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Monday, September 5

The Labor Day post: First Worldism as America's biggest liability (UPDATED 3X)

UPDATE September 7, 3:20 PM ET
Attention FARK readers. I've just made an upsetting discovery. I think most FARK readers are being blocked from reading this blog. There's no time to fully explain why I think this is so and even with the time, I don't want to keep clogging up the main event with updates. So I'll just say that as the volume of FARK visitors has picked up, the readers that have been getting through today to this blog have been making some very thoughtful comments over at FARK -- and some are so interesting that I'm thinking of quoting from a few in my next post on the same topic.

Now, there is no way I can rectify the blocking situation, which I suspect is coming from the places of employment of several FARK readers. And even if I joined FARK's comment section to add quotes from my post for readers who are blocked, it wouldn't do any good because according to FARK's comment policy, it's days before a reader can comment after signing up.

What I find most upsetting about the situation is that if many US companies have a policy of blocking blogs and many Americans read up on news/opinion at work, then once again many Americans are getting only mainstream media opinions. That is exactly why I took up blogging in the first place -- I refused to write for a mainstream internet publication because I knew how hard it was put forth analyses that don't jibe with mainstream media agendas and points of view.

The topper is that I can see from my site meter that energy companies and other companies with a nag in the energy/infrastructure race are able to access this blog, and which they've been doing for this post.

So I don't know; all I can say is that if any FARK readers want to copy and paste passages from this essay into the FARK comment section, so that readers who're blocked can learn what the hell I'm talking about, please go ahead. You can copy and paste the entire blinkin' essay, if you want.

I'm interested in ideas put forward by people who can chew and walk; understand? I couldn't care less about anything else. So it doesn't bother me in the slightest to see copy and pastes from my posts on other websites. Okay?

All right; now to the earlier updates.

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UPDATE September 7, 2:15 AM ET

1. Welcome FARK readers, and thanks to the administrator there for linking (yesterday) to this post. I must say a number of the comments at the site seem written by persons in the pay of the CCP's ministry of disinformation in an attempt to steer FARK readers away from my discussion of The China Question hahaha just joking!

Anyhow, I'm sure the majority of FARK readers are forming their opinions on the basis of what I've actually written. However, for the benefit of one commenter who seemed to have difficulty processing any new concept: I very carefully explained the problem, which is not Big Business.

And to the FARK reader who pointed out that it's not only decaying infrastructure but also poorly conceived infrastructure that's the problem -- yes. That's a huge problem and it becomes an even bigger problem when advances in technology mean that residential and industrial centers suddenly need new types and arrangements of infrastructure -- and don't need the old types anymore.

Of course such things have always happened -- think of how containerization very quickly redrew industrial shipping maps -- but the point of this essay is that when the advances start snowballing, as they are today, this is a very different order of problems.

2. The Glittering Eye's Dave Schuler, whose essay on infrastructure and American jobs of the future leads off this post, expressed a couple reservations about the Bloom Box in his remarks yesterday about this post. He's not disputing the technology; for starters he's questioning whether it could become cheaply available to large numbers of homeowners without federal and state subsidies. (See the post for the rest of his discussion.)

The short answer is that I used the Bloom Box simply to illustrate how a single new technology can render a massive infrastructure system obsolete (in this case, the electrical grid), and to note that this hits developed 'first world' countries such as the USA much harder than countries that don't have to deal with the economic and social dislocations that arise from having a white elephant on their hands.

3. Part 2 of this post, which bats around ideas for making the transitions to new infrastructure easier for the USA, will be published on Thursday morning by 9:00 AM ET.
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UPDATE September 5, 6:30 PM ET
Bloomberg reported at 3:00 PM that in a speech today "President Barack Obama said spending to rebuild the nation’s infrastructure is a key component of his plan to reignite the economy and boost hiring."

