Tuesday, January 30, 2018

Protectionism in the age of solar cells, Part 2

When the Trump administration announced last week that it was imposing tariffs on solar cell panels mostly coming from South Korea and China, it appears that the progressive blogosphere was almost unanimous in condemning the action as an attack on solar energy.

I was dismayed that the neoliberal lies about free trade had apparently been accepted by so many. As Jon Larson wrote on Real Economics, �In certain corners of the economic world, this is a major story�mostly because it flies in the face of neoliberalism's first commandment�Thou shall not condone protectionism!�

The tariffs should be attacked, but not because they are tariffs, not because they are protectionist, not because they may lead to less imports of panels and therefore the loss of jobs of people installing them.

The tariffs should be attacked because they are not accompanied by a robust industrial policy that will help USA manufacturers replace panels no longer being imported, by panels of domestic manufacture.

Protectionism is an issue on which the Democratic Party and the left in general are very vulnerable. Basically, they have forgotten the actual history of industrial development: every single country that successfully industrialized did so behind trade barriers. Many readers may not believe me, but it is historical fact. For a relatively short but full explication of the fact that protectionism works, I point you to James Fallows� December 1993 article in The Atlantic, �How the World Works.� For an entire book on this topic, the best is probably South Korean economist Ha-Joon Chang's 2007 book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, available as a large pdf file here. An excellent review of Chang�s book, by Chalmers Johnson, is here.

For a brief discussion of how this history was purposefully and deliberately eradicated from American universities and economics courses a century ago, read �Prophet of Prosperity� in a recent issue of The Pennsylvania Gazette of the University of Pennsylvania. The motive? �...landlords and other rentiers were reclassified as capitalists, just ones who invested in land and raw assets rather than machinery, and thereby earned �the increments of value attaching to land,� thus removing the social opprobrium of being exploiters, parasites and usurers. And, more importantly, to allow �money to make money.�

We like to taunt our conservative and libertarian opponents that you are entitled to your own opinions, but you are not entitled to your own facts. Well, the same applies on this issue, and to the neoliberals amongst us: you are entitled to your own opinions, but you are not entitled to your own facts. The facts are clear that historically, countries that successfully industrialized did so behind trade barriers that protected their infant industries, and protected the earning power of their working people. The facts are equally clear that since the imposition of economic neoliberalism and free trade on developing countries, and their enforcement by the World Bank, the International Monetary Fund, and other international NGOs, not to mention the USA government and others, the growth rate of the national economies of developing countries has been LESS than it was before neoliberalism and free trade. Those are the facts, and all the crap you were taught in college economics courses will not change them.

But protectionism alone does not work. There must be a national industrial policy to promote and encourage the development and growth of new industries. As originally developed by George Washington and his Treasury Secretary, Alexander Hamilton, and later in the 19th century by Henry Clay, Henry Carey, Abraham Lincoln (on Lincoln, see one of the best overlooked books on historical political economy, Lincoln and the Economics of the American Dream, by Gabor S. Borit, Memphis State University Press, 1978)., and others, protectionism was one pillar of a three-part program for national economic development. The other two were a national banking system, and internal improvements (what we today call infrastructure).

Also, American economic thought � outside the oligarchical slave south � in the 19th century was dominated by the now forgotten Doctrine of High Wages. According to this doctrine, there was a virtuous circle in which paying labor high wages allowed labor to avoid penury and the bodily and mental exhaustion that accompanies it, making labor more productive and thus generating the ability to pay labor high wages. It was explicitly recognized that to force Americans to compete against the poorly paid labor of the British empire (in the dreadful conditions of industrial Birmingham and London as well as the wretched poverty of India and other colonies) was crazy. In the Conclusion to his 1851 book, The Harmony of Interests: Agricultural, Manufacturing & Commercial, Carey wrote that the British system of free trade "looks to pauperism, ignorance, depopulation, and barbarism," while protectionism and the American School of political economy aims "to increasing wealth, comfort, intelligence, combination of action, and civilization."

The history of a national banking system is now obscured by Jackson's demolition of it during the 1830s fight over the rechartering of the Second Bank of the United States. But the key point was that financial activity must be steered toward productive investment and away from mere speculation and "stock jobbing." Hamilton set down a firm and concise test in The Federalist Papers number 15: "Is private credit the friend and patron of industry?"

Today, that would mean a severe crackdown on the over $5 trillion a day of trading in stock, bond, futures, options, and foreign exchange markets, as well as seizing the estimated $50 trillion in hot money sitting in tax havens around the world. A tax on trading in the financial markets would go a long way to eliminate much of the speculative trading, and shift the socially harmful short term outlook of financial markets to a more long term outlook more attuned to the real economy ordinary people experience day to day. High frequency trading in particular, since it serves no economically productive or socially useful purpose whatsoever, needs to be eradicated.

Internal improvements were carried into effect by dozens and dozens of government programs and projects, beginning with the building of lighthouses under the direction of Treasury Secretary Hamilton. Even Hamilton's political enemy, Jefferson, engaged in internal improvements � sending out the Lewis and Clark Corps of Discovery to explore and map the northwest, followed by similar Army expeditions � almost completely forgotten today � to the southwest, to explore the Platte, Arkansas, Canadian, Red, and upper Rio Grande Rivers of the lower Great Plains. Army officers leading these expeditions included Stephen H. Long and Zebulon Pike. Altogether, over 40 Army expeditions would be sent out over the first half of the 19th century, and the information they returned with enabled the vast overland migrations to California and Oregon. In the 1850s, Army engineers led survey expeditions to select the route for transcontinental railroads.

There were many other government programs besides these Army expeditions. There were Navy expeditions to the South seas and the Antarctic, which brought back specimens which formed the basis for creating the Smithsonian Institution. There were programs to build roads and canals, harbor improvements, and improvements to river navigation. There were clean water and sanitation projects carried out by state and municipal governments. There was direct funding of Samuel Morse to build the telegraph, and direct Navy funding of experiments to determine the most efficient designs of steam engines. There were state and national programs to study problems of agriculture, and to find, introduce, and develop new animal and crop breeds more resistant to the pests and germs of North America. There were deliberate policies to spread the new technologies and capabilities of metalworking machine tools from the national armories where they were first designed and developed, to general industry.

In short, there was ACTIVE government promotion of economic development that complemented trade protectionism to encourage the creation and growth of new industries and new transportation capabilities, while at the same time (in the North at least), ensuring that American workers were the highest paid and most productive in the world. (It must be noted that this record of nationalist economic achievement is easily obscured by focusing only on the "peculiar institution" of slavery in the South, or on the emergence of a new class of Gilded Age robber barons who consciously modeled their tastes, biases, and social outlook on British oligarchs.)

Without these two other two pillars � national progressive banking, and massive infrastructure programs � and a discontinuation of the war on the wages and benefits of American workers, then Trump's protectionist attempts to reverse the deindustrialization of the USA economy will be largely ineffective.

There also remains the problem of avoiding a trade war. There are too many brainwashed so-called progressives who aggressively characterize critics of free trade as �isolationists� and jingoistic �economic nationalists.� Again, they may have their own opinions, but they may not have their own facts. And one important fact going forward is that the world desperately needs $100 trillion in new investment to build energy and transportation systems that run on renewable energy sources alone.

The present world trade regime was designed mostly by people working for multinational corporations, and is designed to take advantage of sources of cheap labor that can be exploited to make cheap, increasingly shoddy consumer goods, and to avoid taxes on the resulting high profits. Proponents of this trade regime claim it has helped lift millions of people in developing countries into the middle class. Why then has so little progress been made in areas such as providing access to clean drinking water, waste disposal and treatment, and public mass transit? Why are growth rates for most developing countries slower under this regime than they were before it?

The present world trade regime must be discarded, and replaced with a world trade system which promotes national economic development of the industry, agriculture, and infrastructure of all nations. This must include strict limits on speculative and hot money capital flows. This means negotiating with countries like Algeria � not to open up their markets to speculators and usurers, but to assist them in acquiring and developing the scientific and technological knowledge to build their own fresh water systems, renewable energy systems, and transportation grids. Algeria wants to build its own automobiles and eliminate imports. This desire should not be attacked and disparaged as contrary to free trade, but encouraged as a solid way of providing high paying jobs for Algerians. And it should also be encouraged to be steered in such ways as to move beyond internal combustion engines as quickly as possible, to electric vehicles.

