Dana Blankenhorn

Hope Rising

Think of this as Volume 11, Number 19 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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In most of the items marked Crisis of 2008 I have emphasized the difficulties in the time we're living with, the problems, the dangers.

But it is also vital, sometimes, to look at the opportunities, and to see the hope rising all around us.

I'm fortunate to find such things often in my work. Sometimes I bring them to you. Here are two just from this week:

• Simple breakthroughs in things like capacitors that can improve the efficiency of electric motors by as much as 300%.
• Breakthroughs in telemedicine which Microsoft is quickly taking advantage of.

Science and engineering are using the benefits of Moore's Law to create progress at a Moore's Law rate. That is breakthroughs are coming faster-and-faster, fast enough (perhaps) to halt the present processes destroying human life on this planet, and even turn them around.

If, that is, they can be brought into the world rapidly enough. The society which brings them to the market most rapidly will have the greatest share in the resulting prosperity.

What we need to make this happen is a process revolution. I am talking about accelerating both economic and political processes. We need to change business' processes so companies make more money solving problems than  causing them, as they have in this decade. And we need to change the way political change occurs at a fundamental level.

A generation ago Republicans talked about making government run more like a business. Now we need businesses to start taking their societal responsibilities seriously.

You do that by changing incentives.

• Right now electric utilities have more incentives to build power plants than to build efficiency into our electrical grid. We can change that.
• Right now drug companies have more incentives to create "me-too" drugs with patent protection than to produce generics we know work. We can change that.
• Right now energy producers have more incentives to withhold product from the market than to produce it. We can change that.
• Right now companies have more incentives to create monopolies than to open new markets. We can change that.
• Right now companies have more incentives to create paper than to see loans are repaid. We can change that.
  

When Al Gore talks about trading carbon credits, this is really what he's talking about, creating an incentive to emit less carbon by simply putting a price on it.

None of these changes are terribly difficult. Most are just a matter of will. And when we put the power of the market to work on the world's problems, pointing to those problems as opportunities with profits going to those who create solutions, positive change can happen quickly.

But that's not all.

Capacitors in The War Against Oil

What if we could shrink every electric motor in the world by two-thirds, essentially doing three times the work with the same juice?

We can. And we can do more than that. (Picture from NG Manufacturing.)

I got this story from an old college buddy out in West Texas. It seems a Mexican outfit, Neuva Generacion Manufacturing, which owns most of the big U.S. capacitor makers, has patented technology to do just this.  It will first go into things like refrigerators and air conditioners, as well as industrial motors, but could be applied anywhere such motors operate.

How do they work? As my friend put it, the key to an electrical motor inefficiency lies in starting the thing. Current technology for starting motors increases the power demand by 300%. The capacitors allow start power to match the running power, so all that extra weight (and power use) goes away.

NGM has the capacity to serve the whole market, with factories in the U.S., Mexico and China. Among their brand names are Commonwealth Sprague, Barker, and Mallory.

To quote from their (admittedly poorly written) press release:

Early U.S. Department of Energy reviews of this new technology have demonstrated drastic improvements in life and dynamic improvements in most motor start applications.  Manufacturing tests have proven that many major components of HVAC and Appliances can now achieve smaller overall size with resulting savings in materials and manufacturing costs when fully integrated with the new NG / PACCAP technology solutions.   

The implications are discussed in an article at Copper.Org. Better capacitors mean more efficient motors, three times as efficient as current models. Even if the new motors merely replace old ones as they wear out, we're talking about savings of:

62 to 104 billion kWh per year in the manufacturing sector alone. This savings is valued up to $5 billion. It would also avoid the release of up to 29.5 million metric tons of carbon equivalent emissions to the atmosphere annually.

Industrial motors consume about 23% of all electrical power in this country. Existing incentives for energy efficiency can increase the turnover rate, and the savings.

Now, how can we get even more savings?

The Oil Standard

Think of this as Volume 11, Number 18 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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I have long been intrigued by what stands for value. (Picture from The Zoo.)

Throughout the 19th century, gold was the standard of value.

