MAMMA MIA, ITALY!

All roads lead to Rome. ~ Alain de Lille (1175) 

 Italy, La Repubblica Italiana, enjoys an impressive, lengthy history and has provided a formidable mark on Western culture and cuisine. Over 60 million tourists visit Italy each year, making it the fifth most visited country in the world. Italy’s rich culture contains more UNESCO World Heritage Sites than any other nation on Earth – including Herculaneum, Assisi and Rome with its shrines of antiquity like the Coliseum, as well as the ancient cities of Naples and Ragusa. Rome, its capital, is one of the oldest of the world’s great cities and a favorite of visitors from around the planet who go there to enjoy its celebrated shrines, monuments, artworks and gastronomy, as well as to revel in the city's dolce vita, or "sweet life."

This blog takes a tour of the many "courses" that Italy has encountered from the distant past to the present, some more gratifying than others.

L’Antipasto. Appetizer, such as fritto misto (mixed fried shrimp, calamari, meat or vegetables depending on where you are in Italy). Here we’re tasting the Roman Empire. Italy’s past spans millennia. Before the modern era, the Roman Empire was the most notable western civilization in the world. For centuries, it was the central hub of technology, culture and architecture in the west’s ancient world, although the Greeks might dispute this. Roman engineers built about 50,000 miles of roads (which is more than the entire US Interstate system), bridges and aqueducts. At the pinnacle of its power in the first and second centuries AD, the Roman Empire covered about 2.2 million square miles; from Hadrian’s wall in cold Northern England to the Euphrates in sun-drenched Syria; from the Rhine-Danube rivers in Europe to the Black Sea; from the western North African coast to the Nile Valley in Egypt. Roman territory encircled the Mediterranean Sea. Italy’s current land area is about five percent of the vast Roman Empire’s. Historians believe as much as one-fifth of the world’s population, 60 million people (Italy's population now), were Roman citizens, with as many as 120 million folks living within the Roman Empire’s borders. 

There were well over 100 Roman Emperors (depending on how you count them), some very bad (e.g., Nero and Tiberius), some were better (e.g., Caesar Augustus and Trajan). Perhaps 20% of them were assassinated while in office; it could be rough sitting on those gilded thrones. The last Western Roman Emperor was deposed by Germanic tribes in 476. The final Eastern Roman Emperor was overthrown in 1453 by the victorious Ottoman Turks. And don’t forget almost 40 years later that one of Italy’s own, sailed ailed away from good ol’ Castile, Spain to discover The New World in October 1492. Nice work Christopher Columbus. 

Il Primo. First courses, such as Tagliatelle or Lasagna alla Bolognese (pasta with the traditional slow-cooked veal, pork, beef and a little tomato ragu.) How many shapes/types of Italian pasta are there? Italy’s primo culinary accountants estimate there are at least 350 different types of pasta.[2] 

In this Primo course we’ll be enjoying the Italian Renaissance. The Renaissance marked the transition from the darkish Middle Ages to something brighter and closer to Western Modernity. Taking a somewhat expansive view of this seminal historic period, it began in the 14th century continuing through the 17th century. Whatever its length, the Renaissance started in Florence, Italy, promoted under the patronage of the Medici family.

The Renaissance’s “new thinking” was manifest in architecture, science, literature, politics and art. Last year, celebrated the quincentenary of the death of Leonardo da Vinci, the original polymath “Renaissance Man.” This year, on April 6th, we will commemorate the 500th anniversary of the death of Raphael (né Raffaelio Sanzio), one of the premier artists and architects of the High Renaissance. Together with Michelangelo, Raphael and Leonardo form the traditional Italian trinity of great masters of the Renaissance. After beginning in Florence, the Renaissance further blossomed in the city-states of Venice, Genoa, Milan, Bologna and finally Rome. The world has benefited ever since.

Il Secondo. Second course, such as sogliola alla griglia, (grilled petrale sole) or cotoletta alla Milanese (bone in veal cutlet). Here we’re tasting Italy’s more recent past. After the Renaissance Italy has been transformed and modernized, along with the rest of the world despite detours and challenges. On March 17, 1861 Victor Emmanuel II became the first king of unified Italy, with considerable help from Giuseppe Garibaldi. During the inter-war years Italy succumbed to Benito Mussolini’s despotic fascism.

The new Italian Republic was born in 1946 after World War II (WWII), and its return to parliamentary democracy. Italy became a founding member of the UN, NATO, the WTO, the European Union (EU) and the G-7. Culturally speaking, can anyone forget Italy's Spaghetti Westerns of the 1960s and 1970s that starred actors including even a young Clint Eastwood? No. 
More seriously, on January 1, 1999 Italy was among the first members of the EU to adopt officially the Euro as its currency, and shed its Lira. It is the third largest economy in the Euro Zone. Some current information about Italy is given in the chart below.

ITALIAN FACTS AND FIGURES            

Population	60.5 million
Population growth rate	0.16%
Population 65 years and older	26.69%
Population 15-24 years	9.61%
Birth rate	7.51 births/1000 persons
Median age	45.5 years
Land area	294,140 sq. km
Coastline	7,600 km
GDP (PPP)	$2.32 trillion or €2.08 trillion
GDP/capita (PPP)	$39,637
GDP growth rate	0.4%
Inflation rate	0.5%
Unemployment rate	9.7%
Youth unemployment rate	32.2%
Public Debt/GPP	138.0%
Sources: Eurostat, CIA World Factbook, The Economist

Italy has roughly one and one-half times as many people as California. From a demographic perspective Italy’s population is stagnant and growing ever hoarier. Its median age, 45.5 years, is over 15 years older than the global average. Italy’s birth rate is nearly the lowest of any nation. People 65 years and older represent nearly 27% of the total population; population growth is virtually non-existent, an anemic 0.16%. Italy’s Age Dependency Ratio that measures the proportion of older dependents (older than 64) relative to the working-age population (age 15 to 64) is the second- highest in the world, behind Japan. Despite government programs to reverse the country’s “apocalyptically” low birth/fertility rate, it hasn’t changed much. In 2018 it declined from the previous year.

Politics and economics aside, it’s virtually impossible for a nation to grow sustainably when its population isn’t. Italy’s population growth is, at best, torpid. Unlike the Cohen Brothers’ 2007 Academy Awards Best Picture “No Country for Old Men,” Italy is filled to the brim with them. 

Geographically, Italy is a mid-sized nation with about the same land area as Arizona. In Rome a two-mile border encircles the world’s smallest nation. Vatican City is a 100-acre ecclesiastical city-state and the center of Roman Catholicism. Its population of 1,000 includes not just ordinary folks. 

Being a peninsula, Italy is often defined by its dramatic coastline, which is the 15th longest. The Adriatic Sea, Ionian Sea, Tyrrhenian Sea, Ligurian Sea, Sea of Sardinia, Mediterranean Sea and Strait of Sicily surround the Italian peninsula and islands. Throughout history, Italian explorers navigators and sailors including Amerigo Vespucci, Marco Polo and Christopher Columbus, have discovered many foreign lands.

Italy’s Gross Domestic Product (GDP) is 12th highest in the world on a purchasing power parity (PPP) basis, and comparable to that of Mexico. Its annual macroeconomic growth has long been in the doldrums and not exceeded 2% in 18 years. Last year it was a feeble 0.4%. The nation’s per capita GDP is ranked 33rd highest by the World Bank.

Unemployment remains a relatively high 9.7%, not that surprising given lackluster economic growth. Italy’s youth unemployment also is stubbornly very elevated, more than twice the EU average. Italy remains saddled with a large public debt. This debt, relative to its GDP, ranks 6th highest in the world. Italy's debt-GDP ratio is the second highest in the EU, after Greece. 

Together with its political affairs, Italy’s macroeconomic conditions often seem to trammel its opportunities. An example is the now uncertain fate of Europe’s largest steelworks, called ILVA, located in the Southern Italian city of Taranto. The plant employs over 10,000 workers. In 2018 the facility was bought from the Italian government by multinational steel manufacturing giant ArcelorMittal, based in Luxembourg. The firm's multiple negotiations with successive Italian governments have been fraught, without final settlement.

