I just received the Solid Waste Master Plan Announcement from a couple of sources. Here is the excerpt that caught my eye.

While the Solid Waste Master Plan (SWMP) promotes a number of important efforts to increase recycling and reduce waste generation, it also recognizes that by 2020, Massachusetts will have a shortfall of capacity to dispose of waste that cannot be recycled or re-used. The SWMP modifies the current incinerator moratorium to encourage the development of innovative and alternative technologies for converting municipal solid waste to energy or fuel on a limited basis.

This is certainly not the outcome we had hoped for as shown in my previous post, Video of Presentation of the Petition to Keep the Moratorium on Municipal Incinerators.

As Commissioner Kimmell so proudly pointed out to us in a private meeting we had with him, if Massachusetts builds new incinerators it will attract more waste to us from other states.  The U.S.  Constitution’s interstate commerce clause does not allow the state to prohibit importing waste from other states. This is not exactly how I imagine a solution to our waste disposal capacity problems.  The faster we build capacity to dispose of solid waste, the more solid waste will come to us from other states.  Am I crazy, or am I the only one that sees something wrong with this picture.

According to Commissioner Kimmel, we need to stop exporting waste to other states because the extra pollution from the transportation is not good for the environment.  Magically, the transportation of the waste in the opposite direction is not a problem.

Only in America.

This article and video from Time, How Silicon Valley is Hollowing Out the Economy (And Stealing From You To Boot), is more important than the silly headline might indicate.  You get a small sense of the import from the video below.

You get a little different perspective from the written article. Here is a key snippet.

But Lanier is asking us to stop and examine the economy we’re allowing to be created around us. If automation will subsume most of what we consider to be work, how will we spend our days, and how will we divy the resources created by the machines? [emphasis added] It’s likely too early to come up with the solutions to such problems yet, but it will almost certainly involve the government. Government is the tool through which we set the rules and boundaries of markets. In a world where the most valuable assets are virtual, politics will play an increasingly important role.

Ultimately, Lanier envisages a future where we would retain ownership of our virtual selves, the content we produce online, and the incremental improvements we make — passively or actively — to the products created by powerful companies. Some sort of universal micropayment infrastructure would be necessary to allow capital to flow to and from each player in the economy. Setting up this infrastructure will be a monumental undertaking for sure, but as Lanier points out, no more monumental than the infrastructures that have already been created.

I never imagined how the concept I proposed in my previous post, Monetizing Internet Content could be extended to cover this grander societal issue. Of course, there is much more than just micropayments that has to be invented to turn this problem into a grand opportunity.

RichardH sent me the link to The New York Times column The Chutzpah Caucus by Paul Krugman.

At this point the economic case for austerity — for slashing government spending even in the face of a weak economy — has collapsed. Claims that spending cuts would actually boost employment by promoting confidence have fallen apart. Claims that there is some kind of red line of debt that countries dare not cross have turned out to rest on fuzzy and to some extent just plain erroneous math. Predictions of fiscal crisis keep not coming true; predictions of disaster from harsh austerity policies have proved all too accurate.

If the level of debt compared to GDP is the real issue for Republicans like Gabriel Gomez and for Harvard Professors Carmen Reinhart and Kenneth Rogoff, then why is the following revelation by Paul Krugman true?

The key measure you want to look at is the ratio of debt to G.D.P., which measures the government’s fiscal position better than a simple dollar number. And if you look at United States history since World War II, you find that of the 10 presidents who preceded Barack Obama, seven left office with a debt ratio lower than when they came in. Who were the three exceptions? Ronald Reagan and the two George Bushes. So debt increases that didn’t arise either from war or from extraordinary financial crisis are entirely associated with hard-line conservative governments.

OK, let me be fairer to Reinhart and Rogoff than they were to academic rigor.  They claim that despite their erroneous and fudged calculations,  neither their paper nor their book ever advocated austerity during an economic recovery.  So I guess, Gabriel Gomez and his fellow Republicans are really on their own on this one.

CNBC has an interview with Gabriel Gomez on his supposed plan for growth.

The last thing we need is a another vulture capitalist who thinks that running a business is the same thing as running a national economy. These guys are so sure that they know how to do it, mainly because they know nothing of macro-economics. They are probably not even aware of this field of economics.

We all want economic growth, but there is a difference between someone who actually knows something about a national economy and a quack practitioner who gives you assurance, but does not have the required qualifications.