There are hundreds of millions of people across the globe without access to clean water, without indoor plumbing, without heating or cooling. How many steel plants and plastics plants are there in Africa that produce pipe? How many factories are there in Africa to produce valves, faucets, gaskets, grommets, nuts and bolts? If there are not any, rich countries like USA have a moral obligation to help establish them, and get them running. And NOT for exporting all this new pipe, valves, and faucets back to USA or other already developed markets.

In sub-Saharan Africa, 70 percent of people live with no access to electricity. Yet there is enough solar energy hitting one square kilometer of desert in Africa to supply all the electricity needed -- in all of Europe as well as Africa. Deploy enough photovoltaics, and Africa has a huge surplus of energy it can export to Europe. There is no reason that these solar cells can�t be built by countries in Africa. No reason except plain racism, and blind ideological faith in free trade.

We need a new world trade system based on actual national development of industries and domestic markets in the less developed countries. Free your mind of its free trade lies!

Friday, January 26, 2018

Protectionism in the age of solar cells

The Trump administration has annouced its intention to slap some tariffs on products mostly coming from S. Korea and China. In certain corners of the economic world, this is a major story�mostly because it flies in the face of neoliberalism's first commandment�Thou shall not condone protectionism!

As two guys who are serious students of industrialization in general and USA industrialization in particular, Tony and I are pretty supportive of some sort of economic protectionism. Tony's approach is very straight-forward�he looks at the historical record and sees that every nation that successfully industrialized did it behind tariff walls.

My take is that because the financial markets are hopelessly corrupt, shortsighted, and technologically illiterate, they are unable to properly value the infrastructure of industrialization. When financialization first started, there were a few protests at the ability of real scoundrels to seize and then cash in on assets they rarely understood, who in the process of their plunder, squandered a system of wealth creation that had taken decades to create. They pissed away USA's industrial crown jewels for a tiny fraction of what they were worth with their get-rich-quick schemes. These protests probably crested with Oliver Stone's movie Wall Street�an effort so excellent, I suspect Stone didn't even know how good it was.

Along with the plunder came the justifications for why this did not matter. Around here, these loony economic expressions for how the world should work, but doesn't, are lumped under the garbage pile we call neoliberalism. And in the world of the neoliberals, there is no greater sin than "protectionism." Yet here we are with a president who believes that tariffs and such are probably a good thing. He's about 30 years too late, but he seems to think USA industry should be protected. One other thing, the Asians have been about as brazen in their theft of intellectual property as anyone�including USA from GB. The Chinese were caught red-handed dumping solar panels. The party injured by this was actually Germany but a couple of USA manufacturers won some settlement with the Chinese. Ironically, both USA victims are foreign-owned�one German, one Chinese.

I have included four essays on this subject after the break:
  1. The Asians seem to think this is a major shift in USA trade policy. My guess is that they will figure out ways to adjust to new market realities.
  2. Lindorff seems to think these tough new trade rules are a manifestation of an unhappy empire that wants to slap around China and Korea for the crime of wanting a different foreign policy than the folks from Foggy Bottom.
  3. Reuters, which always believes protectionism is a bad thing, argues that tariffs on solar panels will most hurt the solar panel installers.
  4. The folks at Rolling Stone just assume this is Trump's way of throwing some roadblocks in the way of new green technologies.
All of these folks have a point. And we will probably hear a lot more on this subject. This is a protectionist proposal in a neoliberal world�a world with thousand of economists well-trained and motivated towards shooting this thing down. As someone who participated in the debate over NAFTA, I am very interested to see how this debate will differ.

Asia fears solar panel, washing machine tariffs just the start for tough-on-trade Trump

Ju-min Park and Hyunjoo Jin, Reuters, 23JAN2018

South Korea and China protested against President Donald Trump putting steep import tariffs on washing machines and solar pannels, and they fear it could be the start of more protectionism. Trump campaigned on balancing US trade with other nations, but has yet to do much in terms of tariffs until now.

SEOUL (Reuters) - South Korea and China protested on Tuesday against U.S. President Donald Trump slapping steep import tariffs on washing machines and solar panels in a move that stirred fears in Asia of more protectionist measures coming out of Washington.

For all his rhetoric to win votes, Trump's actions on trade during his first year had been less alarming than many outside the country had feared - until now.

"It shows that the U.S. administration, after taking its time, it's now indeed starting to roll out measures restricting trade with the idea of living up to the promises made during the electoral campaign," said Louis Kuijs, head of Asia economics at global consultancy Oxford Economics, in Hong Kong.

"This could very well be just one step of many," said Kuijs, predicting steel and aluminum imports could be on Washington's target list.

The United States' stance has put a cloud over global trade at a time when its revival has fueled hopes for a stronger world economy. But, at least, economists believe the United States will avoid taking measures that could impact U.S. companies global supply chains, particularly for cars and electronics.

The tariffs on washing machines, meantime, have dealt a heavy blow to South Korea's Samsung Electronics and LG Electronics.

Together they ship between 2.5 million to 3 million washing machines annually to the United States, with sales of around $1 billion, and they hold a quarter of a U.S. market that has been dominated by Whirlpool and General Electric Co .

South Korea's trade minister Kim Hyun-chong said the new U.S. tariffs violated World Trade Organisation rules.

"The United States has opted for measures that put political considerations ahead of international standards," Kim told a meeting of industry officials.

"The government will actively respond to the spread of protectionist measures to defend national interests."

China, the world's biggest solar panel producer branded the move an "overreaction" that would harm the global trade environment for affected products.

"The U.S.'s decision ... is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this," Wang Hejun, the head of the commerce ministry's Trade Remedy and Investigation Bureau, said in a statement on its microblog.

"China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous U.S. decision."

Mexico said it would use legal means to ensure Washington met international obligations, pointing to compensation envisaged under the North American Free Trade Agreement.

India has recently re-opened a U.S. dispute, alleging Washington has failed to comply with a ruling on solar power.

Vietnam has also challenged U.S. anti-dumping measures against exports of fish fillets, according to a WTO filing.

"Security and trade linked"

The decisions in the two "Section 201" safeguard cases for washing machines and solar cells came after the U.S. International Trade Commission (ITC) found that imported products were "a substantial cause of serious injury to domestic manufacturers."

The tariffs on washing machines exceeded the harshest recommendations from ITC members, while the solar tariffs were lower than domestic producers had hoped for.

Trump ignored a recommendation from the ITC to exclude South Korean-produced washing machines from LG from the tariffs.

Washington will impose a 20 percent tariff on the first 1.2 million imported large residential washers in the first year, and a 50 percent tariff on additional imports. The tariffs decline to 16 percent and 40 percent respectively in the third year.

A 30 percent tariff will be imposed on imported solar cells and modules in the first year, with the tariffs declining to 15 percent by the fourth year. The tariff allows 2.5 gigawatts of unassembled solar cells to be imported tariff-free in each year.

"After a year's preparation, Trump is ready to take action to address the huge trade deficit with China and get even," said Zhang Yi, chief economist at Capital Securities in Beijing.

"Last year, we thought nothing would happen, but now China should not have any illusion about it. If the U.S is using Section 201 to hit you, they will hit hard," Zhang added.

Some analysts in Seoul believed Trump was intensifying pressure on its Asian ally to rely more on him when dealing with North Korea, while gaining leverage renegotiating a bilateral free trade pact that Trump has previously labeled as "horrible."

"Security and trade are linked to each other under Trump," said Choi Won-mog, an international trade law expert at Ewha University.

A filing published by the WTO on Jan. 12 showed Seoul had already asked for authorization to impose annual trade sanctions worth at least $711 million on the United States, in response to the dispute over washing machines.

South Korea also asked for permission to impose an open-ended amount of trade sanctions if Washington broke the same rules again with regard to other products.

Seoul has already demanded compensation because the United States had failed to meet a Dec. 26 deadline to comply with a ruling against duties of up to 82 percent it had earlier imposed on appliances made by Samsung Electronics, LG Electronics and Daewoo Electronics.

Both Samsung Electronics and LG Electronics expressed concern over U.S. tariffs, saying they would hurt American consumers and jobs.

LG Electronics shares ended up 0.5 percent after an earlier plunge, while Samsung Electronics was up 1.9 percent in line with the South Korean market's 1.4 percent gain. more

South Korea Slips Off the US Leash


The mainstream US media, when it comes to the idea of talks between the governments of North and South Korea, are focused on the idea that North Korean leader Kim Jong-un is trying to drive a wedge between the Republic of Korea and the United States. No doubt that is true, but this focus misses a major part of the story.

