Socialist Action Believes American Children Should Freeze to Death

James Fortin, a journalist for Socialist Action (SA), pens an article entitled The Capitalist Criminality of (Un)Natural Fracked Gas. It is complete nonsense, buttressing SA's reputation as a pro-poverty grouplet. Indeed, the logical conclusion is that American houses should not be heated, and children should be allowed to freeze to death. It's the socialist way.

The rot starts at the top:

Exxon Mobil, fifty years ago, was the first to obscure and lie about the dangers that fossil fuels pose to the climate. But such criminal “traditions” carries on to this day. Pittsburgh EQT, the largest supplier of U.S. gas, pumping about 4 billion cubic feet a day, says on its website as of this writing: “Clean burning natural gas is an important part of our country’s energy mix, and we are proud to be a major producer of natural gas and even prouder to produce it in an environmentally responsible manner.”  Whatever the claim, the record on natural gas says otherwise, overwhelmingly.

If anybody is lying about fossil fuels, it's SA. Solar and wind (S&W) combined produce less than 4% of America's energy, while fossil fuels are responsible for 80% (nuclear, biofuels and hydroelectric make up most of the difference). It is literally impossible for S&W contribute much more than 10% of total electricity production. Germany has gone the farthest with this, with S&W comprising 11.9% of total electric power, but they have the costliest electricity in the world, at 38.1 cents/kwh. Compare that with Oklahoma's 8.8 cents/kwh.

Unlike what Mr. Fortin claims, cheap electricity does not just benefit Exxon Mobil. How many children would freeze to death if Mr. Fortin turned off gas supply? How many people would lose their jobs if factories had to pay double or triple their current electric bill?

Mr. Fortin admits that gas has ended most coal consumption in the US, and also that it is a much cleaner fuel. As a result, US CO2 emissions have declined steadily since 2005.

(Source)

He also points out that cheap gas made investment in S&W uneconomic. Of course--why invest in something that's more expensive, and therefore wastes more resources and is likely worse for the environment? Raw materials needed for S&W manufacture include silicon, copper, aluminum, cadmium, manganese, molybdenum, and zinc, along with rare earth metals. These are expensive to mine and leave a lot of heavy metal waste in their wake. It is not clear that S&W is a green technology.

While understating the potential costs of S&W, Mr. Fortin hugely exaggerates the dangers of fracking. He writes,

Fracking operators have avoided disclosure of the chemicals used in their extraction process. Numerous studies though have confirmed evidence of cancer-causing chemicals such as benzene, toluene, ethylbenzene, and xylene contaminating groundwater in the area of the wells, and populations in the vicinity of wells experiencing disproportionate occurrences of respiratory, nervous, and immune system problems. A wide assortment of lesser impacts such as headaches, eye irritation, and dizziness have been found as well.

Mr. Fortin provides no source for this data. While the precise components of fracking fluid are kept as trade secrets, the major components are well-known: sand and soap. There is this:

Fracking fluids fall within such cryptic catagories as carrier/basefluid, biocides, scale inhibitors, solvents, friction reducers, additives, corrosion inhibitors, and non-ionic surfactants – which is a catch-all category for dozens of fluids like Naphthenic Acidethoxylate or Poly (Oxy-1,2-Ethanediyl), Alpha-(4-Nonylphenyl)- Omega-Hydroxy-, Branched.

While it sounds scary, most of these are just "soap." Indeed, the term surfactant is a generalization on the "soap" idea. "Solvents" is likely just a synonym for water. According to The Frackers (my review here), the industry has become very sensitive about being green, and tries to source all fracking fluid ingredients from consumer products. It is highly unlikely that anything very toxic is found in fracking fluid--certainly not as hazardous as the waste from S&W manufacturing.

The chemicals that Mr. Fortin lists are very unlikely fracking ingredients and are almost certainly not used. Benzene is a strong carcinogen and is banned from most industrial processes (and from undergraduate chemistry laboratories). Mr. Fortin, as usual, provides no reference nor context for his data. Similarly, his list of ailments is so vague and so common that it is unlikely that they're caused by fracking.

He also writes,

In one Texas location a study performed between 2012 and 2015 demonstrated that babies born to mothers who lived within 5 miles of natural gas flaring during that time frame were 50 percent more likely to be premature. In other areas excessive nausea, fatigue and cancer have been attributed to exposure to radioactive materials extracted from the fracked bedrock together with the natural gas.

Natural gas flaring comes from oil wells, not gas wells. The purpose of a gas well is to capture the gas, not to burn it off. So this is a silly charge. He may be correct that gas wells bring radioactive substances to the surface, but this has to be a minor effect. Is there any evidence of higher radioactivity around gas wells? I doubt it, and again, Mr. Fortin cites no reference. Here as well, the list of ailments is too vague and other possible causes too widespread for anything to be attributed to gas wells.

I'll cite just one more paragraph, full of hyperbolic claims. My responses are in red.

The attack on public health is part and parcel of the assault on the environment. With the development of fracking technology came the exploitation of shale geological formations where 75 percent of U.S. gas now originates, now found throughout the continental U.S. Obviously any resource extraction has some environmental impact. But fracking is less dangerous than coal mining, than the traditional way of procuring gas, and likely less destructive than the manufacture of S&W technology. A poisonous mix of patently secret  chemicals and massive amounts of water, under enormous pressure, are blasted into the fissures created thousands of feet below the surface. The list of chemicals is not secret, and they're not especially poisonous. The deadly concoction – presently with each well consuming over 14.3 million gallons of water on average – is pumped out and stored for treatment and further use. Fracking in total uses about as much water as American golf courses. Much of the water comes from deep underground, way below well-water aquifers, and is too saline for human/agricultural consumption. That the water is reused is a benefit. The fracked gas now being produced releases into the atmosphere carbon dioxide, nitrous oxide, carbon monoxide and methane, a greenhouse gas 80 times more potent than carbon dioxide, alone. Methane is natural gas, and is the product the frackers wish to sell. They obviously try to prevent its escape into the atmosphere. Unlike CO2, methane decomposes quickly in air. Side effects (have that read “cost of doing business”) include earthquakes, billions of gallons of water poisoned beyond repair, and despoilment of grasslands and forest. The earthquakes are a problem, but increasingly understood and perhaps avoidable. As said, the water is already saline before the frackers use it, and "despoilment" is a lot less than open-pit mining, as is done to obtain copper and other metals for solar panels and electric cars.

