The High Cost Of Education

It seems to me….

“Getting a college degree used to be free or low cost because, as a society, we saw providing higher education to young people as an investment – in them and in the future of our own country.” ~ Pramila Jayapal[1].

Higher educational attainment in the U.S. is becoming an increasing priority at a time when financial support to educational institutions is being reduced resulting in prohibitive student expenditures. Education has become so financially burdensome that it has distorted the choices students make. Even medical doctors must become specialists as general practice is insufficient to pay their educational financial burden.

Not only has education become increasingly expensive, educational institutions are receiving much less public funding at a time when a college degree is becoming increasingly important. The percentage of graduate students taking out over $40k in loans to pay for their studies increased from 14 percent in 2004 to 47 percent in 2012 – student debt now exceeds $1.2 trillion, an amount borrowers can never hope to repay.

The amount community colleges spent on debt interest per year increased 76 percent between 2003 and 2012. The increase for state colleges was 45 percent. For students, the cost of going to a community college rose 31 percent over the past ten years. The comparable cost at state colleges was 40 percent.

College debt in the U.S. has increased over 200 percent, roughly tripled, since 2006 and now exceeds $1.5 trillion, second only to mortgage debt. One in five adult Americans, as many as 44.7 million, have student loan debt. While most Americans with student debt are young, the number of Americans 60 and older struggling to pay off either their own loans or debt they assumed for their children or grandchildren has more than doubled in the last decade making them the fastest-growing age group among student loan borrowers.

The average monthly student loan payment ranges from $200 to $300 and many borrowers struggle to repay their loans – borrowers with low balances are the most likely to default. Much of it has to do with the level of educational attainment. While there is a student loan debt crisis, it is even worse for those not having completed their degree, have incurred student debt, but do not have the higher income advantage a degree would provide. They are left with the financial burden but not the value of that credential to allow them to earn as much as they need to pay off the loan. Students who drop out of college are therefore more likely to default on their student loans than graduates.

Across much of the world, a public-university education is free or nearly free, apart from the cost of books and living expenses. In China, India, the Scandinavian countries, France, and elsewhere, all education is completely free for those who qualify. Some countries, including Denmark, emphasize educational degrees encouraging their best students to become teachers and pay them accordingly; they not only get completely free education up to and including a PhD, they also get a stipend to pay their living expenses.

But students in the U.S. and Britain must pay tuition fees which are high and growing still higher. In Britain, a change in the law in 1998 allowed public universities to begin charging. The average tuition fee at four-year public universities in the U.S. has roughly tripled over the past three decades after adjusting for inflation. Rising fees represent an evolution towards a means-tested approach to covering the rising cost of higher education which has gone up steadily all around the world. Places like the U.S. and Britain pass some of this increase on to students in the form of higher fees, with the mostly unacknowledged understanding that poorer students will receive financial aid while richer ones will bear the full cost of tuition.

A student’s financial situation should not prohibit them from pursuing their dreams[2]. While all postsecondary education at an accredited public university or technical school, which historically have been the traditional educational provider for the majority of the U.S. population, should be free or, at a minimum, all associated expenses be fully tax deductible, especially for those majoring in STEM subject areas or honorably discharged from military service.

Some ask why taxpayers’ money should be spent on the children of the wealthy rather than more generous financial aid for the poor? While some might consider it unfair, the simplest answer is that administrative costs are lower rather than relying on inefficient, expensive means-testing to determine eligibility. There isn’t any objection to providing K-12 education to all, why should college be any different. Additionally, a higher percentage of children with wealthy parents attend private colleges rather than public ones so would be less likely to receive assistance.

Private colleges and universities must always remain as viable educational alternatives. For-profit universities can be extremely profitable and while many provide an excellent education opportunity, many others are of considerably less value with students at those schools responsible for 75 percent of student debt defaults. For profit educational institutions on average spend about 42 percent of their annual budget on marketing or investor payout and only 17 percent on instruction.

Many in the growing field of Democratic 2020 Presidential candidates have proposed reforming the nation’s student loan programs, including dramatic restructuring of existing refinancing structures. Tuition-free higher education was a mainstay of Vermont Senator Bernie Sanders’s 2016 presidential run but Elizabeth Warren appears to be the first to propose flat-out debt cancellation. A number of senators, including Elizabeth Warren, Kamala Harris, and Kirsten Gillibrand have signed on as co-sponsors of Sanders’ 2017 College for All Act[3]. The plan would eliminate undergraduate tuition and fees at public colleges and universities by allocating $47 billion annually to states to cover two-thirds of the tuition obligation leaving states responsible for the rest. It would also lower interest rates on student loans and allow those carrying existing debt to refinance their loans.

Warren and others, including Senators Cory Booker, Kirsten Gillibrand, and Kamala Harris are backing Sen. Brian Schatz’s Debt-Free College Act[4], an ambitious plan with an even higher estimated price tag, about $90 billion, that would cover costs beyond tuition, such as books and living expenses, without necessitating loans for students attending a public college.

Other candidates have a wide variety of other plans to alleviate student debt and once again make education affordable for all. While well-meaning, all current plans are necessarily flawed. Student debt does need to be eliminated. Access to higher education should be a basic right but a single one-time elimination of student debt does not solve the problems of a fundamentally broken system. The problem will persist until the reason why students are forced into debt is resolved.

Federal/state cost sharing will be required as many states would strongly object to being compelled to cover all advanced educational costs. Student loan resolution should be treated separately from education affordability. Rather than simply eliminating college tuition, the program should, at least initially, rather than being prepaid, be a reimbursement program for students attending a public institution (university, college, or vocational school) fully accredited by a national accredited agency recognized by the U.S. Department of Education (DoED) such as the Council for Higher Education Accreditation (CHEA). The DoED also recognizes State agencies for the approval of public postsecondary vocational and nurse education.

Additionally, programs, departments, or schools that are part of an accredited institution should be approved for specialized or programmatic accreditation by organizations recognized within their specific discipline such as the National Association of Schools of Art and Design or the National Association of Schools of Theatre which accredits program areas within the arts; the American Bar Association for schools of law; Accreditation Board for Engineering and Technology (ABET) for applied science, computing, engineering, and engineering technology at the associate, bachelor, and master degree levels; or the Association to Advance Collegiate Schools of Business (AACSB International) which grants national accreditation to undergraduate and graduate business administration and accounting degree programs. Other additional recognized accrediting agencies also exist.

Additionally, the DoED should determine those institutions and degree programs within an institution that provide students the best overall experience and return on investment (ROI). Ranking metrics should include student satisfaction, graduation rate, debt, and post-graduate success providing students sufficient information to determine the worth of attending that institution and program. (Most colleges and universities have always objected to such rankings as they recognize some of their degree programs do not provide any appreciable value.)

Reimbursement should be for all charges; including tuition, fee, room and board, books, etc.; within those fully-accredited programs at fully-accredited public institutions of higher educational and only to those students maintaining a 3.0 or better academic average. There isn’t any perfect assistance program. It must be acknowledged that this would not completely eliminate the need for students to incur debt but would provide an incentive for diligence and concentration for costs to be reimbursed. This program also would not initially reimburse expenses of students associated with living off-campus, transportation, or other related expenses.

The U.S. needs to revive its innovative capabilities if it is to survive. This will require increased investments in education, research, and development (especially in science and technology – many more people major in underwater basket weaving than will ever possibly be needed). If we fail to educate students to innovate, will not encourage highly qualified immigrants, and are discouraging new technology imports, how can we even hope to grow our economy?

That’s what I think, what about you?

---

[1] Pramila Jayapal is an U.S. politician and activist who currently serves as the Representative from Washington’s 7^th Congressional district. Born in Chennai, India, and raised in Indonesia and Singapore, she is the first Indian-American woman to serve in the House of Representatives.

