Economics – Brock at Cliff Cottage

2023-03-042023-03-07

S-curves

On 2021-12-24, a close relation, the one who had not taken tertiary business education, confessed that s/he had not heard of S-curves before s/he had come across the term in a YouTube video. This post is to help explain the importance of S-curves.

In a country like USA, understanding how S-curves function, can mean the difference between mere survival, and a life of luxury. Part of the reason for this is that residents are largely responsible for securing their own pensions, frequently in the form of an employer-sponsored defined-contribution pension account, popularly known as a 401 (k) after the internal revenue service (IRS) code.

That is because corporations, such as General Motors, with effective lobbyists, receive generous aid from the government when they encounter difficulties, while ordinary citizens are told to submit themselves to the vagaries of the market. It is not just the losers amongst the corporate giants that are treated generously. A winning company, such as Apple also receives help. For example, much of the technology used in the iPhone was developed under DARPA or military contracts. Mariana Mazzucato (1968 – ) explains in The Entrepreneurial State: Debunking the Public vs. Private Sector Myths (2013) that achieving advanced missions, including space flights, required “a confident ‘entrepreneurial state’ willing and able to take on the early, capital-intensive high risk areas which the private sector tends to fear.” More recently Mazzucato has written The Value of Everything: Makers and Takers in the Global Economy (2018) and Mission Economy: A Moonshot Guide to Changing Capitalism (2021), that explain her concepts in more detail.

iPhone Technology Military Funding Chart PNG — Mariana Mazzucato, *The Entrepreneurial State: Debunking the Public vs. Private Sector Myths* (2013)

While cellphone producers like Apple and Samsung do not own many utility = functional patents with respect to their products, they do have a number of design = ornamentation patents. These have been the source of much litigation throughout the world, although often with different design forms being the focus of contention, in different markets. In the US, Apple has generally won these disputes and been awarded damages. In other countries, including Australia, Germany, Japan, South Korea and the United Kingdom, Samsung has won, although the winning side may have flipped at different court levels. A Wikipedia article examines these cases in more detail.

There is seldom a relationship between cost and price in market economies. O of the more interesting examples occurred in the resent past, in the form of a Covid testing service. In the US, the test kit this relative gets through his/ her employer has a value/ cost of about $1 000, for a device and a test. Douglas Coupland also complained about this in Trek, AlumniUBC Fall/ Winter 2021. Asked, What is your latest purchase? He replied, “Two criminally expensive COVID tests ($780 CAD in total) just to get in and out of Los Angeles for three days of business. Scam.” p. 60. Yes, one could buy a home test in Norway, at a cost of NOK 79 from Boots pharmacy = at the time, US$8.84, without the need for any special device. They are available locally, in quantity at 10 for NOK 599, although individuals are only allowed to buy 50. However, there was no need to go to this expense. They were available free of charge to residents at the local municipal service centre. Why? The Norwegian government realized that testing was an inexpensive way to restrict new Covid cases, so that hospitals and other front-line health resources can continue to cope. Making tests free, was smart because it eliminated an important barrier (price) to testing.

In essence, there are two ways of viewing this difference in approach. It can be viewed as American companies being indirectly taxed to pay for health insurance, while the second sees Norwegian companies as being subsidized. Neither is strictly correct, but good enough to encourage reflection on the organization of society.

In Norway, pharmaceuticals are subsidized, and the price largely determined, by the government. Thus, there is a built in safety net and other mechanisms that ensure most people can live a satisfactory life somewhere between the two extremes of survival and luxury. In the Nordic countries, an understanding of S-curves is not nearly so important as it is in the US or Canada.

Not everything is perfect. Currently, in Norway, we are experiencing a challenge with respect to electricity prices. Electricity, it appears, is no longer being considered as part of the infrastructure to be supplied to residents if not at cost, at an affordable price. After eight years of a conservative government, it is regarded as a market opportunity to be exploited. The cost of producing hydro-electric power is estimated to be between NOK 0.05 and 0.15 per kWh, which means that it could be supplied to consumers at less than NOK 0.20 per kWh. This past year, it has sold for over NOK 8.00, because of a European shortage and because companies can get away with it. Earlier, in 2021-02 the conservative government was asked to put into place mechanisms to prevent situations like this occurring. They replied that there was no need. The current Labour/ Centre party coalition seems unable to do anything, apart from provide some subsidies.

In San Francisco, where I have immediate family living, and in Vancouver, Canada, where I was born, the type of house I grew up in costs well over one million dollars, in local currency. Currently, the most expensive single family dwelling on the market for sale in Inderøy, Norway with 175 square meters of living space, six bedrooms, probably several bathrooms, and a double garage, has an asking price of about NOK 3.5 million or just under US$ 400 000. There are also financial mechanisms ensuring people have a down payment, and preventing people from overextending their income.

There are major problems regarding factual information. As I wrote this post, I felt obliged to comment about an Infowealth posting about insurance disruption: Since I am watching this about two weeks after its publication, I am uncertain how many others have taken up the history of insurance. Insurance, more generally, began in Babylonia at least 3 700 years ago, and has existed through all of the major historical periods since then, including the Middle Ages. Even in the US, many people point to the Philadelphia Contributionship, co-founded by Benjamin Franklin in 1752, 269 years ago. If one looks just at cars, then there were liability insurance policies issued in the late 1890s (that’s 125 years ago), and it was mandated in Ohio in 1925, which is almost 100 years ago. So, when the video starts off with “The history of the insurance industry dates back to a little over a half century ago” it is beginning with a factually incorrect statement. If you want people to watch your channel start off by researching your facts! While I am aware that even American presidents can get away with lies, some of us are concerned about truth. Thus, when someone starts off a video or podcast or article with incorrect facts, the author of that incorrect information will loose many viewers/ listeners/ readers for life, Infowealth.

In general, people like to discuss two types of growth, linear and exponential. Common for both of these is that they cannot continue indefinitely. So, linear growth is often replaced with a steady state. Exponential growth also ends up in a similar situation, but users refer to the growth picture as an S curve, because of its resemblance to that letter.

An S curve involves four stages each with a distinctive rate of growth. While many business analysts believe that each stage offers its own specific opportunities, there are no guarantees that any particular company will follow that curve. Theoretically, the first stage is an initial slow growth, during which the company develops products and attracts customers. This is followed by a period of rapid growth, with increased market share. During this stage a company typically invests in production facilities, and increased marketing and sales. It is during this period, that the company must be keenly aware of its growth ceiling and not over invest. At some point, growth with slow and the S curve will have a more gradual upward slope. At some time after this, the growth will end. In a best case situation, it will remain stable, but in many cases it will decline.

From a business perspective, inflection points are critical. These are places along the curve where internal or external factors, change the shape/ direction of the curve. Some of the factors influencing inflection points are listed below.

Technology: when a company’s competitors release a new technology or product, this may cause an inflection point for that company.

Values: initial core values of a company may change. Don’t be Evil was Google’s unofficial motto from about 2000 to 2015. In 2015, when Google became Alphabet, the motto was changed to Do the Right Thing. By 2018, this motto had all but been abandoned. Maintaining and communicating values is always hard work. Yet, because values are such an important part of corporate culture, they can trigger an inflection point.

Customers: Relationships with customers can be challenging. : As companies scale, maintaining a high level of customer attention and individual care can be challenging. This change in customer relations may change consumer behavior, bringing a decreased demand and eventually an inflection point.

Economic changes: Businesses may find their growth limited or enabled as the economy cycles through different stages.

Funding changes: Financial changes like new bank policies or government policies that affect subsidies, grants and loans can limit or enable a company’s growth, bringing an inflection point.

