Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

29 October 2013

Six Things our President and Every Other High Executive Should Know about Websites


[For discussion of what can make a many-to-many website exemplary, click here.]

Introduction
1. Websites are human and social systems, not technology projects.
2. Neither lawyers nor programmers should be in charge.
3. You should get it right the first time.
4. “No” is not a design parameter.
5. Legacy systems pose special problems.
6. Users are the only proper testers and judges.
Conclusion
P.S. Why I’m Not Slavering over Twitter’s IPO
Coda: an exemplary many-to-many online community


Introduction If you think the embarrassing debut of “healthcare.gov” is unique, think again. It may have been an extreme example. And it’s certainly recent. But lesser and nearly equal website debacles abound, in business as well as government.

A good example is Facebook. Its website is a cluttered, disorganized mess, to the point of randomness. “Chaotic” might be a better word. Its policies and consumer choices—especially for privacy—are obscure, overly complex, unclear, confusingly presented, hard to change, and (in the eyes of many) inadequate.

Even today, Facebook is nothing more than a social-media concept waiting for successful implementation by more competent firms like Google. It’s a minor miracle that its stock is now trading above its IPO price, and at a P/E ratio over 189 (at day end October 28). (At least Amazon’s P/E of 1,268 and Google’s of nearly 258 suggests that the investing public has some residual ability to distinguish good from bad Websites).

What is my basis for judging? I’ve worked with (and sometimes programmed) computers for 52 years. Doing that has always been a sideline for me—an avocation. But it’s always been there.

I started with machine-language programming of a long-forgotten Bendix G-15 computer at a summer science camp in 1961. I bought my first personal computer in 1986. I used it, in part, to program some simple things like stock charts, long before there was a World Wide Web. Ever since Bill Clinton and Al Gore released the Internet for commercial use in 1996, I’ve spent from one to several hours per day surfing it and using it. As a practicing lawyer, I spent eight years doing mostly software licensing for some of the top companies in Silicon Valley, including household names like Apple and Hewlett-Packard. I drafted some of the first licensing agreements for artificial intelligence and “expert systems.”

So I know what computers and software can and cannot do, and how bad management can exacerbate their problems and good management propel their potential. And, as faithful readers of this blog know, I do not flinch from criticism and tend toward perfectionism.

If Facebook actually had to do anything real—let alone with your money—it would go bust in a single quarter. But when all it does is transmit cute photos, water-cooler chat and random gossip, its quality doesn’t much matter. It’s a bit like the talking dog: it needn’t talk well, just talk at all. In an era of perceptible American decline, being the first widely used social medium was enough.

Some government websites do much better, and with things that really matter. Take a look, for example, at socialsecurity.gov, eia.gov, or cdc.gov. These websites, respectively, competently report (and partly manage) the world’s largest single pension program, America’s energy industry and infrastructure, and the worlds single best (if not only) comprehensive and up-to-date compendium of medical, health, and epidemiological information.

There are also a number of business websites that I use weekly, if not daily, without complaint. But there are only three commercial ones that I really admire: google.com, amazon.com, and ameritrade.com (the online stock broker).

So good (or bad) websites don’t depend on whether government or business runs them. They depend on whether whoever is responsible for them knows what websites really are.

With that in mind, I proposed the following five principles. If followed, they might help save healthcare.gov and make the Web the universal human organizer that it still can be.

1. Websites are human and social systems, not technology projects. Websites are means by which people exchange information, interact, and trade in large numbers. Even the commercial ones are technologically assisted social communities. Business managers dimly recognize this truth today when they speak of “communities” of customers and treat brands the way nations once treated flags.

A website is no more servers and software than a subway is wheels and tracks, an airline is baggage conveyors, or a city is water and sewage pipes.

The “tech” in websites is a means—really only part of the means. The end and the essence are social and human.

When you set up a website, you are establishing a community of people with common interests in something. The something may be only a tiny part of their lives, such as a transient purchase of a single product. (Even then, there is always the hope of a repeat purchase.) It might be a larger part, such as the e-mail and social communities that Google and Yahoo and later Facebook set up. It might be a universal department store like Amazon.com, with a satellite community of reviewers who trust each other and Amazon because they can post negative reviews. It might be a news community, like that of Bloomber.com. Or it might, like healthcare.gov, be a community of people who rely on it literally for life and death.

But in every case, when you work on a Website you are working on a social and human project, not a technological one. This point is paramount. If you get it wrong, nothing else will go right. And sometimes, if you get it wrong at the outset, you can never recover (see Point 3 below). You might as well pull the plug and start over, putting someone in charge who understands what websites are.

2. Neither lawyers nor programmers should be in charge. Don’t put a lawyer or programmer in charge of building a website. You would do much more good—for yourself, your firm or agency, and for society—by donating the project money to a good charity.

Why is this so? Because neither lawyers nor programmers are big-picture people. Their entire training is in detail. You don’t start a community with details. You start it with a goal and a vision.

The details come later, sometimes much later. And if the website is to work well, they must be and remain subordinate to the goal and vision—far subordinate, throughout.

It doesn’t much matter how smart the lawyer or programmer is, or how good his or her reputation. The training and mindset are wrong. If you look hard enough and are lucky enough, you might find a lawyer or programmer with a big-picture mindset and a steep enough learning curve to succeed. But in general, you might as well look for an open-minded jihadi. Good luck with that!

Websites have a painful and dirty little secret. If you’re the boss, their big-picture design, and a large part of the process of their development, is up to you. They are not projects to delegate. They move too fast. And they can go off the rails in a moment, especially in their early stages.

Too many bosses delegate this work. That, sadly, seems to have been the President’s and Secretary Sebelius’ primary mistake.

The irony is that the President cut his teeth in politics on community organizing. His right-wing opponents are whistling past their graveyard when they ridicule that background. For the communities—including online communities!—that this President has organized may soon relegate the Old South and its Tea Party to the dustbin of history, creating a New South and a new nation.

But with healcare.gov, the President apparently failed to understand that he was creating a human community, not ordering a new air conditioning system for the White House.

True, it was and is in part a commercial community, a market. But who would build a marketplace where doormen bar the way to anyone who hasn’t filled out a blizzard of forms? What market proprietor turns browsers and window shoppers away? And who ever hides prices? Certainly not the owners of gas stations all over America, who advertise their prices, to the tenth of a cent, on huge signs, lit up at night and visible from the highway?

I know, I know. Health insurance is complicated. I’ve written about that myself. And you can’t give an accurate price quote without knowing a bunch of things about the person seeking insurance. But how about giving some price examples, with key information and a disclaimer for each, inviting the website user to sign up and submit personal data to get a more accurate quote?

Isn’t that the kind of thing that department stores and newspaper advertisements have been doing for over a century: getting people interested enough with general and approximate or (“as low as”) price quotes to come into the store? What’s wrong with window-shopping for health insurance?

I would bet heavily that a lawyer or programmer was responsible in some measure for these flaws. But the President and the Secretary were in charge. These gross failures to advance their vision were not failures of legal or technical competence, but of executive vision or attention. And they will only get fixed with high-level, “hands on” executive involvement.

3. You should get it right the first time. Nowhere in modern business or government is the apothegm “Do it right the first time” more apt than with websites. With them, there is no substitute for strong executive vision and supervision from the very beginning.

Doing it right the first time is infinitely cheaper, simpler and easier than having to backtrack. And as healthcare.gov may be in the process of proving, backtracking may lose much of your community.

Law and software are both complex. So when you build a website that depends on them wrongly, every change needed to make it right will turn out to be more complex and expensive than you thought beforehand. Every change will involve numerous details and time-consuming investigation, first to find out how the wrong vision was implemented in detail, and second, to correct it.

But even that’s not all. Law and software are much like ecology. They are complex systems. Everything in them relates to and affects everything else. So when you change one detail to bring the vision into focus, the change can affect numerous other details, which also much be changed.

To be sure, both law and computer programs are modular. There are separate statutes and separate programming modules. But when a basic vision goes awry, its unintended consequences will appear in numerous unanticipated ways: how those statutes are handled (or legally circumvented) and those programming modules are designed and interfaced. So when you change something, even for the better (in terms of vision), you will encounter numerous unanticipated problems.

More likely than not, you will have a cascade of unintended consequences. In the best case, they will run the project over term and way over budget. In the worst, they may make it better, in retrospect, to have junked the work so far and have started over from scratch.

4. “No” is not a design parameter. When you build a website, you are literally drawing on a blank page. You are an artist as well as a business person or government official. There is nothing you cannot do, from Google’s ultra-clean single-field home page, introducing an extraordinary collection of services and products, to Facebook’s cluttered, chaotic and disorganized mess.

Don’t ever let a lawyer or programmer tell you what you can or cannot do on your website. There are laws and legal constraints, to be sure. But how you present them, and how you let them affect your community, are up to you. If your lawyer doesn’t understand this and has insufficient flexibility and creativity to help make it happen, get another lawyer.

As for software, there is another dirty little secret. Modern computers, servers and software are incredibly flexible. They are designed from the ground up to be flexible and versatile. (If your hardware or operating system isn’t so designed, swap it out, the sooner the better.)

So you can do almost anything you want with a website, unless it involves creating new principles of physics, chemistry, engineering or mathematics. Most websites don’t.