What we�re really seeing here is South Korean President Moon Jae-in making a bold move to assert South Korea�s independence from the United States.

Nobody should be surprised that Moon, who was swept into power thanks to a surge of voters (he won by 41.1% against two conservative parties which received 24% and 21.1%) last year on a promise to reach out to North Korea and attempt to bring the two warring halves of the Korean Peninsula (they are still technically in a state of war that began in 1950, nearly 68 years ago) back together.

Taking the seeming baby step that he has taken of inviting North Korea to compete in the Winter Olympics being held next month in South Korea might seem like a small thing, but it was actually a bold step for Moon. What most Americans don�t know is that South Korea is technically a kind of colony of the US, given that its military is still under the control of the United States. This is thanks to a UN Security Resolution passed in 1950 authorizing a UN military action against the North and designating the US as the lead authority of the UN operation � a controlling role that the US still clings to.

That situation explains the bizzare warning given about North/South two-party-only negotiations by former Obama-era US State Department Assistant Secretary for East Asian and Pacific Affairs David R. Russell, who is quoted in a Jan. 3, 2018 article in the New York Times by Mark Landler as revealingly saying, �It is fine for the South Koreans to take the lead, but if they don�t have the US behind them, they won�t get far with North Korea�And if the South Koreans are viewed as running off the leash [my emphasis], it will exacerbate tensions within the alliance.�

Imagine US diplomats telling NATO allies UK, Germany or France not to �run off the leash� in bilateral discussions say, with Russia! Sure, they too are on a leash to some extent, but nobody associated with the US State Department, would ever stick it in their faces like that.

Leo Chang Soon, a Korean-American historian and author of an important history of US and Korea, whose father faced an assassination threat for standing up, as vice president, to Korean dictator Rhee, �South Korea has been under the US leash since Syngman Rhee flew into Korea on General Douglas MacArthur�s plane to become the first president of South Korea (ROK) on September 2, 1945.�

In his must-read history of the US role in the Korean War and the subsequent neo-colonial control over South Korea titled Reflections on the Roots of US Involvement in Korea (Levellers Press, 2013), Chang writes:

Even a US general, the late Richard G. Stilwell, commented that the degree of operational control enjoyed since July 1950 by the United States in Korea is �the most remarkable concession of sovereignty in the entire world.�

Chang says that last year�s impeachment of conservative Korean President Park Geun-hye, the daughter of former South Korean dictator Park Chung-hee, in the face of massive protests known as the �candle movement� against her corruption and links to the giant South Korean chaebol industrial conglomerates, and the subsequent election of the liberal Moon, an advocate of rapprochement with the north and of a more independent relationship with the United States has �fundamentally changed the character of political dynamics in South Korea for years to come.�

Understandably, the US, used to running the show in South Korea, is not amused. Ignoring the opening between north and south, the US organized a meeting of allies in Vancouver, Canada called a �North Korea summit.� Invited were representatives of all 15 of the nations � like France, the UK and South Africa � that joined with the US in the �UN� military action against North Korea and its allies, China and USSR in the Korean War. Pointedly not invited to the meeting were either China or Russia, nations that would obviously have to play key roles in any peaceful settlement of the current Korean crisis. Both those countries blasted the conference as a sham.

The last thing the US government wants is the eventual unification of the two Koreas, which would inevitably wind up being a neutral nation under the influence of its two largest neighbors, China and Russia. As Chang notes, an end to the Korean War and the possibility of further hostilities on the Korean peninsula would be a huge blow to the US arms industry. South Korea buys billions of dollars worth of US arms every year, and also serves as a base for US troops and naval vessels, and now also for anti-missile systems that can target both China and Russia. All of this would be lost in the event of Korean unification, or even of an end to hostilities between North and South.

While the US government is doing its utmost to frighten Americans about the supposed capability of North Korea to hit US cities with its nuclear-tipped missiles, South Koreans, whose country would be devastated once again by a war between the North and the US, as it was by the Korean War in the early 1950s, when millions died, mostly from an incomprehensibly huge and brutal US bombing campaign, particularly of North Korea, but of the South Korea, too, seem confident it won�t happen again. While there are right-wingers in the South who hate and fear the North and oppose reunification, most South Koreans understand that North Korea�s nuclear program is about preventing a US invasion aimed at regime change, not at trying to attack the US or South Korea. There is tremendous anger and antipathy in South Korea � and among Korean-Americans in the US � at Trump�s name calling and threats to erase North Korea in a US nuclear attack on that long-suffering nation. Many have relatives who live in the north, and also remember the ruthlessness of America�s military in the �50s. Many Koreans also still recall that the US military oversaw the killing of some 100,000 Korean leftist and nationalists in the south after the war during the US occupation, and that Washington US generals in Korea okayed the slaughter of hundreds of students during an uprising in the South Korean city of Gwangju in 1980.

Some leaders in the US, notably Rep. Tulsi Gabbard (D-Hawaii), have spoken out against Trump�s threats. Gabbard, a major in the Army Reserve who served in Iraq, has even gone so far as to explain that North Korea�s nuclear weapons are clearly meant as a defense against the threat of US �regime-change� efforts, and has also said that US government attempts to demand denuclearization of North Korea as a precondition for peace talks are futile.

She is right. Kim Jong-un has seen how the US dealt with Muamar Ghaddifi in Libya, once he gave up nuclear weapons, and with Saddam Hussein, who had none, and sees possession of credibly deliverable nuclear bombs as his best bet for staving off US military action against his regime.

There is also the reality that China is not going to allow the US to gain control over North Korea, which would put US troops on its border. It was the threat of that happening back in 1950 that led a much weaker China, just a year after its forces had won their long revolution and taken power in Beijing, to join the battle on North Korea�s side when Gen. Douglas�s forces appeared likely to crush the North Korean army.

The situation in Korea is unprecedented at this point. The Democratic Peoples Republic of Korea (the North) now has as many as 20 nuclear weapons, including hydrogen bombs, that can probably reach the US mainland on North Korean missiles. Meanwhile, the Republic of Korea in the south is showing signs of shaking off at least some of the control the US has long exercised over its relations with the North. At the same time, under President Trump, behind all the bluster the US is pulling back from its prior efforts to behave as the world�s �lone superpower,� and is being forced by a resurgent Russia and a China that is both a dominant economic and an increasingly potent military rival, to recognize the limits of US military and economic power.

Since there really is no way the US can simply have its way militarily against a nuclear-armed North Korea, at some point the US is going to have to either negotiate with the DPRK, or let South Korea do it, with the four or more surrounding powers, China, Russia, Japan and the US, playing supporting roles.

The sooner the US recognizes that reality the better. more

Job creator, or job killer? Trump angers solar installers with panel tariff

Ayesha Rascoe, Nichola Groom, JANUARY 22, 2018

WASHINGTON/LOS ANGELES (Reuters) - U.S. President Donald Trump signed into law a steep tariff on imported solar panels on Tuesday, a move billed as a way to protect American jobs but which the solar industry said would lead to thousands of layoffs and raise consumer prices.

The 30 percent tariff on solar panels is among the first unilateral trade restrictions imposed by the administration as part of a broader protectionist agenda to help U.S. manufacturers, but which has alarmed Asian trading partners that produce lower cost goods. The administration also introduced a tariff on imported washing machines.

�You�re going to have people getting jobs again and we�re going to make our own product again. It�s been a long time,� Trump said as he signed the order.

But the solar industry countered that the move will raise the cost of installing panels, quash billions of dollars of investment, and kill tens of thousands of jobs, raising questions about whether Trump�s move will backfire by triggering mass layoffs.

�We are not happy with this decision,� said Abigail Ross Hopper, president of the U.S. Solar Energy Industries Association, on a conference call with reporters on Tuesday. �It�s just basic economics - if you raise the price of a product it�s going to decrease demand for that product.�

The leading solar trade group predicted that the tariffs could cut forecasted solar installations this year by nearly 20 percent, to 9 gigawatts from 11 gigawatts, and lead to the loss of 23,000 jobs in the United States, the world�s fourth-largest solar market after China, Japan and Germany.

Research firm Wood Mackenzie estimated that over the next five years the tariffs would reduce U.S. solar installation growth by 10 to 15 percent.

The U.S. solar industry employs more than 260,000 workers - about five times more than the coal industry - with the vast majority involved in installation rather than panel manufacturing.