Infrastructure: New infrastructure can enable businesses to distribute much more easily, while changes in publicly maintained infrastructure may cause temporary or permanent additional costs.

Market saturation: If a company’s product was very successful in a certain market, demand for their product may go down when they have reached a majority of their possible customers.

Natural disasters: Natural disasters can change what resources and infrastructure are available over the long or short term, sometimes bringing inflection points for entire industries.

Regulatory changes: Additional regulations that impact a company’s production or distribution can slow their growth and cause a negative inflection point, while reduced regulations may cause a sudden growth increase.

Scaling issues: Some companies may have internal decision-making challenges when they begin to scale, as founders and leadership work to hire, supervise and provide for a larger group of employees.

Slower innovation: New companies or products that are built on new technology may face challenges to their rate of innovation as they scale and their development process changes. If innovation doesn’t meet customer needs or keep up with competitors, this can cause an inflection point.

Trends: The rise and fall of trends often causes inflection points for products perceived as luxuries or items that gain viral popularity.

The challenge with this sort of information is that the world is in the middle of a makeover, an unpleasant one described as a climate crisis or global warming. The challenge is that consumption has to be reduced. I remember, some years ago now, that in some Californian population centre, there was a need to reduce water consumption. My imperfect recollection, was that they recommended that everyone reduce it by 10%. This, of course, is utterly unfair. The swimming pool owner who changes water weekly, will only have to miss one week out of ten to align him/ herself with the regulations. Someone, who is already using minimal amounts of water will have much greater difficulties.

It is my opinion that as the climate situation imposes greater strains on the world, there will be a need for strict rationing of resources. Money won’t be able to buy everything, because it is far too unequally shared. One sees this with road pricing. There is a group of people where extra charges have absolutely no effect on behaviour.

Technocracy, despite its limitations, is the organizational model I seek out in times of crises. It accounts for everything not in terms of dollars/ euros/ crowns, but in terms of energy units, joules (J) or Watt-hours (Wh), with 1 Wh = 3 600 J = 3.6 kJ. Every product has all of its component energies, baked into an energy price. In an egalitarian Technate, the social organization, each person receives an equal share of the energy resources, that can be spent as desired. In less equal systems, this share varies.

Technocracy will be described in another post, originally intended to be published 2023-03-11 at 12:00 (EST), but currently postponed. Its future publication date will be announced, after it has been determined.

2022-01-302022-01-30

FDR

This weblog post is being published on the 140th anniversary of the birth of FDR = Franklin Delano Roosevelt (1882 – 1945), who became the 32nd American president. There will undoubtedly be many other commemorative writings today, although probably less than will be found on this date, in 2032. Many of these will focus on his contributions during the second world war. Some may even mention the paralysis in his legs, at the time attributed to polio.

In this post, I want to focus on FDR and the New Deal, nothing more.

The term new deal was first used by Mark Twain = Samual Clemens (1835 – 1910) in his novel, A Connecticut Yankee in King Arthur’s Court (1889). The work is a satire of -isms, with feudalism and monarchism juxtaposed capitalism and industrialism. Here engineer Hank Morgan is transported back in time, but fails in his quest to modernize and democratize 6th-century England. “. . here I was, in a country where a right to say how the country should be governed was restricted to six persons in each thousand of its population. . . I was become a stockholder in a corporation where nine hundred and ninety-four of the members furnished all the money and did all the work, and the other six elected themselves a permanent board of direction and took all the dividends. It seemed to me that what the nine hundred and ninety-four dupes needed was a new deal.“

The political term New Deal was coined by FDR’s advisor, Stuart Chase, (1888 – 1985), an American economist and social theorist. Chase was influenced by political economist Henry George (1839 – 1897), Norwegian-American economist and sociologist Thorstein Veblen (1857 – 1929), by Fabian socialists, perhaps especially Sidney Webb (1859 – 1947) and Beatrice Webb née Potter (1858 – 1943) and by the Soviet social and educational experiments made in the name of communism around 1930.

I hesitantly suggest that FDR is the greatest American president of the twentieth century. The term greatest is used comparatively, in relation to other presidents. It does not mean that I condone all, or even most, of his actions. His attitude to non-European races was, in general, revolting. In particular, I find the relocation/ internment of Japanese Americans repulsive; his initial support of Nazi Germany repugnant; even his extra-marital relationships were regrettable. Some Norwegians may be surprised to learn that FDR’s son, James, stated that “there is a real possibility that a romantic relationship existed” between his father and Crown Princess Märtha (1901 – 1954) of Sweden/ Norway. Other sources propose/ document many other women.

In many ways, FDR appears better when he is compared with his immediate predecessor Herbert Hoover (1874 – 1964). Indeed, Hoover is usually ranked in the bottom third of American presidents.

Yet, because of my particular interests, Hoover deserves credit for: his mother’s origins in Norwich, Ontario; his Quaker background; his Oregon background; his relationship to Palo Alto, including his Stanford education; his relief work in Belgium and his leadership of the American Relief Administration, which provided food to people in central and eastern Europe; his regulation of radio and air travel; and, his support of standardization, “own your own home”, an eight-hour workday and union membership.

However, Hoover was a racist; an optimist despite multiple economic threats, including a farm crisis, a saturated market for consumer goods, growing income inequality, and excessive stock-market speculation. He was reluctant to regulate banks, a characteristic shared with his predecessor, Calvin Coolidge (1872 – 1933); viewed lack of confidence in the financial system as the fundamental economic problem; avoided direct federal intervention, believed that supporting individuals economically would weaken the country. Instead, he believed that charity and local governments should address these needs.

A year before FDR took office, 1932-02-27, an important piece of legislation was enacted: An Act to Improve the Facilities of the Federal Reserve System for the Service of Commerce, Industry, & Agriculture, to Provide Means for Meeting the Needs of Member Banks in Exceptional Circumstances, & for Other Purposes. With such a long title, it is not surprising that it is referred to as the Glass–Steagall Act. It separated commercial and investment banking, and did much to regulate securities, typically stocks and bonds.

FDR was elected in 1932-11 but took office in 1933-03, at the worst moment of the worst depression in American history. With a total population of about 125 million, one quarter of the workforce was unemployed, farm prices had fallen by 60%, industrial production had fallen by more than half since 1929, two million people were homeless, 32 of the 48 states and the District of Columbia, had closed their banks.

FDR’s presidential program is often referred to as 3-Rs: relief, recovery, and reform. Relief, providing support to tens of millions of unemployed; recovery, normalizing the economy; reform, applying long-term fixes.

The New Deal refers to a series of programs, public work projects, financial reforms, and regulations enacted between 1933 and 1939, as laws passed by Congress as well as presidential executive orders. Regulated areas included the Civilian Conservation Corps (CCC), the Civil Works Administration (CWA), the Farm Security Administration (FSA), the National Industrial Recovery Act of 1933 (NIRA) and the Social Security Administration (SSA). Support was provided for major groups: farmers, the unemployed, youth and the elderly. Banks faced new constraints and safeguards, with a goal of re-inflate the American economy after a sharp fall in prices.

Many historians and others distinguish between a First New Deal (1933–1934) and a Second New Deal (1935–1936).

One of the first items that the First New Deal dealt with was the American banking crisis. This involved the enactment of the Emergency Banking Relief Act of 1933, and the Banking Act of 1933.

On 1933-03-06 the Emergency Banking Relief Act dictated a four-day national banking holiday that kept all banks shut until Congress could act. The federal government inspected all banks, re-open those that were sufficiently solvent, re-organize those that could be saved, and closed those that were beyond repair. FDR gave a fireside chat to explain the situation. Americans returned 1 billion previously withdrawn dollars to banks the following week.

