Dana Blankenhorn

The 1979 Game

An industry’s takeover of politics tends to be defensive.

It happens when that industry seems to be riding high. It acts against leaders whom neutral observers may credit with that rise.

I covered this story 40 years ago. In Houston.

The oil industry did great in 1979, despite Jimmy Carter’s cardigan sweater. Saudi Arabia, more Texas’ ally than America’s, had proven the economic power of resources with its 1973 embargo. Iranian mullahs believed they could use the same economic force against America. Oil understood this as a threat to its interests. Carter saw oil’s profits as leverage he could use against the Iranians.

Fall of the House of Oil

There is no energy shortage. The sun shines. The wind blows. The tides roll. We live on a molten rock.

At the start of this decade, when I first began covering the War Against Oil, and changed the sub-head of this blog to reflect that, I believed the key to victory was bringing enough investment to the space, public and private, so that the cost of renewable energy would fall below that of fossil fuels.

It’s happened.

Crossover happened just as I expected, in 2016. The cost of energy from solar panels is now lower than that from burning coal. The cost of energy from windmills is now falling below that of burning natural gas.

The only thing keeping fossil fuels alive in the big utility model is the sunk cost of infrastructure. When that proves unreliable, as it did in Puerto Rico a few years ago, it’s replaced by solar power, batteries, and micro-grid technology, just as Al Gore predicted two decades ago. 

This Medium Cries Freedom

Throughout the decade now ending there has been a steadily growing drumbeat of elite opinion to the effect that this medium enables tyranny.

I blame Trump. The Russian manipulation of Facebook made Trump possible. Now tech must live down that legacy.

It means every collection of private data, whether by corporations, government or hackers, whatever the motive, is seen as evidence we need to throw our computers out the window. Every new technology meant to thwart abuse, meanwhile, is seen as a threat to human liberty.

Tech can’t win.

Technology can, in the hands of a ruthless dictator, enable terrible abuses. But there’s a limit.

Getting Around

I have had the same bicycle for almost 40 years.

It’s a road bike with a Romic frame, hand-made by a Hungarian refugee. The derailleurs are by Campagnolo, the gearing Shimano.

It’s very nice. It cost me three teeth. A car ran into me, crushing my old bike, in early 1981, and this was offered by my mechanic as the replacement.

I mention this only to show I have experience in getting around an urban place without gasoline.

My strangest finding over that time is that Houston is a better city for bicycling than Atlanta, if you’re trying to go someplace. That’s because Houston is flat. Hills cost energy and limit the distance you can travel comfortably.

The Crash of 2019

Right now, in early April of 2019, the U.S. economy seems to be in great shape.

Inflation is minimal. Money is cheap. Unemployment is down. Wages are rising.

Here is why I think this is all going to collapse, and that right soon.

Deflation.

As I have said here many times, technology creates deflation. Deflation is the primary subject of my Moore’s Law book, which I’m getting ready to rewrite for 2020.

To understand deflation in action, look in your hand.

The Coffee Man, A Short Story

Note: This story emerged from a small brainstorm. We know that climate change is driven by over-use of fossil fuels but what if, instead of an invention that burns coal or oil, someone had invented a machine that just sucked energy out of the air?

With just a tweet of encouragement from a well-known alternate history writer, I set to work

____________

The old man put on his “Juan Valdez” hat, a term his young employees did not understand, and walked slowly into the greenhouse, a sling across his left shoulder, the basket against his right hip.

The delicious fruit, with its precious stones, awaited him. His hands shook in anticipation.

Carefully, he pulled down a branch and picked only the ripest, reddest cherries, placing them one-by-one in the basket. It took him nearly an hour to fill the basket, not due to his age but to his care, for he avoided all the green, unripe fruit that had long been pulled routinely by those desperate for what lay within.

By the time his young workers arrived for work, chattering in a half-dozen languages, the old man was sitting at their shared lunch table, picking fruits from his basket like an aged chimpanzee, stripping off the thin fruit layer with his teeth and gums, then carefully placing each seed beside him in a dish. Satiated, he hefted the remaining fruit in its basket and placed it in the hopper of a processor.

The fruit had an intense, citrusy taste and a grape-like texture. He rubbed his hands together after emptying the basket, then smelled them with pleasure. The fruit not only tasted great, and energized him, but left a waxy residue which made his hands look younger. The fruit would be separated from the stones, dried into a pulp, and become a second harvest for the greenhouse.

His workers would go through the greenhouse today harvesting from several trees, separating the red fruits from the green, and processing them all so that, when the seeds were dried green, then roasted, they could be crushed to create what was now the most expensive beverage in all the world.

Coffee! Glorious coffee!

What Comes Next

After the market falls, when everyone is in despair, is when I get the most excited about the future.

That’s because recessions aren’t so much an ending as a beginning.

A recession means the old games no longer work. The oldest business processes disappear entirely. WE have seen this during every recession of my working lifetime.

Small towns fell under the onslaught of Walmart in the 1980s. Big boxes replaced department stores in the 1990s. In the 2000s, whole layers of middle management disappeared. In this decade, gatekeepers like insurance agents have gotten the boot.

The 1979 Game

When you win the popular vote by 9.5% but still lose ground, as Democrats did November 6, your problems are systemic.

The result underlies tech’s obligation to come out of its shell and fight for the political system that birthed it.

Tech moguls have done some things. Jeff Bezos bought The Washington Post, Marc Benioff bought Time Magazine, Laurene Powell Jobs bought The Atlantic. The key to gaining more power will be in creating journalism business models beholden to tech interests.

Tech must do to Bizarro Carter what oil did to Jimmy Carter, and for the same reason -- to protect its self-interest.

Peak Carter, Peak Trump

One thing that has surprised me over the last two years is how almost no one understood my point right after the 2016 election, that Donald Trump is a sort of Bizarro Carter. 

By that I meant he is completely the opposite of Jimmy Carter. Carter was a Democrat. Trump is an Autocrat. Carter believed in human rights. Trump believes in the divine right of kings. Carter championed the environment. Trump trashes it. Carter said he’d never lie to us. Trump lies 6 times before breakfast.

What they have in common is they represent the end times for the Political Thesis that birthed them. Carter was elected 44 years after Franklin Roosevelt and was the last President to run on those principles. Trump came 48 years after Nixon and will be the last President elected under the Nixon Thesis of Conflict. 

Nature of Money, Nature of Man

When I wrote my “anti-Trump polemic” early this year I thought I was writing about politics.

It turns out I was writing an economics book.

I learned this while reading a biography of the late Jane Jacobs, best known for her fight against the “urban renewal” of Robert Moses. After that fight Jacobs moved to Toronto, becoming one of Canada’s most beloved intellectuals, and there she wrote an economics history book, Cities and the Wealth of Nations. 

In this book Jacobs identified cities, rather than farms, as the original source of wealth. It was cities that turned wheat into bread and beer. It is cities that transform everything.

True, as far as it goes. But how and why remained a mystery to Jacobs. The nature of money eluded her. It’s something my recent book explains by looking at American history and seeking what I first saw as political patterns in our national life, and later concluded were economic patterns.

The answers, in our time, strike at the nature of money, the nature of man, and why, even after Hurricanes Harvey and Irma, there remain people like John Stossel who continue to deny the reality of man-made climate change. 

Wealth, it turns out, is entirely man-made. This is more controversial than it seems. Politicians have always believed wealth to be a product of holding land, or of exploiting it. They see history as great men moving lesser men around like pawns on a chessboard. Social historians, by contrast, focus on the real lives of ordinary people. These are important, but they are no more relevant to economic history than land is.