Category Archives: Web Article Review

modern monetary theory

This might be the clearest explanation of modern monetary theory for the layman (like me) that I have seen so far. This is specifically in a developing country context.

Kaboub is an advocate of Modern Monetary Theory (MMT), an approach that views states as the source of money creation through the issuing of currency, and taxation as the destruction of that money supply. In this formulation, states do not use taxes to fund policies but rather create funding through issuing currencies, while taxation is used to curb inflation or disincentivize social practices that are seen as harmful, such as pollution or extreme inequality. MMT has grown increasingly popular among left-leaning politicians in North America and Western Europe, and is beginning to make its way into African political discourse as well.

Rosa Luxemburg Stiftung

Money is a store of value and a means of exchange, I learned in my one or two lectures on the subject in the 1990s. I’ve always wondered if you could separate the two by having one form of money that has an expiration date and one that does not. Of course you can – think of coupons or frequent flyer miles. If you need to stimulate the domestic economy, you can use the one with the expiration date. You would use the other in international trade, for retirement savings, etc. You would have to decide if you would let people pay taxes in the temporary currency. Businesses would have to decide if they are willing to accept the temporary currency, unless you forced them. An exchange rate would probably develop between the two forms of currency, unless you outlawed that. Prices and exchange rates could be volatile. New mutant forms of debt and derivatives would probably arise. Foreigners and corporations would speculate and manipulate unless you tried to stop them. Come to think of it, maybe there is a reason currency is the way it is and the status quo is hard to change.

the latest on fusion power

According to the Washington Post, there are looming breakthroughs in fusion.

But the technical challenges of essentially creating an artificial mini-star have been daunting. Scientists have made fusion happen with various approaches, but more energy was expended in those experiments than was released. The turning point will come when more energy is produced than goes in.

The roadblocks have started to fall away in recent years, thanks to the use of supercomputers to model and optimize the design of fusion systems, and to a new generation of superconductors that increase the magnetic fields that contain the artificial star, thereby dramatically decreasing the required size of fusion devices. Advanced manufacturing techniques for specialized fusion materials have also been developed.

Washington Post

The title of the article is “The fusion energy dream is inching toward planet-saving reality”. Would this “save the planet”. Well, if it were clean, cheap, and safe, it could move us closer to that world of abundance some envision. The problem with fission has been that the infrastructure required to make it safe has been so big, complicated, and costly, that by the time it can be put into place it is already obsolete by a decade or more. And then there is the weaponization problem which has prevented widespread use in poor countries.

Let’s assume it will be clean, cheap, and safe. It could solve our carbon emission problems, air pollution problems, and generally free up a lot of resources for other things, making us quite a bit richer. Whole industries would be created and destroyed, which we could expect to cause some political and financial turmoil. It wouldn’t solve our land use, biodiversity, or water pollution problems.

let the twenteen retrospectives begin!

Here we are a month and a half from the end of the decade, so I assume we are in for a tidal wave of not just 2019 retrospectives but 2010-2019 retrospectives. I am not too hopeful that we will ever pick a name for this decade, considering we have not even agreed on a name for the last one (I vote for the British entry, “the naughties”.) But anyway, “twenteens” is my humble proposal.

The first retrospective I have come across is from the podcast BackStory. This is a podcast where academic historians discuss current events, which I think is neat even though they sometimes try to make everything about race and gender when not everything is about race and gender. Anyway, I thought they might review some of the major geopolitical events of the decade, compare them to major geopolitical events of the past, and speculate on how we might view them in the future. But what they came up with was…social media. Well yeah, I guess the internet and our interactions with information and communication did continue to evolve in the past decade. I think one thing we have seen over the past decade is the democratization of propaganda – now anybody can try to confuse and misinform us, not just big governments and corporations.

Anyway, after I felt a little underwhelmed by that, I found myself needing to make a list of major geopolitical events and trends from the decade. Here is what I came up with.