That’s why Google, Facebook and Twitter were started by youngsters. They were young enough to understand that technology imposes no limitation on websites. Only your imagination does.

The message here is simple. If your programmer or software supplier tells you “no” too often, get another programmer or software supplier. And be as sensitive as you can to attitude from the hiring interview forward. A “can do” programmer or supplier can give a website eternal life. A looking-for-problems attitude can be the kiss of death, and often is.

5. Legacy systems pose special problems. Large organizations like government and big business often have so-called “legacy” systems. These are big, existing software and hardware systems already in place before website design begins. If the website has to interface with them and use and/or change their data, they require special consideration. This is the one big exception to the rule against design “nos.”

Most big organizations have legacy systems. Many have old, outdated and cantankerous hardware and software which are too big, expensive or difficult to replace quickly. Interfacing with them and using or changing their data creates whole new layers of complexity, which lawyers and programmers can cite to justify their design “nos.”

In the case of healthcare.gov, interfacing with these legacy systems was a large part of the problem. When you have a system as big and expensive as those that manage Social Security, Medicare and Medicaid, you can’t change them overnight. Legal and political constraints, not to mention budget limitations, might not permit changing them at all.

In that case, you have a choice. You can interface with the legacy systems, or you can develop new supplementary or replacement systems from scratch. Sometimes the latter option is simpler and cheaper.

Let’s take a quick example. Apparently, healthcare.gov had to have certain personal information about seekers of health insurance in order to provide accurate premium quotes. That makes sense.

But other things don’t. For example, why did the system have to try to verify some or all of that information, through the government’s cumbersome legacy systems, before even posting a quote? Couldn’t it just give an internally figured quote, derived from healthcare.gov’s own systems, with a big, red disclaimer that all data are subject to verification and that the premium might change accordingly? And wouldn’t it be easier, simpler and cheaper for insurers and healthcare.gov’s own programmers to build and work with their own databases and verify legally necessary items later?

Databases are easy to copy in whole, and computer storage is incredibly cheap, at least compared to systems programming. How about copying the necessary databases, in whole, from the legacy systems once a week, or even once a day, so that healthcare.gov’s programmers and designers could have freer hands? Actual insurance enrollment—presumably at a much lower level of demand than mere window shopping—could be verified case by case later, in accordance with the big, red disclaimer.

Our President is a very, very bright man. I’m not so familiar with Secretary Sebelius, but I have no reason to think that she is not a bright woman. If either had spent an hour thinking about these points, he or she would have come to the right conclusion. The mess that resulted is strong evidence that neither did.

A decision to rely on or to supplement and eventually replace cumbersome legacy systems is one of those make-or-break decisions that must be made right at the outset. Only high executives imbued with the goal and vision of the community can get it right. Now that so much programming and interfacing has been built around legacy systems, they may be very difficult and expensive to change, at least for healthcare.gov.

6. Users are the only proper testers and judges of websites. We humans have had electronic communications for just over a century. They all started with radio, which allowed a single person to broadcast to millions.

The Internet’s major contribution was not digitization. That just made copying easier, cheaper and more accurate (with big implications for copyright). The Internet’s really big advance was that it not only let the millions talk back; it also let them talk to each other.

Every news medium or commercial site with product reviews, comments or feedback lets millions talk back. But only recently have social media—and commercial sites with comments to reviews or news sites with replies to comments—allowed millions to talk to each other. This is where the Internet’s vast still-untapped promise lies.

Even the wisest of us has trouble grasping the full implications of this change. We are just infants in organizing and rationalizing, let alone streamlining, many-to-many communication. Much—if not most—of the enormous potential of this single change still lies obscured in the mists of (future) time. Instantaneous traffic reports and real-time epidemiology as cold or flus spread give us a tiny notion of what may lie ahead.

But one implication is obvious, or should be. The users of websites are no longer a passive audience, as readers of newspapers or books once were. They are part of a community of interactive participants. And they must have a say in how a website works, or they will leave it. In the twenty-first century, when virtually every country but North Korea has no serious restrictions on emigration, the same principle applies to websites as to nations: if people don’t like the community you manage, they will go elsewhere. And they will take their brains and skill, or their patronage, with them.

The upshot is that users—preferably in their millions—are not just the best testers of websites, but the only really useful ones. Of course the website provider has at least to verify, while the website is still off line, that the software and hardware have no obvious bugs. But that’s the easy part. Nerds call it the “alpha test.”

The real test occurs when the community the website is supposed to serve gets invited in to visit, try, use, attempt to break, and even to hack the website. If that doesn’t happen before the website goes live, it happens afterward. Almost invariably, belated testing by users produces a debacle like healthcare.gov’s debut.

In the “old days” (just a few years ago), software vendors sent out trial disks to selected users and asked them to test the software. This they called a “beta” test. The good vendors spent months or even more than a year (a lifetime in software development) analyzing the users’ reports and suggestions, modifying the software accordingly, and then testing it further.

The Internet now gives website builders new opportunities and a new problem. No longer need they send out discs or select users. They can let users select themselves by putting a “feedback” button on their home pages (or any page). (This is what users do in posting product reviews on Amazon.com.) The problem is that there is a much greater volume of suggestions and complaints to cull, and a hacker might be successful and impose additional expense.

Smart website builders know that these opportunities far outweigh the problem. Some even make user feedback a continuous process. Among them is Google, which has a “feedback” button on some, but not all, of its pages, every day. For Google, beta testing is now a continuous process, like today’s post-marketing “surveillance” of side effects from FDA-approved drugs.

Not beta testing long before product release was one of healthcare.gov’s key errors. Even mere window-shoppers would have discovered the problems now providing fodder for Jon Stewart and other late-night comics. They would have seen them in the first week, if not the first day, of beta testing.

There are reports that neglect or curtailment of beta testing was politically driven. The law has deadlines written in stone, the most important of which is the December 15 deadline for signing up for coverage on January 1. And the reports say that the President and his political advisers blanched at beta testing before last year’s presidential elections, which would have allowed healthcare.gov to become a political pawn in the presidential campaign.

But it’s hard to believe this political delay could have been the cause of the debacle. After all, it’s now almost a year later. A few months of beta testing may not have cured all problems, but surely it would have at least revealed the worst.

The President’s political judgment has been so consistently better than mine that I no longer seriously question his. But would postponing the online debut of healthcare.gov from October 1 to November 1 have caused enough political havoc to outweigh an extra month of beta testing and improvement? I have a hunch that the President, if he could run the film again, would not only authorize, but direct, the month’s delay for testing, had he known of the problems now revealed.

Conclusion I write this post not to disparage the President or his style of governing. As readers of this blog know, I am a strong supporter of his. I remain so.

But like Betty Ford’s and Angelina Jolie’s breast cancers, the healthcare.gov debacle is a teachable moment. It highlights larger lessons having nothing to do with the relative merits of government and business or contending political ideologies. It shows how far, in general, we are from understanding, let alone realizing, the Internet’s potential in building communities, let alone how to use it most effectively for that purpose.

There are far too many websites like healthcare.gov or facebook.com, and far too few like Google’s, Amazon’s, and the CDC’s. The reason, in my view, is that what websites really are hasn’t yet dawned on most of us, especially our high executives. Far too many, in business and government, still think of websites as organizational plumbing, to be delegated to specialists called “nerds,” budgeted and then ignored.

There are business-school grads who think they can manage anything with a knowledge of spreadsheets and some indefinable personal quality called “leadership.” These we have in abundance today.

Then there are those like Jeff Bezos, Steve Jobs, Elon Musk, and Larry Page. They have enough knowledge of technology to know what it can do, and enough humility about themselves and the warp speed of daily progress and competition to seek to know what users want.

These men build whole new industries. In the process, they justify the kind of confidence that creates the astronomical price-earnings multiples cited in my introduction to this post.

How do they do it? In two ways. First, they work hands on. None of them would ever think of delegating a project as important as healhcare.gov to nerds or contractors, let alone lawyers. Second, they are humble enough (even Jobs was!) to think about users and occasionally ask them what they want. Sometimes, they even let users test their products before release.

None of these leaders would sit in his office playing with spreadsheets, while delegating most of the process of developing anything important. Somehow, they manage to stay “hands on” in a society in which knowledge, expertise and concomitant specialization are increasing exponentially. That isn’t easy.

Leaders like these men are not only going to clean to clocks of their less savvy competitors. They are going to build our collective future, in government and politics, as well as business. That’s why I still believe that Jeff Bezos’ personal purchase of The Washington Post is a signal event of our times.

Erratum: Earlier versions of this post misspelled HHS Secretary Kathleen Sebelius’ last name, confusing her with the Finnish composer Jean Sibelius. Although I don’t usually point out my typos, misspelling a person’s name is an embarrassing error, especially for a retired lawyer and law professor. It’s especially embarrassing in the context of this post, as a thirty-second Google search could (and did) reveal the correct spelling. Websites expand our horizons, but they also limit our excuses. I apologize.

P.S. Why I’m Not Slavering over Twitter’s IPO With Twitter’s IPO coming up next week, some readers might wonder what I think about it.

I won’t be participating. Why? For me, all you can fit into 140 characters, with no context whatsoever, is a wisecrack or an announcement. A written belch that short doesn’t even rise to the level of a thought.