The 1896 Crisis, the Cross of Gold speech, these were outgrowths of the 1895 gold loan by J.P. Morgan to the U.S. government in exchange for bonds, which Morgan then sold at the "usurious" interest rate of 4%. With gold as the standard of value, the value of other commodities (like wheat) withered. Farmers suffered, bankers gained. The farmers' uprising was called Populism, and it made Democrats dominant in the farm belt for decades.

Today we have a new standard of value. Oil. And the impact is much the same. For wheat read dollars, for farmers read Americans, and for J.P. Morgan read the Saudi sheikhs, Hugo Chavez and Vladimir Putin.

What makes a "strong" store of value is the fact that its supply is limited, that it doesn't inflate. It's stable. It's sound.

The U.S. dollar is no longer sound. It's being tossed out by Helicopter Ben the way farmers a century ago tossed wheat on the market, and the result is very predictable. The age of the "dollar standard" is over, and while the world seeks a new safe haven, oil will do nicely.

There can be only one response.

Making It About Us Again

Why are people so disgusted with the present political campaign?

It's not about us. (Picture by Fred Askew from MonthlyReview.)

Candidates give lip service to this being about us, but it seems to be more about the media and the pundits and their own obsessions than about us.

Campaigns generally get into the weeds like this when the discussion about us becomes uncomfortable to the elites in power. It's not policy choices which make the elites uncomfortable. It's the idea of someone other than the elites making those choices which makes them uncomfortable.

I'm not talking here of idiots and know-nothings making decisions based on their own prejudices. I'm talking about candidates and parties addressing our real crisis, not just pandering to our short-term problems but inspiring us with a different future.

What's happening, to both young and old, is we fear losing control of our future. We don't know where our next job is. We don't know if America can ever lead again. We don't know how we'll pay our bills or educate our children. We fear we've lost control, personally, politically, economically. We're scared.

An Alternative Energy Census

One of the treats in my first reporting job, at the Houston Business Journal, came in learning about geological maps. Using sonar and great creativity, engineers in the "oilpatch" mapped where potential oilfields might lie. The maps determined the value of potential oilfields, and told wildcatters where they should drill.

With businessmen now taking The War Against Oil seriously, we need new maps.

Such maps might indicate:

• How much sunlight falls.
• How deep you must drill to reach usable geothermal resources.
• How reliable is the wind.
• Where is a stream capable of taking a water wheel?

From such maps we can determine the potential alternative energy value of any place in the country.

A Nation of Makers

At the heart of the economic component in our current crisis is this salient fact.

We are no longer a nation of makers. (A version of this iconic Norman Rockwell image is painted on the side of my car mechanic's workshop in Atlanta.)

In this last generation we have transformed ourselves from a nation of makers into a nation of takers. Most jobs don't really involve the making of anything. They involve either the recycling of money or the spending of it.

I'm proud to say that my lovely bride isn't part of this. One point of pride in her computer programming job has always been that the transaction processing programs she writes make money each time they run. (Another curiosity -- she's been at one employer for a quarter century.)

My son, on the other hand, wants to be a taker. A lawyer. Usually a prosecutor. Sometimes a trade negotiator. My problem with the law is that it doesn't make anything. It refines rules which take from one and give to the other. The plaintiff gets the defendant's money, or the state takes the defendant's liberty. Essential to security, but it doesn't add to GDP.

While the U.S. is still the world's manufacturing leader (believe it or not) our share of the world's value added through manufacturing has been declining throughout this decade. Changing this last fact is the key to a lasting economic turnaround.

Fighting the War Against Oil at Home

How can you fight the War Against Oil today?

Here on Winter Avenue, we're doing our bit.

First, let's take a look at the field of battle. We live in an old "Craftsman" style bungalow, built in 1921 by guys with hand saws. It's one story, three bedrooms and one bath, about 1,650 square feet in all. The home was originally heated by coal, then by gas space heaters, before a central system was installed in the mid-1960s. We replaced it in 1990, added air conditioning 8 years later.

Three years ago, in 2005, we added a layer of cellulose insulation to the attic, where it's now R-30. We also had all our old knob-and-post wiring replaced by real insulated copper.

