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Walter Watts
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knock knock Hermit
« on: 2008-05-23 19:44:34 »
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Hey Hermit.

If you get a couple of spare minutes (and I'll bet that's all it would take YOU to read it 

would you give me your short-'n-sweet on this paper. It's hot off the presses and I'm curious as to your take.


http://hsgac.senate.gov/public/_files/052008Masters.pdf


Best.
Walter

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Re:knock knock Hermit
« Reply #1 on: 2008-05-25 20:14:32 »
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Reply 1

Who is there Walter?

Work In Progress

Disaster? Or Opportunity?

Again you give me an article so wrong that addressing it directly is very tricky indeed, although it could be said to have been inspirational. Let me try to give my perspective first. I first described what I thought was happening generally in the late 1990s and  in the markets specifically in 2002. And repeatedly since then. It is why my investment recipe has included gold, food and oil futures since the 1990s. Which just happens to map why institutional investors are now doing the same. But I have now decided that this, or indeed any, wealth preserving strategy is doomed to failure unless we can change society. Why and how will be addressed in this article in which I am trying to precis and describe a much larger collection of things upon which I have been working.

The View from the Other Side of the Mirror

The US has a long history of messing with indicators. When the data displeases you, change the formula until it gives you the results you require. When this requites the suppression of other contradictory data, do it. This began around the depression leading to the Civil war and continues today. According to John Williams of the Shadow Government Statistics, if we measured inflation the way that it was done in 1981, it would exceed 12%. I reached a similar conclusion based on published European data indicating that the Europeans inflated their money supply by 18% per year in order to stabilize the Dollar-Euro relationship - and still the Euro-Dollar exchange rate has gone from $0.70 in 2000 when Bush took office to $1.60 today. In addition, currencies with a de facto dollar linkage, such as Saudi Arabia, have seen a balance between either a 20% inflation rate or a 20% rise in their M3s, prior to their effective unlinking from the dollar in September last year. What with the "core-adjusted inflation rate" which omits all mention of food and energy, and excludes negative savings rates and the average decrease of 15% in real estate values, the cheerful 4% inflation of government statistics bears as much resemblance to reality as Pravda and Izvestia reporting on the stunning successive successes of Stalin's five year plans in the 1930s - while vast numbers of Soviet citizens died of starvation. (Refer also Goldseek).

Unemployment data is also unmistakably bodged. Official unemployment rates show a decline(!) in unemployment for most Iowa counties. In Jefferson county (chosen because of personal knowledge of the reality) it has reduced from 4.2% to 3.8% between April of 2007 and April of 2008. The reality is that the number of houses foreclosed and for sale, children obtaining state food subsidies and people lining up for food handouts have all soared and the county reckons that the number of people now not earning a living exceeds 25%. The reason for this difference is easy to discern. The "unemployed" include only those entitled to "unemployment benefits" (which due to the bodged consumer price inflation rates since the 1980s are a tiny fraction of what they would need to be to have maintained parity with the rates then). This number has continuously declined, because having been out of work for 6 months or longer, people lose these marginal benefits and removed from the ranks of the official unemployment statistics. Even worse, the driver for local prosperity tends to be the ranks of the self-employed. The merchant, the professionals, the realtor, the service providers like plumbers and satellite TV installers. These people have seen a catastrophic decline in income due to the collapse of the middle classes (others like themselves) and yet their employment status is unchanged. Even if they earn nothing for years they are not and will not be eligible for unemployment benefits, and will not be shown as unemployed.

The problem became far worse after 9/11 when the US Stabilization Task Force intervened ever more heavily and erratically in the markets in a vain attempt to prevent "exceptional" excursions. This "not-so-very-well-hidden hand" progressively manipulated the markets, until in 2005 the vast book debts and its excursions were blindingly apparent in both the M3 index as well as in the the increasingly strange investor sources in the US Treasury market as internally created money pumped back into the economy via the Bahamas replaced dollars returning from China, Japan and Saudi Arabia - without any hint of the origin of these new sources or any visible corresponding increase in debt elsewhere in the world. I suspect that it was not a coincidence that the M3, which was the largest giveaway of this new phenomena, was abolished when, in March 1986, the Reserve ceased publication of the M3. During the lead-up to its cessation, my articles here commented extensively on this connection.

The "strangeness" in the market of the time was reflected in weird losses being shown by investment companies whose historically successful systems failed to predict anything useful in trading predominated by noise. Accordingly new instruments were sought. The one blindingly obvious fact which no amount of fudging could conceal was that the prices of commodities in the food and energy sector were soaring, and, as I had already been recommending for a while, ever more investors headed to the futures and derivatives markets where they have made vast amounts of notional value (otherwise known as money) betting on effective certainties. The vast amounts of money they extracted from the market were, unfortunately, far from virtual, and had to have come from somewhere. The somewhere was the pockets of the billions of people who need to eat, heat, cool, travel or use energy in all its myriads of not always intuitively obvious forms. For example, about 18% of the cost of all items sold in the US is made up purely of the energy used in transporting it. So when the cost of diesel went from below $US 1.00 in 1999 to above $US 4.00 in 2008 or 100 times the official inflation rate, the cost of everything had to increase by at least the same amount, plus the profits made in the market, to maintain parity.

Meanwhile most anything that can be off-shored has been. Americans no longer make things the rest of the world wants, unless it can be downloaded free from bittorrent et al, or are arms bought from American aid funds that will never be repaid in a bizarre form of public subsidy bean feast for the military-money-mercantile-media machine we have been feeding and nurturing for the past 130 years or so. So while the USA haemorrhages money from every pore, including the money needed to pay to import food for her growing-at-third-world-rates population, there is no value being generated to replace it, meaning that money, the very symbol for value, is simply being diluted at an unsustainable rate. Given that our suppliers have spent the last 40 years buying the raw materials in which we were no longer interested, the rate of bleeding is going to keep increasing, particularly as the falling value of the dollar means that the off-shore share of the costs will continue to rise even if nothing else changes.

The above means that almost anything you buy - including personal services from other Americans (who have to buy things to be able to deliver their personal services) involves the payment of offshore suppliers. Even when you buy one of those rare things made, with or without pride, gay or not, in AMerica, some or all of its components and raw materials were almost certainly imported, and even more certainly, a soaring transport component (largely imported of course) is a part of the bargain. So our huge internal economy, still (for another decade or possibly two) the world's largest, can keep us going for a while, but only so long as others continue to supply us what we need at prices we can afford.

Why you may ask, is the dollar going to continue to fall? The reasons are many, but one of the most significant is that the US is once again shafting its suppliers and its suppliers, with dawning horror in their eyes, are beginning to realize it. The Saudis with 3.5 Trillion, the Chinese with 1.3 Trillion, the Japanese with 900 billion are all going to get toasted as the dollar depreciates as people around the world begin to face the reality that the US cannot even afford to pay interest on the money it has borrowed, let alone service the capital it owes. Then again, the US is thoroughly deservedly going to get itself hosed in the process.

Another significant reason is that it seems that Hubberts peak is indeed behind us (as suggested in 2005 and 2006 by me and the US military). While energy futures only show exponential growth in oil prices on to 2016, that is not because we think they are going to stabilize then, but rather  because that is as far as the futures market is open.

There is, however, one potential avenue of escape. With the current political system and media, I don't think that the US is going to see it or take it, although I think the Chinese, Russians and Europeans may use it to escape some of the worst consequences of the collapse of the USA and the consequent impact on the international financial markets. The unknown in my mind is whether the collapsing USA, with its already escalating paranoia, delusions, xenophobia and anti-globalization agenda will decide to attempt to destroy the planet in a Samson like gesture, on the grounds that if the last person left standing, be it for never so short a while, is American, then the USA has somehow "won" something. This is not some strange reach on my part. It is part of the current National Strategic Posture to respond aggressively to any threat to the "preeminence" of the USA, and does not make an exception for self inflicted hole-in-foot damage no matter what size gun is carried by Bush and fired by Cheney with his proven inability to aim, or even what the next President Of More-Of-The-Same if the Republicans win, apparently senile even before taking office might do with the same awesome powers of destruction. I therefore regard this threat to humanity and the planet as being very large, very imminent and very real.

Escaping the Trap's Closing Jaws

The potential avenue of escape, the only avenue of escape I see, lies in redefining the rather Lamarckian reality of social evolution, comprehending that what might in the short term have looked to us like progress for about 200 years or more, was undoubtedly one of the least fit evolutionary strategies ever adopted by any culture any when, recognize that Adam Smith, and through him the USA, had everything the wrong way around and acting rapidly on that recognition. All distortions to the contrary, true wealth does not lie in scarcity, but in plenitude. History ought to have taught us that wealth relies upon social stability to exist, that instability destroys wealth.  It follows that when everyone is housed and fed and healthy and happy then a nation is wealthy. When a nation is wealthy its people are wealthy. Stability depends upon equality, thus wealth does not lie in inequality but in equality. Greed, which destroys equality is not the highest, but rather one of, or even the lowest, motivator. The invisible hand of the market, rather than being an efficient mechanism, requires vast amounts of massive waste to operate. These costs have been hidden by the burst of wealth provided us by cheap energy, but was only viable when and while energy costs were at a brief, unsustainable low; as it has been while we burned through the first half of our precious heritage of "fossil fuels" which could have provided plastic and chemical supplies for millennia, and used that wasteful energy to distribute invaluable concentrations of minerals and other to resources, irrevocably alter our  biosphere and to build a population and environment that will not support human civilization for 3 days after the price of the "cheap fuels" becomes unaffordable.

When I say redefining, this has some concrete implications.

We burn in a year the equivalent in energy of what biomass addition would be generated in 300 years. So that can't rescue us. The cost of collecting diffuse solar energy - whether by solar electric (which has yet to produce a single nett watt), wind (which is better), solar thermal (which is a little more promising), or even wave and current energy (which are very relatively good) is just too high, the reliance on fossil fuel to produce them and their components too great, and the energy collected not sufficiently convertible into fuel, fertilizer and materials, to make the investment worthwhile as a straight investment; although all of these strategies may and some will help eke out our surviving fossil assets. Even nuclear power will not rescue us for very long, the US is already passed its peak in nuclear fuel production, and the world will be within 100 years. What is needed is more concentrated energy which can be collected cheaply and used effectively. The answer is no further away than our nearest star.