Well I'll be darned. Obama's words certainly make a great introduction to this post.
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The Infrastructure Problem

The Glittering Eye's Dave Schuler has misgivings about the argument that an important aspect of economic recovery in the USA rests with the need to repair America's aged infrastructure. He wrote in a September 3 post titled Infrastructure and the Jobs of the Future:
[...] I do not doubt that there are decaying roads and bridges in the United States. I question that there is a straight-line connection between the actual roads and bridges that are decaying, where the actual needs are, and attracting global corporations to put production facilities in the United States.
He goes on to make a number of salient points and good recommendations but here I want to jump to this observation:
Finally, we need to embrace change rather than trying to avoid or retard it. World automotive productive capacity already exceeds any consumption we can envision for the foreseeable future. The overhang in housing inventory will keep the home construction industry recovering for three to five years at the most optimistic. We have a financial sector several times the size needed to service an economy of our size. Subsidizing these industries is a desperate grab at restoring the past, not preparing for the future.

Consistent with those principles, I think the infrastructure projects we need to concentrate our ever-scarcer tax dollars on are energy and information distribution projects. Unfortunately, these are not projects that will employ large work gangs of the unemployed or produce showy results you can use to point to your tax dollars at work. But they just might produce the jobs of the future.
Dave is right about the need to prepare for the future. There's just one problem: in many ways the future is already here but it will have to remain the future in the United States for many years.

The Bloom Box

(For readers who have a hard time believing that the Bloom Box is as wonderful as it's cracked up to be, watch the February 18, 2010 CBS 60 Minutes segment that introduced the Bloom Box to the public (or read the transcript from the show). For the cheat sheet see the Christian Science Monitor's February 22, 2010 report, Bloom Box: What 60 Minutes left out.)

One example to illustrate why the future is proving elusive in the USA: There is a stand-alone electricity providing unit called the Bloom Energy Server or "Bloom Box" -- small, simple to use -- which can power any home or commercial building. The wondrous box has already been test-driven; Google, eBay and a number of other Fortune 500 companies have a few Bloom Boxes and they're saving fortunes in electrical bills.

In other words, the Bloom Box can make America's electricity grid obsolete. There are only two things holding the box back from being installed in every residential, commercial and government space in the USA:

a) Bloom Energy, the company that makes the box, doesn't have large manufacturing capacity.

b) The U.S. energy industry doesn't want to be shoved around by a box. (The same for much of the 'Green Jobs' sector that the federal government has been pushing hard. The Bloom Box technology makes windmill and solar panel technologies obsolete.

The first problem is already on its way to being solved; several companies are racing to crack the secret formula that's applied to the box's fuel cells; once this happens companies with large manufacturing capacity can crank out the boxes by the millions, and thus put the price for the box within easy reach of homeowners.

The second problem will be much trickier to solve. So why are companies interested in developing their own version of the Bloom Box? Because the gizmo will sell like crazy in the poorest countries.

And so the last shall be first: the least-developed countries, those with small and very primitive electrical grids are now poised to rocket ahead of developed countries in electricity efficiency, thus freeing up financial capital for other development projects.

In this, the Third- and Fourth World societies stand to repeat the cell phone technology revolutions now underway in their countries; just as their small land-line capacity made it easy to switch to cell phone towers, so they won't have to dismantle a huge part of their energy, with all the social and economic upheavals this entails, to benefit from the newest and best electricity transmission technology.

The United States and other highly developed countries don't have the same luxury and because the USA is the largest of the First World countries, the transition to the truly modern era in energy efficiency stands to be very painful for Americans.

And to return to one of Dave Schuler's points -- manufacture of the Bloom Box-type electrical server doesn't require huge labor pools. However, it does require skilled factory workers, which are in such short supply in the USA that many openings for good-paying factory jobs are going begging.

What kind of wonk would you like to be?

Given the high unemployment in the USA, how did such a situation come about? A big part of the answer: Because what can be considered another infrastructure in the United States, albeit a 'soft' one, the university system, is hopelessly outdated yet also strongly resistant to change. Here, though, it's not energy companies, their lobbyists and the politicians they back that are the problem. Recently an American pundit -- it might have been John Fund but don't quote me on that -- took a whack at summarizing the problem during a FNC report: It's parents who prefer to say, 'My child is attending Brown University' rather than, 'My child is attending a technical college.'

