Category Archives: the economy

…on the Entrepreneurial State

With the next Canadian federal election less than a year away – and undesirables like Wayne Gretzky soon to be purged from the voter lists – I’ve been getting a lot more fundraising emails lately. As of mid-December I’d received nineteen in eighteen days. It was like a Christmas advent calendar, but in my email inbox! (Like a beleaguered Silician storekeeper, I paid my “protection money” and now they’re leaving me alone. :) )

Politicians are often derided for their short-term thinking, which is probably a fair criticism. If you ballpark an election cycle at roughly four years, newly-elected officials might take a year to learn the ropes, a couple years trying to be effective, and then a year trying to get re-elected. Judging by how successful those old Soviet and Chinese Five-Year Plans typically were, that might not be quite enough time…

The kind of decade-scale industrial policy used so effectively over the past half-century by Japan and South Korea (and Singapore… and Taiwan… and to an extent in Norway) typically occurred when these countries were dominated by one political party. This political stability may have allowed government and industry to set effective long-term plans without fear that a few years on, a new Prime Minister would reverse course on everything.

Of course, one-party dominance is no guarantee of long-term economic success – as evidenced by Mexico, parts of both the American South and South America, and … Alberta. As recent history shows, our neighbours would rather stay a Saudi prince’s whim away from economic catastrophe, than raise sales and income taxes to build up a treasury to buffer themselves from the ravages of the resource cycle. It’s as if they’d read Aesop’s Fable about the ant and the grasshopper, and concluded the grasshopper was the role model!

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Steven Chu’s “Time to Fix the Wiring” at four years

Former US Energy Secretary Steven Chu’s recent resignation — his farewell letter is here  — is no doubt celebrated in the fuel cell quarters as passionately (or more so) than it is mourned in the rest of cleantech.  Early in his term, Chu infamously argued (infamously, at least, to fuel cell enthusiasts) that fuel cell electric vehicles (FCEV’s) needed four miracles for commercial success, namely:

  1. most hydrogen comes from natural gas (so why not just use that as a fuel?)
  2. improvements in hydrogen storage were needed
  3. fuel cells needed to improve
  4. there was no distribution system in place

While many of my colleagues were hostile to Chu — some more than others (an inside joke) — I was largely unfazed, as Ballard had by then moved on to “everything except automotive fuel cells” in light of the commercialization timelines.  (Which reflected points 3 and 4 above.)  And Chu seemed open-minded towards stationary fuel cells.  From the MIT Technology Review article:

“I think that hydrogen could be effectively a “battery” in the sense that suppose you had a way of using excess electricity–let’s say a nuclear plant at night, or solar or wind excess capacity, and there was an efficient electrolysis way of turning that into hydrogen, and then we have stationary fuel cells. It could effectively be a battery of sorts. You take a certain form of energy and convert it to hydrogen, and then convert it back [into electricity]. You don’t have the distribution problem, you don’t have the weight problem. In certain applications, you don’t need as many miracles for it to happen.”

Chu, ARPA-E, and solar

Many people have already written panegyrics to Chu’s departure, Climate Progress and Grist among them.  Even coming from the fuel cell industry, I think on balance he deserves a lot of praise for carrying out the US Department of Energy’s ARPA-E program to fund next-generation energy research.  Even if he did get a bunch of things wrong, among them the prediction that solar needed breakthroughs to achieve commercial viability.

“But Chu noted that solar power, for one, is still far too expensive to compete with conventional power plants (except on hot summer days in some places, and with subsidies). Making solar cheap will require “transformative technologies,” equivalent to the discovery of the transistor, he said.”

In the past four years, it’s gotten there in Germany, is on the cusp in Australia, and is probably already there in several sunnier climes.  The cost-reductions in that industry have come almost exclusively from economies of scale and the nearly-universally-applicable cost-learning, or experience curve.

Mind you, given my political leanings, I’m generally supportive of government-driven industrial policy.  :)  Societies generally last a lot longer — centuries longer — than any individual businesses, so it makes sense that societies may want to fund projects with a payoff too far out for individual businesses to care about.  That said, I support the notion that “moonshot” projects should ideally have partial private-sector funding, so that business people have skin in the game, and can search out ways to commercialize achievements made on the way.

An intro to “Time to Fix the Wiring”

The above provides good context with which to revisit the essay Chu (and one of his underlings?  :)  ) wrote for a McKinsey & Company series on the future of energy, exactly four years ago today.  This was part of their “What Matters” umbrella, which covered energy, biotech and other topics.

