Grid growth and wealth

A recent article about the impact of electric grid power expansion in India and Africa peaked my interest and so reviewed some of the papers on the topic spanning decades. While I obviously can’t declare definite conclusions they seem to point to problems with base assumptions made by advocates of broad electrification.

The blog post was a quick review of a couple of recent studies discussing the expansion of electric power to villagers in rural India and Kenya. The studies are very different looking for different things. But they both show that the expected economic boost from the build out of the electrical power grid has not arrived, at least not yet, and some of the data indicates a net negative impact.

In general it appears that the cost of the service is too high to pay off for these poor farmers/villagers is modest at best and in some ways is a net negative.

This is contrary the experience in places and times, most specifically the US where rural electrification was a vast boost to the economy.

The situation needs study but the thing that comes to my mind is that the served populace needs a certain amount of wealth to make use of electricity.  On its own electricity does nothing, its what it enables that is the important thing.  Many of the areas that have already electrified were both relatively wealthy and had existing in service infrastructure that could be made more productive powered by electricity rather than the prior human, animal, steam or wind power.

Today the urge is to spread the grid out into the poorest rural areas, these are subsistence farmers not commercial farmers and these people have little or no infrastructure to make more productive. Not to say that they cannot move up the chain with time but the move from subsistence to commercial farming is non trivial. Transportation infrastructure and marketing/sales infrastructure are critical while cell phones are a huge enabler the rest of the picture is still fuzzy at best.

Also one has to wonder if this uplift isn’t facing a very stiff counter wind from the global economy. It is very cheap to move products in bulk across the major transport networks it could be that farmers, selling a local staple product will find it very hard to compete even if the distance to market is relatively short.

Though this is only one data point, it seems to point out that implementation of small scale solar/battery systems for light and telecom are the most important stepping stone for these subsistence farming communities.  That the improvement of transportation infrastructure might be of value before a major build out of electrical grids.

Syria, the ugly truth is its not going to get better

Syria (like Egypt) as presently constituted simply is not viable as a country. Iraq might be viable, because it has enough oil to subsidize a largely uneducated, pre-modern population. As an economist and risk analyst (I ran Credit Strategy for Credit Suisse and all fixed income research for Bank of America), I do not believe that there is any way to stabilize either country


Ludwig Von Mises Austrian school economics

Was reading some Mises and ran across this very neat aphorismReference
Sane sicut lux se ipsam et tenebras manifestat, sic veritas norma sui et falsi est, (Latin). A dictum of Spinoza (1632-1677). Translation: “Indeed, just as light defines itself and darkness, so truth sets the standard for itself and falsity.”


Spinoza is one of the most important philosophers—and certainly the most radical—of the early modern period. His thought combines a commitment to a number of Cartesian metaphysical and epistemological principles with elements from ancient Stoicism and medieval Jewish rationalism into a nonetheless highly original system. His extremely naturalistic views on God, the world, the human being and knowledge serve to ground a moral philosophy centered on the control of the passions leading to virtue and happiness. They also lay the foundations for a strongly democratic political thought and a deep critique of the pretensions of Scripture and sectarian religion. Of all the philosophers of the seventeenth-century, perhaps none have more relevance today than Spinoza.

Ludwig von MisesRead more at:

The Ludwig von Mises Institute was founded in 1982 as the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics. It serves as the world’s leading provider of educational materials, conferences, media, and literature in support of the tradition of thought represented by Ludwig von Mises and the school of thought he enlivened and carried forward during the 20th century, which has now blossomed into a massive international movement of students, professors, professionals, and people in all walks of life. It seeks a radical shift in the intellectual climate as the foundation for a renewal of the free and prosperous commonwealth.

What the Hayek?

Economist Philosopher F.Hayek

Economist Philosopher F.Hayek

The Road To Serfdom is often referenced and probably like many such books rarely read.  This link goes to a real life Readers Digest version, that seems to hit hard and capture well his central thesis, at least it seems so from the references to his writing.

Its certainly making me think of buying a version either at Half Price books or more likely for Nook.

From the Post Referenced above a few key pieces:

From the preamble:

At that time it was a political philosophy that stood for progress through preserving the Autonomy of the INDIVIDUAL, and the protection of the INDIVIDUAL’S civil liberty. Oddly enough, today “liberalism” equals “socialism.” Equally as odd, conservatism (and in many instances, libertarianism) champions the independence of the individual.

From the first section:

Yet is there a greater tragedy imaginable than that, in our endeavor consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?