  • Evidence of accelerating ecological collapse, and some halting steps to do something about it. The Paris climate accord, followed by the US. backing out of the Paris climate accord. When we look back in a few decades, the Paris accord could be seen as a turning point where the world started to come together and address a problem. Maybe we look back and see that we built on these first steps and ultimately succeeded, or maybe we look back on this as the only time we tried, and ultimately failed. Of course, global warming and sea level rise are not the only ecological issues we face. The most shocking stories I have read recently are about the sheer magnitude of the losses in natural habitats and animals, from insects to birds to mammals. A big chunk of what the planet had has vanished in a matter of decades, and the trend is snowballing.
  • Events in the greater Middle East. The initial hope of the “Arab Spring” followed by the grind of brutal and ongoing conflicts across the region, including the Syrian civil war and Yemen and U.S. military involvement across the entire region from Africa to Afghanistan. The Osama bin Laden assassination. The U.S. nuclear deal with Iran, followed by the U.S. backing out of the U.S. nuclear deal with Iran. The Iran-Russia axis vs. the U.S.-Israel-Saudi Arabia-UAE(-Pakistan?) axis. The weird Saudi Arabia-Qatar spat. The fraying of the U.S.-Turkey alliance. Renewed protests in Iraq and elsewhere at the end of the decade.
  • Nuclear proliferation and rearmament. The U.S. and Russia abandoning decades of treaties and gradual progress toward risk reduction. The never-ending Iran-Israel, North Korea, and Pakistan-India sagas.
  • Evaporation of the UN and international cooperation in general. When the U.S. invaded Iraq in 1991, it went to the UN security council and got approval to march across the borders of a sovereign UN member state. I naively thought that would be the new normal in post-Cold War conflicts. In the past decade, that has completely gone away with little or no consequences. The U.S. and Russia are in Syria, a sovereign UN member state, with no consequences. Russia is in Ukraine, a sovereign UN member state, with no consequences. So being a sovereign UN member state seems to offer no protection against invasion by a more powerful neighbor, and powerful countries don’t feel the need to consult the UN before invading a neighbor. It seems to me that this is a huge change in international norms over the past decade that could really raise the risk of a major war in the future. (By the way, Bernie Sanders is the only U.S. presidential candidate I have heard even mention reengaging with the UN.)
  • A decade without a world war, nuclear war, global pandemic, famine, or severe economic depression. Because we shouldn’t take any of this for granted, and hey I wanted to end on a high note.

carbon sequestration potential of restoring degraded land

The UN Convention to Combat Desertification says there is a large and potentially very cost-effective opportunity to sequester a lot of carbon by restoring degraded farmland. This is not planting trees or trying to green areas that were historically desert, but trying to restore areas that used to be productive cropland or grazing land to their original condition or better. It’s also an opportunity to expand food production without displacing productive natural ecosystems.

Rene Castro Salazar, an assistant director general at the UN Food and Agriculture Organization, said that of the 2 billion hectares (almost 5 billion acres) of land around the world that has been degraded by misuse, overgrazing, deforestation and other largely human factors, 900 million hectares could be restored.

Returning that land to pasture, food crops or trees would convert enough carbon into biomass to stabilize emissions of CO2, the biggest greenhouse gas, for 15-20 years, giving the world time to adopt carbon-neutral technologies…

Key to returning dry lands to vegetation is the use of fertilizer, said Mansur. “Fertilizers are essential for increasing productivity. Good fertilizer in the right quantity is very good for the soil.”

Time

industrial policy

This article is about industrial policy. It worked for countries like Japan, Korea, Singapore and China. Basically, they were able to put vast pools of low-cost labor to work producing things to export to markets much bigger and richer than their own economies, using technology imported from those economies. That is no a recipe for success in today’s advanced economies. The article argues for investments in education, research, and innovation as the “industrial policy” of today. One interesting thing it does is draw parallels to the migration of manufacturing from the U.S. northeast to south.

In a recent International Monetary Fund working paper, we use these past successes to identify three principles that underlie what we call a “true” industrial policy. In the Asian “miracle” economies – such as Singapore and South Korea – as well as in Japan, Germany, and the United States, the government intervened early on to support domestic firms in emerging, technologically sophisticated sectors. The successful policies placed special emphasis on export orientation, and held firms accountable for the support received. Given the strong focus on cutting-edge sectors, this “true” industrial policy is essentially a technology and innovation policy (TIP).

Technology and innovation are key to economic growth. China’s Made in China 2025 program essentially emulates the strategy used by South Korea (and Japan before it) to escape the so-called middle-income trap. Likewise, the new UK and Franco-German industrial strategies focus on the industries of the future: renewable energy, artificial intelligence, and robotics.

Project Syndicate

progress on carbon capture technology

There is progress on carbon capture technology. Now I’m not scientifically illiterate, but I won’t claim to understand this story. What I gather is that earlier technologies used a lot of energy or required a lot of chemical inputs, or both, and this is an improvement.

Incumbent technologies are inherently inefficient due to thermal energy losses, large footprint, or degradation of sorbent material. We report a solid-state faradaic electro-swing reactive adsorption system comprising an electrochemical cell that exploits the reductive addition of CO2 to quinones for carbon capture. The reported device is compact and flexible, obviates the need for ancillary equipment, and eliminates the parasitic energy losses by using electrochemically activated redox carriers. An electrochemical cell with a polyanthraquinone–carbon nanotube composite negative electrode captures CO2 upon charging via the carboxylation of reduced quinones, and releases CO2 upon discharge.