On 1933-06-16, the Banking Act legislated 1) a federal system of bank deposit insurance, that protected most people; 2) the further separation of commercial and investment banking, with restrictions placed on speculative bank activities.

The Federal Emergency Relief Administration (FERA) provided $500 million = over $10 billion in 2022, for relief operations by states and cities. The CWA gave money locally to operate make-work projects in 1933–1934. The Securities Act of 1933 was enacted to prevent future stock market crashes. NIRA set up the National Recovery Administration (NRA) to eliminate cut throat competition by bringing industry, labour and government together to create fair practices codes and set prices. The Supreme Court declared the NRA unconstitutional.

The Second New Deal in 1935–1936 included the National Labor Relations Act to protect labour organizing, the Works Progress Administration (WPA) relief program, which made the federal government the largest employer in USA. The Social Security Act and programs to help tenant farmers and migrant workers, also benefited people. The final major items of New Deal legislation were the creation in 1937 of the United States Housing Authority and the Farm Security Administration (FSA), followed by the Fair Labor Standards Act of 1938, which set maximum hours and minimum wages for most categories of work.

An economic downturn in 1937–1938 led to a split between the American Federation of Labor (AFL) and the Congress of Industrial Organizations (CIO). Only the CIO supported FDR and its membership was open to African Americans. This confrontation allowed Republicans to make gains in Congress in 1938. By 1942–1943, conservatives of both parties had managed to shut down relief programs such as the WPA and the CCC and blocked other proposals.

While African Americans had to deal with the depression, they also faced social ills, such as racism, discrimination and segregation. They typically held the most marginal of jobs. Most unions excluded them from joining. Anti-discrimination laws were often unenforced, especially in the South. The WPA, NYA and CCC relief programs allocated 10% of their budgets to the African American population (who comprised about 10% of the total population, and 20% of the poor). They operated separate all-black units with the same pay and conditions as white units. In general, benefits for minorities were small compared to that received by the European descendent population. FDR appointed an unprecedented number of African Americans to second-level positions in his administration, often referred to as the Black Cabinet.

The New Deal also discriminated against women, by created programs for breadwinners, husbands/ providers, assuming that whole family would benefit. This failed to take into account households headed by women. When the discriminatory aspects of this policy came to light, the government began to modify policies to help women as well.

After the death of FDR, both Republican and Democratic presidents left the New Deal legacy largely intact, even expanding it in some areas. After 1974, however, there was an increasing demand for deregulation of the economy, that gained bipartisan support.

The New Deal regulation of banking was compromised starting in the 1970s when bank regulators began interpreting the Glass–Steagall act (later upheld by courts) that permitted commercial banks to engage in investment banking activities. Even in the 1960s some financial products blurred the distinction between the two areas.

Separately, starting in the 1980s, Congress debated bills to repeal some Glass–Steagall’s provisions. In 1999 Congress passed the Gramm–Leach–Bliley Act, also known as the Financial Services Modernization Act of 1999, that repealed them. Democratic party President Bill Clinton signed it into law.

In 2022, several New Deal programs still remain active. Those operating under their original names include: the Federal Deposit Insurance Corporation (FDIC), the Federal Crop Insurance Corporation (FCIC), the Federal Housing Administration (FHA) and the Tennessee Valley Authority (TVA). The Social Security System and the Securities and Exchange Commission (SEC) are the largest programs still operating.

Ray Allen Billington and Martin Ridge have assessed the Impact of the New Deal, especially in their book, American History After 1865 (1981). Not all economists and economic historians are in agreement.

They contend the New Deal harmed the United States: by increasing federal debt. However, Keynesians counter that the federal deficit between 1933 and 1939 averaged only 3.7% which was not enough to offset the reduction in private sector spending; increased bureaucracy, inefficiency, and enlarged the federal government; slowed civil service reform; reduced opportunities of businesses to engage in free enterprise. New Left critics point out that it also squandered an opportunity to nationalize banking, railroads and other industries. They also criticize it for doing too little for minorities.

Neutral effects include a stimulation of class consciousness among farmers and workers; and brought to prominence economic regulation issues, especially where these came in conflict with personal liberties.

Billington and Ridge find the most beneficial aspect of the New Deal, is that it allowed the US to survive the depression without undermining its capitalist system. They also claim that the capitalist system, and the banking system in particular, became more beneficial by enacting banking and stock market regulations; created better income balance between labour in agriculture and industry; distributed wealth more equitably; conserved natural resources; and, established a precedence for the national government taking action to rehabilitate and preserve America’s human resources.

From my increasingly European economic perspective, Americans have through the past almost ninety years diluted the New Deal. Governments, of whatever colour, increasingly expect ordinary citizens to subject themselves to market forces, but exempt large corporations, especially banks, resulting in capitalism for individuals and families, but socialism for corporations. I do not believe that this was FDR’s vision.

2021-02-062022-06-24

Heat

The U.S. consumes about 100 EJ = 100 Exajoules = 100 x 10¹⁸ Joules of energy, annually. Americans, being Americans don’t often express energy in Joules. Rather, they prefer to use British Thermal Units (BTUs), where 1 BTU = 1055 J. Another way of expressing this is to say that Americans use about 100 quads of energy, where 1 quad = 10¹⁵ BTUs. If one is willing to accept a 5.5% error, one can say that 1 EJ is about equal to 1 quad.

Only about one third of energy consumed is used for productive work. The above Sankey diagram shows energy inputs and outputs, productive work is clumped together as energy services, in a dark gray box. The other 2/3 is wasted as heat, which in the above diagram is referred to as rejected energy, which is clumped together in a light gray box.

Renewable energy comes from solar (1.04 quads), hydro (2.5 quads), winds (2.75 quads) and geothermal (0.21 quads) sources, for a total of 6.5 quads. Thermal energy systems burn fuel or split atoms, and accounted for about 93.5% of American energy inputs in 2019. Most of this fuel come from fossil sources, that is responsible for most of the carbon emissions associated with climate change. Wasted/ rejected energy is a proxy/ surrogate/ substitute for the damage being done to the planet. The exception is the energy provided by nuclear power, although it also has issues of its own. In contrast, renewable energy (wind, solar, hydro, geothermal) capture energy, without creating heat. While there are some transmission loses, most of that energy provides energy services.

A modern electric vehicle (EV) with regenerative braking is about 95% energy effective. Even the most efficient internal combustion engine (ICE) vehicles, can only achieve about 30% energy efficiency. This means that an EV only needs about 1/3 of the energy inputs that an ICE vehicle needs.

The United States transportation sector uses 28% of the total energy. Of this, cars, light trucks, and motorcycles use about 58%, while 23% is used in heavy duty trucks, 8% is for aircraft, 4% is for boats and ships, 3% is for trains and buses, while the last 4% is for pipelines (according to 2013 figures). This means that road transportation accounts for over 80% of the total. From the Sankey diagram, one can see that the transportation sector has 28.2 quads of input of (mostly) fossil-fuel energy, which means that 22.5 quads are road related. This results in 5.93 quads of transportation services, of which 4.75 quads are road related. These figures show about a 21% efficiency, because transportation related engines are considerably less efficient than other engines, including those used for electrical power generation.

If one uses renewable energy for road transportation, 4.75 quads of transportation services could be produced from about 5.0 quads of renewable (wind/ solar/ hydro/ geothermal) energy. At the same time, 22.5 quads of oil production would be eliminated, without any negative energy-related consequences. In fact, there would be benefits in terms of improved health, and less pressure on the environment.

