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2020, the Year the US Imploded, so Where is Hope?

Yes, it all happened in Seattle, dear friends, as this harsh documentary shows, but the COVID-19 pandemic is like an X-ray machine. It displays all that is broken and hidden.   

I'll start my detailed explanation of the multiple causes that underlie urban decay in the US from this beautiful quotation by a friend: 

Many saints grew in holiness to the point where, by God's grace, they restored around them the original harmony with creation which Adam enjoyed in Paradise. One thinks immediately of St Seraphim of Sarov and St Sergius of Radonezh who befriended wild bears, or of St Paul of Obnora who was beheld surrounded peacefully by forest animals. Even in our own time there are testimonies of monastics living in the wilderness peacefully with wild deer and even mountain lions. Elder Herman is remembered for a gentle ermine who was utterly devoted to the Saint. When asked what he thought of the animals, a recent American monastic elder replied, "They have something to do with paradise."

A buck visiting our home on Christmas day morning

Sadly, the beauty of these human outliers, who have lived in harmony with nature - just as we try -, is inconsistent with my understanding of human nature, and of God who must have been invented out of emotional necessity to ease the unbearable weight of freedom of choice. God enters directly or not as the key motivator and (ab)solver of human endeavors. What follows are four of the most famous excerpts of use of an/the invisible hand (of God, sometimes) in the treatises on economy. God started helping economists in the eighteenth century, when He/She inspired a famous Scott, Adam Smith.

I have compiled the next five paragraphs by paraphrasing and editing somewhat the fragments of this Wikipedia article and other sources. In summary, I am not sure that Adam Smith thought of God as using His/Her own hand, beautifully manicured by the female Vietnamese angels, as “the” or “an” invisible hand of the markets. God could have been one of the causes of this mythical hand’s emergence, perhaps the main cause, but surely not the only one, according to Smith. The subsequent interpretations of neo-classical economics, and the fervent religious interpretations of economic theories, injected God into economics a tad too much perhaps for Adam Smith’s taste. But this is merely my opinion. 

All too often, in my mind, an invisible hand has been created by exhausting the environment and causing excessive pollution, but treating these essential inputs to and outputs from the human economy as externalities. Today, economists have become very adept in omitting these inconvenient boundary conditions of all human endeavors. I claim that these boundary conditions should have entered all economic models by the mid-nineteenth century when modern, large scale industrial operations and monopolies were introduced. After the 1920s, advertising distorted markets even more, by playing on human irrationality and heavily influencing purchasing choices of millions of people.

 

Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith. He used for the second time “an invisible hand” [emphasis added] metaphor in Book IV, Chapter II, paragraph IX of The Wealth of Nations. I start from this quotation, because it is pertinent to a more modern economy:

 

“But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value, every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand [emphasis added] to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.”

 

The first use of the “invisible hand” entered The Theory of Moral Sentiments (1759) in Part IV, Chapter 1, where Adam Smith described a selfish landlord as being led by an invisible hand [emphasis added,] to distribute his harvest to those who work for him. Notice that this time Smith uses “an invisible hand,” as opposed to “the invisible hand.” So perhaps this invisible hand is a result of many causes or it does not exist at all, as Joseph E. Stieglitz wrote famously (The Roaring Nineties2006; Altman, Daniel. Managing Globalization. In: Q & Answers with Joseph E. Stiglitz, Columbia University and The International Herald Tribune, October 11, 2006 05:03AM. Archived June 26, 2009, at the Wayback Machine.

 

Only in The History of Astronomy (written before 1758) Smith speaks of the invisible hand (not of God) [emphasis and “not of God” added], with which ignoramuses explain natural phenomena otherwise unexplainable:

“Fire burns, and water refreshes; heavy bodies descend, and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters.” (Smith, A., 1980, The Glasgow edition of the Works and Correspondence of Adam Smith, 7 vol., Oxford University Press, vol. III, p. 49.)

