Sunday, July 5, 2015

Why Are People Overlooking the Collapse?

Ran had a thoughtful post (June 30) about how his thoughts on collapse have changed over the years. In it, he says:
"The reason I'm no longer a doomer is simply that I got tired of being wrong. And I started to feel contempt for other doomers who shamelessly made the same wrong predictions year after year."
I can  understand that; I've tried to call out what I call "peak oil derp" over the years.

But I think it's less about being wrong than the fact that people misunderstood what collapse was and how it unfolds. Ran's right when he says people's predictions about what would happen were all over the map and hard to pin down. But were the kollpasniks really wrong? Surveying the global scene just now, it seems like they should be taking a victory lap instead.  Bringing this to mind was this article yesterday in The Guardian using the 'C' word: Greek economy close to collapse as food and medicine run short
The survival of the Syriza coalition, formed just over five months ago to repudiate five years of austerity programmes, was in doubt as Greece started to suffer shortages of basic provisions, including the sale of vital drugs in pharmacies nationwide. 
Food staples, such as sugar and flour, were also fast running out on Friday as consumers started to feel the effect of the restrictions. 
“We have shortages,” said Mary Papadopoulou, who runs a pharmacy in the picturesque district of Plaka beneath the ancient Acropolis. “We’ve run out of thyroxine [thyroid treatment] and unless things change dramatically we’ll be having a lot more shortages next week.” 
Greek islands, where thousands of holidaymakers headed this week, have also been hit, with popular Cycladic destinations such as Mykonos and Santorini reporting shortages of basic foodstuffs. More than half of Greece’s food supplies – and the vast majority of pharmaceuticals – are imported, but with bank transfers now banned, companies are unable to pay suppliers. 
Queues were reported at every cash machine in Athens on Friday night and business groups warned that the economic shutdown in the week since Tsipras called the referendum had already caused lasting damage to the economy. 
“Imports, exports, factories, firms, transport – everything is frozen,” said Vasilis Korkidis, who heads the national Confederation of Hellenic Commerce. “The only sectors in demand are food and fuel.”
For another take on the ground, see this: Grexit Crisis (June/July 2015): What hardships are Greek citizens facing under the ongoing economic crisis? (Quora):
Believe me, that is a big difference: young greeks today are put in front of an immigration decision, which is surprisingly attractive for *skilled workers*, the very people that the country needs to increase its competitiveness. Please, take a note of this.

Surprisingly, this immigration wave is sustained by the very aid that is provided to the country by its EU partners; unfortunately, that aid pays back for the country's past (hello German taxpayers, please check that line out, because much of the expenses are for french & german banks) rather than the country's future. This is more serious than it appears at first sight: a continuous recession has increased (registered) unemployment to 27% and completely drained economic activity in so many forms. If you walk central streets in Athens, you might be shocked to find more than half of the shops being closed (yes, that kind of closed) in a major commercial street.

The only reason that society still holds together (whatever it holds) is due to family ties - other europeans could be surprised about how many people may be assisted by an old-ager's pension... that's why that is a battleground.

Now, focusing on the hardships, here's a list of what I've seen evidence of:
* wages compression (this is the "better" outcome, really)
* living below poverty line (choose electricity or bread)
* unemployment
* missing mortgage payments, due to any of the above
* losing a house due to the above, even after several years of faithful pay
* people who maintain businesses have to make the arduous decision of "choosing" between paying their obligations and firing an experienced employee. It might seem like a rational choice but it's not that simple in a country that provides inadequate unemployment benefits.

I kept the worst for last:

You might have seen homeless people in many other countries and have become familiar to the view, but this was not the Greece in which I grew up...back then, there was NO chance a homeless would ever be seen in daylight approaching a garbage bin for food. People would jump from all corners to prevent such thing happening. Unfortunately, the preventive forces of society are no longer functioning since quite a while, due to massive poverty...
The latter picture stands in sharp contract with the (technically, more poor) Greece in which I grew up, which has been a jewel under the sun, when it came to social cohesion.

Something is wrong with finance in the modern world, that's pretty clear; and, something is seriously wrong with persistence to fix the numbers, when the humanitarian aspects are left on their own. It's simply called inhumane?
I wonder how many and who of other Europeans think alike in this.
I've just been rereading Dmitry Orlov's Five Stages of Collapse, and it's eerily spot-on to what the Greeks are experiencing right now.

Sounds like collapse to me, doesn't it? And many experts are saying that it's only a matter of time before much of Southern Europe will follow suit.

I wrote What If A Collapse Happened and Nobody Noticed? a couple years ago now. My predictions have held up pretty well. Back when I wrote that, Greece and the Levant were arguably in better shape than they are now. Back then, I didn't mention ISIS because it wasn't even a thing (at least not in the news) and now look at it. Japan continues to stagnate and shrink; the reason the crisis in Greece is as acute as it is is because Greece happens to be in the uncomfortable position of not having its own currency (compare also to the U.S. and Great Britain).

A few weeks ago I wrote about Nigeria which was undergoing something that looked an awful lot like the Peak Oil predictions that the doomers made for America. And similar to the Middle East, this week has seen a pretty bloody spate of attacks in Nigeria by the Muslim fundamentalist Boko Haram movement.

Boko Haram attack caps week of bloodshed in Nigeria (BBC)

Greece, Nigeria, Syria, Iraq. And those are just the most acute cases. The list of failed states has grown since 2005-6 (Peak Petroleum)

Even China, the bright, shining example of prosperity through globalized capitalism, has been hit by a stock market slide which has been almost entirely unreported in the West for some odd reason:

China share slump: Dealers to spend $20bn to halt slide (BBC)
I am, of course, anxiously awaiting the results of Greferendum, although the next few days in Greece will be terrible whoever wins. But we shouldn’t lose sight of other risks facing the world. Some of us have been worrying quite a lot about China — an economy that at market exchange rates is 40 times the size of Greece, and is severely unbalanced. And in the past month, mainly in the past few days, the Shanghai stock index has fallen almost 30 percent. This doesn’t necessarily mean that the feared crisis has come, but it’s definitely not a good sign.
Meanwhile in China (Paul Krugman)

Closer to home, Puerto Rico, a U.S. territory, is also on the verge of default. Many people have had to leave to find work, even though the rich are doing just fine.* Meanwhile, in the U.S. "recovery":
Here is the reason to be somewhat happy with today's jobs report: In June, U.S. employers added 223,000 workers to their payrolls, according to the Bureau of Labor Statistics...Also, the unemployment rate fell to 5.3 percent, from 5.5 percent...Here are the reasons to be less happy with today's jobs report: pretty much everything else. The labor-force participation rate suddenly dropped to a new post-recession low of 62.6 percent, after holding more or less steady for roughly a year. (That's part of why the unemployment rate fell—a smaller fraction of people in the job market.) The last time participation was this low was 1977, when women were still entering the workforce.
Today’s Jobs Report: Cloudy With a Chance of Labor Market Slack (Slate)

It's worth noting that the peak oil movement was out front in arguing that debt defaults were going to wrack the global economy as the ability of the global economy to grow could not keep pace with the exponential growth of debt. I've expressed skepticism that the underlying cause is Peak Oil rather than just the regular crashes of capitalism that happen for a variety of reasons (elite greed, bubbles and manias, economic shocks, debt repudiation, etc.). I could be wrong though, and others like Ugo Bardi make a case that it is related.

