Dana Blankenhorn

The Other Arms Race

We talk a lot about guns in the US, without doing anything about them.

But there’s another, even more dangerous arms race, going on.

It involves cars.

It’s not just that there are too many of them. They’re too damned big. Spending $60,000 for a pick-up that will never see a trailer hitch, or an SUV higher than an elephant’s eye, is stupid. Especially since these cars are sitting, unused, 90% of the time.

People buy giant cars for the same reason they buy guns. They make you feel safe. They buy as much car as they can afford, like these things are houses.

The Word for 2023 is Efficiency

If you can save costs, in business or consumer markets, you can make money.

This is technology’s big opportunity in 2023.

The cloud has already transformed how people interact. It’s now going to transform how machines interact.

Sensors and network software can be applied everywhere. Thanks to falling chip prices this can now be done cheaply. There is labor available to write the software, build the companies, and reap the rewards.

Consider the water system. Why aren’t sensors monitoring the condition of pipes, warning of potential failures, and identifying leaks the moment they occur? Why are water authorities still depending on people finding cracks in the street with water coming out of them on their own?

2022: The Global Cold War

It was clear in 2020 that Americans were at war with ourselves.

In 2021 that became a Cold War, mostly played out in the media and state legislatures. There were some violent outbursts. There always are. But for the most part it was our war.

In 2022 that war became global. Russia invaded Ukraine. China ratcheted up its rhetoric about invading Taiwan. Afghanistan and Iran criminalized every woman in their countries. And the war became hotter here.

With the good people of this country activated, we won some notable victories. We held off the horde in our general election. Ukraine held off Russia. China’s economy rolled over, giving Xi Jinping something else to think about. Iran’s women revolted. Jair Bolsonaro lost his re-election.

The Trouble with E-Bikes

A month ago, I bought an e-Bike for the family. The Lectric 3 is a great value at $1,000. It folds to fit into a trunk, gets 20 miles of hills on a charge. It can do our shopping, my son’s commute, and even get me back to Stone Mountain next year.

Meanwhile, one of Atlanta’s city councilmembers has introduced an e-Bike rebate program. It’s an effort to accelerate uptake, which barely needs the stimulus.

But before the revolution, we need to talk. There’s trouble coming to River City.

You can already see it if you ride the Beltline, which Atlanta advertises as its ticket to the future. The Beltline is a long sidewalk that sits on old railroad right of way. By the end of the decade, it’s supposed to run all the way around intown Atlanta, 22 miles in all.

I love the Beltline. I love the idea that the city is building paths leading to the Beltline. I love the idea that e-Bikes could force planners to assume less inner-city car traffic.

But…

Positives of a Tech Recession

Despite some stunning investment losses, I’m enjoying the latest tech recession.

No one likes a recession, but sometimes it’s like spring cleaning, necessary to clear the excess. There were a lot of zombie technologies, zombie companies and zombie assumptions that have been overrun since the Fed decided that money should cost money and there should be less of it around.

Web3, the metaverse, and crypto were all fake from the jump. Advocates for streaming and podcasting didn’t understand that the gating factor is time, not money. A lot of companies were selling themselves based solely on sales growth, ignoring the need for profit.

This means there’s now opportunity, in the form of talent, for new ideas that will power the economy forward. The main trends I described in 2019 – the end of oil, the Machine Internet, and DNA as a Programming Language – they’re still on. But there’s a lot more, too.

Urban Game Changer

I’ve been a bicyclist my whole life. My present one dates from 1981, and it works great. (Here it is in Centennial Olympic Park last year.)

I know most people aren’t me. Bicycling remains a niche activity. Bike lanes are rare because there is little demand. Rail lines scale, but they’re inflexible. Cars offer comfort, but roads don’t scale. The urban environment is little changed from when I came to Atlanta in 1981.

I’m getting older. At 67, the heart rate needed to maintain a good speed for a half hour is near my limit. All I’m good for at the end of 10 miles today is a nap.

But electric bikes are a game changer. I finally bought one this week, a Lectric 3.0. It unfolded from its box in about an hour and took no tools to set up. The battery runs 20-40 miles between charges, for which you use a 3-prong wall plug and a power supply just like your old laptop. Anyone can get it to go 10 mph, even over hills. You can buy a passenger seat or grocery baskets.