When negotiations collapsed with the new Italian government last November ArcelorMittal said it would end its operations at ILVA. Italy’s Prime Minister Giuseppe Conte visited the steelworks on Christmas Eve, attempting to be Santa bearing economic gifts. But no gifts were offered under a blast furnace, and the plant’s future remains doubtful. The government’s former Minister for Economic Development, who led the original deal for ILVA’s purchase, said the current situation is “Totally crazy. You cannot better explain the Italian crisis than to explain what is happening in ILVA.”

The challenge remains because the Italian populist Five Star Movement, one of the two controlling political parties in the current government, is adamantly opposed to ArcelorMittal and wants the government to once again take over ILVA’s operations. Which brings us to the next course. 

Il Contorno. A side dish, such as cavoletti di Bruxelles in padella (sautéed Brussel sprouts). Here we’re sipping a side order of mixed political "salad" greens. The world has been fascinated with Italian politics for a long, long time, which Italians themselves hardly view as a “side dish.” One fascination is the astounding turnover of multi-party governments and prime ministers. A high degree of fragmentation and instability, often leading to short-lived coalition governments, has been characteristic of Italian politics.

Since the end of WWII, the Republic of Italy has had 69 governments and 43 prime ministers. Impressionate. The only prime minister to serve a full five-year term since 1989 is Silvio Berlusconi, the scandal-ridden, impetuous billionaire (in his beginning years, he would sing on cruise liners and sell vacuum cleaners)  and a European ally of Russian President Vladimir Putin. Does this make Mr. Berlusconi an appetizer for our #45? That’s food for thought. In the US and Italy Mr. Berlusconi is probably better remembered for his “bunga -bunga” parties with young women; so it goes. He has been prime minister of Italy on three occasions, starting in 1994 ending in 2011, reigning for almost 8½ years. 

One cause of this unsteadiness was Italy’s adoption of a purely proportional voting system right after WWII — meaning that seats in Parliament were given to parties in strict proportion to the votes they received, no matter how small. This resulted in many small parties, frequent and complex coalition governments and consequent political stalemates. In 1994, following a significant corruption scandal – the Tangentopoli (Kickback City) scandal - when Mr. Berlusconi was prime minister, the parliamentary voting system was altered, with damaging results to several aspects of political stability in Italy. In particular, the new reform dissolved the popular and broader-based Christian Democracy party and others, which were washed away into the Tyrrhenian Sea. After this alteration, there have been several other fruitless attempts at further reforms aimed at providing more political stability.

Over the past decade one small, fringe party – the Five Star Movement (M5S) – has evolved and grown into a major political force in Italy. The M5S was founded in 2009 by Beppe Grillo, a comedian and blogger and Gianroberto Casaleggio, a web strategist. The M5S has been described with various representations: populist, anti-globalist, Eurosceptic and anti-establishment. The "five stars" are a reference to five proclaimed key issues for the movement: right to Internet access, environmentalism, public water, sustainable development and sustainable transport. From the beginning, Mr. Grillo and M5S members decreed that it was not a party, but a movement. Virtually all its pronouncements and messages are Web-based. The movement also advocates for direct democracy and degrowth. Hence, M5S’s strong disdain and opposition to private businesses like ArcelorMittal. 

In Italy’s 2018 general election, the M5S succeeded in becoming the largest individual party in Parliament and entered into government with the far-right Northern League. This oil-and-water coalition collapsed last summer after just a year in office and was replaced by another coalition, this time between M5S and the center-left Democratic Party. Remarkably, Giuseppe Conte has been prime minister during each of these last two Italian government coalitions. How long this alliance will last is a matter of open conjecture.  

Interestingly, a new grassroots left-wing political movement against Matteo Salvini, head of the Northern League, is forming called the “Sardine” (sardines, of course!) and they have been attracting thousands of people and protesting in the piazzas/squares of major Italian cities. Up to now they wisely refuse to become a political party because they can more easily pressure the current politicians to work harder and better.

Il Dolce. Dessert such as panna cotta, tiramisu and cannoli. Yum! Here I will be nibbling on the tasty, wide slice of Italian cuisine that thankfully migrated to America, much beyond the gorgeous Italian dolce delicacies mentioned above. I’m talking “red sauce restaurants.”

Brimmingly-full plates of fettuccine with meatballs and marinara gravy (aka, red sauce), eggplant parmigiana, garlic bread with delicious Italian olive oil, red-and-white checkered tablecloths suffused with nostalgia. These dishes among others, are primo ingredients for the beautiful cuisine that has affectionately become known on America’s main streets as red sauce Italian. There are over 63,000 Italian restaurants in the US. Oh, and let's not forget bottles of straw-flasked Chianti that is making a comeback in Italy and beyond. 

From 1900 to 1910, at least 2 million Italian immigrants passed the Statue of Liberty to Ellis Island, and other US destinations, including my dear wife’s predecessors. Like others, they dreamt of improving their lives and hoped to escape the poverty of that surrounded them in Italy. Besides a few trunks, they brought their culinary heritage and adapted it to American life. They cooked remembered Italian family recipes, and used ingredients that likely were not always accessible or attainable in the old country. Larger portions and new, savory tastes have followed. Buonissimo. 

Italy produces 5.5 million (M) tons or 14% of global processed (mostly plum) tomatoes per year. Here in the New World, California’s Central Valley produces 12.3M tons of processed tomatoes that represents 34% of world production and 95% of US production. The US enjoys being the world’s largest market for pasta, 2.7M tons per year. But on a per person basis Italians are kings and queens of the pasta dish, eating 26.0 kg (57.3lb) of pasta each year, three times as much as Americans.

Except for a finishing espresso Italiano, this completes my culinary-based overview of the Italian universe.  I mie migliori auguri per il 2020 e arrivederci...

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[2] Pasta shapes are specifically designed to hold the sauce in the best possible way. Many regions have created their own pasta shapes: for example, bigoli (thick, noodle-like spaghetti) are from Veneto; strozzapreti (meaning, ‘priest strangler’) are from Emilia-Romagna; trofie (perfect with pesto) are from Liguria, and orecchiette (or, ‘little ears’) are from Puglia.

BEWARE, SUBSIDIES BITE BACK

In the game of baseball, you live by the sword and die by it. You hit and get hit. Remember that. ~ Alvin Dark[1] 

The world is awash in subsidies. Many sorts of taxpayer-paid benefits to customers and producers inhabit all types of markets. Unsurprisingly, benefited producers and consumers, like you and me, enjoy them because they provide lower costs and prices. Subsidies are like ghosts; most folks are not even aware of them; but they’re lurking in lots of marketplaces including fuel and food. We do not relish it at all when subsidies are taken away.

Around the world, when governments attempt to scale-back costly subsidies, citizens get very offended. As it has in the past, this has been happening recently. Just ask the leaders of Chile, Ecuador, France, Iran and the US, among other nations.

Every subsidy is initially justified as an incentive to promote the “public good” be it oil exploration in 1913 or mortgage interest tax deduction also in 1913. But inevitably, subsidies soon become seen as deserved entitlements, when they are thought about at all. That’s why the “best” subsidies should always have an explicit end date, like the California state subsidy for solar panel installations.

Historically speaking the grandest subsidy of all were the Homestead Acts, first signed by President Lincoln in 1862, that incentivized western migration. Any citizen, including freed slaves, could claim up to 160 acres of federally-owned land. If they lived on the claimed property for five continuous years, built a home and grew crops, they could then file a deed to own the property. More than 160 million acres were homesteaded, representing almost 10% of the US, mostly west of the Mississippi River.

Subsidies have come in an impressive variety of new, old and strange flavors. New ones include credits for green energy technologies (like solar and wind power) and electric vehicle purchases. Agricultural subsidies, probably created not long after farmers first started purposefully tilling fields 10,000 years ago, are ancient as well as relatively large and spanning the globe. Food – and subsidies supporting it – usually comes first on anyone’s menu.  

Downright strange subsidies include a $47,000 grant to a New York jitney service to improve its shuttle operations for wealthy New Yorkers going to their summer homes in the Hamptons on Long Island; a $50,000 subsidy spent on a tattoo-removal program in San Luis Obispo, California; and a $225,000 grant in Minnesota to determine whether poultry litter (aka, chicken poop) could be used as a fuel for generating electricity.

Question: What is the largest subsidy that the US government now provides?

No, it’s not the very tall heap of Ben Franklins [over $26 billion (B) worth] that the fossil-fuel industry receives from federal and state governments. This impressive sum fuels about $12B for renewable energy and energy efficiency efforts. This total does not include $14B to corn farmers who produce ethanol. We’ll get back to fuel subsidies in a moment.

