"The World Speculation Made"

From the introduction to a 2021 link to the Boston Review: 

"Neoliberalism’s Bailout Problem"

We used to link to the Boston Review with some regularity until last December when they published and we linked to "To Save the Climate, Give Up the Demand for Constant Electricity" which not only dismissed one of the most attractive features of current {!} electrical systems and grids: being available when you want it, but was also a bit boring in its lack of creativity in addressing the intermittency problem with renewable sources o'leccy.

However

The article before us raises the very interesting point that the Western economies could use a whole lot more of Schumpeter's creative destruction and a whole lot less of the politico-corporatism exemplified by the first inductee into the Climateer Hall of Fame:

The 26th Secretary of War, the Democrat and Republican (!) Senator from Pennsylvania, Simon Cameron

 Our Hero

"The honest politician is one who 
when he is bought, will stay bought."

So, although we disagree with the ultimate policy recommendation, the authors have Minsky doing a drive-by and it's hard to go too far wrong with the good Professor and expositor of stability/fragility/speculation and crisis making the arguments.

From The Boston Review, June 24:
Mainstream economics ignores the massive government interventions that “free market” capitalism requires.....

Because here at Climateer Investing we recycle, we'll reuse that into for today's link.

From the Boston Review, February 15, 2023:

Contemporary life has been deeply molded by financialization. But the speculative imagination can also be a tool for building a more just world.

The cautious merchant and the keen manufacturer were equally unable to resist the speculation. It spread among them like a leprosy. It ruined alike the innocent and the guilty. It periled many a humble home; it agitated many a princely dwelling. Men hastened to be rich and they were ruined. They bought largely; they subscribed eagerly; they forsook their counting-houses or companies; if successful they continued on their course, and if the reverse they too often added to the misery of the homes they had already desolated, by destroying themselves.

—John Francis on the 1846 Railway Mania

The only thing that makes life possible is permanent, intolerable uncertainty: not knowing what comes next.

—Ursula K. Le Guin

Whether in markets or philosophy, speculation tosses the coin of uncertainty in the hope of seeing through a haze-draped future. A mirror (speculum) and a watchtower (specula), it animates a certain vision. From the leaps of scientific revolutions and technological futures to the pursuit of dreams and mystical theologies, speculators have always sought to capture what lies ahead.

At the dawn of finance capitalism, markets vied fervently for control over the power of speculation.

Speculation encompasses a duality at the core of all financial activity. When pushed to its outermost limit, it can unleash formidable destructive forces and lead to the burst of market bubbles, such as seventeenth-century Amsterdam’s notorious tulip craze, the Victorian era’s railway manias, last century’s Great Depression, or the more recent 2008 global financial crisis. During these periods, market “passions” take hold: traders venerate ethereal values with no material referents or links to “fundamentals.” Yet speculation is also the market’s indispensable lubricant. All speculative trades calibrate risks to generate yields and prevent markets from “overheating.” Here’s the definition of “speculation” provided by the Oxford Dictionary of Finance and Banking:

The purchase or sale of something for the sole purpose of making a capital gain. For professional speculators the security, commodity, and foreign exchange markets are natural venues as they cater for speculation as well as investment and trading. Indeed, speculators help to make a viable market and thus smooth out price fluctuations. This is particularly true of commodity futures and option markets.

Speculation’s greatest gift to markets is stability, not crisis: absorbing volatility by “smooth[ing] out price fluctuations” and generating liquidity. For those in the business of trading, speculation means betting on possible future movements of asset prices, but it also involves dealing in risky assets (including derivatives and futures) with the goal of providing insurance against price movements. Speculators, in other words, both “short” and “hedge” uncertainty. Throughout capitalism’s history, defenders and opponents of speculation have foregrounded one function over the other to mark it as a virtue or as a vice.

---

Iconic anarchist thinker Pierre-Joseph Proudhon, in his 1857 Stock Exchange Speculator’s Manual, famously distinguished between the greedy financiers of the Paris stock market—whom he lamented as “pure, corrupt, and unproductive gamblers”—and what he saw as more productive forms of speculation. When sought for its own sake, speculation is circular, autotelic, and parasitic on the real economy. When put to “productive use,” however, it can also be generative, exciting, and imaginative: a source of the “the genius of discovery . . . that invents, innovates . . . [and] creates something from nothing.”

As markets in the global centers of capitalism sought to expand their insatiable financial activities over the course of the nineteenth century, they vied fervently for control over the power of speculation. Just as Proudhon was writing his Manual, a new kind of speculative market was being established some four thousand miles west of the Paris Bourse. In 1848 the Chicago Board of Trade (CBOT) was founded. In the coming decades, it would become the world’s first organized exchange for futures contracts: standardized agreements to buy or sell an “underlying asset” (predominantly grains such as wheat from the city’s hinterland), at a guaranteed price for delivery at a specified future time. Trading futures ostensibly served the hedging side of speculation’s coin, functioning as insurance against volatility for farmers whose harvest was exposed to radical and incalculable weather uncertainties.

Speculators stepped in to take on the unwanted risk at a discount (thus performing a social function), while farmers received security and the market remained liquid. Yet no bushels of grain were being moved because of these trades, and actual contracts never exchanged hands in the CBOT. Soon after the launch of the future contract, the circulation of “phantom wheat” in the pit vastly overtook that of the real grain produced in farms; futures traders engaged in “fictitious dealings” that were entirely unmoored from the corporeal economy. Was this kind of speculation ethical? Was it different from ordinary gambling? Advocates of futures contracts and the CBOT’s influential allies believed so. State courts enshrined the legal right of futures traders to short sell for their alleged positive effect on setting off prices in the real economy, and successive governments sanctioned the promise of even the most fictitious of trades “to financially stabilize an inherently unstable capitalism.” Importantly, speculative bets made in the pit were painstakingly distinguished from the wagers placed outside of incorporated commodities, which were systematically slated. In the mushrooming bucket shops (informal establishments open to anyone who wanted to wager small sums on the price movements of stocks in formal exchanges) strewing U.S. cities of the fin de siècle, speculation was becoming a game for the many....

....MUCH MORE

"Neoliberalism’s Bailout Problem"

We used to link to the Boston Review with some regularity until last December when they published and we linked to "To Save the Climate, Give Up the Demand for Constant Electricity" which not only dismissed one of the most attractive features of current {!} electrical systems and grids: being available when you want it, but was also a bit boring in its lack of creativity in addressing the intermittency problem with renewable sources o'leccy.

However

The article before us raises the very interesting point that the Western economies could use a whole lot more of Schumpeter's creative destruction and a whole lot less of the politico-corporatism exemplified by the first inductee into the Climateer Hall of Fame:

The 26th Secretary of War, the Democrat and Republican (!) Senator from Pennsylvania, Simon Cameron

 Our Hero

"The honest politician is one who 
when he is bought, will stay bought."

So, although we disagree with the ultimate policy recommendation, the authors have Minsky doing a drive-by and it's hard to go too far wrong with the good Professor and expositor of stability/fragility/speculation and crisis making the arguments.

From The Boston Review, June 24:
Mainstream economics ignores the massive government interventions that “free market” capitalism requires.

The most basic tenet undergirding neoliberal economics is that free market capitalism—or at least some close approximation to it—is the only effective framework for delivering widely shared economic well-being. On this view, only free markets can increase productivity and average living standards while delivering high levels of individual freedom and fair social outcomes: big government spending and heavy regulations are simply less effective.