[2] Gregorian, Dareh. Growing Student Debt Crisis: Candidates Say Cancel It Free College, Refinance, NBC News, https://www.nbcnews.com/politics/2020-election/massive-student-debt-piling-so-are-candidates-solutions-n987741?cid=eml_nbn_20190330, 14 March 2019.

[3] S.1373 – College for All Act, https://www.congress.gov/bill/114th-congress/senate-bill/1373.

[4] S.672 – Debt-Free College Act of 2019, https://www.congress.gov/bill/116th-congress/senate-bill/672/text.

Advertisements

Energy Providers and Response

It seems to me….

“Well, the responsibility for maintaining a reliable transmission grid is one that’s shared by an awful lot of players who have a role in the grid: Companies that either generate and transmit energy or just play the role of being the transmission systems or monitoring them.” ~ Spencer Abraham[1].

Global warming has affected everyone. More frequent and severe weather-related events, flooding, higher temperatures, and wildfires are only some of the impact being experienced. California was especially hard-hit by fires in 2017-2018, several of which were ignited by electric utility company transmission lines. While transmission line maintenance is costly to the utility companies, it is even more so to utility customers subject to power outages regardless of their location. Options are now available capable of reducing the effects of those outages while ultimately making service more affordable.

The wildfire season in California has expanded from a few months each year to a year-long phenomenon. From a scientific perspective, this new reality is made much more likely by climate change which raises temperatures and makes drought more persistent. Millions of trees died across California after years of intense drought creating vast quantities of fuel that allow fires to burn faster and over greater distances. That, combined with higher temperatures, has resulted in conditions capable of potential disaster.

Nearly 9,000 wildfires burned 1.2 million acres (1,875 sq. miles) of land – an area the size of Delaware – in late 2017, destroyed more than 10,800 structures, and killed at least 46 people. The California electric utility Pacific Gas & Electric was responsible for at least 12 of those fires that caused billions in damage due to fires initially sparked by power lines which, in most cases, came into contact with trees. The utility points to climate change as the actual cause: planetary warming has created conditions that makes such fires all but inevitable.

As bad as 2017 was, 2018 became the deadliest and most destructive wildfire season on record in California with a total of 8,527 major wildfires fires burning an area of 1,893,913 acres (3,000 sq. miles). Just three of those wildfires, the Camp Fire; Woolsey Fire, and Hill Fire; caused more than $9 billion in damage, killed 88 people, and damaged or destroyed nearly 20,000 structures. The Camp Fire alone killed at least 86 people, destroyed nearly 14,000 homes, damaged nearly 5,000 other structures, and resulted in nearly 27,000 claims totaling over $7 billion. Energy companies are responsible for starting many of these fires including both the Camp and Woolsey Fires.

Energy companies object to being held economically accountable for expenses associated with fires directly attributable to their power lines or transformers from trees being blown into those lines. Energy companies claim increasing damage to lines can partially be attributed to climate change and they therefore should not be held responsible.

This argument, though, is at best only partly correct. Energy companies have, especially in the past, directly contributed to carbon dioxide increases by using coal or natural gas generation facilities, a primary source of carbon dioxide causing global warming. They also have resisted burying power lines and transformers based on cost even though power outages cost customers substantial amounts in lost business and time. In 2017, customers dealt with a reported 3,571 power outages lasting an average of 49 minutes, a 62 percent increase from a decade earlier. Above ground power lines also constitute a safety hazard along roadsides and through neighborhoods. Carbon-based power generation is additionally both an environmental and health issue which companies refuse to acknowledge or factor into accounting statements.

No one wishes to force public utilities, such as energy companies, into insolvency but this, as in many problems, is not a zero-sum issue. Rather than being held totally accountable for costs associated with fire responses, energy companies should be given a fixed amount of time to place all transmission lines underground, encourage local energy production, and replace large regional power production facilities with more local generation and transmission. Partially subsidizing energy company modernization and improvement using public funding that otherwise would be expended fighting fires would benefit everyone.

There is much else that could be done to reduce power company’s culpability for the increasing number of such events related to their systems. Much of the distribution network remains essentially unchanged from when originally built and is rapidly becoming increasingly obsolete. These companies have a significant investment in that technology and are reluctant to embark on a costly improvement program, especially when public utility commissions (PUCs) across the country are committed to maintaining utility rates as low as possible. Still, power generation and transmission technologies are rapidly changing in response to the need to eliminate the fossil fuel dependency causing climate change forcing utility companies to reconsider much of their existing design dependencies.

More than 100 years ago scientists and business leaders feuded over the incipient U.S. electrical grid: should it rely on alternating current (AC) or direct current (DC). Thomas Edison championed DC as the better option but by the early 20^th century AC prevailed for technical and economic reasons. Technology for power transmission advanced in the 1970s allowing direct current to return as a viable option, especially for lines more than 300 to 500 miles long, where DC outcompetes AC. After a certain distance, AC systems become more costly to build than DC and have larger power losses along the line because of issues such as higher impedance. The Midwest and other regions are now producing a great deal of renewable energy and utility companies need a way to deliver it to distant urban and industrial centers. DC lines provide a much better solution to move power from big, remote wind or solar farms.

The national power grid connects homes, businesses, and other buildings to central power sources which allow us to use appliances, heating/cooling systems, and electronics. But this interconnectedness means that when part of the grid needs to be repaired, everyone is affected. The grid has rapidly evolved and improved in recent years as utility companies have developed innovative ways to move electrical power around the country to account for weather fluctuations including extreme temperature-related demands.

There are more than 640,000 miles of high-voltage transmission lines in the lower 48 states’ power grids which currently are at maximum capacity. Additionally, the nation’s grid was constructed to allow electricity to flow in one direction – to the customer. With the increase in distributed power sources, such as solar, businesses and consumers are increasingly selling back excess power to local utilities. Electricity delivery in the U.S. depends on a complex patchwork system of power generation facilities, transmission and distribution grids, local distribution lines, and substations owned by an array of investor and publicly owned utilities, independent power producers, and governmental agencies.

Maximum wind and solar availability are not uniformly distributed across the entire country. Additional constraints resulting from local weather differences and daily sunlight cycles necessitate national power grid redesign and upgrade. Dependency on large regional power generation facilities can be expected to decrease as more private and corporate structures generate their own power and feed excess energy back onto the grid. To better facilitate these changes, energy utilities should be encouraged by local PUCs to modify their billing to separately breakout customer charges for energy generation, transmission, and storage.

The largest change in energy provision is transitioning from large regional production to smaller local facilities called microgrids. Microgrids are a form of distributed energy generation capable of functioning independently from the traditional, centralized regional power grid. They can enable towns, sections of cities, or even corporations to develop their own energy sources and power storage systems, distribute that energy, and depending upon their independence, possibly even provide excess power back to local utilities.

A microgrid is a local energy supply network with control capability. They are built around local power generation facilities designed to operate autonomously or in synchronization with a national grid within a clearly defined area. Battery technology is now capable of storing sufficient emergency backup energy for when renewable sources are not adequate to provide immediate supplementary power whenever necessary. Able to operate while the main grid is down, microgrids can strengthen grid resilience and help mitigate grid disturbances as well as function as a grid resource for faster system response and recovery.

A microgrid generally operates while connected to the grid, but importantly, it can break off and operate on its own using local energy generation in times of crisis such as storms, power outages, or other reasons. A microgrid connects to the grid at a point of common coupling that maintains voltage at the same level as the main grid unless there is some problem on the grid or other reason to disconnect. A switch can separate the microgrid from the main grid either automatically or manually enabling it to then function as an independent island.

Most microgrids, rather than being dependent on large regional power production facilities normally incorporate renewable energy sources (solar, wind, or biomass), include a link to the electrical grid for when power production is either insufficient or exceeds current requirements, and some form of energy storage (batteries, hydrogen storage, mechanical storage, etc.). For now, many also include some form of fossil fuel energy sources to ensure grid stability. Such grids typically are more sustainable, costs less, and produce lower emissions than larger power generating facilities.