They’ve since taken the series offline — I suppose they need to keep things fresh — but I was able to get permission from a McKinsey representative to reprint the essay below.

Hindsight is 20/20, of course, and in this case renewable energy has progressed far beyond his Olympiad-ago assessment.  Solar’s costs have come way down, as noted above; renewables may be now viable for 40% of a grid instead of  25% he cites, and some of the geothermal breakthroughs he discusses, can probably be borrowed from the shale gas fracking industry.

All in all, the essay is a reminder to environmentally and stewardship-inclined alike, that the clean energy sector has come  astonishingly far in four years.  I’ll delve into further detail when I continue my series on our renewable destiny. :)

—————

Time to fix the wiring

By Steven Chu

26 February 2009

Imagine that your home suffers a small electrical fire. You call in a structural engineer, who tells you the wiring is shot; if you don’t replace it, there is a 50 percent chance that the house will burn down in the next few years. You get a second opinion, which agrees with the first. So does the third. You can go on until you find the one engineer in a thousand who is willing to give you the answer you want—“your family is not in danger”—or you can fix the wiring.

That is the situation we face today with global warming. We can either fix the wiring by accelerating our progress away from dependence on fossil fuels, such as coal, oil, and natural gas, or we can face a considerable risk of the planet heating up intolerably.

The need to act is urgent. As a start, governments, businesses, and individuals should harvest the lowest-hanging fruit: maximizing energy efficiency and minimizing energy use. We cannot conserve our way out of this crisis, but conservation has to be a part of any solution. Ultimately, though, we need sustainable, carbon-neutral sources of energy.

It’s important to understand where we are now. Existing energy technologies won’t provide the scale or cost efficiency required to meet the world’s energy and climate challenges. Corn ethanol is not a sustainable or scalable solution. Solar energy generated from existing technologies remains much more expensive than energy from fossil fuels. While wind energy is becoming economically competitive and could account for 10 to 15 percent of the electricity generated in the United States by the year 2030 (up from less than 1 percent now, according to the US Energy Information Administration), it is an intermittent energy source. Better long-distance electricity transmission systems and cost-effective energy storage methods are needed before we can rely on such a source to supply roughly 25 percent or more of base-load electricity generation (the minimum amount of electrical power that must be made available). Geothermal energy, however, can be produced on demand. A recent Massachusetts Institute of Technology (MIT) report suggests that with the right R&D investments, it could supply 10 percent of US power needs by 2050 (up from about 0.5 percent now).

Coal has become a dirty word in many circles, but its abundance and economics will nonetheless make it a part of the energy future. The United States produces more than half of its power from coal; what’s more, it has 27 percent of the world’s known reserves and, together with China, India, and Russia, accounts for two-thirds of the global supply. The world is therefore unlikely to turn its back on coal, but we urgently need to develop cost-effective technologies to capture and store billions of tons of coal-related carbon emissions a year.

Looking ahead, aggressive support of energy science and technology, coupled with incentives to accelerate the development and deployment of innovative solutions, can transform energy demand and supply. What do I mean by such a transformation? In the 1920s and 1930s, AT&T Bell Laboratories focused on extending the life of vacuum tubes, which made transcontinental and transatlantic communications possible. A much smaller research program aimed to invent a completely new device based on breakthroughs in quantum physics. The result was the transistor, which transformed communications. We should be seeking similar quantum leaps for energy.

That will require sustained government support for research at universities and national labs. The development of the transistor, like virtually all 20th-century transformative technologies in electronics, medicine, and biotechnology, was led by people trained, nurtured, and embedded in a culture of fundamental research. At the Lawrence Berkeley National Laboratory—part of the US Department of Energy and home to 11 Nobel Laureates—scientists using synthetic biology are genetically engineering yeast and bacteria into organisms that can produce liquid transportation fuels from cellulosic biomass. In another project, scientists are trying to develop a new generation of nanotechnology-based polymer photovoltaic cells to reduce the cost of generating solar electricity by more than a factor of five, making it competitive with coal and natural gas. In collaboration with scientists from MIT and the California Institute of Technology, yet another Berkeley Lab research program is experimenting with artificial photosynthesis, which uses solar-generated electricity to produce economically competitive transportation fuels from water and carbon dioxide. If this approach works, it would address two major energy challenges: climate change and dependence on foreign oil producers.

In the next ten years, given proper funding, such research projects could significantly improve our ability to convert solar energy into power and store it and to convert cellulosic biomass or algae into advanced transportation fuels efficiently. Combined, this would mean a genuine transformation of the energy sector.