Humanity needs affordable space solar collectors, with microwave and laser downlinks of effectively limitless power to Earth. Just 3 collectors, each with a radius of 90km, powering "solar fusion" MHD generators could provide more energy to every man, woman and child projected to be on Earth if current unsustainable growth is not halted, than the notional "average American" currently squanders. The same collector system will provide a way to massively manage weather systems, both through the provision of shading (reestablish and stabilize the Arctic, Antarctic and Greenland ice pack and global glaciers) as well as the modification of cloud cover and disruption of Hurricanes and possibly even Tornadoes through the modification of local temperature and humidity and the extention of growing seasons and alleviation of winter depression through lengthening daylight hours. (SpaceSolar)

To achieve this without incurring huge costs in capital and environmental damage, we need a space elevator. To have any chance of seeing this completed, it must be realized in time to be completed before the cost of fossil fuels and political capital required to produce it becomes unmanageable. That means we need to begin work on it immediately. Even though these systems will last effectively forever (with appropriate maintenance) and will deliver effectively free power (the cost of accounting for the power will be greater than the cost of the power itself if we were foolish enough to charge (money) for it), even the most optimistic scenario places this as a twenty four year project. Had we not wasted 8 years of that squandering the last of the cheap fuel as well as our reputation and international stability fighting pointless wars over nearly worthless areas we would be in a much better position to have reason to think that this project could be completed before we run out of cheap fuels and the last society capable of undertaking such gargantuan projects ends. Because if we do not have this power when we run out of affordable fuel, the end will be messy and brutal. Due to the destruction of arable land, depletion of concentrated resources, including fertilizers, wood and ground water, we no longer will be in a position to sustain even the 1.2 billion or so people of the early 1900s and the death shriek of the surplus 5 to 9 billion people that will be alive when this happens will endanger the survival of any people at all. (Space Elevator)

This is why we need to undertake a series of projects which will act both as insurance (to help our successors have a better chance of finding a worthwhile life on as stable a planet as can be hoped for in more desperate times if the larger projects fail) and as a way of eking out the energy we do have to allow society to survive until its future is assured by effectively unlimited power availability to the planet. Most importantly, rather than escatalogical despair, these projects provide real answers to the very real problems that beset us, and will allow people to realize that hope is indeed justified. Hope for themselves, and hope for their descendents, if they can change their behavior in the short term. This leads directly to a fairly large number of conclusions, a few of which are, in summary:
  • We desperately need to reduce populations. This means one child per family until populations are back down to about one to two billion world wide. It ought to be possible to establish a way to trade child licenses, say tubal ligation for one in exchange for a suitable sum of money to purchase a license for another to have more. But this policy has to apply everywhere, not just in China. People breaking this rule should be sterilized and their children treated as orphans, placed for adoption, because the insanity of uncontrolled breeding threatens the survival of all. Regulation enforcing this can be used to justify social services for all, because it means that in the long run everyone will become far wealthier than we are now, but as will be seen below, this is not the only reason for massively increased individual wealth and the equality needed to sustain it in the near term. (One Child Policy and Reproductive Credits)

  • We need to rebuild our housing assets to be fuel efficient, maintainable and affordable, even as we downsize our populations. This needs to happen as a priority. The cost of this will be returned thousands of times over in the near future, but is not something the market will dictate until it is too late to achieve. The market is currently in denial and pretending that growth will continue to continue forever as it rapes the last small pockets of wealth from the 95% that do not own 80% of the world's wealth. Instead we need to be building highly standardized housing assets in well insulated domes, in strip cities, for individual families as well as for larger groupings. (Monolithic Domes)

  • We need to redefine our life styles to where we don't live in suburbs aspiring to ape a non existent pseudo countryside in quarter acre lots, but instead choose to live between our transport arteries and our food supplies, using the countryside we have paved over and destroyed for roads, to instead carry our populations. We need to stop the insane habit of living hours from where we work and instead interleave living, working and playing zones to minimize transport costs. We need to virtualize as much travel as possible. Google Earth and Second Life begin to offer hints as to how well this will eventually work. (Second Life)

  • We need to redefine our transport and distribution systems to match that required by a sustainable economy. This means small local vehicles, not electric unless using an electrical transmission system, but rather using chemical and pneumatic energy as efficiently as possible, as exemplified by MDI (MDI and Haxxar).

  • It means the movement to standardized containers, including liquid and gas containers - and the creation of new categories of side loading sub-container systems to eliminate over the road handling of loads. It means high speed, high efficiency unmanned monorails for the transport of freight and goods at less than 1/20th the cost of trucks. (HaxTrax)

  • It means high capacity ships and airships moving vast quantities of goods and services long distances at very low cost, less than 1/100th of trucks. Far lower than the cost of roads and railroads which are the only possible alternatives (Megalifter).

  • It means the use of pipelines to transport gas and water in vast quantities to service the needs of population. (Reticulus)

  • We need to rediscover mixed farming on small farms with good disease control between them. Farms need to recapture and recycle most everything they produce. This means farming indoors, again in domes, long proven to be the most cost effective, resilient and longest lasting structures we know how to build. The move indoors for all except cereal and legume production will allow us to capture most of the energy currently wasted in atmosphere destroying methane (1kg of methane has 72 times the greenhouse effect of 1kg of CO2), as well as much of the energy expended on tilling, weeding, fertilizing etc, as well as dramatically reducing the need for herbicides, pesticides and fungicides along with crop losses due to natural causes, predators and inefficiencies. (Integral Farms)

  • We need to generate power locally, avoiding the losses caused by long distance transmission and the waste of associated heat. We need to switch to trigeneration, producing heat, cold and electrical power simultaneously and so massively conserving energy. We need to recycle the methane produced by humans and their livestock (Reticulus).

  • We need to install Renewable Power where we can, but sensibly addressing high density sources with cost effective solutions. This means ocean based currents and swells must be used (SwellGen), wind must be collected as locally as possible (VeloMill), but also offshore (Danish Wind Association). Thermal Solar must be used along with geothermal heat systems are viable. All these renewable systems with the possible exception of ocean currents are somewhat intermittent and are difficult to store. Therefore we need a clean, cost effective system to produce relatively low carbon impact energy in as renewable form, as possible (UnaCoal).

  • We need to process and reprocess water locally. We need to separate different classes of "waste water", collecting the nutrients and warmth in it to prevent loss of precious fertilizers and energy. We need to process storm water locally and use it to recharge the aquifers we have been senselessly and destructively depleting. We need to desalinate water on a massive scale to dilute and remove the salts we have been building up on our most productive farm lands. (Reticulus)

  • We need to design production systems allowing the rapid and cost effective production of most assets on a local basis, and the ability to reproduce the production systems and transfer the designs and products efficiently and cost effectively to other locations.

  • Quite a lot more to follow here and details above


The wonderful news is that careful modeling shows that if we take the approach described here, we will expand expand the economies where it is implemented beyond all imagination. The less good corollary is that should we not do this, the old systems will expire with the end of cheap fuel - and the people dependent on the old systems will expire with them or shortly after in the guaranteed to be brutal competition that will develop for what little remains when civilization fails to proceed. Unfortunately there isn't a very long time left to think about this. Oil which was under $20 a barrel in the 1990s is now over $120 per barrel.

Neither stockpiling nor investment, nor even future manipulation is driving more than a fraction of this increase, there are no huge lakes of oil waiting to be used at enormous profit to some. It has been driven by demand. Demand that shows little sign of abating in response to increases in cost. It has gone beyond that already. The demand is there because we need oil, even when it is no longer cheap, to sustain our economies and our civilization. This implies, strongly, the end of cheap oil is upon us, and the price of everything else, including alternative energy technologies, being dependent to a greater or lesser extent on oil, all energy is about to become very, very expensive indeed; even if it remains affordable for a little longer - so long as we don't try to do much of anything else but run as fast as we can to stay in the same place.

Fortunately, as you have seen, there are alternatives. Which path we take is up to us. The choice is ours.

« Last Edit: 2008-06-13 16:25:43 by Hermit » Report to moderator   Logged

With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion. - Steven Weinberg, 1999
Walter Watts
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Re:knock knock Hermit
« Reply #2 on: 2008-05-26 17:44:46 »
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Hermit,

I fully get what you wrote, except the part that calls the document you read "wrong".

http://hsgac.senate.gov/public/_files/052008Masters.pdf

That document consist solely of a plea by a long-short equity hedge fund manager of 12 years (active) that "Congress Should Eliminate The Practice Of Index Speculation".

Index speculation in commodities under current rules has loopholes allowing as much leverage as was in bundled mortgage securities that precipitated the housing bubble.

There is no reason for these loopholes, other than to line speculators pockets with a scoop of higher global energy prices.

Kill the loopholes. And keep looking for more while re-writing the tax code into brochure-like simplicity.


Best to you,

Walter
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Re:knock knock Hermit
« Reply #3 on: 2008-05-26 20:22:46 »
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Reply 3

It is not that simple.

Please remember that the Pensions and long-term Insurance companies need to provide a future income stream off a current investment and have to compensate for inflation. If they can't do that then they will go broke and pensions and insurance payouts will decrease or cease. That would, quite justifiably in my opinion, piss off a fair number of people and lead to calls for further regulation - after the horse has bolted.

To a major extent, financial instruments, including these instruments, exist to: stabilize the market; provide predictable prices; guarantee future product availability; distribute risk; ensure transparency of demand, supply and pricing and provide residual income. The significant move into commodity futures and derivatives has occurred because other more traditional instruments have failed in one or more of the above aims. The failures largely can be attributed to non-transparent government interventions in the market in order to support their buddies the bankers and the Uberwealthy.

To complain that these particular instruments are now being used (correctly), but to complain only at the use by a single (huge) category of user, when the problems at hand are both fundamental and structural is ridiculous. To expect the government to fix the situation they caused by adding layers of legislation and prohibition without massive unintended consequences here and elsewhere is ludicrous.

If you want to solve all the tax issues, simply abolish all taxes and duties, and introduce a flat rate transaction tax at 4% to 6% on everything except bank-to-bank transfers and overnight deposits.

Rather than regulation and reporting, introduce a government card that can be linked to any accounts and which effects the transaction tax for you. Use of that would then guarantee compliance and free you from reporting requirements. Rather than providing a complex tax code with hidden subsidies in all directions, simply provide perfectly transparent payments to those in need.

Then you can also get rid of most of the hugely expensive collection and compliance structures and that saving will allow the introduction of free wifi to carry transactions (with the side effect of provide everyone with free mobile Internet access), and would still leave money over to institute Universal Healthcare besides.

Win, win, win all the way to the ATM.

Kindest Regards

Hermit & Co
« Last Edit: 2008-05-29 11:06:48 by Hermit » Report to moderator   Logged

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Re:knock knock Hermit
« Reply #4 on: 2008-05-27 15:47:56 »
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Now I'm getting scared!

Hermit - you seem to recognize the problems caused by the US government's intervention in the economy (fiat money, inflation as hidden taxation, protectionism of one sector at the expense of another, debt as a growth engine, etc), yet your solutions rely on even greater levels of intervention!  (or so I suppose when I read that "The invisible hand of the market, rather than being an efficient mechanism, requires vast amounts of massive waste to operate.")

The government bureaucrats can't even balance a budget but we should expect them to be able to regulate birth rates, housing standards, workers location, transport, power generation, and even the planet's climate??

Society and climate are systems that are simply beyond our current ability to model and control.  To the extend where we fool ourselves thinking we can control them, we usually end-up making things much worse. 

It could be that in a post-singularity future, there will be intelligences that can model and plan societies, but given the current scarcity of intelligence, I'll trust the market's discovery processes anytime over a central planner's biased opinion.
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Re:knock knock Hermit
« Reply #5 on: 2008-05-28 02:06:50 »
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Duxua,

If what I had said implied everything you seem to think I did, then you would maybe have grounds for concern. But I didn't (or not entirely). If I thought that what I began to address would be a quick and simple process, I would be ready for anti psychotic treatment. But I don't (or not entirely). If I somehow imagined that the current US system did not appear almost perfectly designed to combine the very worst of government control and the consequences of unconstrained, unmitigated private greed I might begin to agree with you. But I don't (or not entirely).

Things are gray, not black and white. My suggestions are not as complex (or immediate) as you seem to think, nor is the current system so ideal that it cannot (easily) be improved. Consider that, in Europe and Asia, the citizens of countries defeated by the US - and massively damaged by the two world wars and a catastrophic integrum - have, with much more control and far more planning, dramatically overtaken us in lifestyle, leisure time, disposable income, measured happiness, health and life expectancy - while having a fraction of the environmental footprint and little or no debt by comparison. Sweden, one of the most planned economies in the world, laboring under the burden of a huge noncontributory immigrant population, who live as comfortably as their hosts - at their host's expense - still has no national debt. Oppose that to the $US 450,000 debt per family in the US today. Against this look at the cost of maintaining the status quo. Before you interject with more argument to precedent, please really examine the status quo.