The Intranet of Systems

 

A warehouse is a system.

A factory is a system.

A hospital is a system.

The Machine Internet is now ready to take its next step, toward the transformation of systems.

Vendors have been adding intelligence to machines for a decade. My car can now tell me when my tires need air. Many machines can tell their owners when they need preventive maintenance.

An Intranet of Systems would get all the software on these machines working together, the way orchestration software lets a company control its supply chain.

Oil is Crack

Here’s today’s reason for optimism.

Fossil fuel companies are not the “energy industry.” They never were.

They’re miners, seeking fuel. They’re bringing up stuff from the ground that engines then burn.

Solar panel and windmill makers aren’t the “energy industry” either. They’re manufacturers. They make engines that create energy.

Utilities are the energy industry.

The difference between oil companies and the manufacturers of solar panels is the difference between fuel and an engine.

Until recently, man had no choice but to do the energy two-step, burning fuel in engines to create energy. The engines created by renewable energy producers weren’t economically practical.

Now they are. It now costs less to build and run a windmill than a car engine, much less. The gap gets wider all the time. Even when the cost of battery storage is added, harvesting the energy all around us is the cheaper way to do things.

Given both that economic reality and the damage fossil fuels are doing to our climate, it’s clear that oil is the crack cocaine of our time. We need to get off it if we’re to survive as a species. As I wrote three years ago, we’re in the process of doing that. 

Too Much Winning

Joe Biden is proving to be the economic nationalist Trump only pretended to be.

America isn’t just back, baby. We’re rolling over the world. The dollar is as high as it’s been in 40 years. Inflation is headed down, even if markets don’t yet know it. We’re at full employment. Even manufacturing is coming back.

But there can be too much winning. When everyone else, including your friends, is losing, winning makes you the bully.

That’s what is going on now. That’s the real message of the Swedish and Italian elections. Voters there are turning on the U.S. as an economic bully. We’re exporting inflation to them, and they’re looking at a very long, cold winter.

When you treat your friends like adversaries, they become your adversaries. It’s one thing to crush your enemies. Russia is being crushed. China is in very bad shape. But when everyone is on the ropes it’s time to be a good winner.

What built American prosperity is we were good winners. We won World War II, then instituted the Marshall Plan, aid and loan forgiveness meant to give democracy a chance against the Soviet Union. We were magnanimous toward Japan, too, so that by the time of the Korean War they were mostly in our corner.

This is another such time. The Fed’s interest rate hikes, which quadrupled what the best borrowers pay for money over just three months, are going to cure inflation. Many prices are already coming down. But we don’t have to treat inflation as Sherman did Georgia to win. It’s time to take the foot off the gas, not on behalf of America but on behalf of England, of Germany, of Japan, even of China. They’ve had enough.

Is the Volcker Precedent Wrong?

Fed chairman Jerome Powell is basing his anti-inflation fight on the success of Paul Volcker from 1979-1984.

The myth is Volcker sent interest rates higher than that era’s inflation, but the resulting recession set the stage for decades of growth to come.

What if it’s wrong?

I had already begun my reporting career in 1979. Volcker’s policy did cause pain. But interest rates didn’t start falling until the 1980s, and the Fed wasn’t the only cause.

The other cause was the State Department. In 1981 the Reagan Administration quietly negotiated an alliance with the Saud family based on a simple premise. They would sell oil in dollars and pump a lot of it. We would extend to them our military protection, specifically against Iran.

That alliance has held firm from that day to this. It held firm through the Gulf War. It held through 9/11, even though the attack was committed mainly by Saudi nationals and inspired by the son of a Saudi billionaire. It held through the disaster of Iraq.

It was this alliance that sent inflation down in the early 1980s, not Volcker’s Fed. Oil went from over $125/barrel to $80 in Reagan’s first term. Texas’ economy was crushed, but everyone else prospered. It was morning in America.

Our present inflation is also based on resources. Oil costs spiked from $80/barrel last September to over $115 in May. They’ve since fallen back to $80. The fall came about because we’re no longer in an economic era defined by resources.