Sunday, October 28, 2018

Another round of wealth destruction

 
Stock markets are probably the best examples of how both supply and demand determine prices. Elsewhere, prices are influenced by numerous other factors such as government grants, transport costs, wages and patents, while demand is encouraged by credit. Demand on the stock exchange is also bolstered by credit, but supply has no production costs or sell-by dates, and depends entirely on whim or the possessor’s need of cash.

Stock indexes go up when demand is stronger than supply. This occurs when fresh money goes on the market and increases demand, while supply is reduced by shareholders waiting for prices to rise. Alternatively, indexes go down when supply is greater than demand. This occurs when the fresh money runs out, and when shareholders either need cash or decide that cash is a better guarantee of value than shares. Shares for cash or cash for shares are the two trends that make share prices rise or fall.

The easy money of tax cuts, repatriated profits and free credit has run out. Demand has weakened and that has pushed down share prices. And falling share prices signal that it is time to sell. As many shares do not pay a dividend, the only profit to be made is by speculating on their prices going up or down, by buying to sell at a higher price, or by selling to buy at a lower price. But both bets are self-realising, as buying pushes prices up and selling pushes them down. Right now, shareholders are in a selling mode and prices are falling. If this continues, it will encourage more selling and even lower prices. This coincidence of falling prices and companies publishing the last semester’s results, mostly up to expectations, has been explained by the prohibition of share buybacks during this period. If this is the case, buying will start again soon and prices will go back up. But it would also signify that share prices depend on company buybacks, that the only fresh money on the market comes from company profits and debts, and that companies are feeding the stock market instead of investing in production and increasing wages.

The stock market is where productive capital and financial capital meet. It is where wealth flows one way or the other. The classic model sees unspent incomes buying shares and bonds to allow industry and commerce to expand and increase production and sales. Financial capital becomes industrial and commercial capital. But the flow can apparently be reversed. When companies use profits and debts to buy back their shares, it is productive capital that becomes financial capital. Wealth is moving from industry and commerce to finance. And the financial sector has shown time and again that it is where wealth can be the most easily and abundantly destroyed.

Sunday, October 21, 2018

Reactionary politics in a chaotic world


Plutocracies exist because they pay mercenaries and buy politicians and, more importantly, because they decide what people think. Thought control goes back to the earliest forms of speech, when words, tales and legends were modelling minds to a social norm. And thought control was a tool of power for theocracies such as the Ancient Egyptian dynasties, who inscribed steles and obelisks, and plastered their pyramids to use them as billboards. And secular Roman emperors would have their statues and their triumphal arches erected everywhere. And when Constantine revived theocratic rule, he adopted the Christian thought control that had shown its effectiveness. Thinking depends on language and vocabulary. If the words do not exist, the thought cannot take shape. Orwell’s description of Newspeak is all about reducing and reshaping vocabulary, while Klemperer’s LTI is an account of the real-life phenomenon in Nazi Germany (1). Minority rule has always done its best to restrain its subjects from thinking. It is only when people govern themselves that words and the imagination they induce expand freely. The rest of the time they undergo a standard discourse infinitely repeated, and alternatives are marginalised or criminalised.

Concentrated power relies on force and thought control. People must believe that their rulers are just, that god is on their side, that there is no alternative. And these convictions must be acquired as early as possible, in childhood. Schooling is the foundation of servility to force and ideology. For most of the day, week and year, children are closed in a room with an adult who knows. They have no choice. They must be there and listen to that. And what they are being taught has little if anything to do with what they want to know, or even need to know. But habits set in, and pupils are obliged to compete with one another. This constraint and the struggle to keep up are presented as natural and unavoidable. So that rebellion is judged as depraved or criminal, which are the two possibilities left open. However, most do comply and accept the rule and the story. Rules that keep them in their place and stories that make them feel superior.

Throughout recorded history, monarchs, tyrants and emperors, oligarchs, plutocrats and aristocrats have held power with the sword and the pen, and the latter is the mightier. The process is timeless but technology is in constant evolution. Weapons and information have not always been easy to control. Guns and print made a breach that put an end to feudalism and let in the Renaissance and the Reformation. The reaction was absolutism, which was brought down by Enlightenment. Printing circulated old and new ideas, of democracy and republic, of cosmology, physics and chemistry. And fighting with muskets and pikes did not need the arduous elitist training of jousting and swordsmanship. But, when the rule of aristocratic landowners was replaced by the government of merchant bankers, industrial entrepreneurs and media magnates, the mass production of force and information was overwhelming.