The world can and will meet its energy challenges. But the transformation must start with a simple thought: it’s time to fix the wiring.

This article was originally published in McKinsey’s What Matters. Copyright (c) McKinsey & Company. All rights reserved. Reprinted with permission.

The world (of investing) according to Dante

(originally written Oct 21, 2011.  Part of Great Upload of 2013.)

It seems like the financial markets will have an “upwards bias” for the next few months, despite the circling-the-drain quality of the macroeconomic picture, which inspired this magazine cover from the Oct 1 issue of The Economist magazine.

20111001_CNA400[1]

If there’s anything I’ve learned over my years watching stocks (and, to be perfectly honest, there isn’t  ;) )  it’s to do the opposite of what The Economist says on its cover, a phenomenon known as the magazine cover indicator:

  • you’d’ve tripled your money in Ford in about two years by buying them after the July 2009 “Detroitosaurus Rex” issue
  • a couple months prior to that, the cover story “The Jobs Crisis” coincided with the bottom of the stock markets
  • of course, their timing is occasionally off; they did an oil-barrel cover in May 2008, and the price increased several percent into July before plummeting.

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From housing to plumbing

(originally written Mar 4, 2012.  Part of Great Upload of 2013.)

Readers (regular and irregular both) may know that about six years ago, I was quoted in MacLean’s saying Canadian housing was in a bubble.  So after six long years of looking very wrong, I was delighted to see the right-wing rag run a cover story proclaiming that Canadian housing is in a bubble!  So I’ll dedicate this email to all the stopped clocks out there — twice a day, your time will come!  :)

Like anyone else challenged by a cognitive dissonance between ego and evidence, I naturally prefer the delusion that I wasn’t wrong, just early.  ;)  Having figured prices would fall by 2008 at the latest, I like to think I was only off by an Olympiad, or eight “Friedman units“.  On the more forgiving fossil-record timescale, I nailed it!

MacLean’s take

MacLean’s cites low interest rates and lax lending standards as a (sub?)prime reason for the real estate boom-turned-bubble.  This can kind of be expected, because most people aren’t great with money.  It’s a financial variant of Sturgeon’s Law, which says that “ninety percent of everything is crap”.  Take housing market predictions, for example…  ;)

Given the opportunity to make very bad decisions by enabling financial institutions, most people will do so.  Indeed, the mutual fund industry owes its existence to people’s predilection for sub-par performance!  Of course, most guys who throw their own darts probably do even worse, so the best way to look at mutual funds is probably to see them as a less-damaging “cowpox” to the “smallpox” of DIY investing.  :)

My take

As you’d expect from a left-leaning atheist on an issue like this, I’m with… Jesus, and blame the bankers.  ;)  If people are trying to borrow beyond their means, competent financial institutions are supposed to not make loans.  Of course, fewer loans means lower profits and much lower stock-option-based executive compensation.  (As they say, no good deed goes unpunished.)  By loosening lending standards, bank executives can enjoy kingly compensation; and by the time the crisis hits, they’ve moved on to other pillage-able pastures.  Which explains why cartoons like this make the rounds:

Banks lending / too much damn money / to people, is a haiku microcosm of how Greece came to be in its quandary: it borrowed more than any sane lender could’ve reasonably expected it to repay.  Which is why European governments are trying to work out “bailouts” by which they launder money through Greece to recapitalize their countries’ banks.  The “choose your own adventure” blog entry here does a pretty good job of showing the stalemate.

Compounding the problem, austerity packages are being pitched, which will only make the crisis worse; in cutting public services, austerity measures reduce a country’s GDP (because public-sector activities count towards GDP) meaning debt has to be repaid from an even smaller national account.

The endgame seems to be that Greece defaults and reverts to its own currency, while everyone else does the duck-and-cover.  After mistiming the Canadian housing market — and fuel cell vehicle commercialization for that matter — I’ll decline to guess when that happens.  ;)  A cheaper currency would cement Greece as a cheap vacationing spot (tourism is one of their biggest industries) and allow them to attract some manufacturing jobs with which to rebuild their economy.

There’re many precedents for thinking that default and devaluation would work.  Iceland defaulted a few years back; its GDP is now higher than pre-crisis levels, and its government debt is now back at “investment grade”!  Argentina also did pretty well after its default in the early 2000’s… and a forgiving of debts (effectively a society-wide default) preceded the rise of democracy in classical Athens.

The march of progress.  And plumbing!