They enable communities to collect, store, and use their own energy rather than be dependent upon power sources located elsewhere. Microgrids also offer security that a larger grid cannot as they are more resistant to outages from blackouts or cyber-attacks. They can be isolated from the grid when necessary providing resiliency and frugality while reducing dependency upon more expensive carbon-based fuels for backup generation. In addition, the use of local sources of energy to serve local loads helps reduce energy losses in transmission and distribution further increasing efficiency of the electric delivery system.

Microgrids currently supply only about 1.6 gigawatts (GW) of U.S. electricity, less than 0.2 percent of installed capacity. Nearly 500MW of microgrid capacity has been recently been added and cumulative microgrid capacity is expected to increase by 115 percent surpassing 4GW by the year 2020. Just as solar rooftop installations on homes have skyrocketed over the past decade due to falling costs, there’s an expanding business opportunity for affordable microgrids which now have an estimated return on investment of seven to eight years.

Consumer preferences are rapidly forcing an industry traditionally based on scale and cost/kWh to provide electricity with beneficial environmental attributes. While there previously was a “green premium” for purchasing renewable or carbon-free electricity, that cost differential has essentially disappeared. Those utility providers uncomfortable with the pace of industry transformation must adapt as there isn’t any indication it will slow down any time over the next five years.

That’s what I think, what about you?

---

[1] Edward Spencer Abraham is an American attorney, author, and politician who was a U.S. Senator from Michigan and the tenth Secretary of Energy serving under President George W. Bush.

What Both Political Parties Get Wrong

It seems to me….

“Political conflicts distort and disturb a people’s sense of distinction between matters of importance and matters of urgency. What is vital is disguised by what is merely a matter of wellbeing.” ~ John Grierson[1].

Neither conservative nor liberal extremes provide solutions to difficulties in areas where the U.S. is experiencing challenges. Both provide valid insights but, unfortunately, consider opposing beliefs mainly with derision and automatic rejection. In reality, both perspectives are beneficial. Politics is dependent upon compromise where neither side gains all they originally wanted but which ultimately results in something better than either side had initially proposed.

Now, the chasm separating the opposing parties frequently appears too broad to span. There are many implications to the rising disagreement between liberal post-nationalism and conservative historical orientation. It is time to set aside the narcissism of small ideological differences. Both conservatives and liberals supposedly seek the same thing – what is best for the country. If so, why should their different outlooks be so difficult to reconcile?

Most people belong to the same religious denomination or political party as their parents but both, similar to all institutions, evolve and change over time. Independent choice is not supported by facts; we have freedom of choice but not objectivity. The beliefs of most people are primarily dependent upon party leadership; not objective independent consideration; most merely unquestioningly accept what they are told.

While some refrain from making a choice between either political party preferring to remain independent, others identify not strictly based on either a liberal or conservative basis but rather as dogmatic Republicans or Democrats supporting whatever ideology their respective party is promoting at that time. The Republican party platform had never been consistent or compatible with Trump’s campaign claims until following his victory in the 2016 Presidential election. Much of the general public are like sheep willing to accept whatever they are told to believe rather than impartially thinking for themselves. Many strongly support their respective party’s ideology and change only when told something different.

There are many parallels between the current political environment, especially under the Trump administration, and the dystopian novel 1984 by George Orwell. For example, the repeated attempts by Trump to claim that what he said as proven by recorded video was in fact not what he had said. “… at just this moment it had been announced that Oceania was not after all at war with Eurasia. Oceania was at war with Eastasia. Eurasia was an ally.” The “fake media” had substituted fake banners – “THEY” were subversives attempting to undermine the government. “Past events, it is argued, have no objective existence, but survive only in written records and in human memories. The past is whatever the records and the memories agree upon. And since the Party is in full control of all records and in equally full control of the minds of its members, it follows that the past is whatever the Party chooses to make it.” Frighteningly prescient of what is obviously being attempted.

Many people frequently attempt to paint someone of a differing political perspective using too broad a brush. While extremes exist on all sides of the political spectrum, all are somewhat necessary in that they aid in delineating mainstream party ideology. Though frequently adversaries, compromise normally effects superior results: liberals are the idealists and impractical creative dreamers; conservatives initially reject anything new but are practical and can make those dreams successful.

More specifically, liberals, rather than accept the world as it is, tend to entertain utopian fantasies of a better world, of better people. They are unduly optimistic trusting that the government is able to accomplish practically anything. They always find the good fight to be fought, the righteous cause to support, the injustice to be righted. The world is not perfect and never will be. Rather than accept this, they somehow seem to find solace in the belief that everything would be better if only those damn conservatives would be more cooperative.

Liberal policies generally emphasize the need for the government to solve problems. They believe in government action to achieve equal opportunity and equality for all and that it is the duty of the government to guarantee that no one is in need, to alleviate social ills, and to protect civil liberties and individual and human rights. That there are natural rights that belong to all people. They have faith in and support the human rational potential. They believe there is a compact between the people and their government in the right of revolution if that compact is violated. They believe in majority rule tempered by minority rights and that the government only has limited powers. They support change in society as it constantly continues to evolve.

It is difficult to speak of either a precise “liberal” or “conservative” ideology as it means something different to each person. Additionally, each of us is more liberal or conservative depending upon the specific topic being considered rather than an all-encompassing political ideology. Conservatives are normally more resistant to change than liberals exhibiting a greater need for order, structure, and closure than liberals and are inclined to be more dogmatic and intolerant of ambiguity.

Contrary to some liberal’s perceptions, conservatives do actually have some valid perspectives. Given that conservatism is relative and not able to be precisely defined, there are some principles general accepted by many of its supporters. Still, there is no single set of policies universally regarded as conservative, conservatism is basically a political and social philosophy that favors retaining traditional social institutions in the context of culture and civilization. The meaning of conservatism therefore depends on what is considered traditional in a given place and time.

Generalizing, they do tend to believe in personal responsibility, limited government, free markets, individual liberty, traditional American values, a strong national defense, and that the role of government should be to provide people the freedom necessary to pursue their own goals. Conservative policies generally emphasize empowerment of the individual to solve problems. There is an acceptance of human inequality and the attendant consequence of social hierarchy.

Conservatives believe in what may be called the principle of prescription; we, as moderns, are unlikely to make any brave new discoveries in morals, politics, or taste.

Conservatives tend to place a high value on existing institutions based on custom and tradition. They are more likely than liberals to express faith in some supernatural force that guides human affairs necessitated by mankind’s essential base and irrational nature. They are guided by a principle of prudence; that an enduring moral order exists made for man and that man is made for it: human nature is a constant and moral truths are permanent.

They feel affection for the proliferating intricacy of long-established social institutions and modes of life, as distinguished from the narrowing uniformity and deadening egalitarianism of radical systems. The conservative adheres to custom, convention, and continuity believing it is the old customs that enable people to live together peaceably.

Conservatives recognize a need for a sense of community among individuals that will bind them emotionally to their society. They uphold voluntary community, quite as they oppose involuntary collectivism. In a genuine community, the decisions most directly affecting the lives of citizens are made locally and without coercion.

Conservatives are persuaded that freedom and property are closely linked; that economic leveling is not economic progress. The conservative perceives the need for prudent restraints upon power and upon human passions.

Conservatives understands that permanence and change must be recognized and reconciled in a vigorous society. Still they frequently insist on striding backwards towards a glorious past that never was; to never let an actual fact stand in the way of ideology. Republicans are never happy even whenever Democrats propose anything positive or beneficial. Democrats, on the other hand, would be philosophically happy if Republicans proposed anything they felt worthwhile.

Democrats propose numerous measures but sometimes misrepresent facts, the numbers do not always add up and emotional appeal tends to take priority over actual policy analysis. There already is one political party that routinely twists facts, disregards evidence, ignores serious policy analysis, and makes stuff up. There isn’t any need for still another.

Change is inevitable in society, in governmental arrangements and relationships, in leadership, in public policies and throughout the political world. Ideologies of the moderate varieties seek change at a pace that enables progress to occur but neither so fast that the destruction of stability and order in society becomes more likely, nor so slow as to foster stagnation and status quo permanence. Clearly then, there is considerable room for disagreement and dispute over what is the proper balance in all of these concerns.

I was a registered Republican for most of my early life. I did not leave the Republican party, they left me in the years following President Eisenhower in their shift toward the extreme right – a move that still continues today and now borders on neofascism. Though Republicans falsely shout “socialism” to denigrate Democratic policies, the Democrats have also shifted toward the right and now advocate positions once advocated by Republicans. There effectively is no longer any actual liberal U.S. political party in its most traditional sense. Both political parties have abandoned their traditional constituents with Democrats now backing policies proposed by Republican in the not too distant past.

Perhaps an improved collective sense of national benefit based on historical beliefs would help in diminishing the mutually antagonistic perspective in how each party views the other. Progress has stagnated for too long; it is time to return to addressing the concerns of our nation.

That’s what I think, what about you?

---

[1] John Grierson CBE was a pioneering Scottish documentary maker often considered the father of British and Canadian documentary films.

Environmental Degradation

It seems to me….

“Unprecedented technological capabilities combined with unlimited human creativity have given us tremendous power to take on intractable problems like poverty, unemployment, disease, and environmental degradation. Our challenge is to translate this extraordinary potential into meaningful change.” ~ Muhammad Yunus[1].

No one wishes to be the constant bearer of dire warnings but the consistent tone of environmental studies is that current planetary stress has become extremely serious and requires immediate action to avoid possible catastrophic consequences.

Environmental degradation is probably the greatest threat confronting the world today. Our environment is undergoing significant ecosystem and habitat destruction, species extinction, pollution, and deterioration of resources such as air, water, and soil. It involves changes or disturbances to the environment perceived to be deleterious or undesirable and results from a combination of an already very large and increasing human population, continually increasing economic growth or per capita affluence, and the application of resource-depleting and polluting technology.

It needs to be taken extremely seriously as our planet is already experiencing severe negative effects primarily resulting from excessive amounts of carbon dioxide (CO₂) being released into the atmosphere. While some segments of the general population remain unsure despite nearly unanimous studies by environmentalists, the cause has been proven to be anthropogenic.

The last time CO₂ levels exceeded their current 400 ppm, there were camels and forests in the Arctic, the tropics were locked in a near constant el Nino (the pattern that typically floods the western U.S.), and large expanses of the U.S. East Coast, Florida, and the Gulf States were underwater since sea levels were around 100 feet (30.5 meters) higher than today.

Ocean temperatures have risen 1.4F (0.8C) degrees since 1970. Unless these trends are reversed, by the end of the century global temperatures could increases by as much as 10.4F (5.8C) degrees, sea levels could rise between 7 and 23 inches (18 and 59 centimeters), hurricanes and other storms would be stronger and of greater intensity, and both floods and droughts would become increasingly common.

Increases in average global precipitation (rain and snowfall), more common droughts and flooding, and melting of mountain glaciers and ice sheets covering West Antarctica, Greenland, and the Arctic can be attributed to rising global temperatures.

As warmer air holds more water vapor, inland areas can anticipate increased rainfall and flooding. Melting ice caps, composed of fresh water, would unbalance the global ecosystem. Reduced Gulf Steam salt percentages could disrupt global currents that now warm Northeast America and Western Europe. Rising oceans temperatures increase the probability of extreme weather including devastating storms. The destructive power of hurricanes has increased by 50 percent in the last 30 years.

Ecosystem changes will result in some species moving farther north or become more successful while others unable to move becoming extinct. There has been a decline in the number of polar bears and Adélie penguins (from 32,000 to 11,000 breeding pairs in 30 years). Coral reefs are affected by disease, heat stress, and ocean acidification. Some species of butterflies, foxes, and alpine plants have moved farther north or to higher cooler areas. Spruce bark beetles have chewed up 4 million acres of Alaskan spruce trees. Diseases such as mosquito-borne malaria are spreading northward. Some dependent species have become unsynchronized, such as plants blooming earlier than when their pollinating insects become active or the spring arrival of migratory birds arriving later than the emergence of destructive insects.

Ocean warming has reduced phytoplankton, the tiny plants that are an integral food source for ocean life and responsible for around half of the world’s photosynthetic activity. Phytoplankton are the lowest level of the oceanic food chain so any reduction affects the entire food chain – particularly predators at the top. Ocean acidification and warmer surface temperatures increase the dangers to many aquatic animals, particularly crustaceans, mollusks, and coral reefs.

Conversely, while some areas of the planet can anticipate higher levels of precipitation, other less humid areas currently susceptible to wildfires can expect them to become more prevalent and destructive. Increased evapotranspiration and the accompanying decrease in rainfall in already semi-arid and sub-humid areas would result in desertification negatively affecting biodiversity and have a major impact on local human culture and wildlife. Droughts and heat waves could threaten food supplies.

Along with vehicular fumes, ground-level ozone, airborne industrial pollution, and stagnant hot air associated with warmer temperatures, smog represents an immediate and chronic health threat to those living in developed urban areas resulting in an increase in smog-related deaths of about 4.5 percent from the 1990s to the 2050s. Temperature increases also aggravate pre-existing respiratory system health conditions such as emphysema, bronchitis, and asthma and in general impede the immune system’s ability to fight against infection and disease. An estimated 65 million people died in just 2012 due to air pollution according to the World Health Organization (WHO).

A so-called “Deadly Dozen” group of diseases including Avian Flu, Cholera, Plague, Ebola, and Tuberculosis are likely to spread due to global warming. Other sources of serious illnesses are aggravated by the effects of pollution and release of chlorofluorocarbons (CFCs) that harm the ozone layer. Since disease-bearing insects such as mosquitoes multiply more rapidly as temperature increases, diseases like Malaria, West Nile virus, and Dengue fever also are expected to spread. Increases in affected populations could potentially overwhelm public health services especially in poor or unprepared countries.

Many heavily populated places throughout the world could become uninhabitable due to flooding, heat, or other factors displacing millions of people. Africa is the continent most prone to climate-induced instability resulting from widespread poverty, rain-dependent subsistence agriculture, extreme climate variance, and poor governance. Compounding the problem is a population predicted to double by 2050 and already susceptible to disease, crop failure, ethnic/religious rivalry, and corruption.

Resource reductions will lead to migration and population relocations resulting in social and economic impact as countries and factions seek to control valuable and dwindling resources to provide safety and shelter for their own people. Unwelcome refugees might be forced into semi-permanent camps which become breeding-grounds for extremists. In addition to the forced relocation of 150 to 200 million people worldwide by 2050, anticipated ocean surface level increases would submerge considerable sections of low-lying or coastal communities and facilities along the U.S. eastern seaboard necessitating expensive relocation of power stations, refineries, hospitals, homes, etc.

All energy production comes at a cost – none is perfect – but we still are primarily dependent upon the same fossil-fueled power generation, though slightly cleaner and more efficient, we have depended on for most of the past century. Major breakthroughs are needed to advance renewable energy production at costs comparable to fossil fuels. Advances in renewable fuel energy have not happened at the speed desired for a number of reasons: in spite of all the apparent attention, it never has become a sufficiently high priority; anticipated exponential scientific and engineering advances in energy-related fields never have occurred, sustained fossil-fuel government financial support and tax incentives…. So far there has been far more talk than action.

There are many causes of environmental degradation, nearly all of them rooted in human technology. While some are the result of the unintended consequences of technological advancement, others are examples of humans becoming too successful and efficient at resource extraction. Not only is change necessary, it is needed quickly.

That’s what I think, what about you?

---

[1] Muhammad Yunus is a Bangladeshi social entrepreneur, banker, economist, and civil society lead, er who was awarded the Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance.

Lunar Cooperation

It seems to me….

“I think we’re going to the Moon because it’s in the nature of the human being to face challenges. It’s by the nature of his deep inner soul… we’re required to do these things just as salmon swim upstream.” ~ Neil Armstrong[1].

This week on 20 July 2019, a half-century will have passed since Apollo 11 astronauts Neil Armstrong and Edwin “Buzz” Aldrin became the first humans to walk on the Moon. The landing on the Moon and successful return remains one of humanity’s most incredible achievements. But in many ways we are celebrating an accomplishment from fifty years ago only because we have failed to build upon and exploit what was done back then. While not disparaging the significance of that achievement, current attention being paid to it is in reality an acknowledgment of the failure to follow through with what had been accomplished by that program. The dreams of finally breaking free of the small insignificant rock which has been the home of the human species were cast aside and trampled by Congressional ineptitude apparently totally devoid of deep-space aspirations.

There are those who question the basic premise of returning to the Moon or even of space exploration. Many people, including some scientists, rightfully point out that robotic missions are less expensive than manned missions but that actuality fails to acknowledge that frequently it is the serendipitous possibilities that make manned missions of increased value. It is highly doubtful that any robotic lunar expedition would have recognized the potential value of the so-called Genesis Rock as David Scott and James Irwin did while exploring a section of the Mare Imbrium on Apollo 15.

The Moon provides an opportunity to test new tools, instruments, and equipment that could be used on Mars, including human habitats, life support systems, and technologies and practices that could help us build self-sustaining outposts away from Earth. Scientific research is critical but the primary goal should always be to further enable permanent human presence in space.

For those hoping to put more people on the Moon, many plans for future missions hinge on harvesting its available resources. The most resource-rich targets seem to be the Moon’s poles, where permanently shadowed craters act as “cold traps” building up deposits of water ice from billions of years of comet and asteroid impacts – and also a possible active “water cycle” on the Moon. Although its utility for human survival is clear, the ice may have immense scientific value as well, revealing hidden chapters of lunar history that could inform our knowledge of how life on Earth arose and evolved. Studies of the deposits in dark polar craters could conceivably provide new information about the long-term stability of the Moon’s orbit, the nature and timing of impacts by asteroids and comets, and even past episodes of lunar volcanism.

Every President since Kennedy has given their own version of his space speech, a rite of passage attempting to rally the country and recapture the national pride that came with the 1960s-era Apollo program. The newly announced Presidential Moon plans follow at least two other Republican administrations’ plans to go there: George H.W. Bush announced the Space Exploration Initiative in 1989 stating “And next, for the new century: back to the Moon; back to the future. And this time, back to stay”. His son, George W. Bush, envisioned the Constellation program in 2004 “Establishing an extended human presence on the Moon could vastly reduce the costs of further space exploration, making possible ever more ambitious missions…”. Both initiatives were eventually canceled.

Now it is Trump’s turn to announce plans for a return to the Moon by 2024. If anyone prefers to be skeptical rather than fully accepting that announcement, based on past history, they would be correct in doing so. Congress has yet to fund the program.

This time, however, there are some differences which might finally provide some motivation to actually make it happen. No longer is the U.S. government the only player in what is becoming an increasingly crowded number of contenders in a very real space race with possibly meaningful consequences. Half a dozen governments, as well as a handful of private companies, all have missions to the Moon planned for the near future which could lead to serious disagreements if not possible conflict[2]. Paranoidally, it is feared that the Chinese, with whom Congress has barred U.S. space cooperation, will attempt to lay claim to a prime site preventing anyone else from landing in a preferred location.

The Outer Space Treaty, an international law approved on 10 October 1967, stipulates that space exploration must be conducted peacefully and for the benefit of all nations. While no one can actually own territory in space, the treaty contains two “noninterference clauses” providing that anywhere an entity has landed, others should avoid disturbing that site to avoid causing harm to another’s probes or outposts. Such loopholes create an opening for a nation or private entity to monopolize the Moon’s most valuable real estate simply by arriving there first and staking a claim.

A potential race could result to claim highly desirable areas of the Moon acquired on a first-come-first-served basis, rewarding the wealthy countries and companies that can actually (and successfully) get there. There is sufficient real estate on the Moon to go around – the total surface area is about the size of Africa – but the resources there are unevenly distributed. Iron and titanium, which could be useful for building Moon habitats and technologies, are abundant in different regions of the lunar surface. The helium 3 deposits common in areas of the top layer of lunar regolith could conceivably power possible fusion reactors. And “resources” are not limited to extractable materials. Some landforms, such as certain crater pits, could offer radiation protection to astronauts, and sites on the lunar far side that are shielded from Earth’s radio noise would be especially well suited to hosting telescopes. In the near term, the most desirable resource of all is water. Astronauts can drink water or they can break it into its constituent elements and transform them into rocket fuel. For the first off-planet explorers, water has been called the oil of space.

Some of the most promising sites for water extraction are the so-called “Peaks of Eternal Light” at the north and south lunar poles. These are crater peaks, geographical features that often form at or near the edges of impact craters when an asteroid strikes the surface and pushes material to the side, where it rises up to form a ridge at the rim. Because of the Moon’s orbital mechanics, the sun shines almost perpetually at these peaks, offering a nearly constant source of energy for solar panels. Astronauts could stage bases there to extract the water sitting conveniently nearby at the bottom of these craters where permanently shadowed regions have allowed ice to accumulate. Each pole contains roughly half a dozen of these Peaks of Eternal Light, which are only about a few hundred meters across apiece. Given this relative scarcity, it is easy to see why the principle of noninterference could be a useful way for nations to claim territory. They are so small no one else can land on one without risking damage to a spacecraft that’s already there. The first one to land in those locations could claim de facto ownership.

Several missions scheduled to take place in the next few years all target the same territory. India’s Chandrayaan-2 mission, due to launch in July 2019, will aim for the lunar poles. The China National Space Administration has said that at least its next three probes will head to the poles as well. The Russian space agency Roscosmos is developing its Luna-Glob program, which would touch down near the Boguslawsky crater near the south pole perhaps as early as 2021. That same year Japan intends to launch the Smart Lander for Investigating Moon, or SLIM, which could demonstrate extremely high landing accuracy on small lunar features. China has announced plans, probably near the end of 2019, to send a robotic lunar sample-return mission that would be a precursor of a manned research station near the lunar south pole.

In many ways, NASA is gambling that commercial partners will enable it to reach the Moon by taking over some crucial tasks. Over the next few years, NASA envisions that private companies will continue to fly lunar probes that grow progressively more complex. These might culminate in a robotic mission to collect Moon rocks and scout landing sites for a crewed mission.

NASA, the European Space Agency, and other private interests are looking Moonward as well. In May 2019, Amazon CEO Jeff Bezos, who founded the spaceflight company Blue Origin, unveiled plans for its Blue Moon lunar lander, which, he said, could be ready to carry crews within the next five years. Moon Express aims to land at the lunar south pole in 2021.

NASA announced on 3 June 2019 it had chosen the first commercial companies that will carry the agency’s equipment to the Moon during its lead-up to a tentative human landing in 2024: Astrobotic, Intuitive Machines, and Orbit Beyond. Each company will carry a selection of NASA payloads intended to either address scientific questions about the Moon or test new technology that engineers are developing to advance space exploration. Astrobotic has said its Peregrine lander will carry up to 14 payloads for NASA as well as 14 experiments for other customers, for a total of 28 payloads in all. Intuitive Machines will fly five payloads on its Nova-C lander, with Orbit Beyond carrying four payloads on its own Z-01 lander. NASA announced its selection of Maxar to build the power and propulsion element of the Gateway, a lunar-orbiting station meant to act as a platform for missions bound for the Moon’s surface.

It’s fairly unlikely that NASA will return to the Moon by 2024 as it is politically handicapped by carrying unnecessary, but Congressionally directed, weight in the use of a very large, very expensive, as yet unfinished NASA-developed booster, the Space Launch System (SLS). Additionally, Congress, which controls NASA’s budget, seems increasingly uninterested in either the SLS or alternatives such as SpaceX’s Falcon Heavy, the New Glenn rocket being developed by Jeff Bezos’s Blue Origin, or even paying for any Moon-related mission.

But there are alternatives to a space race. In the past, space activities were realized by direct procurement of the agencies, as in the Apollo Moon missions. Rather than entering into such a space race and attempting to lay claim to any lunar area, the U.S. should actively promote a cooperative approach to lunar exploration similar to what has been done with the International Space Station (ISS). If we are to travel again to another planetary body, it should be together with all other nations. Congress should immediately remove any restrictions on working with the Chinese and join with the Europeans in the construction of a multinational Moon Village.

This idea has perhaps been vociferously expressed by Johann-Dietrich (“Jan”) Wörner, director general of the European Space Agency (ESA). In 2015 Wörner introduced his vision for the “Moon Village”, a sort of cooperative campsite on the lunar surface. Countries, private companies, universities, nonprofits, and individuals would be welcome to send people, robots, and any type of scientific, exploratory, or commercial ventures to take part. The Moon Village is a multi-partner open concept where cooperation would enable different participants to provide whatever they are capable of offering, whether transportation, mining, tourism, science, or technology development for in situ resource utilization; e.g., using water to produce fuel.

To establish Moon Village international and collaborative bona fides, the project is officially being organized not by the ESA but by a Vienna-based nongovernmental organization called the Moon Village Association which is open for groups and individuals to join. Rather than engaging in a race to claim limited resources, all nations should join and venture forth in peace and unity.

It is difficult for many of us to understand how anyone can walk out on a clear night and not hear the faint whispering siren call of the myriad distant stars letting us know that where we truly belong is out there among them. We must never forget our basic nature is that of an exploring species and if the day ever arrives when we cease to expand our knowledge of the cosmos, it marks the end of human enlightenment. The world would become bleak, pre-occupied with the immaterial relative importance of religion and nationalism, with the sophistic quests of resource-hungry people and nations, and with acceptance of a statistically inevitable extinction event.

We are motivated by the power of our dreams to undertake and accomplish tasks – truly big dreams similar to what resulted in successfully landing and returning from the Moon demonstrates a power capable of motivating our nation even in the midst of social and political strife. It is time, following a fifty-year hiatus, to once again recall that dream and take our next steps on an endless journey of exploration and discovery. Humans have always been motivated to see what is beyond the next hill or around the next bend in the road. Without going where we never have previously ventured, we will have lost much that makes our species unique.

Humans are not special in that rules applicable to other species do not also equally apply to us; intelligence has yet to be proven beneficial to long-term survival. Regardless, single-planet species do not survive; living off the planet is a necessary long-term survival strategy. Only by escaping the constraints binding us to a single infinitesimally small piece of rock can we fulfill our destiny.

Whenever I see a picture of Earth from space, I never am able to distinguish any political boundaries. Hunger will always be with us.   Poverty will always be with us. Likewise, we always will know conflict. But our window of opportunity to the waiting universe will remain open only for a limited interval of time. No greater challenge awaits us.

That’s what I think, what about you?

---

[1] Neil Alden Armstrong was an American astronaut and aeronautical engineer who was the first person to walk on the Moon. He was also a naval aviator, test pilot, and university professor.

[2] Mann, Adam. Lunar Land Grab, Scientific American, https://www.scientificamerican.com/article/the-new-scramble-for-the-moon/?redirect=1, July 2019, pp60-65.

Lessons From The Past

It seems to me….

“The heart of the 2008 financial crisis was a coterie of reckless financial executives, working for too-big-to-fail financial companies, who were handsomely compensated for taking risks that almost ruined the economy when they failed.” ~ Gary Weiss[1].

The housing market crashed, the economy fell into recession, and then the Wall Street investment bank Lehman Bros. collapse on 15 September 2008 plunging the nation into the worst financial crisis since the Great Depression.

It now has been over ten years since the start of that financial crisis in late 2008. No government handled it better than the U.S. which acted in a surprisingly bipartisan fashion and almost seamlessly coordinated policy between the outgoing Bush and incoming Obama administrations but backlash, especially to the bailouts, produced consequential results here in the U.S. The crash brought together many forces that already existed – stagnant wages, widening inequality, anger about immigration, and, above all, a deep distrust of elites and government – and amplified them. Having led the world safely out of the financial crisis, the U.S. is now leading the world in a wave of nationalism, protectionism, and populism that just might once again send everything crashing down.

Blaming President GW Bush for the 2008-2009 financial crisis is reasonable based on his two unjustified tax reductions while starting two expensive but unfunded wars (at least one of which was also unjustified) but the Democratically controlled Congress during the Clinton administration deserves equal responsibility for their repeal of regulations preventing combined commercial and investment banking, refusal to regulate so-called exotic derivative financial instruments, and other pro-bank tax code provisions not permitted under Glass-Steagall regulations.

While lessons learned from that experience should still be relatively fresh to all involved, we unfortunately appear to be travelling down that same road repeating mistakes that originally led to that crisis. Perhaps the most important lesson is that Keynesian economic theory[2] regarding financial crises was once again proven correct.

Now, talk of recession in the U.S. is once again rising as is the implied probability that the Federal Reserve, which has been slowly raising rates, will be forced to once again take them back below zero creating a liquidity crisis. It seems entirely appropriate to look at measures taken to alleviate the worst-case scenario of what seemed entirely infeasible prior to that time.

The Dow Jones Industrial Average (DJIA) lost about 54 percent of its value in the 17 months from the market high in October 2007 to the trough in March 2009. The unemployment rate rose to 10 percent and almost 8.7 million jobs were lost. Roughly 10 million Americans lost their homes.

Problems in the banking industry were widespread, especially in small and local banks, as 176 failed just in 2009. Even financially secure banks stopped lending lacking confidence potential borrowers would be able to pay them back. Many businesses were unable to obtain credit needed to purchase inventory or to pay their creditors or workers.

For those who remained unemployed, lost their homes and credit rating, or were forced to take jobs at a far lower pay, the loss was sufficiently deep that it took years before many felt as if the economy had fully recovered.

A wide variety of fiscal, monetary, and trade economic measures were enacted to mitigate the damage. Congress in February gave President Obama, at the time only in the first month of his Presidency, a legislative victory by enacting a $787 billion fiscal stimulus bill comprised of $288 billion in tax reductions and $499 billion in spending, mostly for public-works programs such as school construction and highway repair.

While beneficial, the stimulus results were somewhat limited by the delay in time required to actually get funding into the economy. Much of the tax reduction, especially to the wealthy, went into savings and investments and the public-works projects required substantial time to plan and for work to actually begin.

Distressed financial institutions received government bailouts so as to pump money into the economy to stimulate business activity when private loans were scarce. Many of the biggest bailout beneficiaries quickly paid the government back.

Both fiscal stimulus and quantitative easing are Federal policies intended to increase the total amount of money available to the economy[3]. The primary difference is that one is a “fiscal policy” while the other is a “monetary policy”. Though different in application, both have the same goal.

A fiscal policy; e.g., a fiscal stimulus; is when the government itself, through legislators, acts to change the economy. A fiscal stimulus pumps money into the economy usually either directly through an increase in government spending (on infrastructure, education, or direct employment) or tax reductions. During the Depression of 1929, the Works Progress Administration (WPA) did this by employing formerly unemployed Americans on large public works projects.

