Thursday, June 25, 2015

Against Reformism in Greece

Trotskyists are uncompromising. The class line cannot be crossed. Accordingly they oppose popular fronts like Syriza, which consist of unprincipled alliances with bourgeois parties. That Syriza's coalition partner is a small, center-right outfit called ANEL simply demonstrates the perfidy.

Nevermind that the Left wing of Syriza is a sundry mob of Maoists, pseudo-Trotskyists, anarchists, etc. Nevermind that Alexis Tsipras has resolutely refused to compromise with the Troika on core issues. True Trotskyism, as expressed by Socialist Action, regards the whole movement as nothing but a bourgeois front, just waiting to sell out the working class as soon as politically expedient.

The global organization of Trotskyists is something called the Fourth International. The Greek section of the Fourth International is a grouplet that not even I had previously heard of: OKDE-Spartacos. If bombastic proclamations are a mark of revolutionary fervor, then these folks take the cake. Their statement is reprinted in Socialist Action. (The translation isn't very good.)

Of course no proclamation is complete without a list of demands at the end. These range from the stupid to the ridiculous. I've copied them below, along with my comments.

  • No new austerity measures, no new agreement, no negotiations
Why should there be no negotiation? What can one possibly lose by talking? Even Trotsky negotiated at Brest-Litovsk. Otherwise, this sounds also like Syriza's strategy. If Syriza is going to sell out the working class, then they've only got a few days left to do it.
  • Reduction of working hours, along with raises in wages and pensions
Greeks already don't work very hard--that surely is part of the problem. And where is the money for the wage & pension increase going to come from? Our Trotskyist friends don't say.
  • Stop paying off the debt and fully cancel it
Greece has long since stopped paying off its debt, and nobody is suggesting that they start now. The only issue is how the debt going to be refinanced so that the country doesn't default. Greek bailouts consist of money lent by European banks, which is then paid back to European banks to avoid the appearance of default. There is no advantage to anybody in letting Greece default--certainly not to the Greeks. By advocating default, OKDE shows why they are such a small, irrelevant organization.

Far from asking Greece to repay its debts, the Troika is merely insisting that it break even, i.e., run a primary surplus. That's a reasonable request, but the country can't do that with stifling regulations, a retirement age at 50 or 55, and a completely bloated public sector. (Some argue that Greece also needs to cut defense spending.) These misnamed "austerity" measures will bolster the Greek economy and enrich Greek consumers.

  • Expropriation of banks and big enterprises, with no compensation for capitalists, and operation under workers control
Greek banks are broke and continue to exist only by the generosity of the ECB. Expropriating them will yield no assets--only debts. And of course the ECB won't continue to put in money. Regarding "big enterprises", it's not clear that Greece actually has many of those, and decapitating a company hardly improves its chances of success. See, e.g., Zimbabwe.
  • Self-management of closing factories and enterprises
Good luck with that. I don't care who manages it, but without access to either capital or markets no business can flourish.
  • Disengagement from the euro and the EU, for an anticapitalist internationalist perspective For the self-organization, the government and the power of the working people
So 70% of Greeks want to stay in the Euro no matter what. That's because their standard of living depends on it. If Greece is forced out of the Euro instant poverty will follow. I've always said that Trotskyists are pro-poverty, but rarely is it so dramatically illustrated.

Frankly, this is just pathetic. There is such a thing as intelligent Trotskyism--I've remarked on it many times on the blog. But that Socialist Action reprints the foolish ramblings of silly people is beneath their dignity.

Further Reading:

Friday, June 19, 2015

The Minimum Wage

Recent articles in the Trotskyist press and elsewhere have covered the Fight for $15, a serious effort to raise the minimum wage. Let's review.

An early report appeared in Socialist Viewpoint, in April 2013. That article covered the demonstration by fast food workers in Chicago demanding a near doubling in the minimum wage to $15/hour. The march set the tone for the fight as it spread nationwide. While the marchers included some fast food employees, the organizers and majority of attendees appeared to be members of already existing unions, notably the SEIU.

At the time I didn't think anything would come of it--the very idea of doubling the minimum wage seems outlandish. But I confess it's gotten more traction than I expected. Since then, Seattle, San Francisco, and most recently Los Angeles have agreed to raise wages to $15/hour. Chicago will raise its to $13, and other cities are making lesser pledges.

In addition, Walmart, McDonalds, and Target have all agreed to give their employees a raise, albeit not to $15. So something is going on. The Militant reported on this last March, which elicited my comments here. What gives?

