Posts Tagged ‘Free Market’

Economics As Science: Quesnay, Not Smith

July 7, 2016

Where it is revealed that Adam Smith was Quesnay’s Feeble Student…

Faithful Anglo-Saxons love to evoke Adam Smith and Ricardo, who are famous British economists.

Adam Smith is viewed as the first temple of economics, inventor of the free market. And that is the first set of deep mistakes. First, there was never any free market, ever since there are tribes, and they are governed. Even a government of pirates has laws. Which its market obeys.

Second, Adam Smith was actually a student. All right, we all are, but some of us do like Einstein, and get “their” main ideas somewhere else. They are not the ultimate creators. Ultimate creators are the ones worth pondering: their reasons are always deeper and more interesting than that of their parrots.

Adam Smith went to France, and learned from the physiocrats. The most prominent physiocrats were towering personalities. One, Turgot, became France’s Prime Minister (under Louis XVI), another was king Louis XV’s surgeon and “first doctor” (so economy was a love of his, as it was with the philosopher who named and founded economics, Xenophon. Lovers tend to think better than those paid to think correct thoughts).

What was the idea of physiocracy? Well, it’s in the name: the power of nature. Physiocracy views economics as an application of the laws of nature, hence its great reverence to agriculture. 

Mercantilism Is Much Smarter Than This Sorry Abstract Puts it. Physiocracy Insisted That Nature, Not The Sovereign, Should Guide Economics. True, But Naive...

Mercantilism Is Much Smarter Than This Sorry Abstract Puts it. Physiocracy Insisted That Nature, Not The Sovereign, Should Guide Economics. True, But Naive…

As The Economist put it at some point: “If YOU asked twenty well-educated souls to identify a physiocrat, only a couple could help you out. Writers like A.R.J. Turgot, the Marquis de Condorcet and Francois Quesnay are not household names, unlike Adam Smith or David Ricardo. But they are important. According to one late-19th century historian, the physiocrats (who called themselves the “économistes”) created “the first strictly scientific system of economics”.

Adam Smith was half the age of Francois Quesnay when the latter instructed the former (43 versus 72). At the time, intellectuals from Britain and France heavily influenced each other, to the point theater has been written about them. The phrase laissez-faire, coined by fellow physiocrat Vincent de Gournay, came from Quesnay’s writings on China

Some say that physiocracy was a theory of wealth. In this reduced vision of physiocracy, the physiocrats, led by Quesnay, believed that the wealth of nations was derived solely from the value of agriculture. In that parody, Quesnay’s understanding of value-added was rather primitive—he could not see, for example, how manufacturing could create wealth. But that is certainly not true, as Quesnay greatly admired the Chinese universal education system, and its vaunted examinations producing mandarins who ruled the empire (without aristocracy).

Moreover, as Quesnay was France’s top doctor, he could not possibly believe that there was no added value in science and medicine. Quite the opposite. Quesnay, Louis XV’s esteemed friend, was called by the king, “my thinker”. Quite a compliment, as another friend was Voltaire. So that physiocrats believed in agriculture alone is a parody.

Farmers certainly produced wealth. To quote Karl Marx in “Das Kapital”, “the Physiocrats insist that only agricultural labour is productive, since that alone, they say, yields a surplus-value”.

The physiocrats are most commonly known for these most simplistic economic ideas which do not reflect their subtlety. Indeed these parodies are not their most important contribution to economic thought. Rather, it was the physiocrats’ methodological approach to economics that was revolutionary.

Before physiocracy, economics was not viewed as a scientific discipline, but rather a strategic one (this is what is called “mercantilism”). Mercantilist thinkers sometimes assumed that amassing gold, or military power was the best economic strategy… And indeed, it often was. Economic efficiency was irrelevant.

But Quesnay was a scientist (for most of his life, he was a surgeon, trained with the best, who then, at age 50, became an official medical doctor). And Quesnay wanted to apply the scientific principles of medicine to the study of economy. The “Tableau Economique”, which shows in a single page how an entire economy functions, and the abstruse book which contained it, is Quesnay’s most famous contribution.

Quesnay,an immensely respected figure, showed that the economy was something to be respected, analysed and understood—much like a human body. It could not simply be moulded by the will of a monarch (or government, or a bunch of know-nothing aristocrats).

