Tag Archives: economics

Technocracy’s Big (Secret) Comeback

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I have said more than once that we need to fundamentally change the way wealth is distributed in our society. I am not the first to say it, and I won’t be the last. Workers produce more and more, and the workforce as a whole is harmed by that trend. All the wealth they are creating goes into the pockets of a few at the top.

In the 1930’s, as banks failed and people lost access to food and shelter, many movements came up with ways to solve the problems that unfettered capitalism had fomented. Socialism and Communism gained in popularity, along with Fascism, which had a bit of a heyday not long after. In the mix were also some more wackadoodle ideas like Technocracy.

Technocracy is named more like a government system, but is mostly about economics. Based on the assumption of continued increases in worker productivity, the response is a very healthy “if people are more productive, they don’t need to spend so many hours producing.” So far, so good!

There is no money in the Technocratic State. Periodically each person is given a certain number of credits. They are not transferrable, and expire. When you go to the store and buy something, the credits you spend are not transferred to the vendor, they simply cease to exist. Shortages and surpluses are not the vendor’s problem.

Prices are controlled by the state, based on the energy required to create the thing. However that would work.

Before I get to some of the more wackadoodle parts, let me mention a couple of less-bad things about Technocracy. The credit distribution is essentially Basic Universal Income; everyone gets what they need. There are no billionaires; no one-percent. Wealth cannot be accumulated; all credits expire. Increased productivity means more for everyone, and more leisure time. Basing the pricing on energy consumed means that the environmental cost of the full lifecycle of an item can be built into the price.

I wrote once (I would include a link but I can’t find it… this blog is big!) that if you could make the cost of purchase of a widget include the cost of mitigating the environmental impact of producing, shipping, using, and disposing of it, there would be no need for any other environmental regulation. Products that pollute less will cost less.

In that same episode I pointed out that such a system was impossible to implement. The government would have to determine the environmental harm tax on every damn thing. The government would have to be swift, efficient, and not subject to second-guessing.

Technocracy solves that problem by getting rid of Democracy along with money. Instead, dispassionate, unbiased engineers would run the show. In this particular autocracy, decisions about the economy would be made by people who recognize that without money the economy is just a machine. They would make the best choices because they are smart and not swayed by greed or politics. They are engineers, dammit, immune to the frailties of humans.

Edison and his ilk were heroes back then; these were the people who should be running things!

Get your chuckles in now; things might turn scary later.

Let’s not even get into how innovation happens in this environment — presumably the engineers in charge will be able to judge every idea and allocate the appropriate resources, with the sole goal to increase worker productivity balanced against energy cost (and state security) further.

One of the core tenets of currency is fungibility. Any dollar is worth the same as any other dollar. All dollars are interchangeable, so they can just as well be numbers in a bank’s computer. The technocrat’s credits are non-fungible: they each are unique and limited in utility and duration. The techno-cretids are, quire literally, non-fungible tokens, or, as the kids say, NFT’s. Put that in your pocket for a minute.

Anyway, no money. Which makes it hard to deal with any economy that still uses money. The answer from the Technocracy proponents was (is?) simply this: don’t. Even back in the 1930’s this was already a stupid and unworkable idea, but the Technocracy proponents wanted to create an absolutely isolated nation that had all it needed, and was surrounded by physical and military walls. No trade, no tourism, no diplomacy.

This proposed nation involved the United States annexing Canada, Greenland, and Central America at least as far as the Panama Canal; preferably further.

Huh. That’s an interesting list, these days. Greenland?

Something else that is interesting: Elon Musk’s grandfather was an active proponent of this nonsense back in the day.

Perhaps it is coincidence that Orange Julius Caesar wants to annex Greenland and take back the Panama Canal. But seriously, Greenland? Perhaps the shift toward isolationism in our diplomacy is not simple stupidity, but stupidity informed by a larger, even stupider goal.

We can be damn certain that OJC loves being rich, but maybe that just means Elon hasn’t told him the whole plan yet. More likely Elon and OJC have built into their plans a way to be far more equal than everyone else in the new regime – they will preserve the billionaire class.

Maybe you’ve already thought of this, but that hypothetical council of wise, unbiased engineers that is supposed to run things? Elon has already fired them. In his drug-addled brain, our new overlord will be AI. Programmed by Elon and his bros, carefully trained to advantage Elon and his bros.