The Militant revisits the issue again with a recent report by Alyson Kennedy and Dan Fein, two reporters for whom I have considerable respect. Entitled McDonald's Workers' Fight 'Getting Stronger', it's an account of the demonstrations in front of the company's headquarters in Oakbrook, IL.
“I make around 30 meals per hour and earn $7.25 per hour. I can’t even afford to buy one of the meals I make,” Amy Petite, 21, who works at Wendy’s in Knoxville, Tennessee, told the Militant. 
Demonstrators said that as the movement grows, gains are being made. “We won better hours and five days a week where I work,” said Connie Bennett, a Chicago McDonald’s worker. “Before we were getting three or four days a week.”
Socialist Action highlights the campaign of Kshama Sawant, the socialist Seattle City Councilwoman now running for re-election.
Since her election in 2013, Sawant fulfilled her campaign promise to make Seattle the first major city to pass a $15 an hour minimum wage. And she has taken on a number of other issues that are important to working people. In the city with the fastest rising rents in the country, she has championed the fight for rent control, a Tenant’s Bill of Rights, and the demand that the city build thousands of quality apartments to be rented at below-market rates.
The most substantive article comes from Socialist Viewpoint's contributer, Arun Gupta. He reveals Fight for $15 as astroturf, staged by the SEIU.
For example, one fast-food protest in 2013 was run like a military campaign. The staffing plan included the local organizing leadership, four different media workers, half-a-dozen “diffusers” to soothe any trouble, a photographer, videographer, police liaison, chant leader and energizer, a supply team, drivers, onsite legal, a criminal lawyer on standby, breakfast and lunch coordinators, and people designated to hand out signs, flags, t-shirts, and water. A spreadsheet mapped out protests by the minute, noting times and location for loading vans, picking up workers, talking points for press conferences, skits, prayers, dancing in the streets, and “walk backs” of workers the next day to minimize retaliation. Insiders say to maximize turnout, Fight for 15 will sometimes rent hotel rooms for workers the night before a protest, rent vans to drive them to the start point, and provide meals.
 Mr. Gupta, while a staunch supporter of the effort, is skeptical about its chances of success.
A fundamental goal of labor organizing is to take labor out of competition with itself. But that is nearly impossible when low-skilled, low-wage workers have few rights and number in the tens-of-millions. Fight for 15’s approach is unorthodox, but it is constrained by organized labor’s history. Class-struggle unionism has been abandoned by labor leaders who act as junior partners to corporations, like SEIU and Kaiser Permanente, the UAW and auto companies, the machinists union and Boeing, and the building trades and real-estate developers. Many union leaders are also in the pocket of the Democratic Party despite it being in the pocket of Wall Street.
As said, I share Mr. Gupta's skepticism, and that begs the question. Why has Fight for $15 been as successful as it has? I count several reasons.

1)  I am willing to give the SEIU some credit. Their well-organized public relations campaign has surely had some effect, albeit mostly as public relations. The victories in city councils are probably due mostly to this effort.

2)  $15 per hour has passed in cities that have lots of billionaires, and even more millionaires. These are places where the added costs can be passed on to consumers. That won't work in less fortunate towns, such as Fayetteville, NC or Kokomo, IN. So far from starting a trend, the SEIU has just picked the low-hanging fruit.

3) McDonald's and Walmart are both reevaluating their business models. They need a different kind of workforce to make that happen. So I think the pay raises they offer probably won't go to their current employees, but rather to future employees who will have different skills. The lowest-skilled, least educated people will be laid off.

4) McDonald's is shrinking--this year they are closing more stores than they are opening. Further, all the stores in San Francisco will be closing. While high real estate prices are probably the culprit, the fact is that $15/hour will have no effect on McDonald's there.

My socialist friends all make one important mistake. They implicitly assume that raising wages to $15/hour will have no effect anywhere else in the economy. Only the Wall Street Banksters will suffer negative consequences--their endless stash of cash will be slightly diminished because of higher salaries.

But of course that's not true. Mr. Gupta at least points out that profits are shrinking at McDonald's. There is no stash of cash, and the Banksters will not be the ones who pay the bill. So who's the patsy? There are only two choices: customers or other employees.

Except in billionaire cities, customers simply won't pay up. They don't have the money, and/or they have too many other choices.

That leaves the employees. For everybody that gets a pay raise, somebody else is going to be either unemployed or paid less. That's obviously what is happening at McDonald's and Walmart--both companies are looking to trim their workforces. They can afford to give the remaining people raises.

So I'll stick to my original prediction: The Fight for $15 will fail. It is impossible to nearly double the pay of low wage workers in a low-inflation world where everybody else's salaries are flat. It won't happen.

Further Reading:

Wednesday, June 10, 2015

Louis Proyect's Pro-Poverty Alliance

Louis Proyect kindly posted video from the recent Left Forum meeting in New York. It's a nice summary of the travails of the modern Left.