This was a hugely important step forward. The elder Comte de Mirabeau, father to the main leader in the first few months of the Revolution, before an untimely death at age 40, considered Quesnay’s Tableau to be one of the world’s three great discoveries—equalled only by the invention of printing and the discovery of money. As The Economist says:

Familiar notions of contemporary liberal economics, laissez-faire, the invisible hand, etc. derive from Quesnay’s scientific approach. The physiocrats, like many other thinkers of the eighteenth century, believed in “natural order”. They showed that unchanging laws governed all economic processes. Consequently, it is generally thought that the physiocrats were opposed to government intervention: the dead hand of the state would only corrupt the natural evolution of the economy.(but, as Quesnay’s admiration for the Chinese governmental system based on erudition, and for Confucius, and Quesnay’s de facto appartenance to the government shows, that’s another nefarious Anglo-Saxon parody). T. Jacob Viner, a Canadian economist, referred to the physiocrats as one of the “pioneer systematic exponents” of laissez-faire… Alongside with Adam Smith.

But the root of physiocracy was much more general. Adam Smith was the student.

Why is the preceding important? First it destroys the Anglo-Saxon hubris that the Anglo-Saxon culture invented modern economic theory and practice. And that it succeeded because of it (whereas the proper application of gunnery has more to do with it).

In truth, it is quite the opposite. When Louis XIV, the self-flattered “Sun King” took control of the state, he discovered, to his dismay, that France had only twenty (20) major capital ships. England and the Netherlands each had one hundred (100). Each.

Why?

Because the Netherlands and England practiced the exact opposite theory to Physiocracy (which would be created in name a century later). The Great Powers, starting with the Imperium Francorum, Francia, and, seven centuries later, Portugal, Spain, etc., practiced Mercantilism, or how to create economic opportunity with big armies and then, big guns. And you know what? Right now the super states of the USA, China and Russia are practicing Mercantilism, while Europe practices Physiocracy. Obama has turned out to be a major practitioner of Mercantilism. Mercantilism has been his main activity. Europeans have not understood this at all.

Guess who is winning?

Patrice Ayme’

Synthesis Found: GOVERNMENTALISM WORKS.

August 13, 2013

In “Synthesis Lost” the honorable Paul Krugman courageously ponders the unthinkable:“you have to ask why, if markets are imperfect enough to generate the massive waste we’ve seen since 2008, we should believe that they get everything else right. I’ve always considered myself a free-market Keynesian — basically, a believer in Samuelson’s synthesis. But I’m far less sure of that position than I used to be.

Indeed, the economic beliefs that built-up civilization, East or West, rested on a completely different notion: the irreplaceable genius of government funded & commissioned Public Works.

Pont Du Gard: Not built By The Free Market

Pont Du Gard: Not built By The Free Market

The aqueduct above brought water to Nimes (Latin Nemausus, local Celtic god).

The first three aqueducts built into Rome, about 23 centuries ago, later carried 400,000 tons of water into the city, each day.

The first one, the Aqua Appia (312 BCE) was one of two major public projects commissioned by the censor Appius Claudius Caecus; the other was a strategic, super strong and super durable road between Rome and Capua, way south.

Eleven (11) giant public aqueducts served Rome at her peak, some piercing mountains through tunnels. Although extremely expensive to build and operate, the water the aqueducts brought to the public was free. So were the uncountable baths found in all Roman cities (many had curative properties… Thus, RomanCare was free!).

Rome was not called a Republic for no good reason.

That Republic worked as long as the law limiting wealth absolutely was enforced; as I have argued, globalization was the undoing of the law first, and the republic, next. A vivid lesson for today, when the situation is pretty much the same.

Don’t try to explain the relevance of Public Works to the economists who helped bring the present Greater Depression, slowly morphing into a Great Degeneration. They will look around with boiled cod eyes.

In “Colbert Good, Keynes Not So Smart” and in “To Save The World, Please default!” I have attacked Keynes as one of the creator of the vengeful Nazi mental system and a promoter of the powerlessness of the plebs (I may fire another blast against him, and his admirers some day soon). “Keynes” does not deserve to be honored in economics. All the more as the correct parts of “Keynesianism” have been known ever since there are serious governments, and they erect pyramids.

Here is a proof:

Grand Canals Of China: Built By Government

Grand Canals Of China: Built By Government

The Grand Canal Hangzhou-Beijing, 1,800 kilometers long,  was built from 581 BCE to 1290 CE (when the Mongols/Yuan finished an elevated section to reach Beijing, using locks, the first summit level canal in the world). At some point during the Sui dynasty, 14 centuries ago, over a 6 year period, 3 million worked on the Grand Canal.

Looking at this, one understands better why China has built a gigantic Very High Speed Train network. It’s the very Chinese thing to do.