The CARES and COVID Relief Acts amounted to about 14 percent of U.S. GDP in 2020. But the government spent more—nearly 20 percent of U.S. GDP—to keep Wall Street afloat.

These neoliberal premises have dominated economic policymaking both in the United States and around the world for the past forty years, beginning with the elections of Margaret Thatcher in the United Kingdom and Ronald Reagan in the States. Thatcher’s dictum that “there is no alternative” to neoliberalism became a rallying cry, supplanting what had been, since the end of World War II, the dominance of Keynesianism in global economic policymaking, which instead viewed large-scale government interventions as necessary for stability and a reasonable degree of fairness under capitalism. This neoliberal ascendency has been undergirded by the full-throated support of the overwhelming majority of professional economists, including such luminaries as Nobel Laureates Milton Friedman and Robert Lucas.

In reality neoliberalism has depended on huge levels of government support for its entire existence. The global neoliberal economic order could easily have collapsed into a 1930s-level Great Depression multiple times over in the absence of massive government interventions. Especially central to its survival have been government bailouts, including emergency government spending injections financed by borrowing—that is, deficit spending—as well as central bank actions to prop up financial institutions and markets teetering on the verge of ruin.

Bailouts have therefore not only repeatedly rescued neoliberal capitalism during periods of crisis, but they have also, as a result, reinforced neoliberalism’s most malignant tendencies. In 1978, just prior to neoliberalism’s rise, the CEOs of the largest 350 U.S. corporations earned $1.7 million, 33 times the $51,200 earned by the average private-sector non-supervisory worker. As of 2019 the CEOs were earning 366 times more than the average worker, $21.3 million versus $58,200. Under neoliberalism, in other words, the pay for big corporate U.S. CEOs increased more than ten-fold relative to the average U.S. worker. This curious conjunction—theoretical disdain for government alongside practical reliance on it—has amounted to champagne socialism for big corporations, Wall Street, and the rich and “let-them-eat-cake” capitalism for most everyone else.

This represents a curious conjunction: theoretical disdain for government alongside practical reliance on it.

The COVID-19 pandemic and recession powerfully illustrated how neoliberalism works in practice. During the pandemic, employment and overall economic activity throughout the world fell precipitously, as major sections of the global economy were forced into lockdown mode. According to the International Monetary Fund, overall economic activity (GDP) contracted by 3.5 percent in 2020 in a “severe collapse . . . that has had acute adverse impacts on women, youth, the poor, the informally employed and those who work in contact-intensive sectors.” But during the same period, global markets soared. In the United States, nearly 50 percent of the entire labor force filed for unemployment benefits between March 2020 and February 2021. However, over this same period, the prices of Wall Street stocks—as measured, for example, by the Standard and Poor’s 500 index, a broad market indicator—rose by 46 percent, one of the sharpest one-year increases on record. Moreover, this increase did not simply reflect the U.S. stock market recovering from the pandemic and lockdown. As of February 2021, the Standard and Poor’s 500 index was also 38 percent higher than two years prior, in March 2019, nine months before COVID-19 had been recognized as a human pathogen. And the 2020 stock market ascent began months before there was any clear evidence that the economy was recovering from the lockdown. All these gains are the result of large-scale government interventions: bailouts were given, first and foremost, to boost financial markets and to help the rich.

Textbook Neoliberalism vs. Bailouts 101

In textbook economics the movements of financial markets are supposed to reflect underlying conditions in the real economy where goods and services are produced, workers are hired and paid, and companies profit or don’t in attempting to sell their products. In this scenario, when companies lay off workers, workers lose income and cut back on spending, which means companies are likely to face difficulties selling their products. Their profits should fall as a result. As unemployment rises and profits fall, the value of these companies, as expressed in their stock market prices, should decrease. This has not been the case over the past year—as disparities grew between conditions in the real economy and financial markets—because governments undertook massive bailout operations in the face of the COVID-19 pandemic....

....MUCH MORE

"Could Ditching Elections Save Democracy?" (Sortition Baby, Sortition!!)

We used to link to the Boston Review with some regularity until December 2020 when they published and we linked to "To Save the Climate, Give Up the Demand for Constant Electricity" which not only dismissed one of the most attractive features of current {!} electrical systems and grids: being available when you want it, but was also a bit boring in its lack of creativity in addressing the intermittency problem with renewable sources o'leccy.

However...

From The Boston Review, August 19:

A new book makes the case for replacing them with a system of government based on random selection. 

Lottocracy: Democracy Without Elections
Alexander Guerrero
Oxford University Press, $45

When democracy seems everywhere in crisis, it may sound paradoxical, to say the least, that the solution to our troubles is to scrap elections altogether. But that is precisely what political philosopher Alexander Guerrero proposes in his bold and illuminating book, Lottocracy: Democracy Without Elections. We should select political officials not by voting, he contends, but by lottery from among the entire adult citizenry.

As radical as it sounds, the idea, indeed the reality, of “sortition”—using random selection to select political officials—is nothing new. Nor is it the prerogative of any particular political persuasion. The Athenians used such a system more than two thousand years ago. The Trinidadian Marxist C. L. R. James celebrated this system when he argued, echoing Lenin, that “every cook can govern.” The idea has seen something of a popular revival in recent years thanks to the writing and advocacy of people like political theorist Hélène Landemore and Belgian historian David Van Reybrouck. And it has been put into practice in a variety of deliberative and citizens’ assemblies, including in Europe and the United States. What sets Guerrero’s analysis apart is that he has thought through how such a system might work in modern societies in exhaustive detail. The result is a landmark argument that must be reckoned with.

Guerrero spends much of the book putting flesh on the bones of the abstract idea of lottocracy, presenting a picture sufficiently well specified for meaningful comparison with real-world electoral democracy. In the rest of the book, he makes the case for the relative superiority of lottocracy and offers ideas about how we might get there from here. The book’s central claim is not that lottocracy is perfect but that, for all its flaws, it is still preferable to other political systems.

Of course, there are many ways to compare political systems. One might ask how well they comport with political equality: the ideal that everyone should have, at some level, the same say over policy. Or one might ask how well they offer opportunities for participation: the ideal that everyone be able to contribute to making policy. Guerrero contends that lottocracy does as well if not better than other systems on these criteria. But his primary interest is different: how well a political system solves problems, whether it delivers the objectively correct policy (which he thinks exists). While the capacity of a political system to solve problems—to, among other things, make people’s lives better—may not be a condition of a system’s counting as democratic, Guerrero is certainly right that it is something that we should want....

....MUCH MORE 

Previously:

"Detox democracy through representation by random selection"

Assume for now that I am correct in my long-propounded judgement that the very people who pursue political power are exactly the same folks who should not be allowed anywhere near it. 

A repost from the early days of the covid-19 pandemic, January 18, 2020:
We are fans of randomness....*

*****

*The Joy of Randomness: Central Bank Strategy, Management Technique and Stock Selection
Profiting From Random Strategies
Can Information Rise From Randomness?
Should You Just Give Up And Trade Stocks Randomly?
Joys of Noise: Technologies that Rely on Randomness
Think a coin toss has a 50-50 chance? Think again.
Randomness: "A Drunkard’s Walk in Manhattan"
Attention Managers, You Can Improve Corporate Efficiency by Randomly Promoting Employees

That last piece of research was awarded Harvard's own Ig Nobel prize in 2010.