Not only is Mr. Fortin against fracking, he's also against pipelines. Indeed, he's against any kind of industrial infrastructure at all. He apparently believes that electric power and home heating will appear miraculously from the tooth fairy and free unicorns.

The man literally believes that letting children freeze to death is a price worth paying in order to prevent "climate change." Mr. Fortin and SA have their priorities all mixed up. They're subscribe to pro-poverty politics.

Unlike Mr. Fortin, I'm against poverty, and I hope it can be eliminated.

Further Reading:

• Jeff Mackler on Trump, Trade and China
• The Pro-Poverty Crowd
• Louis Proyect and the Pro-Poverty Girl

Louis Proyect and the More-Poverty Solution

Louis Proyect worries a lot.

There is climate change--a boogeyman that's supposed to destroy civilization within the next 12 years (I guess since the New Year it's now only 11 years). All this because of modest increases in CO2, which despite being only 0.04% of the atmosphere is nevertheless supposed to heat up the world's oceans lickety-split. Recall that the oceans represent 99.9% of global heat capacity--many orders of magnitude more than atmospheric CO2.

Rumors of our imminent demise from climate change are exaggerated way beyond any credible belief.

Then he frets over GMOs, or genetically modified plants that manufacture their own insecticide and thus don't need to be sprayed. While in principle just an improved method for breeding agricultural plants as has been done for millennia, the specific technique has been used since 1983. It saves farmers huge amounts of money in pesticides, along with greatly reducing the quantity of pesticide in the environment from any source. Despite trillions of GMO meals having been served, there is absolutely no evidence of any threat to human or ecological health as a result.

Mr. Proyect's aversion to GMOs is less rational than the fear some people have of measles vaccines. That is, completely irrational.

He worries about fracking. Here he is on more solid ground since the industry clearly has some environmental costs, though they are increasingly under control. But the benefits of fracking are huge, reducing fuel expenses across the entire society. Natural gas just fell below $2/Mbtu. The cost of gas to heat my 1800 sqft house was only $88 this past December, a nearly trivial expense. If you're against poverty and want poor people to be able to heat their homes, then this is really a good thing.

But Mr. Proyect probably agrees with President Obama: that we'd all be better off if all fuels cost three or four times more in the future. What a guy!

Mr. Proyect doesn't like nuclear power, either. He writes 

In his letter urging Bernie Sanders to embrace nuclear power, Phillips assured him that the human costs of Chernobyl were exaggerated. Even though there were likely 4,000 people who would die eventually because of exposure, it was a lot less than Greenpeace and other groups alleged.

The implication is that today's small, completely redesigned, Generation IV, nuclear power plants are just like Chernobyl. Which is like saying a modern Prius is the same as a Model T. With Gen IV, the residual radioactive waste decays in a few hundred years rather than a few billion. Unlike, say, coal ash waste, the volume of generated nuclear waste is very much smaller. It could all be stored in Yucca Mountain with plenty of room to spare. And it emits no CO2 (if that's important to you) or other atmospheric pollutants.

He worries about tourism--especially "mass tourism." He approvingly quotes Richard Smith: 

Take just one: Cruise ships are the fastest growing sector of mass tourism on the planet. But they are by far the most polluting tourist indulgence ever invented: Large ships can burn more than 150 tons of the filthiest diesel bunker fuel per day, spewing out more fumes—and far more toxic fumes—than 5 million cars, polluting entire regions, the whole of southern Europe – and all this to ferry a few thousand boozy passengers about bashing coral reefs. There is just no way this industry can be made sustainable.

This, presumably, is in addition to AOC's effort to ban airplanes--in Mr. Proyect's perfect world nobody will be allowed to travel at all. At least not unless you're exceptionally Woke. Only really Woke, pre-approved, certified people could get a passport. The rest of us will have to make do with three hots and a cot (aka free food and housing).

All for the sake of saving the planet.

Tens of millions (perhaps even hundreds of millions) of people depend on tourism, directly or indirectly, for their livelihood. Of those, some millions earn a living specifically from cruise ships. Mr. Proyect will throw all of these people into abject poverty.

Tourism is one of the most efficient ways of transferring money directly from rich people to poor people. And Mr. Proyect has, as a first order of business, a desire to stop it. What a guy!

Then, of course, he and Mr. Smith have their facts all wrong. Modern cruise ships don't run on oil at all, but instead on liquefied natural gas (cheaper, cleaner, and doesn't spill into the ocean). More, eco-cruises are growing faster than the industry as a whole--e.g., to the Galapagos and Antarctica. These ships, along with their customers, have a strong self-interest in protecting the resource they want tourists to see. If there was ever a lobby to protect the environment, the cruise industry is it.

Finally, Mr. Proyect writes off the people who live along Bangladesh's coast.

Huber certainly feels sorry for some Bangladeshi farmer or fisherman whose life will be destroyed by rising ocean levels but has to question how such struggles could ever have the social power capable of taking on a capitalist class that is responsible for the dispossession and pollution in the first place.  ... For a Yanomami or a Bangladesh farmer or fisherman, the stakes are very high. For a machinist working at Boeing or a Verizon lineman in suburban New Jersey, there are worries about climate change but it doesn’t have the same immediacy as living in a village near the Indian Ocean.

Rich people are able to take care of their environment--that's why America is much cleaner today than it was 50 or 100 years ago--and why the average New Jerseyan doesn't care. Poor people don't have that luxury. Mr. Proyect's solution is to make the rich people poor, which is truly perverse. The best solution is to make the poor people rich.

Perhaps Mr. Proyect has never heard of the Sundarbans, the largest mangrove swamp in the world, located in Bangladesh. Wouldn't part of a realistic solution be to attract more tourists to visit it? People who would buy fish from local fishermen, tours from local guides, handicrafts from local women, and food from local farmers. Plus they'd leave tips. Plus the travel company will have a strong vested interest in preserving the ecosystem.

Nah! That's much too practical. Mr. Proyect is against that. He thinks Bangladeshis should just remain poor forever so that some kooky folks on the Upper East Side can power-trip by banning air travel and cruise ships. What a guy!