 

Finally, in The Theory of Moral Sentiments (1759) and in The Wealth of Nations (1776) Adam Smith speaks of an invisible hand, never of the invisible hand. In The Theory of Moral Sentiments, Smith uses the concept to sustain a "trickle down" theory, a concept also used in neoclassical development theory: The gluttony of the rich serves to feed the poor.

“The rich … consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand [emphasis added] to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last too enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of body and peace of mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.” (Smith, A., 1976, The Theory of Moral Sentiments, vol. 1, p. 184 in: The Glasgow Edition of the Works and Correspondence of Adam Smith, 7 vol., Oxford University Press.)

There is no invisible hand. But there is greed and abuse of the environment, plain and simple, like in the picture below. More precisely, that which the global fossil Amoeba takes from the Earth, and the poisons she dumps back into the Earth, is the invisible hand that guides our smooth and fast self-destruction that results from greed.



In the US, capitalism has reached its logical conclusion.  A few superrich, a few millions of well to do, and 200 millions of the impoverished, ravaged masses.   We have laid most of the interior of the US to waste, and converted it to an ugly industrial machine that consumes people, resources (soil, water, forests and minerals) and the rest of the environment.  

Any way out of this social and physical wasteland will require an overhaul of our social priorities of the unheard-to-date magnitude. This we will have to do facing an orgy of greed called the stock market, and the unwillingness of many people I know to share in their "invisible hand" of God spoils. Yes, they think that their greed and spoils are the God-sanctioned benefits of being rich, smart and pious.  And fuck the poor and destitute. 

To understand the scope and the almost untreatable depth of the social wasteland we have created, one must read the "Hillbilly Eulogy". Dwayne Willis was that one-in-a-million guy, who got away and chronicled his own life, and his family and friends over three generations. I cried at times, when I read his heart-wrenching book. So this is the prevailing, post-economic collapse US landscape, as I see it now.  

It is telling that the "Hillbilly Eulogy" book was translated into the "Hillbilly Elegy" movie by Netflix in an excellent albeit too brief adaptation of the book. Americans simply will not watch stories with unhappy titles.

The silly, naïve Alexandria et al. of this world need to realize that the real "Green Revolution" in the US will be one of massive public health investment, drug rehabilitation, food, and structured, long-hour education for tens of millions of young people in the American wasteland.  We need to curtail or eliminate the kolkhoz-like corporate agriculture, giant animal killing plants, abusive produce agriculture, terrible non-paying jobs with no benefits, underfunded healthcare, no mass transport, failing infrastructure, etc. To halve power consumption, we need to tax individual consumption AND corporations as a quadratic or cubic function of income and profits. Given my current income, not consumption, I will be among those taxed at a higher rate. 

These new taxes would then go to the creation of healthcare to all, subsidized housing for the functional homeless, and plenty of psychiatric and drug rehabilitation hospitals in every community, followed by the high-quality, tax-subsidized nursing homes with qualified personnel.  In short, we would have to convert the US to a much more socialist country, like Norway or Sweden or Canada, but not emulate the degenerated pseudo-socialism, driven by taxpayer gifts to the corporations, that is the US agriculture. 

I have just outlined a new deal, in which we will cut our private consumption and stimulate the public sector. My plan will surely be broadly accepted by the confused, generally brain-washed, at times crazy Americans (those who believe in the lies that no one else can see, like the fraudulent presidential election of 2020), and the corrupt nomenklatura they elect, and reelect, and reelect... 

Just to be clear, real small businesses, not the shell companies by and for the super rich, will be encouraged and subsidized as needed to create the high quality jobs. And if you want to see how difficult what I outline shall be, please read the readers' comments to this piece by Faux News I watch and read in order to understand better the mess we are in.