Planning and Power

In order to achieve their ends, the planners must create power – power over men wielded by other men – of a magnitude never before known. Democracy is an obstacle to this suppression of freedom which the centralized direction of economic activity requires.

And despite the somewhat old fashioned and formal words this should have striking impact because it tells you exactly what is going on today and why so many fear it.  It does not matter that we voted ‘the planners’ into place or that they are bureaucrats subject to dismissal.  We are providing the keys to power and we are then likely to forget about them until they are far too entrenched to remove easily.

It is only because the control of the means of production is divided among many people acting independently that we as individuals can decide what to do with ourselves. When all the means of production are vested in a single hand, whether it be nominally that of “society” as a whole or that of a dictator, whoever exercises this control has complete power over us.

Now this sounds like Communism, Socialism or Fascism not the American way but the truth is that any major part of the social structure-economy in one groups hands creates a massive center of power, privilege and patronage, the 3P’s of tyranny writ small or large.  The 3Ps lead to lawless, corrupt and ineffective organizations.

Individualism, in contrast to socialism and all other forms of totalitarianism, is based on the respect of Christianity for the individual man and the belief that it is desirable that men should be free to develop their own individual gifts and bents. This philosophy, first fully developed during the Renaissance, grew and spread into what we know as Western civilization. The general direction of social development was one of freeing the individual from the ties which bound him in feudal society.

This is not a theologian’s statement it is a philosopher’s recognition of the Christian-European (unstated but clear) understanding of the centrality of the individual as the basis of societies. That societies are are the emergent organization of many individuals interacting with each other.  And societies that provide ‘room’ for people to find their own level and best place in the social fabric are vastly more fair and kind than ones organized in rigid hierarchies and treat or form the person as an interchangeable cog.

From the post script a quote  from Frédéric Bastiat.:

Individualism, in contrast to socialism and all other forms of totalitarianism, is based on the respect for the individual man and the belief that it is desirable that men should be free to develop their own individual gifts and bents.

Blue Model – Education and Family Life from Via Meadia

Walter Russel Mead continues his Blue Model contextualization of the 19th, 20th century. A deeply thoughtful look at what was, why it was, and the beginning of a philosophical platform for looking at what is to come:

A family business circa 19th century model

A family business circa 19th century model

American kids spent more time in school as a general rule than kids in other parts of the world in the 19th century, but their “book learning” was only one part of a much broader and richer education that prepared them to be productive citizens. Parents taught kids the fundamentals of agriculture and animal husbandry; they taught them the hundreds of skills that went into maintaining a family farm. In urban areas and sometimes on farms, adolescents went to work on nearby farms or serve as apprentices. There they found production units much like the one they came from: the husband and wife were the proprietors of a bustling family enterprise that might include a few hired hands but in which young people and older people lived, learned and worked side by side.


In the 20th century, it became increasingly common for both parents to work in quite different jobs and professions, often many miles from home. Blue collar workers worked in factories and warehouses; pink collar workers in service and clerical positions; professionals and white collar workers in offices.


If we wonder why marriage isn’t as healthy today in many cases, one reason is surely that the increasing separation of the family from the vital currents of economic and social life dramatically reduces the importance of the bond to both spouses – and to the kids.


Repetitive factory work taught very little; to put ten-year-olds in a factory for a shift was to deprive them of learning and stunt their intellectual growth. On the other hand, office and administrative work often demanded skills that few children could acquire. It was cruel to put kids in the factories or coal mines; useless to put them in an office.


As the educational system grew more complex and elaborate (without necessarily teaching some of the kids trapped in it very much) and as natural opportunities for appropriate work diminished, more and more young people spent the first twenty plus years of their lives with little or no serious exposure to the world of work.


In the absence of any meaningful connection to the world of work and production, many young people today develop identities through consumption and leisure activities alone. You are less what you do and make than what you buy and have: what music you listen to, what clothes you wear, what games you play, where you hang out and so forth. These are stunted, disempowering identities for the most part and tend to prolong adolescence in unhelpful ways. They contribute to some very stupid decisions and self-defeating attitudes. Young people often spend a quarter century primarily as critics of a life they know very little about: as consumers they feel powerful and secure, but production frightens and confuses them.


People often speak of the need to revive vocational and industrial education as a way of reaching students for whom the traditional academic classroom holds little appeal; more basically, education needs to be integrated with the priorities and purposes of life as these young people experience it.

As I said here, complexity and segregation of our lives drove many social changes.