Ya see, ya got your complex systems and ya got your chaotic systems and then ya got your complex-chaotic systems like weather or the economy or the stock market and when you endeavor at those levels of sophistication you realize:...

There may be issues.

William Janeway: "Productive Bubbles"

Expounding on and contextualizing the post immediately below, "World economy has exited the ‘boom and bust’ cycle, BlackRock says".

This topic is pretty basic history of finance stuff that our readers already know but I wanted this piece on the blog because Janeway is sharp and brings a non-geek perspective to some geeky stuff. From our intro to  "The Rise of Mesoeconomics" - William H. Janeway:

In our last visit with Bill Janeway, "The Forgotten Origins of Silicon Valley" - William H. Janeway, I didn't mention that he is not your typical pointy-headed academic. Here's his mini-bio at Cambridge Uni.:

Ambassador for Cambridge Judge Business School

Senior Advisor & Managing Director, Warburg Pincus

Dr William H Janeway is a Senior Advisor and Managing Director of Warburg Pincus. He joined Warburg Pincus in 1988 and was responsible for building the information technology investment practice. Previously, he was Executive Vice President and Director at Eberstadt Fleming. Dr Janeway is a director of Magnet Systems, Nuance Communications, O’Reilly Media, and a member of the Board of Managers of Roubini Global Economics. He is a Visiting Lecturer in Economics at the University of Cambridge and Princeton University.....

And from Noema, July 27, 2021:

Occasionally, financial speculation fastens onto transformational technologies that have the potential to create a genuinely new economy. 

The persistent recurrence of speculative excess is a defining feature of financial capitalism wherever and whenever investors have the opportunity to trade assets. For the last 500 years, from tulip bulbs in the 1630s to cryptocurrencies today, the prices of assets have been subject to waves of herding behavior and momentum investing, with prices decoupling from any relationship to past, present and prospective cash flow. The economic historian Charles Kindleberger and the economist Robert Aliber summarized the phenomenon in their book on financial crises:

Investors have speculated in commodity exports, commodity imports, agricultural land at home and abroad, urban building sites, railroads, new banks, discount houses, stocks, bonds (both foreign and domestic), glamor stocks, conglomerates, condominiums, shopping centers and office buildings.

At the extreme, such speculation has come to be characterized as a bubble, a term associated with the iconic South Sea Bubble in London in 1720. As has often been the case, speculation in the shares of the newly chartered South Sea Company began with a plausible story: the opportunity for British merchants to take over the lucrative returns generated by trade with the new world from the fading Spanish Empire. 

None other than Isaac Newton joined the fray, having transformed himself from the progenitor of mathematical physics in Cambridge to the wealthy master of the Royal Mint. Newton bought in early and cashed out for a healthy profit — but then as the bubble accelerated he could not stand it and reinvested at the top, shortly to lose everything. He is supposed to have remarked: “I can calculate the motions of the planets, but I cannot calculate the madness of men.”

---

Bubbles are ubiquitous. In his history of the city of London since the end of the Napoleonic Wars, David Kynaston chronicles a speculative “bull run” in every decade up to World War I. When New York then emerged as London’s successor, the great bull market of the Roaring Twenties followed. A long generation of “financial repression” followed the Great Depression and World War II, but then came the “money game” years of the 1960s. And stagflation in the 1970s yielded to a generation-long “super-bubble,” as George Soros characterized it, which peaked first with the dot-com bubble of the later 1990s and then in the derivatives-fueled credit bubble that exploded in the global financial crisis of 2007-8. 

But not all bubbles are the same. When financial speculation is limited to the relatively unleveraged equity markets, the consequences of the inevitable bust are limited. But when speculation is fueled by credit and infects the core banking system, the consequences are likely to be devastating, as in the recession that followed 2008.

Occasionally, financial speculation fastens on to a transformational general purpose technology (GPT) that has the potential to create a genuinely new economy. Call it a productive bubble. The British railway manias of the 1830s and 1840s — when the GPT of steam power was applied to locomotion — were the first fully documented productive bubbles. The railways were built by newly created companies, endowed by Parliament with special privileges: Eminent domain enabled them to take land for their rights of way in return for fair compensation, while limited liability protected investors from losses beyond their actual investment. 

“Not all bubbles are the same.”....

....MUCH MORE

Possibly also of interest:

 

The Time Charles ('Popular Delusions...') MacKay Thought 'This Time it's Different'
The British Railway Mania has so many lessons for investors that I'll have to devote a couple posts to the subject.
I did mention the Mania in last year's "UPDATED: Visualizing Bubbles":

...The 1845 British railway bubble is also problematic. I don't know of any index that the chartmeisters could use to derive the 100% figure from and individual issues exceeded that degree of movement, some increasing 500 or 600%.

Also, a lot of the railway issues were subscriptions which meant that the 'scrip' traded (not legally) prior to the issuance of the stock....

New York Fed's Crisis Chronicles: Railway Mania, the Hungry Forties, and the Commercial Crisis of 1847   

 

Winton on the Railway Mania

 

The Century of War: Bear Markets in the 1700s; A Century of Peace: Bear Markets in the 1800s 

 

"This time is different: An example of a giant, wildly speculative, and SUCCESSFUL investment mania"

In "Early Victorian observers would have found our financial markets familiar, but would likely expect a crash" I commented: 

We've visited the author of this piece, Professor Andrew Odlyzko a few times, he is something of a polymath. An MIT trained mathematician with an interest in financial history....

That was understating the case.
In addition to his work on the valuation of networks, which gave a much higher (IEEE Spectrum) figure for say, Facebook, and thus saved his followers from embarrassment and loss in contemplated short-sales (ahem) he may be the, or at any rate one of the top experts on the minutiae of the British railway manias (there were two).... 

"The World Speculation Made"

From the introduction to a 2021 link to the Boston Review: 

"Neoliberalism’s Bailout Problem"

We used to link to the Boston Review with some regularity until last December when they published and we linked to "To Save the Climate, Give Up the Demand for Constant Electricity" which not only dismissed one of the most attractive features of current {!} electrical systems and grids: being available when you want it, but was also a bit boring in its lack of creativity in addressing the intermittency problem with renewable sources o'leccy.

However

The article before us raises the very interesting point that the Western economies could use a whole lot more of Schumpeter's creative destruction and a whole lot less of the politico-corporatism exemplified by the first inductee into the Climateer Hall of Fame:

As Adam Smith put it in his book on the 'sixties bull market, The Money Game:

“Now you know and I know that one day the orchestra will stop playing and the
wind will rattle through the broken window panes, and the anticipation of this
freezes us. All of these kids but one will be broke, and that one will be the multi-
millionaire, the Arthur Rock of the new generation. There is always one, and
maybe we will find him.”

—Last seen in February 2024's "JPMorgan's Jamie Dimon On The Business Case For AI: "This Is Not Hype" (JPM)" 

HBR: "Why Innovators Should Study the Rise and Fall of the Venetian Empire"

Huh.
So there I was thinking about Venice because KayYen had really nailed it with this photograph of the Grand Canal:

Merchants of Venice  Venice from the Rialto bridge

lighter and brighter than Guardi or Canaletto but no less perfect an image of the Grand Canal than the ones those guys painted, when this dropped out of one of the home-version feedreaders:

That's "Mole with the Doges' Palace" by Luca Carlevaris, another of the Italians that couldn't resist a paintbrush, or Venice, and whose life overlapped those of the more famous painters.