The largest subsidy also does not include the $150B per year of tax-breaks that home mortgage-holders receive as well as other aid to encourage home ownership in America. This subsidy is the second biggest.

American farmers have long benefited from several types of subsidies, which total about $25B every year. Federal support for agriculture (ag) includes the establishment of our land-grant colleges beginning in 1862 with Kansas State University. In 1887 federally-funded agricultural research was initiated. Direct subsidies that provide “farm income stabilization” were first introduced in the 1930s.

We taxpayers provide subsidies that seek to protect farmers against fluctuations in prices, revenues and yields (the amount of crop produced per acre). These agricultural subsidies do cover price-supports for commodity crops like corn, wheat, rice and soybeans, as well as crop insurance. About 40% of the nation's 2 million farms receive subsidies. A recent analysis found that 60% of the largest ag subsidies go to the biggest 10% of farms.

Crop insurance can be vital. It is purchased by farmers and subsidized by the federal government, to protect against the loss of their crops due to natural disasters, or revenue losses due to declines in agricultural commodity prices. Over 80% of US crop acreage is insured via the federal crop insurance program. Five years ago, the portion of total cotton acreage covered by crop insurance was 96%; and soybeans, 88%. And who said commodity farmers are defenseless against mother nature?

The $25B sum for all farm subsidies does not include the additional $15.3B that the Trump administration has provided farmers since 2018 as “trade aid” to ameliorate the nasty effects that retaliatory Chinese tariffs have laid upon one of his most stalwart constituencies. It is nearly certain that more trade aid will be provided to US farmers, as the US-China tariff “war” drags on.

Agriculture subsidies cover much more than US farms. The European Union (EU) spends even more money on ag subsidies; 37% of its budget is devoted to Common Agricultural Policy (CAP) subsidies, or about $65B per year. These subsidies are designed to protect European farmers’ livelihoods. They are so substantial that according to the New York Times, the Hungarian Prime Minister, the Czech Republic Prime Minister, as well as very senior officials in Slovakia and Bulgaria, have re-directed part of their nations’ CAP subsidy gravy train to their family members and political friends. Is there a quid pro quo down on the farm? Seems so.

Whenever EU politicians initiate preliminary discussions about reducing their massive CAP expenditures, farmers protest by driving their huge tractors into capital cities to disrupt commerce. In late November this happened once again, in Amsterdam, Berlin, Dublin and Paris.

Subsidy recipients in the US also protest when valued benefits are threatened. In January 2015 the Obama administration proposed ending the popular Sec. 529 tax benefit to pay for college expenses. The hue and cry from many of the millions of folks who took advantage of this tax-reduced means of paying for their children’s college was loud and clear. President Obama abandoned his proposal within a week. His staff called it “such a distraction” for the State of the Union address preparation. Back to the drawing board.

Answer: The very largest subsidies that the federal and state governments proffer are for healthcare, about $290B each year. In addition to subsidized Medicare and Medicaid, healthcare supports include the key tax-exclusion that employer-paid health care insurance receives. Employers provide 56% of all healthcare policies in the US and pay over 80% of their employees’ healthcare premiums (it used to be a higher percentage). Employers’ premium payments are exempt from federal income and payroll taxes. In addition, there are direct subsidies that reduce premiums for lower-income citizens through the ACA and tax-deductibility for large, personal medical expenses. If Bernie Sanders or Elizabeth Warren is elected president next November, many of these subsidies probably would disappear. Instead, the federal government would directly pay for virtually all our healthcare expenses, perhaps over $3 trillion per year, ten times the current healthcare subsidies.

Let’s return to another market that receives significant subsidies in many nations, energy.

To get a sense of how large energy subsidies can be, the table below calculates the implied subsidy for each listed country, based on its domestic gasoline price versus the world average price.

As shown, Venezuela completely subsidies (100%) its domestic price of gasoline, basically offering one gallon to consumers for a worthless 

Price of Gasoline by Nation

Nation (Price rank in parentheses)	Price of Gasoline* ($/gal)	Implicit Subsidy
Venezuela (1)	$0.00	100%
Iran (2)	$0.47	89%
Ecuador (11)	$1.85	55%
USA (31)	$2.93	29%
World Average	$4.14

*Average prices as of Nov. 25, 2019.

Source: https://www.globalpetrolprices.com/

1 Bolivar, a price fixed in 1997 despite hyperbolic inflation since 2018. This giant subsidy is costly; it represents over 20% of the Venezuelan GDP.

For perspective, a liter of milk – when available – costs about 20,000 Bolivars in Caracas. On the Venezuelan black market – the illegal, “parallel market” – one US dollar is worth well over 1 million Bolivars. The Venezuelan government’s official exchange rate states 1 Bolivar is worth about 10 US cents, which everyone considers a grotesque fiscal joke. Gas may be free at pumps in Venezuela, but only if a person can afford to wait in line for days to buy some due to significant shortages.

Iran provides the second most-subsidized (and thus least-expensive) gasoline in the world, where it currently sells for $0.47 per gallon; that’s a gasoline price level the US hasn’t seen since 1973. Iran’s gasoline subsidy is 89%, relative to the world average price. Iran’s fossil-fuel price subsidies represent more than 15% of its GDP.

Iranian gasoline consumers rioted across the country in mid-November after their government increased the price of fuel by about 50%. Multitudes of very unhappy demonstrators – most of whom believe that super cheap gasoline is an entitlement – have continued to burn gas stations and block traffic in Tehran and dozens of other cities. Many have been killed. Iran’s theocrats have yet to back down.

In early October Ecuador’s government removed its costly 40-year old subsidy, now 55%, on gasoline that increased the price by about 25%; the price of diesel doubled. Protests happened immediately led by indigenous groups that turned increasingly violent despite a military-enforced curfew. With two weeks the President of Ecuador retreated and re-imposed the subsidy.

Remember the country-wide “yellow vest” protests in France? In November 2018 these protests were precipitated when the French president raised the gasoline tax. That didn’t last long. President Macron soon cancelled the tax increase due to the protests’ intensity and potency. Despite this victory, the yellow-vest protests have continued.

Similar widespread, popular protests against gasoline price hikes have occurred in Indonesia, Myanmar and Nigeria during the past 20 years. Indonesian strong-man Suharto’s government was deposed in no small part by gasoline price-induced protests. In effect, he lived by the subsidized sword, and also died by it politically. Perhaps baseball and politics really are not all that different.

The pervasive protests I have mentioned above raise a challenging dilemma for political leaders: How can governments reduce and reform fuel (and other) subsidies, which can be both fiscally and environmentally ruinous, without setting off extensive protests? So far, there seems to be no answer. Once a subsidy of any kind has been established, the beneficiaries (consumers and/or producers) will cry wolf, bite back, or worse if it is reduced or eliminated. It is a beyond-holiday gift we pay for that keeps on giving.

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[1] Alvin Dark won World Series rings both as a player and a manager during his 31-year career. He managed five major league teams including the Oakland A’s. He oversaw the A’s World Series championship in 1974. 

DOWN BY THE OLD MILL STREAM

The rosier but irretrievable past of workers in manufacturing 

You were sixteen, my village queen, by the old mill stream. ~ Tell Taylor

For much of our nation’s first century, loads of manufacturing occurred in water-powered mills on streams and rivers. We have always had a soft spot for the hard work of manufacturing things. Nostalgia about manufacturing runs deep way beyond the nation’s old mill streams. Images of American blacksmiths are enduring ones. The picture below shows three blacksmiths at work in 1893. The “black” in blacksmith may come from black metal, an ancient name for iron. Thousands of blacksmiths forged, welded and finished many vital items for our growing economy including parts for Conestoga wagons. Presently, there are perhaps 500 artisanal blacksmiths remaining, who make items like custom railings and artistic hardware for homes.  

     Modern US manufacturing has nothing to do with streams, blacksmiths or wagons, but nostalgia about its origins carries far more reverence and importance than actual numbers. Manufactured goods are created from the conversion of tangible raw materials into consumable or useful products. If you drop one on your toe, it could certainly hurt on impact.