U.S. Republican Senator John McCain of Arizona, a big solar power producing state, said in a Twitter post that the tariffs amount to �nothing more than a tax on consumers.�

The main beneficiaries include U.S.-based solar manufacturers Suniva and SolarWorld - both controlled by foreign parent companies. They petitioned for the trade relief arguing they could not compete with the cheap imports that have caused panel prices to fall more than 30 percent since 2016 and asked for the equivalent of a 50 percent tariff.

Suniva on Monday said the tariffs were �necessary,� while SolarWorld said it was �hopeful they will be enough.�

Bankrupt Suniva is majority-owned by Hong Kong-based Shunfeng International Clean Energy, and SolarWorld is the U.S. arm of Germany�s SolarWorld AG.

Shunfeng rose 2.6 percent after the announcement and SolarWorld was up 22 percent.

Other U.S. solar stocks were mixed. SunPower Corp, which manufactures panels in Asia, was down more than 6 percent and residential installer SunRun Inc. was up about 6 percent. The tariffs were broadly in line with investor expectations, creating some relief in the market, analysts said.

Both SunPower and Sunrun said they disagreed with the decision to impose tariffs.

Research firm CFRA said it expects the tariffs to increase solar system prices by about $0.10 per watt. It reckons First Solar, a U.S. company with offshore panel manufacturing whose technology is not included in the tariff, would be the biggest beneficiary, while China manufacturers such as JinkoSolar would be the biggest losers.

Globally, solar capacity soared to almost 400 GW last year from under 10 GW in 2007, according to the International Renewable Energy Administration.

China, the world�s biggest solar panel producer, branded the move an �overreaction� that would harm the global trade environment for affected products.

�The U.S.�s decision ... is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this,� Wang Hejun, the head of the commerce ministry�s Trade Remedy and Investigation Bureau, said in a statement on its microblog.

�China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous U.S. decision.�

South Korea�s trade minister Kim Hyun-chong said the new U.S. tariffs violated World Trade Organization (WTO) rules.

�The United States has opted for measures that put political considerations ahead of international standards,� Kim told a meeting of industry officials. �The government will actively respond to the spread of protectionist measures to defend national interests.�

Trump dismissed the prospect of a trade war and said during the signing that �a lot of manufacturers� will come to the United States to build solar plants.

CFRA analyst Angelo Zino said he expected any added manufacturing jobs would be �minimal� given the 18 months to two years it takes to build and ramp up a new production facility and the industry�s shift toward automation. more

Trump's Tax on Solar Power: Here's What You Need to Know

How the 30 percent tax on imported panels is likely to kill jobs and boost America's reliance on coal

By Tim Dickinson, 24JAN2018
President Donald Trump has imposed a 30 percent tax on imported solar panels, a move that's expected to pull the plug on tens of thousands of American jobs, while slowing the rush to renewable energy and rewarding fossil-fuel producers. Here's what you need to know:

The technology exists to combat climate change � what will it take to get our leaders to act?

America First?

The solar tax announcement came down Monday from the Office of the U.S. Trade Representative � during the government shutdown � followed by a quiet White House signing ceremony Tuesday. Solar manufacturers in the U.S. had been "decimated" by unfair trade, Trump said, arguing the new tax means "those companies will be coming back strong."

The lack of fanfare was from the White House was curious. Taxing solar imports is one of the first concrete implementations of Trump's "America First" trade agenda. And Trump himself had been badgering senior staff to, "Bring me some tariffs!"

But taxing solar panel imports is not a clear political victory for the president � underscoring the reality that U.S. trade policy is far more complex than Trump's bumper-sticker sloganeering. "It boggles my mind that this president � any president, really � would voluntarily choose to damage one of the fastest-growing segments of our economy," Tony Clifford, chief development officer of Standard Solar, a leading installer, told reporters. "This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries."

American Plants, Foreign Owners

The solar trade dispute came to a head last year, when two distressed companies that manufacture solar panels in the United States filed a trade complaint to the U.S. International Trade Commission (ITC), an independent federal agency. The flood of cheap solar panels produced by Chinese-owned solar firms across Asia, the companies argued, had unfairly undercut their businesses.

Suniva and Solar World were not wrong about solar panel dumping: The ITC ruled, unanimously, that the companies had been harmed by low-cost imports, and recommended in October that tariffs be imposed. Under U.S. trade law, the ITC's recommendation is non-binding. The final decision to impose an import tax fell to the president himself � leading to Monday's decision.

At first glance, Trump appeared to have been given a golden political opportunity to protect American manufacturers and U.S. jobs. But the big picture is far muddier: Despite manufacturing in the United States, the two companies at the heart of the trade dispute are not American. Suniva, which operates in Georgia, is Chinese owned. Solar World, producing in Oregon, is a German concern. Both operations are highly automated � employing only hundreds of Americans. And both have been kept afloat by large taxpayer subsidies � about which Republicans have long cried foul.

The Solar Boom

If the flood of cheap imported panels harmed a few domestic manufacturers, the same imports created a much greater solar boom in America. Solar energy has become cost-competitive with coal. It is now being adopted even in red states that lack renewable energy mandates � purely on the economics. Florida Power & Light, for example, recently announced it has shuttered an aging coal plant in favor of four new solar farms, featuring more than 1 million panels combined.

The solar industry today employs 260,000 Americans � more thantwice the number of jobs in the coal industry � including in unexpected places like Mississippi and Alabama. That total covers more than 38,000 American manufacturing jobs, for workers who make "racking" equipment needed to mount solar panels or high-tech inverters required to integrate solar power to the electrical grid.

Trump's "Lose-Lose" Decision

Trump's solar tariff lasts four years. It starts with a 30 percent tax on imported solar panels in the first year. The tax drops by five percentage points each year afterward. (The decision also allows the first 2.5 gigawatts of imported panels to enter America, tax free � or about a fifth of what the U.S. imported in 2016.)

Trump's tariff numbers left many in the industry scratching their heads. The tax was lower than what the ITC had advised (up to 35 percent) and the tax-free exemption was more than double ITC's recommendation. MJ Shiao, a top solar analyst for GTM Research, said that many will see the decision as a "lose-lose": It will slow solar deployment in America without guaranteeing a future for domestic solar panel manufacturing. (Despite their ostensible victory, both Solar World and Suniva were tepid in their endorsement of Trump's decision. They had been seeking an import tax of 50 percent.)

A Victory for Coal

In fact, the biggest winner from Trump's decision appears to be a party that wasn't involved in the trade case at all: The fossil-fuel industry. According to GTM, Trump's tariff will block 7.6 gigawatts of solar from being installed through 2022 � roughly twice what's currently installed in Arizona � primarily by deterring utilities from building new solar farms. In turn, this will extend reliance on older, more polluting generations like coal-fired power plants.

Clean Gigawatts and Jobs Squandered

Trump's solar tax will cost 23,000 jobs this year, according to the Solar Energy Industries Association, and ultimately prevent 1.2 million homes from being powered by solar. "This case will not keep foreign-owned Suniva and SolarWorld afloat," argued Abigail Ross Hopper, the solar trade group's CEO. But it will, she added, "create a crisis in a part of our economy that has been thriving" and "ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs."

Ironically, Trump's decision hits workers in "new and emerging state solar markets" in red America hardest, "with southern states like Texas, Florida, and South Carolina among the most impacted by the tariffs," according to GTM.

Trump's decision to tax solar power is seen as a betrayal by solar advocates who supported his candidacy. Debbie Dooley is one of the founders of the Tea Party, and was an ardent Trump supporter. ("Tears of joy started falling from heaven right after Trump was sworn in. #MAGA," she tweeted during the inauguration.)

Dooley is also a solar activist who runs the "Green Tea Coalition," which promotes solar power as part of a "freedom" agenda. "I strongly oppose this horrible decision," Dooley tells Rolling Stone, "because it is going to cause many Americans employed by the solar industry to lose their jobs, many of whom are veterans." While Dooley says she is "very disappointed" in Trump, she remains committed to the solar fight: "The future," she insists, "is in renewable technology." more

Saturday, January 20, 2018

Bids to build renewable energy in Colorado point to a bright future

In Colorado, an electric utility's request for proposals to build new generating capacity resulted in stunning evidence that renewables are now cheaper than fossil fuels--even with storage capacity included for when solar and wind are "down."