The Carlevaris was used by the Harvard Business Review as the header art for:

Why Innovators Should Study the Rise and Fall of the Venetian Empire

Most organizations would be happy to last for centuries, as the Venetian Republic did. From 697 to 1797 AD, Venice’s technological acumen, geographic position, and unconventionality were interlocking advantages that allowed the Most Serene Republic to flourish. But when change comes suddenly, it can turn strengths into weaknesses and sweep away even thousand-year success stories.

Venice’s military technology and the city’s pivotal location on the main trade routes of the time gave Venice several strong, mutually reinforcing advantages.

The Arsenal, an advanced naval munitions factory that anticipated by several centuries the production-line method of manufacture, was the beating heart of the Venetian naval industry. From the thirteenth century on, the Arsenal nurtured creativity and spurred innovation and entrepreneurship in the construction of its galleys.

The city’s geographic location helped it to defend itself from both land- and sea-based invaders. This location, consisting of a series of islands in a marshy lagoon, also pushed it to develop a (then unusual) trading and moneylending economy, since there was little land to support agriculture. And its position at the top of the Adriatic Sea allowed it to become a vital trading hub, connecting the East with the West via the Mediterranean.

If, as Michael Porter wrote, competitive advantage stems from how “activities fit and reinforce one another….creating a chain that is as strong as its strongest link,” then strategic fit is something that the Venetian Republic had in spades.

But, like a lot of successful entities, Venice reached a point where it focused more on exploitation than exploration: Venetian traders followed existing paths to success. Entrepreneurs chose not to move away from traditional pathways. Established practices and preferences became more popular than exploration and speculation. Merchants and traders played the game of incremental innovation by focusing on efficiency and optimization. Determined to grow their own fortunes rapidly, they pressed their feet to the accelerator rather than charting new courses.

But toward the end of the 16th century the world was changing in ways that would make Venice less relevant. The Arsenal’s focus on galley ships made sense when the Mediterranean was the most important trading waterway. Alessandro Barbero, professor of medieval history at the University of Eastern Piedmont, in Italy, notes that the galley remained for a long time the favorite vessel of Venetian navigators. But the invention of seafaring galleons allowed countries bordering the Atlantic to set up new trade routes that did not flow through the Adriatic.

This age of exploration triggered the beginning of Venice’s decline. One huge advance in technology — ships that could survive at sea for months, even years — weakened Venice’s competitive advantage and the strategic fit of its competencies....MORE

HT: Alpha Ideas

The KayYen pic was used as the header art for the Boston Review's "Finding Ourselves in the Venetian Ghetto" with this quote as the introduction:

“We do not see things as they are; we see them as we are.”

For comparison to the photo here's Canaletto's "Entrance to the Grand Canal":

Previously on Venice:
"How Venice Rigged the First, and Worst, Global Financial Crash"
The Perpetuities of Venice: Favored Investment of the Fourteenth Century 1%
"How a Medieval Friar Forever Changed Finance"
3D Printing: Apparently the Future Is To Be Found In 13th Century Venice
Another Post On Glass, This Time With "The Alchemist's Fallacy" (And Professor Nordhaus)
Goldenballs: Not For Nothing Was Jacob Fugger Known as “Jacob the Rich”
HBR: "The Hand Signals That Drove Business in Renaissance Europe"
Magicians, Mafiosos, a Missing Painting, and the Heist of a Lifetime
For Sale: Apartment In Freddie Nietzsche's (very impressive) Place In Venice

...Not bad for a nihilist 

This opulent Venetian palazzo once belonging to Friedrich Nietzsche is either too much, or simply not enough, for a nihilist of his caliber, depending on how you slice it. The German philosopher lived in the 1600-built Palazzo Berlendis—set on the Fondamente Nuove by the feet of the Mendicanti bridge on the northern border of the city—between 1880 and 1887 and penned Thus Spoke Zarathustra here....

iRobot Co-founder Refines the Sequal (iRobot)

Back in February we visited another of IRBT's co-founders, Helen Greiner, to see what she was up to:

We’re one of the only flying robot companies that are focusing on industrial applications....

Today it is Rodney Brooks, MIT guy and co-founder of Rethink Robotics.
From MIT News:

Professor emeritus Rodney Brooks refines the sequel to iRobot

Rodney Brooks’ startup, Rethink Robotics, is producing robots that can adapt to manufacturing tasks and the factory environment.

Professor emeritus Rodney Brooks gained fame in the 1990s for co-founding iRobot, an MIT spinoff that brought the world the Roomba and other innovative, helpful robots. He’s since moved on to robots that are bigger, but no less revolutionary.

Brooks’ newest startup, Rethink Robotics, headquartered in Boston, is producing robots that can work safely in factories alongside humans and demonstrate “common sense,” adapting to their tasks and environment.

Rethink’s first commercial model, Baxter, released in January, is a human-sized, two-armed robot that can be programmed to learn repetitive production tasks: material handling, testing and sorting, light assembly, and packing and unpacking. Any worker, tech-savvy or not, can program Baxter by moving the robot’s arms — demonstrating the desired tasks and locations — and pressing buttons on a control panel.

The robot’s “face” — eyes and eyebrows displayed on an LCD screen — indicates its status and where its attention is focused. Sensors on the robot’s “head” allow it to recognize when people are nearby, and sensors on its joints allow it to reduce the force of impact should it detect a collision — valuable, and novel, safety features.

“Baxter changes its movements to accommodate the world. That’s a revolution in robots for manufacturing by itself,” says Brooks, a former director of MIT’s Computer Science and Artificial Intelligence Lab and now Rethink’s chief technology officer. “And the fact that it’s aware of people and safe to be around people is another revolution in the manufacturing environment.”

As importantly, Brooks says, Baxter is built from parts manufactured in the United States. (Rethink’s Boston office works on quality assurance and software development, releasing new software to expand Baxter’s capabilities every few months.) The product’s domestic roots are contributing to the company’s popularity, Brooks says: “Our customers have a lot of emotional investment in that.”

Hundreds of Baxters have sold nationwide, and the robot has been praised for its safety and affordability, among other things. Technology Review listed Baxter as one of 10 breakthrough technologies of 2013; Time named the robot a top invention of 2012. Rethink itself — named to Technology Review’s most recent list of “disruptive companies” — has raised more than $62 million in funding.

Making U.S. manufacturing more attractive
A Baxter-type robot first appealed to Brooks as a means of helping America compete with low-cost overseas labor and making its factories competitive globally. “I decided maybe I could do something with robots to make manufacturing more attractive in the United States,” he says....MORE

Previously on Baxter:
MIT's Technology Review: "10 technologies we think most likely to change the world"

Economist Wynne Godley Undergoes Psychoanalysis

We are fans of Godley.
From Boston Review, December, 2002:
Return of the Repressed

In February 2001 the psychoanalytic world was shaken by a London Review of Books article by Wynne Godley, visiting scholar at Bard College’s Levi Economics Institute, professor emeritus of applied economics at Cambridge University, and onetime member of H.M. Treasury Panel of Independent Forecasters (the so-called Six Wise Men). “Saving Masud Khan” tells the story of Godley’s lengthy psychoanalysis with Mohammed Masud Raza Khan, the charismatic Anglo-Pakistani who—it was recently revealed—slept with and abused many of his patients. In Godley’s telling, he was essentially tortured by Khan from beginning to end. It was a “long and fruitless battle culminating in a spiral of degradation.”