I agree with Mr. Proyect that human civilization will come to an end some day--nothing lasts forever. We've been around (as a civilized species) for some 7000 years now, and perhaps we've got a few thousand more to go. I don't know how it ends, but I do know that we're not gonna run out of environment in the next eleven years. Not even in the next millennium. Mr. Proyect needs to get more sleep at night, and stop worrying about silly things.

Down With Poverty!

Further Reading:

• Book Review: Capitalism Alone
• The Pro-Poverty Crowd
• Louis Proyect and the Pro-Poverty Girl

Note: Due to health issues, blogging may be light for the next few months.

Jeff Mackler on Trade

Jeff Mackler pens a piece in Socialist Action (SA) entitled Inside Trump's trade bluster. It is an opinion which, while I think is mistaken, deserves a serious response.

Regarding Trump's trade policy, Mr. Mackler states:

Obviously, he is an embarrassment to the majority of the ruling-class elite. Virtually every major corporate newspaper and media outlet in the country daily pillories his too overtly right-wing tweets and pronouncements, but the essence of his direction, as opposed to the form, is not too dissimilar from mainstream ruling-class views.

This is unusual for SA--normally they write Trump off as a bone-headed klutz. Now they give him credit for substantial policy, however poorly advertised. I agree with them--the world has changed, and Trump's efforts are redirecting American policy in response to that change. It is not simply random outbursts from a senile old man.

Where Mr. Mackler fails is in identifying what has changed. He quotes Marxist economist Michael Roberts.

"... The Great Recession of 2007-8 and the ensuing Long Depression since 2009 has changed the economic picture.

In a stagnating world capitalist economy, where productivity growth is low, world trade growth has subsided and the profitability of capital has not recovered, cooperation has been replaced by increasingly vicious competition—the thieves have fallen out.”

All of the premises are arguable. Certainly, at least in the US, corporate profits are currently at record highs, so that claim seems undeniably false. The statement about poor productivity growth can be disputed. The slowdown in growth is probably due more to demographic factors--low birth rates and an aging population--than any failure of "capitalism."

By blaming Trump's tantrums on the 2007-8 financial crisis, Mr. Mackler misses the big picture. He doesn't see what is really going on.

Mr. Mackler asserts that, circuses notwithstanding, Trump's policies represent America's ruling class. This is not true. Every business organization--from the Chamber of Commerce to the National Association of Manufacturers, to the car manufacturers, to big and little Ag, and so on down the line--has come out strongly against Trump's tariffs. Whenever he announces them the stock market goes down.

The people who do like the tariffs are the unions. AFL-CIO chief Richard Trumka has stated his support. So at least part of Trump's motivation is political--he wants to keep his word to his blue collar constituents. Promises made--promises kept.

The unavoidable fact is that tariffs will hurt the economy. Everybody knows this, barring Mr. Trumka, Pat Buchanan and a few Trotskyists. I think even Trump knows this--otherwise why would he have Larry Kudlow on the White House staff?

The implication of all this is that "Trump's trade bluster" has nothing to do with the economy at all. Instead, it is about geopolitics--an effort to weaken China, who is today America's greatest military competitor. Mr. Mackler alludes to this.

Trump’s denunciation of China for “stealing” U.S. technology was followed by his administration’s widely publicized list of proposed tariffs on Chinese imports. The list includes 1102 categories of goods, all focused on high-tech industries like nuclear reactors, aircraft engine parts, ball bearings, bulldozers, motorcycles, and industrial and agricultural machinery. These are precisely the categories in which China has employed the advanced robotics and related super-modern production technologies—that is, intellectual property rights.

Though he doesn't mention it, the military applications of those technologies are what is most in Trump's mind. The president is willing to take the economic hit now to avoid having a rival superpower in the future. They don't call it a trade "war" for nothing.

So the question is not how tariffs help the economy (they don't) but about how to minimize the blowback they will inevitably cause. And here one can separate the conversation into three topics: China; Fracking; and NAFTA.

China: Mr. Mackler's opinion very much resembles that put forward by Lynn Henderson. I responded to that gentleman here, so no need to repeat it.

Fracking: A milestone was reached in 2010--in that year for the first time in ages the United States exported more oil and gas than it imported. We became energy self-sufficient. Today we import ZERO oil from the Persian Gulf.

This has huge consequences: First, the Straits of Hormuz are no longer a core national security interest of the US. Iran's threat to close them is no longer compelling--we only care about their nukes. That is the essential difference between Europe and the US on the Iran nuclear treaty. Europe is very worried about the Straits of Hormuz, while we are not. Our strategy toward Iran is accordingly much less compromising than the Europeans would like.

Likewise, as Mr. Mackler points out, the US is no longer a reliable defense partner for Europe. If Iran were to close the Straits of Hormuz, it is Europe that will have to send in the cavalry, not the US. That means Germany is going to need a blue water navy--and fast. They're working on it already.

Second, we used to pay for our Persian Gulf oil in dollars, that were then known as petrodollars. But the petrodollars got deposited in dollar accounts in Switzerland, Hong Kong, the Cayman Islands, and elsewhere offshore, whence they acquired the (misleading) name eurodollars.

Those offshore banks lent out those eurodollars to finance international trade. The abundance and liquidity of eurodollars is what made the dollar the reserve currency, and what enabled the WTO. Since the US ultimately controlled the flow of dollars (euro- or otherwise) around the world (the SWIFT system), the US became the enforcer of WTO rules.

The absence of new petrodollars, along with rising interest rates in the US, means that the supply of eurodollars is drying up--there is now a severe shortage. The liquidity needed for international trade is sharply reduced. This has two big implications.

1. The dollar will cease to be the reserve currency, and there is nothing that in the short term can take its place.
2. The WTO will fall apart--without a reserve currency and without US enforcement, it can't survive.

All of this is a disaster for any country not called the United States.

NAFTA: The new Mexico-US trade agreement will insulate the US from the coming trade disruption. The basic idea is to move manufacturing from China to Mexico. This will be a huge boon to the Mexican economy, which is why they eagerly signed it. It's described very well by Gloria van Rees--here is the money quote.

