Posts Tagged ‘Efficiency’

GDP Doesn’t Produce Life

March 10, 2014

One of my not so sophisticated jokes is that GDP stands for “Gross Demonic Product”. I have long compared France and the USA in economic matters, as the two republics are highly comparable. Paul Krugman is now of this opinion. As he puts it:

“I think I can usefull [sic] phrase my concerns in terms of my favorite comparison on these matters, which is between the United States and France.

The GDP Economy Roars Ahead In the USA: Nowadays, Americans Pay For everything

The GDP Economy Roars Ahead In the USA: Nowadays, Americans Pay For everything

Why this pair? Because we’re talking about two advanced countries that clearly have similar levels of technological competence but have made very different social choices; in particular, France not only does much more redistribution, it has expanded its redistribution over time, limiting the rise in overall inequality, while the United States has not.

So how have the countries’ destinies compared during the New Gilded Age? French growth actually has been somewhat slower, although hardly the catastrophe the country’s incessant bad press might lead you to expect.”

Overall French GDP is about 20% less, per capita than that of the USA.

However, it’s not clear that it means a lesser way of life.

Take medication: the French can buy the exact same drug, from the exact same manufacturer (French, American, or German), and the same package, and pay a fifth the cost. That’s fifth LESS contribution to GDP. The money contributing to GDP ends up, overseas, in some tax haven. How does that help well-being? By helping tax dodging plutocrats?

Take education: there is more than a trillion dollar of student debt in the USA. That’s a trillion dollar of contribution to GDP… of inextinguishable debt. The French GDP is terrible that way, because there is NO contribution to GDP, in France, from over indebted students.

Take transportation. Contemplate an American going around with his car. The car uses much more GDP per mile than the High Speed trains millions of French use every week. So GDP tells us the greater the efficiency of fast, modern transportation, the poorer a nation.

The USA’s economy has much improved since 2007. Thanks to fracking. Now the USA is the greatest fossil combustible producer in the world, even beating Putin’s petro-state. Fracking the planet to death since 2007 is great for the GDP of the USA. However, scientific studies in 2013 show that methane leaks all over much of the USA: that’s not so great for the planet, as CH4 is twenty, or more, times more of a greenhouse gas than CO2. (CO2 itself acts as a trigger for H2O, itself the prime greenhouse gas.)

The French, in vacation all the time and retired, early on, enjoy life outrageously. That brings a lower GDP. OK, so the French GROSS product is lower than it could be. Does that mean that French refined product is low? Of course not, quite the opposite: the grosser, the less refined.

Is a slave working the GDP per capita of his master up, better off?

France has been handicapped in recent years by artifacts related to her refusal of some methods, such as OGMs. The result? France went down from the world’s second food exporter to fifth. France has also outlawed fracking. An efficient crack-down on corruption (by contrast to corruption perception) has led to the loss of many contracts overseas.

What is GDP? The sum of all moneyed transactions. Thus, when a young French retiree works exclusively in a non-profit fashion, no GDP is generated. But that does not mean nothing is produced. Instead what’s produced is too precious to be moneyed.

In general, in an economy, what is the most precious, cannot be bought, or sold. That’s one thing free market naïfs don’t get.

It’s not a coincidence that Doctors Without Borders, Journalists Without Borders and the like got started in France.

Patrice Aymé


July 31, 2008

Abstract: a few critiques of the energy conversation the USA is having with itself during the presidential campaign, in a somewhat broader perspective.

Some on the US “left” have recently discovered that the USA has 3% of the proven oil reserves, and uses 25% of the energy, and strangely conclude that the USA should not drill for oil and gas anymore. Supposedly that would feed the “addiction” (and then they say it would make no difference anyway: being from the “left” is all too often supposed to be about having the “right” emotion, not the right logic).

The numbers are correct, and outrageous. Still, axing one’s attitude on energy around “not-drilling” is more of the same old mentality of exploitation of others. Instead the correct attitude ought to be to get oneself into energetic shape. Not-drilling is rather like not-thinking, and it’s even emotionally and morally wrong.

Indeed, what’s the idea around “not-drilling”? We will not drill in our backyard, because drilling is dirty, and so we prefer drilling in other people’s backyards? And then go invade them if they get an attitude?

The USA gets more than 70% of its oil from overseas in 2008 (long time ago, all the oil used in the USA came from the USA). This percentage is augmenting quickly as US oil production collapses. In other words, the USA, to feed what president G. W. Bush called its “oil addiction”, DRILLS and EXPLOITS other countries. Ever more. The plan of the “left” is to to do more of the same (whether it understands that or not; probably not) . Soon one thing will happen on present trends: 90% of US oil will come from overseas (in France 99% of the oil comes from overseas).

So the so called American left’s main energy plan is to keep on digging down the same hole ever more. And that hole is overseas. The only thing new that will happen: $300 per barrel oil. And after that: $500 oil. And so on. And then what will happen when the foreigners ask “too much” for their oil, according to Mr. Average American Joe?