In the 19th century, American communities were small and generally self-managed. Most Americans lived in small towns or in rural areas where government really was something people did for themselves. The “state” scarcely existed; outside port inspectors and postal officials, the federal government was largely invisible. And even at the state level, local communities were much more autonomous than they generally are now. Local mayors and selectmen had very few mandates coming down from on high; people managed their own schools and roads and other elements of their common life by their own lights.

In the 20th century Americans became more politically passive as the state grew. The citizen was less involved in making government and more involved in watching it, commenting on it, and picking candidates who were sold the way other consumer goods are marketed: you voted for which party and candidates you supported, but more and more of the business of government was carried on by permanent civil servants acting under expert guidance. Government did much more to you, and you did less of it yourself.

 WRM discusses the urbanization and complexity of life in the 20th century and I think rightly points out that more gov’t was inevitable.  I would also point out that the above description of the 19th century was largely true till something like the last thirty years.  When I first emerged from my family in the 1980s the vast majority of the land in the US was still governed very lightly.  In many ways the differences between Eastern Urban | West Coast Urban | and the light urban cities most other places, were quite extreme.  But the basic thrust of the above is not affected one iota by that quibble.

Since work itself was so unrewarding for so many, satisfaction came from getting paid and being able to enjoy your free time in the car or the boat that you bought with your pay. It was a better deal than most people have gotten through history, but the loss of autonomy and engagement in work was a cost, and over time it took a greater and greater toll.

there was a feeling that we needed to keep:

up consumption so the economy could work. It was not just the experience of the Depression that led so many to the conclusion that under consumption was the characteristic problem of a capitalist economy.  ……     . Many businessmen promoted imperialism in European countries and to some degree in the US because they wanted …….. markets for their goods. When the age of imperialism came to an end, the intensive development of home markets replaced the extensive development of foreign markets in the eyes of many social thinkers and planners……


Another factor promoted the rise of a consumer economy: the development of new and much more expensive goods required a psychological and institutional shift. If people couldn’t buy cars and refrigerators — to say nothing of houses — on credit, the markets for these goods would be vanishingly small. Americans had traditionally been averse to debt, whether personal or governmental. They thought like producers, for whom debt is sometimes necessary but always a cost. Thrift mattered, and for many Americans it was a point of pride not to buy on credit; if you didn’t have the cash for something, you waited.

That kind of attitude wouldn’t keep the car factories humming. The blue social model involved an unprecedented expansion in the use of credit by private households, large companies and all levels of government. Debt was the mother’s milk of blue prosperity and John Maynard Keynes was the prophet of the blue age. While consumer finance has deep roots in Anglo-American history, with installment plans used to sell goods like furniture and sewing machines well back into the 19th century, the 2oth century became a golden age of consumer credit, and to carry large balances on credit cards, home mortgages and student loans came to seem normal and respectable in a way that would have shocked Americans living in the 19th century.

Between the 1930s and the 1970s this worked better than many of its critics expected.  In a relatively closed economy like the US, if more people went into debt to buy more stuff, the demand would stimulate economic growth, which would tend to raise wages and employment. The additional income would offset the cost of carrying the debt and support additional consumption as well.

And so round and round the money went and it all worked.  Until globalization began to derail the machine.

But the real problem with the debt-based, consumption-focused blue social model, the one that bothered many social critics even in the days when the blue model was working and looked sustainable, is one of values. A consumption-centered society is ultimately a hollow society. It makes people rich in stuff but poor in soul. In its worst aspects, consumer society is a society of bored couch potatoes seeking artificial stimulus and excitement. They watch programs on television about adventures they will never have. They try to change their consciousness through the consumption of products (entertainment, consumer goods, drugs) rather than by changing the world and accomplishing things. The massive use of recreational and mood altering drugs reflects and embodies the distortions that a passive, consumption-based society produces in human populations over time.

Ultimate Couch Potato Contestant(s)?

The above image could be seen as “The end”…but no its not…humans are only able to take so much passivity (at least at the sociatal level) look at what Putin is facing, 10 years of kleptocracy given a free hand because he has made the lives of more Russian’s better than they ever have been. But now they are sick and tired of the grinding corruption and the insults it produces at every turn. Now even though pretty well off many upper middle class citizens are beginning to look up and ask, ‘what else?’

WRM has been thinking about this for a long time, though not always as an eventually positive thing.  In the 1980’s he perceived the oncoming wave of change as a potential tragedy.  The competition from low wage countries, from our technical near peers in Europe and Japan, now China, India and elsewhere, along with the equally disruptive changes wrought by automation of all sorts have made the Blue Model unsustainable.  The US Model that was the Beacon of the world from the 1950’s to the end of the century is no more and what comes next can only vaguely be seen. 