The Middle Kingdom found, all by itself, just as Egypt, the Middle East, Persia, Roma, and Europe (starting with Francia and the re-emerged Italian Republics), that only public works can achieve certain tasks. The most important tasks.

Grand Canal: Public Utility For 26 Centuries.

Grand Canal: Public Utility For 26 Centuries.

So much for the concept “Keynes”. Now for eliminating the so-called “free market”, as a most fundamental concept. (In a follow-up essay, I will explain what allows the free market in the first place,”governmentalism“).

There is an entire religion around the free market. It is immodestly compared to god, complete with his ”invisible hand“. Adam Smith, a student of the French physiocrats, had mentioned the “invisible hand” no more than a handful of times in his entire works. Wall Street made a cult of these two words… Yet, Adam Smith was a government official, and no rabid free marketer. Some of the French economists had previously stridently, and correctly, called for freeing the markets… but for excellent reasons. However:

***

THERE IS NO REALLY FREE MARKET:

This is a basic, but fundamental observation. The free market is a carefully contrived illusion, a myth. Plutocrats have recently exploited that myth, to make their hands invisible as they manipulate society into submission. (That’s why the plutocrats want us all to worship the ‘invisible hand’, so that we will worship their invisible influence too!)

As long as there were ferocious Marxists all over to bark naïvely about “capitalism”, plutocrats had to stay honest enough to prevent a critical mass of critics to not go over to the other side. But, when Stalinism collapsed, the ex-USSR embraced the Harvard version of plutocracy (not as bad as Hitler’s, but still pretty bad). On the other side of the Amur, cynical Chinese plutocrats embraced all capitalists willing to change from their pesky, expensive workers at home. Soon enough, the German Socialist Chancellor introduced tough reforms of the German welfare state, making it distinctly less comfy… And it, literally, worked!

The leftists, the progressives, the socialists, the liberals and the humanitarians were thrown in total confusion and spastic despondency by this collapse of the idols. Still are. (Hence Obama’s feverish clinging to Warren Buffet and Summers).

All the more as a heavy propaganda from the plutocrats, pouncing for the kill, insisted that the ‘free market’, namely themselves, was everything. In a word: god.

Yet. There always was no free market, and there will never be any free market. The free market is a playground set-up by the government, always. That’s done through various laws and regulations, and the exchange of personnel.

That became very clear in 2008. The ex-chairman of Goldman Sachs, Sec. of Treasury that G.W. Bush and Barack Obama had left in total control, Hank Paulson, went on his knees to beg Nancy Pelosi, a democrat in control of Congress, for nearly a trillion dollars to save all the largest banks of Wall Street (we are now, with “Quantitative Easing”, and counting a similar aid in Europe, well above ten trillions!).

Pelosi gave the People’s money to Paulson.

Yet that was not hers to give. In a democracy, people would have voted to see if they wanted all their money to go to the richest owners in the land.

Left unsaid was the fact that the richest people in the land had lost all their money to the… richest people in the land. To themselves! It’s a case of insurance fraud: plutocrats stole the loot, and then asked the people to pay for it.

Pelosi gave all the People’s money to the richest, because she is an immensely rich woman, and got there by being extremely kind to families controlling assets 100 times (of more) her own wealth. By being kinder than ever, to the powers that be, no doubt her family will prosper, further and better than it would otherwise.

The entanglement of plutocracy and supposedly democratic politics is a worldwide phenomenon. For example Pompidou, director of bank Rothschild in France, was selected as Prime Minister by president De Gaulle, and then later succeeded him. In Britain, past Prime Ministers Thatcher, Major and Blair, were handsomely rewarded, no doubt to encourage their successors to be just as kind to plutocrats. Clinton, a simple man driven by basic instincts, was little more than the puppet of Goldman-Sachs’ Robert Rubin, and then his assistants Summers and Geithner (all of them plutocratically connected, just as Susan Rice, a fixture of plutocracy under Clinton, now Obama’s National Security Adviser.).

In the Obama administration, most personnel with a say in economics are young multi-millionaires shuttling back and forth between White House, giant banks and Wall Street; this corruption is even considered an objective criterion of seriousness. It is reproached loud and clear to Janet Yellen, the very qualified, and prophetically accurate, Vice President of the Fed,  who ought to be the obvious successor to Bernanke, to “lack experience” at being such a corrupt double dipper!

There is no such a thing as an economy independent of the government. The government rules. The real question is who is ruling the government. (In the USA, the likes of Susan Rice rule, for now more than 20 years, in her case; she was only elected by the plutocracy, but that’s good enough; Summers, just as unelected, was in the White House already 32 years ago…).