What's wrong weren't predictions of collapse, just what it would look like.

People underestimated the ability of extend and pretend. People underestimated the ability of elites to suck wealth into imperial centers even as the living standards of most people deteriorate. People underestimated how normal it all looks from one day to the next. It's less of a wildfire than a glacier. It's like walking across a minefield - if you're not the one who steps on the mine, you just keep pressing forward, and avoid looking too hard to what's going on around you.

But does anyone doubt it *is* happening. How many years have we been waiting for "recovery," at least seven or so?

Greece has rejected the harsh austerity terms offered by the banking cartel. This could mean an exit from the Euro. If the Euro goes down, this could be the end of the many-century long march toward larger and more unified systems, and the beginning of the breaking up and disunification that is one of the harbingers of the breakdown of the existing centralized social order, along with movements around the world toward separatism and secession. As Orlov points out, the nation-state is a very recent creation with a fairly shallow track record historically.

Finally, somewhat related, I've claimed that Stoicism is the ideal philosophy for the age of unravelling that we are going thought. The BBC has an article on that very subject: Putting the Greek back into Stoicism. See also Why Stoicism is one of the best mind-hacks ever (Aeon)

*Ironically, I bumped into a former colleague recently who is moving TO Puerto Rico. He's from Wisconsin, but his wife is from P.R. and actually moved back there recently when she got a job. He's planning on selling the house and moving down there soon. So, again, everyone's circumstance is different.

Friday, July 3, 2015

Is The Free Market a Hoax?

One point often made is that much of the advanced technology that techno-utopians are touting are dependent not only on whether these things are technologically feasible but whether they are economically viable. That is, they not only have to be technologically feasible but they also need to be economically viable enterprises that justify their costs, otherwise they will not outlast the government subsidies that keep them going. The example often used by, for example, the Archdruid—is supersonic air travel. The Concorde was clearly technologically feasible – it flew for over twenty years, but it never paid for itself. It took a lot of money and fuel to push a plane at supersonic speeds across the Atlantic, and not a lot of people could afford to pay the price for that luxury (or even needed to-few people are in that much of a hurry). If a society collectively decides it no longer wants to continue subsidizing white elephant projects or does not even have the resources to subsidize them, they will go away even if we have the technology to do them, they argue. This is something ignored by techno-optimists who say that if something is technologically feasible then it will be done no matter what, and assume anyone who doubts them is somehow not intelligent enough to grasp what is possible or just too pessimistic concerning human inventiveness.

This got me thinking about the issue of subsidies in general. See, I happen to know that it's not only the Concorde--the entire commercial airline industry has been unprofitable. When you average out all the ups-and-downs of the commercial air travel industry and subtract the bailouts and giveaways, air travel itself has never made a profit in the entire history of the industry! It turns out that in the 30 years since the airline industry was deregulated in 1978, it has lost nearly $60 billion on U.S. operations. Domestic passenger airline operations lost $10 billion from 1979 to 1989, made profits of $5 billion in the 1990s and lost $54 billion from 2000 to 2009. A similar case is true for just about any means of commercial passenger transportation (bus, rail, etc.)

This caused me to wonder if this were really true. Will any nonsubsidized entity cease to exist beyond subsidies? If so, we're in a heap of trouble because, try as I might, I could not think of a single major industry that was not subsidized!

In a widely-reported story that came out in May, the International Monetary Fund, hardly an institution hostile to capitalism, looked at the amount of subsidies the fossil fuel industry received globally and concluded they were a whopping 5.3 trillion dollars a year! That’s 10 million dollars a minute every single minute of every day throughout the year, year in and year out for the fossil fuel industry. That is greater than the total health spending of all the world’s governments combined.

People complain a lot about all the subsidies that green energy receives (wind, solar, tidal, etc.), but of course the fossil fuel industry is heavily subsidized as well. Nuclear is famously dependent on government subsidies, and the impossible dream of net-positive-energy fusion is entirely a ward of the state dependent upon the world’s rich governments for donations at this point (ITER, etc.). Thus is seems like all our energy sources are subsidized in some way.

Fuel is fundamental to modern industrial society, but so is food. We all know how much modern agriculture is subsidized. Every year, agricultural subsidies are a huge, complex, and contentious topic.
Nearly every industrialized nation on Earth subsidizes agriculture to some extent. It’s a way to make sure production stays high, and prices stay low. It’s just a matter of figuring out how to make it work — and that’s where things get tricky. Right now in the U.S., we subsidize certain crops pretty heavily. These are things that can be shipped and stored easily, and traded in international commodity markets. 
But because of the way we manage our subsidies, we end up with A LOT of corn. In 2010, U.S. farmers produced 32 percent of the world’s corn supply on 84 million acres of farmland, raking in a cool $63.9 billion. Most of that corn goes to non-“food” sources — either to feed livestock or to feed our cars, in the form of ethanol.
Our Crazy Farm Subsidies Explained (Grist)
Critics say crop insurance has reduced the risk of farming so much that farmers are now incentivized to farm on marginal lands, such as wetlands or lands with less than optimal soil. "When the government is guaranteeing you [a farmer] 85 percent of your income, it suddenly makes a whole lot more sense to farm in places that might flood or have low soil moisture, which might not have been practical to farm if you simply had your own skin in the game," says Scott Faber of the Environmental Working Group. 
He also says the system helps the rich get richer. About a third of the subsidies go to the largest 4 percent of farm operators. In its farm subsidy database, EWG finds the largest recipients of crop insurance support receive more than $1 million a year in subsidies.
Congress Poised to Make Crop Insurance Subsidies More Generous (NPR)

With the current drought in the Southwest, water subsidies are coming under a lot of scrutiny:
…Over the last 20 years, Arizona’s farmers have collected more than $1.1 billion in cotton subsidies, nine times more than the amount paid out for the next highest subsidized crop. In California, where cotton also gets more support than most other crops, farmers received more than $3 billion in cotton aid.
http://marginalrevolution.com/marginalrevolution/2015/06/king-cotton-and-deadweight-loss.html

