Dana Blankenhorn

The Death of the Oil Patch

Lost in my commentary on the coming decade was its first chapter, called The End of Oil.

The global economy has become dependent on oil since I was in college. Oil is behind most of our current problems, from global warming to the rise of Putin.

But the fall of oil is made possible by one fact. At the start of this decade I called it crossover. It’s the point where wind energy, and solar energy, become cheaper than energy from fossil fuels.

We made that crossover on schedule, in 2016. Since then, as I predicted, costs for renewables have continued to fall.

This is especially true for the most important form of renewable energy, efficiency. Insulation, LED lights, better furnaces and appliances, and computer controls mean demand for electricity in the U.S. has been stable through this decade. As a result, utilities have embraced electric cars, a technology as old as fossil fuels, but abandoned early in the 20^th century because electrical systems hadn’t scaled but oil infrastructure had.

All this should be good news. But it’s not. It’s a crisis the likes of which we haven’t seen since World War II.

Even OPEC now sees demand for its product falling. The International Energy Agency has cut its demand forecasts repeatedly this decade, and now agrees with me.

Apotheosis of Nationalism

An apotheosis is the glorification of something to a divine level, the treatment of a human or institution as a god.

It’s a climax state. As with a swamp that has become a forest due to the steady deposit of leaves, it’s unstable. It’s the last step before a fall. Anyone and anything can become Icarus. Our doom is sealed when we get too close to the Sun.

Nationalism was born in the 18^th century. Ours was the first new nation. Nationalism has dominated political organization since the 19^th century, because it delivered leaders beyond those of royal blood. The reign of Louis XVI, then, was an apotheosis for the imperial model. The tumbrel began the end for the divine right of kings.

We’re now at the apotheosis of the nation state. Everyone is now part of a nation state. We can’t conceive of any other structure. Nation states, their leaders, and their philosophies send their people off to war for the glorification of “the people.” It’s a continuing competition for resources, both human and physical. Nationalism is the ultimate zero-sum game. For my nation to prosper, other nations and people must suffer.

Elizabeth Warren on Tech Street

Ronald Reagan was not oil’s first choice in 1980.

John Connally was first. George H.W. Bush was second. Oil accepted Reagan and, through Bush, won political power for a generation, power it still has in the face of tech’s need for human capital.

So it is that we come to the 2020 game. Tech has been in the economic driver’s seat for 12 years, but in the political back seat for three. Tech has suffered for this. Its priorities have been ignored. It has been scapegoated by an Administration working in the interests of oil.

Technology is Democratic. It’s not a question of who tech prefers. Tech needs a seat at the political table, it will have a seat at the table, and that table will be Democratic. Assuming, of course, that democracy survives.

Vint Cerf: The One and Only

Try to summarize an hour in the presence of Vint Cerf in 500 words.

I can’t do it. 

Cerf is the most famous name at the Heidelberg Laureate Forum. He accepts that. Wherever he goes he is surrounded by eager young researchers. They come hoping for wisdom but also get lessons in charm, and his full attention. These are important lessons, that if you want to be heard you should listen as well.

Cerf helped design the TCP/IP protocol, 45 years ago.. He is still one of the most vital voices on the Internet and will answer any question asked, at length, and in complete sentences. 

Take autonomous cars. 

A single car is like a peppercorn, he said. A bunch of them are a peppermill, getting in one another’s way. Things get very complex, very fast. 

“Don’t make assumptions about the behavior of systems, especially if they’re large and complex and have many interacting parts,” he said. “There are some airports without controllers. So pilots get on a common channel ad the pilots negotiate with each other. I can imagine self-driving cars taking advantage of these mechanisms to negotiate .”

That’s the way Cerf’s brain works. Every question gets an extended, thoughtful answer, leaving his listeners with much to think about, and wanting more. 

Martin Hellman Has Concerns

What do you do if you win one of the big prizes in math or computing and are invited to become a Heidelberg Laureate? 

Some go back to their work, like Yoshua Bengio and mentor the next generation. Others become great men who wear their celebrity like a warm coat, like Vint Cerf, who is also in Heidelberg this week.

Then there is Martin Hellman. He won the Turing Award in 2015, along with Whitfield Diffie (who is also in Heidelberg), for public key cryptography, the Diffie-Hellman key exchange. 