In a democracy, We the People rule. In a plutocracy, an oligarchy of admirers of the Dark Side rules, more or less invisibly. That oligarchy will use whatever means to stay in power, and their impudence knows no bounds. As Anne of Austria, queen and regent of France, sneered to the head of the Paris Parliament during the Fronde:“Do you believe this is a republic?”

Question, Ms Anne of Austria:”When and how did it stop being republic?” Answer: well, insensibly. Just the way a frog is being boiled by rising the temperature slowly. And that is exactly what today’s plutocrats, who hold the government, are doing.

Banks using leverage insured by the government are not private, but agents of the state. Indeed, they could not exist without that insurance and implicit back-up (“the lender of last resort”). They claim to be private, so that the few individuals who manage and “own” them can grab what are, truly public funds and public profits.

Jamie Dimon, for example, is a rogue agent of the private-public financial system. The government gave him the huge bank Bears-Sterns in the famous “Jamie deal”.

A number of private mercenaries feeding at the teat of the Public are the dark lords of that system. While of course denying that this teat is a teat, or has any milk, or value.

(That’s why plutocrats love Summers; because he is so dark; the richest banks have been given eight trillion dollars, in the USA alone; the problem Summers will have to solve is how they keep most of that while making it appear otherwise; the trick of paying TARP with QE may not work again…)

There is no such a thing as an independent financial system when the fractional reserve system is used. Finance is an instrument of the government, at least proportional to the leverage used. For example with 3% reserve, one can view a bank as 97% government (and 3% private!).

Why? Because if there was no governmental back-up, people who have deposited money in the bank, understanding that the bank has lent 30 times the money it really has, would rush to recover their money. In hours, the bank would have zero reserve, and then would be bank-rupt.

Hence a new synthesis has to be founded, with these truths made central. I call it “governmentalism”.

Grand Canal: No Mountain Is High Enough To Stop The Government

Grand Canal: No Mountain Is High Enough To Stop The Government

It’s nothing new.

***

Patrice Ayme

TALK IS CHEAP, ENERGY IS EXPENSIVE.

January 21, 2009

ENERGY LURES.

 

OVERALL, THE ENERGY PLAN PROPOSED UNDER OBAMA’S GOOD NAME, IS A LURE. IT VIEWS ENERGY AS CHEAP, A SELF CONTRADICTION, AND TAKES SOME SHINY OBJECTS FOR A SERIOUS FOUNDATION. IGNORING WORLDWIDE EXPERIENCE DOES NOT HELP.

***

Abstract and warning: Change of energy policy without hefty energy taxes is no change at all. Be it only because there will be no money to implement change [as was demonstrated this week, when money that should have gone to the energy infrastructure, was directed instead into the usual unrestrained tax cuts of recent years, financed by, well, future taxes, and guaranteed, this time, not to work!].

Very detailed sharp and deep technical arguments show that all too many proposals in the present “Obama” energy plan come very short, while obvious strategies one should embark on as soon as possible, are completely ignored, such as light and high speed rail, efficient short range planes, and a closed nuclear cycle [those suggestions of mine have all in common that they will allow to rebuild American heavy engineering, the indispensable core enforcing an increase of efficient energy usage; it’s a deliberate push away from Silicon Valley’s gimmicks].

At this point the cultural set-up of Ronald Reagan is still firmly in place: the state is bad, except for a huge military, so let’s destroy the tax base. Modern historians are now realizing that destroying the tax base is exactly how Rome went down. Roman culture was unable to see the increasing errors of its ways, and the simultaneous increasing change in the world. The way out would have been a much stronger state, and that, with Rome, should have started by making energy more expensive, and that should have meant, at the time, by outlawing slavery [as the Franks did later].  

*** 

Overview: Changing energy policy without raising the cost of energy is a lure. Trying to do so would make any change unattractive, and unbearably expensive for the government [yes, there is no contradiction: by taxing energy heavily, the government would acquire the power to change energy procurement, and only then. This tax does not have to be regressive, and would be cheaper in the long run, for all concerned; watch what Europe has done, and is doing much more of]. Change that one does not finance is change that will not happen.  The beauty, though, is that energy change can self finance.

After two days of Obama presidency it was indeed revealed that the hope for increased mass transit funding was slashed down to nearly zero, precisely because it cost money [or to leave some for the silly “recovery plan”, also known as money-for-China]. Europe, instead has augmented both energy cost and transportation spending, in the last few months, to react to the crisis, and the work below shows why. This is all the more alarming since the subsidies for inefficient cars and suburbs are enormous (more than 10 times greater).

