> A really important concept, albeit one that is rarely discussed in the mainstream press, is termed “EROI”, which means Energy Return on Investment. Basically, this is a measure of how much energy is returned for each unit of energy used to find and process an energy source, such as oil and coal and nuclear energy. Depending upon how you account for the side-effects of pollution and global warming and waste disposal, the EROI for most of our energy sources has been in the 10 to 100 range over the past 100 years. Thus there has been vigorous economic growth in the nations that knew how to exploit this energy cornucopia. Unfortunately, we may now be going into an era when EROIs are falling below 10.

>>> Some analysts feel that ethanol, despite its appeal of coming from a natural crop that soaks up energy from the sun and the soil, has an EROI of 1.6 at best and possibly below 1.0, depending on how you account for pollution side-effects. So, ethanol subsidies by the U.S. may well be a political porkbarrel, unless much more efficient techniques for growing corn and converting it to alcohol fuel are in the offing.

>>> Therefore, in the short-run, oil prices might be artificially high due to speculation, which will trigger a recession. That would bring some price relief. But in the long term, world demand for oil will probably keep climbing, while discovery and production costs will keep increasing. That will obviously put the squeeze on those people used to high levels of cheap oil consumption, i.e. the people of the USA. A Prius here and a mini-fluorescent lamp there may not make up for the gap; something will have to give, and that would be the USA’s high standard of living — its suburban lifestyle.

>>> Of course, technology may come to America’s rescue once more. However, over the past few decades, the American governments (federal and state) have radically reduced subsidies to scientific and technological education and research, in favor of tax cuts, homeland security expenditures, and ethanol subsidies. At the same time, the developing countries have been increasing their science, technology and education subsidies. It’s kind of like that old Popeye children’s cartoon, where Popeye throws his spinach down the river, and the spinach can says “you’ll be sorry” as it gets swept ‘round the bend.

>>> The world is tired of living in muddy or dusty poverty while the USA revels in suburban luxury. It will seek its share of the wealth either through crafty merchantalism (China), investment in human capital (India), revived nuclear armed forces (Russia), or the worst strategy of the bunch, fundamentalist religious warfare. At the same time, the USA leans back on its past accomplishments and revels in the amazing cell phones and flat screen TVs that its capitalist system currently produces (or imports). Unfortunately, that capitalist system is not supporting the basic research and development that would keep America at the technological forefront in 10 or 20 years. That requires government; remember that the Internet was originally set up by federal government research.

>>> So, unless America gets its “spinach” back, and soon, today’s kids may live to see an America in decline, an America of worsening living standards and continually rising unemployment. Oh well; at least that will take care of the Mexican border crisis.

◊ posted by Jim G @ 11:43 pm Read Comments (4) / Leave a Comment

Sunday, December 30, 2007

◊ THE IMPORTANCE OF BURNT CHRISTMAS COOKIES

Food / Drink ... Photo ...

The photo below seems almost normal, but not quite. (Much like myself). The subject of the photo is a plate of cookies, sugar cookies decorated for Christmas. Most of the cookies look OK, but what’s with those two ugly dark things? Well, those are the undersides of some cookies that I intentionally left in the oven a bit longer than most people would prefer. (The one between them is the bottom of an un-burnt cookie, for comparison sake).

Every year I continue my mother’s holiday tradition of making sugar cookies with decorative sprinkles (and some walnuts, as I like cookies with walnuts). My mother wasn’t exactly a gourmet chef, and her stove didn’t have precise temperature control. So, she often let her cookies bake too long; there would always be a lot of “burnies” in the cookie tray. But did that stop us kids from eating them? Of course not. If they were anything more than pure ashes and cinders, we’d wolf them down.

I’m not exactly a gourmet chef either, but I now have a two-layer cookie sheet that makes it easy to get the timing just right. But nonetheless, every year I still get out an old flat sheet and singe a dozen or so. Why? Because it brings back memories. I mean, not every cookie needs to taste just like it came from a professional bakery. When you eat a burnt cookie, you get a mix of the bitter and the sweet. As such, those burnt cookies are a good representation of my youth — in more ways than one.

◊ posted by Jim G @ 4:14 pm Read Comments (2) / Leave a Comment

Friday, December 28, 2007

◊ No Self, No Things . . . But Still, Relationship!

Philosophy ... Spirituality ...

I was off from work today and had a chance to catch up on some reading. I was cutting through a book about the relationship between Buddhist thought and cognitive science (The Embodied Mind by Francesco Varela, Evan Thompson and Eleanor Rosch). You really have to plow your way through this book; it’s very dense with complex thought, although you can usually stay up with the authors if you go slow. However, it becomes incomprehensible whenever Buddhist doctrines are discussed. The two key Buddhist doctrines being flouted here are 1.) the falsity of “self”, and 2.) the ultimate emptiness and groundlessness of everything.

Well, that certainly covers a lot of ground (except that ‘ground’ ultimately doesn’t exist). We believe that we have stable, if slowly changing, self-identities; and that we live in a world that is “really there”. But certain Buddhists seem to think it’s all an illusion. Or mostly an illusion. Or an illusion in one sense, but not in another. Somehow, this confusion is supposed to break our egos (not unlike what a Zen koan sets out to do), and turn us into wiser, kinder and gentler beings. Once we stop grasping for fixed identities, we can then just experience things “straight up”, open-heartedly, without self-delusions.

Yea right.