You would have to be seriously high all the time to think something like that could work, but… Elon. He’s already trying his fizzy-brained best to replace at least some of our government with generative AI. If you credit him with having enough brain to form an endgame, replacing money with NFT’s and government with an AI he controls seems like a good candidate.

Am I saying that Elon Musk is a drug-addled idiot eager to adapt the overt racism of one side of his family and the elitist ideals of both to use his wealth to compel a simpering sycophant president to create a world to his liking? Am I saying that the current President of the United States is the simpering sycophant mentioned above, and who like a starving dog will follow any plan as long as it leads to personal profit?

No. Clearly I am not saying that.

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The Third Horseman has Arrived

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I am not a Bible scholar, but like any real Bible scholar I can cherry-pick passages to comment on. Here is some version or other of the Christian Bible describing the third horseman of the Apocalypse:

“(5) And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand. (6) And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.” (Revelation 6:5-6)

Other versions replace “penny” with “a days’ labor”. In other words, this passage doesn’t say there will be no food, it says that working people won’t be able to afford it. I’ll let “the oil and the wine” speak for itself.

The third seal is some guy on a horse telling us that a time will come when there exists a calamitous situation known as “working poor”. That a day’s wages cannot feed your family. Sure you can take the passage to mean that there will be shortages that drive up prices, or you can recognize that in one of the fattest nations on Earth the children of working parents don’t get enough to eat.

That guy with the balances in his hand reminds me a lot of the people arguing against living wages. The whole thing is framed as economics. That horseman is on the board of directors at Amazon, and Uber, and almost everywhere else. The horseman is working hard to make sure that bonuses to executives aren’t reduced because they have to pay the people who make them rich enough so those people can survive.

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People Should Listen to Me More Often

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You can look at every major financial crash since tulip bulbs and find the underlying fiction that created paper wealth without any value behind it. Handshakes and winks and it’s fun while it lasts.

In April of 2021, I wrote that Bitcoin was a terrible solution to an interesting problem. It is called a cryptocurrency, but it does not match any previous definition of the word “currency”. As an investment it is, in fact, slightly below “bag of magic beans that aren’t actually magic”. At least with those you could make a nice soup. Soon after that episode, the price of a Bitcoin tumbled, then briefly rose to new dramatic heights in November of the same year, and has since steadily eroded.

It is late and rather than sleep I thought tonight I’d read about the latest crypto disaster. Roughly One Trillion Dollars vanished this week. Poof. Gone. Retirements destroyed, hedge funds cratered. Those investors should have listened to me.

Time magazine (wow has that brand been dragged into the dumpster) included this in an article about crypto volatility:

Given that crypto derives some of its value from people’s belief in it, markets can be rattled by surrounding skepticism or policy changes.

Time.com

So, close, yet so far. In fact, crypto derives all of its value from people’s belief in it. There is absolutely no other source of value. If you were to buy gold, and then suddenly everyone decided gold had no value, you could at least make something pretty out of it.

What drove this week’s meltdown is complicated on the surface, and simple in substance. There was a cryptocurrency that was, through elaborate mechanisms including game theory, always supposed to be worth a dollar. While my first question is “why would anyone buy that shit instead of just buying dollars,” apparently plenty of people thought that was a good idea.

So how do the people flogging this investment plan to control the value of the tokens they sell? Part of it is by holding investors hostage – people with a vested interest in maintaining this dollar parity will buy up other people’s tokens to maintain their value. But you can’t always rely on that, so these companies also keep reserves so they can maintain the price by buying up tokens when there is a bunch of people selling.

But… whoops! What if your reserves are in other crypto tokens? What if you need to sell all your Bitcoin ($1.7 billion worth, maybe), but Bitcoin is also falling because someone is trying to sell a shit-ton of it, and even when you’re done, it’s just not enough? Everything goes to shit, is what happens.

It’s a regular cycle. Someone finds a way to create an illusion of value where no value exists. Before crypto, it was weird real estate loan guarentee instruments that created an entire market unto themselves, and led to a near-collapse of our banking system in 2008. That was done by bankers who should have known better, and there were (for a little while) regulations in place to keep it from happening again. In 1929 it was shell companies that all owned each other but not any company that actually made a profit.