Making energy more expensive will shift the emotional paradigm regarding wasting energy, and is the best way to increase efficiency. it is not just an economic tool, but a psychological one.

Forgetting to build trains, while talking up hypothetical “hybrids”, makes for a nice couple of mistakes that show that pork is not dead, and that the concept of a correct energy policy has not been the object of tiring brain work. But there are better ways to save energy, than to rest one’s mind.

Besides, the present energy plan, in its haste, forgets to mention aerospace completely, although this is one of the last industrial sectors where the USA is still a leader, and has something to trade with, something that people in other countries want to acquire, and fight the American deficit with. In aerospace, one would not be throwing good money after bad, because it is a sector which is just at a point in time when it is absolutely certain that throwing money at existing technology would give spectacular results. In other words, the conceptual opposite of some potential car technologies the Obama plan pushes.

***

At the end of our personal discourse on energy which follows, we have reproduced the Obama energy plan, with our comments added in italics.

That Obama plan, as it stands, is conspicuous by the absence of the only strategy that is known to work, according both to what common sense says, and what experience shows.

Obama says that he will end programs that do not work. Well, experience, worldwide, shows that the only energy plan that works is a strategy that was adopted long ago by France. As a result, France produces now less than a third of CO2 emission per unit of GDP, relative to the USA. Other methods have not worked [including a few that are still tried in Europe].

That strategy that has been proven to work in France, was then copied successfully by all of Western Europe. It is the policy of the 27 countries of the European Union, and even of a giant energy producer and exporter such as Norway. It is British policy. That policy is now propagating to Eastern Europe [making Ukraine anxious and furious]. So Obama’s energy plan does NOT mention the only strategy that is known to work for a wise energy policy: making ENERGY EXPENSIVE.

One makes energy expensive, first, and then one lets the free markets play in this new, expensive. arena.

TAX ENERGY, OR AT LEAST TAX CARBON, TO PROVIDE A STABLE BUSINESS ENVIRONMENT:

Energy prices are not regulated in the USA, preventing energy planning, and RUINING THE MARKET FOR CLEAN ENERGY. Robert Lutz, second of General Motors, a Swiss, said (originally in French): “Now that the price of gas has collapsed, we do not sell one hybrid anymore. Having the price of gasoline up and down every seven months, in wild oscillations, makes us stupid every six months. Franchement, j’en ai marre.” (”Frankly, I had enough”, although it’s much more robust in French). On Swiss TV, he was really angry (it’s OK to be angry in European psychology, because communicating the truth with passion is often viewed as more important than being so cool that nothing goes through). In Europe these energy price oscillations do not happen, because taxes keep energy prices always high, hence predictable (the poor get compensating subsidies).

As a result the USA is ever less efficient, relatively to the competition. This was bound to condemn US industry, in the long term, and it did [because if you stay in bed your entire life, having the easiest of times, you can’t compete].

TAX ENERGY TO PROVIDE REVENUE: That is self explanatory. The poor, and those whose jobs require a lot of energy, get compensating tax breaks in Europe [for example self employed fishermen get a subsidy when fuel gets too expensive].

TAX ENERGY TO MAKE PEOPLE VALUE ENERGY AND REALIZE IT’S PRECIOUS: That, too, is self explanatory. One can sing from the roof top of a big White House that one is going to do this, and one is going to do that, people don’t care, once they have turned off the TV. People will do it when they are forced to do it, because the alternatives are too costly.

Another strange obsession of the Obama plan, and democrats in general, is “plug-in hybrids”. OK, that is better than flying saucers, but Toyota came in with their latest version of their Prius hybrid, and it’s not plug-in. Why? Because Toyota says that battery technology is not advanced enough.

Volkswagen has studied hybrids for years (as other top European car makers). Its conclusion is that they are not the most efficient solution in the present state of technology [Fall 2008]. A problem is that hybrid technology is heavy, and the heavier the car, the less efficient. Volkswagen said that the “Stop and Start” technology introduced in 2003 by its competitor, Peugeot-Citroen, does work and allows to save 15% of energy minimum, and that Volkswagen will deploy that instead [BMW intents to do the same, so does KIA]. Peugeot has been claiming up to 30% savings in city driving with that technology. Peugeot has the highest mileage family car [the 308, with well above 65 mpg].