Consider that the US had the best railway network in the world in 1900 - and had effectively all but destroyed it by 2000, while distributing goods using trucks that use 20 times the fuel per tonne/kilometer than does rail. And human costs vastly greater still. All because the "independent" railways had to pay for the tracks, maintenance, rights of way, expansion and operating costs from current income - while the road network was massively subsidized by every level of government, literally giving the truckers a free ride. Now consider that, in the years since 2001, we have given the airlines more tax-money per year than all of the US railways have received in their entire existence. What, would you say is wrong with this picture? Did we not create regulation, environment and precedent for a national transport system incorporating the worst of all possible factors - and now driven by massive vested interests with huge political clout interested only in preserving your status quo at any cost. But how do you pay the cost when fully 18% of every product sold in America was made up of transport costs - in 2005.

It gets more interesting. A German has 3 to 5 foodmarkets within 600m of home. A pleasant walk. Along with transport options up the wazoo. Bus, train, light train, tram, taxicab,car, bike, moving walkways, even pedibikes in some places.  Americans have a major food store within 30 miles of home. And a gas guzzling car. European cars aver 45 mpg. American cars don't average 35. At what point does it become too expensive to go shopping for food? How about getting to work?

Now think about the Tennessee Valley Authority which pioneered the idea of a National Grid in the 1920s and 1930s. In the rest of the world these have been built at state cost to the massive benefit of every citizen. In the USA small under capitalized "private" but massively regulated to prevent "unfair competition" (and the capital required to build an effective network) utility generators built a patchwork of scarcely adequate local grids scarcely able to cope with normal loads let alone an emergency. Now that the days of central generation are fast becoming economically unfeasible (at least four coal fired gigawatt power plants are massively over budget and schedule) , and long after they were economically unfeasible, the US is looking to spend more building a grid - at state expense - than it would cost to institute all of Reticulus. And a grid won't produce one more Watt than already exists, it will only make it easier to redistribute it longer distances with even greater  inefficiency than the miserable 22.5% that we currently enjoy; while Reticulus (with Integral Farms) would reduce energy requirements some 40% and greenhouse emissions by roughly double that. And will make a massive profit while doing it. Of course, the only way this will deliver its full benefit is if the communities themselves end-up owning the infrastructure. As they already do throughout most of the world including Europe. Where nobody suffers power outages, sometimes for days or even weeks, due to weather or unexpected loads or fraud in energy companies conspiring to cut a profit at the expense of the consumers.

Consider that coal in the USA is radioactive and that burning it releases the radioactivity. Look at a map reflecting actuarial life expectancy for people living in the plume of coal fired power stations - or at the incidence of lung cancer and you will not need regression to determine correlation. We accept these deaths. Grass absorbs airborne radiation. Nuclear power plants are clean places, usually surrounded by grassy fields. Radioactivity and thus deaths from lung cancer, a major killer are lower in their surroundings. Why is it possible to permit construction of a coal power plants while nuclear plants face a sea of obstacles? Was there a planning decision made here? Is it a rational choice? How is the status quo acceptable? Should those being killed, and their families, be allowed to sue coal based electricity producers for the loss of life and quality of life? If not, is this a planning decision? If yes, who is going to run the plants once they are bankrupted? Is this kind of chaos the status quo you are advocating?

So much for power generation, and some transport issues. As for the rest of your worries, lets look at them: "birth rates, housing standards, workers location" and  and even "climate control."

Over population is easy to solve. One woman one child. Enforced as it is in China which is well on its way to a declining population. You can adjust it by creating a market in child permissions. If somebody else gives up theirs to you for whatever reason or inducement they may be exchanged but not added. It is a trivial actuarial calculation to track the decrease and relax the policy to 2.1 or so when they have sufficiently declined. Forced termination - or the transfer of a birth permission to somebody already pregnant by somebody who objects to abortion in exchange for their birth permission will be sufficient. No need to leave infants outside to select which would live and which would die (as in Ancient Greece), or to engage in child sacrifice (particularly of the firstborn and virgins as in Israel and possibly Carthage), nor even prenatal execution (as in modern China).

Setting standards for buildings does not preclude people from choosing not to follow them. However building vast numbers of identical long lasting highly insulated shells (which we are quite competent to do) will drive both economies and choice. What you do inside them is your choice. Those choosing not to move will, sooner or later, find themselves trapped by failing infrastructure and demanding assistance, just as those building on cheap land in flood plains and in reclaimed coastal swamps found temselves trapped not too long ago in the South of this country. Most of those in trouble after Rita and Katrina were able to make claims on the National Flood Insurance Program. But had at that point reached the limits of the three strikes/three rs policy (roll-it, raise it or raze it). And yet they are rebuilding. In the same places. Are you going to argue that, on the next time they are flooded, and they will be flooded again, they should be denied all aid? Or are you going to say that the disaster must be mitigated? And if you do "help" them, as they have already been "helped" after private underwriters declined the risk, are you not setting housing standards and determining worker location - in an admittedly haphazard and irresponsible fashion. How can a rational policy be worse? The rapid increase in energy costs will condemn the McMansion to certain death anyway. It would be sensible to demolish existing cities and their suburbs before the means to do this is lacking, so as to ensure their eventual return to pastoral use rather than establishing strongholds for post-apocalyptic nut cases.

Now I could point you to a nationwide (or nationalized) insurance and disaster response program that could again make a fortune - or save one if implemented as policy, and if performed before the first class V hurricane strikes any major metropolitan area will pay for the implementation of the entire system. Clearly if this is possible, and a large number of Insurance experts and emergency responders working together after Katrina are certain this is the case, then implementing the programs I am writing about here is clearly more urgent and much more profitable if they will in fact maintain the viability of current civilization and its successors (if there are any) at similar or rather much, much better levels than present. And I am not talking about merely redistributing the 80% of US wealth from the 0.5% holding it currently to everyone else and thereby quintupling the national median income (without affecting the average at all), but about provable real and massive profits and ongoing growth through avoided costs, fully vested opportunities and reinvested near term growth.

Would this make sense? It does to every technical person, engineers, lawyers, insurance, military, social, agricultural, environmental and financial experts who have vested the effort in examining them so far. Why on earth wouldn't it make sense? How on earth do arguments that don't reference the fact that most of the US west of the Mississippi is going to be out of water before 2016 - irrespective of climate change and without taking the cost of energy into account - both of which are likely to exacerbate this. What would the cost be of shutting down farming in the Western States - or abandoning the cities? Wouldn't a policy designed to avoid this be of some interest to a prudent financial planner? Wouldn't the fact that federal agencies are assuming this as fact be of some interest to somebody? How many people do you know? If the USDA is correct (and as I have noted previously, I think they are optimists) then 3 out of 5 need to die in the next 50 years in order that the other 2 might live. Don't you think that this should at least be discussed. Perhaps evaluated by the media in between break-downs by Brittany Spears and discussions of the Second Cumming or whatever. Maybe investigated to see if if serious professionals maybe have some way of addressing what seems to be an oncoming wall. Especially when any financial person can tell you that the medium term outlook is disastrous because no matter what else happens, we can't afford the energy we need to survive at existing prices. And sure as shit there is no way that it is going to get significantly cheaper. Production has decreased since then while demand is steady at 6% per year, compounded. And at that rate it takes a mere 13 years for demand to double. All else being equal that means half the energy flowing into the system, which means that the system will cease operation long before then. Energy transfers between buildings and the environment continue even when the energy available to mitigate the thermal swings is insufficient to prevent freezing or heatstroke. And by then the building has become unoccupied and the sunk investment in it is lost anyway. How do you propose to maintain the status quo under those circumstances? How do you think this government proposes to maintain public order when people begin to realize that they and their offspring are on the wrong side of those 2 in 5 in the balance sheets?

And that was before addressing climate change. Climate change is already happening at historically unprecedented levels. Even Bush has had to acknowledge that "Global Warming is real" - although not all of his followers are "on message" yet, and he certainly didn't apologize to Al Gore, to Americans who followed his beliefs in the crazy impression that Our Dear Leader knew or cared about facts, or to the planet, which is, unfortunately, the only one we've got. If the Space Solar project happens, then in some 20 years we will have the ability to rapidly refreeze the Arctic and Antarctic. We may well, by that time, assuming the growing consensus is even slightly correct that we have underestimated how fast ice packs are collapsing; desperately need that capability. If we don't have it, and we lose tens or hundreds of thousands of hectares of the most densely populated areas of the planet as oceans rise (and on average 1m of rise results in the loss of 80km of coastline while 80% of humanity lives within 120km of the sea - and the loss of Greenland alone will result in a far greater rise than that), will people then say, well, nobody could ever have foreseen this unfortunate situation? As millions die, given that by then fuel will likely be too valuable and scarce to make intervention a reality, will we say well, climate management is too complicate for us? How about when- not if - the melted tundra should release its store of methane - worth centuries of anthropological CO2 release, or should the the littoral oceans warm sufficiently to trigger the release the methyl hydrates captured there, flipping massive, rapid and self-reinforcing runaway climate change, both of which inevitable if current trends continue? At that time, saying if only or claiming that it was unpredictable will be as futile as longing for the relative "coolth" of the Jurassic.

The real beauty of a solar shelter program is, of course, that it is both reversible and cheap. The opposite of the situation we currently have. Which might allow us the ability to manage the consequences of the change we have already made all but inevitable. Are  you sure that not having these options is a better idea?

Having thought on all this for a moment or two, consider that rapid transformation is possible and recent examples are visible. The US economy increased some ten times and switched from an agrarian economy to an industrial one in the span of WW I. The Soviet Union transitioned from the equivalent of Europe in the 1300s to the space shuttle in under 70 years - and their centrally planned (and very inefficient) economy still managed to outpace the USA from the 1940s into the 1970s (according to bot Soviet and CIA sourced data) when defense expenditure against perceived US threats removed needed reinvestment from their development and collapsed their economy at the same time as a stupid and unwinnable war drained their exchequer. Now consider what the US is doing to itself with unsustainable defense expenditures and stupid and unwinnable wars. But we are actively exporting all production at the same time while the USSR was content to merely observe theirs rusting to a halt.

If you remain skeptical, and that is not a bad place to be, although I think your skepticism is directed in the wrong direction, keep working at The Long Emergency, and I will try to keep working on showing how the arguments there can be answered.

Kind Regards

Hermit







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Re:knock knock Hermit
« Reply #6 on: 2008-05-28 12:48:51 »
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"Things are gray, not black and white" 

I totally agree that it is important to apply nuances when interpreting a situation or a phenomenon.  The solution to a problem is rarely "all this" or "just that". 

That said, you have to admit that there are a lot of superlatives that qualify the facts and opinions that you present, which doesn't flow well with your statement that "things are gray".  If I understand your text well, you suggest -amongst other things- that we should actively demolish cities, use China as a model to institute birth control,  nationalize property insurance, and attempt to control global weather events by freezing oceans.  This looks more black (or white) than gray to me.

In addition:
  - some of the facts are simply wrong (amongst others: Sweden does have a national debt *and* it's planned economy has been a mess since the 1970's);
  - some of the opinions I would respectfully disagree with (I think the diversity of lifestyle options in the USA makes it one of the best places to live in the world);
  - and some of the examples are less than convincing (references to Katrina to justify the government's nationalization of insurance)

Now, I'm not a proponent of the status-quo either.  I think that many things need to change. You provide some great recommendations:  distribution of power production, improving our management of water systems, modernizing our freight infrastructure, etc. 