Pessimists might note that we’re not always that good at learning the lessons of history — even as Iceland resurges, Latvia is in a “Shock Doctrine” death spiral.  But here on Team Glass-half-full, I like to think that we do in fact make slow progress.  :)   Consider universal indoor plumbing, which none of us would want to live without.  First invented around 2000BC by some proto-Tommy Douglas of the Harappan Civilization in the Indus Valley, this was such a breakthrough that within thirty-eight centuries London, England — capital of the globe-straddling British Empire — had decided to build its own!  Progress — there’s no stopping it!  ;)

The millionaire tax, American- and French style

(originally written Apr 19, 2012.  Part of my Great Upload of 2013.)

The American “millionaire tax” plan

At the moment, Obama is facing stiff resistance from his proposal to tax all income above $1,000,000 per year at a rate of 30%.  This, despite the support of one-time world’s-richest-man Warren Buffett, who wondered in a NY Times editorial last year why he, a billionaire, paid a lower tax rate than his secretary.

(Answer: most of Buffett’s income comes in the form of capital gains taxed at 15%, which is lower than income tax rates paid by all but the lowest-paid labourers.  A similar situation exists in Canada — capital gains are taxed at half the rate of actual work.)

The French “millionaire tax” plan

As has become the regrettable pattern, Obama’s proposal sounds nice on the surface, but pales in comparison to others being bandied about.  A French economist suggested his country raise the top rate from 40% to 60%; and, not to be outdone, Francois Hollande, the leader of France’s Socialist Party, proposed 75%.  :)  And get this — with the election imminent, Hollande is topping the polls!!

Of such things, the new leader of Canada’s NDP, Thomas Mulcair, can only dream.  ;)

France being France, it wouldn’t be unprecedented for Hollande to win the election and runoff.  In 1988, the year after Reagan gave his famous “tear down this wall” speech in Berlin, and with Glasnost and Perestroika in full effect in the Soviet Union, France re-elected a Socialist as President.  Yessir, the French rabble takes marching orders from nobody.  :)

In May 1968, student protests there went viral and culminated in a general strike by two-thirds of the working population, causing President de Gaulle to flee the country, fearing revolution.  (Not an unreasonable fear; in the prior two centuries, the country had gone through four revolutions and two empires, and was on its fifth republic.  They even found the time to restore the monarchy once!)

In the snap election a few weeks later, in a display of that characteristic French je ne sais quoi, voters gave de Gaulle a landslide majority, having decided that he was actually better than the alternative, after all.  (When they say a week is a long time in politics, kids, this is exactly what they mean!)

Millionaire surtaxes in general…

In broad terms, surtaxes on the very highest incomes tend to be difficult to implement, because the 0.001% who live in “Richistan” tend to move between countries in a game of tax whack-a-mole.  Aiming at the top 0.1% or even 1% is probably more productive, as they’d be more likely to look for tax loopholes, than move to the Cayman Islands.  And that at least creates jobs for accountants and lawyers.  Plus, there’s more of them.  ;)

This makes me wonder if, for all the global advantages English brings us internationally, it becomes a disadvantage, here: Canadians can move to most parts of the US without suffering much culture shock.  Britain and Australia would be bigger cultural leap, but most of us would still have “home-language advantage”.

For the uberrich Swede, Norwegian, German or French person to emigrate to a lower-tax zone though, they’d have to leave their social circles, adapt to a new culture, and manage day-to-day in a different language.  And if they wanted to stay close to home, their selection would mostly be limited to countries they’ve historically invaded, or countries which have invaded them.  (It’s awesome, the kinds of elaborate theories you can come up with, when you don’t bother to back them up with data!  But in this case the Wall Street Journal provides some cover for the idea that even if the well-off say they’ll leave, they usually don’t.  Reminds me of a certain someone at work, actually…  ;)  )

On this side of the pond, no one really raises a fuss about our cousins’ invasions (1775, 1812) or the fact that we burnt their White House in revenge (1814).  So for well-off Canadians, border-hopping mainly means cheaper home, gas, dairy, phone, TV and internet costs.  ;)  That, and having to put up with heathens who don’t know that some words aren’t meant to be pronounced “abowt”.  ;)

Dinner with the Overclass (II) (“Great Upload of 2013”)

(written April 10, 2012 – part of my Great Upload of 2013)

So I got special, spousal dispensation to go to a mutual fund dinner the other night.  As a thank-you for generating a lot of fees for the company, attendees got dinner (including drinks — pity that I don’t), a pen, paper pad, mints, and chocolate wrapped up to look like a silver bar.  (Milk chocolate; they didn’t spring for the good stuff.  Even financial houses have their limits, I suppose.)  I guess it’s kind of like how some credit cards offer a cash-back option, which kicks back a fraction of the interest their victims clients pay them!