Still, with the rising price of oil and gas we're suffering. Our natural gas bills have been running at $200-250/month during the winter, and our electric bills the same in the summer.

What to do?

Final Warning

After the shiny, happy people feeling you got from reading my last post, now I'm going to bring you down.

Over at Juan Cole's shop, former University of Chicago professor William Polk reads the tea leaves and pronounces the War With Iran to be at go time.

To last week's US News warning he adds the personal recollection that Dick Cheney also made a trip to Saudi Arabia in March 2002 -- ostensibly diplomatic but (we now know) his warning, and assurance, that Saddam Hussein was a dead man.

The article contains the tantalizing possibility that Israel's recent attack on Syria was just a test of its radar and anti-missile defenses, but Polk then adds news that there has been an unprecedented build-up of U.S. Navy assets in the Persian Gulf:

Of course, deploying forces along Iran’s frontier does not necessarily mean using them. At least that is what the Administration says. However, as a historian and former participant in government, I believe that having troops and weapons on the spot makes their use more likely than not.

Instead such forces create a "climate of war" like the one which set off The Guns of August and World War I, a climate which both Bush the Wiser and Bush the Dumber have given in to before. He adds that the rationale for war is contained in the 2005 National Defense Strategy, which asserted America's right to engage in first-strike warfare anytime, and anywhere, it chose.

What can halt the march to war? Just one thing.

Rice Science Thursday: Big Buckyball

One interesting thing about C-60 carbon fullerene molecules, or "Buckyballs," as Rice people have been calling them ever since they found the things in 1985, is that they don't have to be that size.

Or that shape.

In fact the most useful structures based on this form of carbon are Buckytubes, which the rest of the world (which has no sense of humor) knows as carbon nanotubes.

Imagine the basic structure of a soccer ball, with carbon atoms in each corner of each pentagon, then instead of wrapping it around itself as tight as possible open the sides until they head into infinity. And beyond.

Well you don't have to make the ball tiny either, even though that's the first type of Buckyball Drs. Smalley, Curl and Kroto actually found. You can extend the structure as you would with a nanotube and make it really big.

Fine, Mr. Smarty Riceypants, but what can you do with them? Well, you put stuff in 'em. Like hydrogen. And here's the thing, as the kids at Dr. Boris Yacobson's lab (back at the mothership) have just figured out with their cool computer models. They can hold hydrogen as tightly as the gravity found in the center of Jupiter.

By Jove indeed.

The Magic Word for 2008

Think of this as Volume 11, Number 10 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Production.

Say the magic word and the debate, as well as the choices, of 2008 come into sharp focus.

The only way to get out of our current economic problems is through production of new goods. The only way to launch the War Against Oil is through production of new types of energy.

The two points are directly related. The key to production at a profit lies in reducing the energy costs of production. And the energy costs of distribution.

Speaking of which, a focus on production is how you address questions regarding the Internet. Our Internet infrastructure is in sorry shape. It needs a serious upgrade. These are the canals or roads of our time, and we need to treat Internet access just as seriously as our forefathers did those routes to market.

Production also puts many issues into sharp focus because of how the two parties have proposed to boost it.

Republicans want tax cuts. They want "incentives" for companies to boost production of oil and gas, of coal, and of Internet capacity. These have been at the heart of their economic program for years.

Democrats want competition. A Democratic program for production would focus on increasing the amount of competition in all markets.

A floor price for energy would be a good start. Lock in the current gains, tax away oil and gas whose price comes in under the floor (it won't once the floor is in place) and you provide plenty of incentives for both the production of new energy and increasing the efficiency of industrial production.

Competition is also the answer to our Internet problems. Demand that current networks, both wired and wireless, open up to new competition, as was done in the 1990s. Problem solved, thanks to Moore's Law, because it is only by violating Moore's Law and squeezing more money out of the same services that the current duopolists have stayed afloat.

Production is the answer to not only our labor problems, but (in part) to our crime problems. Production creates lots of relatively low-skill jobs. High demand for low-skill jobs will increase wages for those jobs, and create incentives for producers to take a chance on the 1% of us now behind bars. If you enable people with minimum education the chance to earn a fair living your crime problem goes down.  Create enough jobs and we can even hire Mexicans, in Mexico.  So much for immigration problems.