The US manufacturing sector comprises 86 unique industries; everything from fabric mills, bakeries and tortilla products, soaps and cleaning compound makers to ship and boat builders. Random examples of manufactured goods include: Boeing 787s, baseball bats, flip-flops, Corvette ZR1s, laptop computers, dishwashers, canned onion soup, moly-bolts, insulin pumps, Porsche GT3s, t-shirts and radial saws.

From the latest available data there are 254,941 manufacturing firms in the US. In terms of firm size, this sector is dominated by small companies. Over 60% of these companies have ten or less employees; only 5% have more than 100 workers.

It’s been nearly 50 years since even one-quarter of US workers were employed in manufacturing. Despite numerous promises about improving manufacturing employment, our current president has not increased manufacturing’s share of total employment. It is currently at the lowest-ever portion of total nonfarm employees, 8.43%. However, manufacturing output has steadily increased; from 2009 through 2017 (latest data) it rose 13.7%, slightly less than real GDP growth.

How has output grown while employment dropped? Manufacturing technology has vastly changed over the past decades. US manufacturers have heavily invested in fewer higher-skilled workers using more productive, computer-controlled machinery as well as fully-automated machines. Manufacturing “assembly lines” are now populated both with better-skilled workers and an increasing number of industrial robots. In Oct. 2019 there were 12.88 million workers in manufacturing, about the same as in Jan. 1946. Between Jan. 1946 and Oct. 2019 manufacturing output increased more than 850%. That is impressive productivity growth.

What’s the most manufacturing-intensive state in America? Indiana. The Hoosier state has 28.6% of its output coming from manufacturing and over 17% of its workforce, the highest percentages in the nation. Another mid-western state closely follows Indiana. Michigan, traditional home of the US auto industry, has 19.1% of its output from manufacturing using 14% of its labor force.

Manufacturing workers receive much higher compensation than other industries, reflecting their skills. Indiana’s average annual compensation for manufacturing was $77,235 in 2017, which is 60% higher than the average per capita income for the US. California produces the largest amount of manufacturing output, over $300 billion in 2017 and on average pays the highest compensation to such workers, $105,320. Both these statistics reflect the high value-added of California’s expertise in producing military aircraft and aerospace technology among other items.

Speaking of the auto industry, manufacturing cars is slowly becoming much different than it has ever been. Making electric vehicles (EVs) is more straightforward than assembling vehicles with internal-combustion (IC) engines. The Chevy Bolt, GM’s most popular EV, has 80% fewer moving parts than comparable IC-powered vehicles.

Last year, a study by a German research institute found that by 2030 just a moderate shift to EVs could leave 75,000 Germans out of work—even after accounting for the creation of 25,000 new jobs. That’s because batteries and electric motors are far simpler machines than IC engines. They’re made with only a few hundred parts instead of a few thousand.

Many large challenges remain in convincing lots more regular folks (living beyond Palo Alto, Berkeley or San Francisco) to buy/lease EVs, as I’ve mentioned. EVs now account for a slender 1.9% of US vehicle sales, and an even tinier 0.4% of total registered vehicles. But if states like California are to meet their ever more stringent environmental standards, sales of many, many more EVs will need to be amped up, quite soon. By 2025, sales of EVs are required to dramatically expand to about 7% to 10% of total sales in at least the 11 states that have zero-emission vehicle mandates, including California, Colorado, New Jersey, New York and Oregon. Whether that will actually happen is another matter, as changes in buyer preferences may not coincide with mandated environmental requirements. California’s zero-emission vehicles (ZEVs) mandate requires 1.5 million ZEVs to be sold by 2025. In the first half of 2019 100,600 ZEVs were sold in California.

Increased EV sales are good news for the environment, but not for the UAW, the union representing most US automotive workers. Because EVs have fewer parts, and crucial components like battery packs are now mostly imported, the number of workers needed to manufacture EVs is far smaller than IC vehicles. CEO Jim Hackett last year told investors that Ford could reduce time spent building EVs by 30% compared with conventional IC vehicles. Last week Ford made a media splash by announcing the 2021 Mustang Mach E, its first “expansion of the Mustang family.” The Mach E will be a 4-door crossover SUV, probably selling from $45,000 to over $60,000. Owners of the soon-to-be traditional Mustang two-door sports cars likely cringed. So it goes.

Public officials always celebrate manufacturing’s rosy past and, during campaigns, applaud even minor additions to manufacturing employment. It feels good and carries a long history. But the times when labor-intensive manufacturing was a keystone of the economy are irretrievably gone, not to be re-created. Eighty percent of current US employment and GDP comes from service industries.

No old mills remain commercially operating in villages on any proverbial American stream now. Promises to enlarge manufacturing employment sound lovely, but all too often are hollow. An Obama administration leader aptly stated we would need a magic wand to truly bring back lots of manufacturing jobs. There is most certainly no Merlin in the White House or alas, anywhere else.

THE “THIRD WORLD” COMES TO BERKELEY, AND BEYOND

There is no darkness but ignorance. ~ William Shakespeare 

During the past week Pacific Gas & Electric Co. (PG&E) has again turned off the electricity for millions of its customers, including me.

I spent much of my professional career analyzing the electric power industry. When I was writing my doctoral dissertation about the industry’s dynamic performance I learned that in the 1950s and 1960s electric utilities were promoting their services as the most reliable form of energy. Their promotions were helped by Reddy Kilowatt, shown below, who was the utilities’ mascot and marketer. The industry claimed their customers were receiving kilowatt-hours (kWh) 98+% of the time. That’s an impressive number. Lesser-developed nations – aka, “the third world” – had far less reliable electricity distribution systems. We were king of the kWh mountain. 

Reddy Kilowatt  

    This remains true on a national basis. According to the US Energy Information Administration, the average US utility customer in 2017 experienced 1.4 interruptions including those caused by major events like hurricanes, tornados, winter storms (and firestorms). These interruptions averaged 7.8 hours (470 minutes). In contrast, Bangladeshi electricity customers experience a power outage in 249 days per year!

But guess what. This past week I and 2.8 million other Northern and Central Californians experienced our second, much longer period of widespread intentional electricity shut-offs “in the interest of public safety” due to strong, gusty winds and high fire danger.

These winds are called Diablo winds in the Bay Area and Santa Ana winds in Southern California. The dry, offshore winds blow every Spring and Fall due to weather patterns that have existed for millennia. They are not new news at all; Diablo and Santa Ana winds happen every Fall. They are always most dangerous in the Fall, when vegetation is driest.

For Berkleyans like me this shut off lasted for 42 hours. I was using a headlamp and lanterns in our dark, un-electrified home, and buying bags of ice to supplement our non-functioning refrigerator. My suitcase was packed in case I had to evacuate. The idea of 98+% reliability was pretense. These episodes reminded me of how much we take for granted the full-time availability of electricity. Hordes of Californians are still without electricity.

As PG&E has descended into bankruptcy, it has stunningly mismanaged its operations, its facilities and its customers. During our Fall Diablo-wind season, which happens every September to November, one portion of the third world is now visiting many in Berkeley and the rest of California: complete darkness after sunset. It’s not quaint.

Many folks here offer genuine feelings of endearment and support for the plight of third-world denizens. But in Berkeley, no one is happy when PG&E seems as unreliable as some utility across an ocean. Where’s Reddy Kilowatt when we want him? Our situation is not nearly as bad as in Pakistan, where customers endure with an average of 75 power outages per month. Nevertheless it’s still quite upsetting, as has been clearly illustrated in social media. When the winds blow, PG&E’s strategy of re-booting my and others’ electricity multiple times seems neither effective nor smart. But if you’re stuck with only a sledgehammer, everything looks like a formidable railroad spike.

Besides complaining, what can be done to avoid darkened lightbulbs and warming refrigerators in homes and businesses? There are two much-discussed technical possibilities; undergrounding lower-voltage (<34kV) electric distribution lines and microgrids. Each has promise and problems.

First, undergrounding. For decades, electric utilities have undergrounded their distribution lines in cities and urban areas. There are several advantages beyond the straightforward aesthetic elimination of ugly power poles carrying overhead lines. Underground lines are less subject to damage from severe weather conditions –lightning, freezing, hurricanes, tornados and other winds (like Diablos, Santa Anas and Siroccos). And perhaps more important for our part of the country, underground power lines provide decreased risk of fire. Overhead power lines can draw high fault currents from vegetation-to-conductor or conductor-to-ground contact, which result in large, hot arcs that can start fires like we experience every Falls-worth of Diablo/Santa Ana winds.