I'll also agree with one of your concluding remarks: rapid transformation is possible.  I'll go one step further: rapid transformation is happening. 

More and more people are now assigning value to living in a healthy environment; energy generation has never benefited from as much industry investment; our global manufacturing processes are more efficient and resilient than ever; information technology and cheap communications is transforming every aspect of human life on earth. 

I haven't started reading The Long Emergency (I did receive it this week).  We'll see if it's message is powerful enough to tarnish my generally optimistic view of the future.  I'm just not ready yet to burn my copy of "The Singularity is Near"
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Re:knock knock Hermit
« Reply #7 on: 2008-05-28 14:23:06 »
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Reply 7

A quick, linear and conversational response with excerpts from duxua's reply in bold.

Being involved with a team that has invested hundred of man-hours in these problems, and comparing the catastrophic brutal end of civilization which is what I see as the likely future without intervention to mitigate the end of cheap energy with what I know is possible, my use of superlatives is advised. I will attempt to fully justify them over time.

Specific comments on your interpretations:

actively demolish cities - yes. We need to reduce populations and distribute them closer to their food sources on much better (more energy efficient, less wasteful) distribution systems. If we don't demolish them now while we still have the fossil fuel to do it, and we don't succeed with space energy, those cities that survive the coming wars will still be blots on the future landscape millennia from now - and the materials invested in them will remain largely inaccessible to our successors. If we demolish them now they can be recycled and the land restored to reasonable condition.

use China as a model to institute birth control - yes and no. Yes in that a rigorous "one child per mother basis" is needed to bring populations down rapidly. No in that I noted that a trade mechanism could be implemented and that the program could be implemented with a little less brutality and still be effective.

nationalize property insurance - No. I was trying to convey the idea that there are viable alternatives to the existing model which currently combines massive inefficiency and incompetence with grotesque profit taking on the private side, and a de facto reliance on state aid and nationalized emergency responses in a disaster - and which could be even more profitable or cost effective - or could be very much cheaper if planned nationalization occurred - but either would be better than the current mess. I was trying to use this model to illustrate that while this is all possible (and not just desirable but necessary or future expected emergencies are likely to have terrible consequences) it points to the fact that what I am proposing here crosses the borders of "insurance" as the cost of not responding is likely to exceed any amount invested in attempting to avoid or mitigate the future as currently projected by multiple models.

attempt to control global weather events by freezing oceans - No. I meant to point out that if we are able to orbit large mirrors (90km radius) for solar energy collection that the same technique used to reduce solar power being delivered to Earth, or to adjust the balance of where it is provided - which will allow us to correct - delicately and reversibly - changes which we have already set in motion in the biosphere, the consequences of which are difficult to predict but according to a number of irrefutable (but of uncertain likelihood) models, potentially threatens the planet as we know it. Currently we have NO corrective or mitigation policies available. And the method proposed here is the only one available which is quick, cheap, tunable and reversible.

When "expensive" solutions are proposed, then it is only when the alternatives are more expensive that they make sense. If the mindset is that the alternatives have no or at least fewer costs, the idea that the recommendations are crazy will predominate. So it is the blunt articulation of the unusual, and thus likely-to- be- regarded-as-crazy, recommendations which I suggest require nuancing with a "because" or two.

"Some of the facts are wrong:"

Sweden: You may find [  Church of Virus BBS, General, Science & Technology, Socialized Medicine?, Reply #2 on: 2007-08-28, Hermit ] and its sources helpful.

I think the diversity of lifestyle options in the USA makes it one of the best places to live in the world I live there currently, having lived in many places, and find its insistence on social conformity distressing. But of course opinions can vary.

references to Katrina to justify the government's nationalization of insurance - I suspect from your comment that  you haven't realized that the National Flood Insurance Program is a nationalized insurance system - and despite its horrible limitations and the devastating effect on tens of thousands of having different insurers with competing interests for flood and wind damage, was and is the only form of flood insurance available to huge numbers of people in the Southern states - many of whom now are uncovered due to its three strike rules. Where we go to next is not only in the air, it is not even being discussed.

You provide some great recommendations - Thank-you.

I'll also agree with one of your concluding remarks: rapid transformation is possible.  I'll go one step further: rapid transformation is happening. - I suggest not nearly fast enough, not nearly transformative enough, and much of it in the wrong direction. The lights reflecting off the insides of our skulls are, in my opinion, not a brighter, whiter, cleaner future, nor even the end of the tunnel, but rather multiple oncoming express trains. I'm more than half expecting you to agree with me after your study (For which my many thanks. A common base of substance about which to communicate makes all communications much easier.)

More and more people are now assigning value to living in a healthy environment; energy generation has never benefited from as much industry investment; our global manufacturing processes are more efficient and resilient than ever; information technology and cheap communications is transforming every aspect of human life on earth. - My disagreement here is not with the overall thrust (at least as far as it speaks for Americans - whom we should remember are a tiny fraction of the global population using vastly more energy per capita than anyone else), but rather with the implication that this is sufficient to preserve la Dolce Vita in the face of a collapsing US - and potentially global - economy, and the multiple threats addressed (with an implication of them being unavoidable) in "The Long Emergency."

Reiterating, my take is that Kunstler is correct in effect if not all the details - but only if we don't engage in massive preemptive action - which is not only possible but which would be good for the economy, the environment, humanity and even the people of the USA - even were Kunstler utterly wrong about the near future. What Kunstler doesn't sufficiently emphasize (in my opinion) is how fast collapse can happen and how close to the door the wolf's nose is. We will hopefully discuss this further when we are on the same page.

Kind Regards

Hermit


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Re:knock knock Hermit
« Reply #8 on: 2008-05-28 16:17:10 »
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Reply 8

One more comment I have to add: When I said, "The invisible hand of the market, rather than being an efficient mechanism, requires vast amounts of massive waste to operate," what I meant was that the very concept of "the market", is a modern one which only operates when you accept that "value is a function of scarcity" (rather than plenitude being a virtue) and when you accept selfishness and its consequences as a virtue, rather than identifying it as a vice. Both of these are modern aberrations and arguably incorrect.

Certainly it wasn't until we stopped having to cooperate in order to survive that we could afford selfishness. That is why selfishness resulted in expulsion from many primitive communities - and would still result in extreme difficulties in most tribal and family oriented societies. We have to remember that these were the norm until the modern age and its vast surpluses of energy (which we have wasted to the extent that we are about to see them vanish).

There is another aspect of this which might concern you, which is that when we develop a spirothete how it treats us may well be dependent on how well we manage to answer the questions of cooperation, coevolution and coexistence. Right now, I suggest that we are not doing very well. You might find "Spirothetes and Humans, Hermit, 2003" illuminating in this regard.

Kind Regards

Hermit



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Re:knock knock Hermit
« Reply #9 on: 2008-05-28 18:15:53 »
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Scarcity vs plenitude isn't something we get to decide.  I take it from reading your articles that a lot of the gloomy future that you forecast is a result of the scarcity of oil.  I appreciate that you view plenitude as being a great thing, but what do you do when you don't have plenty of a good?  How do you resolve the problem of allocating the resource?

I also think that you misunderstand what a market is.  Markets are just as cooperative as they are competitive.  I would recommend that you clearly define your terminology before you shoot down one of the central pillars of human civilization.

You make a reference to tribal societies as if this was something that we should aim towards, where there is no room for selfishness, where great family values prevail, and people coexist in a harmonious -albeit primitive- community.  That's a nice fairy tale that doesn't have any place in human history.

The reality is that tribes (and more complex civilizations alike) also need to find ways to to deal with scarcity.  The "community" approach might work well within an extended family where a father (or mother) figure controls the allocation of resources, but even then, there is expectation amongst the family members that they will be treated fairly.  Well ingrained in our human DNA is the concept of value for value. 

Value for value is an exchange, it is a market transaction.
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Re:knock knock Hermit
« Reply #10 on: 2008-05-29 02:30:29 »
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Quote from: duxua on 2008-05-28 18:15:53   

<snip>
Value for value is an exchange, it is a market transaction.</snip>

[Blunderov] This seductive equivocation seems to me to be at the heart of the matter.  Monetary value is not the only value there is. There are other kinds of value like 'utility value' and 'sentimental value'. The distinction is germane. For instance the concept of 'privatization', so beloved of free marketeers everywhere, relies upon this semantic confidence trick in order to perpetrate an outrageous theft. The tax paying public is deprived of a utility value which is much greater than the monetary value with which they are supposedly 'compensated'.

En passant, there seems to be a false dichotomy hanging in the air; the choice is not necessarily between either 'free' or 'centrally planned' economies - it is quite possible, even usual, to have a mixture of the two. It is noticeable, for instance, that even the most ardent libertarians are socialists when it comes to protecting their own hides. For quite obvious reasons not one of them seems prepared to commit the care of their precious carcases to the tender mercies of a 'free enterprise' army or 'laissez faire 'police force. Horses for courses I think.
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Re:knock knock Hermit
« Reply #11 on: 2008-05-29 09:18:49 »
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Hi Blunderov.

You're making a distinction I didn't make.  I said "value for value", which includes all the value units you care to imagine.  In economic literature, they sometimes refer to "psychic value" to stress the fact that it is value as perceived by the person making the exchange.

As for your seemingly general disapproval of privatization, I would only say that if you think the "tax paying public" isn't getting their value's worth, then I would lay the blame squarely on the custodians who didn't properly represent the interests of those who entrusted them with the power and obligation to do so.

I do agree with the fact that we operate under a mixed (free & planned) economic system.

...but I need to ask:  how many of "the most ardent libertarians", whom you also call socialists (knowing I'm sure that this ticks libertarians off), do you actually know?  I'm asking for the "quite obvious reason" that *all of them* (remember, we're talking about the "most ardent" here) would rather have the service of a private army and police force. 

I won't expand on this since it is off-topic and I'm not convinced that it would be very productive.  I can point out a significant number of books and essays to anyone interested in learning further about private defense.
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Re:knock knock Hermit
« Reply #12 on: 2008-05-29 10:31:33 »
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Reply 12

[Hermit 12] I think the dialog just reached the point where we need to thread it. May I introduce you to some useful conventions. I have gone back and edited each of my previous posts to include the canonical reply number. If you scroll down to see the previous posts while responding, you will find it helps, though we wouldn't normally do that (I tend to open a second copy of the thread in a tab to cross reference when responding). When we refer to the words of others, prefacing them with their name and the number of the reply keeps the words threaded. To refer to individual components, simply suffix decimals (see, e.g. [Hermit 12.5] Infra). For more on referencing and formatting. please refer to [ Church of Virus BBS, General, FAQ, FAQ: Hermitish mail mark-up and citation V3.0, Reply #4, 2007-12-12, Hermit ]

[duxua 9] Scarcity vs plenitude isn't something we get to decide.

[Hermit 12] I think you misunderstand. While I could discuss this at length at both the macro- and micro-economic sense, let me try to save time and not sidetrack, by conveying my meaning through a simple example. If one or two houses are well insulated they are valuable and ownership of them conveys an advantage to the owner. When all houses are equally well insulated the advantage vanishes and all else being equal, in a perfect market all the houses will approach towards sharing the average value. Scarcity is valued. Non scarcity is not. But if all houses were well insulated the amount of fuel used and CO2 released would be reduced and everyone would be better off. Thus the "true value" of the economist is better served by having all houses well insulated. Unfortunately, that is not how we currently allocate value even though that is where the idea originated as a side effect of the construction of Royal granaries. When we first built well designed granaries of stone, and commanded all grain be deposited in them, "money" (which didn't meet the definition of "money" at all*), was required to act as a token of value substituting for the no longer barterable grain. This had many benefits, particularly the resolution of the problem of the need for the double coincidence of wants inherent to barter, but more to the point it increased the wealth of everyone as grain in a stone granary built by the efforts of all was not eaten by insects and rodents, did not rot or mould due to moisture and could be shared equally ensuring that nobody starved irrespective of how local crops had performed.