Could the people of Massachusetts actually elect another disastrous Senator like they did with Scott Brown? Why should the ordinary citizen understand economics any better than the fool economics professors at Harvard? Maybe there is something to the claims of elitism in Harvard. If only the average voter could understand what the economists at UMass Amherst know (and MIT, Princeton, UCal Berkeley, UTexas Austin, and some at Harvard – the people who don’t fudge the data to prove their point).

Keynesian economic theory has two things going for it. The explanation of why it works is very logical. The history shows unequivocally that it works.

On the other side is national Austerity which is totally illogical in why it ought to work. And history has proven time and time again that it makes things worse rather than better. It even makes the debt go up while it strangles the economy.

New England drivers ought to know from experience that if your car is skidding on ice, you do not stop faster by slamming on the brakes. Slamming on the breaks makes your car lose traction even faster than doing nothing. This is quite similar to how austerity makes the debt grow because the national income drops faster than the cuts in spending.

I have been in the very driving situation described above. My foot just wanted to press harder on the brakes, but my head kept telling me to take my foot off the breaks. It is very hard to give control to your brains instead of your gut when you are in a panic. I failed to let my head take control, the car spun around,  and had to be winched out of a snow bank at the bottom of a hill.  Luckily I survived to talk about it.

If this country fails, it will not be because its citizens kept their cool in a difficult situation. It will be because we panicked.

Reader RichardH sent me a link to The New York Times article Boom, Bust or What? Larry Summers and Glenn Hubbard Square Off on Our Economic Future.  It is a great exploration of the opposing economic views of Larry Summers and Glenn Hubbard, and the reporters futile  attempt to get them to reconcile their differences.

As I responded to RichardH, at first it seems like the point is that there is no way to separate fact from fiction.

Then I realized that this is the wrong way to look at these opposing points of view.  We the consumers of these ideas and as voters and policy makers need to find a way to turn this away from a religious argument about two sets of beliefs and into an engineering discussion of how to get the economy and society to work best.  Engineering is my bias, because that is my training and natural bent.

As an engineering problem we need to realize that this is a discussion about choosing the right policies in the face of huge uncertainties.  There are things we just don’t know about the future.  There are human, social, and technological changes that will occur that we can’t predict.  There are some changes that we cannot even imagine. This is the type of situation that engineers face every day, yet they are called on to make decisions anyway.

So any policy proposal ought to be accompanied by an analysis of the uncertainties that could upset the wisdom of the policy in major and minor ways.  In other words, what is the proposal assuming for the future and  what is the sensitivity of the proposal to changes in these assumptions.  The proposer should tell us what we ought to measure about the progress of the proposal after it is implemented and how are we realistically to measure it.  What remedial steps are available when the path deviates from expectations after the proposal is implemented?

What other steps can you engineers out there recommend to turn this into a discussion that comes out with a resolution instead of an argument that never moves from the spot we are currently in?  What do people who have been trained or are experienced in other disciplines do to find a path forward?  What have people learned from their mistakes along the way?

What really makes me nervous is anybody who is so sure that a recommendation is so bullet proof that nothing could possibly go wrong.  Hearing that kind of argument, tells me that I am hearing ideas that may turn out to be useful, but that need a lot of further analysis before trying.

The role of some people is to come up with as many wild ideas as possible.  Others must take on the role of weeding out the good ideas from the bad ones. Some of the people who come up with the ideas will participate in weeding out the good from the bad.  Other idea people will choose not to participate. This will always be an ongoing exercise in a very dynamic world.

and The Boston Globe, for that matter.  The Boston Globe has an editorial today in which they praise Harvard Economists Carmen Reinhart and Kenneth Rogoff for owning up to a mistake in their influential research paper and book.

Errors happen in statistical research

is how the editorial phrased it. When they had provided their data to a graduate student at the University of Massachusetts at Amherst,

…he found a Microsoft Excel error that distorted their results.  Corrected computations showed by some accounts, that carrying very high debts – of over 90 percent of gross domestic product – wasn’t quite as ruinous as the two Harvard economists had computed.

Look at the video in my previous post, Study Debunking Austerity Research Sparks Wide Reaction, to see how gross an understatement “wasn’t quite as ruinous” is.

Now we turn to the Brainiac column at the front of the very same editorial section of the newspaper.

But when Thomas Herndon, a UMass economics student, endeavored to replicate Reinhart and Rogoff’s results for a class assignment, he quickly found that he couldn’t. When he dug a little deeper he realized why: The paper had significant errors, including data omissions, questionable decisions about how to weight data, and a coding typo in the Excel spreadsheet they used to calculate the results.