I met my account representative for the first time, as well; and discovered to my great pleasure that I’m taller than him.  (There’s a complex in there somewhere, I’m sure of it. :) )  The funny thing is, I think he was assigned to me because the company thought I was Jewish — the tip-off being when they sent me a New Year’s greeting last September, in time for Rosh Hashanah.  I wonder whether, given the economic strength of the Chinese ethnic minority in south-east Asia, financial advisor types over there send Lunar New Year cards to clientele with Chinese-sounding last names?

Goooooold

Summer came early to many parts of the US this spring; in March, record high temperatures outpaced lows by a 35:1 margin, and a couple states even broke their month-of-April temperature records!  It also came early to the precious metals markets, starting with a suspiciously-instantaneous $50 drop in gold on Feb 29.  (What self-interested seller would unload so much product so suddenly as to crater the prices they can get for it?)  Up ’til then, copper’s curiously-coveted cousins had followed their usual pattern of floating upwards until roughly summertime blockbuster-movie season, leaving me sitting giddily (and smiling Cheshire-ly) in the catbird seat.  Two months on, it feels more like a litter-box.  :)

A couple weeks back, things got so aberrationally low that I even sold the company stock that I bought last year, netting a vanishingly small profit of about $120 after fees.  (Timbits for everybody!  Whee!)  The money was reallocated to a gold-related mutual fund, which promptly moved… floor-ward.  (Timbits offer postponed.)  As pleasing as it is to get stuff on discount, there’s always a twang of regret when you see a lower clearance price, later!  Of course, there’s nothing much to do but wait for the “sale” to end, and regular prices to return.  Such is the nature of the “long game”.  :)

(Note: “buying and waiting for the sale to end” is an astonishingly poorly-advised strategy when it comes to individual companies, but works fairly well on an index-of-companies basis.  While individual companies are prone to bankruptcy, stock indexes tend to bounce back: they tend to include not just weakened companies going out of business, but the stronger ones driving the weak ones into extinction!)

How to miscalculate debts owing…

During the evening, one of the gold-pushing, silver-tongued speakers made a cringe-worthy comment to the effect that the US has a $12 trillion economy, but had outstanding obligations of $100 trillion.  This meme has been making the rounds, and the reader/listener is generally supposed to conclude either that the US dollar is doomed (so they should stampede into gold as a store of value), or that the welfare state is doomed (and so we have to cut taxes on the rich.  Wait, what?).

Here, the magician’s trick is to compare the size of this year’s economy, with the cumulative cost of every expense reaching decades into the future.  It would be as if we told Leo, “our household annual income is X; the cost to raise you for the next 18 years is way bigger, so here’s a copy of Oliver Twist, keep in touch”.  Similar chicanery is used in “tax freedom day” calculations, which overlook the fact that the yin of taxes paid is matched by the yang of public services.

Of course, I shouldn’t be overly critical of the low-taxation philosophy pushed by right-wing American think-tanks and their Canadian franchisees (e.g. the Fraser Institute).  If a recent book is to be believed, one of the reasons Canada even exists today is that when the Americans tried to manifest their destiny in the War of 1812, American hawks refused to raise taxes enough to pay for a proper army, making it possible for a combination of British soldiers, Canadian militiamen, First Nations warriors, and Laura Secord, to repel them.  :)

A toast to low taxes … in America, that is!

So, this coming barbeque season, on the bicentennial our southern cousins’ northern invasion, feel free to raise an occasional glass to toast the role that low taxes — another country’s low taxes — played, in the history of how Canada came to be the nation it is today!  :)

Homer (not Simpson) and the Kaopectate Kid

The doctor diagnosed young son Leo recently with the stomach flu — which is colloquial shorthand for a condition which isn’t the flu, per se.  (The most recent editor of the relevant article on the almighty Wiki agrees!)

The Kaopectate Kid

Our medical professional then suggested we give Leo some Kaopectate to soothe his stomach.  So, what is the active ingredient in Kaopectate?  Clay.  Yes, modern medicine’s 21st-century response to our son’s stomach flu … was for him to eat dirt.  (Expert biologists will surely argue that clay isn’t dirt per se, but we ignoramuses outnumber them.  ;)  )

I didn’t realize Kaopectate was a real-life product, never having used it in my youth.  The first time I’d heard of the stuff, I was about twenty, and listening to my brother’s copy of The Sugarhill Gang’s Rapper’s Delight — the fourteen-minute version.  (The song makes Don McLean’s interminable “American Pie” seem short in comparison!)