The big question about the impact will be the economic efficiency of the impact of trade diversion into NAFTA and away from other countries. By this I mean, what will be the impact of buying more parts intra-NAFTA rather than outside NAFTA and layering on top of that the low skill parts outside of NAFTA and the high wage parts intra-NAFTA? Here is what I suspect, and feel free to disagree respectfully of course. Assume there are currently, for simplicity sake, four parts needed to make a car. Each part costs $20, $15, $10, and $5 respectively. For simplicity sake, let’s assume that currently the $20 and $15 parts are made inside NAFTA and the $10 and $5 parts are not. Under the new agreement, I think we can expect the $20 part to remain unchanged, the $15 part rise to a $16 part, the $10 part move to Mexico, and the $5 part stay outside of NAFTA. Again, this is a very simple model, but this would meet the general requirements before and after. What we see primarily is a diversion of trade to Mexico as the primary recipient with some increased work likely going to the US and Canada. However, the major question, which is very difficult to know with good foresight is the impact of trade diversion from the rest of the world to the trade agreement partners.

In summary, Mr. Mackler, for all his facts, misses the elephant in the room. It's fracking. Fracking changes everything.

Further Reading:

• Solidarity on Trump & Trade
• Trade Wars
• Book Review: The Absent Superpower

Book Review: The Absent Superpower

So I'm on a Peter Zeihan tear this month--this is the third post in a row about that author. But now is the end of it, for as much as I agree with his premises and some of his conclusions, his recent (2016) book goes off the rails.

The first section, entitled Shale New World, is worth the read no matter what you think of Mr. Zeihan's opinions. It is a concise and clear description of the US and global shale industry, including relevant facts about technology, geology, chemistry and finance, all very clearly explained. In particular, my Trotskyist friends would do well to read this--not that it will change their minds, but at least they could argue their environmental extremist positions knowledgeably.

American frackers have worked hard to ameliorate the environmental problems of their trade, also making it cheaper in the process. For example, there has been much talk about the amount of water used in fracking. That was never as big problem as it was cracked up to be--the US industry uses less water American golf courses. Still, especially in arid areas, water had to be trucked to the site, and the resulting waste water was no longer usable by humans or agriculture.

What frackers have since discovered is that accompanying shale oil is also a layer of water far below the shallow ground water that makes up important aquifers. This deep groundwater is brackish, meaning it can't be used as fresh water, which is an advantage to frackers since they need to add salt to frack-water anyway. Further, organic material--algae, etc.--is a problem and aquifer water needs to be filtered to remove that. The deep groundwater contains little or no life, which saves money. Finally, they drill through the layer on their way to the oil, so water can be extracted on site, eliminating trucking costs.

While shale producers recycle as much wastewater as possible, eventually there is a disposal problem, which remains the largest environmental issue associated with fracking. Accordingly frackers have worked hard to make their solutions as non-toxic as possible. Today they restrict themselves to using non-toxic, consumer products as additives. Apparently there are YouTube videos showing frack executives drinking frack water!

The result is that the American frack industry is profitable at $35/barrel, competitive even with Saudi Arabia.

A second important point is that fracking is overwhelmingly an American industry, and Mr. Zeihan explains why that will remain true even two or three decades into the future, despite the fact that there are massive shale reserves elsewhere on the planet.

And that leads to the remainder of the book, which reads very much like a war thriller. It's as compelling as fiction largely because it mostly is fiction--at least in my opinion.

I accept Mr. Zeihan's two premises: 1) North America is already energy independent, and does not depend on global trade for oil; and 2) the United States no longer has any compelling reason to remain engaged in world affairs outside the Western Hemisphere, and therefore will no longer police global sea lanes or enforce international borders. 

The result will be the Great Disorder as the rest of the world fails on short notice to establish their own order. Mr. Zeihan predicts three wars, all occurring roughly simultaneously. The Twilight War, centered around the Baltic Sea, will pit Russia against Scandinavia, Poland, England, and probably Germany. Related to the Twilight War will be Russia's effort to secure its southeastern flank against Turkey by occupying land to the banks of the Danube in Romania.

The second war is the (Next) Gulf War which will pit Iran against Saudi Arabia, precipitated by the withdrawal of American forces from the Persian Gulf. This will lead, in extremis, to the complete de-civilization of the entire Middle East, including the destruction of the electricity network from Oman to Lebanon. It will result in 60 million deaths and/or refugees.

And finally is the Tanker War, caused by the closure of the Persian Gulf, along with most Russian oil exports. The Tanker War will be a struggle between China, Japan, Korea, and Taiwan to secure whatever little oil is left on the open market, and to protect their ships from the depredations of enemies, pirates, and third-party countries such as India that will engage in privateering.

Of course all of this could happen--anything could happen--but it's not likely. When I mentioned these scenarios to a friend of mine, he immediately asked Don't any of the countries have any diplomats? It's a good question--Mr. Zeihan's scenario assumes they don't and they all go for absolutely the worst possible outcome.

Let's take the Twilight War as an example--so named because Russia is in terminal demographic decline and has only a few more years to wage war of any sort. It will spend this opportunity attempting to recover the defensible boundaries of the former Soviet Union. Of course they will probably lose, and either way their demography will still decline, so this really doesn't make too much sense.

It's easy to come up with a diplomatic solution to the Twilight War. Germany, far from fighting Russia, has every reason to ally itself. In return for a guaranteed supply of oil and access to the Russian market, Germany will guarantee Russian borders. Indeed, Germany can guarantee all the borders in the Baltic region. As Mr. Zeihan points out, the Russians could invade the Baltic countries on a Sunday afternoon. There's no reason for them to do it preemptively when there is no military threat on the Western frontier. By treaty both Poland and the Baltics could be demilitarized.

Further, the Germans will float a flotilla down the Danube to Romania, and set up camp on the Black Sea. Of course they'll be keeping an eye on Russia, but their primary mission will be to defend against the real rising power in Eurasia--Turkey. On this front, too, the Germans and Russians are allies. Germany has been very quiet about objections to the Russian reconquest of Crimea, and is not all that upset by the Russian invasion of Ukraine precisely because the Turks are a bigger threat.

If the French navy can secure the Eastern Mediterranean, Russia can fortify the northern shores of the Black Sea, and Germany can defend Romania, Bulgaria, and mainland Greece against Turkey, then Europe is as secure as possible against either military or refugee invasions from the Middle East. The Russians can get back to doing what they most urgently need to do--make babies.

