This is disturbing. Members of the elected legislature of a democratic country are openly advocating the use of nuclear weapons. This is happening in the only country in the world that has ever used nuclear weapons before. This is from 2013:
Rep. Duncan Hunter Jr., R-Calif., appearing on C-SPAN, encouraged Washington to get ready for war, arguing that “if you have to hit Iran … you do it with tactical nuclear devices and you set them back a decade or two or three. I think that’s the way to do it, with a massive aerial bombardment campaign.” …
Play out Hunter’s proposal and one quickly sees how devastating it would be. While Hunter doesn’t specify what type of “tactical nuclear device” he would propose for such an attack, the Federation of American Scientists notes that launching the least powerful of such weapons would cause nuclear blasts that would “blow out a huge crater of radioactive material, creating a lethal gamma-radiation field over a large area.
“Suppose Hunter would opt for something more lethal. If the United States were to use a more powerful tactical nuclear weapon, like the B-61, it could unleash an explosion many times more powerful than Little Boy, the atomic weapon the United States dropped on Hiroshima. Any such nuclear attack would incinerate untold numbers of Iranian civilians, including those working in Iran’s nuclear power facilities, and those in nearby urban centers.
We’re lucky in this country that the grownups are in charge most of the time. But there are moments when they are not, so while they are they should do whatever they can to idiot-proof the place before our next Lord of the Flies moment arrives.
I feel like Ukraine is not front and center in the U.S. headlines like it was late last year, but I don’t think that means things are any better. It’s just that events in the Middle East are grabbing the headlines. This BBC article is from February:
Nato is to bolster the alliance’s military presence in Eastern Europe in response to increased fighting in eastern Ukraine between government forces and pro-Russia rebels…
The six bases are being set up in Estonia, Lithuania, Latvia, Poland, Romania, and Bulgaria.
France, Germany, Italy, Spain, Poland and Britain are taking the lead in establishing the new rapid reaction “spearhead” force, with its lead units able to deploy at two days’ notice.
I’m still reading about secular stagnation. Joel Mokyr from Northwestern University is one of the few optimistic voices in the book:
…digitalisation has penetrated every aspect of science. It has led to the re-invention of invention. It is not just ‘IT’ or ‘communications’. Huge searchable databanks, quantum chemistry simulation, and highly complex statistical analysis are only some of the tools that the digital age places at science’s disposal. Digital technology is everywhere, from molecular genetics to nanoscience to research in medieval poetry. Quantum computers, still quite experimental, promise to increase this power by orders of magnitude. In much recent writings, the importance of ICT on output and productivity has been stressed, and it is clearly of great importance. What needs to be kept in mind, however, is that the indirect effects of science on productivity through the tools it provides scientific research may, in the long run, dwarf the direct effects. A striking example is the growing use of high-powered computers and radically new software in material science.
Materials are the core of our production. The terms Bronze Ages and Iron Age signify their importance; the great era of technological progress between 1870 and 1914 was wholly dependent on cheap and ever-better steel. In many ways, core-materials can be viewed as general-purpose technologies made famous by Bresnahan’s and Trajtenberg’s (1995) seminal paper on the topic. But what is happening to materials now is nothing short of a sea change, with new resins, ceramics, and entirely new solids designed in silico, being developed at the nano-technological level. These promise the development of materials nature never dreamed of and that deliver custom-ordered properties in terms of hardness, resilience, elasticity, and so on. Graphene, the new super-thin wonder material, is another substance that promises to revolutionise production in many lines. The new research tools in material science have revolutionised research. Historically, progress in material science had been always the result of tedious and inefficient ‘trial and error’ or highly uncertain serendipity. The classic example is William Perkin’s discovery of aniline purple in 1856 and Henry Bessemer’s invention of the eponymous steel-making process the same year. Compare those with the situation today: researchers can now can simulate in silico the quantum equations that define the properties of materials, using high-throughput super-computers, and experiment with materials having pre-specified properties.