Throwing billions of wisecracks out into cyberspace at random is not, in my view, an effective way of organizing the Internet’s vast potential for creating and sustaining many-to-many communities. I’m not sure what is. If I were, I might be rich. But Amazon’s multiple communities of users of various products, interacting through their reviews and comments, seems much more like what may eventually emerge. Those communities seem infinitely more solid and durable than anything that Twitter might create.

With billions of wisecracks floating around in cyberspace, what gets most of the attention? The announcements, of course. But announcements only get traction if they come from prominent people—politicians, business leaders, and celebrities. (Twitter might be a good way to organize “spontaneous” demonstrations, even under the watchful eyes and ears of censors. That’s why China and Russia, among others, might try to control it.)

In promulgating announcements, Twitter turns out to be just another broadcast medium for the famous and powerful, much like radio or network TV. So it’s really just another one-to-many medium. I don’t think it comes close to realizing the Internet’s potential for many-to-many community building.

But don’t listen to me for investment advice. Although relatively successful (especially in ducking the Crash of 2008), I tend to be overly cautious. I missed the big early rises on Google, Amazon and even Tesla, although I now admire all three firms, use the first two regularly, and may buy or lease a Tesla soon.

Twitter’s IPO may give a bounce to short-term investors. As the old joke goes, you don’t have to beat the bear, just the other investors he’s trying to eat. But I don’t expect Twitter to be a prominent company in a mere twenty years. In contrast, I’d be surprised if Google or Amazon wasn’t.

Anyway, I’m not sorry I never invested in Facebook. I plan to join Google Plus as soon as I have the time to assimilate it. Eventually, excellence in programming, website design and responsiveness to users should win the day, despite Facebook’s long head start.

Coda: An Exemplary Many-to-Many Online Community

Amazon.com’s product reviews are not just a cute website feature or a recipe for Internet success. They are, in my view, the best present example of the many-to-many online communities that the Internet portends, if we use it well and exploit its full potential.

All communities begin with a goal and a vision. In Amazon.com’s case, the goal was better informed and therefore happier customers. The vision was letting past purchasers inform both serious shoppers and window shoppers about products they are considering buying.

That was (and is) the essence of Amazon.com’s online product reviews, nearly all by volunteers. But there is much more to Jeff Bezos’ vision than that.

The most important element was allowing negative reviews. This advance appeared to run against the mainstream of advertising and product promotion since the days of caveat emptor in ancient Rome. Yet it built the foundation and set the moral tone for Amazon.com’s online communities: fair, honest and useful reviews.

This simple change alone was world-shaking. But there was more, much more. Amazon allows anyone to comment on posted reviews. That step deepened the many-to-many interactive experience, exploiting the Internet’s full potential.

As a result, you often find multiple and even extensive comments to the first (or best, or most thorough) online review of a particular product. Sometimes you can learn all you need to know to make an informed purchasing decision simply by reading that exemplary review and accompanying comments.

The next advance was more recent. Amazon now allows its site’s users to interact with reviewers by posing them questions, which appear in the reviewer’s e-mail inbox. So if you have a burning question about a product you are considering buying, you can pick the author of the most helpful online review and ask him or her directly. That’s the sort of many-to-many interaction that radio, television and even cable simply cannot offer.

These revolutionary website features have had an extraordinary consequence. They have built an online community that has developed its own moral code. Amazon does not impose this code from the top. It doesn’t have to, although its software does try to limit reviews to people who have actually purchased the product under review. Intead, the moral code developed organically, as in any true community.

And a beautiful moral code it is. Already, it has has two distinct elements, which half a day’s (or less) perusal on line will reveal.

The first and most important element is fairness and relevance. Online comments regularly discourage negative reviews by people who: (1) haven’t actually purchased the product, (2) complain about product irrelevancies like poor delivery service, (3) base poor ratings on, or fail to acknowledge, obvious idiosyncracies of their own uses or needs, or (4) base poor reviews on obvious failures to understand the product or read the supplier’s product descriptions.

The enforcement mechanism is simple but effective: social pressure. Mild violations evoke gentle remonstrance from commenters. More severe and repeated violations evoke sarcasm, flaming, shaming and blaming, including charges of working as a “troll” for competitors. This online community polices itself!

But policing is only half the story. The other half is selflessness. I have read numerous reviews that self-evidently took hours, maybe days, to prepare and write. I myself have spent an hour or two on reviews that I submit. All this work is free, gratis, an effort to help one’s fellow human beings.

Sometimes, people with special expertise go out of their way to write extraordinarily useful reviews. One review I read, on rechargeable batteries, involved extensive electrical testing, including tests on discharge characteristics, which take a lot of time. Although written for ordinary users, it had all the substance of a professional paper in an engineering journal. And the author cast all this work on the clear waters of the Internet for free, expecting nothing more than thanks, which he got in abundance.

Amazon.com’s website design encourages selflessness like this. If an e-mail question from a reader of your review appears in your e-mail in box, and you know the answer and consider it helpful, how can you not respond? This simple technical feature—allowing anyone to question voluntary product reviewers—brings out the best in us. It is just one small example of the type of quintessentially human progress that the Internet’s many-to-many interaction portends.

As a lifelong nerd with a Ph.D. in physics, I have no trouble reading technical specifications. I often peruse them before buying products. But with a little patience, Amazon’s product reviews, although written by mere volunteers, often provide better and more relevant information. They tell me things that any actual user of the product would want to know. Some provide information that can only come from extensive use, such as reports of product durability and longevity.

The reason Amazon.com is a world-shaking corporation is not just that it delivers good products conveniently and on time, with a generous satisfaction guarantee. It also has forged its customers into a series of transient communities—one for each product or type of product.

And these online communities, like those in the brick-and-mortar world, have developed their own moral code. That code motivates their “netizens” to become their brothers’ keepers, as the Bible suggests. When you consider that all this goodness comes from a mere enlightened attempt to sell commercial products, it’s enough to make you think that maybe our species has a future.

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18 October 2013

Solar PV Energy: Cheapest Now, and Even Cheaper Soon


FLASH! IKEA goes solar! Consumers can now beat
the cost of coal and natural-gas energy!


[For brief comment on how solar PV panels could save Harbin from its horrible coal smog, click here. For a final take on our recently suspended political travesty, click here.]

Cheapest Now
Why Cheapest Now
Why Cheaper Soon
Investing Tip and Disclosure
Uncertainty: Not Much
Saving Harbin from Coal Smog
IKEA goes solar!

Cheapest Now

Right now, as you read this post, solar photovoltaic (PV) energy is the cheapest form of electrical energy known to Man.

Properly accounted for, energy from new large commercial solar PV arrays costs between one and two pennies a kilowatt-hour. According to David Crane, the CEO of Texas utility NRG Energy, as reported in The Economist [subscription required], “new gas-fired generation costs $0.04 per kilowatt-hour, against at least $0.10 for nuclear.” My own estimate of the generating cost of the nation’s biggest coal-fired plant is four cents per kilowatt-hour. And that’s without any accounting for maintenance or the horrendous pollution that burning coal causes, let alone global warming.

Thus solar PV panels beat the cost of all conventional, fuel-based sources of electrical energy by at least a factor of two. In order to understand why—and to account for PV energy properly—you have to know how they work.

Why Cheapest Now

Solar panels make electricity without any fuel, rotary motion, noise, smoke, pollution or global warming whatsoever. They have no moving parts. Instead, they use a subatomic physics process known for over a century as the “photoelectric effect.” The process occurs inside the atomic-molecular structure of semiconductors, in a kind of collective phenomenon not yet completely understood.

Like the working of your computer’s or cell phone’s microprocessor, the entire process is “solid state,” that is, without mechanical action. So is the work of the semiconductor “inverters,” which convert the direct-current output of solar panels into the alternating current that our households and industry use.

So solar panels are not mechanical devices. Not only don’t they have any moving parts. Unlike the rotating turbines used in conventional power plants, they operate at ambient temperature and normal atmospheric pressure. And so they don’t “break down” like engines, turbines or other machines.

Solar panels’ huge economic advantages follow from these points. They need no fuel to make electricity. The have no pollution-remediation cost because they create no pollution. And they have near-zero maintenance expense. Barring their destruction by accidents, sabotage or extreme weather, all they need to keep them running is cleaning off leaves, dust, snow or bird droppings when necessary. They require no “tune-ups,” oiling, maintenance shutdowns, adjusting, or replacing burners or anti-pollution scrubbers, let alone fueling.

So the cost of energy from solar panels depends almost entirely on two variables. These are: (1) the capital cost of building and installing the solar array, and (2) its lifetime, expressed in kilowatt-hours of total energy produced. To a close approximation, within about ten percent, the cost of solar energy is simply variable (1) divided by variable (2).

We don’t yet know precisely what solar PV array lifetimes will be, because we don’t yet have the longevity of experience. But theory, existing experiments and solar-panel-makers’ current “linear” warranties suggest that solar panels can produce useful power for a century or more.

By the end of that century, their power output will have dropped to about one-third of its original value. But by that time, they will have produced energy equivalent to full-power production for about 66 years. All this is simple math, extrapolating the linear warranties that solar-panel makers offer right now, today.

Using the results of this simple math, you can calculate the long-term amortized cost of solar photovoltaic energy. For large-scale commercial arrays, it is already approaching a penny a kilowatt-hour. Soon it will drop below that level.