Turkey can relieve Iranian pressure on Saudi Arabia simply by attacking, or threatening to attack, Azerbaijan. With this tool the Turks can turn Saudi Arabia into a vassal state, reminiscent of the Ottoman Empire. By building a pipeline from Ghawar (Saudi's oil-producing region) to the Mediterranean, Turkey will have both the Iranians and Arabs by the short hairs.

There is no shortage of oil in the world--the only issue is transport disruption due to war. Get rid of the other wars, then the tanker war becomes unnecessary. Peace will prevail. And we'll all live happily ever after.

Or maybe not. It may not end as cheerily as I suggest. But Mr. Zeihan's predictions I think are almost certainly wrong.

Further Reading:

• Book Review: The Accidental Superpower
• New World Disorder
• North Korea

Book Review: The Accidental Superpower

The Accidental Superpower, by Peter Zeihan, has a long subtitle: "The Next Generation of American Preeminence and the Coming Global Disorder." The thesis is summarized in a talk Mr. Zeihan recently posted here, and which I reviewed in my previous post, here. Both the book and the talk are a perfect trifecta of things that interest me: geography, politics and economics. Accordingly, my enthusiastic account of the video might be described as "breathless."

I found the book equally fascinating, and I pretty much inhaled it as others might a good novel. Mr. Zeihan is a talented writer and makes an excellent case. But now I will force myself to take a more critical eye and look for weaknesses. There are a few.

Briefly, Mr. Zeihan's thesis is that two things have changed: 1) the Soviet Union is no more, and even Russia itself is in the process of disintegrating; 2) The shale revolution means that the United States is largely energy independent, and therefore no longer relies crucially on foreign trade as it once did.

The result is that the global free trade regime, institutionalized under the Bretton Woods framework, is breaking down. From the US perspective, Bretton Woods provided lots of allies as a bulwark against the Soviets, and also guaranteed American energy supplies, including from the Persian Gulf. In return, the US policed global sea lanes, ensuring safe travel from the Skagerrat and Malaccan Straits, all the way to the Straits of Hormuz and everything in between.

The result is the Soviet Union was defeated, and everybody got rich--from Western Europe to Japan, Korea, and even China, Israel, Chile, and more.

But now, because of shale oil, America has little incentive to patrol the global trade routes. Accordingly we will no longer guarantee shipping through the Persian Gulf or the Indian Ocean, or over much of the rest of the world as well. Absent energy needs, the USA depends less on trade than any other country on earth, and can simply rely on itself. Or so Mr. Zeihan maintains.

The US can get away with this new isolationism because it is blessed in two ways: geography and demographics.

Geographically, America has more navigable, internal waterways than the rest of the world combined, not even counting the intracoastal waterway from Chesapeake to the Rio Grande. Since transport by water--even today-- is more than a factor of ten cheaper than by truck, and still a factor of three cheaper than rail, the US has a huge advantage. Further, our water network overlaps the largest bit of agricultural land in the world. Put bluntly, a homesteader in Iowa had, via the Mississippi, cheap access to global markets, even from Day One in the early 19th Century. By comparison, today's small farmer in Mexico's Chiapas state still has no cheap access to any market, not even Mexico City.

The Iowan will get rich. The Chiapas peasant will remain poor no matter how much some stupid Commandante rails against the injustice.

Second, while birth rates have declined in most of the world, the US still has relatively bright demographic prospects (though perhaps not as bright as Mr. Zeihan imagines). By contrast, countries like Canada, Japan, Greece, and especially China and Russia, are facing a crisis.

Using these two factors as a guide, Mr. Zeihan offers predictions for the next 15 years, beginning in 2015. The book was written in 2014--a very long time ago. Back then oil cost $100/bbl, the Canadian dollar fetched US$1.05, and the word "trump" doesn't even appear in the index. Further, he never mentions robotics (a subject in the more recent video), which certainly changes the situation considerably.

Still, for all that, his predictions hold up reasonably well:

• Russia is at the point of demographic collapse and will cease to be a viable nation within the next decade.
• The Chinese economy will collapse, and China as a unitary state will disintegrate. He points out that China throughout its history has only briefly existed as a single state.
• Japan, no longer able to source oil from the Persian Gulf, will need to conquer neighboring, oil-bearing territories to meet its needs. He predicts that Manchuria and Sakhalin Island will fall to the Japanese.
• The fastest growing economy over the next fifteen years will be Mexico (though the spread of robotics might change this).

So I think all of this makes sense, and I am now making sure that my retirement funds don't include any investments in China--that part of his argument is completely convincing. Still, there are some flaws, and it is now my duty to point them out.

1) Geography and demographics are certainly important, but hardly determining. That America has a near-perfect geography is as much historical accident as anything. Andrew Jackson could have lost the Battle of New Orleans, or worse yet, not fought it at all. A president not named Lincoln might have agreed to Southern succession on the condition of peace. A talented Canadian negotiator could have settled on the 42nd parallel rather than the 49th. Any of these would have changed American history dramatically, negating our geographical advantage.

History is contingent. Or put another way, history is just one damn thing after the other. Geography is the stage on which it all takes place, but it really doesn't tell us very much about the ultimate outcome. None of Mr. Zeihan's predictions will come true if the US descends into civil war, or if California really secedes from the union, geography notwithstanding.

Demography isn't all that it's cracked up to be, either. For example, Greece and Japan both have similar geographies (mountainous, seafaring nations), and similar demographics (old). Yet the prognoses are very different: Greece is predicted to be a failed state, while Japan will muddle through mostly as is. Culture matters a lot. Mr. Zeihan gives it too short shrift.

2)  I don't think Mr. Zeihan understands very much about economics. Some of this is just semantic--he refers to geographically-rich countries such as the US as "capital-rich." I think "resource-rich" would be more precise. Capital is investment in plant and equipment, which can be bought and sold and where depreciation is a problem. None of that applies to the Mississippi River, at least not in any meaningful sense.

Despite having no navigable waterways, Japan is a capital-rich country because of its beautiful cities, high-tech factories, elaborate rail system, and skilled labor force.

3) Mr. Zeihan claims that because of the retirement of the baby-boomers, total capital will decline. This is partly because we're not saving anymore (I stopped saving last month), and also because we're living off our accumulated wealth.

And this is true as far as it goes, but Mr. Zeihan leaves out the other half of the picture. Beyond withdrawing our savings, we are also withdrawing our labor. Capital is often usefully expressed as capital density: capital per worker. If total capital declines and the total number of workers declines, there is no obvious change in the capital density. So I think Mr. Zeihan exaggerates the scale of this problem.