A significant disadvantage is that undergrounding is costly. A recent article in the NYTimes was written by Ms. Carine Hines who co-owns a farm in rural Yolo County, west of Sacramento. She, like many of us, was dealing with PG&E’s shut-offs. She believes “the most obvious solution” would be for the utility to underground its electric lines in rural areas like Yolo County.

It may be obvious, but it’s pretty expensive. The life-cycle cost of an underground distribution power cable can be two to four times larger the cost of an overhead power line. Higher-voltage underground power lines cost proportionately more. Is Ms. Hines ready to pay a substantial premium for the safety of her undergrounded electric lines? In our age of seemingly unlimited “free” stuff, I have my doubts.

Another disadvantage is that underground power cables are more subject to damage by ground movement – like earthquakes. The Capay Valley, where her farm is located, is riddled with nearby earthquake faults like many other places in California, including Berkeley. Two fault systems near the Capay Valley are the Rogers Creek Fault Zone and the Concord–Green Valley Faults. Repairing overhead electric cable breaks can be accomplished usually in hours; underground repairs can take days or weeks.

Second, microgrids. A microgrid (also termed “distributed generation”) is a localized, small-scale assemblage of electricity generation, low-voltage distribution and customer electric loads. Microgrids often operate connected to a traditional, centralized macrogrid. A single point of common coupling with the macrogrid can be disconnected, if need be. The microgrid can then function autonomously and thus strengthen grid resilience, and help mitigate centralized grid disruptions. If Berkeley had a functioning microgrid last week, it is likely our home wouldn’t have been darkened.

Creating systematic microgrids for PG&E’s entire 70,000 square mile service territory – from Eureka to Bakersfield – would require a major, pricey redesign of our centralized generation, transmission and distribution system.

Microgrid designs heavily depend on specific local conditions and defy cost generalizations. Microgrid experts have seen cost proposals as low as $250,000 to as high as $100 million. Local generating capacity typically accounts for most of the cost. Would the City of Berkeley consent to siting a local generation facility for its microgrid? Not likely, given its commitment to be carbon-neutral by 2045, and having no space for solar or wind power facilities (that will require additional off-peak backup power). I wonder how the City’s 2030 plan to be a Fossil Fuel Free city and become a net carbon sink will work when there may be no consistent, uninterrupted source of kWhs for all Berkeleyans and their mandated EVs.

How many microgrids exist in the US? They now represent under 0.2% of the nation’s overall generating capacity. Most microgrids are unconnected to a centralized grid and serve industrial facilities. Nevertheless, interest in microgrids is growing; and clearly there’s a lot of room for growth. Like undergrounding, there’s no agreement about how the considerable extra costs of designing and installing microgrids can be allocated among beneficiaries.

What can be done to avoid defensive power shut-downs in California? Shut-downs will certainly be in our future because the Diablo/Santa Ana winds will continue to blow. Depressingly, no one really knows what to do; ignorance reigns. Governor Gavin Newsom has expressed interest in Warren Buffett’s Berkshire Hathaway making a bid for PG&E. This is Gavin’s empty-winded political doggerel. Is that all he’s come up with? OMG.

The legislature isn’t in session now, so no insightful words of wisdom are forthcoming. Although if it was in session, I’m not sure it would be any different. The California Public Utilities Commission (CPUC), the state’s utility regulator, has yet to inspire any stakeholders that its providence includes actual remedy. And PG&E? Surely, you jest. It’s the deserving, convenient scoundrel for public leaders to heap accusations upon. But these same leaders haven’t bothered to state what they believe actually needs to be done to solve California’s electricity/wildfire calamity.

     So for the near future, I’m keeping my bag packed, headlamp and lanterns ready and ice-chest filled. The “third world’s” electricity availability could be staying here at least until the first rain storms miraculously appear from the Pacific. 

FANTASYLAND OR FRONTIERLAND

I was happiest between the waves. ~ Gertrude Ederle 

Have you ever spent holiday time at a Disney theme park? I expect so. Disney’s two US theme parks, Disneyland in California and Disneyworld in Florida, are the most-visited vacation resorts in the world. Last year, 76.9 million folks attended one of these parks. That’s close to twice the total number of people living in California, the nation’s most populous state. When I first visited Disneyland in 1962 on a family vacation as a teenager I was thoroughly captivated, especially by Fantasyland and Frontierland. Tomorrowland wasn’t far behind.

Disneyland opened in 1955 as the Happiest Place on Earth. It pioneered being an all-encompassing family resort where both kids and their parents have enjoyed its four created “lands,” Fantasyland, Frontierland, Tomorrowland and Adventureland. Customers have happily made 726 billion visits to Disneyland since it opened. Disneyworld opened in 1971 and features two water parks and four theme parks, including EPCOT (Experimental Prototype Community of Tomorrow) and its spherical Spaceship Earth exhibit. When we visited, EPCOT was my favorite. Disneyworld has three times the number of annual visitors of Disneyland.

For a while there have been some new visitors to Fantasyland and Frontierland who are seeking their own happiest place on Earth. These folks’ hoped-for happiest place isn’t on Disney’s iconic Mainstreet USA in California or in Florida. It’s at 1600 Pennsylvania Avenue.

These visitors are the aspiring candidates for the 2020 Presidential election, that’s still in the distant future. At the moment there are 7 Dems out of the 19 remaining who RealClearPolitics shows as having average poll numbers exceeding a measly 2%. Several of these “leading” Dems’ rank very high on my Fantasyland Indicator – Bernie Sanders, Elizabeth Warren and Andrew Yang.

My Fantasyland Indicator heuristically accounts for each candidate’s approach to solving their signature issue(s). The higher a candidate’s Fantasyland Indicator is, the lower I believe is the candidate’s likelihood of passing real, effective policies – based on those they’re promoting as a candidate – implemented across the US, not just in Fantasyland. The indicator’s maximum value is 10.

I recognize that reality – an opposite of fantasy – by itself has hardly ever won an election. Politicians must instill hope, belief, trust and aspirations through their campaigns and programs in order to win. One of candidate Barack Obama’s successful slogans was "Change We Can Believe In." I did believe in his wished-for changes; some of which like the ACA actually became the law of the land. As a voter I seek candidates whose proposed policies can, if implemented, offer improvements to our lives. These policies need some realistic foundation and some likelihood of political and economic success, not a utopian ideal that sounds fantastic but isn't practically achievable.

I also recognize that my need for some real, pragmatic possibility for these candidates’ proposed plans doesn’t square with many primary voters. Oh well. But to not have some measure of reasonableness simply allows the candidate’s policies and plans to become empty verbal bait designed to catch targeted segments of voters. Vote for me because I’ll offer you 100% student-debt forgiveness, “free” healthcare and a “green” or a “great” America whether or not I can actually make it happen as president. The higher a candidate’s Fantasyland Indicator, the less likely I think her or his stated policies can actually become the law of our land.

Bernie Sanders.  Sen. Sanders’ signature issues – health care, inequality and college tuition – will be remedied by his Democratic Socialist, revolutionary policies that will significantly change both the structure and performance of our entire economy. His revolution appeals to people other than me. Ironically, given that Bernie suffered a mild heart attack last week, that he announced belatedly, people now may be more concerned about his health and stamina rather than his single-payer Medicare for All (M4A) plan.

As I’ve mentioned here, important parts of his M4A plan will disturb large numbers of already-insured folks, including over half of people under 65 years old (158 million) who are insured through their employers. That doesn’t bother Bernie. But at the least, creating the required new and increased taxes to fund M4A and devolving the nation’s existing healthcare system will be highly contentious and disliked. The US healthcare system employs almost 17 million people – roughly 1 in 10 US workers. Under Bernie’s M4A many of them will be dislocated and looking for new work. It is the rare citizen who gladly pays more taxes, especially new ones, or enjoys having to find another job. His free college tuition plan, like Elizabeth’s, and his total student debt forgiveness plan could offer benefits to one of his important constituencies, young people, but also will increase some folks’ taxes (guess who). They also will increase the non-tuition costs for public colleges to successfully provide ever-more entering students with an A.A. or B.A. My Fantasyland Indicator for Bernie is 9.8.