Why Cheaper Soon

But that’s only the beginning of the good news. Up to now, solar PV industry investors have focused on the most important and sophisticated part of a solar array: the solar cells or panels themselves. We all know the only question most reporters ask. “What’s the cost, per Watt of nominal power generated, of the solar panels themselves?”

In the last several years, that cost has dropped from around $2 per Watt to around 41 cents—a factor-of-five reduction. As this well-visited Internet graph shows, that precipitous drop in panel cost has motivated the present boom in solar-array construction.

As the industry progresses, it will become harder and harder to lower the panel cost without breakthroughs in semiconductor or photovoltaic technology. But that doesn’t really matter any more. Why? Because the cost of the solar panels is just a fraction of the cost of the whole solar array.

From now on, significant cost breakthroughs will come from advances in pedestrian engineering of the infrastructure and its installation. That is, cheaper solar energy will come from reducing the cost of the supporting foundations and racks, inverters, cables, switches and control-and-test elements that turn bare solar panels into a working solar array.

Remember, the cost of solar PV energy depends almost entirely on just two variables: (1) the capital cost of building the whole array and (2) its working lifetime, expressed in kilowatt-hours. The first variable—capital cost—in turn consists of two elements: (1) the dollars-per-Watt (now cents-per-Watt) cost of manufacturing or buying the solar panels; and (2) the cost per Watt of turning the bare solar panels into a working generator.

I express the second element as a dimensionless multiplier [scroll to table], which I call the “Turnkey Factor.” It tells you what you have to multiply the “cents-per-Watt” panel cost by to get the total “turnkey” cost (per nominal Watt capacity) of a working, generating solar array.

Right now, industry experts put the Turnkey cost of large-scale commercial arrays at $2 per Watt. Assuming a 50-cents-per-Watt panel price, that implies a Turnkey Factor of four for large-scale commercial arrays.

Because small, home retail arrays lack economies of scale, the Turnkey Factor for them is much higher. For my family’s own solar array, just installed in August, the Turnkey Factor, based on a putative (not our actual) 41-cents-per-Watt of the panels, was 14.6. (The actual fully-loaded cost of our array, including siting, installation, permits and assistance with federal and state tax credits, was $5.98 per Watt.)

A little arithmetic shows how important these numbers are. With a Turnkey Factor of four, 75% of the cost of the array (and therefore of the cost of energy) comes from the cost of the infrastructure and installation, not the panels. Reduce the infrastructure-and-installation cost by just 15%—or 15% of 75% = 11.25% in absolute percent—and you’ve done as much as cutting the cost of the panels from 25% to 13.75%. That’s the same as cutting the price of cells or panels from 41 cents per Watt to 22.55 cents, almost in half!

For smaller-scale home arrays, the numbers are much more dramatic. With a turnkey factor of 14.6, the solar panels account for only 1/14.6 or 6.8% of the cost of the array. Reduce the infrastructure-and-installation cost by 7.3%, and you’ve done as much as eliminating the cost of the solar panels entirely. Not even a major breakthrough in semiconductor technology could do that!

So from now on, cost reductions in solar PV energy will come primarily from pedestrian (but important!) advances in infrastructure engineering and management that lower the cost of the foundation, racks, inverters, cables and other equipment for solar arrays, and the cost of installing them. From here on out, it’s all about ordinary industrial efficiency.

Let’s take an example from my family’s ground-mounted home solar array, pictured here. It took about six days to prepare the foundation alone: (1) a day (for a six-man crew) to dig the holes for the concrete pads, smooth them, border them, and place and adjust the cables and conduits; (2) a second day to pour the concrete; (3) two days to let the concrete dry thoroughly; (4) a day to drill the holes for and glue in the special bolts for mounting the aluminum racks and to let the glue dry; and (5) another day to mount the racks, panels, inverters and switches and connect everything up.

The ground under our array is not very hard; it’s soft soil. Suppose someone could figure out a way to pound in steel pilings with the necessary attachments in a single day. That improvement alone would probably cut at least twenty percent from the infrastructure and installation cost—almost three times the savings from eliminating the entire cost of the panels themselves.

Not being a soils engineer, I don’t know how practical this idea is. It’s just an off-the-top example. But it’s easy to see how that or similar techniques could make dramatic cost reductions, far beyond incremental reductions in the manufacturing cost of solar panels.

Suppose racks and other infrastructure for small arrays could be prefabricated, pre-assembled, delivered to the site on large trucks, and installed by pounding in key supports with pile drivers. Then a small crew, perhaps with the aid of a specially-designed support equipment, could assemble the rack, attach the panels and inverters, and connect the switches and cables—all in one day. That probably would have cut the total cost of our solar array by at least 50%, more than seven times the savings from reducing the panel cost to zero.

If you’ve ever seen a picture of a fleets of specialized small trucks used for fracking gas and oil, you get the idea. At this point, investment in infrastructure generally, including specialized vehicles and tools to build and install the infrastructure quickly, could produce economies far more quickly than any advance in solar-panel or semiconductor technology.

These sorts of advances don’t require new physics or math or new materials science. They just require good engineering and good business management—something our energy industry is already adept at.

As these advances take hold, you can probably expect concomitant reductions in solar-PV-energy pricing, perhaps down to (or below) half a penny per kilowatt-hour over the life of the solar installation. It shouldn’t take more than two or three years to get there.

Investing Tip and Disclosure

This analysis suggests that the cost “horse race” among solar-panel manufacturers, so avidly covered in our financial press, is largely irrelevant. The biggest reductions in the cost of solar energy are likely to come from greater efficiencies in infrastructure manufacturing and installation, not small reductions in panel cost. That’s why my wife and I own stock in GE (an engineering infrastructure leader) and First Solar (an efficient American solar-panel maker). GE now has a contractual “partnership” with First Solar. I wouldn’t be surprised if, after an extended trial of that “partnership,” it bought First Solar entirely, in order to achieve further efficiencies from vertical integration.

Uncertainty: Not Much

There’s not too much uncertainty in these cost figures. After all, they depend on only two variables: (1) plant cost and (2) plant longevity. The accountants can calculate (1) with a high degree of precision. So the only uncertainty comes from the longevity factor (2), i.e., the plant’s working lifetime expressed in kilowatt-hours of aggregate lifetime energy generated.

Longevity is uncertain only because no one has yet run solar panels for a century or more. So we don’t have the actual experience. That’s not surprising. Albert Einstein explained the photoelectric effect in his famous Nobel-Prize-winning paper in 1905. So it’s only been 108 years since we knew (roughly!) how solar panels work, let alone made practical use of the principle that Einstein explained.

But we do have plenty of shorter-term measurements and theory. Both show that solar panels’ power drops about 2 to 3% in the first two years and then tapers off thereafter in a linear fashion, at about 0.7% per year.

That’s precisely what the so-called “linear warranty” of solar-panel makers says today. It’s now an industry standard, offered by both LG and Solar World. It guarantees that linear tapering of power output for 25 years, with a minimum power output at 25 years at least 80% of the original.

What can we expect after the warranty expires at 25 years? Should we expect the solar panels to just suddenly die, as cars and appliances often seem to do right after their warranties expire?

Not at all. Mechanical-device warranties are relatively short (up to a maximum of five or ten years for some car drive trains) because cars and appliances have moving parts. Engineering projections on which warranties are based use something called a “mean time before failure” or “MTBF” analysis. The MBTF estimate comes from actual tests of moving parts as they fail for all sorts of reasons, including wearing, breaking, cracking, spalling, warping, and other mechanical failure from the heat and mechanical stresses of being a moving part of an engine or transmission.

Engineers use complex statistical techniques to calculate the MTBF for each critical part. Then they use even more complex statistics to put the MTBFs together to deduce a probable time to failure of the engine and drive train as a whole, or at least the point at which it will no longer be economical to offer a warranty.

There is no analogue to MTBFs for solar panels because they have no moving parts. Complete failures simply have not been observed, except when the panel is physically damaged or destroyed.

My solar array installer, for example, reports only one problem of this sort, when a kid drove a baseball through a panel. Insurance covers that sort of damage, as well as destructive weather events.

What has been observed—carefully and over many years and many panels—is the slow, steady, reliable decline of power output, as described in the linear warranty. There is no reason, other than the risk-aversion of lawyers and executives, to expect that power output to drop precipitously, or to continue along a steeper linear path, after the warranty expires.

And even if it did, there would be a limit to the impact on energy pricing. Why? Because, as we’ve discussed, the lion’s share of capital cost—and therefore energy cost—comes from the infrastructure and installation, not the solar photovoltaic panels. If, for example, the Turnkey Factor is four (about the state of the art for commercial arrays now), you would have to replace the panels three or more times before you would double the amortized energy cost.

Since our calculations are based on a century longevity (with the equivalent of 66 years of full-power operation, in accordance with the linear-warranty formula), that is the maximum added-cost exposure that the 25-year warranty would allow. And if even panel failures doubled the amortized cost of solar PV energy from one to two pennies a kilowatt-hour, it would still be half the cost of coal power (4 cents per KWh), without the pollution and global warming.

For home solar arrays, the arithmetic is even more favorable. If the panels cost only 6.8% of the cost of the array as a whole, replacing them three times during the course of the century would raise the amortized cost of energy by less than 21%.