As a leader of the North Star movement, he provides an introduction to its history and goals. "What we need," he maintains, "is a broad Left Party where people can work together based on a common program" that doesn't require close ideological agreement. Mr. Proyect goes back to Peter Camejo, Lenin, and even the Communist Manifesto for guidance. The latter sounds veritably reformist, calling for a "heavy, progressive, graduated income tax, equal liability of all to work, establishment of industrial armies, especially for agriculture."

Mr. Proyect claims that Lenin's conception of a Leninist Party was much closer to what North Star aspires to than something like the Socialist Workers Party. Socialist movements can't simply imitate ancient Russian history and expect success. Instead they must draw heavily from the heritage of their own time and country. Socialists need to stop waving hammers & sickles around, and end democratic centralism in it's current form.

Channeling Peter Camejo, Mr. Proyect cites as positive examples the Farabundo Marti National Liberation Movement (FNLM) in El Salvador, and the Sandinista National Liberation Front in Nicaragua. Marti and Sandinista were local heroes, not Russian ideologues. Likewise, North Star named itself after the (very obscure) newspaper published from 1847 to 1851 by (nearly as obscure) Frederick Douglass. Current role models include Greece's Syriza, and Spain's Podemos.

And here's the problem. Does Mr. Proyect really think that either the FNLM or the Sandinistas made their countries any richer? Both movements plunged their countries into decades-long civil wars that killed thousands of people. Yes, one can lay significant blame on the Contras and the Salvadoran army, and even the USA, but it takes two to tango. Both nations were left substantially poorer at the end of the Leftists' reign than they were at the beginning. Which is why the Left is no longer in power in either country.

If that's success, then I'd like to know what failure looks like.

Likewise Syriza, which by becoming the government has inherited a poisoned chalice. It can either succumb to the demands of the Troika, or it can take Greece out of the Euro. Contrary to the popular media, the Troika's demands are not unreasonable and will lead to long-term economic growth in Greece. But Syriza's constituency (government employees) will be hurt. Leaving the Euro, on the other hand, will drive the entire population into instant poverty. Please, Mr. Proyect--tell us how this is a positive outcome for the Left.

Two other speakers are worth noting. Kshama Sawant, the global proletariat's representative on the Seattle City Council, was asked to speak on the fly, without prepared remarks, and the result is slightly incoherent. She doesn't like corporations. She's very proud that her campaign received no corporate money from Starbucks. Count me happy--when I buy coffee I really don't want my purchase subsidizing socialist radicals.

But she really hates Starbucks. She didn't explain why, but I'll suppose it's because they pay low wages. In most of the country it's probably around $9/hour, albeit with some benefits. In Seattle they now pay $15 per hour. To Ms. Sawant (a talented software engineer) this sounds like chump change--the baristas are getting exploited.

So here is my question for Ms. Sawant: What salary would Starbucks have to pay before she'd like Starbucks? Obviously $15/hour is not enough.

Here are my reasons for liking Starbucks:

  • I like their coffee. It's better than 90% of the Ma & Pa places. Starbucks is good for consumers.
  • They employ 180,000 people, all of whom get a salary, some benefits and a possible career track.
  • They have greatly expanded the coffee market in the US, to the benefit of farmers in places like Nicaragua.
Ms. Sawant, judging from her language, thinks the world would be a better place if Starbucks went out of business. Needless to say, I don't think the 180,000 people who work there are going to sign on to that crusade.

The best talk was given by the 2014 Green Party candidate for Lieutenant Governor of New York, Brian Jones. He's a card carrying communist--a member of the International Socialist Organization. He's also a member of the teacher's union, NYSUT, an organization dedicated to ripping off the taxpayers in support of their members. Taxpayers like those who work at Starbucks, who pay New York's record high property taxes and sales taxes.

Mr. Jones channels Syriza, and as such epitomizes Mr. Proyect's project. Mr. Jones believes that government employees--and only government employees--are people of good will who have the public's interest at heart. Thus he sees no conflict between higher salaries for teachers and better outcomes for students, despite the fact that there's no empirical correlation.

We need government employees. We need cops, and prison guards, and road maintenance crews, and soldiers. These people are an expense necessary to correct for the failings of human nature.

But government workers don't make us richer--they simply preserve civilization. Wealth comes from people who produce things that consumers want to buy. Starbucks employees make me richer because I enjoy drinking their coffee. On the other hand, I hope I will never require the services of a prison guard. The goal of society is certainly to pay civil servants appropriately--even generously. But frankly, we need as few of them as possible.

Mr. Jones and Syriza have it backwards. Greece has hired way more people than it needs--the Troika wants a lot of them privatized (or fired). New York schools are famous for their rubber rooms--places where useless teachers can hang out because the union won't let us get rid of them. College professors (like me) use the taxpayer's dime to write books that literally nobody is going to read.

So there it is. Mr. Proyect is pro-poverty: he has supported hugely destructive civil wars; he thinks Starbucks employees should all be fired because it's an evil company; he believes that more teachers and more cops and more prison guards will make us richer.