And so it might not go, my dear friends, Tad

P.S.  As John Muir would say, all things big and small are connected.  In this post, I stayed away from the war on the American democracy that has been waged mercilessly by the Republican party in the 1970s; then in the 1980s; then between 1997 and 2001 (PNAC and the orgy of special counseling against that sleaze-bag, Bill Clinton, that enabled the 9/11 and started the eternal war in Afghanistan); then the 2003 war in Iraq; and - not-so-finally -, the 2016-2020 presidency of Trump. The last half a century of unrelenting outsourcing of industrial jobs and work benefits in the US has given us the 40 million of desperate hopeless souls, who latched on to Trump's Big Lie of draining the swamp and helping the poor. The ever-lasting wars gave us tens of thousands of wounded soldiers, and the opioid epidemic powered by the American super rich crime families and the criminal corporations, such as McKenzie Associates, that served and advised them. The meth epidemic, in turn, has resulted from the long, monotone jobs in terrible places like the meat packing factories. Finally, most of the 550,000 COVID-related deaths in the US will be the result of the public health desertification of our country, and the political and humanitarian catastrophe that still is and will continue to be the Trump administration. 

P.S.P.S. (01/03/2021): About the importance of living in harmony with nature, here is an image emailed to me by a friend from Seatle, Brian.


P.S.3 (01/22/2021) Here is another beautiful quote from Adam Smith, pointed out by my friend, Brian: "But when he possesses stock sufficient to maintain him for months or years, he naturally endeavours to derive a revenue from the greater part of it; reserving only so much for his immediate consumption as may maintain him till this revenue begins to come in. His whole stock, therefore, is distinguished into two parts. That part which, he expects, is to afford him this revenue, is called his capital."    

Says Brian: "So the past production of capital (a gold dust covered balloon factory) enabled the present consumption at the party, which spurred the creation of more such factories for future parties."  

In other words, the cumulative past investment leads to current state of the economy and defines its ability to grow.  Some seven years ago, I wrote a little paper I never published.  In it, based on the Fed financial data for the US since 1949, I derived a diffusion equation of debt that defines current rate of growth of the economy.  It turns out that cumulative debt diffuses into current efficiency of GDP generation that is an always decreasing function of the debt.  There are three major conclusions from this diffusion equation:
  1. The more debt you accrue the slower you will grow, and this is a universal law.
  2. If you want to change your economy to a new mix of resources ("Green Revolution"), you will have to forgo your cumulative investment in the old resources, build a stock of new resources, and only then you will be able to grow again from a much lower level. This is a multidecadal process that no politician will be able to stomach, and the disinterested, uneducated public will refocus on the conspiracy theories and other lies.
  3. Current rampant borrowing will translate into GDP generation with a low and ever lower efficiency. And that's a universal law again!

Comments

  1. Glad to see that you are back! Happy new year!

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    1. Yes, dear Koji. I had a little bit of a struggle with cancer, but it is subdued for now.

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  2. But the Haynesville. :)

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    1. Well, Happy New Year to you too. I am just putting finishing touches on our mega paper on Haynesville. It will be submitted for publication later this week.
      Here are the key results: EUR from all current wells will be 30 Tscf. By adding 923 wells in the core areas in Louisiana and Texas, EUR will increase to slightly above 40 Tscf. By adding another 5,023 wells in the noncore areas, EUR will increase to above 90 Tscf. The noncore areas in Haynesville are almost as good as the core areas, and that's a huge plus. The 68 existing wells in the outer Haynesville are so bad that adding 11,198 new wells might increase EUR only to 105 Tscf. The latter will not happen, no matter what technology progress is, simply because the reservoir quality is very poor. You'll get excruciating detail on all of this soon. The Marcellus paper will be next, followed by the Utica paper and the Haynesville paper #2. The Permian paper will come out in two months or so, because it is so damn complicated. We are also working on the Jafurah Basin shales in Saudi Arabia. Three papers will come out soon

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    2. I meant Eagle Ford paper #2 with all gas and oil wells. This paper will be a test of our algorithms for the Permian mess.