The Blue Model was pretty coherently envisioned by the thinkers of the late 19th and early 20th century (socialists, communists, fascists.) In the long run we ended up pretty much where they thought we would.  Unfortunately for their meme we ended up there as the seas of changed washed the foundations out from under the model.

Now we need a new model to strive for as the old one crumbles around us.  I move forward by holding to the desire to leave the world a little richer for my passing, but I have no overweening image of the future, I am afraid that the rate of change of change has overcome the human imagination. 

And perhaps we shouldn’t think in the grand sweeping, dehumanizing sweeps the great thinkers of the last interregnum did.  Maybe we all need to think about things we need to do ourselves and for each other, not to each other.  Maybe we should look to the simple guidance and not grand sweeps:

  • The Golden Rule:  Do unto others as you would have done unto you.
  • My rule: Try and make the world a little better for everyone as you pass.
  • The libertarian rule: Who governs least governs best.
  • Libertarian rule 2:  What does not affect me does not concern me.
  • Murphy’s rule: Keep it simple stupid.

Jaja: Worlds first pressure sensitive iPad Stylus

This project to develop a better iPad Stylus is a Kickstarter, crowd sourced project, i.e. the project is funded by putting the prospectus on the website and asking for a set amount of funding to get to the next level.  This is an approach to funding that is taking off big for many types of effort and holds a great deal of promise for W.R.Mead’s Post Blue Model (on which more later.)

The project itself looks reasonably conceived and has what in some circles is called off ramps, that is pieces of the technology that may be of value in their own right. 

jaja cutaway

jaja cutaway

I do have to say that eventually I think a non-capacitive system, maybe even an old style optical dig pen will be needed in addition to the capacitive if the iPad is to reach its peak functionality.  Which is what this Technology Review blog post, Will Designers Take to the iPad3? talks about.  The answer in my opinion is no, I am not a professional but am somewhat ProAm and I find that while the iPad has its liberating effect (frothed about elsewhere) it still has some irritating downsides at times.

This explains it all! Really! It does!

As e connected as I am I still enjoy sitting down in the morning and reading the Indy Star in its print form.  I have to admit I sometimes spend more time reading the funnies than anything else, but I do scan the first section (and the first and last page of Metro) But I do often read articles and this OpAn (opinion/analytical) piece from the Washington Post caught my attention.  I think Ezra Klein’s caught on to the problem,

There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher.

Really! It is almost that damned simple.  This graphic or the table version in the Star is infuriating and eye opening. 

Of course it’s not an explanation in and of itself and one could take Mr. Klein’s piece as a pointless frontal attack on the health care industry but the point is much more subtle. As I have discussed broadly before the issue is that things cost as much as they do because the way the current system creates vast inequality almost on purpose through weak and or distorted pricing signals.

A Gifted Man is a great TV show….how is that relevant? In it Michael Holt a brilliant neurosurgeon finds himself ‘gifted’ with the ghost of his wife, a socially conscious doctor who he had divorced (apparently amicably) years before.  While Michael runs Holt Neuro, an extreme high end clinic for the wealthy and powerful, Anna is running a Free Clinic, Clinca Sanando, in a poor section of the city (NewYork though its portrayed as almost any city.)  Anna has been killed in a hit and run, and her ghost goads him into helping the free clinic which is on the edge of folding.  (I could go on, its good TV but won’t.)

The thing is A Gifted Man points out without grinding ones nose in it the huge disparity in health care between the rich and the poor.  It also make the point that one can do good even superior general medicine in very spartan conditions if you have a dedicated and reasonably competent crew.  You can do even more if you back that up with truly superb facilities for those who need it, but those facilities are very expensive and somehow need to be supported by the clients. 

Now the the article points out the cost of medicine in many countries with more socialized medicine and I grew up in England then in middle class America where the conditions in the Doctors office were more reminiscent of the Clinica than Holt, today, I’m middle upper middle economic tranche and all the offices are much more like Holt than the Clinica, but why? Partially because I bitch if I have to wait for an appointment, and partly because I never see the cost until after the fact (except for dental work beyond the basics…becuase many more people lack dental coverage than lack general health insurance.)  In most ways the reason I go to my general practitioner is because he (or his office) keeps track of my overall health and is a central repository of my health records and I value that.  I’d value it even more if I could see it as a cost rather than an overhead hidden in the other post facto numbers I get….in no other part of my life do I have such uncertainty about the cost and yes perhaps because its hidden I’m not as reticent about going, because I know that in the end I can afford it, but many others are not as lucky and the uncertainty is discouraging, and then there are the folks with no coverage, who get bills many times what I pay…in some part because the Medical Establishment figures that in the end with many of those folks will end up paying pennies on the dollar, if you multiply the dollar by some large factor then the ME is more likely to at least cover costs one way or another.