The more important problem is the decline in the labor force. If Mr. Zeihan had phrased his argument from that point of view I think he'd make a stronger case.

4) Despite the crystal clarity in most of the book, there are a few sections that just didn't make any sense. For example, he claims that the Mexican drug war will lower the cost of labor--and for the life of me I don't understand his argument. It doubt it's true. First, a drug business, and much more a war, requires labor and therefore competes with other industries, raising wages. And second, civil discord makes labor less flexible and less productive, increasing the total cost. Again, I don't believe he thinks like an economist.

5) Mr. Zeihan apparently has never heard of comparative advantage. While the geopolitics he describes will undoubtedly change the comparisons by which the advantage is calculated, the principle will still hold.

Mr. Zeihan lumps all 1.2 billion Chinese together as "low-cost labor." But surely among that mass of humanity there exists particular skills and infrastructure that are comparatively advantageous--be it porcelain or shoelaces or rice or whatever. The US will still trade with China.

So I am skeptical that there will be the collapse in world trade that he predicts. Yes, the Americans will withdraw from the Persian Gulf and the Indian Ocean. And maybe even from the Mediterranean. But likely not from other important trade routes.

So he's left out culture and economic complexity. That let's him tell a simple, engaging, largely convincing story. It's fun to read. I think it's mostly true. But it is far from inevitably true. And indeed, there are enough differences between the book (2014) and the video (2017) to indicate that it won't be true.

Further Reading:

• Book Review: Everybody Lies: Big Data, New Data...
• Abandoning the Working Class!
• Book Review: The Frackers

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:

• Working on the Railroad
• Book Review: A Troublesome Inheritance
• Book Review: The Second Machine Age

Be Afraid--The End Is Nigh!

The very word ecosocialism just makes me depressed.

So when Louis Proyect gives us a report on the New York's Ecosocialism Conference, I just want to curl up into a fetal position and go back to bed. The term connotes a series of ideas that all contain a grain of truth, but lead to gross exaggerations if not outright falsehoods.

Ecosocialism suggests a beneficial connection between socialism and environmental quality. There is no evidence for any benefit. The former communist countries all have a very poor record of environmental stewardship. China, famously, has been unable to reform its Maoist-era apparat--the air quality in Beijing proves that. Centralized control over the economy leads to crony capitalism and corruption on a massive scale--along with ecosocialist-scale pollution.

Both environmentalists (at least the radical ones) and socialists ascribe religious urgency to their crusade. One of Mr. Proyect's correspondents puts it well:

Joel Kovel’s talk brought in an absolutely necessary, albeit uncomfortable recognition that the ultimate stakes of climate change are meta-economic, meta-social, and meta-political, which is to say they are transcendental or, to use his vocabulary, spiritual.

They believe the world is in do-or-die crisis--if we don't stop greenhouse gas emission right now, then the planet is doomed.

It's a very self-serving theology. Environmentalists and socialists alike want to run your life for you. They arrogantly presume to tell you what kind of car you're allowed to drive (if any), where you can live, what you're allowed to eat, and whether or not you can smoke or drink. They want to ration your electricity, your gasoline, and your home heating and cooling. They will tax anything and everything you do, all for the sake of saving the planet. Ecosocialists have pure hearts--but that means it's all your fault.

They get away with this using four strategies. One is they exaggerate everything out of proportion. Fossil fuel burning won't just result in some incremental change in the climate (with both positive and negative consequences), but instead augers immediate and irreversible catastrophe. Fortunately, most of the world no longer believes this stuff--even the Real Climate crowd has stepped back from the imminent disaster theory. But catastrophe is a major justification for the dictatorship of the ecosocialists, so they scream that from the rooftops.

Second, they make liberal use of the for the children argument, as in If it saves one child's life, it is worth banning all automobiles now. The argument is a non-starter because it makes any rational cost/benefit analysis impossible. Everything involves risks. Perhaps tripling the cost of gasoline would benefit the environment some how, but it would also hugely raise the cost of fresh fruits and vegetables. Ecosocialists claim to know all the answers to these trade-offs. I suggest they've got no clue.

Now the ecosocialists' real beef is with people like you and me--we're supposed to sacrifice our livelihoods, lifestyles, and enjoyments so that the all-wise, all-seeing, pure-hearted ecosocialists can save the planet for our great-great-great-great grandchildren. But we, being the selfish bastards that we are, don't readily volunteer for a life of poverty, misery, boredom and servitude.

So the ecosocialists have a third trick up their sleeve--namely it's all the rich people's fault. That's right--in the new, ecosocialist paradise only millionaires and billionaires will have to live in mud huts with no heating. The rest of us will use solar magic-powered electricity to drive around in earth-friendly Priuses manufactured out of thin air by free unicorns.

Mr. Proyect reports

Jill Stein, the Green Party presidential candidate in 2012, spoke at the morning plenary. She is really dynamite, using Powerpoint slides to illustrate how fucked the system was. ... She really knows how to speak to working people using concrete examples like people and loaves of bread. With the current income disparities in the USA, there is one person at the top with fifty loaves of bread and at the bottom fifty people to share one loaf.

That some people are richer than others is unfair, to be sure, but only in the sense that life is unfair. This is the old Marxist meme: We're poor because the rich people stole all the money. But it's simply not true--the rich people created the money (or, more accurately, wealth). Capitalism makes everybody richer, and rich people are better for the environment. The ecosocialists are not just against rich people--they're against wealth in general. They think poverty and slavery are good for the environment. They're wrong.

Fourth, ecosocialists slander anybody who disagrees with them. They think people like me are opposed to any environmental regulation. And further, they think we're just motivated by money, i.e., Exxon or somebody is buying us off. I wish. But I guess that's true in the sense that I'm not willing to sacrifice my standard of living just to make a bunch of ecosocialists happy. I don't feel too guilty--I've just googled a couple of Mr. Proyect's correspondents, and they're not living in mud huts without electricity, either.

And for the record, I support appropriate environmental regulation. Unfortunately there is no sharp definition of the word "appropriate," but clear and present danger does seem like a reasonable standard.