A shift to renewable sources in other sectors would also have benefits. Natural gas and coal currently make a large contribution to inputs for electricity generation used elsewhere, 11.7 and 10.2 quads each, respectively, for a total of 21.9 quads. However, using the 1/3 service, 2/3 rejected formula, this means that these fossil-fuel inputs only produce 7.3 quads of electrical services. This contribution could be replaced by 7.5 quads of renewable energy.

Gasoline has an energy density of about 45 MJ/kg, which can provide about 15 MJ/kg of energy services, and 30 MJ/kg of rejected energy, as discussed above. A litre of gasoline has a mass of 0.76 kg and produces 2.356 kg of CO₂ and 11.4 MJ of energy.

For American readers: The United States Energy Information Administration (EIA) estimates that “About 19.64 pounds of carbon dioxide (CO₂) are produced from burning a gallon of gasoline that does not contain ethanol. About 22.38 pounds of CO₂ are produced by burning a gallon of diesel fuel. U.S. gasoline and diesel fuel consumption for transportation in 2013 resulted in the emission of about 1 095 and 427 million metric tons of CO₂ respectively, for a total of 1 522 million metric tons of CO₂. This total was equivalent to 83% of total CO₂ emissions by the U.S. transportation sector and 28% of total U.S. energy-related CO₂ emissions.Under international agreement, CO₂ from the combustion of biomass or biofuels are not included in national greenhouse gas emissions inventories.”

Since 1 MJ = 0.2778 Kilowatt hours (kWh), 11.4 MJ is the equivalent of 3.17 kWh. According to Electric Choice, the average price a residential customer in the United States pays for electricity is 13.31 cents per kWh in December 2020. This means that gasoline would have to sell for 42.19 cents per litre to be cost effective. Since there are 3.785 litres per American gallon, a gallon would have to sell for about $1.60 to provide an equivalent price. According to Global Petrol Prices, the average price of mid-grade/ 95-octane gasoline was $2.752 per gallon, the equivalent of $0.727 per litre, as of 2021-02-01.

In Norway, the price is about NOK 1 per kWh for electricity, but with wide variations. The price of 95-octane gasoline is about NOK 16.33 per litre, once again according to Global Petrol Prices. This helps explain why EVs are so popular. To be price equivalent, gasoline would have to sell for about NOK 3.17 per litre. Currently, Stortinget, the Norwegian parliament, is debating increasing the CO₂ tax by NOK 5 per litre, which would bring the price to over NOK 21 per litre. Not all political parties are in agreement, with this proposal.

There is a great deal of discussion about consumption figures for electric vehicles in Norway. In part, this is because the terrain varies greatly. Some people drive in urban landscapes, others out in the country. Some people are flatlanders, while others have more mountainous environments. However many consumers have experienced real-world energy consumption levels of about 15 kWh/100 km for vehicles such as a Hyundai Kona, Kia Soul and Tesla Model 3. This gives a fuel cost of about NOK 15/ 100 km. In American terms, this would be about 24 kWh/ 100 miles, or $3.20/ 100 miles, with the electrical costs noted above.

Update: 2021-06-12 at 15:00.

The amount of energy used to refine gasoline (and diesel) is more than the electricity required to drive the same number of miles/ kilometers, using equivalent battery electric vehicles. Fossil fuel vehicles make absolutely no sense. When a country substitutes EVs for ICE vehicles, electrical consumption actually declines.

2020-01-092020-01-10

Carlos Ghosn vs Japan Inc.

Nissan Diesel Trucks (Photo: NZ Car Freak)

This weblog post is about Carlos Ghosn (1954 – ), the former CEO of the Renault-Nissan Alliance and his cultural war with the Japanese business establishment. It might have had a different plot if I hadn’t read Exposure: Silenced. Threatened. Time to Fight Back. (2012) written by Michael Woodford (1960 – ).

The major reason for writing this post now, is Ghosn’s escape from Japan to Lebanon. He had been charged in Japan 2018-11-19 with under-reporting his earnings and misuse of Nissan assets, followed 2019-04-04 with charges of misappropriations of Nissan funds. He has spent considerable time in detention, as well as house arrest. However, many suspect that these charges were more about Japanese business interests (aided by the Japanese government) wanting to take back control of Nissan, than that anyone was actually worried about the relatively miniscule size of misappropriated funds. The fact that a major Japanese auto manufacturer had to use the services of a gaijin (foreigner) had been extremely embarrassing.

Background

In 1996, Renault hired Ghosn to turn the company around from near bankruptcy. By 1999, the plan devised by Ghosn had worked. Much of it involved using Japanese management practices. In 1999 Nissan was facing a similar bankruptcy threat. In 1999-03, Renault and Nissan formed the Renault–Nissan Alliance, resulting in Renault purchased a 36.8% minority interest in Nissan. This allowed Ghosn the opportunity to develop the Nissan Revival Plan to turn around Nissan, using many of the same approaches as he used at Renault. By 2002-03-31 all of these goals had been accomplished. As of 2018-11, Renault owned 43.4% of Nissan, while Nissan owned non-voting shares equal to 15% of Renault’s equity, showing the unequal strength of the two companies in relation to each other.

This webpost does not proclaim Ghosn’s innocence. Only a court of law can do that, although there is a presumption of innocence until proven guilty. A legitimate question to ask is, what is the reason for the criminal charges against Ghosn? The problem with the Ghosn affair, is that Ghosn seems to be treated differently than equivalent Japanese business leaders caught up in similar situations. Here are some examples.

Fukushima

Perhaps the greatest Japanese crime of this century is related to the Fukushima Daiichi nuclear disaster that began 2011-03-11. This disaster was the most severe nuclear accident since the 1986-04-26 Chernobyl disaster and the only other one to be given Level 7 on the International Nuclear Event Scale.

The disaster caused meltdowns in three separate reactors. The lack of adequate preparations for a tsunami and related events resulted in the evacuation of more than 470 000 people. Nearly 18 500 people died in or were listed as missing from the disaster area. Despite the enormous ramifications of this disaster, Japanese society/ culture effectively blocked any one person or even group of people from being found responsible for it. Japanese prosecutors had twice declined to press criminal charges against former Tokyo Electric Power (Tepco) executives, saying there was little chance of success. Then a judicial panel ruled that three men should be put on trial, despite the opposition of the prosecutors.

2019-09-19 a Japanese court found Tsunehisa Katsumata, Sakae Muto, and Ichiro Takekuro, the former most senior executives of Tepco, not guilty of professional negligence. No one else has been charged with anything related to this disaster.

The conviction rate in Japan is 99.4%. In other words, the prosecutors are acting, effectively, as judges. In this particular case, their reluctance to prosecute was interpreted as an indication of non-guilt.

Olympus

Only a month after the Fukushima Daiichi nuclear disaster, Michael Woodford was appointed president and COO (2011-04) of Olympus Corporation, a Japanese manufacturer noted for its professional optical products. He was appointed CEO six months later, 2011-10. Woodford started working for Olympus in 1981 and subsequently rose in the company to manage its European operations. Woodford was the company’s first non-Japanese CEO. He was removed from his CEO position after two weeks, when he persisted in questioning fees in excess of US$1 billion that Olympus had paid to obscure companies, which appeared to have been used to hide old losses and appeared to have organised crime connections. By 2012 this scandal had developed into one of the biggest and longest-lived loss-concealing financial scandals in the history of corporate Japan.

Woodford’s life was threatened, because of the criminal organisation connections. Ultimately, Olympus had to agree to a settlement for defamation and wrongful dismissal.