Both these estimates assume that the price of the panels would stay the same, instead of decreasing with advances in manufacturing efficiency and semiconductor technology. Just as it’s bad strategy to bet against Mother Nature, it’s bad strategy to bet against improvements in efficiencies and cost in American industry, especially over time periods as long as a century.

A simple conclusion follows. There is no reasonable projection under which the cost of solar PV energy, from this day forward and properly computed, will ever exceed the cost of electrical energy from coal or natural gas, which produce energy at about the same cost if you ignore coal’s horrendous pollution from sulfur, mercury and particulates, and its double effect in heating our planet. This conclusion also ignores the probable increase in natural-gas prices with increasing use and demand and decreasing supply as even fracked sources become depleted.

Footnote. Precise links to warranty information may vary, as manufacturers tweak their websites. As of this post’s publication, you could find the linear warranty on LG’s website at this link by clicking on the “Technical Specifications” tab and “Certifications and Warranty” subtab. For Solar World, you could find the same linear warranty here, complete with a helpful graph. [Scroll down to “Performance guarantee.”]

Saving Harbin from Coal Smog

Today (10/21/13), Harbin, China, suffered record-breaking smog, forty times the international limit. Most of it came from ordinary people burning coal to heat their homes. Today was the first winter day on which authorities permitted that burning, and it was quite an eye closer.

Harbin today is like London in the nineteenth century. Actually, it’s worse because it has more people than nineteenth-century London. And Harbin is colder than London, so people use more coal to heat their home and businesses.

But it’s the exact same phenomenon. The “London fogs” that Charles Dickens and other writers described were not fogs all. They were coal smogs. They miraculously went away when Londoners converted to electric heating, using large power plants away from cities. Those plants still used coal, but they pulled the pollution out of the city. At least they didn’t disperse it uniformly over the inhabited area, as individual coal fires did. Later, with nuclear power and natural gas, the pollution decreased still further.

Could Harbin do much the same thing? Well, the Gobi Desert’s eastern edge is less than 600 km from Harbin. That’s an easy pull for power lines. On average, the Gobi Dessert has 100 mm rain a year. It has lots of sun and wind. China could build huge solar and wind power plants only 600 km away from Harbin and heat Harbin with clean electricity.

What about at night? Well, heat is easier to store than electricity. When I was on fellowship in Cambridge, UK, in the early 1970s, my flat had a big, heavy heater full of bricks. The power came on at night, when electricity rates were cheaper, and heated the bricks all night. The stored heat kept my flat toasty during the day.

Harbin could do the reverse: heat during the day with clean electric power from the Gobi Desert and store the heat in bricks or oil at night to keep people warm in bed. Harbin would have it even easier than London, for two reasons. First, people need less heat at night because they have blankets. Second, cloudy London has no reliable source of sun and wind like the Gobi Desert nearby.

China could do this without any expensive lithium batteries. It would need no high technology beyond existing solar panels and windmills. Just a little sound engineering and a few hundred kilometers of power lines could do it.

Bye, bye smog. With Chinese solar panels and windmills, administrative decisiveness, ingenuity and labor, it wouldn’t take more than two or three years to make this happen.

How much would this solution cost? Let’s do some quick numbers. Harbin has eleven million people. Suppose China gave every man, woman and child there five kilowatts of heating during the day. That’s a total of 55 gigawatts. If China can match the US state-of-the-art Turnkey Price for large arrays of $2 per Watt, the cost for an adequate solar array would be $110 billion.

According to American Electric Power, a Northeastern US utility, a single 765kV high-tension power line can transmit 81.5 gigawatts 550 miles or 880 kilometers. [Search for “Q11”] The actual distance would be less than 600 kilometers, or 360 miles. At a maximum per-mile cost of $ 4 million each [Search for “Q3”], that single line would add 360 x $ 4 million = $1.44 billion to the array cost, or about 1.3%.

How big would the solar array be? A 55 gigawatt solar array would occupy 55,000 times 1.6 acres, or 88,000 acres—137.5 square miles. That’s a square less than twelve miles or twenty kilometers on a side, a drop in the bucket of the Gobi Desert’s half-million square miles.

The Great Wall, with all its tributaries, is over 6,000 kilometers long. China started building it well over two millennia ago, with nothing but muscle power of men and beasts. Think it could build a single 600 km power line and a twenty-by-twenty kilometer solary array? Of course it could. All it needs is political will. Then China could have the first twenty-first-century clean solar city. And think of all the clean, healthy construction jobs.

IKEA goes solar!

IKEA, the Swedish furniture maker, will soon be offering solar arrays at the bargain price of $9,200 for a 3.36 kW system, but only in Britain. Following is the price analysis, without and with federal and state tax credits:

Raw price
before tax credits
Price per
Watt Capacity
Lifetime Price
per kilowatt-hour
$9,200$2.742.2 cents
Price after 30%
federal credit
Price per
Watt Capacity
Lifetime Price
per kilowatt-hour
$6,440$1.921.53 cents
Price after 30%
federal and
10% state credits
Price per
Watt Capacity
Lifetime Price
per kilowatt-hour
$5,520$1.641.31 cents

In comparison, existing coal and natural gas plants produce energy at 4 cents per kilowatt-hour and nuclear plants at 10 cents.

At last rate in our table, you’d be generating energy at less than a third the cost of coal and natural gas, and less than a seventh the cost of nuclear power, with no pollution and no meltdown risk. And you would be saving about 11.5 cents (the national average retail cost of conventional electricity)—for a net savings of 10.2 cents—on every kilowatt-hour your array produces that you use.

If you produce more energy than you use and live in a state that pays you for it, you get a check every month, instead of a bill. My family just got our first $58 check this month. Welcome to practical application of Albert Einstein's "photoelectric effect."

IKEA’s price probably excludes installation. If installation is included, you should run, not walk to your nearest IKEA store and buy an array when (and if) IKEA makes them available here. Even if installation is extra, for a roof it mount probably would not increase the price by more than 30-40%, i.e., less than the federal and state tax credits here.

Sobering Note: Unfortunately, IKEA’s solar arrays will probably not be available in this country anytime soon, and maybe never at this price. IKEA has no present plans to sell them here.

Why? Probably because its Chinese supplier has excess capacity and is selling below cost. Having no domestic solar industry (of which I'm aware), Britain would not object. But we would. Selling below cost is illegal under US and international law, and our strong domestic solar industry and our President would take legal action to stop below-cost imports.

A Conspiracy of Silence?

After two weeks of unremitting political travesty, it was so refreshing to publish a post about something real, like the one above. But before taking what I hope will be (at most) a sixteen-week recess from political insanity, I can’t help but make one comment.

Why will no one in our so-called “mainstream” media call out the Tea Party for what it is: a rump movement born in and driven from the Old Confederacy?

Is there a conspiracy of silence? Is there some sort of misguided geographic delicacy, a desire not to set one region against another? Is it historical amnesia—a counterfactual desire to believe that our Civil War actually ended with the President’s second election? Is it that Southerners have silently taken over our mainstream media, as suggested by the soft Southern accents around the table on this night’s edition of Gwen Ifill’s Washington Week?

I have no idea. But aren’t our media supposed to give us facts, at least some of the time? And isn’t it a fact that just short of two-thirds of the core of 32 self-confessed Tea Party members in the House come from the Old Deep South and the border states? And isn’t it a fact that none of the infamous 32 comes from a city, at least one outside the Deep South?

And isn’t is a fact that the most notorious of all, the Joe McCarthy of our time, sporting the same sort of nasty smirk and personal mannerisms, comes from Texas, our most mentally unbalanced state, whose Republican party at one time wanted to abolish most every agency of the federal government but our armed forces?

Is Ted Cruz really a national movement? Is JimDeMint, former senator from South Carolina, who now heads the arch-conservative Heritage Foundation, and has been heard to say that “he would rather have 30 Republican senators who think exactly as he does than 60 who don’t”?

Does it make any difference that, of all the 38 million people in California, which is by far our largest and most productive state, there is only one Tea Party Member in the House? Does it matter that he comes from a district in the far southeast of Sacramento, which, as far as I can tell from a quick Internet investigation, is a retirement community of old white people who can’t afford to live anywhere in California where people with middle-class incomes prefer to live? And does it matter that the Tea Party has not a single member of Congress from the great industrial states of New York and Illinois?

I’m a reasonable guy, who admit my mistakes. If I’m wrong, show me. Name the Tea Party representatives from our big cities, from our productive industrial areas, from our financial or entertainment centers. Name the ones from our defense centers, where people make the machines and train the men and women that keep us safe.

But if you can't, if there are no such, then tell it like it is. Tell us, again and again, that the Tea Party is a creature of the South, another means to refight the long-lost Civil War, and an attempt by a tiny, atavistic minority to rule this country through procedural machination, self-aggrandizement and media smoke and mirrors. Tell us that it’s all a dark and dangerous form of show business, with the goal of destroying what remains of this nation’s heritage of Reason and greatness.

Please don’t pretend it’s a national movement or anything other than a transient gasp of a dying regional culture. And please don’t let us think so because you’re too lazy to investigate, or you need sensationally dysfunctional personalities like Cruz to sell news. We’ve had quite enough drama and far too little leadership lately, thank you. We don’t need more from our media, let alone PBS.

Footnote: I provide no link because this show was one of the few that simply wasn’t worth watching. Maybe everyone was tired from the nonstop drama.