Elizabeth Warren.  Senator Warren’s signature issues include income and opportunity inequality. Her “I have a plan” candidacy includes 45 different plans listed at her website, but curiously not one for comprehensive healthcare. Her wealth tax, which she initiated before Bernie’s version, would provide some funding for several of her plans, including student debt annulment, free college, universal child care, the opioid crisis and green manufacturing.

Virtually any Dem candidate that’s to the left of Attila the Hun has subscribed either wholly or partially to her “2₵” wealth tax. It’s become a de rigueur keystone of most progressives’ funding plans. Although it’s a reasonable idea for effecting wealth redistribution, it will create several basic challenges including a Constitutional one, an enforcement one, a compliance one and a capital flight one. No matter. She has consistently staked out plans and policies that would face a host of practical issues if she succeeds in winning the White House. The breadth of her plans impressively exceeds even Bernie's. 

Passage of her plans (or of any other successful Dem candidate) would require the Dems in November 2020 to produce a filibuster-proof majority in the Senate as well as maintain their control of the House.   

Several of Elizabeth’s plans could have difficulty convincing moderates and others that they don’t reside just in Fantasyland perhaps even with middle-class tax increases she refuses to ponder. Such plans include her $150 billion (B) per year plan to expand Social Security benefits – an immediate $200 boost in monthly benefits for each of the 64M Social Security recipients. Social Security’s finances are already shaky. Last year the negative cash flow for Social Security’s retirement and disability programs was $80B. Would the FICA tax need to increase to help pay for her plan? Perhaps. Another of her plans would cost at least $1.25B/year to offer free-tuition for public colleges, like Bernie’s, and cancel most student debt. Her education plan contains a fair amount of fiscal caprice, as does her $100B program to resolve the opioid epidemic.

Her climate plan, which is adopted in large part from Jay Inslee’s plan, includes quite imaginative timescales and costs. Gov. Inslee dropped out of the race in August.

Sen. Warren wants to eliminate planet-warming emissions from power plants, vehicles and buildings by 2030, that’s only nine years after she hopes to start living in the White House. Her goal is praiseworthy, her timing is Fantasyland. Her plan would shut down each of the 219 operating coal-fired power plants that account for 30.1% of US electricity generated. The plan also seeks to achieve zero emissions from passenger vehicles and medium-duty trucks and buses by 2030. In 2018, zero-emission vehicles (ZEVs) represented just 1.9% of US vehicle sales. ZEV percentages now are even lower for trucks and buses. Getting to zero emissions in less than a decade is Fantasyland.

Do Elizabeth’s plans contain laudable objectives? Yes, in most cases; but they’re not practically achievable in her proposed timeframes or costs. My Fantasyland Indicator for Elizabeth is 9.5.

Andrew Yang.  Andrew Yang’s tour-de-force policy is his Universal Basic Income (UBI) plan, a favorite of progressives and even a few conservative movers and shakers. It is the central focus of his campaign. Like Donald Trump before he became #45, Mr. Yang has no prior government experience. His UBI plan would provide $1,000/mo. for every citizen older than 18 years. Their “freedom dividend,” as Andrew calls these unconditional payments, regardless of income or employment status. Andrew’s program, unlike all others, would truly be universal, with everyone covered. All other UBI pilots to date have been offered only to low-income folks.  

Andrew’s national program would be funded by the federal government by creating a 10% national value-added tax, much like a sales tax. Using our current population and the number of people over 18, my and others’ estimates for his UBI come to around $3 trillion per year. That’s a large heap of money.[1] In fiscal year 2018 the Federal government spent $4.1 trillion. If enacted, Andrew’s UBI would increase federal spending by a massive 73% in one fell swoop, although he says that some existing welfare plan payments could be “consolidated” with the UBI payments. Such an increase in government spending would push the US up to levels seen in France and Scandinavian social democracies. This is fiscal Fantasyland.

A UBI plan’s costs have always been a substantial impediment to implementation. One of the largest UBI projects was undertaken in Finland. In 2017, the Finnish government created and tested the program, giving 560 Euros (~$616) to 2,000 unemployed Finnish citizens per month, with no requirement to find a paying job. By 2019, Finland scrapped their entire UBI “experiment” principally due to its cost that totaled $22.7M. Preliminary results indicate there was no significant improvement in employment by participants. Their actual benefits were in terms of “fewer problems” with health, mood, concentration and stress. The Finnish government has no plans to undertake other UBI projects. Ontario, Canada launched a UBI test in April 2017 involving 4,000 low-income people. The program was axed in early 2018 due to the “extraordinary cost for Ontario taxpayers.”

Concerns about such projects’ costs along with uncertain benefits have led critics to characterize UBI as a solution searching for a problem. Harvard professor Laurence Summers stated, “A universal basic income is one of those ideas that the longer you look at it, the less enthusiastic you become.” Because of the problematic nature of UBI and Andrew’s naïve expectation that Congress would pass a national value-added tax along with his UBI program, my Fantasyland Indicator for him is 9.3.

Pete Buttigieg.  Mayor Pete Buttigieg’s campaign has focused on generational change; he is the youngest Dem candidate, and only left-hander. He has endorsed expanding the number of Supreme Court justices may be a progressive crowd-pleaser, but it chiefly resides in Fantasyland. He has offered several ideas: increase the number of permanent Supreme Court justices to 10 from the current 9 that’s been in place since 1869, along with 5 others rotating in who could be seated only by unanimous consent of the first 10. Pete is also considered having appellate court judges serve rotating one-year terms on the court. Franklin D. Roosevelt undertook the last attempted “packing” the Supreme Court; it failed in 1937. Any of the mayor’s changes for the Supreme Court would require passing new Congressional legislation and winning subsequent legal skirmishes. He also believes students shouldn’t have to take on debt to go to college, by substantially increasing aid. He’s in favor of a carbon tax and a single-payer healthcare system modeled on M4A. My Fantasyland Indicator for Pete is 8.6.

Kamala Harris.  Senator Kamala Harris’ positions on some of the increasing number of progressive Dem litmus-test issues like M4A, taxing the wealthy and allowing convicted criminals to vote have changed over time, creating uncertainty about her beliefs. She seems interested in straddling the wide Dem expanse between leftish progressives (that the NYTimes now oddly labels just liberals) and mere moderates. Kamala has yet to master this balance-beam exercise’s difficult poising. She calls herself somewhat puzzlingly a “progressive prosecutor.” My Fantasyland Indicator for Kamala is 8.1.

Beto O’Rourke.  Former Representative Beto O’Rourke’s campaign seems to have stalled. His principled stands on immigration and gun violence are well-reasoned but unfortunately unlikely to result in new policy – e.g., “Hell yes we’re going to take away your AR-15.” If only. He’s in favor of a national cap-and-trade program to reduce emissions. If only, one more time. Like most of his candidate colleagues, he’s taking the high road by favoring the national legalization of marijuana. My Fantasyland Indicator for Beto is 8.5.

Joe Biden.  And last but not least, Joe Biden. His campaign is founded on amending Dem policies to be more relevant for today’s world, not revolutionizing them. As such, he’s the Dems’ elder monarch of moderates. Little fantasy shines on Joe’s policy stars although his verbal meanderings can indeed be fantastic. He’s far more in favor of modifying the ACA, passed when he was Vice President and listening to LPs on his record player, rather than creating a brand-new M4A healthcare system. He seems much more politically-practical than most of the other Dem candidates, which befits his appreciation of the Obama era. Fantasyland and Joe aren’t that chummy.

Will he and his candidacy be wounded as collateral damage from the Dems’ Impeachment Inquiry on #45? Irony abounds. The Inquiry is focused, for the moment, on the president’s conversation with the Ukrainian President. It’s way too early to tell if Joe will survive, but it certainly can’t help to have his and his son’s names repeatedly used in the growing swarm of media stories about potential impeachment. My Fantasyland Indicator for Joe is 5.7.

My Fantasyland Indicators, shown in the chart below, for Joe, Kamala, Beto and Pete, have values lower than Andrew’s, Elizabeth’s or Bernie’s.

    Fantasyland Indicator by Person

    The higher the indicator’s score, the more fantasy-like the person’s rating.

So let’s bid adieu to Fantasyland and hitch our wagon to Frontierland. Disney’s Frontierland recreates the romanticized, wondrous, long-ago pioneer times along America‘s frontier. Never mind the realities of life in the 1800s; when life expectancy was only 40 years, one-half what it is now, and maternal mortality was 35 times greater than it currently is.