[Hermit 12] Contra modern lassaiz-faire thinking, the value of grain increased when it was nationalized. Until local grain supplies exceeded needs, which only happened when we had the fertilizers, machinery, transport systems and knowledge required to do it as a result of the "energy revolution" (which we now begin with hindsight to realize wasn't a revolution at all but a massive squandering of a precious resource), grain was a much greater good when distributed equally. Indeed, until the late 1800s,  state granaries were a vital component of any economy, and indeed, even today they remain a bulwark (currently failing) against popular revolt in Egypt. For most of history, the exchange rate for grain was set, not through a market (In the modern sense of agents, information and value) but by fiat. And most of the time, this worked remarkably well. Not least because economies and populations tended to be reasonable stable, in part because they were, through necessity, sustainable. "The Wealth of Nations" could not have been written during these times. It needed the Industrial revolution and the use of fertilizer delivered by barge on a network of canals built on borrowed money by Royal Charter, principally to move coal, before the necessary selfishness (one of the three principle aspects, self-interest, division of labor and freedom of trade) of a so called "free market" economy) and the surplus wealth to fund enterprises like pin manufacturing became sufficiently visible for Smith to reach his conclusions. But to fool yourself that the world did not have functioning economies (even though they were not called that) before Smiths, and could not have them after it would be very foolish, and to imagine that a "free-market" is necessarily superior to other systems would be to be willfully obtuse.

[duxua 9] I take it from reading your articles that a lot of the gloomy future that you forecast is a result of the scarcity of oil.

[Hermit 12] No. You take it incorrectly. The "gloomy future" is not inevitable unless we no longer have access to "cheap" energy. If we climb out of the gravity well, there is sufficient cheap energy (and lebensraum) to support nearly infinite growth before the end of the Universe some 200 billion years from now. The significant challenge we face is whether we can climb out of the gravity well before the upheavals which will accompany end of sufficiently "cheap energy" makes it impossible. Given timescales, prices, interdependencies, uncertainties and the nature of exponents this is no longer a sure thing (it would have been much better had we begun eight years ago and had we not trashed the US dollar (which I should remind you was the globe's reserve currency) in the meantime). As it is it will be a near thing even if we throw ourselves at the problem and do as much as we can to convert ourselves to a sustainable basis in the meantime. If we miss this opportunity, the effort will also serve the purpose of alleviating the pain of the transition to our decline.

[Hermit 12] Oil is not scarce. Unfortunately, oil is fundamental to most things we do including the harvesting of energy from other sources, and oil is no longer a low cost good. Unfortunate because the cost of oil is embedded in most things to a far greater extent than people, including or perhaps especially economists, tend to realize. For example, in most of the world, the cost of water is massively dependent on the cost of oil; and when societies have no usable water due to resource depletion or cost, they begin dying in droves in a very short order. Whereupon civilization and the investment in long term projects breaks down.

[Hermit 12] Peak oil is not about scarcity, it is about cost. As the dollar collapses and the size of the available pockets of oil reserves decrease, and the difficulty in extracting the oil from them increases, so the cost soars. Hubbert's genius was to recognize that the effective cost of oil was predicated on the effort required to obtain the oil demanded by the market in a usable form and to quantify the fundamentals describing that cost-equation.

[Hermit 12] My addendum is that as the cost of oil soars, so the cost of extracting that oil or developing alternatives soars faster.

[duxua 9] I appreciate that you view plenitude as being a great thing, but what do you do when you don't have plenty of a good?  How do you resolve the problem of allocating the resource?

[Hermit 12] Until we had, at least locally, "grain to waste" (or surpluses), the price of most commodities was set by fiat, by law. Societies recognized, correctly, that unless distribution was perceived as fair, that instability would result. "Free markets" have no special exception to this rule. When "free markets" are no longer a fair means of distributing things, they too will be swept away.

[duxua 9] I also think that you misunderstand what a market is.  Markets are just as cooperative as they are competitive.  I would recommend that you clearly define your terminology before you shoot down one of the central pillars of human civilization.

[Hermit 12] I am fully aware of what a market is not as well as what it is. And while you may imagine that it is "one of the central pillars of human civilization," civilization vastly predates the idea of a market which is merely descriptive of an imperfect method and if modern society continues, better information and tools will likely obsolete it (see e.g. openbarter.org).

[duxua 9] You make a reference to tribal societies as if this was something that we should aim towards,

[Hermit 12] Do you think so?

[duxua 9] where there is no room for selfishness, where great family values prevail, [ Hermit : My emphasis ]

[Hermit 12] I said this?

[duxua 9] and people coexist in a harmonious -albeit primitive- community.  That's a nice fairy tale that doesn't have any place in human history.

[Hermit 12.5] Can you support this assertion? Before you reply, please ensure that you explain the leisure ratios of hunter gatherers vs agriculturalists, and also address the prosperity of the  Bons Hommes et Bonnes Femmes (later termed Cathars and Albigensians), the Lollards and Waldensians.

[duxua 9] The reality is that tribes (and more complex civilizations alike) also need to find ways to to deal with scarcity.  The "community" approach might work well within an extended family where a father (or mother) figure controls the allocation of resources

[Hermit 12] After the research required to respond to [Hermit 12.5], it seems hardly necessary to point you to the (extremely successful) Amish and Mennonite communities of the East coast and Mid West, but I would not want to live in a world run on such a basis no matter that we know that that is exactly what is needed for primitive agrarian societies to be wildly successful (NB I suggest you reserve judgement until after reading "The Long Emergency" unless you are already familiar with their community practices.)

[duxua 9] , but even then, there is expectation amongst the family members that they will be treated fairly.

[Hermit 12] Where do you think that I suggested that this was not the case?

[duxua 9] Well ingrained in our human DNA is the concept of value for value.

[Hermit 12] Can you please sustain this?

[duxua 9] Value for value is an exchange, it is a market transaction.

[Hermit 12] Can you please sustain this? Reference to [Blunderov 10] Supra may be helpful.


*Money embodies of functions four,
a medium, a measure, a standard, a store.
« Last Edit: 2008-05-30 09:15:40 by Hermit » Report to moderator   Logged

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Re:knock knock Hermit
« Reply #13 on: 2008-05-29 14:01:49 »
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[Hermit]Scarcity is valued. Non scarcity is not. But if all houses were well insulated the amount of fuel used and CO2 released would be released and everyone would be better off. Thus the "true value" of the economist is better served by having all houses well insulated.

You still fail to address the problem of scarcity.  You talk about how you would find it more valuable to have all houses well insulated, and plenty of grain houses to feed the village, which is nice and all... until there isn't enough grain for everyone. 

Value is in the eye of the beholder.  You don't get to "serve the economist's true value" (whatever you meant by that) or decide how much value different people assign to different things.  Identical sacs of grain or identically well insulated houses are not valued the same by any two individuals.

[Hermit]Contra modern lassaiz-faire thinking(...)

Everything you write beyond this statement is *exactly* as free-market theory would predict...

[Hermit](...) the value of grain increased when it was nationalized.  Until local grain supplies exceeded needs, which only happened when we had the fertilizers, machinery, transport systems and knowledge required to do it as a result of the "energy revolution" (which we now begin with hindsight to realize wasn't a revolution at all but a massive squandering of a precious resource), grain was a much greater good when distributed equally.

Value is an ordinal concept: you value something more or less than something else.  So when you say that the "value of grain increased", you have to provide a frame of reference.  Price is cardinal so I'll assume you meant that the "price of grain increased when it was nationalized".  What you are saying matches basic supply/demand rules: when supplies exceed the needs, the prices are low; when supplies are horded, prices increase.  Econ 101.

In the interest of keeping a productive dialogue, I'm skipping the parts where you provide examples of supply/demand in action. 

[Hermit]But to fool yourself that the world did not have a functioning economies (even though they were not called that) before Adams, and could not have one after it would be very foolish, and to imagine that a "free-market" is necessarily superior to other systems would be to be willfully obtuse.

I'd like to point out that you are the one who makes reference to Adam Smith and "The Wealth of Nations" as if they were part of my argument.  You are building a strawman here.  Trade and exchange are as old as the division of labor. 

I would also appreciate if you would drop the name calling.  Ad hominem arguments do not strengthen your position or my opinion of your arguments; to the contrary.

[Hermit]The "gloomy future" is not inevitable unless we no longer have access to "cheap" energy.

So destroying cities, and all the other police-state policies you suggest (birth control &al.) don't seem gloomy to you?  Sure, you'll say they are *less* bad than the total collapse of civilization, but I'd still categorize your recommended course of actions as "gloomy".

[Hermit]Oil is not scarce. Unfortunately, oil is fundamental to most things we do including the harvesting of energy from other sources, and oil is no longer a low cost good.

Alright, if you can't recognize the fact that these two sentences are inconsistent with each other, I don't know that it's worth pursuing this conversation. 

[Hermit]Peak oil is not about scarcity, it is about cost.

Wikipedia on Scarcity: In economics, scarcity is the problem of infinite human needs and wants, in a world of finite resources.

Wikipedia on Hubbert peak theory: The Hubbert peak theory is based on the observation that the amount of oil under the ground in any region is finite

[duxua 9] I also think that you misunderstand what a market is.

[Hermit]I am fully aware of what a market is not as well as what it is. And while you may imagine that it is "one of the central pillars of human civilization," civilization vastly predates the idea of a market which is merely descriptive of an imperfect method and if modern society continues, better information and tools will likely obsolete it (see e.g. openbarter.org).

OpenBarter on OpenBarter: A market place without any central value reference. (and) A spot market for bartering measurable commodities like primary goods.

Are you really saying that better information and tools like OpenBarter, a self-described market, will render markets obsolete??!!  OpenBarter *is* a market!  Can you appreciate my confusion? 

You've recommended some readings to me before in order for us to have a common ground on which to discuss these topics.  Allow me to do the same at this point because we clearly do not share common definitions of what scarcity, value, prices, and markets are.

The book is called "Human Action" by Ludwig von Mises (http://mises.org/resources/3250).  It is freely available online and I highly recommend that you read through the first 100 pages where the author discusses scarcity, value, action, and exchange.  Maybe we'll be able to have more meaningful exchanges after that.

moving on...

[duxua 9] You make a reference to tribal societies as if this was something that we should aim towards,

[Hermit 11] Do you think so?

That's indeed the impression I get from reading your posts. 

[duxua 9] where there is no room for selfishness, where great family values prevail

[Hermit 11] I said this?

[Hermit 8]That is why selfishness resulted in expulsion from many primitive communities - and would still result in extreme difficulties in most tribal and family oriented societies.

[duxua 9] and people coexist in a harmonious -albeit primitive- community.  That's a nice fairy tale that doesn't have any place in human history.

[Hermit 11.5] Can you support this assertion? Before you reply, please ensure that you explain the leisure ratios of hunter gatherers vs agriculturalists, and also address the prosperity of the  Bons Hommes et Bonnes Femmes (later termed Cathars and Albigensians), the Lollards and Waldensians.

Nice, will you need anything else with that?  I'll get right on it.  In the meantime, if you need support for my assertion, you might enjoy Steven Pinker's "The Blank Slate: The Modern Denial of Human Nature".  The book has a nice chapter on the Noble Savage myth.