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17 October 2013

A Real Solution? Not Yet!


Our media are all breathless with a “solution” to the crisis that our Republicans manufactured. If all goes well, by the end of the day we’ll have a government that is open for business and can borrow again.

The stock market will surge. And we Yanks, whose greatest skill these days seems to be congratulating ourselves prematurely, will celebrate. Break out the champagne!

By its own terms, this “miraculous” solution will last through January 15 for government operations and February 7 for borrowing. In sixteen weeks the whole show will begin again.

The People’s Republic of China has five-year plans. We have sixteen-week plans. Who do you think is going to win in the fierce but peaceful competition long under way?

I keep waiting for a little ® to appear next to the terms “government shutdown” and “debt default.” Below them will be the lawyerly legend, “Government Shutdown® and Debt Default® are registered trademarks of the Republican Party.”

Republicans certainly don’t want the Dems to use their intellectual property when the GOP is in power. So why don’t they just register their trademarks and be done with it?

Anyway, what will happen to our democracy, i.e., to majority rule? John Boehner will still be Speaker. You could see from his little Ted-Cruz smirk that he’s pleased with himself. He put on a good show for his Tea Nuts and kept the whole party together, at least for now.

Having changed nothing and apparently having learned nothing, Boehner will still follow the so-called “Hastert Rule,” at least after today. That means he will require majority Republican support, rather than a simple majority of the whole House, for the House to pass any bill.

According to the House’s own official Website, it now has 232 Republicans, 200 Democrats and three vacancies. So if 116 Republicans and all 200 Democrats want to do something, their bill will never reach the House floor.

Think about that. That’s 116 Republicans and 200 Dems—a total of 316 out of 432 members. That’s 73%. And under the “Hastert Rule” they can’t do anything. Didn’t our Founders and our high-school civics courses say something about majority rule?

That’s what’s wrong with our country. It’s not the Tea Party. We’ve always had nuts in this country. We’ve always had a Confederacy, explicit or tacit. Now its political arm is the Tea Party. So what? It just hid itself better than usual.

We should have known, but our media failed us, badly. They were so riven by the human drama and that entrancing and aggravating little Cruz smirk that they failed to give us the basic facts: who are these people and whom do they represent? Now we know.

Until the last two decades, we’ve never let our South rule us as a minority. Didn’t we once fight a Civil War about that?

The Confederates have never been able to convince a majority of us to see things their way. But now they don’t need to. They just need a 27% minority in the House, a 41% minority in the Senate, or a single Senator willing to stick his or her neck out and “hold” a bill or presidential appointment that the vast majority of us want. Then they can bring Congress and our government to a halt.

The rogue senator doesn’t have to stick a neck out very far. Unlike a presidential veto, a Senate “hold” can’t be overridden. And much of the time it’s secret and anonymous, so the public doesn’t even know. Not even the senator-culprit’s own constituents need know.

He or she can stab our democracy in the back in the dark. Senator Shelby of Alabama has done this to the President’s appointments seventy times.

Numbers matter. Procedure matters. Rules matter. And they have changed so we no longer have a democracy. It’s that simple. Those smooth Southern pols, with their soft voices and soporific accents, have lulled us into giving up our birthright as a nation, without a shot fired.

But don’t worry. Our President has a plan.

It involves those sixteen weeks. If today’s “precedent” holds, by next November we will have gone through this selfsame farce approximately seven times.

Think we’ll all be mighty sick of it by then? I hope so. By then, maybe most of us will have realized that our government is not our enemy, but our friend. Sometimes absence makes the heart grow fonder.

But by then, we’ll also be a banana Republic and the world’s laughingstock. They rest of the globe, which is not as big on late-night television as we are, will invent new comedy shows just to crack jokes about us. The new global reserve currency will be the Yuan, the Euro, or some come combination of the two (maybe with the Yen). And when we try to offer our advice, foreigners will work hard to look polite but will start to chuckle and guffaw into their cuffs.

There’s always a silver lining. Our good people, having wised up at last, will finally vote out the goons who don’t believe in government and vote in some who do. With Democratic majorities in both Houses of Congress, we’ll be able to change the rules and restore majority rule in our Congress. We might even save our Democracy, but we’ll probably be too late to save our global leadership.

So please don’t tell our moron-bullies about the President’s plan. It might not make much difference to them. They don’t seem to pay attention to much beyond the voices in their own heads anyway. But stay mum just for caution.

If we let the President use his superb skills, we’ll have a wild ride for a bit over twelve months, and then democracy again. We’ll be a much-diminished nation. But won’t majority rule be worth the roller-coaster ride? And do we have a choice? I don’t know about you, but I’m not ready to join the Confederacy quite yet.

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15 October 2013

Not Even a Fig Leaf


[Events are moving so fast that I’m taking the rare step of publishing a new post while the most recent ones are still current. For those recent posts, about what the Tea Party and its goals really are, click here].

As our pols search for a way out this GOP-made artificial crisis, they talk of accommodating Boehner and his Tea Nuts. Give ‘em a fig leaf, some say, so we can get on with the nation’s business.

But we shouldn’t. We shouldn’t even think about it. We shouldn’t even think about it quite apart from the endless series of continuing resolutions and new phony crises that beckon if we do. Why? Let me count the ways.

1. They have no plan. If you thought there was a coherent plan, the news today should have dispelled that misconception. After vacillating among debt reduction, approving the Sequester, trying to fix the Sequester, not trying to fix the Sequester, killing “Obamacare,” delaying “Obamacare,” and going back to debt reduction, the nuts are after “Obamacare” again.

As I explained in my last post, they apparently don’t fear a government default because they expect it to cause another Sequester on steroids, but not a default in Treasury obligations. If they have any plan at all, it appears to be causing as much confusion, pain, havoc and makework in government as possible, and then shutting it down, for as long as possible.

2. They are after power alone. There is not the slightest hint of consistency or realism in the apparent goals of the Tea Partiers or their champion Boehner. They are just trying, extemporaneously, to exploit whatever momentary blip in the polls their political operatives see.

They are entirely PR driven. Their sole consistent goal is securing transient power for their party and its backers.

And who are those backers? Certainly not us, the people, or even the Tea Party’s own deluded partisans in the outback. Their backers are billionaires like the Koch Brothers and Sheldon Adelson, the casino magnate in Macao, and the moron-pundits on Fox.

3. They are the minority. We should never forget that the Tea Party is a tiny minority, mostly from the South. Its banner is the Confederate flag. It is fighting a non-violent war that has been with us since our Republic was founded. It wants a United States governed by medieval ideology that the whole world has abandoned. It fights for the right of bosses to control us, including the ones who support the PACs that support it.

In the House, the 32 self-confessed Tea Party members constitute a 7.3% minority of the 435 members. By extortion and procedural machinations, and with John Boehner’s blessing, this tiny minority presumes to rule us—all 307 million of us.

If we let them, even in small things, we will have lost whatever pretense to majority rule our malapportioned Senate, routine filibusters, Senate “holds,” and the so-called “Hastert Rule” have left us. We will have allowed the subversion of majority rule in America to become complete.

4. “Obamacare” will work. Every innovation takes time to shake itself out. Think Boeing’s “Dreamliner” is a failure? Think again. It’s now flying again, and it’s 20% more efficient its competition on a per-passenger basis. In a year’s time it will dominate the market for long-haul air traffic, possibly sharing especially dense routes with the Airbus A-380. That’s why I intend to invest in Boeing again as soon as I can assure myself that Boehner and his Tea Nuts will not destroy the global economy in the near future.

“Obamacare” is like the Dreamliner. It’s brand new in concept, and it’s extremely complex. It will take time to work out its bugs. But there’s plenty of time to do so before President Obama leaves office. And before even thinking of repealing it, just ask your doctor how having 15% of Americans with no medical care would affect a pandemic. (Hint: it would let it spread much faster and kill many more.)

5. Even a tiny fig leaf would be a big PR victory. The Tea Party and its Republican fellow travelers have no plan and no understanding of economics. In fact, their “platform”—if such exists—is contrary to the economic interests of most of its rank-and-file members.

The Tea Party was born of PR and exists for PR alone. Even its name is a misleading bit of PR. It is a Southern rump movement having nothing to do with the original Boston Tea Party or the Founding of our nation.

It lives on PR like a lizard eating its tail. We should not give it more food so it can fight to subvert our democracy for one more day. We should starve it.

6. We must draw a line. In our best days as a nation, we did not compromise with evil. We made Robert E. Lee, the Nazis, and Tojo surrender unconditionally. We should do the same now.

We made a big mistake in dealing with our rogue bankers. We made them pay money for their wrongs, which they have plenty of. But we didn’t make them confess to wrong, or even pay very much. So, except for the Fed’s more stringent capital requirements, our financial system is about as precarious and susceptible to skullduggery today as it was in 2007-2008.

Our new SEC chief, Mary Jo White, has a better idea. When she sues and wins, or even when she settles, the culprits will have to admit wrongdoing, as well as pay up.

Mary Jo White is right. We cannot leave our children and our posterity thinking that wrong is right and that accommodating wrong is the right thing to do.

We cannot accept a 7.3% minority of one House trying to rule this country. We cannot accept a clueless authoritarian boss trying to let them rule just to preserve his personal power and his failing party in its current extremist form. We cannot let the South and its medieval ideology rise again.