This seems a little more serious than the previously quoted editorial statement  “Errors happen in statistical research.”

Then of course there is the Brainiac comment

The whole dust-up has also highlighted a basic issue present all along in Reinhart and Rogoff’s paper: It doesn’t address causality. That is, it doesn’t show whether high debt slows economic growth, or whether slow economic growth leads to high debt.

Lest you think that the Brainiac column is taking a purely factual stance they include the comment,

In the 1970s, he explained [Dylan Matthews], it [the UMass economics department], remade around a coterie of Marxist radicals and post-Keynesians.”

One of the knocks against the UMass researchers is that  they concentrate , among other things, on

using empirical analysis to question tenets of economic thinking…

To think that anyone would look at how things work in reality instead of basing their thinking on their personal gut reactions must be beyond the pale of anything that could be considered by the Globe editors or the Harvard professors.

In the Metro section of this same newspaper, there is an article, “Professor apologizes for remarks on economist.”  The start of the article explains,

Niall Ferguson, Harvard professor, sought to defuse a controversy Saturday when he apologized for telling an investors’ conference that the policies of influential economist John Maynard Keynes were short-sighted because Keynes was gay and had no children.

The article goes on to explain that Ferguson

was an adviser for US Senator John McCain’s 2008 presidential bid and has been highly critical of President Obama…

This article quotes a conference attendee:

Jeffrey Gundlach, founder of the investment firm Doubleline Capital, said he heard the exchange and “wasn’t offended by it in any way.”  It made him think back to how his views changed when his first child was born.

“I thought it was informative and sort of insightful”, he said.

It is one thing to get an idea about something from your personal experience.  It is quite another to assume it is a universal truth before making a reality check.

And then of course there is the gross injustice of implying that John Maynard Keynes ever espoused deficit spending under all circumstances.  His theory distinctly points out when you should do it and when you should not.  It was the irresponsible Republicans and their academic toadies that said deficits don’t matter during the phase of the economic cycle in which Keynes said the government should be running surpluses, but the Republicans ran up huge deficits.

McClatchy News has the article Fed’s language shift signals Washington, sequester harming growth.

“Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth,” the Federal Open Market Committee’s statement said.

That was almost identical to the March wording, except that back then the Fed said that “fiscal policy has become somewhat more constrictive.”

It means that by the Fed’s read of the latest economic indicators, actions taken by Congress and White House – or not taken in the case of failing to reach a budget compromise and allowing automatic cuts to begin on March 1 – are harming the economy and the Fed’s efforts to jumpstart it.
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“Like a patient who has been administered too many antibiotics, the economy is less and less responsive to the Fed’s continued monetary stimulus,” Rep. Jeb Hensarling, R-Texas, head of the House Financial Services Committee, said in a statement. “America is nearly five years into the Fed’s historically unprecedented interventionist policies and there is very little gain to show for it.” He added: “12 million Americans remain unemployed – a number roughly equal to the entire population of Ohio.”

Here is another great example of how a Republican tries to shift the blame from deliberate Republican policies to an agency that is doing its best to repair the damage the Republicans are doing.

As I have posted extensively on this blog, trying to resolve a recession bordering on depression with only the monetary policy tools at the disposal of the Fed is like trying to push on a string.  Pulling on a string is much more effective, and that would be robust, stimulative fiscal policy.

The Republicans put every roadblock possible in the path of stimulative fiscal policy, leaving the Fed to come to the rescue with the only tools that it has.  These tools are not nearly as effective as the tools at the disposal of Congress, but if Congress will only behave in a negative way, what is the Fed supposed to do?

If the Fed did not try to counteract what Congress is doing, then this economy would be in much deeper trouble than it is now.  For political purposes, the Republicans are harping on the “problem” of an increasing deficit, when in fact, an increasing deficit is the most effective tool to counter a recession, short of  correcting the mal-distribution of income and wealth in this country.  The Republicans are even firmer in not allowing a fix to the mal-distribution problem.

McClatchy News has the article Obama pick of Rep. Mel Watt to regulate mortgage finance sparks controversy.  The article has a slew of examples of how the Republican party lives in a place far from reality.  I picked a few of them to quote below.  You’ll have to read the article itself to get the rest of them.

The Obama administration’s selection Wednesday of a North Carolina congressman to head the government’s mortgage-finance regulator appears certain to spark a confirmation battle and renewed debate over the government’s role in backstopping home loans.

