Labor Day Thoughts

My discussion question for today: In a world with global and highly-efficient transportation and communications…and billions of people who are accustomed to low wages…is it possible for a country such as the United States to maintain its accustomed high standards of living for the large majority of its people?…and, if so, what are the key policy elements required to do this?

Henry Ford did not establish the five-dollar day out of the sheer goodness of his heart.  He did it because worker turnover had become unacceptably high: people didn’t like assembly-line work, and they had alternatives.  Suppose Ford had then had the option of building the Model T in a low-wage country, say Mexico.  Maybe he wouldn’t have needed to bother with the American $5/day wage and the productivity improvements needed to support it. (Although Ford being Ford, he still might have implemented the manufacturing innovations and process improvements even without strong economic necessity to do so.)

America’s premium wage structure has, I think, been historically enabled by several factors:

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We Need to Talk About Joe

The fictional mass murderer Kevin is most often described as a psychopath and his mother Eva a sociopath in book and movie reviews, the latter defined the same as the former, but without the insanity defense, i.e., a physical brain disorder rather than a choice. President Biden isn’t suspected of any such brain disorder (although dementia has long been suspected, common for his age). But Bruce Cannon Gibney argues that Baby Boomers, those born between 1940 and 1964, are A Generation of Sociopaths (2017) based primarily on their over-consuming at the expense of future generations, a massive inter-generational injustice. He allows for exceptions, but not among the Baby Boom political leaders, of which Joe Biden was the first on the national scene.

Sociopaths are defined as narcissists with additional characteristics, among which are: superficial charm, glib, manipulative, self serving, grandiose, pathological lairs, without remorse, self-centered, untrustworthy, physically aggressive, impulsive, blaming others, lacking in empathy, break promises, an ability to avoid persecution for illegal acts, and a belief they deserve to rule the world. As a result of the Obama/Biden “Good War” over half the current population of Afghanistan was born under American protection. These and thousands of those who assisted the American occupation and their families have been left behind by Joe to meet repression, and, for many, death at the hands of his captors and other Islamic radicals. His press conferences revealed almost all these sociopathic tendencies, leaving no doubt as to the applicability of Gibney’s diagnosis.

Like Kevin, Joe is competitive among his sociopathic political peers. For sheer narcissism it would be difficult to top former President Trump, and the Clintons are unlikely to ever be surpassed in the team sociopath competition. But Joe Biden, whose first attempt to rule the world over three decades ago was thwarted by a plagiarism scandal, seeks to exceed FDR, the record holder by size of Mall Monument, as a world leader not on his foreign policy experience, but by spending his way to a risky “fundamental transformation” of the US economy and society. Should we trust in Joe, or is he the “Borax Man” (a soap salesman)?

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

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.

Thinking, Making, Profiting

256 years ago this month, James Watt made the conceptual breakthrough that enabled a much more efficient steam engine…an engine that would play a major role in driving the Industrial Revolution.  He had been thinking about possibilities for improving the coal-hungry Newcomen engine, then the best available, which lost huge amounts of heat every cycle through the successive heating and cooling of the cylinder walls:

It was in the Green of Glasgow.  I had gone to take a walk on a fine Sabbath afternoon…I was thinking upon the engine at the time…when the idea came into my mind, that as steam was an elastic body it would rush into a vacuum, and if a communication was made between the cylinder and an exhausted vessel, it would rush into it, and might be there condensed without cooling the cylinder.

But in addition to the many details involved in reducing this idea to practice, there was another problem inhibiting the creation of reasonably-efficient steam engines.  The boring of the cylinders…even when the best tools and the highest skills of the day were applied…was so imprecise that considerable quantities of steam escaped around the piston, greatly lowering the overall efficiency of the engine.

Enter Matthew Boulton, who became Watt’s partner, and John Wilkinson, a Boulton associate and foundry operator who was obsessed with all things cast iron.  Boulton and Wilkinson wanted a steam engine to provide the blast for Wilkinson’s foundry, and they wanted an engine with especially-large cylinders…which made the problem of tight cylinder/piston fit even harder to solve.

Wilkinson saw that the technology he had already developed for the very precise boring of cannon could, with some modifications, be adapted to the boring of steam engine cylinders.  Amid “searing heat and grinding din,” he achieved a cylinder, four feet in diameter, which “does not err the thickness of an old shilling at any part.”  With the combination of Watt’s separate condenser and Wilkinson’s improved boring process, the steam engine was ready for the starring role that it was to hold for the next century and beyond.

Key point: It wasn’t only the design of the improved steam engine that mattered, but also the process for making it.

What if Britain had been offshoring its foundry operations, with their “searing heat and grinding din” to another country?  Spain, let’s say.  Given the importance of the interaction between the design talent and the manufacturing talent, would the improved steam engine have been developed in the 1770s timeframe at all?  And whenever it had been developed, to which individuals and countries would the financial benefits of steam power have accrued?

The present-day parallel is the relationship between microchip designers and microchip manufacturing facilities…foundries, as they are actually called.

More about John Wilkinson, here.

An Early and Excellent Example of a High-Technology Product Press Release

The poet/historian  Antipater sings the wonderfulness of the vertical waterwheel as a power source:

Cease from grinding, ye women who toil at the mill

Sleep late, even if the crowing cocks announce the dawn

For Demeter has ordered the Nymphs to perform the work of your hands

And they, leaping down on the top of the wheel, turn its axle which

With its revolving spokes, turns the heavy concave Nisyrian millstones

Learning to feast on the products of Demeter without labour

( circa 65 bc)

 

I would so hire that man for a Marketing Communications job.