The 20th century saw a vast centralisation of ideas. The rotary press was printing identical pages by the millions. Movies were showing the same images across the nation and beyond. Radio emissions were diffusing a solitary narrative throughout the ether. Finally, television brought it all into every household. The centralised control of a nation’s thinking helped the advent of totalitarian regimes and has insured the dominion of just a few over the multitude. In the 1960s a counterculture took shape around the Civil Rights movements and the mobilisation against the war in Vietnam, with an underground press and pirate radios. But it did not survive the drugs and violence of the 1970s and the conservative revival that followed.

Newspapers, movies, radio and television need a lot of financial backing, and are hence part of the dominant system. They cannot stray far from standard ideas. The internet broke that absolute hold of wealth on information and ideology. On the web, even the most radical notions and concepts could be expressed for free and reach a potentially global audience. The new millennium saw the usage of internet expand considerably, and the introduction of smart phones has made it a constant universal habit, and most of the world’s population is connected. This vast space of liberated speech took governments and corporations by surprise, but they have reacted quickly with mass surveillance, censorship, and robotic interventions, and by occupying as much room as they can. Subversive and rebellious ideas have been marginalised, but they have not been silenced. Internet has opened the forum to countless voices, and the result is a cacophony in which the corporate media and government are reassuringly conservative. But internet exists and its effects can only be measured with time. The only comparable precedent was the movable-type printing press developed by Gutenberg five and a half centuries ago. The upheavals it fuelled in religion, politics and science were momentous and would not have happened without the new medium. Civil and religious authorities tried to stem the flow, printers were arrested, fined, incarcerated or worse and presses were destroyed, to no avail. This led them to compete and stand up to comparison. But clerical morality contradicted the Gospel narrative, and papal bulls lacked the reasoning power of Descartes and Newton. And monarchs were confronted with the resuscitated stories of the Maccabees and the Gracchus who rebelled against oppression. Printing circulated information from multiple sources on an unprecedented scale and transformed points of view beyond recall. And the might of religious and secular repressions could not turn the clock back. The cat was out of the bag.

Printing set off a spiral of chaos and Christendom was plunged into rebellion, religious and civil wars, violence and misery. It broke the absolute hold of power on thought. People came to realise that other ways of thinking were possible. And that put them automatically in opposition. Thinking differently is the pre-eminent schismatic activity. However, the late 19th century saw a return of centralised control of print and, in the 20th century, of the new video and audio media. This was because they needed large investments and depended on the ruling system, hence the uniformity of the ideas on offer. That has not changed, but the internet has blown a huge hole in the edifice. It has disrupted central control of thinking, and rulers everywhere are doing all they can to take it back. China may have succeeded, but then so did Spanish kings back in the 16th century thanks to the Inquisition. Elsewhere some basic rights are hindering the process, notably in the old industrial nations where the notions of democracy and commonwealth, of freedom of enterprise and speech still exist. Notions that may not resist the chaos of ideas set off by internet. For those who have not structured or reasoned their own beliefs, there is an overload of information with a multiplicity of contradictory messages. They no longer know what is “faked” and what is “real”, because the mainstream uniform discourse has been shattered. People are left clutching at straws, and celebrity has become the most credible source of news. The old pre-digital world is crumbling away and these are dangerous times. The nations of the world are caught in a maelstrom of information, and they are desperately seeking leaders to show them the way out of their predicament. But desperation is not the best state for making such choices.

1. LTI is the acronym of Lingua Tertii Imperii, The Language of the Third Reich.

Monday, October 08, 2018

Fire, flood and mud, this time


It seems the oceans have been absorbing most of the extra heating caused by “greenhouse” gases (1) sending back part of the heat (infrared) emitted by the Earth’s surface (2). Oceans are vast and deep, and currents move their surface layers from the tropics to the poles, and back again. These hot flows move north and south, meet colder water and, finally, the polar ice. Having cooled enough, they go back where they came from. Moreover, the Earth’s tilt means the Sun is above the tropic of Cancer in June and above the tropic of Capricorn in December. Both hemispheres have summers and winters, and the flows of heat are strong in summer and weak in winter. Ocean currents and the seasonal distribution of solar heat have kept sea temperatures constant over the long term. Heating and cooling balanced out but, over the past few years, North and South Poles have been losing ice at an accelerating pace. More is melting in summer and less is freezing in winter. This is due to hotter water from the tropics warming the Arctic Ocean and the seas around Antarctica. The oceans are using up their cooling system.