Mr. Proyect is wrong on all counts.

Further Reading:

Wednesday, June 3, 2015

Capitalism Just Won't Sit Still

The lead article in Socialist Viewpoint, by Joe Allen, is entitled The Power of Logistics Workers (reprinted from Jacobin). It's a marvelous article--well written, nicely researched, and well worth the read. It has inspired me to purchase the book by Nelson Lichtenstein on The Retail Revolution--with any luck I'll review it here soon.

Mr. Allen's thesis is that logistics, embodied by companies like FedEx and UPS, represents a choke point in the US economy, and therefore an opportunity for working class activism. Logistics workers today have a power that was once held by auto and steel workers. Of course he has a point, and it's odd in this context that he doesn't mention the recent port disruptions on the West Coast. There a few hundred workers put the screws on the entire global economy.

Still, as Mr. Allen admits, organizing FedEx is not going to be easy. A large percentage of the employees are part-time and the turnover rate is very high. At UPS the problem is slightly different--while the full-time employees are all Teamsters, the 1997 strike against the company ended in a draw. Since then not much has happened. Also, the large number of casual, seasonal workers are non-union.

Mr. Allen takes an expansive view of logistics:
Sociologists Edna Bonacich and Khaleelah Hardie argue that logistics has two interrelated meanings. The first is the “nuts-and-bolts distribution function” that we generally associate with the word. But the other refers to “the management of the supply chain, including the relations between retailers, their producers/suppliers, and their carrier/transportation providers.”
While it used to be that manufacturers determined what got sold and when, now it is the retailer who makes those decisions. Mr. Allen accurately credits Walmart with this revolution
Wal-Mart, from its world headquarters in Bentonville, Arkansas, “cut out a raft of salesmen, jobbers, and other supply chain middlemen, squeezed the manufacturers by shifting every imaginable cost, risk, and penalty onto their books [and has] taught the entire retail world,” according to historian Nelson Lichtenstein, “how the bar code and data warehouse could finally put real money on the bottom line.”
Mr. Allen should go on to say that ultimately it is consumers who benefited--they got better products delivered in a timely fashion at cheaper prices. Always Low Prices, as the saying goes.

That, however, is not the major flaw with Mr. Allen's thesis. A hint to the real issue is found in this excerpt.
The production of capital goods (machines and tools for manufacturing) and consumer goods (for personal consumption) has been and will be central to the capitalist system. Every generation or so, however, capital reorganizes its methods of production and circulation (what bourgeois economists call distribution) and in the process remakes the composition of the industrial working class. 
These changes can be painful and disorienting, and it can take a significant amount of time for socialists and other working-class activists to reorient themselves. This remaking includes modernization of production techniques (the means of production), the organization of production and labor management, the methods of transporting goods to the market, and how goods are actually sold to the consumer.
Two glaring problems stand out. First, that events are cyclic--every generation or so. Capitalists do this out of boredom, we suppose, or perhaps because Mars is in Sagittarius. Mr. Allen forgets that capitalists don't like these painful and disorienting changes any more than workers do--just ask Eddie Lampert, owner of the now combined Sears and K-Mart chains. Bourgeois economists call it creative destruction.

The second problem is the belief that the disorienting changes are behind us for this generation. Mr. Allen just assumes that the logistics revolution of the 1990s and the aughts is over, and now we workers have time to readjust, unionize FedEx, and fight for our fair slice of the pie.

How quaint. And how wrong. For the logistics revolution that Mr. Allen describes--goods manufactured in China shipped just-in-time to your local Walmart store--is as passe as last year's Christmas tree.

Has he not heard that manufacturing is booming in these United States? Textiles, in particular, are coming back. Instead of being assembled by low wage workers in China or Bangladesh, instead they're sewn together by robots in North Carolina. Why? Not just because it's cheaper, though that, too. The cost of shipping the product halfway round the world is saved.

Rather, clothes can be made just-in-time and to order. I don't mean orders from Walmart--I mean the order from Kathy in Pocatello. You know--the lady with the big butt and the tiny feet. The old logistics revolution (i.e., from a decade ago) cut out a raft of salesmen, jobbers, and other supply chain middlemen. But now the retailer is getting squeezed out--products move one at a time from the manufacturer direct to the consumer.

So much for that big, FedEx operation in Memphis, moving mass-market merchandise from one continent to the other. No, not anymore. Today it's the small, contract manufacturer in Boise shipping products all the way to Pocatello. Kathy will get her new, custom-designed, perfectly-tailored dress by tomorrow morning.

Mr. Allen informs us that UPS has 395,000 employees. FedEx employs about 300,000. Does he believe that either of these companies will hire as many people ten years from now? While logistics will still be important, it will look very different than it does today. It won't be organized around a central location in Memphis, relatively easy to unionize.