“Within minutes of our first meeting, the therapeutic relationship had been totally subverted,” he writes. In later sessions Khan violated every conceivable boundary between analyst and patient. He assaulted Godley with verbal tirades (“And to think you people ruled the world!”). He gossiped freely about his A-list social life (Rudolph Nureyev, Julie Christie, Peter O’Toole, Mike Nichols) and his other patients, going so far as to arrange a liaison between Godley (who was happily married) and a female patient (Khan said they were “handmade for one another”). The three of them—two patients and their analyst—even played poker together (Khan cheated). In less jovial circumstances, Godley witnessed a drunken row between Khan and his wife, the Royal Ballet’s beautiful prima ballerina Svetlana Beriosova, which ended with her kicking Khan in the groin and then passing out in the front hall....MORE

Here's "Saving Masud Khan" at the LRB:

Vol. 23 No. 4 · 22 February 2001
pages 3-7 | 6211 words
Wynne Godley

This is the story of a disastrous encounter with psychoanalysis which severely blemished my middle years.

I was about thirty years old when I found myself to be in a state of terrible distress. It was the paralysis of my will, rather than the pain itself, which enabled me to infer, using my head, that I needed help different in kind from the support of friends. A knowledgeable acquaintance suggested that I consult D.W. Winnicott, without telling me that he was pre-eminent among British psychoanalysts.

I don’t think that living through an artificial self, which is what had got me into such an awful mess, is all that uncommon. The condition is difficult to recognise because it is concealed from the world, and from the subject, with ruthless ingenuity. It does not feature in the standard catalogue of neurotic symptoms such as hysteria, obsession, phobia, depression or impotence; and it is not inconsistent with worldly success or the formation of deep and lasting friendships. The disjointed components of the artificial self are not individually artificial.

What is it like to live in a state of dissociation? In a real sense, the subject is never corporeally present at all but goes about the world in a waking dream. Behaviour is managed by an auto-pilot. Responses are neither direct nor spontaneous. Every event is re-enacted after it has taken place and processed in an internal theatre. On the one hand, the subject may be bafflingly insensitive but this goes with extreme vulnerability, for the whole apparatus can only function within a framework of familiar and trusted responses. He or she is defenceless against random, unexpected or malicious events. Evil cannot be countered because it cannot be identified.

The short personal story which follows is so familiar in its outline that it may seem stale, but I cannot explain how I allowed such strange things to happen to me unless I tell it.

My parents separated from one another, with great and protracted bitterness, at about the time I was born, in 1926, and I hardly ever saw them together. In infancy I was looked after, in various country houses in Sussex and Kent, by nannies and governesses as well as by a fierce maiden aunt who shook me violently when I cried. My mother, though frequently in bed with what she called ‘my pain’, was a poet, playwright, pianist, composer and actress, and these activities took her away from home for long and irregular periods of time. When she rematerialised, we had long goodnights during which, as she sang to me, I undid her hair so that it fell over her shoulders. She used to parade naked in front of me, and would tell me (for instance) of the intense pleasure she got from sexual intercourse, of the protracted agony and humiliation she had suffered when giving birth to my much older half-sister, Ann, who grew up retarded and violent (screamed, spat, bit, kicked, threw), and of her disappointment when my father was impotent, particularly on their honeymoon.....MORE

Errrmmm, yes.
Previously:
Professor Wynne Godley: The Man Who Foresaw the Euromess Twenty Years Ago
London Times Obituary: "Professor Wynne Godley: economist"
"Embracing Wynne Godley, an Economist Who Modeled the Crisis"
The Genius of Wynne Godley: "Maastricht and All That"
"New Blog On Monetary Economics by Wynne Godley student " 

"Reputational currency, like China's Social Credit Score, rebrands repression as rational nudging. And these algorithmic governance models are spreading"

Professor Pasquale at The Boston Review:

The most successful Internet companies, it seems, all learned the lesson of Tom Sawyer. By outsourcing labor to their users, it is as if they have cordially invited friends and neighbors to delight in painting their fence. Instagram does not need to hire photographers; users snap, post, and comment on photos, and their hashtags are a filing system, a taxonomy as meticulously curated as a filing cabinet. Instagram’s parent company, Facebook, relies on all of us to keep each other amused, as does the Chinese platform Weibo. Even Google, Amazon, and Alibaba, operating far afield from social media, rely on combined consumers and producers (“prosumers”) to let them know when their algorithms are helpful. 

Every society depends on free labor—work that is vital but which goes unpaid. 

They also allow customers to police the quality of products and websites so that they don’t have to pay someone to do that work. Airbnb, Uber, and eBay apply similar methods, shifting the burden of quality control by having both sides in commercial transactions rate one another. We all give up small treasures—our data—to paint the fence of platform capitalists.

We may soon do the same for government. Every society depends on free labor—work that is vital but which goes unpaid. Smart governments realize that they need to strike some balance between market activity and the free labor that supports families and communities. Policymakers promote business and growth, but they also realize that if every moment were commodified, the foundations of social reproduction would wither away. Index funds may prove a better investment than children. And if you don’t get credit for being civil, paying attention in class, or taking care of your aging parents, why would you?

There are standard solutions to such problems. Courts can drain the bank accounts of “deadbeat dads.” Churches and civil society groups can stigmatize deviants, and the carceral state can further scare scofflaws. But these approaches take resources. The perfectly efficient neoliberal state would cut out the middleman. It would learn from Silicon Valley that you can motivate people not only to rate and rank one another, but also to positively enjoy the power and responsibility that rating (and being rated) entails.

The Chinese government is now implementing just such a system at the national level. Called the Chinese Social Credit System (SCS), it has some familiar foundations. Its early iterations (pioneered by private firms) allow users to share images of their scores with one another. As with financial credit scores used by many lenders, the system rewards people for repaying debts promptly. But the SCS does not stop with credit; it factors in court judgments, criminal records, academic dishonesty, jaywalking, moving violations, and failing to pay transit fares.

The Chinese Social Credit System factors in court judgments, 

criminal records, academic dishonesty, jaywalking, and more.

Surveillance, software, and relatively simple artificial intelligence can supply a fearsomely panoptic dossier. But this monitoring alone does not address the concern of Chinese Communist Party authorities that cornerstones of their authority are eroding. Thus the SCS will also dent your score for posting “unreliable” information or engaging in nebulously defined negative interactions online. Conversely, the system will reward volunteer activity and “filial piety”—devotion to one’s parents, grandparents, and perhaps other relatives. To paraphrase Margaret Thatcher, scoring is “the method; the object is to change the heart and soul.”

How can a government judge the relative value of working in the market versus visiting a lonely aunt? For the architects of the SCS, these spheres diverge: cash rules commerce, and a new currency will govern culture. That currency is reputation, a single score to express a person’s social value. As China’s SCS approaches its full implementation around 2020, the scoring of activities will spread, assigning points for a wider range of antisocial and social behaviors. Eventually China may make a Great Leap to Commensuration, in which every activity (or inactivity) is judged and converted to points, giving lived reality the feel of a never-ending video game.