      Also Haynesville is the top candidate for refracturing wells. In total, we have identified 1,685 refrac potentials, with 70% of them in Louisiana. We have shown that the historical refracturing activities in Haynesville started in 2012. The current average refrac rate is fewer than 5 wells per month. By refracturing 807 wells in the core areas, EUR will increase to almost 34 Tscf. By refracturing the additional 840 wells in the noncore areas, EUR will increase to almost 36 Tscf. Again, the wells in outer Haynesville are worthless, refracturing 38 wells in this area gives almost nothing.

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    3. Thanks for the update and good luck. Especially to the first authors.

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    4. Yes, with the industry depressed, confused and shrinking, job opportunities also shrink, perhaps irreversibly. On the plus side, my senior PhD student, Wardana Saputra, who is the first author on many of our the recent papers on shales, already seems to have a promised good job in Austin, TX.

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  3. "Sadly, the beauty of these human outliers, who have lived in harmony with nature - "just as we try -, is inconsistent with my understanding of human nature, and of God who must have been invented out of emotional necessity to ease the unbearable weight of freedom of choice."

    Professor Patzek, why would any rational human try to live in harmony with nature if that human believed God was a construct invented out of emotional necessity? Would not the human reasonably choose to grab everything for itself?

    I am trying to understand why a person like you would choose to leave your homeland? When I read your posts, I am more sad for you than I am for the rest of humanity.

    John

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    1. Dear John,

      You are asking two very complex questions. I feel compelled to address your first question in a separate blog. Here is my answer to the second question, why we had left Poland and became Americans.

      Here is the year 1981, as my wife, Joanna, and I lived it. On January 10, I arrived in my shining White Castle on the Hill. I landed at JFK and flew to Minneapolis, where I became a postdoc for a prominent faculty at the highest ranked ChemE department in the US. I walked from the International Terminal at JFK to a domestic terminal, and still remember that intoxicating feeling of freedom and relief that I made it all the way to the American soil.

      On April 17, my wife was able to join me after a long tortuous journey that involved bribing a secret police officer, so that she would get her Polish passport. The brother of my closest friend, then already in Canada, delivered the bribe.

      We were both Solidarity organizers and activists. My wife continued to organize strikes and other Solidarity events until she left Poland with a passport valid for two months. Between January and April, 1981, I was watching the Red Army mobilizing, knew that there would be a bloody attack on Poland, and understood that they could kill Joanna, the love of my life

      On December 13, 1981, the Soviets used a Polish traitor general to lead the Polish army and the paramilitary police (ZOMO) to impose a drastic martial law. We got a political asylum in the US in March 1982. Today, an American four star general thought it necessary to publicly reassure the troops that no coup d'état is forthcoming here.

      Yesterday, we stayed up until Biden was sworn, because all these personal, very dark memories came back. For eight years, I would have recurring nightmares, in which I was suddenly in Warsaw, they took away my travel document (we became US citizens in 1991), threw me into jail, and told me I would never see my family again. I would wake up drenched in cold sweat. My nightmares stopped in June 1989, when Solidarity again took power in Poland. By the way, years later we learned that the secret police came to arrest us around December 20, 1981. We were on a top secret hit list composed and kept in the Soviet Union, to be used at the right time. People preparing that list did not know we were already in the US of A. So, instead of us they went after my parents.

      Thus, yesterday, we were sickened to our bones, seeing, thank God, a clumsy ill-planned attempt of a coup d'état here, in the adopted country of our dreams. Joanna watched CNN and Fox News (to check what the extreme right is saying) all day long, and was deeply depressed. It ain't over here, by a long stretch. The question is how our democracy will defend itself from now on.

      We will start from organizing a recall of that sleazy ultra-reactionary swine, Senator Ted Cruz of Texas. He was a Supreme Court clerk in his young days.

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    2. Thank you Professor for your kind reply. I look forward to your answer to my first question. I know that you would not have risked the live of your beloved wife or yourself with out the virtue of hope.