So Mr. Allen and his doughty band of union organizers better get hopping. They've got at most a decade to organize that Memphis facility before it goes extinct. Because creative destruction isn't a generational thing. Indeed, you ain't seen nothing yet. Our economy and our world is changing faster than Mr. Allen can keep up.

Further Reading:

Wednesday, May 27, 2015

Book Review: By the People

The terms ultraright and ultraleft are not symmetric concepts.

Ultraright typically denotes neo-fascist groups, such as Golden Dawn, or France's National Front. The closest American analog might be whatever it is that surrounds David Duke. I have no kinship with these groups. I believe in individual liberty and small government--ultrarights instead assert the fascist meme: We're poor because the foreigners stole all the money. A synonym for ultraright might be far right.

Ultraleft is a more technical term of art, described by Lenin in his famous book "Left-Wing" Communism: An Infantile Disorder. Ultraleftism, far from being a different ideology than mainstream Marxism, instead differs primarily on tactics. Ultraleftists favor terrorism or direct action instead of basic political work. People whose idea of political action is to trash Seattle during trade agreement meetings are ultraleftists. Insofar as it had any political content, the Occupy movement was ultraleftist.

The ur-ultraleftist was Lenin's brother, who was executed for an assassination attempt against the czar. In response to that searing event, Lenin rejected terrorism as a tactic, and indeed, for most of his life opposed political violence altogether. Not because he was a pacifist, but because he thought it was ineffective. In this he agreed with Mahatma Gandhi and Martin Luther King.

The key point is that, unlike my principled disagreement with ultrarightists, the mainstream far Left is distinguished from the ultraleft only by tactics. The Socialist Workers Party (SWP) of my day agreed with groups like the Weathermen and SDS in terms of outcome--a socialist revolution is necessary to overthrow capitalism and to create a better world. But we radically rejected their tactics, which we viewed as not merely ineffective, but downright counterproductive.

More tendentiously, the SWP expanded the definition of ultraleft to include the silly sectarian groups, e.g., the Spartacist League. While they didn't advocate violence or terrorism, they also wanted to short circuit the hard political work of building a revolutionary Party. They'd come to antiwar demonstrations carrying banners proclaiming Socialist Revolution Now, as though that were realistic. (Not that the SWP was any more realistic, but back in the day we thought we were.)

So now comes Charles Murray with his marvelous little book entitled By the People. It is addressed to those of us in the Conservative/Libertarian movement who Murray dubs Madisonians, and presents a tactical way forward for our movement. Mr. Murray's book is one of several that have appeared recently, including Kurt Schlichter's Conservative Insurgency (which I reviewed here), and Charles C.W. Cooke's The Conservatarian Manifesto.

To compare these books, I'd like to redefine the term ultraright in a Leninist sense, to be symmetric with ultraleft. That is, an ultrarightist is a person who subscribes to Madisonian ideals, but who advocates radical, uncompromising (stupid) tactics in the pursuit of those ideals. By this definition the neo-fascist groups are excluded because they are not Madisonians. We don't include by the term wackos like Timothy McVeigh, or the racist militias that supposedly occupy northern Idaho.

A synonym for ultraright (in our Leninist sense) might be Breitbartism, after the late Andrew Breitbart.

The first obvious point is that nobody on the ultraright subscribes to terrorism as a tactic. There is no Madisonian analog to the Weather Underground or SDS. Even the Tea Party fringe, represented by Glenn Beck's Taxpayer March on Washington that drew as many as half a million people, was extraordinarily orderly, to the point of cleaning up after themselves after the march was over. Try as they might, the Leftist media couldn't pin terrorism on the Tea Party, apart from a few ill-chosen signs in defense of the Second Amendment.

So that leaves only the sectarians--i.e., people who demand an instantaneous return to a Constitutional order. This is the Madisonian analog to the Spartacist League. These people are preaching to the choir. They inspire us Madisonians--who among us cannot warm to Sarah Palin's oratory or Andrew Breitbart's courage? But at the end of the day we're only 20% of the electorate. We can't win without finding allies outside of our movement.

And that is the message of Mr. Murray's book. His is a polemic against the ultraright (again, in our Leninist definition). He argues persuasively that Constitutional Governance Now is not a practical or reasonable demand. Too much has changed, both in our society and in the world.

For example, Social Security is manifestly unconstitutional. The enumerated powers of Congress does not permit the establishment of a Social Security system. And yet in a country where life expectancy is now 80 years, and human beings who are not capable of planning that far into the future, something like Social Security is inevitable. Mr. Murray suggests that FDR could have asked for a constitutional amendment, similar to what was done for the income tax or prohibition. That would have been a good idea. But today it is simply impossible to roll back Social Security, along with all the unconstitutional precedents it established.