Reactions

Japan Forward was sceptical of Ghosn’s arrest: “A Western businessman with several decades in Japan noted: The “thin gruel of ‘misdeeds’ that they’ve put forward to date as justification is laughable. Reads like any day at the office for many [Japanese] CEOs. The Japanese business establishment crushes everything that threatens its worldview and privileges. … Another added: “During my time in Japan, I met the CEOs and managing directors of a variety of companies and a few were wonderful people, but a lot were not…. [They were] in cahoots with the yaks (Yakuza) — abused their expenses, went on company paid junkets, received kickbacks, got laid on the company tab…. I don’t know what Ghosn did, but I doubt it would have come close to what is normal behavior for many of his Japanese counterparts.”

Japan Forward may not have said it so explicitly, using a question mark rather than an exclamation mark, but many see systemic xenophobia in the Japanese business community.

Nikkei Asian Review was even more condemning: “There is no indication that other board members made actual moves in terms of governance processes or statements at the board level, [Nicholas Benes, head of the Board Director Training Institute of Japan and a former investment banker] noted. This makes him suspect that the board members were more concerned about protecting their jobs than confronting [Ghosn]…. If individual board members, including CEO Hiroto Saikawa, felt so strongly about the issue that they allowed a criminal investigation, they should have taken steps first. These could have included proposing to discuss the issue at the board level, trying to call an extraordinary board meeting, threatening to resign or getting advice externally. No such internal moves appear to have been taken before the prosecutors’ move to arrest Ghosn. Under Japanese company law, directors are expected to actively participate in discussions and oversee the chief executive.”

There are several recent Japanese business scandals:

In 2015 Toshiba revealed that it had overstated its operating profit by nearly $1.2 billion.

In 2017 Takada had become mired in a global scandal over faulty airbags. Ammonium nitrate was used to inflate airbags quickly, some with such force, they spewed shrapnel at drivers and passengers leading to injuries and in some cases, death. Takada was forced to recall millions of airbags which, along with facing a multi-million dollar wave of litigation.

In 2017 Kobe Steel admitted to changing or falsifying data about the quality of some of its goods before they were shipped to customers.

In 2018 Nissan admitted its emissions and fuel economy tests for its cars sold in Japan had “deviated from the prescribed testing environment”.

Japan’s Criminal Justice System

Counterpunch has detailed the inhumanity and authoritarian nature of the Japanese criminal justice system. The current laws are from 1947. Except for omitting offences relating to war, the imperial family and adultery, the 1947 Penal Code remained virtually identical to the 1907 version. This means that there has been no substantial revision for 113 years, as this post is written in 2020.

Nobuo Gohara, a former prosecutor, stated: “If you admit to the crime you’re arrested for, you’re released on bail relatively quickly. However, if you dispute the charges or claim innocence, you will be detained longer. You won’t be released on bail and your detainment will last weeks. You’re basically held hostage until you give the prosecutors what they want. This is not how a criminal justice system should work in a healthy society.” Cases detailed in the same article explain this further.

Beirut Press Conference

At the press conference held in Beirut 2020-01-08, Ghosn compared his arrest to the surprise attack on Pearl Harbor. He said his prosecution on charges of financial misconduct was politically motivated, the result of an elaborate conspiracy involving malevolent Nissan executives and even the Japanese government, a systematic campaign to destroy his reputation and impugn his character. He further claimed that Japanese authorities were repaying him with evil, because he was an easy target as a foreigner. Further information about the press conference can be found in numerous online news sources, including this report in The Guardian.

2019-08-312019-08-31

The Seven Deadly Sins of Project Management

Over-the-fence project management may well have been used at Heaps Engineering, in New Westminster, photographed here in 1946. During the height of the war, the plant employed more than 700 men and women, and turned out giant propeller shafts and underwater fittings for submarine chasers and frigates. Photo by Stride Studios.

This web-log post is about projects, but only those project where a commitment has been made by a board or senior management to start and complete it. It attempts to be general enough that insights can be applied to any industry.

Preliminary work on a project will have to be budgeted. Regardless of its outcome, this expenditure will be a sunk cost = a cost that has been incurred and cannot be recovered. With a go ahead, the entire project will not only have to be budgeted, but in some way financed either using owner equity or debt financing, or a combination of both. Liquidity (cash flow) is critical for any project.

The selection of a project manager is critical to project success. The project manager is responsible for the initiation, planning, execution, validation and evaluation of the project. At a minimum, each of these has to be part of the scope statement, and incorporated into the project plan.

After each of the sins listed below, there is a paragraph long comment on atonement = making amends.

Sin #1: No Budget

There is only one sin worse than having no budget, and that is regarding the budget as a project plan!

Atonement for this sin: Make sure there is an adequate budget that covers the entire project period, that is approved of by the board authorizing the project. Before, any project begins: 1) Make sure there is adequate financing. 2) Make sure there is sufficient liquidity (cash flow) for the project.

Sin #2: Managing a project as a process

In many hierarchical organizations, managers are promoted from lower ranks, so that they have an understanding of the roles required below them in the hierarchy. One of the unique characteristics of a project is that it requires the interaction of professionals possessing different qualities. In addition, tasks are non-repetitive, in contrast to process (or operations) management where repetitive, permanent functional activities are the norm.

Even if a project manager can appreciate a project’s temporary nature, with defined beginning and end points, s/he may fail to understand the implications of time, budget and staff constraints, especially in terms of project goals and objectives.

Atonement for this sin: Ensure that the project manager has the education/ training to manage a project. At a minimum s/he must understand the basics of the Critical Path Method.

Sin #3: No Scope Management

Scope requires the project manager to specify the quantity, quality and variety of tasks to be performed, along with the time and other resources available. A scope statement can then be compiled that specifies what the project is to deliver in detail, and to describe more generally the major objectives for the project. These objectives should include measurable success criteria.

At the most fundamental level, Scope is expressed in a statement that is SMART:

Specific
Measurable
Agreed Upon
Realistic
Time Bound

Scope involves determining the work that needs to be done to meet stakeholder requirements. Many project managers like to distinguish two types of scope: project scope and product scope. Project scope specifies the the work that needs to be done to deliver a product or service, while product scope specifies the features and functions that characterize that product or service.

Another way of understanding scope, is to separate what has to be done (the functional requirements/ product scope) from how it is to be done (project scope). If requirements cannot be defined and described, then there can be no effective project control, allowing project/ requirement creep to emerge.

Scope creep involves large, unplanned and often irrelevant changes to a project that add costs and/ or development time. Very often these occur because there is no change control built into the project. Change control is a procedure to be included in the scope statement that outlines how changes will be implemented. It must distinguish between acceptable and unacceptable changes. The change control procedure should specify how any change will be implemented.

Atonement for this sin: Make sure there is a SMART scope statement, and make certain that all project participants understand this statement, and its consequences.

Sin #4: No Project Plan

The main purpose of writing a project plan, is for the project manager to define tasks, and to appreciate transitions between them. The fact that there may be disparities between perceived and actual implementation times is of secondary importance. Some projects benefit from the use of software tools, such as MS Project/ LibreProject, or equivalent. In other cases, a simple tempo-plan on paper suffices. Tasks have to have milestones/ way points associated with them, so that everyone knows when a task has been completed. These have to be measurable.

Most projects rely on a critical path, a sequence of tasks that have no leeway in terms of an early or late start. Project slack (also called project float) has to be determined to identify the critical path through the project. Slack can be calculated manually or automatically, using a formula that takes into consideration start and finish times/ dates, durations, predecessor times, task dependencies and constraints. Negative slack indicates that this amount of time must be saved earlier in the project to prevent delay. It is an indication of incorrect finish time for the project.

Tasks outside of the critical path can begin earlier or be delayed, by varying amounts of time. Tasks are placed on a project activity diagram, that shows total slack (the time available for a task to slip before it delays the whole project) and each task’s free slack (the time available before it delays successor tasks).