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The selection of Watt, a career politician who hasn’t worked in banking or finance, touched off immediate controversy. He’ll head a highly technical agency, and his nomination did not sit well with Republicans who want changes in housing policy.

“I could not be more disappointed in this nomination. This gives new meaning to the adage that the fox is guarding the hen house,” Sen. Bob Corker, R-Tenn., said in a statement fired off minutes after news broke of Watt’s selection and well before the official White House photo op. “The debate around his nomination will illuminate for all Americans why Fannie and Freddie failed so miserably.”

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Watt has served 20 years in Congress, many of them on the influential House Financial Services Committee. Sen. Elizabeth Warren, D-Mass., called him “a thoughtful policymaker with a deep background in finance and a long record as a champion for working families.” Rep. Elijah E. Cummings of Maryland, the top Democrat on the House Committee on Oversight and Government Reform, said Watt “has deep expertise in housing policy and a record of distinguished service” in Congress.

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How to “unwind” Fannie and Freddie is a complicated question. For now, they’re the only game in town. Before the financial crisis, sparked by a housing bubble and a collapse in lending standards, Wall Street banks had aggressively gone after Fannie’s and Freddie’s business, capturing a large share of the market long enjoyed by the two quasi-government entities.
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Doing away with Fannie and Freddie has been a Republican rallying point, placing calls for their dissolution in the Republican Party platform during the 2012 elections.

“Fannie Mae and Freddie Mac were a primary cause of the housing crisis because their implicit government guarantee allowed them to avoid market discipline and make risky investments. Their favored political status enriched their politically-connected executives and their shareholders at the expense of the nation,” the platform read.

That looks past the lead role that Wall Street played in the housing crisis. But five years later, lawmakers continue to debate just what to do with both Fannie and Freddie.

I finished the selection of quotes with the major understatement from the article.  After saying that “Wall Street banks had aggressively gone after Fannie’s and Freddie’s business, capturing a large share of the market long enjoyed by the two quasi-government entities”, the article could have mentioned how Fannie and Freddie finally started to lower their own mortgage standards to try to recapture some of this market from the private sector that had pioneered low standard mortgages.

The article did not cover at all how the Republicans had insisted on privatizing Fannie and Freddie in such a way that they now had stock holders who insisted that Fannie and Freddie had to pursue this risky strategy in order to maintain market share.  If Fannie and Freddy had remained solely government entities there would not have been the pressure to maintain market share, and thus no need to pursue reckless policies like the private sector was pursuing.

The Republicans are the cause of this whole mess in so many ways that it is amazing that they are the ones to claim to have the policies to fix it.  They just want to go back to the very same policies they put in place that caused this mess.  That the public and the press have such short memories that they allow the Republicans to spout off this way is even more amazing.  Am I the only one around here with any memory of this history at all?

I was just on a conference call with Elizabeth Warren.  I wish I had a transcript so that you could hear what she had to say.

I will do my best to cover the highlights here.

We need Ed Markey in the Senate because he will work along side Elizabeth Warren to fight for the principles that we progressives believe in.

For instance, when President Obama and perhaps Harry Reid talk about cutting Social Security benefits to compromise with the Republicans, we need both Elizabeth Warren and Ed Markey to tell the President that he has strong enough supporters on his own side of the Senate that he doesn’t need give up on our principles to go look for support among the Republicans.

As for the so-called debt crisis, if this were the real issue for Republicans, there are a host of ways to balance the budget by getting profitable corporations to pay their fair share in taxes for the benefits they get rather than ask more from people who are already paying more than their fair share.

The fact that the Republicans won’t do this just shows that the issue they care about has little to do with government debt.  The only issue they really care about is stuffing their own pockets and those of their supporters  with as much money as they can, regardless of the consequences for the rest of us.

No matter what you may think of the Republican rival in this race, we cannot afford to send a Senator to Washington that will strengthen the side that refuses to invest in this country’s future.  No matter what his personal views may be, the fact that he caucuses on the Republican side and will vote the way their leadership wants him to on crucial matters, is reason enough not to send him to Washington.

Some people in this state recently made that mistake with Scott Brown.  His one vote was enough to force a watered down, compromise Affordable Health Care Act to be the only way we could get a health care bill passed.  He voted against highly qualified Supreme Court nominees, but this was  fortunately  not enough to prevent them from being approved.  Why take that risk, when we can have Ed Markey in the Senate fighting on our side for the issues we care about?  Even if the Republican rival could claim he is on the right side of these issues, and he can’t, he would not be as strong an influence as Ed Markey.