Public key cryptography became controversial as soon as it  s was announced. The National Security Agency tried to suppress the technology under Admiral Bobby Ray Inman, who later saw the problem with weak solutions, said Hellman. Another cryptography war erupted in the 1990s with the “Clipper Chip,” an attempt to give crypto a “backdoor” for cops. Hellman called it  a front door. 

The third cryptography war began only recently, with the FBI putting pressure on Apple and others to get “exceptional access”  to iPhones, and the Trump Administration now trying to ban strong encryption. “It’s in a lull,” Hellman said of the current conflict. “Hopefully it dies.” But attacks are global, with even Australia trying to limit it. “They want to defy gravity to put things in space more cheaply,” he said. Hellman has been arguing this case for decades. 

In the process Hellman has created a second life, as an activist.

Martin Hellman has concerns. He likes freedom, and hates war. He rejects attempts to ban encryption because cops already have plenty of  information on us, like security cameras and license plates that can be automatically read as you drive. “I recognize there are trade offs. The FBI is trying to protect safety. We just  have to point out when they’re wrong.”

Trump is Not Unusual

Lost in The Eternal Now, reporters make One Big Mistake in writing about Donald Trump.

They call him unique.

There is nothing unique about Donald Trump. Yes, he is attempting to overthrow gains the American people won from tyranny over the course of 100 years.

But all those fights were against other Americans, and American governments. We have been here before. We have always been here.

Let’s not even talk about slavery or the Indian genocide. Let’s not even play Ragtime, the book, movie or musical where a black man is put down while a white immigrant rises.

Let’s start with that great liberal hero. Woodrow Wilson.

The Ghost of the Eternal Now

I’ve been a reporter for over 40 years, and I’m still angry at the same thing that upset me in journalism school. (That's me on my first journalism job, wondering why someone is taking my picture.)

This is the attitude of an eternal now. It’s driven by this old chestnut – a journalist is someone who works for someone who buys ink by the barrel. The key to that sentence is the phrase “who works for someone.” Journalists are supposed to leave their minds and hearts at the door of the newsroom.

Reporters are taught to have no sense of history, or of the future. Mainly we’re taught to pretend we know nothing, and everything we’re told is equally valid. As a result, most reporting has no context, and we can’t call out stupid when it’s right in front of us.

That’s how Trump gets away with it. Any reporter who likens what he’s doing to Jefferson Davis or Adolph Hitler is accused of malpractice by agents of stupid at The New York Times. We’re just supposed to print what he says and repeat what he does, like good little stenographers. Then let Bret Stephens or Ross Douthat tell us what it means. Everything’s fine.

It’s even worse in business, which is my beat. Because we are taught to ignore the broad sweep of business history, we send readers down blind alleys. We pretend that making cookies is as cutting edge as writing software.

The past and the future have always been there in front of us. It was clear in 1979 that oil was taking over from manufacturing, but people reported from Detroit then as if that city could be saved. It was also clear that oil was a boom-and-bust business, but I was told to report from Houston that the boom would go on forever.

One Nation. At War. With Itself

In August of 2019, the United States is a nation at war with itself.

We are at war with fundamental changes that must occur if the country, and the world, are to be saved from the Industrial Revolution.

We’re also at war with the essentials of economic growth in our time.

As I have written many times, the gating factor in technology is human capital. Trained, eager, free minds, willing to think the previously unthinkable, to model it and make it reality. This is where money is made today.

The more such people you have, the fewer of the other kind, the more money you make. The more freedom these people have, the greater their access to money, to new ideas, and to one another, the more your society prospers. This is Israel’s secret sauce.

Resources don’t matter. Machines don’t matter. Muscle doesn’t matter. Minds matter, more than anything.

The 2020 Game

The Tell on what will happen in 2020 came in late July of 2019.

Trump’s most loyal lieutenants, attorney general William Barr and Treasury Secretary Stephen Mnuchin (far right), issued existential threats against the Cloud Czars. Under Trump’s orders.

The Cloud Czars, for those unfamiliar with my current work at InvestorPlace, are Microsoft, Amazon.Com, Google, Apple and Facebook. As technology has come to dominate the economy, the Czars have come to dominate technology.

They’re the Cloud Czars because the tool which dominates technology is cloud computing. It combines parallel processing with virtual operating systems and open source techniques to hold down costs.

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.