This merely confirms that there is a boom in renewable energy underway, but judged from the perspective of the task at hand--putting the entire global economy on a renewable energy basis and eliminating the burning of fossil fuels altogether--this boom is merely a blip. Bloomberg New Energy Finance, which has been tracking global investments in the sector for the past ten years, reported that renewable energy investment in 2017 totaled $333.5 billion worldwide, up three percent from 2016. The 2017 numbers were the second highest yet recorded, and brought cumulative investment in renewables since 2010 to $2.5 trillion.

This may sound like a lot of money--and it is--but it should also be viewed in the context of fossil fuels being subsidized $1.9 trillion a year. And that number is from five years ago. According to a report from the International Monetary Fund in March 2013, governments around the world give $480 billion a year in direct subsidies. This is a worldwide amount, and it is not structured as you might expect: most of these direct fossil fuel subsidies are by governments in the developing world and are designed to make petro-products affordable for poor people. The remaining $1.4 trillion, according to the IMF, is the �externalities� cost of  �the effects of energy consumption on global warming; on public health through the adverse effects on local pollution; on traffic congestion and accidents; and on road damage.� A writer summarizing the IMF report noted that by "failing to make fossil fuel companies pay" for these externalities, "governments are implicitly subsidizing those companies. IMF calls this under-taxing of fossil fuels �mispricing,� but it�s easier to think of them as indirect subsidies."
But the amount actually needed to shift the entire world to renewables is $100 trillion. We could achieve that in 15 years with a slightly less than ten percent increase in annual world economic output--which would create the largest and most sustained economic boom in human history. That is an investment of just under $7 trillion a year. So, the $333.5 billion worldwide in 2017 needs to be increased twenty-fold.

This shows that a reliance on the conservative/libertarian/neoliberal ideology of free markets and private enterprise is woefully inadequate to what needs to be done. We need the activist role of national governments promoting and supporting economic activity that promotes the General Welfare, and discourages economic activity that is useless and often predatory, such as speculative trading in stock, bond, futures, currency and derivative markets. Contrary to the myths of conservatives and libertarians, this issue of the government actively steering the national economy in a positive direction was the central focus of the U.S. Constitutional Convention of 1787. The U.S. Constitution, its mandate to promote the General Welfare, and the entire history of How America Was Built, clearly shows that government of, by, and for the people, must supervise the building of an economy  of, by, and for the people.

In Colorado, a glimpse of renewable energy�s insanely cheap future Even with storage, new renewables beat existing coal. 
By David Roberts Jan 16, 2018 
This month, energy nerds are very excited about a utility bid solicitation.

Wait, hear me out. It really is exciting!

Usually, when we talk about how renewable energy will evolve in the next five years, we rely on analysts and projections. This is different.

When a utility puts out a request for proposals (RFP) � asking developers to bid in for the chance to build new energy resources � the developers who respond aren�t guessing, or boasting. They are laying down a marker that might get called. They are promising only what they are confident they can deliver.

That makes the responses to an RFP a clear snapshot of the state of the industry, relatively unembellished by ideology or public relations spin. This particular snapshot reveals that, on the ground, renewable energy costs are falling faster than even the most optimistic analyst had projected.

(Let�s face it: In most areas of life, when you look past the hype at the real numbers, it�s depressing. Renewable energy is one area where that typical dynamic is diverted. The closer you look, the better the news gets!)

Colorado�s biggest utility seeks lots of new renewables

First, a brief bit of backstory.

The utility in question is Xcel Energy, Colorado�s biggest, which serves 3.3 million electricity customers in the upper Midwest, Colorado, and New Mexico.

In 2016, Xcel released its Colorado Energy Proposal, which was news in itself. [1/18/18: see clarification at bottom of post.] The proposal would shut down two coal plants in the state and replace their output with roughly 700 MW of solar, 1 GW of wind, and 700 MW of natural gas by 2023. That would put Xcel�s Colorado energy mix at roughly 55 percent renewables. (Xcel�s reasons for ramping up renewable energy are complex � part price, part taking advantage of federal tax credits, part public sentiment.)

Based on that plan, in 2017 the Xcel subsidiary Public Service Company of Colorado issued an �all-source solicitation,� which amounts to the utility saying to private developers: �Here�s how much new power by 2023 we need. Whatcha got?�

At the very tail end of last year, while everyone was busy with the holidays, the company quietly issued a report on the results.

They were mind-blowing. An unprecedented number of developers came forward, eager to build renewable energy and eager to couple it with energy storage, all at unprecedented prices. It seems the people building this stuff are more confident than the analysts writing reports on it.

In Colorado, new renewables are cheap as hell, even with storage

Here�s a high-level overview of the bids and projects received in response to the RFP:
This is about as striking as spreadsheets get.

First, the scale!

Xcel says that its 2013 all-source solicitation yielded 55 bids. The 2017 equivalent received 430 individual bids, for 238 separate projects. (Sometimes developers bid multiple times on a single project, with different combinations of financing, timeline, etc.)

A total of 350 of the bids involve renewable energy (134 for solar alone), representing more than 100 GW of capacity. Developers are chomping at the bit to build this stuff � partly to claim expiring federal tax credits, partly to claim market share in a booming sector, and partly just because they are human beings and excited about clean energy.

Second, the storage!

The big knock against wind and solar power is that they are variable � they come and go with the weather; they are not �dispatchable.� Critics say their low prices are misleading, because they must be backed up by �firm� capacity that can be turned on and off at will.

One way to make wind and solar more firm (ahem) is to attach storage, which can store excess production during the day when it�s cheap and sell it into the system at night when it�s more valuable. Storage extends the range of hours a renewable energy project is able to operate.

The problem is that adding storage adds considerable cost. But the Xcel bids show that is changing.

The median bid for a wind project was $18.10/MWh; the median for wind+storage was $21, just three dollars higher. The median bid for a solar PV project was $29.50/MWh; the median bid for solar+storage was $36, just seven dollars higher. (Keep in mind what median means: Half the projects bid cheaper than this.)

Here are a few comparisons to help put those numbers in perspective:
  • According to Carbon Tracker, based on these bids, new wind+storage energy in Colorado is cheaper than energy from the state�s existing coal plants; solar+storage energy is cheaper than 75 percent of the state�s coal energy. This is worth repeating, because it�s a significant milestone: In Colorado, getting energy from new renewable energy projects with storage is cheaper than getting it from existing coal plants. Coal is dead.
  • For the Tucson project, storage added about $15/MWh to the cost of the solar. Compare that to the $3 to $7 added by storage in the Xcel bids. Storage prices are plunging, and as they do, renewables become more competitive.
  • The financial advisory firm Lazard issues a much-watched analysis each year of the �levelized cost of energy (LCOE),� a measure that purports to directly compare energy sources based on total costs. Its 2017 analysis estimated that solar+batteries has an LCOE of $82/MWh. You might notice that the median Xcel bid for solar+storage is less than half that. (Important caveats: The Lazard LCOE is for solar with 10 hours of storage, but we do not yet know how much storage is involved in the Xcel bids; Lazard estimates unsubsidized costs, while Xcel projects will benefit from federal tax credits; Lazard�s estimate is for 2017, while developers are effectively bidding 2023 costs. Direct comparisons are difficult. Point is, the number is vaulting down.)

Renewables just keep outpacing expectations

Colorado has excellent solar and wind resources, but it isn�t the only place where real-world bids are racing ahead of official estimates like Lazard�s. Saudi Arabia recently saw bids for utility-scale solar at under $20/MWh, which is less than half Lazard�s lowest estimate for the range of solar LCOE ($46/MWh).

At an auction in Chile last year, a solar+storage project won at $34.40/MWh, which is a third lower than the lowest Lazard LCOE estimates for solar alone.

A company called ViZn Energy Systems, which uses flow batteries rather than lithium-ion, is promising $27/MWh solar+storage by 2023, when the Xcel projects are scheduled to be online. By comparison, Bloomberg New Energy Finance projects an average LCOE of a little higher than that for solar alone in 2030.

What broad averages like LCOE can obscure is that the value of renewable energy (and storage) varies widely from place to place and market to market. In places with competitive procurement of energy (still a minority of energy markets in the world) and good renewable resources, renewables are crushing fossil fuels, even natural gas. Every market like that is a leading wedge, allowing the industry to scale up faster and drive down costs in other markets. This drives a self-reinforcing cycle that analysts looking at averages miss.

That helps explain why reports that focus on real-world projects (�bottom up� reports) tend to be so bullish on renewables. For instance, the latest report on renewable energy costs from the International Renewable Energy Agency (IRENA), drawing on 15,000 data points from projects around the globe, concludes that by 2020, �all the renewable power generation technologies that are now in commercial use are expected to fall within the fossil fuel-fired cost range.� That�s only two years away!