In any case, it seems unwise that the Obama White House would suggest it knows car technology better than the best car companies in the world [Peugeot has an advanced hybrid diesel project, but just as Renault’s electric car, it is wrapped in secrecy; French car makers have the best overall fleet mileage in the world, causing very strong headaches at gas guzzling Mercedes]. Why not to simply impose CO2 emission maxima? [currently the average per car in the USA is ~ 330 grams per kilometer, whereas the maximum law in the EU is 160 grams, soon to be 130.]

IT IS NOT BECAUSE SOME TOP DEMOCRATS HAVE INVESTED IN HYBRID START-UPS, THAT HYBRIDS ARE GOOD. Verily, it is probable that start-ups in the automotive area will stay side shows. Companies such as Peugeot have existed for nearly three centuries [making other machines], Daimler-Benz and Renault for more than century, and so on. Bid industry is big serious, doing big things. Companies such as Google and Microsoft make a lot of money, true, but it’s mainly from monopoly tricks. In truth, they are highly replaceable: Google is basically a media company, and Microsoft profited handsomely of the work of others [universities, IBM, etc…]. The business success of such ex-start-ups has made many believe that innovative hicks in a garage backed up by wealth, is all it takes to bring progress. This is not true. Sophisticated engineering know-how is acquired by very serious schooling, over many years. The opposite legend was set up by venture capitalists and Wall Street types anxious to prove that wealth thinks. It does not. Science and engineering do. 

When talking about “hybrids” one has to realize that more than half of US electricity is produced by very dirty means [coal, etc…]. That makes plug-in hybrids intrinsically dirty, because the more they will be used, the more coal will be burned. (It is hard to imagine that the presently proposed “clean coal technology” could ever work in practice, except in a few places.)

For politicians to force car makers, or any high tech companies, into the details of a particular technology is a traditional mistake. The role of government should simply be to force the context of the market. For example, as now the Obama plan suggests to do, it would be good to do what has been done in France: big incentives and subsidies to buy efficient cars. In Europe one can buy some BMWs that make 55 mpg, precisely because gas is so expensive, and the CO2 emissions law, so low.

AND WHAT ABOUT TRAINS? That is a total mystery. The Obama administration took the same train as Lincoln, but it deserves better!

All the evidence indicates that Al Gore did not find a train start-up to invest in. How could he? There are only so many companies in the world that know how to make the best trains, and they are all huge, because trains are huge; one is Canadian [Bombardier], one is French, one is German, and then there are the Japanese and now the Chinese [the later two have been known to be, let’s say, more duplicative…].

HIGH SPEED TRAINS ARE A GOOD SOLUTION FOR THE USA: most of the US population is in a few clusters that would fit inside France. Considering that present high speed trains from the French Alstom and the German Siemens can operate at 250 miles per hour, high speed trains could actually replace a lot of plane travel [Europeans already prefer to use high speed rail to planes if the flight is less than four hours, and high speed rail is far from being completely deployed in Europe]. LIGHT RAIL rail will also rejuvenate cities and make urbanization more energy and culturally efficient. The USA used to be covered with light rail: it was bought by car companies, and destroyed, part of the racist and plutocratic plan to turn city centers into lower income, colored zones [a situation that needs to be reverted, ASAP!]

Now of course French and German trains going at 250 miles per hour use technology that the USA does not have. But the USA can license it, and learn to make it [the Japanese high speed trains started long ago by buying three fast French electric engines, and deconstructing them; for the USA in the future I am talking about lawful licensing]. The big US car companies could help make these trains. Europe uses presently 1,000 high speed train sets, and will have much more in the future. That is a lot of work, for a long time to come. And a lot of increased efficiency and comfort, and… power, for the good.

Russia, not just Western Europe,  has embraced that conclusion. The Saint Petersburg to Moscow high speed line will be run with Siemens trains by the end of 2009, with a domestic content of components of 30% [expected to grow to 80% by 2015, as Siemens transfers technology, and Russian industry rise its standards high enough to produce it. Meanwhile the French Alstom got a huge contract for high speed tilting trains going all the way to Helsinski, Finland [tilting trains are more friendly with older tracks]. Russia is developing the engineering and planning background for high speed rail all over, at speeds above 400 kilometers an hour (250 mph). French engineers believe they could reach speeds around 400 miles per hour [aerodynamics has become problem number one].

Some people will feel that I am contradicting myself: first I am against the government singing the praises of hybrids, and apparently planning to finance them, now I am for the government encouraging, and even financing trains. Well, there is no contradiction, it’s comparing apples and supermarkets. Hybrids are like apples, except those particular apples could well not be the best. Trains are like supermarkets: there is lot more there. 