 I do not ever feel that Micheal Holt does not deserve Holt Neuro or that the folks at the Clinica should have unfettered access to Holt Neuro.  I do not (most of the time) begrudge the well off hospitals their cathedral like front lobbies.  I do feel that the system is seriously distorting the messaging power of pricing and under suppressing the power of pricing the Medical Establishment hold because we are all frail humans who if not now then one day will have health issues to deal with.

Establish portable health savings accounts and require published pricing for standard procedures based on standard practice codes (and all procedures should have such codes and a cost you can find if you look or enquire.)  Don’t take away the tax advantages of the coverage companies provide, but extend it to everyone who buys their own insurance.  Reduce that tax advantage over a couple of decades.  Allow insurance companies to negotiate costs but they have to do so based on standard codes and publish some metric of what they are paying, make it illegal to charge different customers different prices for the same procedure (and don’t allow rebadging, the procedure codes have to be the same for all customers.)   Make it illegal for companies to charge different people different insurance rates, insurance takes into account your age and that’s it, different insurance companies can sell different sets of coverage and different age windows but that’s it.   Make the market place fair and flat.  An actuaries job is to make sure the insurance company collects enough money to cover its costs and make a reasonable profit! But again they have to publish their rates and compete for customers and if the marketplace is open and fair the prices will drop to the minium that covers costs and reasonable profits.

GM Reveals Dismal Volt Sales in January – Technology Review

GM Reveals Dismal Volt Sales in January – Technology Review.

The Volt is a pretty car but it’s just too expensive and too Me-to to gain real share.  The Prius is a Toyota and as such, up scale yuppies don’t feel down class when driving it, they feel virtuous. 

While the Chevy Brand is beloved by many middle class Americans it’s loved for its trucks and muscle cars, edgier yuppies buy Cadillacs.  If the Volt had been a Caddy and a bit more of everything:  bigger, striking, powerful, EXPENSIVE it might have had a better chance.  Yuppies feel dissed in a Chevy, however green, and the Red Staters aren’t going to buy a smaller, slower, more expensive car when they can get one of the quality new generation GMs, Fords or Chryslers for a few pennies more or less.

A Couple of Positives| Down with Ethanol! | Up with Capitalism!!!

Corn...worst source of ethanol ever

Corn...worst source of ethanol ever

So the Atlantic says that the Tea Party has ended the ethanol subsidy.  As if! The only thing that has ended is the Tax Credit, the rules about the % of ethanol in gas are still there and probably more important overall.  The basic problem of ethanol being a terrible source of ethanol is not solved.  Apparently we have started shipping some ethanol overseas, I’d like to know how that happened, I suspect other subsidies. 

One problem with subsidy systems like that set up for Ethanol is that they become terrifically difficult to remove.  An entrenched special interest is created and they have a lot more pull than is generated by the general by very dispersed understanding that it’s a waste of money, the guys who know it’s a waste aren’t losing enough individually to make it worth while fighting the long war to overturn the subsidy.  So to a degree the Tea Party may have done good, concentrating the anti vote enough to do something, hopefully they can move on to other subsidies.

<<<Nuf Said on That Topic>>>

A link to Blomberg from the Atlantic lead to this article A Crisis of Leadership, Not a Crisis of Capitalism by Clive Crook :

With the world’s rich economies struggling and the leaders of the European Union intent on making things worse, the gravity of the economic crisis still confronting the West is hard to exaggerate. Nonetheless, it can be done.

According to what I read, we face not just the worst recession since the 1930s, but a challenge to the West’s entire economic order. The Great Recession exposes the poverty of orthodox economics. It constitutes an ideological crisis. It shows that capitalism itself is “fundamentally” flawed. If all this were true, I’d be a lot more worried about the coming year than I am — which is saying something.

A new year’s corrective is in order. Reports of the death of capitalism are greatly exaggerated.

What’s surprising is just how wrong those reports have been. Perhaps, as I write, the revolutionaries are organizing in secret, but I see no signs of a popular uprising.