Similarly, the abolition of the regulatory state is impossible. There are too many institutional barriers to dismantling the EPA, OSHA, and the EEOC, ranging from corporate stakeholders, corrupt politicians (in both parties), a sclerotic court system, and an army of lobbyists. The Constitution as James Madison and Thomas Jefferson envisioned it is gone and buried, never to come back in its original form.

While I think Mr. Murray is too pessimistic, he is certainly correct in saying that electing, say, Ted Cruz as president is not going to make any difference. The problem is both more difficult and more complicated than that. What is required, instead, is something more...Leninist...for lack of a better word. Mr. Murray's strategy has three legs.

  • Compromise. We will have to come to terms with those aspects of the nanny/regulatory state that make sense. This includes Social Security, and some bits of the EPA, etc.
  • Alliances. We will have to find points of agreement with non-Madisonians. We can, for example, unite with Liberals on certain states rights issues, e.g., drug legalization.
  • Discipline. We will need to pick our battles very carefully. Mr. Murray proposes a form of lawfare, but one where the targets are very carefully chosen. For example, he excludes a battle against the tax regime, first because the income tax is constitutional, and second because it reduces our cause to pecuniary issues.
The ultraright approach is represented by Kurt Schlichter's book, Conservative Insurgency. Mr. Schlichter proposes a take-no-prisoners approach that would work wonderfully if we Madisonians were in fact a majority of the population. But since we're not and likely never will be, this is just wishful thinking.

In my review of Mr. Schlichter's book I argued why I believe the welfare state has to grow. I am not in favor of a growing welfare state, but I predict that it will happen. I mention this because Mr. Murray shares my analysis--modern technology will render large numbers of people unemployable. Madisonians have to come to terms with this reality, as unpleasant as it may be.

Oddly, Mr. Murray barely mentions immigration issues. I support relatively free immigration. Mr. Schlichter opposes it, as does Mr. Cooke. I am sympathetic to their arguments, nor do I doubt their Madisonian bonafides. But I will point out that fascist groups (we're poor because the foreigners stole all the money) all oppose immigration, mostly for racist reasons. Unfortunately, arguing against immigration allies us with people I don't want to be allied with, which is one of the many reasons I am pro-immigrant. I surmise that Mr. Murray shares my concern.

Further Reading:

Sunday, May 3, 2015

Book Review: The Frackers

I really enjoyed this book.

The Frackers, by Gregory Zuckerman, is an excellent account of the short history of fracking. It's a spellbinding description of the over-sized personalities that have made the phenomenon happen.

Unlike Silicon Valley, fracking is not the preserve of youth. Indeed, most leaders were older people. The modern founder of the art was a fellow named George Mitchell (not to be confused with the clown politician from Maine), who started work on the idea in his sixties back in the 1980s. He kept doggedly at it until his dying day--at age 94 in 2013.

Mr. Mitchell was born to Greek immigrant parents. His father's name was Savvas Paraskevopoulos, whose first job in America was working on the railroad. The Irish paymaster could neither pronounce nor spell his name, declaring from now on your name is the same as mine: Mike Mitchell. Son George married another Greek immigrant, siring ten children of his own, and settling in Galveston, Texas.

He went on to build Mitchell Energy & Development, turning it into a Fortune 500 company. The development part included Houston's planned community of The Woodlands, a successful suburb. But the money came from oil and gas. For most of his career he was a classic wildcatter.

Perhaps as a retirement activity, Mr. Mitchell became obsessed with the Barnett shale, a geologic feature that underlies Dallas. It was long known that there was natural gas in shale rock, but nobody besides Mr. Mitchell thought it could be profitably extracted. In the beginning he was a minority of one, but already being a billionaire he had some cash to invest in the hobby.

There are three ingredients to fracking's success. First was the use of explosives to crack open an oil well and get the oil flowing. Mr. Zuckerman tells us this practice began during the civil war. Second, in order to successfully remove gas from tight shale, fracking fluid had to be used to open up cracks in the rock, and then to prop them open so that the gas would continue to flow. Mr. Mitchell was the man who put these two concepts together, so we can rightly consider him the father of the industry.

The third key to fracking's success, which Mr. Mitchell did not initiate, was horizontal drilling. This is a practice where a well is drilled down to the gas-bearing layer, and then horizontally drilled along the layer. Mr. Zuckerman reports that this practice originated in a government lab, probably the only positive contribution of the federal government to the industry. It was later refined to a high art by Harold Hamm, founder of Continental Resources.

A second difference between fracking and Silicon Valley is that, in the latter, most of the participants graduated or attended elite schools, Stanford and Harvard being the most prominent. That's much less evident with the frackers. Mr. Mitchell's alma mater was Texas A&M; another common choice was the University of Oklahoma.