What will the so called “American left” then do? Go invade some more overseas? Military “solutions”, like in Iraq and Afghanistan? However unreal that sounds, why not? Imagine the US invading Iraq or the Middle East for oil. According to most people around the planet, it already happened…

To use less of a product, one has to augment the price of the product, that’s basic home economics. Clearly the USA does not understand basic economics, its economic pundits are too busy giving each other the Nobel prize in economics, to do some basic thinking.

Europeans have long organized themselves according to that elementary knowledge: higher price to use less. Europeans reduced their energy usage by inflicting onto themeselves enormous energy taxes. And guess what? This economic strategy rose their living standards. Because it turns out that sharing one’s life with belching trucks is less enjoyable.

France reacted to the latest rise in the price of oil in 2008 by rising further energy taxes on cars emitting too much CO2, and then rose energy prices all over (while compensating with massive subsidies for the poor). Of course, the USA should have been doing the same. But nobody on the so called “American left” thought of it (OK, the “American left” is led and advised by hyper billionaires).

Applying the rising pressure of ever dearer energy for decades has led to spectacular results. The French car fleet is by far the most efficient in the world. The Peugeot 308 currently holds the record of the most fuel efficient mainstream car, averaging 3.13 L/100 km (75 mpg in U.S. units) over a distance of 14,580 kilometers (9,060 miles). That’s much better than Toyota’s Prius and the car is much prettier too (Peugeot is going to commercialize cars above 83 mpg, and Renault has worldwide plans for electric cars, and explicit contracts with Israel and Denmark to deploy the infrastructure of electric service stations).

Curiously the USA reacted to the first energy crisis, in the 1970’s, with non free market solutions. It is often the case that the USA bellows a capitalist song to drown all intelligent conversations with foreigners, but, when it comes to its internal economics, the US, instead, applies completely bizarre economics (to serve the special interests that truly rule the country).

Thus, instead of augmenting the price of energy, and letting the free market handle that constraint, the usual free market strategy in a civilized country, a bunch of weird puritanical measures were taken.

President Carter, a democrat, spoke on TV wearing heavy clothing to resist the cold. It did not come to his puritanical mind that the higher housing efficiency standards of Europe could be imposed instead. Better to suffer in heavy wool, God prefers those who chose to suffer. It was decided that Americans were to crawl on the freeways at a maximum of 55 mph (90 kms/hour). Never mind the risk of falling asleep, and never mind the immense economic cost of wasting one’s life inside one’s car, crawling along! Besides, crawling along augments traffic jams, and that augments fuel usage. But never mind logic; it’s all about emotion, as found in the Bible. Flee mileage standards were imposed (except on trucks, that’s why so many US citizens drove trucks for decades, feeling really manly). Then fleet mileage was not touched for 30 years!

By contrast, European governments have been very motivated to augment energy taxes, since they are such good sources of revenue. So European energy efficiencies and technologies kept improving, with a lot of subsidies for the poor and money for public transportation (from the energy taxes), while the US fell asleep at the wheel.

US consumption of oil is now going down, hence so is the tax revenue, used for repairing roads and paying for public transportation. Thus giant cavities are developing on crude roadways, inviting people to negotiate them with giant trucks and starving public transportation some more.

Now the American right has proposed to make the situation even worse by “taking a vacation” from energy taxes outright. That’s the American style vacation: don’t do anything for yourself, or your fellow man (just help the oil companies, whose profit margins go UP as the price of crude oil goes DOWN, contrarily to what the “left” has been insinuating!).

The question one is led to is: how come US politicians are so stupid? Well, just as economic efficiency comes from free market competition, mental efficiency comes from competition in the free market of ideas. But the US has long used the MENTAL equivalent of trade barriers, blocking the penetration of exterior ideas. It’s the usual addiction to hubris (what Greek and Athenian democracies died of, before they reached enough critical mass to survive). First thing US opinion makers are anxious to express, is that the USA invented everything (hint: it’s basically completely false).

Whereas Europe, deeply shaken by the monster fascist wars and regimes of the twentieth century, has become humble, and has acquired a deep respect for philosophically correct thinking.

The European Union with its 27 countries (plus many more or less associated to the E.U., and on a steep learning curve, such as Turkey), has been mentally open. European politicians are often under heavy, aggressive  mental pressure to perform better intellectually (presently Ireland, Poland, France, and the U.K. are particularly causing and receiving mental pressure). But all US citizens start from the principle that their country is so superior, it has nothing important to learn from anyone. We are told constantly most thinking mankind ever made happened in the USA, and then the self satisfied critters go to church, and pray (just like in the Middle ages). Besides, the US vision of culture in other countries is wine, cheese, the occasional old castle, and Disney like stuff. No appreciation whatsoever for the existnce of alien mental cultural depth.

US superiority was, and is, a real thing. But a lot had to do with geography, it was nothing mental (although wealth allowed better education, so it ended up being mental superiority, at least until around 1970, when plutocracy hiding behind Christian right wing fundamentalism took over, and ever since praying has overwhelmed thinking).