• I support taking lead out of the consumer environment, with lead-free paints and unleaded gasoline. This has had dramatic and provable health benefits.
• I support catalytic converters. Unburned fuel is a major pollutant and air toxin. This rule has greatly reduced smog in Los Angeles, for example.
• As a chemistry professor, I support the existing rules for the safe disposal of chemical waste. As far as I can tell they seem quite sensible, and they're not that expensive to comply with.

But I can't support laws that are based on hokey computer models, and that even if the models were correct, would do nothing to correct the problem (if there is a problem). Thus I'm opposed to carbon taxes or carbon cap and trade laws. All those do is give ecosocialist bureaucrats more power and money than they deserve.

There is an argument to be made against banning fine particulates from emissions. There are benefits, but the costs are extremely high. My sense is that the costs outweigh the benefits, and we should not pass such regulations. I am opposed to giving the EPA a blank check to "save the environment," regardless of cost, as is now their mandate. The EPA should have its wings clipped.

Nuclear power has been irrationally over-regulated. As a result it is too expensive, and innovation has been forbidden. So today nuclear energy is neither as cheap nor as safe as it would be if the regulators used a lighter touch.

Likewise, fracking has both risks and benefits, but the benefits are huge. The industry does need to be regulated, but innovation has to be allowed and costs have to stay low. In the long run that will lead to cheaper gas more safely procured.

In a word, environmental regulation has to serve people and the economy, not the other way round.

Further Reading:

• Luddites Against Fracking
• Viva Poverty!
• The Problem Of Global Warming

You Can't Eat A Hipster

This post is inspired by the Kotkin - Florida debate about the extent to which the Creative Class contributes to urban welfare.

Back in the day, when I was a Trotskyist in the Socialist Workers Party (SWP), there was an effort to get comrades involved in union fractions. A fraction is a group of comrades who participate as a collective in a union (or on campus) to advocate a for revolutionary socialist perspective. The model for this work was the famous union fractions of yore--communist involvement in the UAW sit-down strikes and the Minneapolis Teamsters' strike in the 1930s. The latter is engagingly recounted in Farrell Dobbs' classic book, Teamster Rebellion.

In the 1930s unions really could shut the economy down. By the late 1970s that ability was much more limited, but that didn't stop us from trying. It is that distinction--disrupting the entire economy versus a labor action against a small-time capitalist--that roughly divides basic industry from the less important stuff. Thus comrades tried to get jobs in basic industry, organized by the UAW, the United Steel Workers, the United Mine Workers, etc. They were (in those days) less interested in AFSCME or the teachers' unions.

I am reminded of this because of Joel Kotkin's emphasis on the material boys. These are the guys who drill for oil, build new manufacturing plants, or are farmers. While likely unaware of his neo-Trotskyist sympathies, Kotkin nicely echos our efforts in basic industry. Like Trotskyists, he believes value is created by the hewers of wood, the diggers of coal, and the molders of steel. Hence thriving cities are places like Dallas and Houston, Charlotte and Nashville, and Indianapolis and Oklahoma City.

Contrast this with the neo-Schumpeterian Richard Florida, who has long touted the Creative Class. These are the artists, the counter-cultural youth, gays, immigrants, eggheads, denizens of Starbucks. Creative class folks are always looking for the Next Big Thing, the idea that'll just knock your socks off. Forget those old, fuddy-duddy material boys--creative destruction is our future. Down with fracking; up with Google. In Florida's vision, the successful cities are New York, San Francisco, Boston, Seattle, and perhaps Portland or even Pittsburgh.

Left off of either list are the old rust-belt cities: Chicago, Detroit, St. Louis, Cleveland, Buffalo. Kotkin's remedy for these towns is more manufacturing. Meanwhile, Dr. Florida prescribes cool bars, nice restaurants, and walkable streets.

I guess I'm still enough of a Trotskyist to side with Mr. Kotkin on this, but not without reservations. His basic point is certainly correct: wealth comes from creating something that people want to buy, and at the core this includes food, energy, housing, clothing, transportation. The hipsters produces none of those things directly. The world will always depend on the material boys.

Trotskyists dismiss the creative class as petty bourgeois parasites, and unfortunately I sense the same tendency in Mr. Kotkin. The truth is that given real products that people want to buy, then the creative class adds substantial value on top of that. For example, the material boys grow wheat, but the creative class financial wizards create futures options and financing opportunities that ultimately make wheat much cheaper for the consumer. Trotskyists treat Wall Street as if it were a casino, but it's not--it is essential to the modern marketplace.

Likewise, one can't eat Google, but Google has made foodstuffs cheaper and more readily available. Advertising, logistics, financing, packaging and R&D are all ways that the creative class adds value. But the material boys have to be there first.

And this Mr. Florida doesn't seem to understand. His view that cities need to welcome the creative class and then everything else will follow is precisely backwards. He is absolutely correct that the creative class adds substantial value, and he is also correct that creative folks thrive in densely populated, diverse, interesting cities. But he's got the cause and effect arrow backwards. It's the material boys who create the cities which the creative class can then move in to. Without the material boys, the hipsters have nothing to work with--they're artists without a canvas.

So I think Mr. Florida's plan--for cities such as Cleveland or Detroit to build gentrified, bohemian neighborhoods in hopes the creative folks might move in--is the wrong way round. If the material boys are already there, then the hipsters will construct their own neighborhoods. Arguably that's what's happened in Portland--first came Weyerhauser, and then came the silicon forest, and after that the Pearl District turned into Florida's dream. Portland's economy has always depended on real products that people want to buy.

Similarly, no amount of artsy-fartsy decorating is going to revive the city of Detroit. Absent something like automobile manufacturing, the city is toast. Formula One races are nice, as is Greektown and the monorail, but those are at the top of the economic pyramid, not the foundation. To revive Detroit, somebody needs to start an industry building something that people want to buy. There's no other way around it.

In some respects, both Mr. Kotkin and Mr. Florida are wrong, and the error exists also in what I've said above. My Trotskyist heritage leads me to segregate the material boys from the hipsters into distinct classes. Kotkin and Florida make the same mistake. In fact, the two groups will increasingly be the same people. Additive manufacturing (3D printing), for example, will involve both kinds of skills, in a manner similar to the traditional craftsman where both design and woodworking are embodied in the same individual.

Second, manufacturing will never employ very many people, and thus cannot support big city populations. The size of the creative class is also limited by opportunities to create value--there aren't that many of them. Most people will work in the service sector, from which they will earn some share of the return from manufacturing.