Instead, envision cowboys gallantly herding steers to market across the plains or homesteaders straining to grow corn on their 160-acre parcel. The appeal of Frontierland goes back to the good ol’ days when men were … Marion Morrison. Marion had a wondrously alliterative name, but Hollywood VIPs didn’t like it, so they changed this actor’s moniker to John Wayne. Just like they did with Danlielovitch Demsky who became Kirk Douglas and Archibald Alexander Leach who became Cary Grant. Talk about old-time diversity suppression. As Franklin P. Adams aptly stated, nothing is more responsible for the good old days than a bad memory.

My Frontierland Indicator accounts for the person’s approach to solving key issues, this time with our historic frontier as his frontispiece. The higher a candidate’s Frontierland Indicator is, the more fond he is of the good old days and the lower I believe is the candidate’s likelihood of passing actual effective, implemented policies in the present-day US, not just in long-ago Frontierland. The indicator’s maximum value is -10.

Donald Trump.  Among the current posse of presidential candidates one stands out as the numero uno denizen of Frontierland, Donald Trump. Every Trumpian acolyte who wears one of his MAGA hat subscribes to his rants to get back to a former, but more “great” era, even if it never ever actually happened. His so-far silent, obsequious Congressional comrades are similarly culpable for #45’s ruinous antics that are founded on an imaginary past.

In this sense, President Trump genuinely lives in Frontierland’s yesteryears. His faint policy record since he was inaugurated has been grim and depressing. Now that the Dems are understandably and singularly focused on their Impeachment Inquiry, I hope they surmount the challenges to convince enough of the public, not only Dem stalwarts, that their quest is both appropriate and can be successful. They’d better remember, and side skirt what happened to the Repubs when they over-reached in their effort to impeach President Clinton two decades ago.

My Frontierland Indicator for #45 is a -9.9; who knows what actions he’ll take next that raise his rating to a maximum 10, or beyond. The possibilities seem horribly endless.

Andrew Johnson.  For comparison’s sake with #45, I’ve also included that of #17, Andrew Johnson, in the Frontierland Indicator chart below. In April, 1865, six weeks after he was elected Vice President, Mr. Johnson ascended to the presidency when Abraham Lincoln was assassinated. He presided over the end of the Civil War and favored quick restoration of the 11 seceded Southern states back into the Union. His policies did not provide protection to former slaves. Andrew’s obstinate interactions with the Republican-controlled Congress ended with his impeachment in the House. [Sound eerily familiar?] The Senate acquitted Andrew by a single vote. Based on numerous surveys of US presidential rankings, obstreperous Andrew Johnson’s average ranking is 37th out of the 45 US presidents. His historical ranking places him solidly in the bottom fifth of all presidents. I give Andrew a Frontierland Indicator score of -8.7.

  

    Frontierland Indicator by Person

  The larger the indicator’s score, the more frontier-like the person’s rating.           

So, what will it be a mere 391 days from now in our presidential election, Fantasyland, Frontierland or something else?

If such prospects seem disheartening, here’s a smidgeon of completely non-political news that may provide a smile and some relief. More importantly, this event confirms that despite the obsessions of the inside the DC Beltway crowd, the actual world thankfully still functions.

I’m referring to the just-completed World Stone-Skipping Championship. As reported in The Economist, the contest again happened on Easdale Island, a jaunty 3-hour drive out of Glasgow Scotland, plus a ferry ride. This island is a small protuberance in the Firth of Lorn off the west coast of Scotland with a permanent population of about 60 resilient souls. It seems an unlikely place to hold a world championship, perhaps as much as Doha, but these hardy Scotts think otherwise. [FYI, the average daily high temp on the island in Sept. is 60^oF, a whopping 42^o less than Doha.] On September 29 Easdale Island held its 22nd World Stone Skimming Championships. Contestants skim their slate stones across the surface of a flooded quarry. The winner is the skimmer who achieves the greatest cumulative distance with their 3 throws. 

Peter Szep of Hungary repeated his 2018 victory and threw an impressive 189 meters (620ft) this time around. Wow. Each skim must bounce off the water at least twice. As in other sports, success in stone-skimming requires maintaining good technique under pressure. It’s all in the wrists as they say. Researchers have found that a stone is most likely to skim if it hits the water at an angle of around 20 degrees, if it is spinning and if it travels at more than 2.5 meters a second. It’s both remarkable and gratifying that individuals have actually devoted time researching what optimal slate stone skimming techniques should be. Clearly Peter has this down. So bend your knees, flick your wrist – as shown in the picture – and toss it with focused power to get ready for next year’s world championship on the island. Onward…

Visualization assistance: Cody I. Smith

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[1] $3 trillion is so large a number that it defies understanding. Here’s a more comprehensible way to think about the size of this huge sum, its length. How long is $3T? If one horizontally crams together Ben Franklin $100 bill packs, $3 trillion’s worth of Ben Franklins would be about 1,860 miles long; approximately the distance from Berkeley CA to Ft. Smith, AK. That’s a 26hr drive, motoring along each and every one of those Ben Franklins.

A BUG AT THE BANK? SAY IT ISN’T SO

We don’t have the gold standard. It’s not because we don’t know about the gold standard, it’s because we do. ~ Allan Meltzer    

Gold has been used by humans as a symbol of value and prestige since antiquity. Its purest 24 carat form is a bright, reddish-yellow dense, soft metal. Gold occurs as nuggets in rocks, in underground veins and alluvial (loose sediment) deposits. So-called “gold bugs” – people who reverently believe gold is the ultimate standard of value – have occupied positions of societal power and influence for a very long time, but not recently. Gold bugs haven’t sat at the citadels of US public authority for almost 90 years; that may soon change if #45 gets his way. Oh my.

Consider first some golden history.

The seemingly eternal allure of gold obliged our ancestors to find it. People have mined gold for at least 7000 years in what’s now eastern Europe and the Caucasus, as well as China, India, Mesoamerica, Spain, Ireland and Wales. Because gold served as the primary medium of exchange within the Roman Empire, they developed and used ground-sluicing methods on a large scale to extract gold. Historians believe the Roman invasion of Britain in the first century AD was principally motivated to expand their supplies of this prized metal.

The first precious-metal coins were used as money in several places about the same time, around 600-500 BC; in the Yellow River valley in northern China, in the Ganges River valley of N.E. India and by the king of Lydia in western Asia Minor (modern Turkey). The Lydian coins, shown below, were made from electrum – an alloy of gold and silver. Officials stamped images on bean-sized lumps of electrum that helped guarantee the value of each coin, and discourage counterfeiting. If only.

Lydian coin

Following the lead of Lydia, most nations have employed gold specie to conduct commerce for centuries. During the Middle Ages, Byzantine gold coins were used throughout Europe and the Mediterranean. Twenty-two carat Spanish Doubloons were widely used in Europe and the Americas from the early 16th to mid-19th centuries. During its primacy, the Doubloon served as a multi-nation de facto gold standard, a monetary system in which the standard unit of currency is based on a fixed quantity of gold. The US formally adopted the gold standard in 1873, using its $10 gold eagle coin as the nation’s primary currency unit. The US mint produced gold coins of various denominations from 1872 through 1933. Like many other nations, our country effectively abandoned the gold standard in 1933 during the depths of the Great Depression. It finally and officially severed the link between the dollar and gold in 1971. The image below shows our “lady liberty” gold dollar coin first issued in 1849.

US Lady Liberty gold dollar coin

The late 1840s ring a very special chime in the golden history of the US.

The California Gold Rush began in January 1848 when James Marshall found a placer nugget in a river at Sutter’s Mill in the Sierra Nevada foothills almost 50 miles northeast of present-day Sacramento. Proclamations of his discovery created such a popular incentive for people also wanting to “strike it rich” that over 300,000 people soon headed for California from nearby and far-away places. They came from each of our then-30 states and every territory. They also arrived with the gleam of gold in their eyes from around the world, including the Sandwich Islands (aka Hawaii), China, Latin America and Europe. Because of gold’s draw, California rapidly became a state in 1850 without first being a territory, unlike any other western US region.