The Chinese government claims that the SCS simply reflects the values now embodied in Chinese families, schools, and courts. But with no appeal mechanism—a basic aspect of due process in any scored society—the SCS’s relentless logic of commensuration threatens to supplant, rather than supplement, the authority of families, schools, and courts. The SCS could easily end up serving as a quant-driven power grab, enabling its authors to assert authority over vast swathes of social life in a way they could never achieve via legislation. Such quantitative governance of culture is a paradox: the very effort to articulate the precise value of manners and emotions threatens to unravel them entirely, as spontaneous affections and interactions are instrumentalized into points....

...MORE

The Net Zero Asset Managers Trade Group Is Shutting Down

From Reuters, January 13:

Exclusive: Investor climate group suspends activities after BlackRock exit

•     Net-Zero Asset Managers initiative writes to members
•     Follows exit of BlackRock amid U.S. political backlash
•     Network partners say have launched review of structure

LONDON/BOSTON, Jan 13 (Reuters) - A flagship coalition aimed at aligning the asset management industry with global climate goals said it was suspending its activities on Monday, days after BlackRock, the world's biggest investor, left amid a political backlash in the United States.

The pause raised concerns that companies will lower their efforts on climate change even after the hottest year on record, but could buy organizers time to review what actions might still be acceptable for U.S. fund firms.

 

BlackRock, which manages some $11.5 trillion in assets, left the Net-Zero Asset Managers(NZAM) initiative on Jan. 9 citing confusion over its climate efforts and legal inquiries from public officials.

 

The step followed months of escalating pressure from some Republican politicians over its stance on investing in fossil fuel companies, with concern that such pressure could rise further as President-elect Donald Trump prepares to take office.

 

The group counted more than 325 signatories managing more than $57.5 trillion in assets as members, according to its website as of last week, before the departure of BlackRock.

In a letter to its members first reported by Reuters, the partner groups which help manage the NZAM said they had decided to conduct a review of its activities....

....MUCH MORE

"How Finance Gutted Manufacturing"

The author, Suzanne Berger, has a comfy endowed chair at MIT.
From the Boston Review:

In May 2013 shareholders voted to break up the Timken Company—a $5 billion Ohio manufacturer of tapered bearings, power transmissions, gears, and specialty steel—into two separate businesses. Their goal was to raise stock prices. The company, which makes complex and difficult products that cannot be easily outsourced, employs 20,000 people in the United States, China, and Romania. Ward “Tim” Timken, Jr., the Timken chairman whose family founded the business more than a hundred years ago, and James Griffith, Timken’s CEO, opposed the move.

The shareholders who supported the breakup hardly looked like the “barbarians at the gate” who forced the 1988 leveraged buyout of RJR Nabisco. This time the attack came from the California State Teachers Retirement System pension fund, the second-largest public pension fund in the United States, together with Relational Investors LLC, an asset management firm. And Tim Timken was not, like the RJR Nabisco CEO, eagerly pursuing the breakup to raise his own take. But beneath these differences are the same financial pressures that have shaped corporate structure for thirty years.

Urging Timken shareholders to vote for the split, Relational Investors argued that they should want “pure-play” companies, focused on a single industrial activity. Investors would then be free to balance their portfolios by selecting businesses in industrial sectors with varying degrees of risk and sensitivity to different phases of economic cycles. A firm such as Timken—about one-third a steel company (a materials play) and about two-thirds a bearings and power transmission business (an industrial components play)—would lock investors into a mix that, Relational Investors claimed, leads to a discount on share price.

Timken management argued that making both materials and products enabled them to bring to market higher-quality goods that met customers’ needs: for example, their ultra-large bearings for windmill towers, which measure two meters in diameter, weigh four tons, and have to stand up to extreme wind and temperature conditions. Controlling the entire value chain, they said, allowed them to fine-tune the attributes of the steel in order to make superior products. Nonetheless, the financial calculation about how to maximize quarterly returns won out.

Timken’s story is not only about stock prices and product quality. Since the 1980s financial market pressures have transformed U.S. corporate structure itself. The system was once dominated by a few dozen very large, vertically integrated firms in which most or all of the functions needed to take a new idea about a product or a service to market—from R&D, design, manufacturing, testing, and logistics through sales and after-market services—were contained within the four walls of a single corporation. Now even the big firms are smaller, leaner, and centered on “core competencies,” with much of their production outsourced and overseas. Those pressures have driven companies such as Timken to hive off activities that involve heavy capital outlays, require large workforces, or promise less profitability in the short term.

The contribution of this decades-long trend to the rapid decline in American manufacturing has not been fully acknowledged. But understanding its role is essential to a revival of American manufacturing that will create jobs and promote long-term economic health. Both private and public sectors are taking constructive steps. Will American finance get in the way?

Timken was one of hundreds of manufacturing companies in a sample of firms interviewed by an MIT research team about their experiences in bringing novel ideas, products, and processes to market. I was a principal investigator in that project. The aim of the project—Production in the Innovation Economy—was to discover whether we really need manufacturing to gain the benefits of innovation: economic growth, new companies, new profits, and good new jobs in this country. After all, Apple and other companies like it—which do R&D, design, and distribution but little or no production in the United States—reap the lion’s share of their profits here. To explore these issues, the MIT researchers collected data on the efforts to scale innovation up to market by startup firms, Main Street small and mid-sized manufacturers, and Fortune 500 companies. When we learned about the Timken shareholders’ vote, we realized that we were seeing up close and in real time the forces that over the past thirty years have transformed and shrunken manufacturing in the United States.

In the radical downsizing of American manufacturing, changes in corporate structures since the 1980s have been a powerful driver, though not one that is generally recognized. Over the first decade of the twenty-first century, about 5.8 million U.S. manufacturing jobs disappeared. The most frequent explanations for this decline are productivity gains and increased trade with low-wage economies. Both of these factors have been important, but they explain far less of the picture than is usually claimed.

In the case of productivity gains, there have clearly been major advances over the long term. The periods of advance, however, do not correlate neatly with the years of greatest job losses. Some periods of rapid productivity growth also saw employment growth, or at least of stability in the manufacturing workforce. Research by economist Susan Houseman and her colleagues on the past decade—when manufacturing employment has fallen off the cliff in the United States—suggests productivity growth in manufacturing was actually modest, but national statistics fail to account for the rising volume and value of imported components and thus systematically overstate productivity. The corrected numbers indicate that productivity growth over the past decade took place primarily within one manufacturing industry: computers and electronics. So productivity gains alone can hardly explain the shrinking of U.S. manufacturing employment....MORE

FTX—Sam Bankman-Fried's Mother: "The philosophy of personal responsibility has ruined criminal justice and economic policy. It’s time to move past blame"—Barbara H. Fried

Following on yesterday's "Sam Bankman-Fried’s Mother and Brother Not Cooperating With Financial Probe, FTX Lawyers Say".

Sam's mom is a law Professor. Here's her mini-bio at the Stanford Center on Poverty and Inequality.

From Boston Review June 28, 2013, some of Ma Fried's thinking:

 

Beyond Blame

Barbara H. Fried

In an article published shortly before his death, the political scientist James Q. Wilson took on the large question of free will and moral responsibility:

Does the fact that biology determines more of our thinking and conduct than we had previously imagined undermine the notion of free will? And does this possibility in turn undermine, if not entirely destroy, our ability to hold people accountable for their actions?