Energy and Environmental Science

Sounds good. Of course, the moral hazard is that each technological advance like this is just seen as a license to pollute even more. I’m not going to stop yelling at those Exxon commercials where they talk about “plants a little more like plants”. YOU DIRTY MOTHERFUCKERS, YOU DELIBERATELY LIED TO US FOR 60 YEARS AND DESTROYED THE EARTH! NOW SHUT UP! Sorry, I lost control for a second there. I really hate that commercial. I never promised this blog would be 100% family friendly. Well, you know who is trying to kill your family and everybody else’s family? EXXON.

Fuck you Exxon

quantum supremacy

Google claims that its fastest computer, a quantum computer called Sycamore, is now faster than IBM’s fastest computer, a “classical” supercomputer called Summit. IBM is disputing the claim, but in any case it appears that quantum computers in general are making progress.

What matters is that Google’s machine is solving a computational problem in a fundamentally different way than a classical computer can. This difference means that every time its quantum computer grows by even a single qubit, a classical computer will have to double in size to keep pace. By the time a quantum computer gets to 70 qubits — likely within the next couple of years — a classical supercomputer would need to occupy the area of a city to keep up.

Quanta Magazine

Even if Google is the leader, I would assume that IBM, and a few other large corporations foreign and domestic, must have similar machines. Hopefully they will be used to improve lives, not just for nuclear weapons and derivatives trading.

still more ideas on funding Medicare for All

This Washington Post article offers still more ideas.

  • Redirect existing spending on Medicare, Medicaid, military hospitals and the Veterans Administration. (makes sense, as long as “Medicare for All” fully replaces these programs. Everybody hates Medicaid and it should just die. It didn’t occur to me until now that “Medicare for All” would replace the Medicare for all Old People we have now. If that is the case, it is disingenuous to include the current price of Medicare for Old in the price of Medicare for All, just for sticker shock purposes. Of course, sticker shock is an old political game. State the cost of your rival’s plan as a 10-year total, in inflated dollars, and any number you come up with will be shocking. And finally, I am assuming the actual physical Veterans Administration hospitals will not go away. Should we even consider expanding those or giving civilians the option of buying into them?)
  • a national sales tax on “non-necessities”, or a “progressive sales tax” (basically a VAT, but less efficient and possibly more progressive. My take: We should just do a VAT like all other advanced countries do. It is a very efficient, counter-cyclical kind of tax. The criticism is always that it is somewhat regressive. This can be countered by just redistributing some of the proceeds in a progressive way.)
  • a wealth tax (this makes me nervous. Even though it is fair in a moral sense, I think it may be a slippery slope where once the government starts grabbing assets, it could eventually go too far.)
  • Just call the new tax a “public premium” to distinguish it from the private premium most people are paying now. Or try to call the plan a “middle tax cut” because it will reduce overall health care cost for the middle class. (makes 100% logical sense, but the “tax and spend” counterattacks are obvious. A certain segment of the population is emotional about taxes regardless of logic. I think most of these people vote Republican regardless, but some will consider voting for a Democrat who is against taxes and those are the voters you risk losing by being honest and logical.)

I personally am comfortable just going with a payroll tax. I personally would be comfortable keeping some level of co-payments or deductibles. Things that should be “free” include preventive care, long-term medication that reduces risk of needing more costly care (e.g. insulin, blood pressure and cholesterol medication), and coverage for catastrophic events. People clearly need mental health and addiction treatment. But then is still some room for personal choices to decide how much health care we want to buy for what we expect to get out of it, given much better information on prices and outcomes than we have available now.

how defense cuts could fund Medicare for all

This New York Times op-ed goes through a series of defense cuts that could save $300 billion per year, enough to fund Medicare for All. The big ones are shutting down the big wars that are accomplishing little or nothing (or worse, creating future enemies and risks), closing foreign bases (and/or asking the foreign countries to fund them if they actually want them there), and phasing out most or all nuclear weapons.

I personally am indifferent between paying a monthly insurance premium vs. a monthly payroll tax to provide the same care at the same cost. But if we could get part of the way there with no tax increases at all, that is even better. Or, we could have a serious discussion about where else some of those current defense dollars could be spent (by the government) that would make us safer, richer, or healthier in the future.

goodbye my darling

The Darling, a major river in New South Wales, Australia (where Sydney, Canberra, and Melbourne are) has all but dried up. It’s not addressed in this article, but I recall that Australia’s political system has managed to anticipate and adapt to climate change reasonably well when it comes to drinking water for its major coastal cities. But one thing this article notes is that the country has gone from a net exporter to a net importer of wheat. It is also indigenous populations in the more rural areas who tend to bear the brunt.