Still, generalizations are made to be broken. Aubrey McClendon graduated from Duke University, co-founding Chesapeake Energy at age 28. He comes from a distinguished family, sharing his heritage with a former Oklahoma governor, and the founders of the Kerr-McGee Corporation. Still, as his mother often pointed out, illustriousness didn't translate into a trust fund--Mr. McClendon would have to earn his own way in the world. Despite lacking for money, he did inherit blinding charisma, capacious intelligence, and single-minded drive. He's since made and lost a fortune, and made it again. Today he's a billionaire--again.

His partner was a fellow named Tom Ward, one of 13 children of an alcoholic, hardscrabble farmer from rural Northwestern Oklahoma. He grew up in Grapes of Wrath country. Interested in oil from the beginning, he majored in petroleum land management at the University of Oklahoma. No famous pedigree there, but Mr. Ward also came with a high IQ and a prodigious work ethic.

Chesapeake Energy (founded by McClendon & Ward in 1989) was named for Mr. McClendon's pleasant vacations along Chesapeake Bay--it was always an Oklahoma company. They added horizontal drilling to the tools inherited from Mr. Mitchell. Instead of the Barnett Shale, the company branched out to other fields such as the Austin Chalk and the Bakken. Mr. McClendon raised money and leased drilling-rights acreage. It was left to Mr. Ward to turn those assets into a revenue stream by producing natural gas.

They were successful beyond their wildest dreams--too successful in fact. Mr. McClendon, suave and charming, was an ace on Wall Street and brought in money by the bucket. He used that to buy up drilling rights in odd places where nobody else expected there'd be natural gas. He got it cheap. Through the 1980s people assumed that the US was running out of oil and gas. Through the 1970s gas prices had slowly risen, reaching $2.71 in 1984 (worth $6.28 today). Mr. McClendon assumed he'd make a killing selling gas, which he did.

But Mr. Ward (along with others) was too successful. Fracking was so productive that by the late 1980s gas prices began to go down. By 2012 they reached a low of $1.89. Fracking was no longer profitable, but Mr. McClendon couldn't stop. He kept buying drilling rights and going deeper in debt. Mr. Ward, who didn't like the debt, quit. And eventually Mr. McClendon got fired (only to come back again in a different company).

A third difference between the frackers and Silicon Valley is that no women are involved. Silicon Valley supposedly excludes women, but at least there they make up 10-15% of the leadership--most famously Sheryl Sandburg. But amongst the frackers there are zero women. The men are all highly driven, single-minded, workaholic, and extraordinarily intelligent. In many respects they are all very far out on the bell curve--not just in terms of intelligence. Few women are to be found amongst those very unusual people.

Silicon Valley was and remains an important driver of technological progress. But so far in the 21st Century fracking is the most important new technology. Government played only a very small positive role (along with a somewhat larger negative one). The major oil companies (ExxonMobil, et al.) also ignored the business until it was too late--they remain bit players. This was an industry founded by wildcatters, using their own money and following their own dreams. It is a true, American success story.

Mr. Zuckerman gives a balanced and (I believe) correct account of the environmental hazards. The industry has mostly underplayed those (Mr. Mitchell being a notable exception), an attitude that now hurts them. The environmental critics, on the other hand, have hugely exaggerated the risks involved. Fracking is much better for the environment than any alternatives, especially coal. I'd argue it's cleaner than solar power given the current state of that technology.

Panic-mongering aside, fracking is here to stay. And eventually the technology will spread around the globe. The world is not running out of fossil fuels any time soon.

Further Reading:

Friday, April 24, 2015

How to Change the Climate

Back in 2005, in the aftermath of the disastrous, Indian Ocean tsunami, The Militant coined a phrase that shouldn't need to be said: "Geology indisputably played a role." As though anybody argued with that. But The Militant thought geology played a rather small role, as the rest of the paragraph makes clear.
The staggering loss of life produced by the tsunami’s wrath, though, was largely due to the absence of any warning system—including in places such as India where the waves struck the shores four hours after the quake. Resources on hand—from communications, to roads, transportation, electrical grids, medical care, and food supplies—have also been scarce to respond to the disaster in its immediate aftermath. These are the products of the plunder of the region’s resources and labor over decades by the wealthy imperialist states—whose governments are now tripping over each other to paint themselves as generous benefactors—aided and abetted by the local capitalist regimes.
The claim--that capitalism bears most of the fault for the disaster--is silly. I argued as much in this blog's past incarnation, here. Still, at least The Militant granted some role for geology, or more generically, for acts of God. Not every problem can be laid at the feet of capitalism.

Not so with Socialist Action. They have gone from the plausible hypothesis that human activity has some influence on the climate, directly to the claim that the climate is completely within human control. It is only because of the greed of the bankers and capitalists that we have bad weather at all. The opening sentence of Andrew Pollack's article on Hurricane Sandy makes the point. "By now the scientific consensus is clear: the fury of Hurricane Sandy was greatly magnified by human-caused climate change." No room left for natural causes.