The Xcel RFP in Colorado is a relatively small signal, but it is one of many sending the same message: renewable energy is not �alternative� any more. Costs are dropping so fast it�s difficult to keep track. It is the cheapest power available in more and more places, and by the time children born today enter college, it is likely to be the cheapest everywhere. That�s a different world.

Read more.

Thursday, January 18, 2018

The decline and fall of neoliberalism in the Democratic Party

If you are snow-bound in USA today, and want something to read, I highly recommend Ryan Cooper's excellent short summary of USA political and economic history since the New Deal, posted last week, The decline and fall of neoliberalism in the Democratic Party
Nations took various roads out of the Great Depression. Every one involved ditching liberal orthodoxy � deficit spending and the abandonment of the gold standard being the key two policies in most instances, which had to overcome resistance from business. In Germany, fascism removed "capitalist objections to full employment," wrote economist Michal Kalecki, by routing all deficit spending into rearmament and by keeping labor quiescent with political repression and permanent dictatorship. 
In the United States, the replacement ideology was the New Deal. After some initial failed experimentation with planning, New Dealers settled on a framework of stimulus, regulation, unionization, progressive taxation, and anti-trust, heavily influenced by Louis Brandeis (to be covered in the next article in this series). To get people back to work and prime the economic pump, vast new public works were built, and millions were directly employed by the state. Business � especially finance � was regulated, above all to prevent concentration. Unions were protected under a new legal regime created by the National Labor Relations Act. Taxes on the rich were sharply increased, both to raise revenue and to deliberately prevent the accumulation of vast fortunes. Finally, world trade was managed under the Bretton-Woods system.
These two paragraphs are an excellent summary of what the New Deal was -- and what was dismantled in a joint project of conservatives, libertarians, and neoliberals. This dismantling is why neoliberals are as much to blame for the rise of neofascism around the world. While conservatives, libertarians and the Republican Party, the past half century, constantly stoked bigotry by "feeding meat to their base," neoliberals joined them in destroying the "welfare state" policies that were enacted after World War Two to ensure that never again would fascism be incubated in a cauldron of economic misery and inequality. 

Cooper includes all the most important points of this history, with the exception of the race to the bottom initiated by NAFTA and free trade. Also, Cooper does not fully grasp that the prosperity of the tech boom under Clinton was mostly the result of the phase shift in the national economy resulting from the 1950s through 1980s build-out of the new technology of computers, which -- like all phase shifts in the economy -- began with government support and promotion of new technologies (in this case, computers are developed in military research programs during World War for ballistics calculations, fire control, aircraft simulation, radar, code breaking, and physics calculation for the Manhattan Project, as covered in my chronology HAWB 1940s-1950s Timeline of computer development shows crucial role of government.)

Cooper's article is the first of a four-part series examining the four major factions in the Democratic Party and American left today. This first part considers the neoliberals, which of course is the faction which currently dominates the Democratic Party leadership, though it is in a dwindling minority. It dominates because it has money, but not votes. 

The second part is The Return of the Trust Busters, the faction around Elizabeth Warren, which Cooper brilliantly traces back to Louis Brandeis. 

The third article is Bernie Sanders and the Rise of American Social Democracy.

The fourth and final installment is The Dawn of American Socialism, which focused on the faction led by the Democratic Socialists of America.

There is no consideration of the historically crucial role of the American School of political economy, which helps explain why Cooper does not include the disastrous "race to the bottom" initiated by NAFTA and free trade.

I also highly recommend Cooper's How to Crush Trump from December 27, 2017, especially this paragraph:
Then in 2020, Trump must be crushed at the ballot box. His corrupt administration must be thoroughly investigated, and any criminal acts punished. More importantly, the economic base of Republican plutocracy � Wall Street, monopolist corporations, and idle rich heirs and heiresses � must also be crushed. Monopolies must be broken up, taxes on the rich and corporations dramatically increased, and the size, profitability, and power of Wall Street sharply reduced with cricket bat regulations.
None of Obama's "don't look back, only forward," pursuit of bipartisan unicorns. Criminal activity must be ruthlessly targeted and vigorously prosecuted, ESPECIALLY by our political enemies.

Tuesday, January 16, 2018

Even the Germans are dropping climate goals

The Germans have been world leaders in pursuing ambitious environmental goals by improving hardware. But their efforts are showing signs of fatigue. The commitment to "clean diesel" has shown pretty conclusively that a vehicle with reasonable fuel economy and performance cannot be built. So everyone started to cheat. Turns out it is easier to raise environmental standards than to comply with them. Especially if the new standards cannot be met because of hard scientific laws.

In addition, the Germans paid for much of the heavy lifting necessary to make solar panels on a commercial scale. And then the Chinese ran off with their markets using the same production technology. This tends to be disheartening. So they are not especially enthusiastic about meeting the climate targets they set in Paris 2015. Throw into the mix that the Germans do not have a government these days and it looks like the targets for 2020 are about to be kicked down the road.

DW takes it from here:

Opinion: German coalition hopefuls drop climate goals

Jens Thurau, 09.01.2018

Preliminary grand coalition talks have just restarted, but already, the parties involved have given up the 2020 climate goals. It's a disaster for climate protection policy but also an opportunity, says DW's Jens Thurau.

This time, the Christian Democrats (CDU), Christian Social Union (CSU) and the Social Democrats (SPD) had vowed not to leak the contents of their preliminary coalition talks to anyone. That pledge didn't last long, and accordingly politicians in Berlin are alarmed by reports of a cancellation of the climate goals for 2020 by a possible future new government. That would amount to deceiving voters, the opposition says, and rightfully so, pointing out that both Chancellor Angela Merkel and SPD leader Martin Schulz promised to somehow meet the emission reduction targets of 40 percent by 2020.

Germany has managed about 30 percent already, but time is short and it seems more of an effort would have been required to meet the target by 2020. Germany would have had to shut down many older, dirtier coal-fueled power plants and taken more aggressive steps in the traffic and agriculture sectors. The potential new government doesn't seem to trust itself to reach that goal. That is unfortunate.

At least they're honest

On the other hand, at least they are honest in recognizing that they can't meet the target. The fact that the goals are barely reachable had already been whispered within the parties and ministries. As usual when a project fails, compliance is pushed to a future date. It appears the coalition hopefuls do want to hold on to the goal of reducing emissions by 55 percent by 2030. But that is another 12 years down the road, and even Angela Merkel won't be in office anymore.

Giving up the climate goal is logical, and it fits the country's climate policies over the past few years. Politicians in general seem to feel that after quitting nuclear energy and moving strongly toward wind and solar energy, they've done enough to save the world. The Chancellor's plan to put one million electric cars on Germany's streets by 2020 simply vanished because it is not doable. At the start of 2017, there were just over 30,000 electric cars in Germany. Way off the mark is a nice way of putting it.

Legislation for a coal exit

Back to the climate objectives: the decision to drop the goal of meeting the reduction target also has a positive side. The CDU, the CSU and the SPD now plan to come up with concrete legislation for a coal exit.

The environment minister actually had that same idea during the last legislature, but met with opposition from the economics minister and the chancellor's office. The coal exit is the country's most important climate task for the next few years. If there is a binding agreement now, it doesn't matter if takes a few years before they get started. That would certainly be better than more grandiose promises no one keeps.

Try modesty

Germany at this point should take a much more modest approach on climate issues on an international stage. Eastern European states, for instance Ukraine, no longer intend to put up with the country's superior attitude on reducing greenhouse gases.

The next UN climate conference takes place in December in the Polish city of Katowice, and Poland is unlikely to let the opportunity pass to point a finger at its unpopular neighbor Germany. Germany's environment-friendly Greens party � which would have negotiated ambitious coal exit plans had last year's exploratory "Jamaica" coalition talks not failed � sees the coalition hopefuls' quick decision to abandon the climate goal as an economic stimulus plan. more

Tuesday, January 9, 2018

Student Debt Slavery

My little town is home to two liberal arts colleges that cost over $60,000 / year to attend. Both have stellar reputations for what they do. One is more of a music conservatory with solid departments in math and science. The other is a place where high achievers like National Merit Scholars go to see what its like to be in rooms full of high school valedictorians. But $60,000??