Production is an economic policy, it's environmental policy, it's energy policy, it's trade policy. By creating new ways to make things, which are more energy efficient, we create exports, both in the goods themselves and the machines used to create the efficiency.

The Virtuous Cycle of a War Against Oil

Think of this as Volume 11, Number 10 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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Right now the U.S. economy, and the U.S. in general, is in a vicious cycle. (Picture from DC Fred  .)

Wealth is decreasing, so sales are slowing. Sales are slowing, so the economy is tanking. The economy is tanking, so the dollar is tanking. The dollar is tanking, so we're importing inflation. Prices are rising so we can't cut interest rates. High interest rates causes wealth to decrease...lather, rinse, repeat.

What if we could replace this vicious cycle with a virtuous one, as we had in the 1990s?

We can, but it can't be the same. Back then we were building the Internet. That's built. We could improve it, add lanes, add competition, and that would be a very good thing indeed, but it won't provide the kind of virtuous cycle we got back in the day. Sorry.

But we can get that virtuous cycle if we commit to a War Against Oil.

What does a War Against Oil mean? It means a total commitment, on the order of a real war (not the kind we've been fighting in Iraq) to eliminating the use of hydrocarbons in our lives. That's the clearly defined victory, and (as the current President likes to remind us) nothing less than victory will do.

How do we do it?

What Change Means

Memo to the Obama campaign. (UPDATE is here.)

Rather than getting lost in the weeds of charge and counter-charge, or letting the media dictate a narrative, you merely need to put some meat on the bones of what change means to win.

Change, repeated often enough, just becomes another word. It becomes a brand, like Coke, which is fizzy water, not a solution to real problems.

There is plenty in Obama's current program to put the meat on changes' bones. I don't have to invent a thing.

I'm not a videographer. Maybe you can produce this. I'm going to describe it as a series of lines and scenes. See if it makes sense to you.

What Change Means (Voiced by the candidate)

1. Change means bringing our boys and girls home -- Pictures of troops returning to families, reunions, parades.
2. Change means engaging all our assets -- Pictures of Obama meeting foreign leaders, shaking hands.
3. Change means making things to pay our bills -- Pictures of people in modern factories making windmills, solar cells, computer chips, etc.
4. Change means serving one another -- Pictures of young people in nursing homes, teaching, etc.
5. Change means  consensus, our common humanity, living what we believe and seeking new mountains to climb -- A jumble of hopeful scenes.

Lock in the Gains

With the price of oil now well over $100/barrel, the time has come for the U.S. economy to lock in its gains. (Tom Noddy does magic with bubbles.)

What do I mean by that?

There are a lot of energy saving, and energy producing ideas, which make no sense at $30/barrel but which make great sense at $80/barrel. But we can't make them so long as there is substantial risk that the price will go back to $30/barrel.

We were at a moment similar to this almost three decades ago. People were talking them about wind farms and wood stoves and all sorts of things, with oil at around $50/barrel. Instead of locking in those gains and letting innovation create a market, we decided on a strategy of killing the bastards standing between us and cheap oil. It worked. All those ideas disappeared.

The End of Impunity

One thing which has marked the last two decades, and it's as true for ordinary people as for our leaders, has been a sense of impunity.

Democrats complain often of how the Bush Administration displays impunity. The rules don't apply to them. They make up their own reality. The President cannot break the law.

We talk a lot less about our personal impunity. We can buy what we want. We can walk away from our debts. We don't have to make hard choices.

Democrats most fear talking about the impunity inherent in their own positions. We'll get out of Iraq on our own schedule, and stay in Afghanistan "to win," they say. We'll give ordinary people tax cuts and raise spending on health care and education.

The end of all this impunity is a big theme in our current crisis and all of us -- Democrats, Republicans, consumers, businesses -- remain in the denial stage of the process.

Last week's biggest story may have been Joseph Stiglitz' (above) estimate of the Iraq war's cost -- $3-5 trillion. (It's all here in his book.) The figure seems unimaginable so let me put it into perspective.