Atonement for this sin: Except for the smallest of projects, someone assigned to the project must construct a project plan based on the critical path method, make sure the plan is used. Significant deviation from the project plan must be reported to the authority commissioning the project, usually some sort of board. Project managers have a responsibility to communicate with stakeholders, and to ensure everyone understands the project plan, at least in outline, and how it will affect each stakeholder.

Sin #5: No Resource Management

After scope management has been satisfactorily implemented as a project plan, the next phase involves resource management. Some projects, such as building construction, will have materials management as an important component. Other projects, including software projects, will find that materials management is minimal, or even non-existent. Regardless of the type of project, much managerial time will almost always have to be allocated to human resource management, if the project is to run smoothly.

In a building construction project, materials management is seldom a problem because everyone, even the project manager, knows that the building has to be made of something, and probably many different things. A bill of materials (BOM) is produced automatically by almost every Computer-Aided Design (CAD) system. These BOMs are first used for scope management, and after that in conjunction with resource management. Problems emerge with materials management, when they are not properly specified during the scope management phase.

Most of the problems associated with resource management come from a failure to appoint a reference group, or even a project group. These two problems will be treated as separate sins.

Atonement for this sin: Materials management – Ensure that a BOM is used, where it is appropriate. Understand how to use a BOM, and ensure that all members in the project group understand how to use a BOM. Provide training if necessary. Human resources management – see sin #7 – no project group.

Sin #6: No Reference Group

In every project there are a large number of stakeholders. In building construction there will be municipal/ county building authorities, neighbours who live on and/ or own surrounding properties, and potential occupiers/ renters/ owners, at a minimum. In software projects there will be assorted classes of purchasers, who may or may not be users. In projects involving local government there are civil servants, as well as politicians, who may view processes totally differently.

The purpose of a reference group is to ensue that a project meets the needs of different user groups, at the same time that it doesn’t encroach on the rights of non-users, who may be impacted by the project. Without a reference group, the project manager and others in the project will be living in a fantasy world. Thus, one of the first tasks of a project manager is to ensure that there is a process to find stakeholders, and to invite them to be part of a reference group.

Atonement for this sin: Ensure that a reference group is appointed, and that it mirrors the diversity of people affected by the project. Ensure that reference group meetings are scheduled and held. Stakeholders must ensure that someone representing their group is appointed to the reference group, that they are invited to reference group meetings, and report back to stakeholders.

Sin #7: No Project Group

Some project managers think they can run a project alone, without involving people possessing different qualities, who together (but not alone or separately) understand the non-repetitive tasks involved. Normally, they can’t.

This does not mean that members of the project group have to devote significant amounts of time to meetings, or other forms of interaction. Rather, members of the project group spend most of their time working on those parts of the project they are assigned, reporting on the state of milestones/ way points as they occur.

When disruptions occur, or when other events impact project progress, there can be a need for project meetings to discuss alternatives.

Atonement for this sin: Ensure that a project group is appointed, and that it mirrors the diversity of people working on the project. Ensure that project group meetings are scheduled and held. Members of a project group, must schedule and attend regular project group meetings. It is particularly important, that project managers ensure that feedback from the reference group is presented to the project group.

Project management has matured considerably, during the past eighty years, but not noticeably since the first projects I worked on in the 1970s. The only difference I have noted is the use of project management software to replace the calculations I had to perform by hand. This was undoubtedly the result of PERT (Project Evaluation and Review Technique) developed for the Polaris submarine project, and CPM (Critical Path Method) developed by DuPont, in the 1960s.

Before these developments there was (not so) managed chaos. “During the 1940s, line managers used the concept of over-the-fence management to manage projects. Each line manager, wearing the hat of a project manager, would perform the work necessitated by their line organization, and when completed, would throw the “ball” over the fence in hopes that someone would catch it. Once the ball was thrown over the fence, the line managers would wash their hands of any responsibility for the project because the ball was no longer in their yard. If a project failed, blame was placed on whichever line manager had the ball at that time.” Harold Kerzner 2017 Project Management: A Systems Approach to Planning, Scheduling, and Controlling, 12th edition, p. 39.

Despite the injustice of this system, it was the users/ customers who suffered the most. Kerzner continues, “The problem with over-the-fence management was that the customer had no single contact point for questions. The filtering of information wasted precious time for both the customer and the contractor. Customers who wanted firsthand information had to seek out the manager in possession of the ball. For small projects, this was easy. But as projects grew in size and complexity, this became more difficult.” (p. 40).

I was very fortunate to have John Reagan as a mentor in 1972 at Habitat Industries, a pre-fabricated housing manufacturer. He kindled in me an interest in project management that continues to this day, even if it was more frequently used in teaching computer science and technology subjects, than in the construction trades.

2018-07-092018-07-10

Humanity Minus

This post started off as a reflection on Douglas Rushkoff (1961-) media theorist professor and author of, Survival of the Richest – The wealthy are plotting to leave us behind: https://medium.com/s/futurehuman/survival-of-the-richest-9ef6cddd0cc1

Survival of the Richest

Article summary. Rushkoff wants us to be so annoyed with the richest among us, that we will rush off (pun intended) and buy his new book!

At a certain level of income , a discussion of technology changes from a discussion of its acquisition costs, to a discussion of the opportunities it offers for professional work. For affluent people, it becomes a discussion of investment opportunities. Beyond this, the opulent seldom need to understand technology, even as an investment. Hired minions understand it and deal with its practical application. Rushkoff is a minion, who sold his soul for an hour to a group of five hedge funders.

While the article is probably just the introduction of his new book, it hints that the author may have had some moral issues with his gig. Writing the book is probably some form of self-imposed quasi-penance. Real penance would have resulted in the book being published under a Creative Commons license.

The opulent already have retreats in areas of the world less impacted by crises, be they social or climatic. They have the financial means to buy them in New Zealand or Alaska or anywhere else that suits their fancy. There will always be a discussion about the level of fortification needed, where an underground bunker is the minimum. If such a retreat is too large and extensive, there will also be a need for another class of hired minion, the mercenary, to defend it. But mercenaries are fickle, and they are only loyal to money. What happens if money becomes worthless?

As we all know, the opulent have no interest in making the world a better place. Their major concern is their personal transcendence of the human condition. Preventing this are any number of potential challenges. Rushkoff lists them for us: climate change, rising sea levels, mass migrations, global pandemics, nativist panic, and resource depletion. The opulent code this in one word, the event, which in turn precipitates just one response, the escape.

Transhumanism reduces reality to data, and humans to information-processing objects. Human evolution reduces to a video game, won by finding the escape hatch.

Rushkoff identifies a brief moment, in the early 1990s, when technology seemed open-ended, an opportunity to create a more inclusive, distributed, and pro-human future. This faded quickly in the dotcom crash. The future was no longer created through creative decisions, but predetermined by passive venture capital investments.

Rushkoff questions the morality of unbridled technological development turning an exploitative and extractive marketplace (think Walmart) into an even more dehumanizing successor (think Amazon). Downsides include automated jobs, the gig economy, the demise of local retail, the destruction of the natural environment and the use of global slave labour to manufacture computers and smartphones.

Fairphone

As an aside Rushkoff mentions Fairphone, founded to make and market ethical phones. Except this was impossible. Bas Van Abel, Fairphone’s founder now sadly refers to their products as “fairer” phones. Interestingly, I had had discussions about these phones on several occasions during the days immediately before reading this article. The main question being, how much more would a person be willing to pay for a moral product? Note your guess before checking the answer at the bottom of the article.