In one of the college's student center, I got into an interesting conversation with a 19-year-old who was reading Kerouac and wondering why his professor had assigned the thing. Now I have a bit of sympathy for the professor who probably, like me, read Kerouac on his own initiative back in the day. I read On the Road and was amazed that Kerouac was able to describe anything at all considering the serious drug and booze haze he was in most of the time. Looking back, this book is mostly a tribute to the casual rootlessness that was possible owing to the general prosperity of the times and $0.26 per gallon gasoline. There was so much prosperity that whole subgroups of people like the hippies could survive on the what fell from prosperity's table. There is probably nothing wrong with having the young read Kerouac if only to discover what their grandparents found cool. But $60,000???

Anther encounter with a product of a quarter-million dollar's worth of enlightenment was amazing in another way. This sparkling-sharp young man had gotten his degree in video production who when faced with the task of how to use the sun to light his scene, got completely befuddled because, I am pretty sure, he had never noticed the different times and positions of the setting sun based on the calendar so could not predict where his subjects should be placed if he wanted to shoot them in golden-hour light. Think of that�this guy did not learn something that humans have known about for at least 6000 years, something that was of practical value if he wanted to be a good cinematographer, and he had just spent a $quarter-million on an "elite" education. $250,000! For that sum of money, he could have traveled the world for a couple of years so he wouldn't have that typical "Merikun parochialism, equipped himself with professional-grade cameras and audio gear, and still have plenty left over to fund his video ventures for a couple of years while starting up. $250,000 is a LOT of money.

I have neighbors who have tenure�which these days is an amazing accomplishment. There's probably at least 50 highly qualified PhD s for every tenured position available. And because being a professor is a pretty cushy job, a lot of them don't retire at 65 and open up the job for someone younger. One neighbor finally got tenure at 50. Hard to find fault with them as people. On the other hand, they are part of a system that consigns children into a lifetime of debt peonage / slavery.

Nasty business.

Student Debt Slavery: Bankrolling Financiers On The Backs Of The Young

Ellen Brown, December 29, 2017

The advantages of slavery by debt over �chattel� slavery � ownership of humans as a property right � were set out in an infamous document called the Hazard Circular, reportedly circulated by British banking interests among their American banking counterparts during the American Civil War. It read in part:
Slavery is likely to be abolished by the war power and chattel slavery destroyed. This, I and my European friends are glad of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led by England, is that capital shall control labor by controlling wages.
Slaves had to be housed, fed and cared for. �Free� men housed and fed themselves. For the more dangerous jobs, such as mining, Irish immigrants were used rather than black slaves, because the Irish were expendable. Free men could be kept enslaved by debt, by paying them wages that were insufficient to meet their costs of living. On how to control wages, the Hazard Circular went on:
This can be done by controlling the money. The great debt that capitalists will see to it is made out of the war, must be used as a means to control the volume of money. . . . It will not do to allow the greenback, as it is called, to circulate as money any length of time, as we cannot control that.
The government, too, had to be enslaved by debt. It could not be allowed to simply issue the money it needed to meet its budget, as Lincoln�s government did with its greenbacks (government-issued US Notes). The greenback program was terminated after the war, forcing the government to borrow from banks � banks that created the money themselves, just as the government had been doing. Only about 10% of the �banknotes� then issued by banks were actually backed by gold. The rest were effectively counterfeit. The difference between government-created and bank-created money was that the government issued it and spent it on the federal budget, creating demand and stimulating the economy. Banks issued money and lent it, at interest. More had to be paid back than was lent, keeping the supply of money tight and keeping both workers and the government in debt.

Student Debt Peonage

Slavery by debt has continued to this day, and it is particularly evident in the plight of students. Graduates leave college with a diploma and a massive debt on their backs, averaging over $37,000 in 2016. The government�s student loan portfolio now totals $1.37 trillion, making it the second highest consumer debt category behind only mortgage debt. Student debt has risen nearly 164% in 25 years, while median wages have increased only 1.6%.

Unlike mortgage debt, student debt must be paid. Students cannot just turn in their diplomas and walk away, as homeowners can with their keys. Wages, unemployment benefits, tax refunds and even Social Security checks can be tapped to ensure repayment. In 1998, Sallie Mae (the Student Loan Marketing Association) was privatized, and Congress removed the dischargeabilility of federal student debt in bankruptcy, absent exceptional circumstances. In 2005, this lender protection was extended to private student loans. Because lenders know that their debts cannot be discharged, they have little incentive to consider a student borrower�s ability to repay. Most students are granted a nearly unlimited line of credit. This, in turn, has led to skyrocketing tuition rates, since universities know the money is available to pay them; and that has created the need for students to borrow even more.

Students take on a huge debt load with the promise that their degrees will be the doorway to jobs allowing them to pay it back, but for many the jobs are not there or not sufficient to meet expenses. Today nearly one-third of borrowers have made no headway in paying down their loans five years after leaving school, although many of these borrowers are not in default. They make payments month after month consisting only of interest, while they continue to owe the full amount they borrowed. This can mean a lifetime of tribute to the lenders, while the loan is never paid off, a classic form of debt peonage to the lender class.

All of this has made student debt a very attractive asset for investors. Student loans are pooled and repackaged into student loan asset-backed securities (SLABS), similar to the notorious mortgage-backed securities through which home buyers were caught in a massive debt trap in 2008-09. The nameless, faceless investors want their payments when due, and the strict terms of the loans make it more profitable to force a default than to negotiate terms the borrower can actually meet. About 80% of SLABS are backed by government-insured loans, guaranteeing that the investors will get paid even if the borrower defaults. The onerous federal bankruptcy laws also make SLABS particularly safe and desirable investments.

But as economist Michael Hudson observes, debts that can�t be paid won�t be paid. As of September 2017, the default rate on student debt was over 11% at public colleges and was 15.5% at private for-profit colleges. Defaulted borrowers risk damaging their credit and their ability to borrow for such things as homes, cars, and furniture, reducing consumer demand and constraining economic growth. Massive defaults could also squeeze the federal budget, since taxpayers ultimately cover any unpaid loans.

Investing in Human Capital: Student Debt and the G.I. Bill

It hasn�t always been this way. Until the 1970s, tuition at many state colleges and universities was free or nearly free. Education was considered an obligation of the public sector, and costs were kept low.

After World War II, the federal government invested heavily in educating the 15.7 million returning American veterans. The goal of the Servicemen�s Readjustment Act of 1944, or G.I. Bill, was to facilitate their reintegration into civilian life. By far its most popular benefits were financial assistance for education and housing. Over half of G.I.s took advantage of this educational provision, with 2.2 million attending college and 5.6 million opting for vocational training. At that time there were serious shortages in student housing and faculty, but the nation�s colleges and universities expanded to meet the increased demand.

The G.I. Bill�s educational benefits helped train legions of professionals, spurring postwar economic growth. It funded the education of 450,000 engineers, 240,000 accountants, 238,000 teachers, 91,000 scientists, 67,000 doctors and 22,000 dentists, 14 future Nobel laureates, two dozen Pulitzer Prize winners, three Supreme Court justices, and three presidents of the United States. Loans enabled by the bill also boosted the housing market, raising home ownership from 44% before the war to 60% by 1956. Rather than costing the government, the G.I. Bill turned out to be one of the best investments it ever made. The legislation is estimated to have cost $50 billion in today�s dollars and to have returned $350 billion to the economy, a nearly sevenfold return.

That educational feat could be repeated today. The government could fund a public education program as Lincoln did, by simply issuing the money or having the central bank issue it as a form of �quantitative easing for people.� Infrastructure funded with government-issued US Notes in the 1860s included not only the transcontinental railroad but the system of free colleges and universities established through federal land grants.

The exponential rise in college costs occurred only after the government got into the student loan business in a big way. The Higher Education Act of 1965 was part of President Lyndon Johnson�s Great Society agenda, intended �to strengthen the educational resources of our colleges and universities and to provide financial assistance for students in postsecondary and higher education.� The Act increased federal money given to universities, created scholarships, gave low-interest loans for students, established a National Teachers Corps, and included a PLUS loan program that allowed parents of undergraduate and graduate students to borrow up to the full cost of attending college. Unfortunately, the well-intended Act had the perverse effect of driving up tuition costs. The availability of federally guaranteed loans allowed colleges and universities to raise their prices to whatever the market would bear. By the mid-1970s, tuition was rising much faster than inflation. But costs remain manageable until the late 1990s, when the federal student loan business was turned over to private banks and investors with aggressive collection practices, converting federally-guaranteed student loans from a public service into a private investor boondoggle.