      I am more inclined to believe that the events this week are the products of agent provocatuers and not the people. Please note that no other MAGA deteriorated into a violent protest. I share your opinon of our mutual Senator and readily concede that Trump is no leader of men. But then neither is Biden.

      I am not an engineer but I try to read every paper you author. Most of it is well over my head. But you make want to try.

      John

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    3. Thank you, John, for your kind reply. I will answer you by paraphrasing an email I just sent to some 50 of my international friends.

      How telling it is that an Englishman caught these words (https://www.youtube.com/watch?v=mz3zFsTp2Pk) of an Austrian-American former governor of California, so that a Polish-American can wipe off tears of relief from his tired eyes, and forward this link to his American family and friends?

      The link above answers an Australian economist's narrow question about why is Google losing money on YouTube?  Not everything can be measured in dollars in cents.  I am glad that Twitter and Facebook finally decided to do the right thing and lose some revenue. Two thirds of the people who entered the extremist groups on Facebook were directed to join them by the Facebook's own algorithm designed to increase revenue, and satisfy demands of the ever-hungry Wall Street beast that thrives on exponential growth of greed, while devouring everything. Twitter woke up when Trump crossed the line that separates the Executive Branch of our government from the Legislative Branch. By directing his fans to attack the Capital, Trump violated our Constitution in the most naked, direct way that most Americans understood clearly. This is when Facebook silenced that failed president, without a doubt the worst president America has had in her 200-year old history.  Let's be mindful that the cowardly, egotistic Trump enablers are still in this Congress, in Fox News, etc., and are counting on us to forget.  Forget we shall not, when our democracy is at stake! We must also unite as Americans, not just fans of a political party.

      Arnold Schwarzenegger's words struck a particularly powerful chord with me. I think that he expressed it more eloquently than I could, why President-elect Biden deserves our unequivocal, united support to get this country back on track, fight the fast-deepening economic depression, and get us out of the key reason for this depression, the coronavirus pandemic that is completely out-of-hand in these battered United States of America.

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    4. I forgot to add that today we celebrate the fortieth anniversary of my landing in New York on a Pan American flight. When I boarded that flight, I knew instinctively that I was never going back to Poland. Since I spoke fluent English, I immediately requested Newsweek and the Herald Times. Oh, what a feeling it was to be able to read them freely, not looking around for those who might spy on me.

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  4. Why are Sovie...I mean Russians so good at math? Came across a Russian (visiting us) while doing academic work in ceramics (literally grinding). And another at [what used to be the premier chemical company]. Both were WICKED smart at Bessel functions. Knew all kinds of physics and math. Even while doing chemistry.

    USians are not like that. You gotta be a physicist to bonk people over the head with Bessel functions. But these comm...I mean chess masters were completely down with hard stuff that I only admire from afar. One of them wasn't even a genius.

    (The other really was. And I am not. But I can see it. So even if his English wasn't good. I used to ask him for his evaluation of outside speakers and the like. He could tell me who was full of it and who wasn't. Just a small thing...but I liked asking him for his eval.)

    P.s. Not getting any oil/gas work. But just did a gig in gold mining (processing plant). Very recession resistant. Very manly. Traveled during Covid. Lived in a man camp. Behind concertina. Literally. Listened to the mosque wailing in the background. They actually appreciated freshman chemistry insights...I kid you not. Then again, have been surprised how chemically ignorant many US independent oil execs were. Not knowing what different NGLs are for instance.

    P.s.s. How about that Haynesville? ;-)

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  5. Glad to see you back and to hear that the cancer is at least in remission. Good luck to you and I am wishing you and your family a happy new year.

    By the way, the book was also called Hillbilly Elegy. I enjoyed the book, but haven't watched the movie.

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    1. In fact the movie is adapted from the 2016 book Hillbilly Elegy by J. D. Vance, not from the 2020 book Hillbilly Eulogy by Dwayne Willis.

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    2. Dear Paul,
      I stand corrected. I do not have a copy of this book in Austin, because it is in Saudi Arabia, and I have not checked my facts. I should have.

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