Stimulus funding prevented a total collapse of the economy by propping up highway work and keeping essential services from being decimated – teachers, police, firefighters… but saving jobs didn’t “lower” the high unemployment rate allowing conservatives to argue that it didn’t “create” any new jobs (in all fairness, conservatives loudly criticized President Obama for failing to increase employment while neglecting to mention they opposed every attempt to pass a jobs bill).

When Congress passed the Stimulus Bill, a provision requiring that U.S. funds be given solely to U.S. companies was stripped out at the behest of multinational corporations. In China, however, when they approved a similar stimulus program, it not only required that funding go to Chinese-only owned companies, but that all parts, components, and raw materials must be Chinese-only putting their country and their people first which the U.S. did not. They also used their stimulus funding to invest in the future while the U.S., with its so-called “shovel‑ready” projects; most of which should have been the responsibility of local governments, did not achieve the hoped-for success as unemployment remained at about 10 percent. In hindsight, Stimulus funding would have been much more effective if restricted to only U.S. companies.

A monetary policy; e.g., quantitative easing; is when the central bank (Federal Reserve or “the Fed”) acts to change the overall supply of money (i.e., interest rates). The Federal Reserve normally manages the economy by either raising or lowering government interest rates to make either more or less money available to it. Under normal circumstances, additional funding would have been provided through banks. Unfortunately, Federal interest rates were essentially at zero percent creating a liquidity crisis.

Qualitative easing is a very specific and “unconventional” type of monetary stimulus program where the Federal Reserve buys financial assets like bonds from banks and other institutions so as to pump money into the economy through those banks and institutions and also to lower the rate on those assets (assuming they are bonds which has been the general practice). The central bank normally does this only in extreme circumstances when normal monetary policy is no longer effective.

The money for quantitative easing is invented by just added it to the ledger and as if by magic, it exists. It is considered a more extreme form of monetary policy as the central bank “creates” that money by buying financial assets directly from private banks and other institutions and only to be done when all else has failed.

As a result of the Federal Reserve’s quantitative easing program begun in response to the 2008 financial crisis when Congress refused to take sufficient action, there are remaining distortions in corporate debt and equity markets increasing the probability of a reoccurring recession.

When the government spends, it has more control of who gets the money. In a contracting economy, the goal is to increase spending. This can easily be done by giving money to the poor (via employment or tax breaks) who will spend it immediately. A problem however is that funding provided through quantitative easing goes through private banks who make their own decisions about where that money will go.

An additional program, the much-criticized Troubled Asset Relief Program (TARP), was an initiative created and run by the U.S. Treasury to stabilize the country’s financial system, restore economic growth, and mitigate foreclosures. TARP sought to achieve these targets by purchasing troubled companies’ assets and stock. It was intended to increase liquidity in the money and secondary mortgage markets by purchasing mortgage-backed securities (MBS) reducing potential losses of institutions that owned them but also was frequently considered to have primarily benefitted the very institutions responsible for creating the crisis.

We currently are not prepared for even a relatively minor financial downturn. The U.S. national debt to GDP ration in 2007 prior to the start of the crisis was only 62 percent; today in 2019 it is 106 percent. The U.S. is also currently facing a personal debt crisis resulting from rising housing, medical, and education costs. Student loan debt now exceeds credit card debt, auto loans, and other nonmortgage debt. The average household that has debt owes $16,000 on credit cards, $27,000 for auto loans, $48,000 for student loans, and $169,000 for mortgages[4]. Any increase in interest rates would result in a default on much of this debt.

Recessions are bad for almost everyone including corporations: the number of people living below the poverty line increases, inability to afford mortgages increases, those without health insurance increases, and unemployment increases. The 2008 economic crisis resulted in significant changes not only to our economy but also increased awareness of the need for changes in organizational structures, skill institutions, and even a reassessment of some of our values.

During the Obama years, many well-known Republican-leaning economists followed the party line on economic policy – even when that party line was in conflict with the nonpolitical professional consensus. When a Democrat was in the White House, G.O.P. politicians opposed anything that might mitigate the impact of the 2008 financial crisis and its aftermath; as did many conservative economists. In 2010 a who’s who of Republican economists denounced the efforts of the Federal Reserve to fight unemployment, warning that they risked currency debasement and inflation though there were reasons to suspect otherwise. None of those economists who warned, wrongly, about looming inflation have since been willing to admit their error after the fact.

Duplicity became apparent in 2017 when after years of hysteria about the evils of debt, establishment Republican economists enthusiastically endorsed a budget-busting tax reduction. After denouncing easy-money policies when unemployment was excessive, some echoed Trump’s demands for low interest rates even while unemployment was under 4 percent – and the rest remained conspicuously silent.

The economy has initially done well (building on the foundation established under Obama) under Trump as he has not “yet” managed to screw it up though he certainly seems to be trying. The supposed tax reform passed in 2017 is a potential disaster. Anyone with any knowledge of economics knows the necessity of deficit reduction when the economy is good so as to be able to stimulate it during a downturn. It now is almost ten years since the last downturn; given past cycles, we are about due for another one. There also is the possibility of a prolonged trade war(s) which could impact our economy even further. Additionally, technology does not appear to be increasing productivity and the traditional relationship between stocks and bonds has apparently weakened. Historically, low unemployment rates should have resulted in higher inflation rates but that, so far, is not totally evident at this time. Has anyone even noticed that growth seems to be slowing? Given our deteriorating national infrastructure upon which we are dependent to sustain growth, we are going to need a considerable amount of luck to avoid a decline.

The U.S. annual inflation rate was 1.8 percent for the 12 months ending in May 2019 which is only slightly below the target rate of 2 percent. The national unemployment rate was 3.6 percent also in May 2019, well below the theoretical NAIRU (non-accelerating inflationary rate of unemployment) of about 6 percent. The federal funds rate was let unchanged at 2.5 percent when the Federal Open Market Committee met on 19 June 2019, also well below a more desirable rate of 4 – 5 percent considering our presently overheated economy. Given the apparent strength of our current economy, none of these are especially troublesome – but….

While the economy currently appears relatively strong, much is only façade similar to conditions in 2008. We are ill-prepared for any financial adjustment that inevitably will again occur. The federal financial interest rate is much too low for rate reductions to provide sufficient stimulus while avoiding a potential liquidity crisis as occurred in 2009. Qualitative easing, the only other alternative, would significantly further increase the national debt. The U.S. economy is obviously sufficiently overheated that the Federal Reserve should continue rate increases.

Financial regulation needs to be increased to prevent another financial crisis similar to that which occurred in 2008. Corporate monopolization including exclusive dealing, price discrimination, refusing to supply an essential facility, product tying, and predatory pricing should be prohibited. The 2005 bankruptcy reform laws should be rescinded. The Dodd-Frank financial reforms and Sarbanes-Oxley accounting regulations should be reviewed and possibly strengthened. A politically independent Regulatory Improvement Commission should be created to improve or remove unnecessary or inadequate regulations.

Somewhat troubling is that the economy under Trump is following a pattern similar to that under President George W. Bush: leveraged lending has risen under Trump while regulations have been rolled back; both Bush and Trump cut taxes and increased deficits during times of low unemployment. Hopefully the results will be different as Bush’s Presidency ended in a global financial crash and worldwide recession.

That’s what I think, what about you?

---

[1] Gary Weiss is an U.S. investigative journalist, columnist, a contributing editor for Condé Nast Portfolio, and author of two books that critically examine the ethics and morality of Wall Street.

[2] Keynesian Economics, Wikipedia, https://en.wikipedia.org/wiki/Keynesian_economics, 10 May 2019.

[3] Kolovson, Eric, and Anna Callahan. What’s The Differences Between Fiscal Stimulus And Quantitative Easing?, Quora, https://www.quora.com/Whats-the-differences-between-fiscal-stimulus-and-quantitative-easing, 26 June 2014, 9 April 2018.

[4] Kirk, Chris. Five Charts That Show Americans Families’ Debt Crisis, Slate, http://www.slate.com/articles/business/the_united_states_of_debt/2016/05/the_rise_of_household_debt_in_the_u_s_in_five_charts.html, 12 May 2016.

