Business

When the Knowledge Walks Out the Door

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Financial Times notes that when cyberattacks occur, it is useful to have some employees around who know how to operate the system…whatever that system might be…without the automation.   And the workers with this knowledge are often those who have been around for quite a while.

The value of older workers with deep operational knowledge was demonstrated two years ago at the Norwegian metals and electricity company Norsk Hydro. Like Colonial Pipeline, Norsk Hydro received a ransom demand but, instead of a shut down, a group of veteran workers switched to manual operations, removing the company from the attackers’ claws. “Without them, our production would have plummeted,” says Halvor Molland, Norsk Hydro’s spokesperson. “They had knowledge that existed 20 years ago but not today, and fortunately some are still employed by us while others returned from retirement to help.”

The CEO of Colonial Pipeline they had “muddled through” in the wake of the ransomware attack.   But a lot of the people who operated the pipeline manually “are retiring or they’re gone.   Fortunately, we still have that last bit of that generation.”

This is like something in a science fiction story: robots running things, humans nominally supervising the robots but not really understanding what they’re doing or why.

It’s been noted for some time that a lot of computer code was written in obsolescent or now-unpopular languages (especially COBOL), with support and modification becoming difficult since most of the people with the skills aren’t there anymore.   But this is different–it’s not about loss of understanding of a linguistic formulation for representing a process, but a loss of understanding of the process itself.

Important People–People Who Matter

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The UK government has decided that senior executives can temporarily leave quarantine in England if they are undertaking business activities which are likely to be of significant economic benefit to the UK.

(Hopefully, the virus will be informed and will conduct itself accordingly)

I suspect that many of the activities which in reality could benefit the UK economy greatly do not meet the requirements of this ruling by the Department for Business, Industry, and Industrial Strategy and hence are not viewed by the government as truly important.

An extremely successful startup CEO once remarked to me that ‘the secret to startups is that you have very smart people working on very small things.”   By ‘small’, he definitely did not mean ‘unimportant’, rather, that the activity…whatever its future potential…was still not yet large enough in revenue and perhaps also in public awareness to get proper attention at the senior levels of a typical large corporation. (And by ‘smart’, he didn’t mean just IQ, but the whole range of business skills)

Governments will always tend to focus on things which are large, or fashionable, or both, and will more often than not act as inhibitors toward true innovations.

HVAC and the Gell-Mann Amnesia Effect

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Today I read this choice article on Fox with the lengthy title of “Air conditioning shortage ahead of hot summer causes nationwide price spike” and was reminded of the Gell-Mann Amnesia Effect. To remind everyone, the definition is:

Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray’s case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the “wet streets cause rain” stories. Paper’s full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.

As someone who has been in the field of HVAC distribution for 32 years I know a thing or two, as they say. Lets take a look at this article (yes, a good old fashioned fisking) and see if it reports what we are seeing on the ground here, or if reality has been distorted somewhat, and we perhaps have an example of the Gell-Mann Amnesia effect as I peruse the rest of the news for today.

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The Curley Effect, 21st Century Style

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The Curley Effect, so-called after Michael James Curley, four times mayor of Boston and one of the most colorfully corrupt 20th century politicians in Massachusetts, has been noted as a significant factor in city politics, where a long-time and popular ruling politician deliberately makes the city inhospitable to those who tend to oppose them, essentially shaping the electorate into one which will support the ruling politician forever and ever, amen. This tactic, of rewarding supporters with public largesse, and punishing opponents economically, worked well for the individual politician, as it did for the very Catholic and Irish Mayor Curley but at the expense of Boston overall, as those individuals, businesses and institutions who opposed him most frequently, departed, taking their money, businesses and civic involvement with them. Mayor Curley and his cronies throve, but Boston was much the worse for it, over the long run.

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“Green” Energy: Materials-Intensive–And It Matters

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There is now considerable momentum behind wind and solar power generation.  In addition to the governments pushing these technologies, there are many companies intending to profit by manufacturing and implementing these systems–also companies intending to get “sustainability” points for using them–and a nontrivial part of the financing industry licking their chops at the prospect of raising the necessary capital.

While wind and solar systems do not directly consume fuels, they do consume capital, that capital representing the labor and materials (and also the energy, in various forms) necessary to manufacture and install them.  Some of these materials are relatively scarce at present, and are sourced from problematic locations under questionable conditions.

Here is an interesting and quite detailed study on “green” materials and sourcing options, from the International Energy Agency.   Worth careful reading for anyone interested in energy issues, technologies, and politics.   Note that in addition to China’s development of its internal resources of the relevant materials, that country is developing strong trade and financing relationships…which may evolve to neo-colonial or even full-colonial relationships…with other countries possessing such resources.

And here are a pair of articles arguing that the only way for the US to acquire the requisite materials for a “green” energy transition will require close collaboration with China…that if the two greatest greenhouse-gas emitters on this planet can’t work together, we’re all going to be living in a more or less literal hell.  The authors of these pieces don’t seem to be very concerned about the risks of US dependence on China for our energy supply; they seem more concerned about the risks of a cold war (anti-China) mentality.   (It is also interesting that the word ‘nuclear’ doesn’t appear in either article.)

Comes now a Reuters article, which asserts that: The Biden administration is considering a plan to import the bulk of the materials needed to build electric vehicles and the batteries that power them instead of mining them domestically — a nod to environmental groups that make up a key part of the Democratic constituency, according to a report.    The article goes on to quote an administration source as saying, referring to mining, that “it’s not that hard to dig a hole”…a comment which interestingly echoes Michael Bloomberg’s assertions about farming–“I could teach anybody, even people in this room, no offense intended, to be a farmer…You dig a hole, you put a seed in, you put dirt on top, add water, up comes the corn.”   (Bloomberg also made similarly dismissive remarks about manufacturing jobs)

On the other hand, a post at the Seeking Alpha investment blog asserts that Contrary to Rumors, the Biden Administration is Not Abandoning Lithium–that on the contrary, they want to expand both domestic and international supply of this material.   (The author of this piece also notes critically that the Reuters article did not reference a single named source.)

But even if the Biden administration does throw some money at domestic mining and processing, environmental objections and litigation are likely to slow things down considerably…a Trump-style president might be willing and able to blow past such constraints, but Biden/Harris, given their dependence on their party’s extreme Left, will likely find it easier to placate environmentalists by combining a US emphasis on vehicle electrification and “green” energy with a de facto sourcing policy of acquiring most of the relevant materials from outside the United States–including China–which allowing most US mining and bulk processing initiatives to bog down in red tape.

Here’s a follow-up article from Reuters.

As the IEA article notes, “green” energy represents a shift from a fuel-intensive to a materials-intensive energy system.   Few of the prominent/influential advocates of such a shift seem to have given much thought to where those required materials might actually come from.

Wind and solar are more capital-intensive than are fossil-fuel power sources, and mining requires considerable capital as well.   It seems likely to me that the worldwide push for “green” energy and electric vehicles will drive enough capital demands–whether via government or private financing–to have a material upward impact on interest rates.