But not all research tools depend wholly on computational capacity. Of perhaps even more revolutionary importance is the powerful technology developed by Stanley Cohen and Herbert Boyer in the early 1970s, in which they succeeded in creating transgenic organisms through the use of micro-organisms. Genetic selection is an old technology; nature never intended to create poodles. But genetic engineering is to artificial selection what a laser-driven fine-tuned surgical instrument is to a meat axe. The potential economic significance of genetic engineering is simply staggering, as it completely changes the relationship between humans and all other species on the planet. Ever since the emergence of agriculture and husbandry, people have ‘played God’ and changed their biological and topographicalenvironment, creating new phenotypes in plants and animals. Genetic engineering means we are just far better at it.
Here is an article about Naypyidaw, Burma’s capital:
Driving through Naypyidaw, the purpose-built capital of Burma, it could be easy to forget that you’re in the middle of one of south-east Asia’s poorest countries. On either side of the street, a seemingly endless series of giant detached buildings, villa-style hotels and shopping malls look like they have fallen from the sky, all painted in soft pastel colours: light pink, baby blue, beige. The roads are newly paved and lined with flowers and carefully pruned shrubbery. Meticulously landscaped roundabouts boast large sculptures of flowers.
The scale of this surreal city is difficult to describe: it extends an estimated 4,800 square kilometres, six times the size of New York City. Everything looks super-sized. The streets – clearly designed for cars and motorcades, not pedestrians nor leisurely strolls – have up to 20 lanes and stretch as far as the eye can see (the rumour is these grandiose boulevards were built to enable aircraft to land on them in the event of anti-government protests or other “disturbances”). There is a safari park, a zoo complete with air-conditioned penguin habitat, and at least four golf courses. Unlike in much of the country, there is reliable electricity here. Many of the restaurants have free, fast Wi-Fi.
The only thing Naypyidaw doesn’t have, it seems, is people. The vast highways are completely empty and there is a stillness to the air. Nothing moves. Officially, the city’s population is 1 million, but many doubt this is anywhere close to the true figure. On a bright Sunday afternoon, the streets are silent, restaurants and hotel lobbies empty. It looks like an eerie picture of post-apocalypse suburban America; like a David Lynch film on location in North Korea.
This video is about how surface parking lots have crowded out actual development in many U.S. downtowns. An interesting thing is happening in Philadelphia, where I live. Surface parking lots that have been here as long as I have (1999) are suddenly turning into development sites, all over turn. This tells me that they were being held in a holding pattern waiting for the next boom. This works in Philadelphia because there were never huge areas of parking in the central city, just smaller lots scattered here and there. But there must be some critical mass where you have so much parking that you no longer have a city at all, and maybe it is hard to recover from that.
The lots that are “temporary” for only a few decades still cause environmental problems of course. Philadelphia has the good sense to charge industrial and commercial landowners by the square foot of pavement for stormwater management, a good policy that more cities should consider (disclosure: I have some professional ties to this program). This general idea of tieing taxes and fees to external costs – in this case the environmental impact of building materials – is basic textbook economics and it works!
In theory, you could cap and trade the right to pave. Initially the credits could be sold to real estate development companies. Then, when the cap is hit, a new development would have to buy enough credits from somebody else who is willing to part with an equal amount of pavement. The alternative would be to use porous materials or low impact development techniques. Credits could be retired over time – either because the government or non-profit groups buy them and retire them, or they could be retired when an owner goes bankrupt or falls behind on property taxes. Maybe they could even be accepted as payment for certain fees or taxes (for example, fees that would have been spent on stormwater management anyway), then retired. Set up a system like this and entrepreneurs would find ways to get in on the game, putting the private sector to work on behalf of the environment.
In Robert Gordon’s chapter in the e-book Secular Stagnation: Facts, Causes and Cures, which I reviewed recently, he claims that he never said technological progress is slowing down, but only that future progress will be similar to the rate of the 1970s to now, not the faster rate that happened before the 1970s.
His main argument is that technology will not grow fast enough to offset economic “headwinds”, including population aging, inequality, government debt, and poor education. I don’t deny that these are all problems that we should be trying to address with better policy, and that addressing them would yield benefits. Gordon gives a policy presciption for the U.S. to address them:
My standard list of policy recommendations includes raising the retirement age in line with life expectancy, drastically raising the quotas for legal immigration, legalising drugs and emptying the prisons of non-violent offenders, and learning from Canada how to finance higher education. The US would be a much better place with a medical system as a right of citizenship, a value-added tax to pay for it, a massive tax reform to eliminate the omnipresent loopholes, and an increase in the tax rate on dividends and capital gains back to the 1993-97 Clinton levels.