If the distance between France and the USA had been a mere 34 kilometers, as it is between England and France, no doubt that, instead of supporting Hitler in 1939-1940 (as it strongly did, in practice), the USA would have been a good ally of France, right away, as Great Britain was (instead of waiting until it had no choice, and it was safe, 38 months after France attacked Hitler). But, being safely 6,000 kilometers away, the USA could leave the Brits and French to their own instruments, while amusing, and enriching itself, with massive dual use and military technology transfers to the Nazis. So the US became hyper rich, while France and Britain were getting devastated (and indebted to the USA, which was busy stealing all their colonies, while exciting the Muslim fundamentalists).

Another way the US was special has to do with oil. The USA had a lot of it, starting in Pennsylvania (smack in the middle of the industrial centers of the Northeast US). So much oil, it cost very little developing US industry with 100% US oil (by comparison, France has 1% of oil coming from France). So much oil, the USA could send plenty to Hitler, from Texas (old friendships spring eternal in these pages, sorry).

Now this is all over. A lot of the American geographical exception is fading fast. The USA cannot afford US stupidity anymore. Soon the US may have to adopt the French slogan: “we have no oil, but we have ideas”.

The simplest way to get ideas is by looking at what other people are doing. A lot of French politicians have been looking at what Denmark is doing to reduce unemployment and have a stellar economy. Never mind that France has 12 times the population of Denmark, Danish solutions are imported to France. And Danish politicians, reciprocally have been mulling joining the Eurozone. Better economics and society is all about freely trading ideas. That starts with humility and hunger for thinking. Forget the big Dog in the sky, He is not barking for you. 

Civilization is improving, because drilling for ideas is increasingly done all over.

Patrice Ayme,

Critical addenda: 1) Drilling will just provide with some relief for the next few decades, and, mostly, make it a bit less probable that the US will insist to invade and occupy the Middle East with as much enthusiasm as it has now, because it will share the pain with these countries it wants to invade so much. Drilling for oil is no panacea: it just buys time. The transforming factor for the economy will be to rise energy taxes, as in Europe. That will force the rise of new energy technologies massively, as in Europe.

2) Nobody has talked about a potentially lethal consequence of not drilling. Indeed, there are other forms of drilling, like exploring the possibility to extract METHANE HYDRATES. Not only those could provide (potentially, perhaps) with a lot of clean energy, but they are a AN IMMENSE REAL DANGER in case of runaway greenhouse. They would erupt in the later case, making a bad situation immediately abominable (super giant tsunamis, and horrid rise of temps). We may as well burn them before we get cooked by them (Japan has given the green light to search for them).

3) What are the “thinkers” on the left thinking? Do they really think that the presence of an absence of drilling will be transformative? Is their idea really to make anti democratic theocratic aliens overseas always richer and in charge of fixing the cost of energy inside the USA? Or is it that they are just weak, and do not dare defend the newer and better ideas?

4) French like solutions, such as very high speed trains or 95% of French electricity from renewables, non carbon sources, and recycled nuclear waste, cannot be developed overnight. They require enormous investment. The fastest electric trains could take only ten hours coast to coast in the USA, but such lines cost billions of dollars per one hundred miles, even on the flattest ground. Simply put, the USA does not have that kind of money. One more reason to rise energy taxes stratospherically (European high speed rail is self financed to a great extend, but that would take time the USA does not have anymore).

5) Another silly and immoral argument from the right has been that the US proportion of pollution is equal to its proportion of world GDP. But developing countries have to feed themselves first, and that requires a lot of cheap energy, and the cheapest way to make energy is to poison the rest of the planet. But they have an excuse. By contrast, since at least 25% of the US population is obese in the USA, feeding is more of a nuisance there, so the argument that Americans need more food can’t be used, except the other way: the cheaper the energy in the US, the more obese the Americans, so, to help Americans recover their health, they should go back to bicycles. More seriously, the USA should want to develop efficient energy technologies, otherwise it will have to buy them in Europe (this is already happening).

6) We did not mention coal as a solution in any way, because it’s not: the CO2 burning it creates cannot be re-injected into the earth, contrarily to the myth of “clean coal”.  The technology (which thrives in four special cases) simply does not exist in general (we do not know if it could exist, whereas we know that sea currents exist, and could be exploited; actually there are French companies deploying that technology further). The final outrageous number is that, per person, the USA uses emits more than three times as much CO2 as France (a rather big country arguably richer per person).

6) The strategic argument could be made that not developing the reserves of hydrocarbons the USA has is prudent, just in case. But if not used in the next 50 years, it is unlikely these reserves will ever be used. Indeed the Europeans are completely running out of old style energy, and developing very quickly new energies and efficiencies, so the USA is just left increasingly behind. Should this emergency unfold further, it is likely that the USA will become ever more aggressive in a military style way, a very bad example for others (such as the democratically challlenged China, Iran or Pakistan).