At some point mining of rare earth metals by slave-labour ends, as reserves cease to be viable. Mines are replacing by toxic waste dump filled with disposed digital technology, “picked over by peasant children and their families, who sell usable materials back to the manufacturers.”

Yes, Rushkoff’s prose can be visible and moving. If people ignore technology’s social, economic, and environmental repercussions, the greater these problems become, resulting in more withdrawal, isolationism, apocalyptic fantasy and more “desperately concocted technologies and business plans. The cycle feeds itself.”

Rushkoff notes that this world view promotes seeing people as the problem and technology as its solution. Human traits are treated as system bugs. Technology is defined as neutral. “It’s as if some innate human savagery is to blame for our troubles. Just as the inefficiency of a local taxi market can be “solved” with an app that bankrupts human drivers, the vexing inconsistencies of the human psyche can be corrected with a digital or genetic upgrade.”

Repo! The Genetic Opera.

In 1996, Darren Smith (1962-) was inspired by a friend’s bankruptcy to write of a future where not only property, but also body parts, could be repossessed. In collaboration with Terrance Zdunich (1976-) this resulted in The Necromerchant’s Debt, a 2002 preliminary theatrical version of Repo! This was then expanded and transformed into assorted incarnations through 2005. In 2008 it emerged as a science fiction musical horror comedy film, directed by Darren Lynn Bousman (1979-).

As a media theorist Rushkoff is programmed to include film references in his works, especially those with post-apocalyptic zombies, where the future is a zero-sum game between humans. One tribe survives at the expense of another’s demise. Repo! is a transgressive film, a genre I appreciate more than most. I am awaiting a sequel, or perhaps, prequel where consciousness is uploaded to a computer. The only challenge is that the Matrix, seems to have had that as its plot.

Westworld is Rushkoff’s media product of choice, depicting a world where human beings are simpler and more predictable than general artificial intelligences. Humans are feeble. They deserve nothing. In contrast robots are far superior. I am looking forward to seeing it, if only to appreciate Ingrid Bolsø Berdal (1980-) as Armistice, a host. She is a brutal and ruthless bandit and a member of Hector Escaton’s gang. In real life, she was born in Inderøy, and attended the same rural elementary school as my children.

Convivial Technology

Surviving the event seemed to be the primary goal of the hedge funders. Rushkoff’s advice was to treat everyone well. The more the world develops sustainability and the wider wealth is distributed, the less chance there will be of an “event”. The challenge was that the hedge funders didn’t seem interested in avoiding a calamity, convinced the world had deteriorated too far. Wealth and power couldn’t affect the future, it could only buy insulation.

As one retreats from the opulent to the affluent, to the middle class, and the working poor, there are better options available for using technology. Convivial technology, where people can have fun, learn and develop, but simultaneously treat each other with respect. Being human is not about individual survival or escape. All individuals die. It is survival of the species that counts in the biological world. Humans thrive through co-operation.

[Answer: A Fairphone costs about 100% more than equivalent phones, about NOK 5 000 for a NOK 2 500 phone. ]

2018-06-12

To Have or Have-Not in the 21st Century

Until Sunday, 2018-06-10, I had never heard of an American crime drama/ soap opera television series, currently stretching over six seasons, titled, The Haves and the Have Nots. Perhaps that says something about my priorities in life. I don’t own a television. The reason for this discovery was that I googled the phrase, to find out how people use the term. How do we distinguish between these two sets of people? Is there a middle ground that is neither have, nor have-not?

Can wealth (or its lack) be used as a criteria? It is an easy matter to calculate the income or net value of assets, and to argue that a specific percentage of people should be in one or the other group. Are haves only those included in the top 1% or 10% or 80%? Conversely, are have nots found only in the bottom 25% or 50% or 99%? Using wealth is tempting, because in this toxic world, wealth is an important power vector. The haves are those with economic power. It is more difficult to specify a limit, because even lowly consumers can brag about their purchasing power. Those without liquidity can use credit cards, or payday loans.

There are other criteria to distinguish haves and have nots. Many are related to possession of consumer durables: cars (early 20th century), televisions (1950s), second or third cars (1960s), colour televisions (1970s) and computers (1980s). The haves are engaged in conspicuous consumption.

Much of our understanding of this comes from the thoughts of Thorstein Veblen’s (1857 – 1929) sociology. He developed the terms invidious consumption, to refer to an ostentatious consumption of goods, designed to provoke envy, and conspicuous compassion, the use of charitable donations to enhance social prestige. His book, The Theory of the Leisure Class: An Economic Study of Institutions (1899), puts consumption into a nineteenth-century social and historical context, that makes an interesting reflection on twenty-first-century values. Today, we simply mash the two terms together.

One of our friends tells the story of life in Northern Norway anno 1972. His father (we will call him Dad) was a fisher, who had used the same fishing boat throughout a fifty year career. When he retired, the boat was sold. With some of the money from this sale, Dad purchased a car (a new Talbot), and a driving license. Yes, purchased is probably the correct word, because the driving license definitely wasn’t earned. Dad never really got the hang of driving a car, because he wanted to steer the rear end of the vehicle, rather than the front end, just like a boat. Fortunately, he seldom ventured further than the local coop.

Yet, this new vehicle, upset the balance of power in the community. No sooned had Dad purchased his car, than his neighbour wanted one too. Neighb also lacked a driving license, but that didn’t matter because the car he purchased also lacked an engine. It was placed at the entrance to Neighb’s property as a symbol of arrival. Neighb was also among the haves.

Undoubtedly, humorous stories could be told about numerous possessions, but many stories are far darker. Seventeen year-old Xiao Zheng, in Hunan Province, sold one of his kidneys in April 2011, to buy an iPhone 4 and an original version of the iPad. This undoubtedly earned him status as one of the haves, at least until the iPhone 4s arrived in October 2011.

Possessions are gradually losing their significance as markers of havness. Why buy a limosine, when it is cheaper to use Echelon Lyft? (See: echelonlyft.com ) As the age of autonomous cars approaches, there seems little utility to a garage stuffed full of unused vehicles.

Another approach to being one of the haves, is possession of assorted certificates, printed on paper complete with logos, seals and signatures, suitable for framing and to hang on walls, or their digital equivalents, to hang on personal websites. Certificates may serve a dual, some would say triple, function. First, they state class membership. Second, they serve as a rite of passage. Third (and optionally), they may indicate that a person has obtained a certain level of competence: theoretical knowledge, or practical skills.

In education, the mark of a have has been subject to inflation, so that a master’s degree is needed for what a bachelor’s degree could buy earlier, replacing the infamous high school diploma. Naturally, it is not so much the certificate in itself that is important, but the prestige of the school issuing it. The haves can afford to send their little darlings to private schools, followed by Ivy League universities like Princeton or Yale or Harvard or even Leland Stanford Junior University. The have nots learn on the street. In-betweens make do with institutions that are close by, public schools and public universities.

Other certificates can also indicate haveness. South Dakota was the last American state to require drivers to have a driving license, in 1954. Originally, driving licenses were simply a source of revenue, since there was no test or competence required to obtain one. Today, there is no prestige in having a driving license, and many millennials can’t even be bothered earning one.

A better indication of belonging to the haves can be found with a pilot’s license. The beauty of this approach, is that there are so many opportunities for one-up-man-ship. If a private pilot’s licence isn’t impressive enough, then one can always add twin engines, floats, jet engines. Somewhere near the top is a multi-rotor helicopter license.

In my own more nautical world, I have fonder memories of obtaining a Pleasurecraft Operator’s Certificate (1965), from the New Westminster Power Squadron, than I do of obtaining my car driving license the same year. Yes, I found it absolutely thrilling to power a fairly large (motor) cruiser up and down the Fraser River, avoiding tugs, barges, fishing vessels and snags. With this experience, I definitely felt that I was among the haves.