And it’s not just food, but other commodities like cotton:
Subsidies get complicated, but for the 4,000 acres of cotton that Bowen and his family farm, the operation could be expected to get more than $100,000 in direct payments from the government. But perhaps the bigger benefit that the government provides is protecting farmers like Bowen from risks. 
RIVOLI: There are bad things that can happen: prices can fall, there can be too much rain, it can be too hot, it can be too cold. A lot of those risks are protected against by government programs, particularly insurance subsidies. 
SMITH: So basically they give them cheap insurance. 
RIVOLI: They give them cheap insurance. 
SMITH: And to be fair, other countries also support their agricultural products in various ways. But no one does it as effectively as the United States. U.S. farmers have big farms. They buy big machines. They take big risks. And the government has a big safety net for them.
How Technology And Hefty Subsidies Make U.S. Cotton King (NPR)

What about the automobile industry? I think we all know that that’s been bailed out like clockwork throughout the entire history of the industry.
”Taxpayers own 61 percent of GM as part of an arrangement in which the federal government gave the company about $50 billion in aid during its bankruptcy proceedings last year. GM has repaid $6.7 billion of the money, and the balance was converted to the ownership stake in the automaker.…Chrysler, the other Detroit automaker to get bailed out, spent $1.2 million on lobbying this year, nearly half of the $3.12 million it spent last year. Chrysler has given back $2 billion of the $11 billion it has received from the government.”
Bailed Out Firms Spend Millions on Political Causes, Federal Lobbying (FOX)

And, of course, those weren’t the first or only bailouts of the auto industry, it’s been pretty consistent since at least the 1970’s.

Not to mention that most of the automobile industry’s profits come from financing the loans to buy the cars, not from the cars themselves. It’s been said, and it’s true, that the auto industry’s major product is consumer debt, and the cars they make are just a means to create that debt. Would the automobile industry even be viable if it just made cars?

And of course cars are just hunks of metal without gasoline, and see above for the gas subsidies. And cars are also useless without roads paid for by the taxpayers. Wal-Mart’s “warehouse on wheels” would be impossible without the roads which are paid for by governments – specifically the Interstate Highway System. It’s long been known that most wear and tear on roads is caused by “axle weight” of which trucks cause much more than individual cars. Yet trucking companies do not pay for upkeep of roads equal to the damage they cause. See this post for the numbers: The Hidden Trucking Industry Subsidy (True Costs Blog): "Freight trucks cause 99% of wear-and-tear on US roads, but only pay for 35% of the maintenance. This $60B subsidy causes extra congestion and pollution, and taxpayers pay the bill." So the trucking industry is subsidized. What’s scary is that truck driving, and hence the roads, provide the largest source of employment in the U.S.

And it’s often pointed out how much taxpayers foot the bill for the low wages paid by Wal-Mart (and others). Most “poor” people in America actually have jobs. According to the Washington Post, taxpayers spend 153 billion dollars a year subsidizing the low wages of employers like Wal-Mart and McDonald’s. And we’re not even counting the actual prison labor used by American corporations to produce goods. Cleary the entire incarceration industry is dependent upon govermment - one of the few "growth" areas in America today.

Surely the computer industry stands on its own two feet! It’s often touted how many “free” services are provided by Google, Facebook, etc. But if they are “free”, where do the profits come from? Much of the profitablity seems to rely on expansion - the very definition of a Ponzi scheme. As one article put it, "Facebook is a large, inefficient engine for transforming electricity and programmers into a down-market place to sell low-value advertising." These Internet companies read all our personal data, aggregate it via "data mining" and sell it to advertisers - advertisers who we do everything in our power to avoid. It just doesn't sound like a viable business model to me. we also know that Google has received lavish support from the national security/defense industry since day one.

Not to mention the computer industry isn’t viable without lots and lots of access to cheap electricity. In fact, Internet companies use more electricity that does the automobile industry. Are they truly paying for the costs of that, or are we? In addition, Apple’s enormous profits come in part from being able to draw on extremely cheap labor in China and ship the products back, which is an implicit subsidy (ports, railways, trade agreements, etc.). After oil and cars, smartphones are the US’ biggest import. Almost $100B of phones was imported in 2014. Half of them were Apple iPhones. As a thank-you to the government, Apple holds its profits offshore and blackmails the U.S. government to do it the “favor” of bringing profits back to the U.S. The same is true for most U.S. manufacturing companies and retail companies like the aforementioned Wal-Mart and others.

Another story that came out at about the same time as the IMF study said: Elon Musk's growing empire is fueled by $4.9 billion in government subsidies (LA Times). This belies his heroic image promoted by Silicon Valley libertarians as John Galt come to life. Just about every piece of the computer industry, from the transistor to the Internet was paid for via government. Maria Mazzucato points out that every device in the iPod originated with government patents. The pharmaceutical industry has long free-ridden on the back of government research (e.g. the National Institute for Health and public universities), and spends more money on advertising and defending its patents than it does on researching new drugs. the industry prefers to invent "me-too" drugs, while dumping the hard research on the government.

How long would the defense contractors last without the steady stream of money from the defense department? (which routinely misplaces billions of dollars) And we all know the health care industry – which has been the only industry that has seen any job growth over the last decade-- is reliant upon government subsidies. This includes everything from Medicare and Medicaid to the tax credits for employers. “In 2009, the public share of health care spending is likely at 53%.. If health care subsidies (primarily tax exemptions) are included as government financing of health care, they add another $200 Billion to the total, raising the government’s share of health care spending to 62%.” (True Costs Blog). Obamacare lavishes even more subsidies upon this “private” industry.

There is much, much more, and I'm sure I could probably write a book-length post digging into subsidies, but I’ll stop there. And that confirms what I set out to investigate – it seems like literally everything is subsidized! Theoretically, we take money from profitable enterprises and use them to prop up unprofitable ones that we think are necessary for some reason. That is, there are things which cannot make it in the market, but are nonetheless necessary. So how is possible that everything is subsidized? What profitable industries are subsidizing the unprofitable ones? If every industry is subsidized, where is the money coming from? Are industries subsidizing themselves? What’s going on?

The only businesses I could think of that weren’t subsidized were things like the small neighborhood businesses in my area like salons and cafes (besides the implicit subsidies we all share of secure property rights, a functioning legal system, police and fire protection, electric, water and sewer service, roads, streetlights, a common currency and measurement system, etc.). Maybe certain types of manufacturing also fall into this category. But that’s about it. And when you go to the farmers' markets like I do and pay to buy stuff from farmers who are actually paying their own way, what is the complaint you often hear? This stuff is all so expensive! that is, Americans love their "free" market, but do not want to pay the true "free" market costs of $15.00 grass-fed ground beef or $5.00 kale, not to mention $10.00 gasoline.

Another point must be made. Not only do industries like food and fossil fuel get direct subsidies, but the get very indirect subsidies in the form of externalities. For example, the coal industry is allowed to "dump" its toxic waste products into the air in essentially unlimited qualities. This causes everything from asthma, to smog, to inedible mercury-poisoned fish. We all pay the costs of those results; the fossil fuel industry does not. Even the solar industry dumps its toxic waste products - one reason why so much of it is located in China. The massive subsidies to corn contributes to the obesity crisis which the rest of society has to pay for. Would these industries be viable without recourse to all these "free" services, which amount to a massive hidden subsidy?

In fact, much of our economic enterprises are specifically dealing with the fallout from these toxic industries! How much "growth" is due to that - everything from pediatricians treating childhood asthma, to weight-loss and fitness centers dealing with the obesity crisis from the lousy food we consume? A lot industries (and hence jobs) are actually dependent upon negative externalities!

If there is no such thing as a free lunch, then where is all the money coming from? If food, energy, water, transportation, computers, defense, manufacturing, health care and retail are all dependent upon subsidies of some sort, which it appears they are, then what else is there? What industry is truly paying its own way? Is there even one?

And that leads you to some disturbing conclusions. Chief among them, that the "free" market modeled by economists is in fact a fiction - it doesn't exist anywhere. All of our conceptions of supply and demand and so forth is just an elaborate hoax.

Now the standard response is that this is exactly why the market doesn't work! That these are all the government interventions and distortions that cause the market to fail, and once all the distortions are removed, the free market will allocate resources effectively. Unproductive enterprises will go under, viable enterprises will remain, unproductive capital will be free to go where it is needed, etc. The market is self-correcting if given enough time.

But this is more an argument of faith than of fact. Where is the proof? If the free market actually worked better and delivered food and goods cheaper without any intervention of any sort, why would we not have done that? To believe the libertarians is to engage in a massive conspiracy from some indeterminate time to subvert the “free” market by a massive conspiracy of insider capitalists and government. When was the market ever “pure?”

In fact, the closest thing to such an experiment is our own past. But most government interventions were due to massive market failures from almost the start of capitalism - bubbles like the South Sea Bubble, panics like the panic of 1857, crashes like the Great Depression. Thus, couldn't you make an opposite case - that without massive government intervention, the so-called fee market based on industrialism is not viable at all - that it would in fact crash and fall to pieces without being constantly propped up by the wider society? It seems like the only economies where the true costs are internalized are the "poor" nations in need of IMF loans for "development."

Free-marketeers want to have it both ways. They always want to tout the prosperity delivered by the Market - the cheap food, the abundant energy, the technological inventions, the plentiful jobs, etc. the but they don't want to acknowledge the role that government subsidies play in that prosperity. They may grouse about those subsidies, but they have no concrete example to point to as a market that would exist without those subsidies, so they can forever appeal to some imaginary "free" market that exists only in theory as being ideal without ever having to test it in the real world. Almost nothing you can buy today, and almost no jobs, come to you from the completely free and unsubsidized market. My guess is we wouldn't be so enamored of the "free" market proposed by libertarians when it takes away our cheap food, our cheap fuel, our cheap goods, and our access to health care.

And the conclusion you draw from that is that we already live in a socialist economy! It's just a socialist economy controlled by a few people at the top that masquerades as a free market. It's already a massive redistribution scheme--from bottom to top. Maybe the technological stagnation so fretted about by economists is just because we’ve run out of subsidy money.

In any case, going down the rabbit hole, I came to the conclusion that the above is wrong - maybe it is possible to keep subsidies going forever. This, of course, will not cause resources to appear where there are not any, and that, it seems, is increasingly the real limitation.

Wednesday, July 1, 2015

Ancient Wisdom


According to Conquests and Cultures: "The highway system connecting the vast Incan empire was tens of thousand of miles long and has been considered one of the best all-weather highways built before the appearance of the automobile." The BBC has a good story on just why that was:
The Inca Road is one of the most extraordinary feats of engineering in the world. By the 16th Century it had helped transform a tiny kingdom into the largest empire in the Western hemisphere.And to the envy of modern engineers, substantial parts of the 24,000-mile (39,000-km) network survive today, linking hundreds of communities throughout Argentina, Bolivia, Chile, Colombia, Ecuador and Peru. Incredibly, it was constructed entirely by hand, without iron or wheeled transportation.

"When you look at Machu Picchu in Peru - that wonderful structure on top of the mountain that millions of tourists visit every year - what most people don't see and unfortunately don't know, is that the real marvel is underneath it all," says Jose Barreiro, co-curator of The Great Inka Road (the Smithsonian uses the Quechua spelling of Inca).

The dry stone monument sits on top of a complex irrigation system of culverts and channels that control the flow of water into fountains that still work today. And while archaeologists have known that for some time, the exhibition reveals the extent of the Inca understanding of water and how they applied the same technology to road building.

"Every year, water destroys many modern roads. But the Inca roads tend to stay," says Barreiro. "The constructions were built with seismic events in mind and that's what engineers today are excited to study - how we can benefit from that knowledge."

Sustainability was the key to success. The Incas paid attention to local conditions, using local materials and working with the landscape. On steep terrain they built steps to dissipate the water's energy and counter erosion. At high altitudes they paved the way with local stone to protect the surface from ice and snowmelt, and when they needed supporting walls they left holes for the water to drain.

The empire's spiritual centre and capital was Cusco in southeastern Peru. All roads emanated from the city. Along the routes, sacred places were marked by wakas - stone outcroppings, buildings or even the confluence of rivers that served as altars to the Pachamama (Mother Earth) or Inti (the sun god)....Inca society was certainly "strict" but at its heart was a philosophy of reciprocity. The Incas gave back to nature and everybody knew their role in the community.

"The entire environment was alive. Everything from the stones to the animals to the cosmos needed some kind of interaction with a human being in prayer, connectivity or appreciation. Everything was organised and regulated by the state. You had the masters of the road, the masters of the bridges, thekhipu - a knotted device that kept track of people on the road, products, organised censuses of people and news from everywhere in the empire."
Inca Road: The ancient highway that created an empire (BBC)

Previously Unknown Inca Road Discovered in Peru (ArtDaily)

Previously:

Alternative Economies In History

Technology Old and New

Tuesday, June 30, 2015

Economics and History

From "The Lessons of History" by Will and Ariel Durant:
In the Athens of 594 B.C., according to Plutarch, "the disparity of fortune between the rich and the poor had reached its height, so that the city seemed to be in a dangerous condition, and no other means for freeing it from disturbances . . . seemed possible but despotic power."  The poor, finding their status worsened with each year— the government in the hands of their masters, and the corrupt courts deciding every issue against them—began to talk of violent revolt. The rich, angry at the challenge to their property, prepared to defend themselves by force. Good sense prevailed; moderate elements secured the election of Solon, a businessman of aristocratic lineage, to the supreme archonship. He devaluated the currency, thereby easing the burden of all debtors (though he himself was a creditor); he reduced all personal debts, and ended imprisonment for debt; he canceled arrears for taxes and mortgage interest; he established a graduated income tax that made the rich pay at a rate twelve times that required of the poor; he reorganized the courts on a more popular basis; and he arranged that the sons of those who had died in war for Athens should be brought up and educated at the government's expense. The rich protested that his measures were outright confiscation; the radicals complained that he had not redivided the land; but within a generation almost all agreed that his reforms had saved Athens from revolution.

The Roman Senate, so famous for its wisdom, adopted an uncompromising course when the concentration of wealth approached an explosive point in Italy; the result was a hundred years of class and civil war. Tiberius Gracchus, an aristocrat elected as tribune of the people, proposed to redistribute land by limiting ownership to 333 acres per person, and allotting surplus land to the restive proletariat of the capital. The Senate rejected his proposals as confiscatory. He appealed to the people, telling them, "You fight and die to give wealth and luxury to others; you are called the masters of the world, but there is not a foot of ground that you can call your own." Contrary to Roman law, he campaigned for re-election as tribune; in an election-day riot he was slain (133 B.C.). His brother Caius, taking up his cause, failed to prevent a renewal of violence, and ordered his servant to kill him; the slave obeyed, and then killed himself (121 B.C.); three thousand of Caius' followers were put to death by Senatorial decree. Marius became the leader of the plebs, but withdrew when the movement verged on revolution. Catiline, proposing to abolish all debts, organized a revolutionary army of "wretched paupers"; he was inundated by Cicero's angry eloquence, and died in battle against the state (62 B.C.). Julius Caesar attempted a compromise, but was cut down by the patricians (44 B.C.) after five years of civil war. Mark Antony confused his support of Caesar's policies with personal ambitions and romance; Octavius defeated him at Actium, and established the "Principate" that for 210 years (30 B.C. - A.D. 180) maintained the Pax Romana between the classes as well as among the states within the Imperial frontiers.

After the breakdown of political order in the Western Roman Empire (A.D. 476), centuries of destitution were followed by the slow renewal and reconcentration of wealth, partly in the hierarchy of the Catholic Church. In one aspect the Reformation was a redistribution of this wealth by the reduction of German and English payments to the Roman Church, and by the secular appropriation of ecclesiastical property and revenues. The French Revolution attempted a violent redistribution of wealth by Jacqueries in the countryside and massacres in the cities, but the chief result was a transfer of property and privilege from the aristocracy to the bourgeoisie. The government of the United States, in 1933-52 and 1960-65, followed Solon's peaceful methods, and accomplished a moderate and pacifying redistribution; perhaps someone had studied history. The upper classes in America cursed, complied, and resumed the concentration of wealth.

We conclude that the concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution. In this view all economic history is the slow heartbeat of the social organism, a vast systole and diastole of concentrating wealth and compulsive recirculation.
pp. 55-57

Monday, June 29, 2015

What We've Lost

Even if humans manage to survive the century, we'll be living on a planet where an incomprehensible amount of magic and mystery will be gone forever. From the lush, blue planet our hunter-gatherer ancestors inherited, we've managed to urn it into a more monotonous and sterile world where nothing exists except the limited biological support systems that cater to our use. We've multiplied like bacteria. We are the ultimate weed. Here are a couple of beautiful things that will be lost forever:

In the past 30 years, their habitat has shrunk by 71%, Mr Li said. This is partly because of climate change and partly because their grazing area has been taken over by a growing population of people at the bottom of the mountain. With less than 1,000 left they are now rarer than pandas.
Meet China's 'magic bunny' - the Ili Pika (BBC)


A picture of loneliness: you are looking at the last male northern white rhino (The Guardian)

"A recent survey detected a steep decline in part of the Japanese breeding population which has presumably occurred because of forest loss and degradation in its winter range." 
Japanese paradise flycatcher (TYWKIWDBI) I like his comment:
'That seems to be true for everything beautiful and awesome in our natural world.  Our grandchildren will have to be satisfied with jellyfish and cockroaches."
But since these animals have no "economic value" to humans, well, to hell with them! What are they good for? What "ecosystem services" do they provide? After all, they need to earn their keep in the Market just like the rest of us, right?

This brings to mind David Quammen's classic essay in Harper's - Planet of Weeds.  It's hard to believe it was written back in 1998. In it, Quammen looks at the mass extinction of species that biologists were predicting even back then, which were on the order of the great mass extinctions in the past. To learn more about it, he talks to a paleontologist named David Jablonsky.
Some people will tell you that we as a species, Homo sapiens, the savvy ape, all 5.9 billion of us in our collective impact, are destroying the world. Me, I won't tell you that because "the world" is so vague, whereas what we aren't destroying is quite specific. Some people will tell you that we are rampaging suicidally toward a degree of global wreckage that will result in our own extinction. I won't tell you that either. Some people say that the environment will be the paramount social and political concern of the twenty-first century, but what they mean by "the environment" is anyone's guess. Polluted air? Polluted water? Acid rain? A frayed skein of ozone over Antarctica? Greenhouse gasses emitted by smokestacks and cars? Toxic wastes? None of these concerns is the big one, paleontological in scope, though some are more closely entangled with it than others. If the world's air is clean for humans to breathe but supports no birds or butterflies, if the world's waters are pure for humans to drink but contain no fish or crustaceans or diatoms, have we solved our environmental problems? Well, I suppose so, at least as environmentalism is commonly construed. That clumsy, confused, and presumptuous formulation known as "the environment" implies viewing air, water, soil, forests, rivers, swamps, deserts, and oceans as merely a milieu within which something important is set: human life, human history. But what's at issue in fact is not an environment; it's a living world.

Here is instead what I'd like to tell you: The consensus among conscientious biologists is that we're headed into another mass extinction, a vale of biological impoverishment commensurate with the big five. Many experts remain hopeful that we can brake that descent, but my own view is that we're likely to go all the way down. I visited David Jablonsky to ask what we might see at the bottom.

[...]

Do you see Homo sapiens as a likely survivor, I ask [Jablonksy], or as a casualty? "Oh, we've got to be one of the most bomb-proof species on the planet," he says. "We're geographically widespread, we have a pretty remarkable reproductive rate, we're incredibly good at co-opting and monopolizing resources. I think it would take a really serious concerted effort to wipe out the human species." The point he is making is one that has probably already dawned on you: Homo sapiens is the consummate weed. Why shouldn't we survive, then, on the Planet of Weeds? But there's a wide range of possible circumstances, Jablonski reminds me, between the extinction of our species and the continued growth of the human population, consumption, and comfort. "I think we'll be one of the survivors," he says, "sort of picking up the rubble." Besides losing all the pharmaceutical and genetic resources that lay hidden within those extinguished species, and all the spiritual and aesthetic values they offered, he foresees unpredictable levels of loss in many physical and biochemical functions that ordinarily come as benefits from diverse, robust ecosystems--functions such as cleaning and recirculating air and water, mitigating droughts and floods, decomposing wastes, controlling erosion, creating new soil, pollinating crops, capturing and transporting nutrients, damping short-term temperature extremes and longer-term fluctuations of climate, restraining outbreaks of pestiferous species, and shielding earth's surface from the full brunt of ultra-violet radiation. Strip away the ecosystems that perform those services, Jablonski says, and you expect grievous detriment to the reality we inhabit. "A lot of things are going to happen that will make this a crummier place to live--a more stressful place to live, a more difficult place to live, a less resilient place to live--before the human species is at any risk at all." And maybe some of the new difficulties, he adds, will serve as incentive for major changes in the trajectory along which we pursue our aggregate self interests. maybe we'll pull back before our current episode matches the Traiassic extinction of the K-T event. Maybe it will turn out to be no worse than the Eocene extinction, with a 35 percent loss of species.

"Are you hopeful?" I ask.

Given that hope is a duty from which paleontologists are exempt, I'm surpised when he answers, "Yes, I am."

I'm not. My own guess about the mid-term future, excused by no exemption, is that our Planet of Weeds will indeed be a crummier place, a lonelier and uglier place, and a particularly wretched place for the 2 billion people comprising Alan Duming's absolute poor. What will increase most dramatically as time proceeds, I suspect, won't be generalized misery or futuristic modes of consumption but the gulf between the two global classes experiencing those extremes. Progressive failure of ecosystem functions? Yes, but human resourcefulness of the sort Julian Simon so admired will probably find stopgap technological remedies, to be available for a price. So the world's privileged class--that's your class and my class--will probably still manage to maintain themselves inside Homer-Dixon's stretch limo, drinking bottled water and breathing bottled air and eating reasonably healthy food that has become incredibly precious, while the potholes on the road outside grow ever deeper. Eventually the limo will look more like a lunar rover. Ragtag mobs of desperate souls will cling to its bumpers, like groupies on Elvis's final Cadillac. The absolute poor will suffer their lack of ecological privilege in the form of lower life expectancy, bad health, absence of education, corrosive want, and anger. Maybe in time they'll find ways to gather themselves in localized revolt against the affluent class. Not likely, though, as long as affluence buys guns. In any case, well before that they will have burned the last stick of Bornean dipterocarp for firewood and roasted the last lemur, the last grizzly bear, the last elephant left unprotected outside a zoo.
If bees go extinct, this is what your supermarket will look like (io9)

Lemurs sliding towards extinction (BBC)

The lion: A victim of its own power? (BBC)

Humans Are the Worst: Western Black Rhinos Now Extinct (Jezebel)

The Earth stands on the brink of its sixth mass extinction and the fault is ours (Guardian)

Global Warming Is Now a "Medical Emergency" That Could Wipe Out 50 Years of Global Health Gains (Mother Jones)

Many animals kill for their needs, but what other animal kills for pleasure and status alone?

Sunday, June 28, 2015

Startup Luck

Marginal Revolution:
Havekarma.com - That is a new start-up.  The purpose is to help your “sharing economy” reputation be portable across a number of sites, for instance Airbnb, DogVacay, Uber, Craigslist, and so on.

I wish them luck…
An excellent choice of words, because they're going to need it:
"LastPass, a company that offers users a way to centrally manage all of their passwords online with a single master password, disclosed Monday that intruders had broken into its databases and made off with user email addresses and password reminders, among other data."
LOL.

Saturday, June 27, 2015

Friday, June 26, 2015

Against Techno-Optimism and the Future of Work

A photo of New York from 1900. Source.
Martin Wolf has written a great essay for Foreign Affairs basically arguing that “the techno-optimists are wrong.” Mr. Wolf is the widely-read and highly influential opinion writer for the Financial Times. I cited this article in a previous post.

Wolf makes two points. The first is that the lowest hanging fruits of innovation are harvested first, leading to ever more marginal gains from new technologies, something I’ve argued here for quite some time. This is what is meant by diminishing returns to technology. The big gains are made first, leading to increasingly more incremental steps. The big leaps can only be harvested once. Thus, growth naturally slows down, and waiting for a new techno-miracle is like waiting for Godot, preventing you from taking real action in the present. Furthermore, more of what our economy consists of - eds, meds, and services - is not subject to rapid advances in productivity:
Over the past two centuries, historic breakthroughs have been responsible for generating huge unmeasured value. The motor vehicle eliminated vast quantities of manure from urban streets. The refrigerator prevented food from becoming contaminated. Clean running water and vaccines delivered drastic declines in child mortality rates. The introduction of running water, gas and electric cookers, vacuums, and washing machines helped liberate women from domestic labor. The telephone removed obstacles to speedy contact with the police, fire brigades, and ambulance services. The discovery of electric light eliminated forced idleness. Central heating and air conditioning ended discomfort. The introduction of the railroad, the steam ship, the motor car, and the airplane annihilated distance.

The radio, the gramophone, and the television alone did far more to revolutionize home entertainment than the technologies of the past two decades have. Yet these were but a tiny fraction of the cornucopia of innovation that owed its origin to the so-called general-purpose technologies—industrialized chemistry, electricity, and the internal combustion engine—introduced by what is considered the Second Industrial Revolution, which occurred between the 1870s and the early twentieth century. The reason we are impressed by the relatively paltry innovations of our own time is that we take for granted the innovations of the past.

[…]

The technologies introduced in the late nineteenth century did more than cause three generations of relatively high productivity growth. They did more, too, than generate huge unmeasured economic and social value. They also brought with them unparalleled social and economic changes. An ancient Roman would have understood the way of life of the United States of 1840 fairly well. He would have found that of 1940 beyond his imagination.

Among the most important of these broader changes were urbanization and the huge jumps in life expectancy and standards of education. The United States was 75 percent rural in the 1870s. By the mid-twentieth century, it was 64 percent urban. Life expectancy rose twice as fast in the first half of the twentieth century as in the second half...The jump in high school graduation rates—from less than ten percent of young people in 1900 to roughly 80 percent by 1970—was a central driver of twentieth-century economic growth...All these changes were also, by their nature, one-offs. This is also true of the more recent shift of women entering the labor force. It has happened. It cannot be repeated.

The reason we are impressed by the relatively paltry innovations of our own time is that we take for granted the innovations of the past...The [breakthroughs of the nineteenth and early twentieth] were vastly broader, affecting energy; transportation; sanitation; food production, distribution, and processing; entertainment; and, not least, entire patterns of habitation...The only recent connections between homes and the outside world are satellite dishes and broadband. Neither is close to being as important as clean water, sewerage, gas, electricity, and the telephone. The great breakthroughs in health—clean water, sewerage, refrigeration, packaging, vaccinations, and antibiotics—are also all long established...
His second point is that the new "innovations" in telecommunications that have been so highly touted have not only not equaled the vast changes of the nineteenth/twentieth century or caused big leaps in productivity, but have actually contributed to falling living standards for many via outsourcing, automation, and so forth, creating a "winner take all" economy and enabling wealth concentration to an unprecedented degree:
The impact of the biomedical advances so far has been remarkably small, with pharmaceutical companies finding it increasingly difficult to register significant breakthroughs. So-called big data is clearly helping decision-making. But many of its products—ultra-high-speed trading, for example—are either socially and economically irrelevant or, quite possibly, harmful. Three-D printing is a niche activity—fun, but unlikely to revolutionize manufacturing. 
[T]he computer itself is more than half a century old,..Yet except for the upward blip between 1996 and 2004, we are still...seeing the information technology age “everywhere but in the productivity statistics.”...Yet perhaps paradoxically, recent technological progress might still have had some important effects on the economy, and particularly the distribution of income...The information age coincided with—and must, to some extent, have caused—adverse economic trends: the stagnation of median real incomes, rising inequality of labor income and of the distribution of income between labor and capital, and growing long-term unemployment....Information technology has turbocharged globalization by making it vastly easier to organize global supply chains, run 24-hour global financial markets, and spread technological know-how...Technology has also brought about the rise of winner-take-all markets, as superstars have come to bestride the globe. 
[…] 
It is also possible that the ultimate result might be a tiny minority of huge winners and a vast number of losers. But such an outcome would be a choice, not a destiny. Techno-feudalism is unnecessary. Above all, technology itself does not dictate the outcomes. Economic and political institutions do. If the ones we have do not give the results we want, we will need to change them.
Same as it Ever Was: Against Techno-Optimism (Martin Wolf, Foreign Affairs)

Related to that last point: A World Without Work - a lengthy article on the jobless future in The Atlantic. It's a good roundup of a lot of the articles I've featured and written here over the years.The author uses Youngstown, Ohio as an example of what happens when work disappears (apparently not caused by spontaneous mass outbreaks of laziness):
Youngstown was transformed not only by an economic disruption but also by a psychological and cultural breakdown. Depression, spousal abuse, and suicide all became much more prevalent; the caseload of the area’s mental-health center tripled within a decade. The city built four prisons in the mid-1990s—a rare growth industry. One of the few downtown construction projects of that period was a museum dedicated to the defunct steel industry.
As for the idea that an economy's ability to create new jobs is unlimited (belied by the fact that every country requires work visas for employment):
After 300 years of breathtaking innovation, people aren’t massively unemployed or indentured by machines. But to suggest how this could change, some economists have pointed to the defunct career of the second-most-important species in U.S. economic history: the horse...Humans can do much more than trot, carry, and pull. But the skills required in most offices hardly elicit our full range of intelligence. Most jobs are still boring, repetitive, and easily learned. The most-common occupations in the United States are retail salesperson, cashier, food and beverage server, and office clerk. Together, these four jobs employ 15.4 million people—nearly 10 percent of the labor force, or more workers than there are in Texas and Massachusetts combined. Each is highly susceptible to automation, according to the Oxford study.

Technology creates some jobs too, but the creative half of creative destruction is easily overstated. Nine out of 10 workers today are in occupations that existed 100 years ago, and just 5 percent of the jobs generated between 1993 and 2013 came from “high tech” sectors like computing, software, and telecommunications. Our newest industries tend to be the most labor-efficient: they just don’t require many people. It is for precisely this reason that the economic historian Robert Skidelsky, comparing the exponential growth in computing power with the less-than-exponential growth in job complexity, has said, “Sooner or later, we will run out of jobs.”
He describes three possible futures: Consumption, Communal Creativity, and Contingency:
1. Consumtion - the paradox of leisure: American society has “an irrational belief in work for work’s sake,” says Benjamin Hunnicutt, another post-workist and a historian at the University of Iowa, even though most jobs aren’t so uplifting. A 2014 Gallup report of worker satisfaction found that as many as 70 percent of Americans don’t feel engaged by their current job. Hunnicutt told me that if a cashier’s work were a video game—grab an item, find the bar code, scan it, slide the item onward, and repeat—critics of video games might call it mindless. But when it’s a job, politicians praise its intrinsic dignity. “Purpose, meaning, identity, fulfillment, creativity, autonomy—all these things that positive psychology has shown us to be necessary for well-being are absent in the average job,” he said.
2 Communal Creativity - the artisan's revenge: You don’t need any particular fondness for plasma cutters to see the beauty of an economy where tens of millions of people make things they enjoy making—whether physical or digital, in buildings or in online communities—and receive feedback and appreciation for their work. The Internet and the cheap availability of artistic tools have already empowered millions of people to produce culture from their living rooms. People upload more than 400,000 hours of YouTube videos and 350 million new Facebook photos every day. The demise of the formal economy could free many would-be artists, writers, and craftspeople to dedicate their time to creative interests—to live as cultural producers. Such activities offer virtues that many organizational psychologists consider central to satisfaction at work: independence, the chance to develop mastery, and a sense of purpose.
3. Contingency - you're on your own: Russo sees Youngstown as the leading edge of a larger trend toward the development of what he calls the “precariat”—a working class that swings from task to task in order to make ends meet and suffers a loss of labor rights, bargaining rights, and job security. In Youngstown, many of these workers have by now made their peace with insecurity and poverty by building an identity, and some measure of pride, around contingency. The faith they lost in institutions—the corporations that have abandoned the city, the police who have failed to keep them safe—has not returned. But Russo and Woodroofe both told me they put stock in their own independence. And so a place that once defined itself single-mindedly by the steel its residents made has gradually learned to embrace the valorization of well-rounded resourcefulness.

Among Youngstown’s precariat, one can see a third possible future, where millions of people struggle for years to build a sense of purpose in the absence of formal jobs, and where entrepreneurship emerges out of necessity. But while it lacks the comforts of the consumption economy or the cultural richness of Lawrence Katz’s artisanal future, it is more complex than an outright dystopia. “There are young people working part-time in the new economy who feel independent, whose work and personal relationships are contingent, and say they like it like this—to have short hours so they have time to focus on their passions,” Russo said.
He sees a new role for government, but it's hard to square that with the complete and total capture of the government by wealthy interests and the drive initiated by the wealthy to shrink the state. In the  end, it's hard to reach a conclusion:
When I think about the role that work plays in people’s self-esteem—particularly in America—the prospect of a no-work future seems hopeless. There is no universal basic income that can prevent the civic ruin of a country built on a handful of workers permanently subsidizing the idleness of tens of millions of people. But a future of less work still holds a glint of hope, because the necessity of salaried jobs now prevents so many from seeking immersive activities that they enjoy.
 Ironically, of the three 'C's', one is conspicuously absent - Collapse - things fall apart.

New York 1900. Source ibid.

Fun Facts

The International Trade Union Confederation estimates that 4,000 workers will die in Qatar by the time 2022 arrives.
http://screamer.deadspin.com/chart-the-qatar-world-cup-death-toll-is-stunning-1707286095

America's wealth grew by 60 percent in the past six years, by over $30 trillion. In approximately the same time, the number of homeless children has also grown by 60 percent.
http://www.alternet.org/economy/numbers-are-staggering-us-world-leader-child-poverty

The top 0.01 percent of Americans -- fewer than 14,000 households -- received 5.6 percent of adjusted gross income in 2012...the top 0.001 percent...had its best year since 2007.
http://www.bloomberg.com/politics/articles/2015-05-27/top-0-01-of-u-s-households-gained-as-income-concentration-rose

There are now more American workers on disability (8.9 million) than are working on assembly lines (8.6 million).
http://www.nytimes.com/2015/06/25/opinion/whos-speaking-up-for-the-american-worker.html

[Les Moonves, president and CEO of CBS Corp] in one day...makes more than double the annual median household income in the United States.
http://www.slate.com/blogs/browbeat/2015/05/28/on_the_briefcase_poor_americans_have_to_prove_themselves.html

You are much more likely to be struck dead by lightning, choke on a chicken bone or drown in the bathtub than be killed by a terrorist. Any number of well-known diseases — cancer, diabetes, the flu — take the lives of far, far more people. Yet, by one estimate, the United States spends $500 million per victim of terrorism, and a piddling $10,000 per cancer death.
http://www.nytimes.com/2015/06/05/opinion/what-to-be-afraid-of.html?rref=opinion&_r=0

Nearly three out of 10 Americans have shown evidence of a serious alcohol-related problem at some point in their lives.
http://www.psmag.com/health-and-behavior/the-enormous-scope-of-our-national-drinking-problem

The average American woman now weighs as much as the average 1960s man
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/12/look-at-how-much-weight-weve-gained-since-the-1960s/?tid=pm_business_pop_b

The least fit child from a class of 30 in 1998 would be one of the five fittest children in a class of the same age today in the U.K.
http://www.theguardian.com/education/2015/jun/18/england-pupils-the-least-fit-they-have-ever-been

According to the 2015 Global Peace Index, the number of refugees and internally displaced people has reached its highest point since World War II.
http://www.theatlantic.com/international/archive/2015/06/refugees-global-peace-index/396122/

Five of the top ten books on Amazon last month were coloring books for grown-ups.
https://twitter.com/CliveDavisUK/status/613976674993053696

Wednesday, June 24, 2015

Scary Fact from Fonzie

Recently, Marc Maron of the WTF podcast interviewed one of the world’s most important people. I’m referring, of course to Henry Winkler, TV’s Fonz. Given the fact that we have a statue of the guy downtown, I figured I ought to give it a listen.

In a fascinating and wide-ranging interview, Winkler talks about his childhood background and the relatives who escaped the Holocaust (and didn’t), how he got into acting, moving to Hollywood, what happened after Happy Days, and his struggles with learning disabilities. He’s turned that last item into a sort of second career helping children who struggle with learning disabilities like he did, authoring a series of children’s books for dyslexics. But I want to highlight something shocking and disturbing that he says toward the end of the episode:

WTF Episonde 593: Henry Winkler [1:012:40]
Marc Maron: What’s your wife do? 
Henry Winkler: My wife is an unbelievable grandmother. She was a champion for abused, abandoned and neglected children in L.A., and then she went and worked when Clinton was president in Washington for those children. Except, here’s the sad thing. Really, we talk a lot about children in America. But they don’t write checks, so you don’t really do a lot for them, you just talk about them. But the real reason is, because they don’t make contributions. 
Marc Maron: Which means? 
Henry Winkler: Which means that we talk about how important their future is. How important their education is. But we really don’t lift a finger. 
Marc Maron: Yeah, so nothing gets solved. I was just talking about that today with a comedian friend of mine, Greg Proops, that the education system; there isn’t some context, there isn’t some guidance, there isn’t some sort of people, you know, who will engage these kids. It’s just… 
Henry Winkler: Well, we now teach toward a test. Do you know that the number of prison cells is negotiated by tests taken by third graders? 
Marc Maron: What?? Is that real? 
Henry Winkler: That’s real. That’s real. 
Marc Maron: That’s one of the saddest things I’ve ever heard. 
Henry Winkler: Fifty-seven percent of human beings, or sixty-two percent, somewhere in there, of human beings incarcerated, probably anywhere in the world, but in America and England, are in some way learning challenged. They fell through the cracks. 
Marc Maron: It’s horrendous. And also there’s a big prison business system here. It’s big business. Like, so, what do you do? I mean, it’s so sad that… 
Henry Winkler: Here’s what you do. You do it one little kid at a time. Any child you meet, you tell them, they’re great. You tell them, they are powerful. And that, because if —I travel and talk to children in classrooms. I ask one question. I say, 'anyone know what they’re great at?'  Every single child in that room anywhere in the world that I have gone knows what they’re great at. And that’s where we should start in moving children toward being great adults on the earth.
So, in other words, locking up a certain percentage of the population is just part of the plan! They are already planning how many of us they want to lock up in a cage twenty years from now based on our current test scores. Now we know why they were so obsessed with enacting all that testing, even though every single teacher I’ve ever heard says how much it hampers true learning. It’s all part of the plan. These are the “surplus” people not able to be turned into “human resources.” I wonder to what extent the projected unemployment rate is also influencing the future prison/security state budget.

This is the most chilling indictment of modernity I’ve ever seen. I think capitalism has definitely jumped the shark.