[duxua 9] , but even then, there is expectation amongst the family members that they will be treated fairly.

[Hermit 11] Where do you think that I suggested that this was not the case?

Every time to talk about pooling everyone's labor in big "granaries of stone" so it "could be shared equally", I guarantee you there'll be those who will think they aren't being treated fairly. 

[duxua 9] Well ingrained in our human DNA is the concept of value for value.

[Hermit 11] Can you please sustain this?

Sure, you and I can do a little scientific experiment:  Step 1) You send me a Paypal payment of $100.  Step 2)  I thank you.  Step 3) You tell me how you feel about the experiment.  We can repeat this as often as you'd like and I'm pretty sure we'll get consistent results.

[duxua 9] Value for value is an exchange, it is a market transaction.

[Hermit 11] Can you please sustain this? Reference to [Blunderov 10] Supra may be helpful.

What exactly is there to sustain is this definition?  It is so elemental that I'm surprised that Blunderov and yourself require more explanation around it.  I tried to distill my definition of a market transaction to its simplest, most basic roots: an exchange of value for value between two individuals. 
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Re:knock knock Hermit
« Reply #14 on: 2008-05-30 10:52:23 »
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Reply 14

[Hermit 14] Have you taken any recognized economics courses? I seem to be having some trouble communicating with you and am wondering if I am pitching at the wrong level?

[Hermit 14] Let me reorder this as I think I discovered the root of our problem.

[Hermit 14] Beginning reordered section.

[duxua 13] You've recommended some readings to me before in order for us to have a common ground on which to discuss these topics.  Allow me to do the same at this point because we clearly do not share common definitions of what scarcity, value, prices, and markets are.

[Hermit 14] Surely. I love learning.

[duxua 13] The book is called "Human Action" by Ludwig von Mises (http://mises.org/resources/3250).  It is freely available online and I highly recommend that you read through the first 100 pages where the author discusses scarcity, value, action, and exchange.  Maybe we'll be able to have more meaningful exchanges after that.

[Hermit 14] I'm sorry. While I read this years ago, this may be the root of your communication problem. According to the vast majority of Economists, von Mises was not an Economist, he was a right-wing crank. Let me quote an article you may find helpful "For most of the Austrian School's history, mainstream academia has simply ignored it. Even today, none of its works are on the required reading list at Harvard. Most introductory economics texts don't even mention the school, and its economists are absent from many encyclopedias or indexes of the century's great economists. Several of its founding figures struggled to make ends meet, rejected by universities which did not view their work as sound. Even today, the movement's faculty boasts no more than 75 scholars worldwide. By comparison, there are over 20,000 economists in the American Economics Association alone. Their failure to rise in academia has not been for want of publicity -- on the contrary, their leaders have been publishing books for over 120 years, all the while bumping elbows with famous economists like John Maynard Keynes. And after Hayek shared a Nobel Prize in 1974 for a contribution to monetary theory, the school received a huge burst of academic attention. But it was just as quickly rejected. Their dismal showing in academia stems from the fact that they have simply failed to make their case." http://www.huppi.com/kangaroo/L-ausintro.htm So you will understand if I vastly prefer to continue to use my more conventional economics definitions.

[Hermit 14] This also may be a reason for regarding articles relating to Economics at Wikipedia with more than the usual degree of skepticism, if only because Wikipedia has apparently attracted many Libertarian editors.

[Hermit 14] So may I suggest that you study some mainstream economics before criticising the economic comprehension of others, but please complete "The Long Emergency" first.

[Hermit 14] And back to the main program of threaded notation.



[Hermit 12] I think the dialog just reached the point where we need to thread it. May I introduce you to some useful conventions. I have gone back and edited each of my previous posts to include the canonical reply number. If you scroll down to see the previous posts while responding, you will find it helps, though we wouldn't normally do that (I tend to open a second copy of the thread in a tab to cross reference when responding). When we refer to the words of others, prefacing them with their name and the number of the reply keeps the words threaded. To refer to individual components, simply suffix decimals (see, e.g. [Hermit 12.5] Infra). For more on referencing and formatting. please refer to  [ Church of Virus BBS, General, FAQ, FAQ: Hermitish mail mark-up and citation V3.0, Reply #4, 2007-12-12, Hermit ]

[Hermit 14] Please don't <snip> unless you have reason and we agree completely over what is snipped. And please, please, do not renumber things beyond adding decimals if you need to refer to previous items. It is a lot of work to establish threaded text on an already established document, and a nightmare to reestablish it once it is snipped. This reply took over 12 hours, at least partly because of your previous snipping, and the discussion simply isn't that valuable to anyone else rather than you.

[duxua 9] Scarcity vs plenitude isn't something we get to decide.

[Hermit 12] I think you misunderstand. While I could discuss this at length at both the macro- and micro-economic sense, let me try to save time and not sidetrack, by conveying my meaning through a simple example. If one or two houses are well insulated they are valuable and ownership of them conveys an advantage to the owner. When all houses are equally well insulated the advantage vanishes and all else being equal, in a perfect market all the houses will approach towards sharing the average value. Scarcity is valued. Non scarcity is not. But if all houses were well insulated the amount of fuel used and CO2 released would be reduced and everyone would be better off. Thus the "true value" of the economist is better served by having all houses well insulated. Unfortunately, that is not how we currently allocate value even though that is where the idea originated as a side effect of the construction of Royal granaries. When we first built well designed granaries of stone, and commanded all grain be deposited in them, "money" (which didn't meet the definition of "money" at all*), was required to act as a token of value substituting for the no longer barterable grain. This had many benefits, particularly the resolution of the problem of the need for the double coincidence of wants inherent to barter, but more to the point it increased the wealth of everyone as grain in a stone granary built by the efforts of all was not eaten by insects and rodents, did not rot or mold due to moisture and could be shared equally ensuring that nobody starved irrespective of how local crops had performed.

[duxua 13] You still fail to address the problem of scarcity.  You talk about how you would find it more valuable to have all houses well insulated, and plenty of grain houses to feed the village, which is nice and all... until there isn't enough grain for everyone.

[Hermit 14.2] I don't think your example illuminates anything, largely because I think that there is an assumption that economics is germane to your assertion that "You still fail to address the problem of scarcity" (which I disagree with, as I am attempting to address the problems as well as can be, before diverting into economics), as well as a huge number of buried assumptions in your example and an implicit logical failure in the idea that one answer might suffice to the many possible open outcomes I think you are ignoring. Let's examine your premis carefully to try to identify the unstated assumptions:
    [Hermit 14.2.1] What does, "not enough" mean? If everyone were given a "fair share" of grain, would
      [Hermit 14.2.1.1] everyone be hungry but survive, would
      [Hermit 14.2.1.2] some die and others survive, or would
      [Hermit 14.2.1.3] all of them die?

    [Hermit 14.2.2] What does "everyone" mean? Is it
      [Hermit 14.2.2.1] local or
      [Hermit 14.2.2.2] universal?
[Hermit 14] Based on the answers to the above I think the the responses would have to be very different, with a first level matrix something like this:

    [2.1] Local[2.2] Universal
    [1.1] Hungry but SurviveUse some method to ensure fair distributionUse some method to ensure fair distribution
    [1.2] Some dieSome move to improve the odds for both groupsSome commit suicide or are killed to ensure the best possible survival for the rest
    [1.3] All dieTry to move, possibly die tryingDie with as much dignity as possible
[Hermit 14] From this table it is clear that a third question is needed:
    [Hermit 14.2.3] What is the cost of moving vs the potential improvements in quality of life and survival rates of both the migraters and non-migraters.

[Hermit 14] Note that if "only" a local insufficiency, some or many might sensibly move if this meant that both groups would survive, but that would depend on the answer to question [Hermit 14.2.1.3] Supra. If a universal insufficiency, movement won't help, and the answers to the first question are more relevant. If everyone can survive then then all that matters is establishing a fair method for distributing grain. Under lifeboat rules this will be unlikely to correlate well with conventional economics as the wealthy are unlikely to be viewed as more deserving than anyone else. If nobody can survive then the answer is irrelevant anyway. If universal and some will survive and others will die then determining who should die becomes paramount. Again, this is unlikely to coincide with normal "free market" economics.

[Hermit 14] I think you also missed the point that the Royal granaries of the ancient worlds were immense undertakings and huge achievements. Like a national grid today, they could not have been constructed with private capital at all, even had private capital existed because the benefits to any one person were small, yet once they were built and crops nationalized there was more food of higher quality available for all. And once they were filled, the nations engaged in building granaries developed the capacity to survive through crop failures that might otherwise have threatened their underpinnings.

[Hermit 14] Now, would you like to rephrase your example? Or attempt to explain your thinking?

[duxua 13.1] Value is in the eye of the beholder.  You don't get to "serve the economist's true value" (whatever you meant by that) or decide how much value different people assign to different things.  Identical sacs of grain or identically well insulated houses are not valued the same by any two individuals.

[Hermit 14] An economists "true value" of a good is simply the discounted future cash flow of that good. I'm surprised you see fit to attempt to advise me on economics without comprehending the basic terminology (or merely googling for it). Placing it in quotation marks signified that it is a standard term and differentiates it from the common or garden usage which might include any number of methods, for example, you might be a "good consumer" (responsive to marketing and advertising) and buy huge quantities of blue beads believing (accepting as true despite or in the face of evidence) them to be valuable. It would not reduce your need for energy (and the impacts that deriving it in particular ways might have on your neighbors), or on your need for grain, no matter how valuable your perception of your beads might be. What would matter would be the opinion of others of the value (or lack of it) of your beads.

[Hermit 14] As an aside, a key attribute of "economics" is that one good has the same value as another identical good, and thus that one "sac(s) of grain"  is equivalent to another at the same time and place. When that is denied then the foundation for economics has been removed. You are then merely sharing your opinions but cannot substantiate them. Which might be interesting to some, but is not likely to lead to progress.

[Hermit 14] Perhaps you missed why I emphasized the "true value" (economic productive capacity) of the economist with the perceived value of the consumer. The consumer who has e.g. been persuaded that glass beads are worth exchanging for worked silver is exchanging a valuable limited resource (time and effort) for something which does not increase the productive capacity of the individual or community. No matter how much this appeals to her menfolk, the consumer is reducing the "true value" of the community when making this swap.

[Hermit 14] When the consumer swaps silver for tractor hours which reduces the number of hours needed to labor in the fields more than the cost of laboring in the mine cost, or more likely (land capacity being limited) expands the area which can be cultivated and so increases the community output, then the "true value" (or productive capacity) of the community has been enhanced. Not difficult to figure, I would have thought.

[Hermit 14] When, due to better insulation, all houses need less energy - for which we exchange productive hours - then all of us have more productive hours available. When most energy is derived from fossil resources (a public good of immense value which, in economic terms, has a near infinite future value in the future as a cost-effective feedstock, than it has currently as a fuel), which impose enormous costs to all of humanity in mitigating their effects on the biosphere - costs which despite their size are not borne by the energy transformation and distribution companies, then imposing a requirement for better insulation is equivalent to building royal granaries. The "true value" (due to the reduction of current and future negative cashflows) of everyone increases for the length of time that that structure is used. This happens irrespective of your opinion of the benefits and costs, which is why it is a "true cost" as opposed to your "psychic costs" - a term I don't recall from my studies in economics. I'm not sure which part of this you are finding difficult to assimilate?

[Hermit 12] Contra modern lassaiz-faire thinking, the value of grain increased when it was nationalized.

[duxua 13.4] Everything you write beyond this statement is *exactly* as free-market theory would predict...

[Hermit 14] Let's see?