I think it was starting in the 1970s that large numbers of Americans in the middle class came to view factory jobs as work for the least intelligent and least educated. Thus, the Liberal Arts degree at American universities spawned thousands of white-collar specialist degrees. An advertising billboard I saw recently in a Washington, DC Metro station paid homage to the situation by asking, "What kind of wonk do you want to be?"

But the microchip revolutions eventually generated highly complex manufacturing processes that require factory workers to have two years at a technical college or a university bachelor's degree (the latter I suppose on the hopeful theory that the BA will be educated enough to master technical manuals and comprehend exploded diagrams).

So the American university system hasn't kept up with changing events and quite naturally doesn't want to do so. Nor does it want to see a stampede to technical colleges. Instead it continues to pile on courses that prepare graduates for a wonkish career -- mostly in the public- and NGO-sectors and academia -- even though it's clear by now that the US employment scene is having trouble creating enough jobs for the wonk grads.

Yet even when U.S. companies have to import foreign workers to fill skilled manufacturing jobs, competition is so fierce for skilled factory workers that a spokesperson for one American manufacturing company told FNC (in the same report that featured John Fund or whomever) that if a skilled worker applies for a job that isn't available, the company will put the worker on the payroll just to hold onto him in the event of an opening at the factory.

Meanwhile, American universities continue to criticize the practice of U.S. companies hiring high school graduates and financing their study at a technical college or an in-house technical school. The argument is that the corporations are trying to recreate the guild system -- downright medieval!

Changing the thinking at the major universities and among jobless young Americans who would wrinkle their nose at putting 'factory worker' on their Facebook page might prove even harder than dismantling America's electricity grid. And so the future that Americans want -- the return of a healthy middle class -- stays out of reach.

The China Manufacturing Supremacy Myth

The craziest part is that Americans have bought into the myth that the U.S. manufacturing sector doesn't stand a chance against China's. To learn the truth, watch The China Question, a two-hour documentary made by a young American freelance filmmaker, Brook Silva-Braga. The documentary, premiered in June on CNBC TV, is available on DVD and, in the USA, on Bluray. Unfortunately the website for The China Question gives no hint of the film's myth-busting aspects.

And frankly I'm surprised that CNBC, a business and investment cable TV station that did much in earlier years to propagate myths about China, chose to air the documentary. But for the purposes of this writing, one myth the documentary dashes is that China has a huge manufacturing export industry. Actually, the country has a huge assembly and packaging export industry.

The majority of factories making up China's economic miracle are literal assembly lines; the millions of low-wage and poorly-educated factory workers assemble parts provided to them by foreign manufacturers. The workers aren't capable of doing the highly-skilled labor that goes into the manufacture of hi-tech parts. Even the hi-tech machines used on the assembly lines aren't made in China; they're made in the USA, South Korea, Japan, etc.

What all that means, at least on paper, is that the United States manufacturing sector actually has an advantage over China's -- and as you'd see by watching The China Question, China's government is very limited in its ability to alter its factory system, chiefly because doing so means breaking up the country's old imperial two-class social system; that would wreak havoc on the society.

Yet the U.S. manufacturing sector can't press its advantage without sufficient skilled factory labor.

Role Reversal

I think the above illustrations are enough to convey the crux of the problem. The USA has long been considered the most advanced among First World nations. But the advances spawned huge industries and a social system that in many important ways hasn't advanced beyond the advances of more than 30 years ago. Just because of this -- entrenched advancement, shall we term it, the USA is now finding it very hard to adjust to the present era.

The USA is such a vast country with such a large population and such an abundance of natural resources that I'm sure Americans will muddle through somehow. But I think we'd muddle faster and with less pain if we became more flexible as a society. How to do that quickly without bringing down havoc on our heads? In the next post I'll discuss what I think is the best bet.

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