Far from being a scientific consensus, the sentence is a crackpot idea, arrived at by taking literally the most exaggerated fever dreams of extremist climateers. But our task here is not to argue with them, but rather to take the statement as a given. Assume, therefore, that the future climate (and not the distant future, either) depends sensitively on how we as a society organize our means of production.

The relevant question then becomes How do we change the climate?

That brings us to the speech by the South African activist, Patrick Bond, delivered in Tunis in March (reprinted in Socialist Action). The event was an organizing meeting in preparation for the COP21 United Nations shindig to be held later this year in Paris. Mr. Bond discussed different strategies that the Left might pursue. Socialist Action makes it clear they don't agree with either of his alternatives, and instead in a lengthy preface propose a third.

The first option (which I'll dub the reformist strategy) is to work "inside." That means collaborating with governments and NGOs to find practical solutions to curb CO2 and methane emissions, ideas such as carbon taxes, carbon capture, or more nuclear power.

Both Mr. Bond and Socialist Action reject the reformist strategy. First, it in no way rises to the urgent challenge of rescuing the planet from imminent disaster. Minor fiddling with CO2 output is drastically insufficient. Second, reformists will inevitably get bought off, making deals with the capitalists for small (albeit lucrative) favors that don't benefit the climate. Trotskyists have always opposed reformism as being class-collaborationist, which in their view always fails. (No doubt in terms of making revolutions it always does fail, but then so does Trotskyism.)

Mr. Bond supports the second alternative, that I'll dub the ultraleft approach. It can be summarized as shut the mother down. The template is the protests in Seattle around the WTO conference in 1999. Those did manage to short circuit the WTO meetings, but otherwise seemed to have rather little impact. It is not clear how similar events in Paris are going to modify the climate. Throwing a temper tantrum is rarely a constructive solution.

Socialist Action poses a third solution, which I'll call the mass movement strategy. This is always Trotskyists' favorite solution, since ultimately organizing the masses is the only way to effect revolutionary change. Their model is the People's Climate March in New York, last Fall, in which 400,000 people marched for--just what exactly? Socialist Action raises the slogan System change; Not climate change, which presumably is the modern analog of the Vietnam war era slogan, Out Now.

But the slogan is completely empty. First, system change is much more ambitious that simply changing the climate (though that seems hard enough). It requires a root and branch change in the very way we organize everything. Climate activists--i.e., people who are actually seriously interested in problems related to climate change--will be unwilling to make their task oh so much harder and more complicated. Rather than simplifying the problem for them, Socialist Action's slogan makes it sound impossible.

Second, system change is not obviously connected to climate change. What guarantee is there that changing the system will improve the climate? Certainly it didn't work in the former Soviet Union or Maoist China. The only evidence that it will work in the future are vague promises from Andrew Pollack, Bill Onasch, and Carl Sack. And activists are supposed to stake their cause on that? Not likely.

And finally, system change is completely disconnected from any individual effort. This, too, is a Trotskyist theme, because they maintain that all social problems are because of capitalism, not because of any individual cupidity.

So, for example, Socialist Action never asks how Patrick Bond got from Durban to Tunis. Presumably he took an airplane, which is not very environmentally conscious of him. Socialist Action will claim that this is irrelevant, because until we change the system, nothing Mr. Bond can personally do will change the climate. But after system change, then the airplane ride will be OK. Because--don't you know--pilots working for the working class pollute much less than pilots flying planes for capitalists. Go figure.

The problem with Socialist Action is they moralize everything. The climate is a moral issue, capitalism is immoral, and therefore capitalism must be bad for the climate. The argument doesn't even work as a syllogism even if you're willing to grant the premises. It's completely nutty, as I suspect the folks at Socialist Action realize. Their involvement in the climate fight is merely tactical--to recruit members to their cause--rather than any heartfelt seriousness about the urgency of climate change.

The climate movement is ultimately doomed. First, the catastrophe predicted by the likes of Socialist Action is unlikely to come true. So facts will eventually prove them wrong. But more importantly, solving the climate problem ultimately means forcing everybody into poverty. The marchers in New York believe themselves exempt from that fate. They are all part of the rich world, comfortably middle class, even by American standards. They can afford to ask other people to forfeit their comforts and livelihoods.

But poor people--people in China, India, Bangladesh--depend much more directly on world trade and fossil fuels for what little prosperity they have. The climateers--unwittingly to be sure--are condemning billions of people to utter destitution, forced back to scratching out a living as subsistence farmers. Poor people are smart enough to realize that the climate movement does not have their back.

That's why India, for example, is simply rejecting the whole movement. PM Narendra Modi speaks for the vast majority of his countrymen when he refuses to accept poverty as an outcome. I agree with him.

Down with poverty!

Further Reading: