Dana Blankenhorn

The Problem of the Moment (Is Not the Problem of the Moment)

Think of this as Volume 15, Number 32 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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As the debt ceiling kabuki reaches its climax it's a good time to consider what the real problem of our time is.

The simple answer is a lack of growth.

If economic growth were strong, the debt would not be a problem. Republicans don't see growth coming, and see that as a good excuse to go back on the promises we made decades ago, to see people into a comfortable, healthy retirement through Social Security and Medicare. They think that if that money can be “put to work,” in the fossil fuel industries, that growth will return.

The key fallacy in the previous paragraph is not where you think it is. It's in the phrase “fossil fuel industries.” We can no longer get long-term growth through fossil fuels, as we have for the last two generations. We can only get scarcity. Every barrel of oil or mcf of natural gas we produce, every ton of coal we tear from the ground, means there's one less left. No matter how much there may be, the cost of getting it will not go down, ever.

This is not news. Nixon knew that domestic supplies were headed down a generation ago, that the abundance of the previous generation was winding down. The energy prosperity of our generation, what there has been of it, was bought with blood. All the energies of our foreign policy, all our wars, over the last 30 years, have been fought for one reason and one reason only – to assure the monopoly of power needed to bring oil, gas, and other natural resources to our markets, at a price we could control.

The Big Mistake of our time, and I'll repeat it because it's important, was Al Gore's decision to make this fight a moral fight, a fight over “the Earth,” rather than what it is, an economic choice. At this point in time, his arguments are completely counter-productive to the simple truth.

The Richest Man in Town

The secret to true wealth lies in working for others, doing work you enjoy, making a difference to a community.

By that measure the richest man in Atlanta isn't Arthur Blank.

It's Pat Apoian (right) .

Detective Pat (as he's known) is an Atlanta Police officer who was injured last Friday while pulling a double-shift on behalf of the Kirkwood Security Patrol, a neighborhood group I belong to. He was called to a domestic disturbance a few blocks from my home, and was run over by (allegedly) a 29-year old named Khalif Edwards, who remains at large.

Who Will Make the Mozilla Phone?

That's the key question here  and the answer is, probably no one.

Android was a Linux, backed by Google. Their problems weren't with the operating system. In theory a mobile Internet client should be no different than a desktop Linux. But every aspect of the design for any “smart phone” – from how it takes calls, to the user interface, to the way apps interact – is covered by literally hundreds of patents.

• Some are held by giant companies which use them to pry open markets.

• Some are held by “development companies” like Interdigital, who research, invent and patent things for a living. (Interdigital invented one of the first digital encoding schemes, TDMA, back in the day.)

• Others are held by trolls like Lodsys, law firms that pick up minor claims at the patent office, expand them into grand conspiracies, then hold up every company in the mobile ecosystem for big gobs of cash.

You can't invent a way around these patents. If the present patent-and-copyright regime were in place at the dawn of the PC age, I'm sure we'd all still be driving IBMs with twin floppies.

Software patents are bad law for two main reasons.

1. They give lawyers an excuse to file their own private taxes on any innovator, slowing innovation, eventually slowing it to a crawl. Meanwhile nations without such court-created regimes, like China, are free to innovate all they want and run rings around us.

2. You can't invent your way around these patents, unlike drug patents, which specify compounds, or device patents, which are published so rivals can improve them. Patents granted on concepts don't have to show an actual invention. They don't have to publish the code. Which means you can't do the same thing, or something similar, in some other way. You can't patent a new mousetrap if someone has already patented the trapping of mice. You have an absolute monopoly on an entire industry that last for 20 years or more.

Bye-Bye Kirkwood Bar & Grill

You can learn a lot at a community meeting.

When last I wrote about my neighborhood of Kirkwood (a neighborhood in Atlanta) I was very worried that racial tensions were on the rise. I was worried that the black owner of a new business was getting a raw deal, and noted how I voted with him, feeling quite proud of myself.

Last night I attended the meeting of our local Neighborhood Planning Unit (NPU), the group whose recommendations are usually followed by the city in the granting of liquor licenses.

I learned a lot.

About 70 folks attended, almost half of them neighbors of the Kirkwood Bar & Grill, which opened a few months ago in a work-shop-residential development called Kirkwood Station. What they said was pretty shocking:

Here's Your Change. Believe It

A lot of people are feeling hopeless right now because unemployment, debt kabuki, and changing climates seem to portend doom.

Intimations of doom are common in any crisis. Read the literature from 1971, or 1935, or even 1863, and it seemed the whole world was coming to an end. To the muckrakers who created investigative journalism in the late 1890s, that doom had already come to pass.

But we always get through the crisis, and the reason is that each one is an opportunity too rich to resist. So it is in our time.

Some news from the front:

• Renewable energy now represents 25% of global capacity, with the developing world leading the way. The paper, from an international consortium called REN21, notes for instance that Germany installed more solar power in 2010 than the whole world had in 2009.

• A report from the Fraunhofer Institute in Germany indicates that a shift to renewable energy improves both the job market and economic growth.  Let's repeat that. A commitment to renewable energy actually improves economic growth and adds jobs.

• Cloud computing is growing 22% per year in part because its energy efficient, a new Forrester Research report says.  Not only does cloud maximize the value of servers and networking gear, but its pay-as-you-go business model encourages more efficient business behavior.

• IPads and other portable devices, including laptop PCs, will be off-the-grid entirely due to a new generation of printed solar cells developed at MIT. The cells could even be used to add warmth to winter clothing. You could see products using the technology in just two years.

These changes are going on under the surface of the economy right now, and that's the way it often is. Economic changes don't result in headlines until long after implementation is underway.

Just as the Civil War years were followed by the technology revolution of the 1870s, the 1890s were followed by the mass manufacturing revolution of the early 1900s, the Depression gave birth to the Baby Boom Years, and the oil crisis yielded to the computer revolution, so it will be again.

Been Here Before

A lot of news people are going to call the present debt crisis "unprecedented" over the next few days.

They are wrong.

The Panic of 1837 represented the bust of states, which had backed bonds for canals and roads. The U.S. government could not backstop these state bonds, because of politics. The Democratic Party of Andrew Jackson deliberately let the charter for the U.S. Bank to lapse, and thus everyone who had bad paper went bust, both holders and issuers.

George Peabody was, at that time, the main banking representative of the U.S. in London. He was unable to sell American bonds at any price for nearly a decade, even with the aid of partner Junius Morgan. Their bank was only made whole by the California gold strike starting in 1848, which made America's credit good again. (The good news for Peabody was he became rich and America's first philanthropist. His firm became the father of many, under his partner's name. And you may have heard of his partner's son, who became the New York office of the firm -- John Pierpont (J.P.) Morgan.

The Panic of 1893 started similarly to the 1837 rout, with the bankruptcy of banks and railroads. But because the U.S. government was mainly supported by tariffs and because money was supported by gold the government was, in fact, running out of money by 1895. Republicans had blamed silver for the panic, winning the 1894 off-year elections, and President Cleveland was forced to borrow $65 million in gold at the usurious rate of 4% interest, from Morgan and partner L.P. Rothschild. As in the previous panic it took another gold rush to really bail us out, this time in the Alaskan Klondike.

Note that when institutions can't pay their bills, hoarders rush first to gold, believing shiny metal maintains its value better than any promise. In the short run they are right. But they were only made right, in the past, by large gold strikes that devalued the market value of gold and made money whole. In the long run only economic activity creates any value. Gold is believed to be a storehouse of this value, but the value itself lies in production capacity.

President Clinton built a bridge to the 21st century, but President Bush detoured it to the 19th. Before we can move forward, many of the issues of the 19th century will have to be legislated again.

 

 

Obama Has Them Where He Wants Them

This is going to make some heads explode.

But the President has his political opponents right where he wants them.

I explained the coming scenario at Seeking Alpha a few weeks ago. The "debt ceiling" is a nonsense. The President has a duty under the 14th Amendment to pay the nation's bills.

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Yep, the same 14th Amendment the Tea Party tried to use against the President taking office guarantees there is only one way this can end. All our current debts are authorized by law. They came about by laws from the Congress, including this Congress, and they must be paid.

(And don't try that game of the extra clauses invalidate the meaning I've outlined. You've done the opposite with the 2nd Amendment for a generation -- that is a militia amendment, not an AK47s for all amendment. Everyone who might scream the President can't use the 14th in this way argued in the opposite manner on the 2nd. So have a nice cup of STFU, Tea Party.)

The President does not want a constitutional solution, because it mainly kicks the can down the road. At some point, as the economy starts to grow on its own, government policy must move toward contraction, away from stimulus. And it must do this in a major way.

Of course there is a way to do it. Once the Bush tax cuts expire, we're actually on a glide path to budget balance within 4 years. Doing nothing actually solves the problem.

The Crisis and the Medium

Think of this as Volume 15, Number 31 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

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For the American people of 1776 the most important document of the year was not the Declaration of Independence.

It was Thomas Paine's Common Sense.

Released as a pamphlet, it was nothing more than a series of articles – blog posts, really – that spoke to the soul of the ordinary person.

It was written with passion, it had one author, it was filled with pithy nuggets, and it told a story in the clear language of the day. Jefferson's Declaration, by contrast, was the work of an elite committee. It was a document of the head. Paine spoke to the heart.

All people today remember the Declaration, and few remember Common Sense, because Paine was just a pamphleteer, a rabble-rouser, while Jefferson was a philosopher-politician, a great man who did great things, like getting the Declaration passed unanimously by the Continental Congress. But when you're in the time of Crisis, it's the pamphleteer, the story-teller, who will have the most immediate impact.

So it has always been. Uncle Tom's Cabin  was not great literature. To modern readers it seems hackneyed. But it told a story people wanted to hear, and it moved them toward facing the Crisis of their time. And what made Lincoln great, in his time, were his speeches, short, to the point. Like blog posts.

I wonder if anyone noticed this. But the Murdochs tried all day today to pretend that their current problems involve just some "rogue employees" of News of the World , when the allegations have already plainly been leveled at The Sun as well. And the FBI is investigating other Murdoch-owned units in the U.S.

Small Solar and the Changing Grid

We usually think of solar in terms of panels, flat sheets of polysilicon that are connected to the electric grid, and laid on top of homes or businesses at the cost of thousands of dollars.

As a result, financing games like that of 1 Block off the Grid get big write-ups.

But that's now how it's going to go. 

There are a host of “small solar” technologies, using plastic, and printing techniques, in the process of coming out of labs, all seeking funding. We don't pay much attention to it because the industry on which it's based, flexible electronics, is itself brand new.

But this is the real revolution of our time. This is the computer chip of the early 21^st century. It's where Always-On meets the power industry.

I've been writing about what I call Always-On, what others have dubbed “the Internet of Things,” since 2003. The idea is that remote sensors and motes, single-chip devices with built-in wireless communications, could live on us, and among us, tracking what we have and our condition.

I underestimated.