Sea temperatures in the tropical zones are kept stable by ocean currents and by the Sun’s seasonal path. And though hot water stays on top, some of its heat is diffused downwards. This is a much slower process that is difficult to measure, but it also helps to cool the surface. The extra heat reflected back (3) by gas molecules in the atmosphere is absorbed by the ocean depths and by melting ice. This has allowed atmospheric carbon dioxide to increase from 300 ppm to 400 ppm, without noticeable effects for most of the world’s inhabitants. Polar ice caps were melting, glaciers were shrinking and permafrost was losing its permanence, but few people knew and even less cared. Some even applauded the idea of hotter weather. One, two, three, or even four degrees Celsius more were welcomed in the colder temperate regions, but nothing seemed to happen. Of course, most of the planet’s inhabitants were poorly or mistakenly informed. The predicted rises are global yearly averages with considerable regional disparities, where some may even be colder (e.g. Western Europe without the Gulf Stream, which is one hypothesis). At present this has started to sink in, as extreme weather conditions occur more and more frequently. Up until recently the oceans have managed to keep the planet cool, but now, like overloaded mules, they are showing signs of strain and may soon lose their effectiveness altogether.

That climate disruption is the consequence of humans burning fossil fuels and tropical forests is still being denied – but then quite a few believe that the Book of Genesis is factual. Part of that denial is that the sky seems boundless. And the fact is, it does reach way beyond the stars, but the troposphere, which contains 80% of the gases surrounding the planet, is at best 15km high. If Earth was the size of a basketball, a proportional layer of gases would be a third of a millimetre thick and scarcely visible. Some deny from ignorance and some because they prefer not to know. Some express denial though they accept the facts, because they can see no alternative, or because fossil fuels and the machines burning them are their livelihoods. And everyone is in denial when they drive their cars, receive a delivery, board a train or a plane, turn on their heating, their lights, their air-conditioning, etc. One of the best informed organisations in the world, the US military, is as mute as usual but is making provisions for rising sea levels and massive flooding (4). And that is what the climate disruption debate should be about, not if but when and how bad. The 400ppm could be a tipping point, and there is no going back because carbon dioxide is a very stable compound and will stay around for centuries. Anyway nobody is seriously considering an end to burning fossil fuels in the near future. Gas instead of coal is a palliative that reduces carbon dioxide emissions but does not stop them. As for electricity produced by sunlight, wind, tides and waves, it is as capricious as the natural phenomena it depends on (though geothermal energy is constant), which explains why it represents such a small fraction of the world’s energy mix.

The speed of melting polar ice, shrinking glaciers and thawing permafrost has taken everyone by surprise. It seems that temperatures are rising much faster in the coldest regions of the planet than elsewhere. Ocean and air currents move tropical heat north and south. This process has been quite stable for a very long time. But global warming means more calories have to be expended. Warmer winds blow on snow-capped mountains, and warmer seas flow round the ice-capped poles. This process cannot be reversed, and will get worse as carbon dioxide emissions continue unabated, not to mention the methane seeping out of the Arctic Circle in increasing volumes. As for electric vehicles, they will reduce air and sound pollution in cities, but car exhausts are only a fraction of global carbon dioxide emissions, which seem largely the result of the Northern Hemisphere’s supplementary use of fossil fuels for heating and lighting in winter, which is when there is the least photosynthetic activity, and of deforestation in the Amazon and Congo basins (5). Going “green” or vegan may be morally uplifting, but the only rational attitudes are either to hunker down behind flood defences like the US military, or to just not care like the Trumps.

1. That is, all molecules of three atoms or more, including water vapour.
2. The “reflective” effect of these molecules varies, but the Earth’s wavelengths are much better reflected than the Sun’s.
3. In fact, they absorb the heat and re-diffuse it in all directions, so only part of it goes back to Earth.
For more reading on all this:
5. This video dates from 2006, but more recent 3D ones have less visual precision.