It's going to cost the U.S. its autonomy. It's going to cost our currency. It's going to cost you your life savings, and me mine. It's going to end the era of American impunity.

Through the Looking Glass

For 75 years, since the depths of the Great Depression, American economists and policymakers have offered just one cure for economic problems.

Liquidity.

Liquidity means the injection of new money into the economy. This is done through monetary policy, cutting the cost of money directly by the Federal Reserve, or through fiscal policy, spending more than the government takes in.

Of course, there's another word for liquidity, and that word is inflation. The film above, produced in 1928, illustrates the hyper-inflation which began the rise of Hitler in Germany.

Once a nation goes through hyper-inflation its people get the message through suffering. Your life's savings disappear. You can't afford food or other necessities. The government can't really help anymore because they're using the same worthless currency you are. Pretty soon you're down to barter and the use of foreign currencies. It's happened many times, especially in Latin America, and the answer of American policymakers was to peg those currencies to the dollar. The dollar was the strong currency.

Is it?

When you're running deficits of $300 billion or more a year, you print money to make up the difference. When you cut interest rates below the rate of inflation, you're printing money. When you offer tax cuts -- to the rich, to the poor, to anyone -- or a "stimulus" package you're printing money. When you tell banks, give us your broken-down loans and we'll lend you 100 cents on the dollar on them, you're printing money.

Nearly everyone across the political spectrum, with the notable exception of Ron Paul, thinks these policies are dandy. And they offer little else in response to them. Paul, however, is a nutcase -- getting rid of the Federal Reserve and going to a Gold Standard won't solve the problem either.

The answer is to start paying down debt. The answer is to start producing more goods. The answer is to turn around our current accounts deficits, and our fiscal deficits, and start paying down our loans. This is what worked in the 1990s, and yet no one has proposed it in 2008.

Instead we get whining when lines of credit which aren't being used correctly are cut off. (Borrowing on your house to pay for pre-school is stupid.) We get nods of approval for more deficits from people like James Surowiecki, who should know better. We get predictions of doom from Nouriel Roubini, but no clear course out.

What can be done?

Al Gore as a King in New York

One of the most important, least understood stories of this year has been Al Gore's reluctance to endorse anyone. (Picture from The Atlantic, originally taken by the World Resources Institute under a Creative Commons license.)

There are all sorts of theories, but only one theory makes sense.

He has better things to do.

As I wrote in November, Al Gore is focused on market solutions to the War Against Oil. He has learned, through his work on An Inconvenient Truth and all the opportunities which flowed from it that the power of money can actually be greater than the power of government. He has also learned that money follows credibility.

During 2007 Al Gore signed some very, very interesting deals. He signed deals with venture capitalists, and hedge funds. The core of those deals was that Gore, and people working with him, would go through all sorts of alternative energy proposals, not just those in the market, but those seeking market funding and those still in the labs. He would offer his considered opinion on the validity of each idea, helping to make sure that capital flowed efficiently toward ideas which made the most sense. And he would profit from that.

The Right War Against the Right Enemy

Think of this as Volume 11, Number 7 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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The most frustrating aspect of this whole decade is how we've gone to war against the wrong enemy, using the wrong means. (Cartoon from the Toronto Globe & Mail.)

Advocates of our present course go on-and-on about radical Islam, about evil-doers, about how we must confront them militarily, over there, so we won't have to do so over here.

There is so much wrong with that sentence it's hard to see where to begin. But let's try.

First, the enemy. It's not Islam, radical or otherwise. Islam is a means to an end. If we did not need oil we would care a lot less about the Middle East, and it's very likely Islam could start caring less about us.

It's a lot more like the South in the Civil War. Why are you fighting us, the Union man asked. Because you're over here, the Confederate replied. Slavery was the economic model behind the talk of state's rights. In the same way, oil is the economic model behind all this talk of Jihad, and a clash of  civilizations.

Oil should be our enemy. Reduce our need for oil and everything else gets easy.

Second, the means. We have been using military means exclusively. And our military rides on a sea of oil.

Whether we're "winning" or not, we're losing because of the means we're employing.

First Real Recession of the Internet Age

The proof is in. We're entering the first true recession of the Internet Age.

It's true there was a technical recession early in 2001, six months of negative growth caused by the dot-bomb. But this was mainly a product of the Internet itself, a relatively small excess that was quickly squeezed out.

The current recession is something very, very different.

First understand what recessions are. They're excess. They're a process by which the economy squeezes some form of excess out of the system, the way you would wring a mop, before continuing on with the job.

Second, the Internet allows markets to re-adjust very quickly. Back in the day we had recessions every few years, due to an imbalance between inventory and sales. When you have bar codes in the cash registers which can interface with demand to the factories, that can't happen.

The same sort of thing happens in other types of market speculation. The 24-hour market day means a panic in one place is seen as opportunity somewhere else, and the vacuum is filled as fast as a thunderclap.

Generally this is a good thing, just like airbags in a car are good things. But just as airbags cause gasbags to just drive faster, the recession prevention of the Internet causes bad policymakers to make things worse. And they have.

It took an enormous conspiracy to create this recession. The causation chain starts with Fannie Mae and Freddie Mac, which first collateralized groups of mortgages into salable instruments. But Wall Street sharpies took this one step further, creating other instruments based on that collateral, creating insurance of that collateral, and essentially creating the Big Shitpile we see today.

Hawaii's Small Ambitions

The state of Hawaii has an ambition, to get 70% of its energy from renewable sources by 2030.

Pfaw! (This, and other moving images of Hawaii from back in the day, are to be found at JaneResture.com.)

When it comes to renewable energy potential, Hawaii is Kuwait. As our most-southerly state Hawaii has the most intense sunshine in America. Its volcanos and trade winds mean the west side of islands like Hawaii itself are literally desert, perfect for solar energy collection.

Then there are the volcanoes themselves. Geothermal energy so close to the ground you can taste it. And those trade winds, both reliable and often fierce. And those ocean currents.

Hawaii is a laboratory we can use to create energy exports, not just sustain a tourist economy.

Transform, Transact, Transcend

One thing I've learned from my studies of American political history is that, while all elections matter, some matter more than others.

• Most elections are transactive. They are a choice between two worldviews, followed by a negotiation of those views.
• Transformative elections happen once in a generation. They realign the political planets. They deliver a new Thesis, a new set of myths and values accepted by the majority, to power.

Transformative elections also deliver a new dominant medium to power. And after such an election people will go on, for the rest of their lives, thinking the world created by the  transformation is the world, that nothing else but its Thesis and its medium can exist or ever has existed.

This is particularly true after a Validation election. New leadership is offered, but the people ultimately go with the Thesis, validating its assumptions. That validation can't last, of course, and you later get an AntiThesis election, in which a new set of ideas, leaning against the Thesis and moderating it, take power. Once this AntiThesis runs its course comes the most curious type of election, the Excess election, in which the Thesis is reaffirmed even if everything the AntiThesis did worked.

We can see this pattern play out throughout the 20th century. The 1896, 1932 and 1968 elections were transformative, bringing a new Thesis to power. The 1908, 1948 and 1980 elections validated the Thesis, bringing it to its height of power. The 1912, 1952 and 1992 elections were AntiThesis elections, in which a set of assumptions leaning against the Thesis came to power. The last such winner, Bill Clinton, was quite explicit about this, calling his the Third Way.

Then you have these Excess elections, these curious selections where the best man loses, where evil seems to triumph because the Thesis has become obsolete. The 2000 selection was one such campaign. So was the 1960 campaign that brought John F. Kennedy to power. As was the 1920 election in which James Cox lost to Warren G. Harding.

So if you've done your math you know the 2008 election is a Transformation election, and perhaps the 2004 election should have been.

Most Americans already intuit the need for a new Thesis, a new set of myths and values which will inform power, and a new medium to carry it forward. Most see this Thesis coming from the Democratic Party -- the new Thesis usually emerges from the old AntiThesis, as Eisenhower begat Nixon and Wilson begat Roosevelt.

Most of us also understand that this medium, the Internet, will dominate the future, with TV becoming a mere application upon it.

And so we face our choice.