[Hermit 12] Until local grain supplies exceeded needs, which only happened when we had the fertilizers, machinery, transport systems and knowledge required to do it as a result of the "energy revolution" (which we now begin with hindsight to realize wasn't a revolution at all but a massive squandering of a precious resource), grain was a much greater good when distributed equally. [ Hermit : Emphasis added ]

[Hermit 14] Duxua is arguing that "free-market theory" predicts that a rigidly controlled market based on equal distribution results in a "greater good"? I wonder if Duxua can show me this in any standard economics work?

[Hermit 12] Indeed, until the late 1800s,  state granaries were a vital component of any economy [ Hermit : Emphasis added ]

[Hermit 14] Duxua is arguing that "free-market theory" predicts that a state granary (with the implied compulsory acquisition of grains to establish a controlled market) is a vital component of any economy? Again, I wonder if Duxua can show me this in any standard economics work?

[Hermit 12] , and indeed, even today they remain a bulwark (currently failing) against popular revolt in Egypt. For most of history, the exchange rate for grain was set, not through a market (In the modern sense of agents, information and value) but by fiat. And most of the time, this worked remarkably well. [ Hermit : Emphasis added ]

[Hermit 14] Duxua is arguing that "free-market theory" predicts that the regulation of markets "worked remarkably well"? I wonder where Duxua read economics? If he didn't, I wonder why he is choosing to attempt to lecture me in it?

[Hermit 14] I will repeat a little of the above to restore context and continuity having addressed the allegation in [duxua 13.4] supra.

[Hermit 12] Contra modern lassaiz-faire thinking, the value of grain increased when it was nationalized. Until local grain supplies exceeded needs, which only happened when we had the fertilizers, machinery, transport systems and knowledge required to do it as a result of the "energy revolution" (which we now begin with hindsight to realize wasn't a revolution at all but a massive squandering of a precious resource), grain was a much greater good when distributed equally.

[duxua 13] Value is an ordinal concept: you value something more or less than something else.  So when you say that the "value of grain increased", you have to provide a frame of reference. 

[Hermit 14] This assertion and the attempted derivation of a conclusion is farcical. Clearly when I introduced a temporal scale, I was comparing the value of the good (the benefit provided by an item or service in economics terms) before grain was "distributed equally" (when it was "eaten by insects and rodents", "rot[ted]" and became "mold[y] due to moisture", and when people "starved" or did not based on "how local crops had performed".) with the good (still the benefit in economics terms) after nationalization and equal distribution.

[duxua 13] Price is cardinal so I'll assume you meant that the "price of grain increased when it was nationalized".

[Hermit 14] Clearly I was not talking about "price," so duxua's assumption that I was doing so faulty, but even had I been, this second assumption inverts reality and conventional economics. The volume and quality of available grain increased - thus the "price," had it had a price, would have decreased, not increased

[duxua 13] What you are saying matches basic supply/demand rules: when supplies exceed the needs, the prices are low; when supplies are horded, prices increase.  Econ 101.

[Hermit 14] It seems that duxua needs to reexamine his prejudices.

[Hermit 12] ...not least because economies and populations tended to be reasonable stable, in part because they were, through necessity, sustainable. "The Wealth of Nations" could not have been written during these times. It needed the Industrial revolution and the use of fertilizer delivered by barge on a network of canals built on borrowed money by Royal Charter, principally to move coal, before the necessary selfishness (one of the three principle aspects, self-interest, division of labor and freedom of trade) of a so called "free market" economy) and the surplus wealth to fund enterprises like pin manufacturing became sufficiently visible for Smith to reach his conclusions. But to fool yourself that the world did not have functioning economies (even though they were not called that) before Smith, and could not have them after it would be very foolish, and to imagine that a "free-market" is necessarily superior to other systems would be to be willfully obtuse.

[duxua 13] I'd like to point out that you are the one who makes reference to Adam Smith and "The Wealth of Nations" as if they were part of my argument. You are building a strawman here.  Trade and exchange are as old as the division of labor.

[Hermit 14] Does duxua really imagine that he can raise "free-market" economics without reference to Adam Smith? I wonder where he thinks that "the invisible hand" originated? Let me restore a bit more context to show how silly this complaint and accusation really is. This is what I said in the first post of this thread.

[Hermit 1] The potential avenue of escape, the only avenue of escape I see, lies in redefining the rather Lamarckian reality of social evolution, comprehending that what might in the short term have looked to us like progress for about 200 years or more, was undoubtedly one of the least fit evolutionary strategies ever adopted by any culture any when, recognize that Adams, and through him the USA, had everything the wrong way around and acting rapidly on that recognition. All distortions to the contrary, true wealth does not lie in scarcity, but in plenitude. History ought to have taught us that wealth relies upon social stability to exist, that instability destroys wealth.  It follows that when everyone is housed and fed and healthy and happy then a nation is wealthy. When a nation is wealthy its people are wealthy. Stability depends upon equality, thus wealth does not lie in inequality but in equality. Greed, which destroys equality is not the highest, but rather one of, or even the lowest, motivator. The invisible hand of the market, rather than being an efficient mechanism, requires vast amounts of massive waste to operate. These costs have been hidden by the burst of wealth provided us by cheap energy, but was only viable when and while energy costs were at a brief, unsustainable low; as it has been while we burned through the first half of our precious heritage of "fossil fuels" which could have provided plastic and chemical supplies for millennia, and used that wasteful energy to distribute invaluable concentrations of minerals and other to resources, irrevocably alter our  biosphere and to build a population and environment that will not support human civilization for 3 days after the price of the "cheap fuels" becomes unaffordable.

[Hermit 14] Perhaps Duxua imagines that this was an unfair introduction of a preemptive Adam Smith strawman, as it seems clear that Smith was part of my argument before duxua interjected! Let's continue with duxua's first response.

[duxua 4] Now I'm getting scared!

[duxua 4] Hermit - you seem to recognize the problems caused by the US government's intervention in the economy (fiat money, inflation as hidden taxation, protectionism of one sector at the expense of another, debt as a growth engine, etc), yet your solutions rely on even greater levels of intervention!  (or so I suppose when I read that "The invisible hand of the market, rather than being an efficient mechanism, requires vast amounts of massive waste to operate.")

[Hermit 14] It seems that this is where duxua came in with a collection of unfounded assertions, and that he may now have lost track of who was arguing what?

[duxua 4] The government bureaucrats can't even balance a budget but we should expect them to be able to regulate birth rates, housing standards, workers location, transport, power generation, and even the planet's climate??

[duxua 4] Society and climate are systems that are simply beyond our current ability to model and control.  To the extend where we fool ourselves thinking we can control them, we usually end-up making things much worse.

[duxua 4] It could be that in a post-singularity future, there will be intelligences that can model and plan societies, but given the current scarcity of intelligence, I'll trust the market's discovery processes anytime over a central planner's biased opinion.

[Hermit 14] I saw this as an attempted attacked an aspect of my thesis which I suspected (correctly, it seems) that duxua had not grasped. I attempted to rephrase the concept, recognizing that attacking two of the lynchpins of modern economic theory, might be challenging to accept unless the articulation was precise.

[Hermit 8] One more comment I have to add: When I said, "The invisible hand of the market, rather than being an efficient mechanism, requires vast amounts of massive waste to operate," what I meant was that the very concept of "the market", is a modern one which only operates when you accept that "value is a function of scarcity" (rather than plenitude being a virtue) and when you accept selfishness and its consequences as a virtue, rather than identifying it as a vice. Both of these are modern aberrations and arguably incorrect.

[Hermit 14] Note that this argument to the virtue of self interest and the interrelationship between scarcity and value are in fact Adam Smith's arguments, as anyone who has read the Wealth of Nations (regarded as the foundation of modern economics) ought to remember. So given that my disagreement was, initially, with Adam Smith, and given that duxua appears to have objected to my disagreement, what ever does duxua mean when he asserts, "I'd like to point out that you are the one who makes reference to Adam Smith and "The Wealth of Nations" as if they were part of my argument. You are building a strawman here."

[Hermit 14] Who really owns the strawman and when do we get to burn it?

[duxua 13] I would also appreciate if you would drop the name calling.  Ad hominem arguments do not strengthen your position or my opinion of your arguments; to the contrary.

[Hermit 14] I think this is a seriously weird accusation. An ad hominem is not an argument, it is a fallacy. It has to occur in a debate and it has to be an attack on the person rather than upon the merits of the arguments. As my only argument is with Adam Smith and as his invention, the free-market, seemed to be the issue under discussion, and as I have, so far as I am aware, spoken primarily to this argument, an argument which duxua has now disowned, asserting that my argument with Smith which preceded duxua's interjection is a strawman, I think it is fair to ask duxua to point out where exactly duxua feels that an "ad hominem" has occurred as it seems to me that this can only be true if duxua takes the arguments so personally as to feel that an attack on his arguments (to stretch the definition) and the weakness of their presentation constitutes a personal attack. And this feeling of his can hardly be my fault.

[Hermit 14] In a debate I would draw a line here and call for a vote. This not being a debate, and there not being winners or losers, I will meander on and address the balance of duxua's commentary, while taking the opportunity to attempt to persuade him that some of his concepts may be wrong.

[duxua 9] I take it from reading your articles that a lot of the gloomy future that you forecast is a result of the scarcity of oil.

[Hermit 12] No. You take it incorrectly. The "gloomy future" is not inevitable unless we no longer have access to "cheap" energy. If we climb out of the gravity well, there is sufficient cheap energy (and lebensraum) to support nearly infinite growth before the end of the Universe some 200 billion years from now. The significant challenge we face is whether we can climb out of the gravity well before the upheavals which will accompany end of sufficiently "cheap energy" makes it impossible. Given timescales, prices, interdependencies, uncertainties and the nature of exponents this is no longer a sure thing (it would have been much better had we begun eight years ago and had we not trashed the US dollar (which I should remind you was the globe's reserve currency) in the meantime. As it is it will be a near thing even if we throw ourselves at the problem and do as much as we can to convert ourselves to a sustainable basis in the meantime. If we miss this opportunity, the effort will also serve the purpose of alleviating the pain of the transition to our decline.

[duxua 13] So destroying cities, and all the other police-state policies you suggest (birth control &al.) don't seem gloomy to you?  Sure, you'll say they are *less* bad than the total collapse of civilization, but I'd still categorize your recommended course of actions as "gloomy".

[Hermit 14] It isn't "I will say", but "I did say." Gloomy is duxua's adjective. As I have repeatedly said, I don't think the future is necessarily gloomy, although the current consensus is that it will be if we don't move quickly on addressing these issues at a planetary level. Of course duxua may use whatever adjectives duxua likes as long as there is no objection to me doing the same :-P I would suggest that "restoring land" and "regulating reproduction" don't sound quite the same as duxua's characterizations. This said, somewhere duxua invented "police-state policies" and that isn't merely an adjective, so perhaps duxua had best explain what was meant? Does duxua think that passing regulations to protect people is inherently wrong or is there an objection to particular policies? In which case, what is duxua's suggested preference? A strategy of mutual depopulation through global nuclear warfare appeals more to duxua? While I didn't advocate a "police state," particularly as Nazi Germany, the USSR and the USA have repeatedly demonstrated that this is quite unnecessary to control the majority of the population, could a police-state (however defined) change the outlook for humanity, and if so, how much worse could a "police state" (however defined) be, compared to the current alternatives?

[Hermit 12] Oil is not scarce. Unfortunately, oil is fundamental to most things we do including the harvesting of energy from other sources, and oil is no longer a low cost good.