However, where he doesn’t convince me is his argument that a constant rate of technological progress can’t lead to big gains. If the rate of increase in technology is constant in percentage terms, that means the level of technology is growing exponentially. We are constantly building on the advances of the past. There may be long periods when it seems like nothing is happening, but progress is actually happening behind the scenes, and then it suddenly seems to burst onto the commercial scene. Gordon actually talks about how the technologies that led to very fast productivity growth in the mid-20th century were actually inventions of the late 19th century (electricity, the telephone, etc.). It took a few decades for the technology to kick into everyday life. The 1970s to the present have been a time of huge advance in computer technology, so even if the lag times are not decreasing it should be about time for that to kick in. Biotechnology would be another couple decades behind, since the big advances in genomics started to happen in the 1990s. But there are reasons to be hopeful that the lag time between advances tends to decrease over time. So technology may be increasing not only at a constant percentage rate, which means exponential growth, but the rate of exponential growth itself may be accelerating. Ultimately, this lag time determines whether we are in for a lost decade or two as Gordon’s “headwinds” kick in before the next wave of technology-driven improvement. Of course, Gordon like most economists leaves out some other possible headwinds such as climate change, energy, and food, not to mention the really bad stuff like wars and pandemics.
Here is Donella Meadows explaining how your bathtub is like your bank account.
If you’re about to take a bath, you have a desired water level in mind. You plug the drain, turn on the faucet and watch until the water rises to your chosen level (until the discrepancy between the desired and the actual state of the system is zero). Then you turn the water off.
If you start to get in the bath and discover that you’ve underestimated your volume and are about to produce an overflow, you can open the drain for awhile, until the water goes down to your desired level.
Those are two negative feedback loops, or correcting loops, one controlling the inflow, one controlling the outflow, either or both of which you can use to bring the water level to your goal. Notice that the goal and the feedback connections are not visible in the system. If you were an extraterrestrial trying to figure out why the tub fills and empties, it would take awhile to figure out that there’s an invisible goal and a discrepancy-measuring process going on in the head of the creature manipulating the faucets. But if you watched long enough, you could figure that out.
Very simple so far. Now let’s take into account that you have two taps, a hot and a cold, and that you’re also adjusting for another system state — temperature. Suppose the hot inflow is connected to a boiler way down in the basement, four floors below, so it doesn’t respond quickly. And you’re making faces at yourself in the mirror and not paying close attention to the water level. And, of course, the inflow pipe is connected to a reservoir somewhere, which is connected to the whole planetary hydrological cycle. The system begins to get complex, and realistic, and interesting.
Mentally change the bathtub into your checking account. Write checks, make deposits, add a faucet that keeps dribbling in a little interest and a special drain that sucks your balance even drier if it ever goes dry. Attach your account to a thousand others and let the bank create loans as a function of your combined and fluctuating deposits, link a thousand of those banks into a federal reserve system — and you begin to see how simple stocks and flows, plumbed together, make up systems way too complex to figure out.
The “secular stagnation hypothesis” has now been around long enough that it has a nickname – SecStag. The basic idea is that the world may have entered a period of low economic growth that is going to persist for a long time, and governments need to start responding to it. This long ebook has chapters from a number of famous economists, including Larry Summers, Barry Eichengreen, Robert Gordon, Paul Krugman, and Edward Glaeser.
It’s hard for the non-economist to summarize, but I’ll try. Some of the ideas are:
The real interest rate is essentially the price of borrowing money. When people want to save (loan it out) more than other people want to borrow (invest it in new capital, infrastructure, inventions, business activity), it suggests that the rate of innovation, or profitable new investment possibilities, might have slowed down.
One way the rate of new profitable investments would slow down is if the rate of technological progress has slowed down compared to what it was over the past 50 years or so. Some are suggesting that.
Another possibility is that the type of technological progress that is occurring is harder to turn into profits than in the past, meaning it is not showing up in the traditional tracking numbers.
Another way is if governments are investing too little in infrastructure, and companies are investing too little in research and development because they are uncertain whether it will pay off.
Another way is if people are saving more for a rainy day, because there are more people nearing retirement as a fraction of the population than there used to be, and/or people and firms are saving because they are uncertain about the future, for example because they fear losing their jobs or having to may large health care bills.
Another possibility is that innovation is occurring, but only benefiting a few rich people and corporations at the top of the income scale, so that the average person is not benefiting.
A final possibility is that workers’ skills became obsolete because they were idle for too long after the recession hit. The idea that education is inadequate is also similar to this.
I think the explanation for the recent low GDP growth could be some combination of all of these, although I have a lot of trouble buying the lack of innovation hypothesis. Corporate profits and stock markets seem to be up, suggesting to me that profitable innovation is occurring but benefiting only a chosen few.
The automation vs. employment debate isn’t mentioned very much here, and climate change is mentioned only once in the 179 page book.
Lee Kuan Yew, the founder and long-time leader of modern Singapore, passed away on March 23. I regret I never saw him in person, but I did live in Singapore from 2010-13 and read his memoir From Third World to First. His accomplishments are extraordinary whatever you think of him. The western press is a little unfair in constantly calling him an “autocrat”. It’s true that he outlawed short skirts and long hair for a time, censored foreign publications, and locked up a few Communists for decades without a proper trial. But that was the Cold War, and before you judge, you have to consider the utter chaos and climate of fear that was going on all around Singapore in Indonesia, Malaysia, Vietnam, Korea, China, and pretty much the rest of Asia at the time. Singapore stayed relatively calm, peaceful, safe, and eventually became prosperous on his watch. Singapore has a parliament with regular elections. They are dominated by one party that only considers a narrow range of policies, partly because that party is popular and has served the people well, and partly because there are strong barriers to entry built into the system for opposition parties that might consider a wider range of policies. But replace that one party with two parties that are only slightly apart on the narrow range of policies they consider, keep the barriers to entry, and you have the U.S. system.
Economically, Singapore took full advantage of its critical location in the global shipping network. They focused on foreign direct investment to build industry first in low wage manufacturing, and gradually built up to advanced industries today such as refining, chemicals, drugs, technology, finance, etc. They have something called the “central provident fund” – this is a personal social security account that people save their money in (it’s not optional) for retirement, housing, and medical care. This money gets invested in the local and global economies and earns a good rate of return. Almost all housing is developed by the government and subsidized – but it is not exactly “public housing” as we think of it in the U.S., because it is owned rather than rented. So it’s more like a condo where the government is your condo association. You can buy your first unit at a discount to the market price, then resell it later at the market price, although the government puts some limits on who can buy where and when. So the combination of this housing scheme and savings scheme has built a fairly broad base of wealth for the population without resorting to a large income redistribution or social insurance scheme like we see in Europe and the Anglo-American countries. Lee famously believed that this would be counter to “Asian values”, part of which is maintaining very tight family units that take care of each other in times of need.
Although I enjoyed my personal time in Singapore, it was a little too cold and corporate for my taste. Too many people seemed to view accumulating wealth and designer handbags as the primary objective of everyday life. Although I agree that people were tolerant of religious and ethnic diversity, I perceived a coldness between strangers on the street, and even between neighbors, that I found disturbing compared to the way people treat each other in the U.S. and elsewhere in Southeast Asia. People sometimes expressed petty racial and class-based attitudes that would at least engender some guilt in other places. Sometimes I felt that Singaporeans have allowed themselves to become the perfect example of the new Homo economicus species described in the economics textbooks. The country also has some demographic challenges – fertility rates are low partly because women have so many more career and life options available to them than in the past. This is great, but because Singapore is so small it is going to mean a dramatic drop in the native-born population. Immigration can compensate in terms of numbers, but the culture and sense of nationhood will somehow have to adjust to this. A shared love of designer handbags is not a good cultural foundation for a nation.
Singapore has an unbelievable PR machine. You should assume that things there are never quite as rosy as the propaganda they put out, nor as bad as the western press sometimes accuses. Regardless, it is pretty amazing to think how far it has come since the ashes of World War II, and hard to point to another figure who has created a prosperous modern country through sheer force of will like Lee Kuan Yew.