And finally, it is possible for a few cities to beat the odds. New York and San Francisco both have successful hipster economies, despite no manufacturing of note. New York thrives on finance (and will continue to do so, new financial centers notwithstanding), fashion, art, and retailing. I have posted elsewhere about what I think is New York's golden opportunity for additive manufacturing, but we can all dream. It probably won't happen. Still, New York is not dying in the way Mr. Kotkin seems to indicate. Likewise, the Bay Area survives on software. Boston and Pittsburgh live on eds and meds.

But this model doesn't scale. There simply isn't a big enough market for two dozen eds & meds cities, nor can the country support more than a handful of financial centers. For everybody else but the lucky few, the material boys come first, followed by the creative class.

So it is true--you can't eat a hipster. But it is also true: Man cannot live by bread alone.

Luddites Against Fracking

I have a dream.

I have a dream that someday soon--from the Midtown skyscrapers to the Rockaway bungalows, from the brownstones to the bodegas, from the Brooklyn walk-ups to the Bronx projects--I have a dream that electricity in New York City will cost three cents per kilowatt-hour.

At 3 cents Google starts moving server farms from Washington State to Queens. Indeed, Google moves it's entire operation to Manhattan.

At 3 cents, New York City becomes the hub for additive manufacturing, otherwise known as 3D-printing. The cost of entry is cheap--just think about all the entrepreneurial energy that clever, well-connected New Yorkers can bring to that task.

At 3 cents, electric cars become viable, at least for niche applications. I'm thinking taxicabs and city buses can run off electricity--clean, quiet, cheap. Of course with Google right next door, the dawn of fully automated taxicabs is nigh. Cab fares will become much cheaper.

Mix cheap cabs, cheap electricity, cheap lighting, a fully-employed population, and just imagine what happens to Times Square. You think it's bright and cheerful now? Just you wait. Those poor folks in Las Vegas won't know what hit them. New York will again become the entertainment capital of the world.

So how do we get from today's 13 cents/kwh to 3 cents? You need three things: 1) cheap, clean fuel; 2) cold water; 3) a smart grid and infrastructure. Dallas might have cheap fuel, but it doesn't have cold water. Seattle has cold water, but it lacks fuel. Anchorage has both fuel and cold water, but it's too isolated to have a smart infrastructure. Los Angeles doesn't have squat.

New York City has it all.

The cheap fuel comes from natural gas--shale gas from Pennsylvania and (eventually) New York. Unlike coal, gas can be piped to where it's needed--no noisy, dirty, diesel trucks required.

New York has lots of cold water--it's on islands surrounded by the sea. Cold water is needed as a heat sink--thermodynamics says that the energy you get from any power plant depends on the temperature difference between the boiler and the cold temperature reservoir. A boiler by itself will not generate electricity.

The smart infrastructure is necessary to engage the highly creative, well educated, totally connected population. But more than that, it is cheapest to generate electricity near where it is used--a lot of power is lost in transmission. I foresee several dozen small power plants along New York's extensive waterfront, each connected by pipelines to a fuel source, and informed by a smart grid to dial out just the right amount of power. Today New York gets power from Quebec and Niagara, necessitating long, ugly, wasteful and expensive high tension wires over long distances. This will not be necessary in a 3 cent/kwh world.

So how do we get to my dream (or something like it) from our current reality? I admit, it will take a lot of really smart engineers working overtime to get the price down to 3 cents/kwh, but that's not the hard part. What we really need is a new crew of politicians. The so-called "public servants" we're now stuck with are all card-carrying members of the pro-poverty crowd. I'm looking at you, Mr. Obama, Mr. Cuomo, and Mr. Bloomberg.

• They think poor people are better for the environment than rich people. They're wrong.
• They prefer to tax electricity and use it to pay welfare benefits, rather than dispensing with the necessity for welfare by making electricity cheap.
• They worry more about long-term, hypothetical problems (like global warming), about which they can do nothing except purely symbolic and very expensive stuff.
• They're afraid somebody besides them might actually have some good ideas.

This blog's beat is to cover papers like The Militant and Socialist Action (SA). This post is inspired by an article in SA. It's one of those that I've read so that you don't have to, but if you're a masochist and want to follow along, here it is. I'd like to say that the ravings of a radical socialist grouplet are irrelevant to political discourse, but sadly that's not true. The points made in the SA article are only slightly more extreme than those expressed by the pro-poverty politicians.

SA has never met an environmental horror story that it doesn't believe. Fracking, per SA, pollutes well water, turns tap water into a flammable substance, creates a "chemical cocktail of radioactivity," causes something called "vibro-acoustic disease," is responsible for subsidence, which in turn leads to volatile organic compounds, and it requires sand quarrying, which leads to tailings and water pollution. Etc. That's not to mention the earthquakes. Oh, and it kills songbirds.

Much of this list is just plain nonsense, and all of it grossly exaggerates reality. Fracking is a $200 billion business today, and growing fast. We've been doing it for 20+ years. People know how to do it right. Everything in life is a tradeoff, and fracking is no exception. There are hazards, but containing and minimizing those hazards is just not that hard or expensive. Properly constructing the wellhead will minimize leaks into the ground water. Correct preparation of the fracking fluid will save money and preserve the environment. And so forth. Fracking is less dangerous or destructive than most other mining activities.. SA hopes to win the argument by making utterly incredible claims that no knowledgeable person can believe. This tactic won't be successful.

But here is the real problem: while SA hugely exaggerates the cost of fracking, they all but ignore any of the benefits. From the article, the ONLY benefit of fracking is to enrich the oil and gas companies. And apparently not even that: "Much of the investment is only on paper, with one-quarter of the reserve growth coming through mergers and acquisitions and massive share repurchases by the majors, giving the illusion of profitability. In other words, the industry is thriving on fake growth, much like the financial markets." How can something in which no real money is being invested be so disruptive of the environment? And are the gas companies really so dumb to put money down a rat hole, for no reason other than to make the Greenies mad? No--it's silly all the way round.

Of course the main beneficiaries are not the gas companies. The main beneficiaries--if I get my way--will be the eight million people living in New York City. All of those people will have cheaper electricity, better jobs, and a higher standard of living because of fracking.

Let my people go and get rich. Down with poverty.