Wilson’s answer was an unequivocal no.

He has lots of company, which should come as a surprise given what scientific research into the determinants of human behavior has told us over the past four decades. Most of that research, as Wilson says, points to the same conclusion: our worldviews, aspirations, temperaments, conduct, and achievements—everything we conventionally think of as “us”—are in significant part determined by accidents of biology and circumstance. The study of the brain is in its infancy; as it advances, the evidence for determinism will surely grow.

One might have expected those developments to temper enthusiasm for blame mongering. Instead, the same four decades have been boom years for blame.

Retributive penal policy, which has produced incarceration rates of unprecedented proportions in the United States, has been at the forefront of the boom. But enthusiasm for blame is not confined to punishment. Changes in public policy more broadly—the slow dismantling of the social safety net, the push to privatize social security, the deregulation of banking, the health care wars, the refusal to bail out homeowners in the wake of the 2008 housing meltdown—have all been fueled by our collective sense that if things go badly for you, you’ve got no one to blame but yourself. Mortgage under water? You should have thought harder about whether you could really afford that house before you bought it. Trouble paying back your college loans? You should have looked more carefully at job prospects for sociology majors before you took out the loans. Unless of course “you” are “me,” in which case the situation tends to look a bit more complicated.

This has also been a boom time for blame in moral and political philosophy, partially in reaction to John Rawls’s A Theory of Justice (1971), which is widely credited with reviving these fields. Rawls focused not on personal responsibility but on ensuring fair conditions that would create opportunities for everyone to pursue their aims. Within a decade, however, Rawls’s theory was under attack from the left and right for giving insufficient attention to personal responsibility and associated attitudes toward blame. On the right, Robert Nozick’s 1974 Anarchy, State, and Utopia heralded a major libertarian revival, centered on individual rights and individual responsibility. On the left, Ronald Dworkin proposed an alternative to Rawls’s vision of liberal egalitarianism, one that brought personal responsibility into the egalitarian fold. On the one hand, Dworkin argued, our fate should not be shaped by “brute luck”—circumstances, whether social or biological, not subject to our control. But as to anything that results from our choices, blame away. As the philosopher G. A. Cohen said of Dworkin’s argument, it has “performed for egalitarianism the considerable service of incorporating within it the most powerful idea in the arsenal of the anti-egalitarian right: the idea of choice and responsibility.”

Why exactly are we trying so hard to make the world safe for blame? What have we gained and what have we lost in the effort? And is there an alternative?....

....MUCH MORE

A couple of the pull-quotes:

"Recent decades have been boom years
for blame—our collective sense that if
things go badly for you, it’s all your fault."
***
"Parental income and education are the best
predictors of whether a three-year-old will
end up in the boardroom or in prison."

 

In the instant case the latter thesis has not yet been adjudicated in a court of competent jurisdiction.

The Riptide of Technocracy: Can There Be a Democratic EU?

The answer is no, no there cannot be a democratic EU.*
From the Boston Review:

The Lure of Technocracy

Jürgen Habermas, translated by Ciarin Cronin
Polity, $22.95 (paper)

For several years now philosopher Jürgen Habermas has weighed the deficiencies and prospects of the European Union (EU). His last two titles—Europe: The Faltering Project (2009) and The Crisis of the European Union (2012)—hinted at the possibility of demise, suggesting an EU on the brink of fragmentation, a process close to its undoing. These were apt concerns following the financial crisis, but now with The Lure of Technocracy, the specter is less dissolution than a form of governance perfected in response to that threat.

The culprit is “technocracy.” At its most basic, the term is simply intended to mean government that is weakly democratic, carried out far away from the influence and scrutiny of a European public. The formal properties of governing officials—their non-partisan status, say, or their technical qualifications—matter less than the way decisions are made and the form of authority claimed for them: the privileged capacity of an elite to identify the most efficient means to achieve supposedly incontrovertible ends. For Habermas, technocracy is a style of rule, marked by its unresponsive and unquestioning character, rather than a specific institutional arrangement. The question he takes up is how to intercept this mutated EU and turn its transformation to positive effect.
• • •
Like any critique of today’s EU, The Lure of Technocracy must be understood in the context of the political handling of the “Euro crisis.” As the global crisis of private debt was transformed in Europe into a question of public debt, and as concerns regarding the finances of particular countries provoked wider uncertainty about the Eurozone as a whole, EU officials implemented a series of emergency measures to restore order. These ranged from short-term bids to ensure the solvency of individual states (principally through credit facilities and cross-border loans) to deeper efforts to reshape national economies and reduce budget deficits. The latest round of this ongoing crisis management resulted in last summer’s clash between a government opposed to the austerity program (led by Syriza in Greece) and an array of institutions determined to impose it (led by the German government).

In these scenes of institutional redesign, Habermas discerns the “self-empowerment of the European executive.” There is no single institution that goes by this name. Among those Habermas denotes are the European Council, where the leaders of EU member-states gather for major decisions, and the non-elected institutions of the European Commission and Central Bank. Sometimes in concert with the International Monetary Fund, these institutions have enjoyed a level of influence over the handling of the Euro crisis unmatched by national legislatures and the European Parliament. Furthermore, by instituting new monitoring regimes to constrain national budgets—ostensibly rule-based but with much room for discretion—they have ensured the longevity of crisis powers beyond the horizon of the financial crisis....MUCH MORE

* From 2008's "European Politicians Think They are Rulers; Need Energy Wasting Palace":

When MEP's dream, are they Capetian or Carolingian?
Capetian, methinks.

I've always liked the Carolingians better,
they seemed more human-

Charles II, the Bald
Louis II, the Stammerer
Charles, the Fat
Charles III, the Simple
Along the lines of the Brit's Aethelred II, the Unready
(my fav. royal nickname)

Anyhoo, from the Economic Times (India):...

See also President Eisenhower's Farewell Address to the American People, January 17, 1961.

Most folks know his warning on the military-industrial complex:

...In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. 

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together...

But they don't remember what followed immediately after:

...Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.
In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the conduct of research. Partly because of the huge costs involved, a government contract becomes virtually a substitute for intellectual curiosity. For every old blackboard there are now hundreds of new electronic computers.

The prospect of domination of the nation's scholars by Federal employment, project allocations, and the power of money is ever present--and is gravely to be regarded.
Yet, in holding scientific research and discovery in respect, as we should, we must also be alert to the equal and opposite danger that public policy could itself become the captive of a scientific-technological elite....

Something to think about.

"To Save the Climate, Give Up the Demand for Constant Electricity"

 The third piece of our look at what people are talking about, energywise.

As intro'd in last night's "Mariana Mazzucato: We may need climate lockdowns to halt climate change.":

Sometimes I get the feeling I'm being groomed to accept things I normally wouldn't.

Sort of a cross between Rotherham and Hegelian dialectic, given two awful choices, choosing the one that seems slightly less awful but that's not enough so rinse, repeat.

 From Boston Review:October 5, 2020:

The writer "David McDermott Hughes" is a Professor of Anthropology at Rutgers.

Waiting to ensure uninterrupted power for everyone as we transition away from fossil fuels will cost too much time—and too many lives.

Many decades ago electricity became the new oxygen, and the vast majority of Americans today believe they need it every moment of every waking or sleeping hour. The United States has built a vast infrastructure for generating, transmitting, and consuming it—all almost entirely based on planet-destroying fossil fuels and nuclear power.