[duxua 13] Alright, if you can't recognize the fact that these two sentences are inconsistent with each other, I don't know that it's worth pursuing this conversation.

[Hermit 14] We have mined 1 to 2 Trillion barrels of oil. Approximately 2 to 3 Trillion remain. Thus oil is not scarce.

[Hermit 14] Oil is now over $125 per barrel. Up from below $10 only 8 years ago. Thus the quasi-alternatives to oil, all of which are to a greater or lesser extent dependent on oil, are already and will increasingly become more, expensive.

[Hermit 14] Where is the inconsistency?

[Hermit 14] Perhaps you should attempt to avoid the use of patronizing language. It only serves to highlight the deficit between posturing and reality while making you look extremely silly (See, I can complain, give patronizing advice and use fancy adjectives too. Only when I do it, I make sure have what others will perceive as justification for it.)

[Hermit 12] Unfortunate because the cost of oil is embedded in most things to a far greater extent than people, including or perhaps especially economists, tend to realize. For example, in most of the world, the cost of water is massively dependent on the cost of oil; and when societies have no usable water due to resource depletion or cost, they begin dying in droves in a very short order. Whereupon civilization and the investment in long term projects breaks down.

[Hermit 12] Peak oil is not about scarcity, it is about cost.

[duxua 13] Wikipedia on Scarcity: In economics, scarcity is the problem of infinite human needs and wants, in a world of finite resources.

[duxua 13] Wikipedia on Hubbert peak theory: The Hubbert peak theory is based on the observation that the amount of oil under the ground in any region is finite

[Hermit 14] And yet, if you evaluate the oil left in the ground there is far more still there than we have already pumped out, even though, if we take the most optimistic data from the International Energy Agency on total extractable oil, and combine it with the lowest use projections, we only have sufficient oil reserves to last 40 years. Meanwhile every major oil company has already stated that it considers the IAE data hopelessly optimistic - and the cost of oil, now over $125/bbl is widely anticipated to exceed $200/bbl by the end of this year, unless we attack Iran, in which case it is expected to exceed $500/bbl. Even so, Wikipedia, which you bless as an unimpeachable source by citing it without comment, reservation or check, supports my opinion. You may confirm it here: http://en.wikipedia.org/wiki/Fossil_fuel.

[Hermit 14] So quoting miscomprehended theoretical phrases from wikipedia extracted from the context of the discussion really doesn't progress us a whit. Is that "ad hominem"? I could have sworn you said something like that so maybe not. On the other hand my statement has the virtue of addressing the issue at hand, I do not know what you are attempting to say, but the cost per barrel and reality of the reserves makes the point for me does it not?

[duxua 9] I also think that you misunderstand what a market is.

[Hermit 12]I am fully aware of what a market is not as well as what it is. And while you may imagine that it is "one of the central pillars of human civilization," civilization vastly predates the idea of a market which is merely descriptive of an imperfect method and if modern society continues, better information and tools will likely obsolete it (see e.g. openbarter.org).

[duxua 13] OpenBarter on OpenBarter: A market place without any central value reference. (and) A spot market for bartering measurable commodities like primary goods.

[Hermit 14.4] First you lecture at me on economics without knowing what I have studied or done or who I cite, then you retreat from Wikipedia - which you just quoted before, even though it is a secondary source, to cite somebody else. May I offer you an economist's definition of the market from your generally preferred source?
    In economics, a market is a social structure that has emerged more or less spontaneously or has been constructed deliberately by human interaction to enable the exchange of rights (cf. ownership) of services and goods. Markets enable services, firms and products to be evaluated and priced. There are two roles in markets, buyers and sellers. The definition implies that at least three actors are needed for a market to exist; at least one actor, on the one side of the market, who is aware of at least two actors on the other side whose offers can be evaluated in relation to each other. A market allows buyers and sellers to discover information and carry out a voluntary exchange of goods or services. This is commonly done through trade. These trades may be handled a variety of ways, but in small market environments, buyers and sellers typically deal in currency, and goods. In everyday usage, the word "market" may also refer to the location where goods are traded, or in other words, the marketplace. [ Source : Wikipedia ]


[Hermit 14] Should you evaluate OpenBarter you will discover that while it may meet the everyday definition of a "market" (though I suspect it does not), it definitely does not meet the economist's definition, which I would define as as "a forum where information is traded in order that the initiating trader may evaluate multiple independent valuations of a good at least partially consequent upon the information traded."

[duxua 13] Are you really saying that better information and tools like OpenBarter, a self-described market, will render markets obsolete??!!  OpenBarter *is* a market!  Can you appreciate my confusion?

[Hermit 14] I can see that duxua is confused. Indeed I suspect that it this is readily apparent to all. If I were to say, "I am an umbrella," expecting it to make people comfortable around me (after all, who has not used an umbrella before?) would duxua immediately accept me as an umbrella?

[Hermit 14] At this point I begin to suspect that duxua's definition of a market is deficient even if he appeared to want to teach me things previously and even if saying this leaves me skirting uncomfortably close to tu quoue.

<snip of reordered section>

[Duxua 13] moving on...

[Hermit 12] As the dollar collapses and the size of the available pockets of oil reserves decrease, and the difficulty in extracting the oil from them increases, so the cost soars. Hubbert's genius was to recognize that the effective cost of oil was predicated on the effort required to obtain the oil demanded by the market in a usable form and to quantify the fundamentals describing that cost-equation.

[Hermit 12] My addendum is that as the cost of oil soars, so the cost of extracting that oil or developing alternatives soars faster.

[duxua 9] I appreciate that you view plenitude as being a great thing, but what do you do when you don't have plenty of a good?  How do you resolve the problem of allocating the resource?

[Hermit 12] Until we had, at least locally, "grain to waste" (or surpluses), the price of most commodities was set by fiat, by law. Societies recognized, correctly, that unless distribution was perceived as fair, that instability would result. "Free markets" have no special exception to this rule. When "free markets" are no longer a fair means of distributing things, they too will be swept away.

[duxua 9] I also think that you misunderstand what a market is.  Markets are just as cooperative as they are competitive.  I would recommend that you clearly define your terminology before you shoot down one of the central pillars of human civilization.

[Hermit 12] I am fully aware of what a market is not as well as what it is. And while you may imagine that it is "one of the central pillars of human civilization," civilization vastly predates the idea of a market which is merely descriptive of an imperfect method and if modern society continues, better information and tools will likely obsolete it (see e.g. openbarter.org).

[duxua 9] You make a reference to tribal societies as if this was something that we should aim towards,

[Hermit 12] Do you think so?

[duxua 13] That's indeed the impression I get from reading your posts.

[Hermit 14] I guess that duxua has not many of my posts touching on this issue. Respecting their capabilities and acknowledging our origins and psychology is different from "aim[ing] towards". What I really wanted to know was how, in this thread where I am explaining that the rapid introduction of complex technologies are required to sustain current civilization and population, can anyone imagine that I am advocating a move towards a tribal society? Particularly when I even said "but I would not want to live in a world run on such a basis" in [Hermit 12.7] Infra. If I approve of such societies, why would I not want to live in them?

[duxua 9] where there is no room for selfishness, where great family values prevail, [ Hermit : My emphasis ]

[Hermit 11] I said this?

[Hermit 14] Is the silence an apology?

[duxua 9] and people coexist in a harmonious -albeit primitive- community.  That's a nice fairy tale that doesn't have any place in human history.

[Hermit 14] As duxua has begun complaining about straw men, it seems only fair to observe that "where great family values prevail and people coexist in a harmonious -albeit primitive- community" are duxua's words not mine, and "That's a nice fairy tale that doesn't have any place in human history." relates to his words - and strawman.

[Hermit 12.5] Can you support this assertion? Before you reply, please ensure that you explain the leisure ratios of hunter gatherers vs agriculturalists, and also address the prosperity of the  Bons Hommes et Bonnes Femmes (later termed Cathars and Albigensians), the Lollards and Waldensians.

[duxua 13] Nice, will you need anything else with that?  I'll get right on it.  In the meantime, if you need support for my assertion, you might enjoy Steven Pinker's "The Blank Slate: The Modern Denial of Human Nature". The book has a nice chapter on the Noble Savage myth.

[Hermit 14] I have read it. I do not understand why you think it is relevant. It does not address the issues I asked about, only your straw man above.

[duxua 9] The reality is that tribes (and more complex civilizations alike) also need to find ways to to deal with scarcity.  The "community" approach might work well within an extended family where a father (or mother) figure controls the allocation of resources

[Hermit 12.7] After the research required to respond to [Hermit 12.5], it seems hardly necessary to point you to the (extremely successful) Amish and Mennonite communities of the East coast and Mid West, but I would not want to live in a world run on such a basis no matter that we know that that is exactly what is needed for primitive agrarian societies to be wildly successful (NB I suggest you reserve judgement until after reading "The Long Emergency" unless you are already familiar with their community practices.)

[duxua 9] , but even then, there is expectation amongst the family members that they will be treated fairly.

[Hermit 11] Where do you think that I suggested that this was not the case?

[duxua 13] Every time to talk about pooling everyone's labor in big "granaries of stone" so it "could be shared equally", I guarantee you there'll be those who will think they aren't being treated fairly.

[Hermit 14] Possibly. Though the evidence I have seen is the other way around. Whether in modern times, when difficulties strike and people work together to alleviate them, or inferred from the fact that royal granaries spread like wildfire and this coincided with the elevation of kings to gods, huge works performed by volunteer labor and laudatory writings in various books (think of the story of Joseph (actually an Assyrian story) and the granaries of Egypt). Please treat my question as a request for evidence, direct or inferred, supporting your perspective and not relying on supposition, no matter how this class of "evidence from feeling" is part of the von Misean tradition (part of the reason why the Austrian School is rejected by mainstream economists).

[duxua 9] Well ingrained in our human DNA is the concept of value for value.

[Hermit 11] Can you please sustain this?

[duxua 13] Sure, you and I can do a little scientific experiment:  Step 1) You send me a Paypal payment of $100.  Step 2)  I thank you.  Step 3) You tell me how you feel about the experiment.  We can repeat this as often as you'd like and I'm pretty sure we'll get consistent results.

[Hermit 14] And where did DNA come into your response?

[duxua 9] Value for value is an exchange, it is a market transaction.

[Hermit 11] Can you please sustain this? Reference to [Blunderov 10] Supra may be helpful.

[duxua 13] What exactly is there to sustain is this definition?  It is so elemental that I'm surprised that Blunderov and yourself require more explanation around it.  I tried to distill my definition of a market transaction to its simplest, most basic roots: an exchange of value for value between two individuals.

[Hermit 14] And as we see through reference to [Hermit 14.4] above, where we saw, "The definition implies that at least three actors are needed for a market to exist", your definition of a market is deficient. Further when you say "value" for "value", you don't categorize what you mean. We have seen that you suggest that you regard "true value" of the economist (or $100 above) as being equivalent to your "psychic value" (or having you listen to my feelings), and even reject the equivalence in value between two identical things at the same place and time ("Identical sacs of grain or identically well insulated houses are not valued the same by any two individuals" [duxua 13.1] Supra), so I asked you to establish if what you meant was the same value on both sides of the equation, i.e. a=a, in which place it is a trivial truism that doesn't advance us, or if it was more akin to a=b in which case it really doesn't say anything other than being a worning that you employ rhetorical sleight-of-hand.

[Hermit 14] BTW, You might have meant, "elementary".
« Last Edit: 2008-05-30 16:16:27 by Hermit » Report to moderator   Logged

With or without religion, you would have good people doing good things and evil people doing evil things. But for good people to do evil things, that takes religion. - Steven Weinberg, 1999
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