Saturday, August 10, 2013

A Cloud No Bigger than a Man’s Hand

I’ve got this little worry. It occurred to me the other day that the government research that made the Internet and the various Apple products possible was actually conducted in the 60s and 70s. Much of the work that underlies green technology and biotech also dates back to that era. The lag time is not peculiar; scaling up and commercializing new ideas takes a lot of doing; and the transition from dream to product has probably been slowed down by the increasing reluctance of American business to invest in anything tangible. What bothers me is the suspicion that there isn’t a great deal left in the pipeline after 40 years of neoliberal hostility to government initiatives and tax changes that discourage corporate research—Bell Labs are a distant memory.

The off again on again support for photovoltaics and other renewables offered by the current administration is not encouraging. The real scandal of Solyndra was not that it got into difficulties, hardly a surprising vicissitude for a pioneering company, but that Obama allowed the company to collapse simply because the venture capitalists got cold feet and he wanted to avoid political unpleasantness. The Chinese government wouldn’t have allowed an outfit with similar problems to collapse. In fact, when the main Chinese PV firm did go bankrupt, its management lost out, but the enterprise was saved.

PV and windmills and the like are already an enormous industry worldwide and have the potential to get far more important. China and Germany and even (you’ll pardon me) fucking Denmark realize this rather obvious fact and their pols act accordingly. Renewable power, however, is probably not a realistic candidate to serve as the basis for a new industrial revolution that could support another hundred years of prosperity. Nanotechnology, on the other hand, might just be as revolutionary (and destabilizing) as cars and electronics previously were. If we’re missing the boat on so obvious an opportunity as new power sources whose commercialization is already under way, how likely are we to have the patience, foresight, and nerve needed to fund and stick by nanotechnology or, for that matter, any really promising new technology? There isn’t going to be a juicy IPO for amalgamated Nano in the next ten years. There are no quick snacks to whet the appetites of hedge fund operators with high-speed intestines. Realizing the promise of nanotechnology will almost certainly take decades and involve putting up with serious risks without the sure prospect of immediate profits. Earlier technological revolutions required copious government support, but in the past American business people were still interested in building great things. How likely that the greedy little posers in charge of our great firms will be willing—or able—to mobilize the requisite investment money and stick to a long-term plan? And how likely that the trimmers and fanatics that control our political system will rally the country to look after its own interests? It is fatally easy for businessmen to pile up profits by exploiting aging research and sitting on patents, especially since the effective tax rate is so low that they get to keep the lion’s share of the extracted rents. It is equally easy for politicians to opt for inadequate levels of government investment in the name of compromise. So I worry that the great torpid serpent that is America in 2013 has forgotten that you do eventually have to swallow a new pig.

Friday, August 09, 2013


Shooting Fish in a Barrel

Businessmen and their PR professionals endlessly promote a love of risk as a basic value entrepreneurial value. At least in my experience, however, lack of imagination, tolerance for boredom, and deeply ingrained cautiousness are much more salient features of the commercial mentality. Far from courting danger and adventure, the executives I’ve met always much prefer the fix to be in. No doubt there really are outliers who live up to the Schumpeter romance of the swashbuckling innovator in fact as well as manufactured image. At least I assume such beings walk the earth. For some reason they didn’t show up at the meetings I attended. The guys who did show up much preferred arbitrage to leaps in the dark. There’s a reason for all those movie sequels and new flavors of Snapple, for the persistence of SUVs, for yet another strip mall in Tacoma, for all the innovations that aren’t very innovative. “Who hath vision? He who died o’ Wednesday.”

A simple syllogism shows that my observation is not mere cynicism: if the business of America is business and the business of business is turning a profit, America is about making a profit and not about taking a flyer. You can’t build an entire system around the proposition that the bottom line is what matters and then bitch when consideration of the bottom line crowds out other possible motives, including actually building something that matters. As Kant might have written, had he lasted long enough to repent of his earlier foolishness, “There is no possibility of thinking of anything at all in the world, or even out of it, which can be regarded as good without qualification, except unearned income.” You’d have to be one of those idiots who know the value of everything and the price of nothing to cavil at that. Unfortunately, in the normal run of things rent seeking doesn’t leave much room for dreaming.

I’m not attacking individual business people here: they are doing what they were told to do and the sustained effort required to do what they were told is nothing contemptible, especially since the vast majority of them are just making a living for their families. The relentless pursuit of profit is, as Max Weber pointed out long ago, a form of worldly asceticism; and it takes considerable discipline, not only to work, but to remember that the work isn’t the point. You’re creating the software for the IPO, not for its technical sweetness or for what it can actually do. The mission statement is for the troops, not the general. They’re supposed to love their work—beats paying ‘em, after all—but it’s better if you manage in a field you don’t like very much, just as it used to be said the best arranged marriages were based on mild antipathy. Keeps your priorities straight.

Like many systems, business works by virtue of the exceptions to its fundamental rules. Somebody has to make it new in commerce as in art or the profit margins will eventually peter out. To a remarkable extent, however, the ones who do make it new do are not businessmen at all but academics, scientists, and artists, many of ‘em working for the government directly or indirectly. There are economic/institutional reasons why government research and investment has been so crucial to the emergence of the growth industries of the last hundred years*—I leave the explanation of those reasons to economists such as Marianna Mazzucato—but the deep conservatism of business culture, particularly its value system, is the proximate reason that the free market is as sterile as a demand economy if left to its own devices.

*Not all industries, just automobiles, aviation, nuclear power, electronics, computers, the Internet, pharmaceuticals, biotech, agriculture, and renewable power.

Tuesday, August 06, 2013

Measures of Central Tendency

I’m always trying to boil down my perception of things into as simple a form as possible. A dull game, I guess, but a necessary one for anybody who reads too much. Herewith my version of the four great facts of our situation:

1. A large proportion of humanity is anguished by the advent of secular civilization, the decline of religious values, and the corresponding overturn of traditional hierarchies of race and gender. Ergo the many versions of reactionary modernism afoot in the world, the Talibans, Tea Parties, fundamentalists of all faiths. In the U.S. and perhaps Europe, the political significance of this protest is mostly that the aging old guard remains capable of blocking efforts to deal with other problems. In other places, especially North Africa and the Middle East where the demography is different, enormous populations of young men are susceptible to cultural reaction; and they aren’t wheezing around on bad knees.

2. The absence of a credible left since the fall of the U.S.S.R. resulted in an dangerously unbalanced situation. Disparities of wealth and income are bound to increase when those who have have no reason to fear those who don't have. Ergo lower wages for the many, the profitable destruction of the environment, and the purchase of governments.

3. Outside of the developing world, the expansion of the economy drastically slowed thirty or forty years ago, in part because it had been driven by a one-time transition from an agricultural to industrial basis, in part because in this period there just haven't been any technological innovations with the same economic importance as the advent of electric power or cars or even refrigerators. In lieu of the growth of tangible productive capacity, global finance has swelled uselessly like the enlarged heart of a sick old man. Meanwhile, the neoliberal dogma of the free market is hobbling what has been the real engine of technological growth over the last century, government-led innovation. This time around, King Ludd is the monarch of business interests rather than workers.

4. The fourth horse, rapidly galloping up from the pack to challenge the leaders, is climate change. Global warming is already putting pressure on social and economic systems, though it will be even harder to convince the public of its indirect effects than of its mere reality. The denialists wouldn’t stop denying what’s going on if Lake Erie were at a rolling boil. They certainly aren’t going to accept that a climate-related Malthusian crisis, especially in the overpopulated global South, is the underlying cause of extreme political turmoil.