Hybrids, especially plug-in hybrids, are an audacious hope, nothing more. Cars with sophisticated technology, and a much higher mileage, have already been sold in Europe by the millions. So it is not clear that this particular automotive technology, hybrids, will ever work better than its competition [better conventional engines, or electric cars]. Whereas the general concept of railroad technology works, and even better than car technology [as far as efficiency is concerned; e. g., in the present USA, trains are four times more efficient than the best trucks; most of the work done by transportation is done by rail]. So funding trains in general is funding one of these programs that works that Barack was talking about. But we don’t need to try the alternative, doing with neglecting trains: we already did, and even in Europe, and it does not work. Not at all.

Modern trains work so well, that the European Union, under the prodding of some Swiss cantons (!), has basically decided to put all trucks on trains for long range travel, as soon as possible. It’s better for all of Europe and even the world.

Trains would make the USA not just more efficient, but more friendly: instead of piling up in airports for ever, people would take trains; cheaper, and, most often, faster. So families and friends would see each other more often. Trains are more friendly and dignified than the glorified sardine cans in which people fly.

Another interest is that, although a French high speed train was bombed by Al Qaeda, destroying completely a carriage, killing all passengers there, the train then stopped, saving the rest of the passengers [even the biggest jumbo jet would have been pulverized].

Still another interest is that electric trains can be fed by renewable energy [in France more than 90% of the electricity is renewable or closed cycle nuclear; see below]. They do not have to run on hydrocarbons.

SOLAR THERMAL TOWERS and PHOTOVOLTAIC PLANTS in the Western deserts have a great potential, although they will require ugly power lines [which cannot be buried economically, unfortunately, it seems]… Environmental objections to them should be pulverized.

AND WHAT ABOUT MUCH MORE EFFICIENT PLANES? The somewhat ridiculous, but otherwise excellent, Boeing Aircraft company is firing workers, causing great hilarity in Toulouse, France, where Airbus headquarters are located [Airbus will fire nobody]. Airbus’ latest jet, the A380 Super Jumbo [some sitting 840 passengers have been ordered] makes 85 miles per gallon per passenger [with around 500 passengers]. In other words, it is superbly efficient. Both Boeing and Airbus are developing jets that are a bit smaller, which should be even more efficient [the 787 and the A350].

But Airbus does not have the capacity at this point to develop a very efficient successor to the A320, a much smaller jet.

The A320 is the one that ditched on the Hudson river, morphing itself into a water craft, thanks to its excellent pilot who was able to keep the plane flying without stalling at very low speed, thanks in turn to computerized electric controls fed by power from the Auxiliary Power Unit and an emergency RAM turbine. In other words, the Airbus jet did not crash, because it had technology much more advanced than those of its Boeing equivalent, the 737. It was a miracle, but also a warning: European technology is forging ahead, and even squadrons of American geese would not stand in the way. Financing gimmicks from Silicon Valley will not compete with serious European engineering.

To keep the USA leading in aerospace technology, the Obama administration should give money to Boeing to develop such a short range, efficient plane [the French government has started to suggest that they would be pleased if Airbus made some efforts towards a more efficient short range plane, and that they are definitively not pleased that in 20 years the A320 efficiency increased by only 2%, while that of the Super Jumbo jumped enormously].

Thus, thanks to well targeted subsidies, it should be possible to marry harmoniously industry, ecology, and even trade [instead of going into hypocritical legal battles with the French about aerospace subsidies].

There are more than 100 civil nuclear plants in the USA, and something needs to be done about their global obsolescence. In particular about the necessity of switching to a closed nuclear cycle as soon as possible [see below]. Research in other nuclear technologies beckon [Thorium, thermonuclear].

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OBAMA ENERGY PLAN OVERVIEW WITH COMMENTARIES:

Here is the Obama’s “Energy Plan Overview”, as taken from the White House site, January 21, 2008, with my own comments on the right in tilted letters, using capitals if I feel particularly strident. I added numbers on the left, to make the list of Obama’s points clearer:

Obama: 1) Provide Short-term Relief to American Families. Commentary: [Why just short term? In Europe the poor get long term energy subsidies]

Obama: 2) Crack Down on Excessive Energy Speculation. Commentary: [This is ABSOLUTELY NEEDED! EXCELLENT! A lot of the futures’ trading should be restricted to commercial operators, leverage should be so reduced for others, that it could operate the other way]

Obama: 3) Swap Oil from the Strategic Petroleum Reserve to Cut Prices. Commentary: [This a silly GIMMICK; besides, the word “Strategoi” means general of an army in Greek: that reserve is for extreme emergencies, not to play the markets.]