Meanwhile, in many countries in Europe university tuition is still free, including Denmark, Estonia, Finland, Germany, Norway, Slovak Republic, Slovenia, Sweden and Turkey. But providing an affordable education for the next generation is evidently not a priority with our government. Only 3 percent of the federal budget is spent on education � not just for college loans but for school programs of all sorts, from kindergarten through graduate school. Compare that to the outlay for military spending, including the Veterans Affairs and other defense-related departments, which consumes over half the federal budget and is an obvious place to cut. But there are no signs that our government is moving in that direction.

What then can be done to relieve the student debt burden? Stay tuned for Part 2. more

Sunday, January 7, 2018

The Shale Oil promise of abundant new petroleum supplies will not be kept

The following from Bloomberg is possibly the least surprising development imaginable. The idea that shale oil was going to supplant oil from traditional wells was just bonkers. For whatever reasons, discovery of oil in traditional formations has been declining�the believers in peak oil have be predicting this for a long time (since about 1970 in my awareness.) Bloomberg does not cite peak oil as the reason for a collapse in oil discoveries�they are true believers that if oil prices would rise, new oil would be found. But then, they are people who worship at the altar of "free" markets�they MUST believe this or they will be drummed out of the economic clerisy for heresy.

The promise of a sustainable energy future was predicated on the hope that humanity would be wise enough to spend some significant fraction of its declining fossil fuel supplies on building the replacement for them. I fervently hope that we have not already screwed up this possibility too.

All That New Shale Oil May Not Be Enough as Big Discoveries Drop

Discoveries of new reserves this year were the fewest on record, according to a December report.

Robert Tuttle, Bloomberg | Dec 27, 2017

Three years after causing an oil-price crash, the shale boom may not be enough to meet rising global demand because the industry has cut back so sharply on higher-risk mega-projects.

Discoveries of new reserves this year were the fewest on record and replaced just 11% of what was produced, according to a Dec. 21 report by consultant Rystad Energy. While shale wells are creating a glut now, without more investment in bigger, conventional supply, the world may see output deficits as soon as 2019, according to Canadian producer Suncor Energy Inc.

�Tight rock is not going to solve the global supply-demand issue,� said Adam Waterous, chief executive officer at the Calgary-based Waterous Energy Fund, which invests as much as C$400 million (US$265 million). �It's going to take a long time for those mega-projects to come back on.�

Hydraulic-fracturing technology made it possible to squeeze crude from tight-rock formations and turned the U.S. into the world�s top producer. But it also sent the global benchmark for oil tumbling from $115 a barrel in 2014 to less than $55 in October. That�s eroded the incentive for companies to invest billions of dollars on new reserves that take years to develop but can produce for decades.

Oil prices would need to climb to $80 and remain at that level for two years to justify the costly deep-water projects off the coasts of West Africa or Brazil, Waterous said. And even then, it could take a decade before crude from those investments would arrive on the market, he said. Prices topped $66 this week.

For now, producers have set their sights on smaller, less-risky reserves. In 2013, when investment was peaking and prices were comfortably above $90, the industry was starting new projects that typically targeted reserves of 1.1 billion barrels and cost $9 billion each, according to a January report by consultant Wood Mackenzie Ltd. By 2017, projects on average were expected to shrink to 500 million barrels each and cost $3 billion.

The shale revolution �made people much more cognizant of not tying up capital for as long a period of time as in the past,� said John England, head of energy resources at consultant Deloitte LLP in Houston. �The lower-for-longer mentality is evident throughout the industry.�

That�s primarily because fracking of North American shale formations in places like Texas and North Dakota has transformed the industry.

Companies like Royal Dutch Shell Plc and Exxon Mobil Corp. historically invested tens of billions of dollars over many years to develop huge reserves in isolated areas like northern Alberta, Kazakhstan or in the middle of the ocean. Shale is different. A tight-oil well could be drilled within a year for a few million dollars. As prices fell, more companies jumped in with more investment.

Now, shale regions that were barely a blip on world markets a decade ago are expected to pump 7.5 million barrels a day in four years, and output probably won�t peak until after 2025, according to the Organization of Petroleum Exporting Countries. The impact was so significant that the cartel was forced to cut its own supplies to halt the slide in prices.

But as robust as U.S. shale oil has been and will continue to be, those reserves alone face a �daunting task� keeping pace with growing global demand if approvals of conventional projects don�t pick up, the IEA said in a report in September. Earlier this year, researchers at the Massachusetts Institute of Technology said the U.S. government may be overstating future growth in shale output because of flawed assumptions about oil technology.

More Expansions

Of the 10 oil projects sanctioned by companies in 2017 that targeted at least 50 million barrels of reserves, only two -- Repsol SA�s Ca Rong Do Block 07/03 in Vietnam and Exxon�s Liza Phase 1 off Guyana -- were classified as new fields that would produce for the first time, according to data provided by Wood Mackenzie.

Instead, companies said they would try to squeeze more out of the reserves they already have. In Canada, Imperial Oil Ltd. is investing $550 million to expand the capacity of its Kearl oil-sands mine by 9%. Chevron Corp. will add 20,000 barrels a day with four wells at its Tahiti platform in the Gulf of Mexico. Off the coast of Norway, Statoil ASA plans to develop the Bauge oil field, using new �plug-and-play� machinery on the seabed and connecting the well to a platform that�s been in operation for 20 years.

To be sure, things could change in 2018. After more than a year of production limits by OPEC, prices have begun to recover, touching a 30-month high of more than $66 this week, compared with $44 in June. Wood Mackenzie said in a Dec. 15 report that almost 80% of projects discussed for 2018 are new ones. The gains are encouraging oil producers to boost capital expenditures by about 4.5% in 2018 to $261.6 billion, according to forecasts compiled by Bloomberg Intelligence.

Still, that level of investment is well below the peak of $495.9 billion in 2013. And plenty of other producers are standing pat. Pioneer Natural Resources Co., Parsley Energy Inc. and Newfield Exploration Co., among the largest independent drillers, have said they won�t increase activity, even if crude rises.

�The era of mega-projects is kind of coming to a bit of a halt,� Bob Fryklund,chief strategist for the upstream energy group at industry consultant IHSMarkit, said by telephone from Englewood, Colorado. more

Friday, January 5, 2018

Graphene�a tribute to Industrial-Class virtue

A big-picture look at the requirements for meaningful action on climate change will always come back to the subject of energy. The human need for energy is what drives the problem. Plus no matter what problem you are trying to solve, from plastics recycling to increased clean-water supplies, the solution WILL require energy.

Running the world on solar supplies alone is probably possible but it will be ridiculously difficult to pull off. Of course, I spent most of my life believing that solar cells would always be so expensive that it would require social subsidies to get countries to make the conversion. And I was mostly right�both wind and solar technologies have been aided by social / political demand and subsidies until now. But now when it comes to solar cells, they have become the low-cost option for electrical generation.

But because they don't work at night, solar cells need a storage system to make them conventionally reliable. Electrical storage has been a primary interest of mine since the 1950s. I had a flywheel phase and a super-capacitor phase along the way. But mostly I ignored the battery stage because of personal experience with their costs and unreliability combined with a series of lavish claims for improved performance that seemed to fizzle on closer inspection.

This time, the key to storage will probably be graphene�a substance first theorized by P.R.Wallace in 1947 while a new hire at Canada's McGill University. This stuff is amazing but ridiculously hard to produce. Not so surprisingly, it's the Koreans who are figuring out how to make commercial quantities�they have set their sights of being world leaders in battery technology and there are a multitude of arguments suggesting they are already there.

The YouTube below will explain the role of graphene in a possible sustainable future. Spend 6:02 of your life to understand this almost miraculous material.

And here is a little 3 minute clip showing graphene research results from academia. These folks think the a threefold increase in energy density from current lithium-ion battery technology is a conservative number. Who knows, maybe, just maybe, someone will really make a breakthrough is this mostly breakthrough resistant product. Get a 5x improvement and we can start talking about battery-powered flight and serious grid-level storage. Just remember, technological improvement is not automatic even though the computer example has taught a whole generation to believe that next year, the new computers will be cheaper and faster. Battery technology has gone for quite awhile without a breakthrough. So in this sphere, the progress almost everyone seems to believe is automatic has been anything but. Of course, it was never automatic in computers either but rather the outcome of very smart people working very hard.

Climate Grief

Below is a pretty good description of what the author calls "climate grief"�the crushing realization that everything at all lovely...