Technology’s Impact On Employment

It seems to me….

“Ever since the Industrial Revolution, investments in science and technology have proved to be reliable engines of economic growth. If homegrown interest in those fields is not regenerated soon, the comfortable lifestyle to which Americans have become accustomed will draw to a rapid close.” ~ Neil deGrasse Tyson[1].

The scale and speed of scientific discovery and technological advancement that occurred in the 20^th century transforming many aspects of our daily and working lives is often underestimated as many jobs still involve long commutes, hard physical labor, low pay, and/or little opportunity for professional development or personal fulfilment. The digital age, however, is providing an opportunity to reinvent both work and the workplace.

The discomforting pattern taking shape across the U.S. economy is that despite all the shiny new high-tech businesses, the vast majority of new jobs are in workaday service industries, such as healthcare, hospitality, retail, and building services where pay is mediocre at best[2]. The forecast of a U.S. where robots do all the work while humans live off some yet-to-be-invented welfare program may be a Silicon Valley pipe dream but automation is changing the nature of work forcing workers without a college degree out of productive industries, such as manufacturing and high-tech services, and into tasks with inadequate wages and little prospect for advancement.

Our entire socioeconomic system is entering a phase of accelerating transformation: markets, businesses, education, government, social welfare, and employment models are being severely impacted. Artificial intelligence (AI) is proving to be very effective in handling more complex activities such as those requiring processing of multiple signals, data streams, and accumulated knowledge in real time; e.g., autonomous vehicles; than initially anticipated.

History has shown that technology always replaces human labor in some form. Sometimes technology complements skills – which has typically driven wages up – and sometimes it substitutes for skills which drives wages down. AI will both complement and substitute for human skills but the correlation to job skill levels and wages in either case may not be as clear cut as with previous technologies.

Automation is splitting the U.S. labor force into two worlds. There is a small island of highly educated professionals making good wages at corporations like Intel or Boeing, which reap hundreds of thousands of dollars in profit per employee. That island sits in the middle of a sea of less educated workers who are stuck at businesses like hotels, restaurants, and nursing homes that generate much smaller profits per employee and stay viable primarily by keeping wages low.

Automation pushes workers into less productive parts of the economy partly helping to explain why despite the spread of information technology, robots, and AI breakthroughs, overall productivity growth remains relatively sluggish. The majority of jobs are now where productivity is low: building services, like janitors and gardeners, healthcare and social services, and restaurants and other eateries where most employees are only paid a minimum wage.

Job growth is occurring in those categories: healthcare, social assistance, accommodation, food services, building administration, and waste services. Not only are some of the tasks difficult to automate, employers have little financial incentive to replace low-wage workers with machines. At the other end of the spectrum, employment in highly productive industries, such as finance, manufacturing, information services, and wholesale has shrunk over the last 30 years.

Although technology always replaces some aspect of human labor, economists typically believe total overall long-term employment percentages are not affected as there are infinitely more things needing to be done. While the economy in the past has always eventually caught up, in the interim, it affects the distribution of income and size of the middleclass.

Economists have in general believed that by reducing prices and improving quality, technology would increase demand creating more jobs and that more productive workers would have higher incomes creating demand for new, unheard-of products that somebody would have to make.

Currently, this appears to be plausible as most of the industrialized world is enjoying an unemployment decline of unprecedented scope. Not only is work plentiful, it is also, on average, getting better. Capitalism, in general, is improving the work environment faster than it has in years as tight labor markets enhance worker’s bargaining power.

Over the last 40 years, this has been true even though jobs have fallen in every single industry that introduced technologies to enhance productivity[3]. The only reason employment didn’t fall across the entire economy is that other industries, with less productivity growth, picked up the slack. The challenge is not the quantity of jobs, the challenge is the quality of jobs available to low- and medium-skill workers.

Future prospects, however, are not necessarily fully encouraging since if future productivity creation continues to be dependent upon increased automation, the relative standing of labor, together with the task content of production, could decline. The consequences would be stagnating labor demand, declining labor share in national income, rising inequality, and lower productivity growth.

Unfortunately, this creates problems for those workers who fail to evolve their skills to match the newly created positions. The key for workers is to make technology, especially AI, work for them. This will primarily be true only for those willing to engage in life-long education and training.

AI can help us dig deeper and to reach higher. It can mine and analyze data faster than humanly possible. It can advance the knowledge base facilitating either improvement or creation of entirely new processes, services, and products benefiting societies and economies. While still too early to know, Silicon Valley’s dream of an economy without workers may be implausible but an economy where people lacking advanced education or training toil exclusively in the lowest category of jobs might be little better.

There is a broad range of opinion about how quickly AI systems will surpass human capabilities. There is a relatively high probability that AI can surpass humans at all tasks within 45 years and automate most human jobs within 120 years. What seems to be certain is that AI will change the nature of work with the only basic question being how rapidly and how profoundly automation will alter the workplace. Many people are doing routine, repetitive jobs but that is the very type of work at which technology is very good at automating. For many people, there is a significant risk of technological unemployment over the next few decades.

At present there are millions of people working in administration, entering and copying data between systems, chasing and booking appointments for companies. As software gets better at automatically updating systems and flagging the information that is important, the need for administrators will decline. As with every technological shift, new categories of employment will be created to replace those lost. What is uncertain however, is whether these new positions will be created sufficiently rapidly to offer employment to those displaced and whether the newly unemployed will have the necessary skills or temperament to fill them.

Policy makers are lagging behind the speed of technological development and often do not understand the uneven consequences their policies can inflict. Too busy tackling populist fears and concerns related to growing inequality, they’re mostly treating symptoms, not root causes.

Increasing the number of graduates with STEM-related (science, technology, engineering and mathematics) degrees is increasingly important as those who excel in these subjects will build and program the machines that will automate all other jobs. It is estimated that working hours for advanced IT and programming workers will nearly double and demand for all technological skills will grow about 50 percent between now and 2030[4].

The greatest STEM shortage is in computer sciences and engineering, which also happen to be the least diverse workforce[5]. Women account for about 50 percent of all STEM jobs overall but for only 14 percent in engineering and 25 percent in computer science. This imbalance extends beyond gender. Whites and Asians are overrepresented, comprising 85 percent of engineering and computer science employment, while Blacks and Hispanics are underrepresented holding only 13 to 14 percent. This imbalance will have to change if the anticipated demand for workers in those fields is to be met and current progress sustained.

That’s what I think, what about you?

---

[1] Neil deGrasse Tyson is an American astrophysicist, author, and science communicator.

[2] Porter, Eduardo. Tech Is Splitting The U.S. Work Force In Two, The New York Times, https://www.nytimes.com/2019/02/04/business/economy/productivity-inequality-wages.html?emc=edit_nn_p_20190205&nl=morning-briefing&nlid=67061316ion%3DlongRead&section=longRead&te=1, 4 February, 2019.

[3] Autor, David, and Anna Salomons. Is Automation Labor-Displacing? Productivity Growth, Employment, And The Labor Share, Brookings Papers, https://www.brookings.edu/wp-content/uploads/2018/03/1_autorsalomons.pdf, 8-9 March 2018.

[4] Bughin, Jacques and Eric Hazan, Susan Lund, Peter Dahlström, Anna Wiesinger, and Amresh Subramaniam Skill Shift: Automation And The Future Of The Workforce, McKinsey & Company, https://www.mckinsey.com/featured-insights/future-of-work/skill-shift-automation-and-the-future-of-the-workforce, May 2018.

[5] Funk, Cary and Kim Parker. Diversity In The STEM Workforce Varies Widely Across Jobs, Pew Research, http://www.pewsocialtrends.org/2018/01/09/diversity-in-the-stem-workforce-varies-widely-across-jobs/, 9 January 2018.