Cognitive Diss

I return to my betes noir: the World Bank and its overpaid minions.

All who have struggled to buy a reasonable meal in pleasant surrounding in Mumbai, with even a bottle of the local plonk, were always surprised by the WB's PPP studies which claimed the rupee was worth 5.0x its nominal exchange rate, rather than the .5x that prices at swish restaurants in Bombay seemed to suggest. Reasonable real estate with 24 hour running water suggested a more penurious .1x.

We consoled ourselves with the fact that this was a result of the Mumbai/Bombay divide. Things were obviously much cheaper in deepest darkest rural India. The only problem? The definition, in a village bereft of electricity and running water, of a reasonable meal in pleasant surroundings is rather different than in either Mumbai or Bombay. And the local plonk could kill you, not just your taste buds.

The new figures show that PPP is actually about 2.5x, very very close to The Economist Big Mac Index - score one for simplicity. In fact, the introduction uses the Big Mac Index to explain PPP though nowhere in its turbid reading does the WB admit to its overstatement of many years nor does it admit to the essential accuracy of the Mac Index.

The question is why did the WB not twig on to this earlier? After all a great many of its functionaries are economic refugees from the very countries they purport to study. I have seen many of them dining from time to time at various Bombay nose bleed price establishments.

Could it be that sitting pretty in H Street on tax free salaries, having taken advantage of an education subsidized by the lack of primary education, health care for the poor etc., they feel a spot of cognitive dissonance? Which can be easily solved by making the poor bastards they left behind into not so poor bastards.

If you really want the twaddle use the link below.

http://siteresources.worldbank.org/ICPINT/Resources/ICPreportprelim.pdf

Airports, Cities and Cityports

There is an inverse correlation between great cities and great airports:

1) New York -Last Remaining Slum in the City
2) London - Thiefrow
3) Paris - What can one say?
4) Rome - Whatever they are calling it these days (Leonardo, Fiumiccino)
5) Mumbai - there is an airport?

On the other hand you have two cities that have made themselves into the image of their airports, complete with transient populations:

a) Singapore
b) Dubai

Hong Kongers do not try and get your city into the exception list - you are living off the colonial legacy of Kai Tak. Besides, Chep is about as much part of HK as is Shenzen.

Any maybe that is the moral of the story - let's keep our grotty airports and make the good ones far away from great cities lest we contaminate ourselves with fake Irish villages.

Zero Sum Brain

Martin Wolf’s column on zero sum growth (http://www.ft.com/cms/s/0/0447f562-ad85-11dc-9386-0000779fd2ac.html) is the latest red herring launched by this acolyte of Chicago School economists who happily run a theoretical system of economics that simply does not correspond to the real world. The point of this debate is to distract us from what can be done today and instead to await a technological cosmic orgasm; in the meantime its business as usual for fat cats.

Sadly, over the last few decades these fellows whose outlandish constructs would never pass peer review in any other social or hard science, have managed to use the US government-business nexus to thrust their models down our throats.

It is now clear that our good fortune is based on the early deaths of our stupid ancestors – stupid because they did not figure out how to use energy stored as oil, coal and gas until recently, leaving more for us.

The use of this energy has meant that we live as human beings, not rude and crude peasants in blackened mud hovels. Well, some of us do. About half of the world still lives in blackened mud hovels. Therefore the correct zero sum question is how we get them out of that hut and into humanity. To do that we will have to consume energy – steel and concrete are non negotiable requirements for this move from hut to high rise. That is why developing countries refused to sign up to reductions in carbon intensity.

Done correctly (this means less personal transportation, better construction techniques, appropriate energy standards from day one) the additional benefits to these people need not be insanely carbon intensive.

The main benefit of the use of stored energy has been the huge increase in population. An increase in population is an immediate increase in smart people, and smart people, even if all of them are not educated, make a difference. Now that we have instantaneous, almost free communication, they make more of a difference than ever.