In Rapper’s Delight — recently rated the 2nd-best hip-hop song of all time by Rolling Stone — one of the MC’s raps about the universal human experience of, um, not enjoying a friend’s partner’s cooking:

“Have you ever went over a friend’s house to eat, and the food just ain’t no good?

I mean the macaroni’s soggy, the peas are mush, and the chicken tastes like wood.”

… a story which eventually culminates with this masterful flow:

“So you bust out the door while it’s still closed, still sick from the food you ate

And then you run to the store for quick relief from a bottle of Kaopectate.”

.

Since I’d never seen a bottle of Kaopectate in my life, I’d always assumed it was urban slang…!

.

The Sugarhill Gang

While The Sugarhill Gang were the ones who brought hip-hop to a wider audience (among other things, Rapper’s Delight opens with the lyrics “I said a hip, hop, the hippie, the hippie to the hip hip hop”) they were complete nobodies.

As chronicled by Wikipedia’s sources, the Gang were the first to record a popular rap record … mainly because they were the first rappers to record (verb) a rap record (noun).  And that was because most rappers — the better rappers, the artists — weren’t interested in recording.

Instead, it fell to a bunch of rank amateurs — no, make that rank-less amateurs — to bring rap to a wider audience.  Better-skilled, higher-regarded MC’s must’ve been horrified to learn that their art — their art! — was being introduced to white America with legendarily-terrible lyrics like:

“…Like a can of beer that’s sweeter than honey,

Like a millionaire that has no money…”

“…It was the best advice that I ever had,

It came from my wise dear old dad…”

.

Rapper’s Delight was probably the first rap song to get censored on the radio as well, with these lines addressed to Lois Lane, in reference to Superman:

“He may be able to fly all through the night,

But can he rock a party ’til the early light;

He can’t satisfy you with his little worm,

But I can bust you out with my super [yep, they went there].”

This was immediately followed by the following example of virtuoso “flow”:

I’m goin’ do it, I’m goin’ do it, I’m goin’ do it, do it, do it.

“Big bank Hank” then brings it all home with the now-cliched lines:

“Just throw your hands up in the air

And party hardy like you just don’t care.”

.

Of course, The Sugarhill Gang weren’t the first to put these lines together (the modern variant of which is “wave them around” like you just don’t care) but again, they seem to’ve been the first to record them.  Like bards of old, MC’s probably kept a mental catalogue of stock rhymes, and “hands in the air / just don’t care” proved popular.  Indeed, Rapper’s Delight is so massively long, that it delivers another variant that fell by the catchphrase wayside.  Partway through, Master Gee raps:

“Then you throw your hands high in the air,

Ya rockin’ to the rhythm, shake your derriere.”

.

Homer (not Simpson)

The fact that the first rap record was brought out by the marginal, unknown Sugarhill Gang — because no rapper of stature deigned to record themselves — opens the delicious possibility that maybe, just maybe, Homer (of The Iliad and The Odyssey fame) was a third-rate rhapsode in his day.

Back in the day, blind bards would go from town to town recounting their stories, entertaining the masses.  If you were a revered poet, you probably did pretty well for yourself (whatever “pretty well” passed for, in that era) and you probably wouldn’t have the drive or need to collaborate with some scribe on this new “writing” technology.  Indeed, you might take offence that someone else wanted to take your exact words so they could try to replicate your divinely-inspired performances… without you!

But if you were a third-stringer who only ever booked the worst gigs in the barren rock-pile that was ancient Greece (and, what with the austerity measures, future Greece*) well, maybe, just maybe, you might indulge some stranger who came up to you asking if you could recite your story, v-e-r-y   s-l-o-w-l-y, so he could write it all down!  :)

————–

* Greek car sales in 2012 were about 60,000.  Greek car sales in 2008, were about 260,000.  Ouch.  As Chris Rock would say, they’re way past Robitussin.  Kaopectate, too, for that matter.  :)

Reflections on others’ perceptions of still others’ hard-workingness

(originally written Dec 20, 2011 — part of my Great Upload of 2013)

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I saw an item the other morning suggesting that as a country, Italians actually work 20% more hours per year than Germans and French.  This runs counter to the popular moralistic argument that countries that run into debt troubles, do so because they’re lazy.