Obama: 4) Eliminate Our Current Imports from the Middle East and Venezuela within 10 Years. Commentary: [It may sound good to the ignorant, but because oil is traded worldwide, it is a bit like saying one will not breathe air from Venezuela and the Middle East within 10 years].

Obama: 5) Increase Fuel Economy Standards. Commentary: [This is historically ineffective; instead, just converge towards European CO2 emissions ASAP; they have been adopted by China, etc…].

Obama: 6) Get 1 Million Plug-In Hybrid Cars on the Road by 2015. Commentary: [This is a TOTALLY UNWARRANTED, UNEXPLAINED STEERING OF A COMPLETELY UNPROVEN, PECULIAR TECHNOLOGY BY GOVERNMENT INTERVENTION; is this pushed by unsavory financial interests? Aside from the fact they will be mostly made by foreign car makers, one million plug-ins will not make a dent: too little and most of US electricity is produced by dirty coal plants.]

Obama: 7) Create a New $7,000 Tax Credit for Purchasing Advanced Vehicles. Commentary: [That very French method was used several times by France, and has now been adopted by Germany; and it has proven effective; but the French subsidies right now are only around $3,000].

Obama: 8] Establish a National Low Carbon Fuel Standard. Commentary: [These are the Euro CO2 emissions that I talked about above]

Obama: 9) A “Use it or Lose It” Approach to Existing Oil and Gas Leases. Commentary: [Sounds good]

Obama: 10) Promote the Responsible Domestic Production of Oil and Natural Gas. Commentary:[Sounds good]

Obama: 11) Create Millions of New Green Jobs. Commentary: [It sounds good, but it will not happen as fast and as much if energy keeps oscillating in price, and not at all if oil goes down to $20 a barrel, which could happen if the USA does not nationalize its entire financial industry swiftly.]

Obama: 12) Ensure 10 percent of Our Electricity Comes from Renewable Sources by 2012, and 25 percent by 2025. Commentary: [Does “renewable” include nuclear? in France NUCLEAR FUEL IS RECYCLED AND BURNED AGAIN (instead of being put away as in the USA, with most of its energy unused, and very dangerous and polluting): that makes nuclear energy “renewable”, to a great extent. One calls that the “CLOSED NUCLEAR CYCLE”; the USA should ABANDON ITS “OPEN NUCLEAR CYCLE” which creates a strong nuclear waste problem; actually France transformed US nuclear weapons in fuel that now sits, waiting to be used (!)].

Obama: 13) Deploy the Cheapest, Cleanest, Fastest Energy Source – Energy Efficiency. Commentary: [That will happen ONLY IF ENERGY IS EXPENSIVE].

Obama: 14) Weatherize One Million Homes Annually. Commentary: [It will work only if energy is expensive]

Obama: 15) Develop and Deploy Clean Coal Technology. Commentary: [This is an unproven technology; meanwhile half of US electricity is from dirty coal].

Obama: 16) Prioritize the Construction of the Alaska Natural Gas Pipeline. Commentary: Natural gas, CH4, is cleaner than any other hydrocarbons.

Obama: 17) Reduce our Greenhouse Gas Emissions 80 Percent by 2050. Commentary: [That’s Euro babble that Europe is moving towards, but the taxes on gas in the United Kingdom are more than six (6!) dollars per gallon…]

Obama: 18] Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050. Commentary:[Cap and trade has been tried in Europe, under French leadership, but has encountered various difficulties, including abuse and gaming the system by major corporations].

Obama: 19) Make the U.S. a Leader on Climate Change.

That obsession, to lead again, be the chief again, is, as long as one does not start with a rise energy prices, just inspiring talk, and wishful thinking, soaring above vacuum. Because, without the preliminary rise in energy prices, nearly any single one of the preceding Obama energy points is all too expensive for the deficit laden government to bear.

Americans love to hear that they will “lead”. But, when one does not know how to do something, one learns by following first. Following others in energy policy is smart, ignoring the history of the rest of the world’s experiences is not.

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Patrice Ayme.

Patriceayme.com

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P/S 1: Rising taxes in a recession, some are sure to say, is folly. Overall, certainly. But irrelevant to the preceding, because rising energy taxes can be made revenue neutral, by lowering other taxes, for example by lowering income taxes on the non-rich [however non-rich is defined; to fight a recession, it could be defined as those who spend less on basic goods and services].

 

P/S 2: Road utilization extracts revenue from the rest of the government’s budget in the amount of 107 billions, the gas tax being too small to repair roads. That’s to rob Peter to pay Car.