This positive experience, contrasts with my experiences obtaining a Scuba diving certificate some years later (1973), where I met a large number of people obsessed with diving depths, and who had motorcycle driving as their primary hobby. Here, I felt out of my class, especially when it came to discussions about financing expensive motorcycles, with crime an acceptable means of obtaining money or parts. Interestingly, participating in this diving course and becoming certified was part of a college physical education requirement, that had been outsourced to a local dive school.

In the twenty-first century, haves can ostentate (yes, I just made up the word) by taking a series of Royal Yachting Association courses, provided by wannabe haves, on their highly mortgaged sailing cruiser.

As we progress further into the twenty-first century, with a service economy increasingly overtaking a possessing economy, the distinction between the haves and the have-nots, will be less detectable, but increasingly more important. The minority haves will have indirect control over artificial intelligence agents. The majority have nots will lack any form of control, simply be required to obey the whims of these agents, and their overlord handlers. Of course people will not feel their oppression, the haves will use post-modern equivalents of bread and circus to pacify. With neural networks living a life of their own, it may not be possible for even the “haves” to exercise direct control over their agents.

2018-06-082018-06-09

The Money Value of Time

At some points in my life as a weblogger, I can push out a post once a day (or more frequently). Then there are periods where equally much is written, but they are only kept as drafts. Gradually so many drafts become stored, that the whole writing process breaks down. Sometimes notes are kept in assorted files, or made on paper, then only in the brain, as real writing stops and imagined writing begins.

For a couple of weeks now, I have been trying to write something meaningful about the time value of money. It has not been easy. At one time, about 1980, I wrote several articles on ROI (return on investment) calculations that were published in several business and trade magazines. I am even the co-author of a book that looks at the subject: Essentials of Management Science, by Morton Helbaek and Brock McLellan, Prentice-Hall, 2010. Don’t even think about buying it, not only is it overpriced for what it offers, it is in many ways outdated. Unfortunately, I don’t have any copies that I can give away.

At some fundamental level, the concept of interest rests on an assumption that money has a time component. If one needs money to buy a house now, a bank will eagerly lend it, provided there is security, but one will have to pay interest on that borrowed money. Conversely, if one saves money, interest will be paid on that saved money.

Declining interest rates, along with governments actively using inflation goals to enforce consumer spending and prevent economic stagnation, have made a mockery of this concept for the past decade. Being a surviver of paying 14% interest on a mortgage gives perspective.

At this stage in my life, with an adequate pension, I do not need to postpone pleasure now, for pleasure later. Interest rates don’t offer any encouragement. In fact, if I don’t indulge in pleasure now, there won’t be a future time to enjoy it.

When I started to write this post I titled it, The Money Value of Time. Then, I reduced it to The Value of Time. Money, when one has enough of it, becomes worthless. Most of this post was written using this title, until I had a change of heart, and re-introduced the original title.

Why? It has to do with an organization of which I am a member, that does not seem to be able to focus on the value of time. It relies on voluntary labour, which it values at the hourly rate of CAD/ EUR/ NOK/ USD 0. This reliance on volunteer labour means that this organization is unable to calculate, let alone appreciate, the value of labour inputs. It can then ask its members to engage in even the most meaningless of activities, because there is no cost associated with them.

At the moment, I am going through a process of determining my internal hourly rate. When this organization next asks me to do a task, I intend to challenge them by asking what this particular task is worth, and how much they have budgeted for it. I hope that this approach will impact them to see that there are limited resources available, that these resources have a cost, and they will have to prioritize.

Time is a valuable resource. Please, treat it as such.

2018-04-112018-04-11

NAFTA’s effect on diet

Has NAFTA, the North American Free Trade Agreement, contributed to Canadian obesity? Barlow et al, in a 2017 paper, suggest it has. Before NAFTA, which was adopted in 1994, Canada had a tariff of 5 percent on high-fructose corn syrup. Under NAFTA, Canada agreed to phase out that tariff, while maintaining tariffs on sugar- and beet-based syrups such as fructose, maltose, glucose and molasses. After the agreement was put in place a years-long decline in total sugar consumption ended, with a shift from liquid sweeteners such as maltose and molasses to corn syrup, a high-fructose sweetener linked to obesity. When high-fructose tariffs dropped, consumption grew: from 21.2 calories of corn syrup per day in 1994 to 62.9 calories per day by 1998. Because tariff reductions make food ingredients cheaper, irrespective of their nutritional qualities, lower prices encourage manufacturers to use more of those ingredients.

The researchers found that consumption stayed flat on those protected sweeteners, but spiked for high-fructose corn syrup. Countries that are economically similar to Canada but not in NAFTA such as Australia and the U.K. did not see a similar effect.

In an interview with the Washington Post, Barlow stated that the connection between free-trade agreements and health has not been well-studied. To date, most research on globalization and nutrition has examined the effects of foreign direct investment: how consumption patterns change when multinational food companies begin producing and advertising in new markets. In trade negotiations NAFTA has often been used as a blueprint. The research leading to the article is an opportunity to think about who benefits from them and who loses, and to construct them to promote health and wellness.

Those interested in this topic are encouraged to read the original research article:

Pepita Barlow, Martin McKee, Sanjay Basu and David Stuckler Impact of the North American Free Trade Agreement on high-fructose corn syrup supply in Canada: a natural experiment using synthetic control methods July 04, 2017 189 (26) E881-E887; DOI: https://doi.org/10.1503/cmaj.161152 See: http://www.cmaj.ca/content/cmaj/189/26/E881.full.pdf

The Washington Post article, includes references to other research studies. Caitlin Dewey, How free trade can make you fat, July 11, 2017: https://www.washingtonpost.com/news/wonk/wp/2017/07/11/how-free-trade-can-make-you-fat/?

2018-04-08

Barbara Ehrenreich

Barbara Ehrenreich is one of my favourite authors. She has written (at least) three important works: Nickel and Dimed: On (Not) Getting By In America (2001);Welcome to Cancerland (2001) ; and, Natural Causes: An Epidemic of Wellness, the Certainty of Dying, and Killing Ourselves to Live Longer (2018).

Cancerland can be found here: https://web.archive.org/web/20131108181820/http://www.barbaraehrenreich.com/cancerland.htm .

To research Nickel and Dimed, Ehrenreich engaged in a three-month experiment surviving on minimum wage as a waitress, hotel maid, house cleaner, nursing-home aide, and Wal-Mart clerk. Her book reports on the difficulties low wage workers face, including hidden costs for shelter and food. The work requires a wide variety of attributes, including stamina, focus, memory, quick thinking, and fast learning. Workers risk repetitive stress injury, have degrading and uninteresting tasks, and have to deal with managers who demeaned and interfered with productivity.

In Cancerland, she described a breast cancer cult, which “serves as an accomplice in global poisoning — normalizing cancer, prettying it up, even presenting it, perversely, as a positive and enviable experience.”

In 2014, at an age of 72, Ehrenreich realized that she was old enough to die. She did not want to waste the time on preventive medical tests or restricting her diet in pursuit of a longer life. She would seek help for a health issue, but would not look for problems. A wellness industry, a cult of mindfulness and food fads elude people into believing that we are in control of our bodies. But with her Ph.D. in cellular immunology Ehrenreich argues that this is not so. The immune systems can promote rather than prevent the spread of cancer cells.

https://www.theguardian.com/lifeandstyle/2018/apr/07/barbara-ehrenreich-natural-causes-book-old-enough-to-die