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The idea that poor countries are poor because they’re not hard-working, is a variant on the outlook that wealth is a moral outcome of life.  This perspective holds that if you’re rich, you deserve it because you were harder-working / smarter / more cunning than everyone else.  And by corollary, if someone else is poor, it’s because they’re lazy / dumb / naive.  By further corollary, if you’re poor (or less rich than you want to be) it’s inevitably someone else’s fault, of course — government is a popular target.  :)

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Taking a broader perspective, many in the West retain the silly notion that the “Protestant work ethic” powered the Industrial Revolution (instead of, say, the exploitation of fossil fuels, which allowed small European countries to spend unprecedented amounts of energy doing and making things, like dominate the rest of the world).  Popular historian Niall Ferguson seems to’ve devoted a chapter to the Protestant work ethic in his new book, Civilization: the West and the Rest, calling it one of the West’s historical advantages.

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This bias is most revealingly shown in the comments of an Australian diplomat reporting back from a trip to Japan at the turn of the 20th century, using the “l-“word or some similar paraphrase to describe the indolent islanders, who could never hope to achieve anything in the go-go world of world economies.  (I came across it in a South Korean economist’s book, Bad Samaritans.)  Within a few decades, of course, Japan had industrialized, militarized, and attempted to colonize East Asia with — if this is possible — even more barbarity than shown by the Europeans in their heyday.

And it’s not just recently that the Japanese got industrious either.  Within a decade of the introduction of firearms around 1542 (through Europe, not China, funnily enough) Japan may have had more guns than any other country in the world.  For some reason, once the country had been unified, the Shoguns introduced the world’s most comprehensive gun-control laws…  :)

No doubt other cultures have similar stories, too.  One can imagine what a Chinese ambassador in the Middle Ages might’ve thought of the hapless Europeans, who lacked the Five Great Inventions: the compass, gunpowder, papermaking, the printing press, and the seedless mandarin orange.  (Others’ lists may vary.  ;)  )

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Such context also helps to make sense of stories closer to home: there was a recent Globe & Mail article about how 1/3 of Canadians expect to be paying mortgages past the age of 65.  This does not a stress-free citizenry make.  (Most frightening for us post-baby-boomers: old people always vote!!)

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One can wonder why someone would sign up for a mortgage that retires after they’d like to (why anyone would agree to provide that mortgage, is another question).  But it could be that they were taking cues from Ben Bernanke, the Chair of the US Federal Reserve.  The central banker refinanced his house twice (!) in the past decade, and at the age of fifty-eight, still owes almost $700,000.  Assuming a 25-year-amortization just for fun, he could be paying that back, well into his eighties!

One wonders if Bank of Canada chief Mark Carney also falls into that all-encompassing “do as I say, not as I do” category.  Fortunately for Bernanke, he has kids, so if “worse comes to worst” (that’s how you’re supposed to say it, people!) he can always move in with them.  :)

Of whales and wind turbines

(originally written June 20, 2012 — part of my Great Upload of 2013)

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So I was reading up on my Ray Kurzweil last night, because it’s good to read people you disagree with once in a while — but preferably no more often than that.  ;)

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Kurzweil

Ray Kurzweil is a futurist who believes we’re heading into a singularity where, in this century, life will transcend biology and we’ll reach some sort of a higher condition of life.  His ideas could probably be summed up as:

– it took billions of years to go from single-celled creatures to multi-celled ones

– then hundreds of millions of years to get to human-like creatures

– then hundreds of thousands of years for homo sapiens to create cities

– then thousands of years for us to start making upgrades (artificial hips, pacemakers and the like)

– and in a short span of time, we’ll transition from a biological-molecule-based form of consciousness to a silicon-based one

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His ideas are pretty much distilled in this decade-old article/manifesto, which he wrote during the heady days of the dot-com bubble.  As such, though the trends in computing power have probably continued, economic progress… has not.

He made surprising choices in some graphs (e.g. patents issued over time) in that he didn’t factor in the huge effect of a rising population.  It looks like the number of patents issued per year went up tenfold from 1900 to 2000, but the US population also increased four-fold from roughly 70 million to 280 million.  So patents per person “only” went up 2.5x in a century.