There are times to accommodate and compromise and times to stand firm. If there ever was one, this is a time to stand firm. We must crush the Tea Party, the sooner the better. We cannot give it bragging rights or feed its insatiable maw with more lies.

We, not it or John Boehner, are the overwhelming majority in this country, in productivity and innovation, as well as numbers. We must re-assert majority rule—decisively—lest we lose it forever. Nothing less than the survival of democracy within our borders is at stake.



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13 October 2013

Know Thy Extortionists


[For a new take on financial Armageddon, click here.]

I don’t usually link to political cartoons, but a superb one appeared in the New York Times Monday, by Pat Oliphant. The drawing is exquisite, and the message resonates on so many levels. It brought tears to my eyes, and I’m not even Irish. It shows what we’ve lost as a nation, and what we once had.

The link may not last, so look at it now. For readers under 50 who are not political junkies, the two men pictured are Ronald Reagan, Republican, and Tip O’Neill, Democrat.

Introduction
Who is the “Tea Party”?
What do They Really Want?
Conclusion
Is Chicken Little Wrong?

Introduction

As we all prepare for tomorrow’s stock-market crash and the usual mealy-mouthed expressions of concern ostensibly intended to avoid it, we might ask a relevant question: “Who’s holding us hostage?” Fortunately for us, our extortionists don’t all wear the ski masks appropriate to their trade.

Of course the short answer is just one person: John Boehner. He could end this phony crisis—and preserve our nation’s good name and credit—in a single hour, while the House is in session. All he has to do is bring a clean debt-limit-raising bill before the whole House for majority rule, as our Founders intended. With the help of Democrats and independents, Republicans who still value their country and its business over extreme and abstract ideology would pass it in a minute.

But no good Mafia capo acts without backup. Boehner is no exception. He’s got at least 32 strong-armers behind him, or (as he might claim) extorting him with loss of his Speakership.

The Atlantic magazine has given us a helpful roster of these strong-armers, complete with their names, photos, districts and key juicy quotes. My state-by-state and regional analysis of the list, shown below, reveals why we are in the pickle we are.

Who is the “Tea Party”?

As I have outlined several times, the so-called “Tea Party” has absolutely nothing to do with Massachusetts, the original Boston Tea Party, or the Founding of this nation. It is an entirely regional movement, dominated by the Old South, with a few fellow travelers from our rural outback.

As my regional analysis indicates, just over half (17) of the Tea Party’s 32 self-designated House members are from the Old, Deep South. Adding in the border states of Kentucky, Missouri and Tennessee accounts for just under two-thirds (21) of the 32 members. So now we know what this movement represents: a belated and covert attempt to refight the Civil War. More on this later.

The remaining eleven extortionists all hail from various parts of our rural outback. Their districts are mostly in the Midwest, with just five—all together one-sixth of the total—in the North and West.

Don’t be fooled by states like California, Indiana, Michigan, Ohio and New Jersey appearing in the roster. Their Tea Party goons don’t come from any notable or highly productive places. They come from towns that can charitably be described as in the middle of nowhere.

The California goon represents Elk Grove, a retirement town in the far southeast of Sacramento. The one from Indiana votes for Howe, a town 53 miles south of Kalamazoo, Michigan. The rep from Michigan hails from Great Falls, a town far from the universities of Ann Arbor and Lansing and the industrial conurbation of Detroit. The one from Ohio represents Urbana, a no man’s land in the outback, about equidistant from Columbus and Dayton. (Don’t confuse Urbana, Ohio, with Urbana, Illinois, the site of the well-respected University of Illinois.) And the one from New Jersey represents Wantage Township, a town in the far northeast corner of the state lying between a national wildlife refuge and a state park.

Needless to say, these places are not part of our industrial, commercial, or financial heartland. They are rural outposts or far suburbs that time, progress and apparently education have passed by.

Not a single listed Tea Party member outside the South hails from a city, and only two from the South or Border States do (Houston and Charleston). There is not a single listed member from the industrial states of New York and Illinois. And the sole member from California hails far from the great industrial conurbations of the Bay Area, Los Angeles, and San Diego, let alone Silicon Valley.

What do They Really Want?

Don’t all these rubes deserve their representation, too? Of course they do. But the Tea Party’s extortionists comprise only 7.3% of the House’s 435 members. They are nowhere near a majority. They aren’t even a substantial minority. That’s why they wouldn’t have a prayer of bringing our nation to its knees if our Congress still operated by majority rule. And that’s why they think they have to resort to the extortion in which they are currently engaged.

I’ve posted another whole essay on the pathological perversions to our supposedly democratic system that permit this extortion and have brought us to this pass. I won’t repeat that analysis here. This essay is about what the Tea Party really wants: to refight our Civil War in a hogtied Congress.

Think I exaggerate? Consider the views of Andrew Johnson, who succeeded to our presidency when a confessed Southern partisan assassinated Abraham Lincoln. Johnson was a Southerner who supported the Union but was virulently racist. He vetoed a bill that would have created a federal “Freedmen’s Bureau” to help freed slaves get on their feet and start normal lives in the Civil War’s immediate aftermath. He also vetoed the first civil rights bill, designed to effectuate the Civil-War Amendments to our Constitution (13th through 15th). But a Republican-led Congress overrode this second veto. (In those days, the Republicans were the good guys.)

It exaggerates little to say that Johnson served as a Southern fifth column at the very head of our government. He worked hard to undo much that the bloodiest and most brutal war in our national history had tried to accomplish. But what he did is not nearly as interesting today as why he did it. He vetoed both the Freedman’s Bureau Bill and the first civil rights bill at a time when his vetoes were the first of major legislation in our national history. And he did so for reasons that precisely prefigure the South’s political culture today.

First, Johnson argued vociferously against federal power and for states’ rights. He was not above lying to press his point. He characterized as a permanent federal intrusion the Freedman’s Bureau, which the bill explicitly proposed to make temporary, i.e., an interim expedient for Reconstruction only.

Second, Johnson made, in another context, the same argument repeated just this year about so-called “Obamacare.” He claimed that the Freedmen’s Bureau, by helping blacks get on their feet after a lifetime of slavery and the ubiquitous destruction of a brutal civil war, would lead them into “a life of indolence.” The proposed aid, he wrote, “would injure the ‘character’ and ‘prospects’ of the freedmen by implying that they did not have to work for a living.” Isn’t that precisely the argument that Southerners make today against giving subsidized health insurance to “freeloaders” and “takers,” or food stamps to starving people who can’t find jobs?

Even then, Johnson was not oblivious to economic arguments. He argued, thirdly, that the federal budget was too tight to help freed blacks become truly independent citizens.

Isn’t that rich? The South exhausts the nation’s wealth by seceding, thereby precipitating the bloodiest war in our history, and fighting that war fiercely until it could fight no longer. Then its representative, now our president by assassination, claims there is no money to complete one of the principal tasks for which the war was fought: freeing the slaves and making them fully American.

This claim recalls the parricide who kills both his parents in cold blood and then asks the court’s mercy because he is an orphan. It’s also much like today’s Southern pols, whose districts have outlandish proportions of uninsured, and who claim that “Obamacare” will bankrupt the country and raise premiums.

But the fourth and final point of Johnson’s world view was and is the most important. His personal ideology elevated individuals (usually bosses) over communities and the states over the federal government. For him and his ilk, our Constitution was a step in the wrong direction, away from our Articles of [loose] Confederation among truly independent states.

Johnson laid out this worldview in his message vetoing the Freedman’s Bureau Bill. Congress, he wrote, had never felt called upon to “provide economic relief, establish schools, or purchase land for ‘our own people.’” Doing so would only promote indolence and reduce states’ rights to mistreat their people, including just-freed slaves, as they chose.

Conclusion

Although almost a century and a half old, Andrew Johnson’s views are strikingly similar to, if not identical with, those our our Tea-Party extremist-extortionists. The only salient difference is that racism is no longer a fundamental and explicit axiom, but only a tacit undercurrent. The foundational pillars are the same: unfettered states’ rights, social Darwinism, bossism, and unwillingness to protect fellow citizens from suffering, for reasons of utter selfishness, sold to us as tradition, “common sense” and social “wisdom.”

This worldview is an anachronism. It was appropriate to the South’s original eighteenth-century landed aristrocracy founded on slavery. It may have been appropriate to nineteenth-century imperial Europe, although it caused some of the bloodiest and most pointless wars in our species’ history.

But it’s no longer appropriate today. Outside the few remaining tyrannies, mostly in the Middle East and Africa, and on the northern part of the Korean Peninsula, the whole world has abandoned it. Europe did so long ago, as they did Down Under. Even authoritarian China and Russia now arrange their policies for the benefit and economic sustenance of ordinary people, or at least they try to. Our own nation may be the last one on Earth to expound social Darwinism and deliberate (or negligent) oppression of the less fortunate as matters of national principle.

In our own country, this view has proven as hardy as tumbleweeds—resilient, irrepressible and popping up everywhere, borne on political winds of self-service. It has survived our nation’s rancorous division, our bloodiest-ever war, the freeing of our slaves, Robert E. Lee’s unconditional surrender at Appomattox, the anguish of Reconstruction and Jim Crow, our tumultuous civil rights revolution of the 1960s, and even one and a half terms of our first half-black president.