Much of what enriches the human experience is contact with others and the non physical works of humans. In increasingly personally isolationist America this takes the form of ipod music, personal TV’s and the rest, rather than hanging out in a café, dancing in the streets (a favourite Indian pastime) or visiting a Museum. Nonetheless, this is still rather less carbon and energy intensive than making steel and concrete. Providing such experience to former hovel dwellers ought to be relatively carbon costless. For the rest we just have to evolve new Veblen and positional goods that are not as bad for the environment as fast cars and to cut out waste (30% of UK food is chucked; Wal Mart shirts are so cheap why replace a button?).

The problem is that our measurement system for calculating the sum of human development (GDP) is rather flawed. What we need to count is carbon+ergs+material+productivity levelled human effort. Do we do that? Most economists will concede in private that we do not.

Now, we have to change how we do business or go under as a species. We sort of know where we have to get but we cannot measure where we are, so we cannot work out how to get there. Following established practice is a dead end. We are out to sea with just a portolan of the Med, when we are off the Arctic.

With these flawed tools do the Chicago Boys ridicule perfectly reasonable ideas, particularly those that come from over the seas, or from California. And nowhere do they attack more vigorously than in favour of modern agriculture and agribusiness, that bloated, inefficient, subsidy ridden, water sucking environmentally disastrous creature of modern man that provides basic energy to every living human.

Organic farming? Commie Bastard Eurotrash creation. Slow food? More of the same. Diverse cropping? Acreage based productivity? Bah, humbug.

Where would you rather potter? The cornfields of Iowa (but away from the industrial piggeries) or Normandy, where fields have all sorts of things growing in them and where Happy Holsteins sit and sit on the grass, chew cud and contemplate the ocean as they churn out the raw material for rather nice cheeses? Velveeta or Epoisse, that is the question.

It is a fact that in the US, Cuba and India (where I have seen the studies), organic farming is perfectly capable of matching the yields of industrial farming after a fall of about three years. After the three years yields come back up but costs have dropped radically because fewer oil based chemicals and patented seeds are needed. This new format requires harder manual work than industrial farming, so some of that extra contribution can be used to pay labour and substitute for industrialization. To top it off, the farms are prettier, less smelly and use much less water, while creating watersheds - both useful with global warming upon us.

Call that a zero-sum game?

A wonderful side effect? We get to reduce the size of the agribusiness sector that is responsible for shovelling high fructose corn syrup down our maws. This is not going to happen in the US, or probably even Europe, where the wondrous ones have the best scam that I have ever seen: use subsidies received from the government to lobby[sic] the servants[sicko] of the people to get more subsidies.

India has a chance to do it differently before Indian agriculture is controlled by ethanol subsidy freaks and before its retail chain is fed by refrigerated lettuce air-freighted around the country.

The government should require as part of its food safety laws and subsidy programs that all Indian farmers switch to (mostly?) organic farming at the rate of 10% or 15% of their land per year. Fertilizer and other subsidies saved can go to income support for the lower yield; over a very few years the switch should be self sustaining. Done right farmers will use lots of labour to maintain income rather than just profit which will also create much needed jobs.

And the food tastes better. Fraise de bois anyone?

Its Official: We Indians Are a Nation of Slum Dwelling Iliterates Who Talk a Lot

Take a look at the new and improved purchasing power parity study just released by the ADB and you will see what I mean: Indian spends just half of the Asian average on housing and a piffling 20% on health and education.

I have no doubt this is because the dead hand of the great Indian state controls education, and has only recently started being co-opted out of the real estate game; healthcare sort of does not exist for most people.

Had this study been done ten years ago we would have been seen to be laggards in telecoms and transport as well, but the privatisation of telecoms and airlines has seen us rise to the Asian average. I have no fear that real estate will catch up given that its ability to generate cash for our rulers is greater even than telecoms.

I do worry about the illiteracy of our masses, at least until some clever entrepreneurs find a way to make enough money out of education that they can share the loot.

On the other hand have you ever wondered why the education business is suddenly being subjected to all sorts of control? The same thing happened at the same stage to telecoms, airlines and real estate. The fact that education is now top of mind for our obstructive politicians means that they smell the next big one coming; as do all the PE shops that have started backing all allowed forms of education.

Rickshaw Solar and the Software Paradigm

The world is working to make solar energy more efficient so that it can be used today.