The biggest problem with Buddhist thought, in my opinion, is its lack of respect for words. They don’t give much regard to the notion that “words have meaning” (which is consistent with their focus on meditative experience). So they can be sloppy with even the most important words like “truth”. Varela and company talk about “relative truths” and “ultimate truths”, but warn that neither are part of a “theory of truth”. The ultimate of ultimate truths is the emptiness of the world. And that would also include the concept of truth. If so, then truth is an empty concept; it can be whatever anyone wants (thus all truth becomes “relative truth”). That’s not what this book affirms, but its flip-flopping notions of what “truth” means would do nothing to prevent this. I suspect that criminal defense lawyers would love to convince judges and juries to adopt this book’s way of thinking.

As to throwing away our notion of “self” and the overly-inflated ego that often goes with it: I’ll be the first to acknowledge that many, if not most, people could use a good dose of humility. Ego causes a lot of trouble. But to nuke the ego and turn everyone into compassionate, compliant zombies – that scheme would work only if you absolutely guarantee 100% effectiveness. If just one person kept their ego, he or she would then become the ruler of the planet. In the real world, egos are a pretty good defense against power mongering and sales pitches and political speeches. Admittedly, the “self” and its ego are not permanent, and are not always good. In extreme instances (e.g., severe head injuries or traumas), the “self” can be terminated and replaced by a new personality. But self and ego are rough working concepts that make sense in the world such as it is.

Another rough working concept that makes sense, at least here in the West, is that “words have meaning”. Philosophers and scientists can prove that words and language could not and do not perfectly “represent” the world. Reality is always a bit more complex than our concepts. But we do need these concepts to maintain law and order, along with industry and commerce and science and education. We have to respect our words, not devalue them in favor of “enlightenment through sitting”. Hell, even in the Far East, most Buddhists these days seem more interested in making a buck than in folding their legs and slowing their breathing until the inner light of wisdom shines. And to make a buck, you have to assume that words have meaning. When China sells a batch of big-screen TV’s and then buys some US Treasury Bonds, it is not willing to accept “relative truths” about payment schedules.

I will be the first to admit that old-fashioned “objectivism” is on the ropes these days; there’s not much you can be sure of anymore. Nihilism is certainly a problem; radical jihad may well be a nihilist reaction to the failings of the Enlightenment. The USA can show the world how to to get rich (albeit with the side effect of unfair wealth distribution). But it doesn’t offer much else to believe in, other than “free elections” (which are good, but aren’t the stuff that one builds their life around). Nonetheless, I don’t think that Buddhist approaches such as “empty-minded open-heartedness” are the answer. I think that we need to press on in order to find compelling ideas and ideals that everyone can grasp and believe in.

Descartes gave us half an answer – we all know that even if nothing else exists, one thing does – we ourSELVES exist! And we know something else almost as fundamental: i.e., that we crave relationship with something else. Preferably something else having an existence much like our own, with thinking and self-consciousness. I.e., relationship with OTHER PEOPLE. Without such relationship we know that we malfunction and ultimately shut down, even if all of our physiological needs for nutrition and air and heat are met.

If our species, in its search for meaning, could lock-on to the necessity of relationship, to the sacredness of having other self-egos that our own self-ego can relate to (without dominance or force, which ultimately corrodes all relationships) — well, that would surely go a long way towards realizing a better world.

◊ posted by Jim G @ 11:27 pm Read Comments (2) / Leave a Comment

Sunday, December 23, 2007

◊ On the Border of Order and Anarchy

Philosophy ... Science ...

I’ve been reading some books and articles about “emergence”, the scientific and mathematical concept of how complex things or patterns such as traffic jams, living organisms, stock market crashes and bee hives “emerge” from a lot of stupid little things interacting together, following simple rules with no central commander. (Technically, these “little things” are called “cellular automa”; they continually decide what to do based on what those around them are doing). Our minds and our consciousness and intelligence may in fact be just an “emergence” from a lot of neuron cells in our brain acting under simple directives without any central guidance.

These books and articles are very interesting. But you can’t truly understand something unless you can get your hands on it, play around with it. When it comes to nuclear fusion, you obviously can’t fool around with it in your kitchen; so most of us will never really understand nuclear fusion. But emergence does lend itself to simple experiments on one’s home computer. You can set up some simple “emergence generators” using an MS Excel spreadsheet. I’ve been fooling around with one lately.

What I’ve learned from my own little emergence experiments is the importance of randomness and unevenness. Many of us curse randomness and unevenness. They’re just too unpredictable. We can’t control randomness, and unevenness just doesn’t seem right. What good is something that you can’t control and has an uneven mix? I myself tend to favor law and order.

I don’t think you want to hear all the details of my little spreadsheet experiment right now. However, I do sense a lesson from them, which I will try to share here. If the universe really does play by these rules, then randomness and disorder are just as necessary for life as law and order are. Without order, spontaneity would just make a useless mess of things. Without spontaneity, order would never get anything started. Opposites really do need each other to make things happen. Paradoxically, randomness causes intermittent clumps of order (e.g., four “heads” in a row in a series of 100 coin tosses). The “emergence machine” latches on to those clumps and weaves a pattern amidst the background static.

Just as an entertainment, here are some of the patterns that “emerge” on my little spreadsheet, based on slightly different rules. These are indeed mixes of law and randomness, order and anarchy.

◊ posted by Jim G @ 10:11 pm Read Comments (4) / Leave a Comment

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