Crypto, on the other hand, is a much more egalitarian fraud. Anyone can play! Elon Musk used the power of his twitter account to rob countless less-wealthy people through Bitcoin price manipulation (he claims he was not being corrupt, just stupid – but both can be true).

One thing that none of the press I read tonight mentions – Bitcoin uses lots and lots of electricity. When the cost of power goes up, ultimately that has to effect the value of their tokens.

Universally the press has treated the crypto crater just like they would any other investment issue. Treating crypto with the same words they would use for something that has intrinsic value. That’s simply not right. None of them are saying “This is all fake! Get out while you still can!”

I could create a crypto tonight, call it “eco-coin” and vaguely suggest that we only accept electricity from windmills, or at least I’ve seen some pretty bitchin’ windmills, windmills are cool, so you should invest in eco-coin. If I could catch the ear of the Master Influencer at Credulous Weekly, eco-coin would be off to the races.

In terms of actual value, my new crypto would be worth exactly the same as Bitcoin: zero. I’ll finish this episode with the same words I used to start it: You can look at every major financial crash since tulip bulbs and find the underlying fiction that created paper wealth without any value behind it. Handshakes and winks and it’s fun while it lasts.

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Bernie and Socialism and how to Pay for that Stuff

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First off, let me say I’m glad Bernie is running for president. Even if he doesn’t win the nomination, it gives the grownups a chance to talk about substantive issues and debate what economic path the US could pursue if it wasn’t being run by crooks and about to be overrun by crazies.

Bernie likes to talk about the ideal socialism, which is, more or less, everybody in a group making sure that everyone else in the group is taken care of. Families do it all the time. It’s not inherently a bad thing. But it’s expensive from a traditional government-does-it point of view, and we have to figure out how to pay for it.

Also, Everybody Knows™* that Socialism enables lazy people. More on that another day. Bernie’s supporters point to reasonably successful socialist governments over in Europe and say that it could be that way here, too. After all, they seem to be able to afford it. What’s the difference?

There’s something no one mentions. Not even Bernie. Your tax dollars and mine are supporting those lovely socialist nations in Europe. We pay for much of the defense and security of Europe, top to bottom, east to west. We took on the burden in a grandiose, “I am the king of the world!” period at the end of World War Two. And we did a damn good job of it, too. When was the last time Europe went seventy years without a major war? Never, that’s when. Seriously. Never.

Mission accomplished. You’re welcome, Europe!

But now as the economies of Europe become ever more integrated, maybe the mission isn’t the same as it was. Maybe those happy prosperous nations can pay for their own defense. Maybe we can turn some of that military money to achieving our own paradise. The simple fact is that we already help fund prosperous socialist countries. They’re just not this country.

I propose a fundamental change in mission for our nation’s military. For the last seven decades we have tasked ourselves with maintaining world peace, and we’ve done a pretty damn good job, overall. There are exceptions, but remember: seventy years with no major war in Europe. Boo-yah! High-five, all you who have served. But it’s time to let Europe and Japan look after themselves. It’s time stop subsidizing Toyota and Hyundai and Mercedes-Benz by lifting a load off their governments’ obligations. The money they don’t spend on tanks is money they spend on day care and gaining an advantage in the marketplace.

So we stop paying (as much) for their security. We take the money we save on tanks and airplanes, and spend it on day care, and health care, and veterans’ benefits. We have the money to put everyone through college. We can get homeless servicemen, the ones who achieved this incredible period of peace, and find shelter and medical care for them. The United States is wealthy enough to give everyone health care. It’s just that right now we spend the money on other stuff. On an obsolete military mandate.

But Bernie, EVEN BERNIE, can’t bring himself to suggest this out loud. He can’t even suggest that we might cut our losses on terrible weapon systems whose only mission is to cost money. (Watch this space for a special feature on the F-35 ‘Flying Turd’.)