What a load of cobblers - solar energy is already viable in India at least, and I suspect in many parts of the developing world.

Myths - Let us first see why we do not think it is viable.

1) Solar cells are expensive to make and really do not make industrial amounts of electricity. From a manufacturing expense and space availability point of view it does make sense to get them into the mid twenty percent conversion rates.
2) Grid power. The attempt right now is to increase solar capture efficiency, thermal efficiency and temporal efficiency to get to a direct comparison versus a coal or gas plant. This is done by using moving mirrors to concentrate sunlight onto capture towers (nice and expensive and using lots of advanced technology) which then can use superheated steam to get more thermal efficiency. Plants that do not work in the night are perceived to need a way to store the electricity so that the high capital cost of these very fancy plants can be defrayed over more hours.

Myths Debunked

In fact solar electricity with usable power and an affordable cost is rickshaw technology that has been around for over a century, and a viable (and still running) solar/gas plant was built in the 80's and 90's with a net efficiency of 11% - that means about 5MW per hectare. Take a look at http://www.luz2.com/apage/12219.php. The poor fellows who started it went bust because of USD 10 per barrel oil and US energy non-policy. They have a new incarnation with much fancier technology that is trying to cut the cost of power generated by 30% by greatly increasing complexity and capital cost.

The question you have to ask yourself is 'why?'

Most power is needed in the daytime so it is OK for a power short country such as India to take what it can get so long as the price per installed KWh (after derating for available hours) is cheaper than any other alternative. With luck wind, gas and our foul weather friend coal will take up the slack. But these do not have to be part of the same package if the damn economics work on a stand alone basis - and they do. Take a bicycle analogy for this one - cheap and cheerful Indian/Chinese bikes are not 20 times less efficient than a set of 2K carbon fibre wheels.

There is no further need for efficiency because the raw material is free (even land in the desert is pretty much free) - so it is a bit like software where Microsoft co-exists with shareware. Even on farmland photosynthesis is only about 5% efficient, and after that you have to process the stuff into ethanol etc. An Indian farmer makes USD 1K per acre net, so to pay him 2.5K to tend 5MWh of solar plantation is cheap - and makes the solar farm cheaper and easier to operate - just move the dishes every hour or so to follow the sun. So cheap and cheerful solar already beats ethanol - and always will.

How cheap and cheerful. All you need is some aluminium, steel, pipes, a heat exchanger and a steam turbine (the last are all available at low cost in India). See http://en.wikipedia.org/wiki/Solar_thermal_collector and http://www.solarenergy.com/info_history.html for a fabulous history of solar power and what might have been had oil not been found.

My guess, based on years of making machines in India is that this set up will cost about 1/3rd of what it does in the US, making cheap solar more money efficient that the latest and greatest in Stirling Engine technology which aims at 30% net conversion efficiency.

What we waiting for Mr. Shinde?

Pundit. Def: A Shyster Who Traffics in Superstition

T. Friedman's silly gimmick of name it and it shall be yours (http://www.nytimes.com/2007/04/15/magazine/15green.t.html) gives the man the title of Pundit in its best Indian sense - a shyster who traffics in ancient superstition.

In fact the Lord High Pontiff's call for more high technology is bunkum of the same order as the politics of let's wait for India and China to reduce their emissions before we do anything. As incumbents are wont, LHP and other commentators concentrate on producing more energy for less pollution. That is some way away, but the 'dark' side of demand management has arrived, and it is best practised in the West where it is cheap, and in poorer countries where it is expensive.
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The reason for the latter is that energy efficient technology for big ticket items is not much more expensive to start with, and is well enough understood to be made in the developed world within five years, so prices will fall further. The reason it will not work in the West is because, as with already emitted emissions, there is not sufficient juice to induce the junking of pre-existing SUV's and inefficient machines, including industrial machinery, and grossly inefficient air conditioning systems and other domestic appliances.

Here are some easy things to do:

1) Home Use
CFL's - even Walmart has heard of them. In Mumbai the payback is sub one year.
Best used in - the USA and other advanced countries - el Cheapos like Indians have been using horrible non compact fluorescent lights for decades to save cash. Some Indian companies are betting the bank on producing CFL's.
Inverter drive a/c's - the US of A, Southern Europe and everywhere in the developing world because there is no installed base to disturb.