There’s a big wrinkle though, which is that the US urban population went from about 40% to 80% in the century of 1900 to 2000, so the urban population probably rose about 8x [28 million to 200 million] in that century.  So in the past century, patents-per-urban-person might only have gone up… twenty percent?  A bigger wrinkle is the fact that half of US patents nowadays go to foreigners, and the biggest wrinkle is probably that patents aren’t a great way of measuring innovation.  They might be the best available measuring-stick, but that doesn’t mean they’re all that accurate…

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Cities and Whales

The urban-population factor is important because recent research purports to show that as metropolitan areas get bigger, they tend to “speed up” — since Metro Vancouver has twice the population of Metro Calgary, one would expect Vancouver to have 15% higher per-capita mean income and patenting rates.  Of course, local factors like the tar sands mean that these general trends come with massive, massive margins of error.  :)

The reason for this trend might be that as cities get bigger, people can become more and more specialized, and nudge the boundaries of human knowledge just a bit further in one tiny area.  And with so many people around them, there’s a better chance they’ll run into someone who can make use of that knowledge.  And there is a symmetric downside: apparently per-capita crime and other social ills also tend to increase about 15% with each doubling in city size.

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This “speeding up” with bigger size is the opposite of what happens in publicly-traded companies, which tend to “slow down” as they get bigger — fewer patents per person, lower per-person revenues, etc.  (The trend surely holds true for privately-held companies too, but since public companies release quarterly financial statements it’s waay easier to crunch public company data than private companies’.)  This phenomenon could elegantly, partially explain why public-sector bureaucracies often seem worse than private-sector ones: few private companies ever reach the size of governments!

A similar “slowing down” with size occurs in biology, a phenomenon known as Kleiber’s Law.  (Not to be confused with George Clooney’s girlfriend Stacy “Keibler”, or the cookie-making “Keebler” elves.)

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In the critter world, when animals double in size, their metabolic (food) requirements tend to only increase by 70-ish percent.  To use math terms, the exponent describing the relationship between metabolic rate and mass, is between 2/3 and 3/4.  And before you ask, yes indeed, there is the usual academic bun fight over what exactly that exponent is!  :)  To use a better example than the one offered in Wikipedia, if we were to compare a 200 tonne blue whale with a 20 gram mouse, the whale weighs 10,000,000x more, but only requires about 10,000,000^0.7 = 80,000x as much food.

Another example of how life seems to “slow down” for big creatures is the reasonably-accurate factoid that many mammals, big and small, have a lifespan of about one to one-and-a-half billion heartbeats.  And indeed, whales live a lot longer than mice — in the absence of whalers.  And cats.  :)  I could imagine that for our earliest mammalian ancestors, this might have represented a good balance between “durable enough to have offspring” and “not so resource-intensive as to starve other important bodily functions of nutrients”, but then I imagine a lot of plausible-sounding, completely-inaccurate explanations.  :)

Rambling aside, as animals get bigger, they get more efficient with their food inputs.  Which brings us to wind turbines!

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…and wind turbines

One of the few things I remember from my chemical engineering economics course is that the cost of components in a chemical plant increases more slowly than size, with the exponents generally in the 0.5-0.8 range.  We could think of this as a rough industrial analogue, or maybe even an extension, of Kleiber’s Law.

This trend applies to wind turbines, because if you scaled up a turbine so its blades and everything else were twice as big, you’d need more than twice the material, but you could probably extract quadruple the energy.  (Taller turbines can access stronger winds, and the blades would rotate through 4x the cross-sectional area, but various losses would eat away at that.)  The net effect is that bigger wind turbines are more efficient per-tonne-of-construction-material.  Not unlike that whale.  :)

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And back to Kurzweil

Before setting sail on that cetacean tangent (ie. talking about whales) we were examining how a lot of the technological progress feeding Ray Kurzweil’s optimism might not have come from exponentially-improving calculation power, but from a one-time migration of people from the countryside to the cities.

If population growth and urbanization were big drivers for the extraordinary progress we made in the 20th century, it stands to reason that we might see a slowing-down of things in the 21st century, as world population (and world urban population) level off and start falling.  This would be a bit of a downer for techno-optimists’ utopian visions, but would fit the more pessimistic notion that the human condition is a cycle between harsher and milder dystopias.

As an admirer of the great Greek tragedies, I’m in the latter camp.  And while I’m as overconfident in my opinions as most men, I have an ace up my sleeve: as per page 3 of the TIME magazine article, people with mild depression are more accurate at predicting future events!  Nice of the universe to finally throw us folks a bone…!  ;)

Newsflash: Canadian PM’s American Idol supports Stephane Dion-esque carbon tax shift

Note: for non-Canadian readers (or, indeed for Canadian readers who don’t follow politics) Stephane Dion was the milquetoast who led the Liberal Party of Canada to its then-worst-ever federal election result in 2008.  He ran on a campaign of a carbon tax shift (“The Green Shift“), for which the Conservative Party mocked and savaged him.

We’ll get to Stephen Harper and his erstwhile idol after the jump, but a bit of background discussion is necessary to provide a proper context…

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