And that’s why I have a hard time contemplating voting for Bernie. If he was really who he says he is, he’d have the balls to take on the completely corrupt defense procurement machine. If we only paid for the weapons that worked, we could cut our budget by hundreds of billions. HUNDREDS OF BILLIONS! And our military will still be just as mighty, because it would be using functional equipment! And Bernie should have the huevos to suggest that maybe Japan could pay for its own army. But he doesn’t. And until I find a candidate who has that resolve, I can’t take any of the other social reform promises seriously. Because until we stop spending so much on defending other countries, and we stop pouring money into flawed weapons, we simply can’t afford the other stuff, much as I wish we could.
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* Many of the things that Everyone Knows are in fact false.

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The Electric Lie

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Ride with me on this one; I’m kind of all over the place.

I read an article today that was the rebuttal to another article and both managed to miss the point entirely. I will summarize here, to save you the trouble of wading through tiresome posturing.

The seminal article was all about how the ‘drudges’ at the oil companies are the ones ensuring America’s energy future, while media darlings like Shai Agassi get magazine covers but don’t actually change anything. Mr. Agassi wrote the rebuttal, saying that his efforts to make electric cars practical were gaining traction, and were entirely relevant.

The only problem is, the two sides in this ‘debate’ have pretty much nothing to do with each other. Making all our cars electric will not solve our energy issues. The electricity has to come from somewhere.

I’ll give you that a massive power plant will produce more kWh per ton of carbon than an automobile engine. If that were the only part of the equation then we’d all be driving electric already. It would be the cheapest way to get around. Even today if everyone had to pay to mitigate the carbon put into the atmosphere for their activities electric might be ubiquitous, but I’m not so sure. There are other inefficiencies we have to take into account.

For instance: transmission costs. Even if the power plant is more efficient than a car engine, every mile of power line the electricity traverses represents loss. I once read (so it may or may not be true) that only 13% of the power generated at the Hoover Dam that sets out for Los Angeles actually gets there. The rest is broadcast into space. (It is actually warmer near the power lines. That is energy lost.) So, first step toward an energy-wise world is to generate locally. Solar panels may not be as efficient but if you put them right on the spot you can minimize transmission loss.

The thing is, energy pricing in this country is a joke. The US government puts crap-tons of your money behind fossil fuels, both directly and indirectly (rhymes with Iraq). We’ve all got together and put a couple trillion dollars into the pot to keep gas cheaper at the pump. Electricity prices are similarly skewed toward big producers. If the government were to get out of the energy price-fixing business, a few things would happen: 1) energy costs would skyrocket; 2) Efficiency would leap and waste would plummet – wind and solar would compete favorably; 3) The economy would crash, dragged down by industries that had come to rely on the taxpayer energy-subsidy crutch; 4) We would have to decide as a society how we’re going to deal with 86-year-old Pittsburgh resident Gladys Pulchowski, who can’t afford her heating bill this winter.

In my happy economic neverland, everyone would bitch about higher prices, but they’d buy more efficient products. They’d put extra insulation in their homes and drive something smaller than a Cadillac Escalade to work. Excess packaging would directly drive up the cost of a product. Folks would not bitch about the reduced federal deficit, but it would be there. People would pay for what they used, without the government artificially spreading the cost around (mostly to our kids).

The price of Perrier would include the energy cost of dragging a dang glass bottle of water over the ocean. Seriously. How does the current situation make sense?

Back on topic: Listening to the electric car guys, you’d think that generating electricity produced no emissions at all. In fact, around here there is a government stamp for ‘zero emissions vehicles’. That, my friends, is a lie. They are Somewhere-Else Emission Vehicles.

Then there’s the batteries. Depending on the car, there’s all sorts of toxic stuff in there. Lead is a favorite, but there are others. And the things are heavy. Most of the energy spent by a car is to move the car. Driver and passengers hardly figure in. Massive batteries just make things worse.

I’m going to toss that out again, so you can ponder and appreciate it. Almost all of the energy spent by a car is to move the car, not the contents. That’s not terribly efficient. Currently the auto makers of the world are managing to improve their engines enough to avoid the inevitable truth: sooner or later we aren’t going to be willing (or able) to pay to move a big pile of metal and plastic around with us wherever we want to go. (Defying that math are the scooters of today getting less than two hundred miles per gallon – less than one-tenth the mass, but only getting three times better mileage. Clearly I’m oversimplifying, but by that much?)

I think someday we’ll all be driving electric. If energy were priced rationally, we already would be, charging our batteries from local sources.

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