Neither will happen in our lifetime in the US because both require government restrictions to overcome corporate greed. Yes Matilda, it costs tiny bits more to make these super gizmo's but then a lot of plants that make not so super gizmo's will have to be junked or upgraded.

Another reason we will not see this happen is that all of these happy things may well reduce GDP. Less electricity used and capital goods at the same price = less GDP.

Remember, 30% of electricity is used for lighting and cooling, so any real reduction could be a sharp drop in GDP growth while being a boon for the earth.

2) Industrial Use
Variable Frequency Drives
Switch from hydraulic to electric power (one conversion less)
Better insulation
Solar air conditioning (available now)

That's another 30% at least off the top from electricity where these applications are used.

Unlike the LHP I do not care what other countries do, nor do I care much about cutting edge research. All of the above are in the public domain or easily available technologies. India, which is where I live most of the time, should simply ban electric bulbs, inefficient motors and all the other paraphenalia of useless pollution (useful pollution is the stuff you cannot substitute easily, like electricity from coal - sorry folks its here to stay).

There are precedents - adoption of Euro III and IV did not kill our car industry - it helped make it.

And the best part of the whole story, at least for India - a set of super energy efficient companies in a world where electricity is about to become as expensive as German labour.

Whale Wash

Whale Wash

While we figure out how to cut global warming and save the world we could start with one simple cure – cut the number of fat people on Earth.

This will reduce food consumption, leaving more corn on the ground to turn into motor fuel. It will also cut the amount of other bulk correlated consumption items:

1) It takes more shower gel to wash a big guy.

2) Large people also require more cosmetic care – ever seen a tube with a cream to relieve the redness and chafing caused by overlapping skin on the buttocks and below the boobs used by a skeleton?

3) Ever increasing sizes also lead to more wasted clothes on two counts:

a. As girth increases the leftovers rot in the attic

b. Small sizes bought as a carrot to cut that gut but not used for obvious reasons

Be my guest and fill in some more reasons

Since I am not a mass murderer the method to cut the gut must rely on people deciding to be thin and getting there. Alas, the numbers of Mike Huckabee’s that exist is small so we have to get used to a hotter planet full of sweaty fatty’s. I recommend the stocks of those company’s that make the aforementioned redness relief cream – it does exist.

Hyperpower Factotum

‘Let’s shoot people’ or ‘skip a Latte and save the world’

The other day at a cocktail party, in an unnamed part of the developing world, I had the joy of coming across a diplomatic factotum of the sole hyper power.

The fellow overheard a conversation where I was predicting a coming German baby boom as most café’s, in Hamburg at least, have switched off the terrace flammenwerfers (overhead gas lamps) and now hand out blankets, the better to cuddle up with. He rolled his eyes, identifying his nationality. Then I bemoaned the fact that my kid had been brainwashed at school into badgering her parents to cut their ecological footprint. Factotum immediately piped in with the his observation that ecological concern was equal across the globe, including the USA.

There is one thing that one has to say about Americans (as opposed to those who represent the hyper power – shall we call them Hyperions?) – they can be most honest. It was with delight that the both of us (one a brit – and we had met merely minutes before) could quote the deliciously American Pew Global study of attitudes (www.pewglobal.org) which showed that Hyperions basically don’t give a bugger about global warming.

I admitted that it was a pain to get used to the strange light from squiggly fluorescent bulbs, but easier than putting up with the nagging of an 11 year old. And the cut in bills was rather nice – we live in Mumbai where we pay about 18 US cents for a unit of electricity.

Factotum could not resist rejoining the conversation and heaved in with the ‘oh that’s ok for you rich people but a cfl (aka squiggly) costs ten times as much as a normal light bulb and our pore people in the US of A can’t afford them’. I checked on the web and found them for about 5 bucks – the price of a bucket of latte at Starbuck’s.

Factotums next shot was ‘the Chinese will never stop emmitting, so why should we.’ Perhaps we should shoot people as well?