There turned out to be a lot of gold in the Sierra Nevada. By the end of 1848, the first year of the Gold Rush, $10 million in gold had been produced. The biggest nugget ever found was a bit larger than a shoebox and weighed nearly 200 pounds. By 1865, $785 million worth of gold had come out of the ground in California, probably making the difference in which side won our Civil War. This multi-million dollar mountain of gold represented 60% of the total US budget in 1865. It significantly contributed to keeping Union soldiers clothed, fed and paid, and bought much-needed guns, bullets and armaments. This massif of gold would be worth $12.9 billion in today’s dollars. Very, very little of this gargantuan sum stayed in miners’ pockets; merchants like Leland Stanford and Mark Hopkins became far richer. Notwithstanding putting California on the US map, the Gold Rush also decimated numerous indigenous Native American communities. Untold environmental damage accompanied the mining, especially the hydraulic variety that used 30,000 gallons of water each minute.

Where did all this lustrous California gold come from? Not from fairy dust. According to John McFee’s superb Assembling California that intertwines the state’s geological and human history, the Sierra’s deposits of gold were precipitated 150 million years ago when the third and last giant (10,000 square mile) island-arc fragment of the Pacific plate – the Smartville Block – accreted into the westernmost North American plate near where Auburn, California is now. The Smartville Block not only doubled the width of what is now California, but created its bountiful Mother Lode as well. California’s Mother Lode has produced more gold than any other state – more than 106 million ounces since 1848. In modern times about 38% of gold is used for jewelry; coins and official government uses, 22%; electrical and electronics, 34%; and other uses, 6%.

Now that we’ve scratched the surface of the history and source of most of the nation’s gold, let’s return to the present time and Judy Shelton, who adores gold.

Dr. Shelton has recently been nominated by #45 to fill a vacancy on the Federal Reserve Board of Governors. Although her nomination may not be as far-fetched as the president’s previous attempt to install the totally unqualified Herman Cain on the Board, she is quite controversial. She belongs to the justifiably much-endangered, very conservative tribe of modern-day gold bugs. Like her fellow bugs, she wants to reverse President Nixon’s decision to drop the gold standard and re-adopt it now. She has publicly praised #45’s tax cuts and deregulation policies. She approves of the president’s misguided trade war with China as a means of forcing it to “play by the rules.” As I’ve mentioned before, no one's won this war. So far the president’s tariffs have cost us taxpayers $28 billion. That’s what the Trump admiration has paid the farmers they wounded, with no end in sight. Nice call, Judy. 

Virtually all knowledgeable monetary economists believe returning to the gold standard would harm the economy and its citizens. The Federal Reserve’s principal means of influencing the macroeconomy is by increasing or decreasing the nation’s money supply depending on expected economic conditions. It increases the money supply if a recession is expected, thus reducing interest rates to spur loans and investment. The Fed decreases the money supply causing interest rates to rise, towards the end an expansion, if higher inflation is expected.

Monetary policy is hardly an exact science, but it would be significantly constrained under a gold standard. Why; because our money supply would essentially be determined by how much gold is produced.

Dr. Shelton has stated, “we make America great again by making America’s money great again” through returning to the gold standard. That’s patently absurd. Dean Baker, a macroeconomist who was one of the first to identify the 2007–2008 US housing bubble that lead to the Great Recession, likened returning to the gold standard as prescribing chemotherapy for someone who doesn't have cancer. An apt diagnosis Dr. Baker.

Turning the economic clock back and re-adopting the gold standard, as Dr. Shelton and Mr. Trump have fantasized, would link the money supply to gold production. If they actually thought through this fundamental relationship imposed by the gold standard, they would not at all be pleased. I don’t believe they’ve thought about it at all; it’s simply a sporadic gesture memorializing the unfamiliar “golden days” of the past. It would not please #45 one single golden leaf to learn that China is the world’s largest gold producer. 

Since the end of the last recession, US gold production has increased a meager 0.87% per year. This is why many economists believe that a re-imposed gold standard would act as a limit on economic growth. As an economy's productive capacity grows, then so should its money supply. But because a gold standard requires that money be backed by the metal, the scarcity of gold constrains the ability of the economy to produce more capital and grow. Thus a gold-standard based monetary policy could no longer be used to stabilize or grow the economy.

It’s likely that the Senate, under the imprudent leadership of Mitch McConnell, will confirm Judy Shelton. A single gold bug will then sit on the seven-member Federal Reserve Board. Her practical and institutional influence will be limited. But that’s one too many bugs at our central bank for anyone who wants an independent Fed to be a viable economic counterforce to #45’s feckless thrusts. Where’s the political Terminix when we need it?

IS #45 RELATED TO CTENOPHORES OR PORIFERANS?

Never look back unless you are planning to go there. ~ Henry David Thoreau

I’ve returned from another delightful, multi-state road-trip adventure through the Pacific Northwest seeing family and friends. It was downright refreshing to take many steps away from the on-going tribulations connected with all things political, especially our vulgarian-in-chief and our upcoming presidential election. I recommend hiking through forests and slopes and viewing gorgeous countryside gurgling with snow-melt fed, rushing brooks.

The myopic media-industrial complex makes it seem like we’ll be voting the day after tomorrow, thus every candidate’s quotidian words are vitally important; even though election day is a colossal 453 days away. Equally obscuring is the media’s 24/7 obsession with each uttered and Twittered syllable of #45. This only magnifies his coarseness, crudeness and deceit – and strokes his already over-colossal ego. Please stop, right now.

At the same time, obdurate progressive Dems keep acting as puritanical, self-righteous bluenoses and continue posing as the sole purveyors of certain Democratic victory, while trashing President Obama’s significant accomplishments. With friends like these, who needs enemies?

But I digress.  

Instead, I offer here a much longer perspective about life on this fine, though endangered planet that transcends far beyond the mere 243 years since the USofA was founded.

It seems naturalists have narrowed down the source of the very beginnings of our hoary Tree of Life. They have been wrestling – thankfully not at all in the WWE tradition– with identifying what living creatures are the closest, current counterparts to the first-ever multicellular animal that developed in Earth’s oceans well over half a billion years ago. Naturally, evolutionary biologists haven’t all agreed about which creature deserves this accolade; and represents every human’s (perhaps especially #45) very oldest ancestor. There are two (2) quite distinct animals fighting it out, as it were, in the biologists’ ring.

First, are the beautiful and seemingly fragile Ctenophores, also called comb jellies. As pictured below, they are usually soft, iridescent blobs wreathed by feathery cilia that are sometimes arranged in groups (“combs”). They inhabit many marine habitats around the world. Despite their seeming simplicity, they have central nervous systems, cilia/tentacles to capture prey, and mouths, throats and stomachs to digest their food. Virtually all ctenophores are predators. They can capture and eat krill, shrimp-like crustaceans and even each other. Adult ctenophores range from an inch to almost 5ft in size. Watching comb jellies swim around in the tanks at the Monterey Bay Aquarium is a delightful almost magical experience.

Comb jellies in action.

Second, the other existing animal-type that’s in the running for being most similar to the founder of Earth’s animal kingdom are Poriferans, aka sponges. Sponges come in all sizes, shapes and colors. They are stunning aquatic animals that mostly attach themselves to an underwater surface, often coral reefs, and remain fixed in place, as shown below. The great majority of sponges are marine salt-water species, living in all the oceans. Their habitat ranges from tidal zones to depths exceeding five (5) miles. Their bodies are full of pores and channels allowing water to circulate through them. Virtually all types of sponges are only able to passively eat tiny particles, like bacteria and other microscopic food from the water that passes through their skeletons. They have no nervous system but do have cells in their outer layers can move inwards and change functions. From afar, sort of like stem cells.

Sponges in inaction.

Over several decades evolutionary biologists and morphologists have sort of drawn a line in the sand (on an ocean beach) with regard to the founder of our animal Tree of Life. Some believe comb jellies should hold the crown; other scientists consider sponges to be the closest modern analogue to the first multicellular animal.

For many years, the common scientific wisdom was that sponges were the foundational animal. Then about a decade ago a study using genetic methods argued that comb jellies were the sister group (the closest relatives of another evolutionary branch) of Earth’s first animals. The comb jelly proponents were overjoyed. If they had them, their cilia were wildly fluttering; but it wasn’t to persist. Last week a new study was published that turns the tide and provides “very strong support” for the sponges-first hypothesis. 

It was a tough choice, but my vote goes for #45 having a spongier forbearer. Like them, he’s immovable despite factual reality and has no nervous system. In any case, we must make sure to send him back to the depths from whence he came in 453 days.