But it remains as it has been from the beginning: decidedly a minority view. Today the minority that holds it is vocal and adamant but tiny.

That sobering truth raises the key question: what now? Can the South and its fellow travelers impose this unwanted world view on the rest of us, by subverting our Congress, extorting us, and using an ex-Australian’s world-crushing propaganda machine to delude us?

At first glance, there seems to be no resolution short of war or separation. We tried war about a century and a half ago. We even won it, but the victory ultimately did us little good. The former slaves are free but still disparaged, and medieval ideology is still at large. It spreads like tumbleweeds in our sparsely populated outback.

And so, as I argued half a year ago, maybe separation beckons. It certainly is better than another civil war or continuing to live as we are. Even someone as dumb as Rick Perry can be right some of the time.

In the meantime, we have a country to run and a default to avoid. The President, with all his political skill, is trying to thread the needle. He’s going to wait long enough, and make us all endure pain strong enough, to show us just who and what these extortionists are. Only he, with his extraordinary empathy and political skill, will know precisely when to stop. Then, he hopes, the Tea Party will go the way of the Whigs, at the election just over a year away, and the party of business, trade and moderation will shake off its tea fever and convalesce.

It’s a good plan, perhaps a necessary plan. And there is no one in national politics today whom I would trust more to make that hard decision than our President.

But a vital question rings: how much of our Republic and economy will remain when all the dust has settled? Our hybrid Republic, from the start an awkward mix of enlightened democrats and self-obsessed aristocratic slave owners, never had a guarantee of perpetual life.

And the slave owners have jinxed us by planting numerous time bombs in our Constitution, which their successors have shamelessly exploited. Whether we can overcome the South’s medieval ideology and procedural manipulation, or whether we should go our separate ways, remains our central question for the twenty-first century, just as it was in the middle of the nineteenth.

Well over two centuries after ratifying our Constitution, we still have two cultures—a dominant, productive and largely enlightened one, and a virulent minority one left over from the days when tobacco and cotton were kings, whom slaves served. This minority culture shows few signs of subsiding. On the contrary, it is spreading like a virus, taking over Congress with procedural machinations that make a mockery of our Founders and their ordered democracy.

Despite our Civil War and the century and a half we’ve had to recover from it, we are no closer to resolving the conflict than we were when our Great Compromise decreed that Wyoming, with 576 thousand people, would eventually have the same two senators as California, with 38 million, or about 66 times as many. Perpetuating minority rule by subverting what is left of majority rule in Congress is unlikely to make the conflict go away.

The House Tea-Party Roster, in Brief


Following, in declining order of number of House members per state,
is the House Tea-Party’s state-by-state roster:

StateNumberDistrict/TownMember’s Last Name
Texas6Clear LakeStockman
HoustonCulberson
LubbockNeugebauer
PearlandWeber
Round RockCarter
TylerGohmert
Georgia3AthensBroun
MariettaGingrey
RangerGraves
Arizona2Fountain HillsSchweikert
MesaSalmon
Florida2Ponte Vedra BeachDeSantis
GainesvilleYoho
Louisiana2MindenFleming
JeffersonScalise
South Carolina2LaurensDuncan
CharlestonSanford
Tennessee2BrentwoodBlackburn
JasperDesJarlais
Alabama1HuntsvilleBrooks
California1Elk GroveMcClintock
Idaho1EagleLabrador
Indiana1HoweStutzman
Iowa1KironKing
Kentucky1GarrisonMassie
Kansas1FowlerHuelskamp
Michigan1Grand RapidsAmash
Minnesota1StillwaterBachmann
Missouri1HarrisonvilleHartzler
New Jersey1Wantage TownshipGarrett
North Carolina1CashierMeadows
Ohio1UrbanaJordan


House Tea-Party Roster by Region


RegionNumberPercentageStates
Old South1753%AL, FL, GA, LA, NC, SC, TX
Border States412.5%KY, MO, TN
Midwest618.8%IA, IN, KS, MI, MN, OH
North13%NJ
Northwest13%ID
Southwest26%AZ
West13%CA


Erratum: An earlier version of this last table listed the Southwest region as having only one member from Arizona, rather than two. I regret the error.

Footnote 1: The quotations are from a section of historian Eric Foner’s 1988 book on the subject that is published on line. Words in double quotation marks are Foner’s and those in single quotation marks Johnson’s.

Is Chicken Little Wrong?

Well, the stock market didn’t tank today as I had predicted. In fact, it went up, albeit modestly. I’ve left some money on the table in the last few days by staying out.

Like any honest scholar or rational investor, I take being wrong as a learning opportunity. What happened?

For days, if not weeks, Chicken Little has been saying, as is his wont, that the sky is falling. His avatars on Earth, including the Administration and most of the financial pros, have been predicting financial Armageddon if the debt ceiling isn’t raised on time. And for all the progress our pols have made so far, it looks as if any accommodation between the irresistible force (Tea Party) and the immovable object (the President) is still days, if not weeks, away.

So what gives? One possibility is that Armageddon is just not as close as claimed. That seems be true. The October 17th date appears to be verrry conservative. In fact, it seems based on the government not being able to pay every single penny of its debts on time and in full.

But is it going to default on its Treasury bonds, notes or bills? That’s what will really call down financial Armageddon. A small business with an invoice for computer programming or janatorial services will probably just grumble and wait.

So is it just that we have a few more days before the sky starts falling? I think not. If you’ve lived as long as I have, and you try to remember your math, you get a feeling for these things. The stock market just isn’t acting as if Armageddon is a couple of weeks, let alone a few days, away. And since no one can predict when the pols will drop their macho posturing and start deal-making, I just have to believe that maybe The End is Not Near. (The Tea Party may be mad as hatters, but Wall Street and global investors are not.)

So what’s the explanation? It appears to be the distinction between mandatory and discretionary spending. The easiest way to see the point is to look at the summary page for the President’s budget here. [Table S-5. Proposed Budget by Category, page 210] For fiscal year 2013, the total budget for mandatory programs is $2.293 trillion. That includes Social Security, Medicare, Medicaid, and (I think) military retirement programs.

Now the Armageddon trigger is default on Treasury obligations. The same budget page lists “Net interest” as $248 billion. But that can’t be right. I have no idea what that number means, but this Treasury Direct page lists total interest expense on US debt for fiscal year 2013 as $415.7 billion. That number seems more reasonable.

So add up the mandatory spending ($2.293 trillion) and the Armageddon-critical Treasury debt interest ($415.7 billion), and you get $2.736 trillion. But the President’s budget lists expected Receipts for the fiscal year as $2.902 trillion. Therefore, if these numbers are right, and if we don’t pay any of our discretionary bills, we can squeak by the whole year with over $160 billion to spare.

What about the principal on T-bonds, notes, and bills? Well, when you pay principal, the total debt goes down. So if we’re right up at the limit, and we pay a bond’s principal, our outstanding debt goes down by that much, and we can sell bonds in that amount again legally, under the existing debt limit.

There may be little problem with finding the cash to pay the principal, but that’s why Treasury people, and bankers generally, earn big bucks. There is no solvency problem or, if there’s enough slush in the slush funds, no real violation of the debt limit at all.

This seems to be the Tea Party’s reasoning in disparaging Chicken Little. If you stop discretionary spending almost altogether, it’s just like a more massive government shutdown, which the Tea Party and John Boehner have already caused. It’s like the Sequester on steroids. For people who like to drown the government in a bathtub, it’s hog heaven.

There are two practical problems with this view. First, expenses and revenue are not steady streams. They’re spiky. If a big interest bill or a big bond redemption comes in when revenue is low, we may have trouble making the required payment without additional borrowing. But if we’re really willing to stiff those discretionary creditors, and if we use the $160 billion annual cushion wisely, we might get by, at least for a few months.

The second problem is more fundamental: those discretionary payments are not bean bag. In fact, if you look at the budget numbers, about two-thirds of them are for security. But don’t worry. Neither China nor Russia is likely to mount an invasion force in the next couple of months. And we can always hope that Al Qaeda won’t get lucky, or that our spooks will work without pay, as true patriots. (Funny how the Tea Party never seems to think that patriotism costs anything, or at least anything out of their pockets. Blowing hard is enough for them.)

So that seems to be the Tea Party’s and John Boehner’s plan. They’ll continue to do their utmost to impose minority rule on the rest of us. And they’ll balance the budget, at least for a while, on the backs of the innumerable contractors who work for the feds, and the people who put their lives and brains on the line to keep us safe.

They’re hoping that, at the end of the day, we won’t notice the difference—as we haven’t yet with the Sequester—and so they’ll get to keep more of their money. On the other hand, their strategy might backfire, and we might come to realize, as a nation, that our government actually delivers value for money after all.

At very least, all the contractors waiting to be paid, and their employees, are going to be mighty unhappy. And of course the economy’s going to take a big hit when the estimated $1.2 trillion in discretionary spending never gets spent.

That’s half again the amount of the stimulus that helped bring us out of the Great Recession in the first place. Think a hit that big might push us back in? Apparently, we’re about to find out.

Stay tuned. But in the meantime, we don’t have to worry about financial Armageddon, at least for a little while. The people who keep and balance the books are about to earn their pay. And the rest of us will soon know for sure whether our government does useful things. Experiential learning is quite the modern thing.

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