Electricity has become the new oxygen. The vast majority of Americans today believe they need it every moment of every waking or sleeping hour.

Those fuels hold and store energy. If you accumulate enough of them, you can generate electricity abundantly and reliably. The result is that the average American household uses electric resources far beyond its needs while losing power for fewer than six hours per year. Renewables can provide that plenitude—and already do through wind and solar farms in Texas and California—but not necessarily all the time. The sun shines at us constantly, with more energy that we can possibly use at any moment, but the Earth’s rotation puts us in shadow at nightfall. And wind, of course, can simply stop. As a result, the leading fossil- and nuclear-free sources of energy bounce from feast to famine, raising the possibility of more frequent and longer power cuts. Critics—often supporters of natural gas—say wind and solar power are “not ready.” Renewables, they warn us, pose an “intermittency problem.”

For those seriously concerned about climate change, the inverse—the demand for electrical continuity—may be the real problem. Today’s most ambitious plans to abandon fossil fuels—which are certainly not supported by the natural gas industry—allow ten, twenty, or thirty years to wire the whole country with solar and wind power, running all day, every day, for everyone, everywhere. The plans differ in speed, but all agree on the last point: except for six agonizing hours per year, electrons must flow 24/7/365. To make that steadiness possible, solar plants will have to store some electricity during the daytime feast to last through the nocturnal famine. “As economies shift to variable renewables,” environmental activist Paul Hawken writes in his aggressive climate proposal Drawdown (2017), “management of the power grid with energy storage systems is critical.”

We ought to consider enduring much more than six hours of electrical downtime every year for the sake of transitioning more rapidly away from fossil fuels.

But storage means batteries, and battery technology takes time to sell and install. In the case of utility-scale batteries or battery farms, investors have to negotiate with regulators and neighbors. Such friction is impossible to measure now, but additional equipment and infrastructure always create delay. That lost interval—years, in each of the transition scenarios—matters profoundly. Carbon dioxide can trap heat in the atmosphere for 120 years. For the most precarious people, a year’s emissions mean the difference between life and death.   

So just how critical is continuity, then? And critical for whom? The U.S. grid sends 30 percent of its electricity to residences. As of 2017, 63 percent of those were single-unit, detached dwellings. Under Hawken’s plan in Drawdown, these houses will require battery farms and high-tension lines, and until they get them, they will probably draw power from natural gas at night. Thus, each household demanding continuous electricity marginally exacerbates the climate crisis. Perhaps, then, it is critical that we not store energy for these houses. At least, we should not do so in a way that hobbles the transition away from fossil fuels. We ought to consider waiting a few years for storage—enduring much more than six hours of downtime every year—for the sake of transitioning more rapidly away from fossil fuels. But few people have championed such residential intermittency. Why not?

Self-sacrifice is not popular, especially at home. After Jimmy Carter suggested we turn down the thermostat in winter, Ronald Reagan banished sweaters to the political graveyard. No one will recommend that we spend the winter being cold. Forgoing the stove for a few hours is a different kind of sacrifice; it doesn’t degrade our quality of life so much as reschedule or interrupt activities. Delay is the kindest form of rationing. Yet we are so wedded to availability, predictability, and continuity that any break seems like a sacrifice. Long before the lithium-ion battery, we became addicted to electrical continuity.

Self-sacrifice is not popular, especially at home. After Jimmy Carter suggested we turn down the thermostat in winter, Ronald Reagan banished sweaters to the political graveyard.

This steadiness became normal and expected at home and in the economy when—and precisely because—the home and the economy converged. First, they diverged from a common concept. As developed in the seventeenth century, the term “economy” derives from the Greek word for household or family management (oikonomos). Both units rely upon internal cooperation. In the seventeenth and eighteenth centuries, they also ran at roughly same tempo: when breadwinners slept, so did production and trade. Factories of the Industrial Revolution, however, moved to continuous production. High-energy manufacturing—in blast furnaces, for example—was just too costly to stop and restart. The economy of making goods thus became an insomniac while the family slumbered. Then, for buyers, sellers, and traders of goods, the digital revolution set an alarm clock without snooze. “Business continuity” is now vital—defended from hackers and blackouts alike. So just about every part of the economy outstripped the family completely. The former is always on, whereas the latter—except where someone works the night shift—appears to turn the lights off at night.

In subtle ways, the family has been catching up to the economy. Perhaps, the change began in the 1960s when the electric clock replaced the wind-up alarm. This technology turned an unnoticed midnight blackout into potentially career-wrecking tardiness. Then the digital clock colonized all our appliances, from the TV to the stove: you can’t turn them off anymore. If the contractor installs them compactly, you can’t even unplug them. Now—through the Internet of Things—they are all going to talk to each other all the time. That will certainly be convenient; houses will run themselves, heating, cooling, and maybe eventually cooking and cleaning through timed algorithms and web-based data. The household will run like always-on, continuous business.

Meanwhile, COVID-19 has forced almost all white-collar workers to telecommute. Thanks to Zoom, meetings have dispersed from the conference room to bedrooms and kitchens. Business continuity now requires uninterrupted electricity in millions of households. For the moment at least, the economy and the family run on the same circuit, and we would seem to need continuity now more than ever. Today’s viral interruption, however, may actually teach us how to live with intermittency.  

We will certainly need to be taught. In 2014 the German grid—6 percent of it working on solar energy—only scraped through an eclipse by drawing on other sources of electricity from neighboring countries. The operators saw that one coming. Wind is harder to predict than the sun. In August, still air hit California’s wind farms during a heat wave, and despite drawing from public and private batteries, the grid still went down in some locales. The more experimental sources of energy—tides, waves, and ocean currents—all vary by hour, season, and forces so mysterious that we call them acts of God. To make matters worse, none of this intermittency coincides with the rhythms of human life. Workers arrive home—where they will cook and turn on appliances—just as the sun is setting, so demand peaks while supply plummets. Many Americans, of course, fall outside this comfortably employed, nine-to-five, meat-and-potatoes routine, but the privileged ones who live this way consume enough energy to set the pattern for everyone else. A familiar criticism of solar energy—“Can’t store. No power after four.”—thus continues to constrain the move from fossil fuels to renewables.

Lithium-ion batteries are moving into position to overcome that constraint, but they create problems of their own. Like most form of mining, lithium extraction produces toxins—imposed, on this case, on indigenous down-winders in Chile. Also like mining, the lithium trade concentrates power and wealth in the hands of few, corporations. Sometimes called “bottlenecking,” this process converts a resource too plentiful for profit—like sunlight—into a scarce and lucrative commodity. Right now, Tesla seems on track to gain a controlling share of any smart grid connected to electric vehicles; its Powerwall battery is out-competing less toxic technologies, and it could eventually dovetail with software known as “demand response.” Through that automated collaboration, your neighbor’s car would wash your dishes, but only at night when she doesn’t need the former and you can wait for the latter. Google’s Nest program will call the shots. A corporate juggernaut is thus taking shape, one that has the power to slow the energy transition and make it less just. Tesla and Google may not have intended to lay the battery trap, but they are now poised to snap it shut.

A corporate juggernaut is taking shape, one that has the power to slow the energy transition and make it less just....

....MUCH MORE 

Also last night: 

"Tesla CEO says electric cars will double global electricity demand"

The next thirty years are going to be lit unlit.