FDR Redux

I am as much a Hayekian on depression matters as anyone, but I question the assertion that "uncertainty" explains all that is happening right now. While this particular administration appears to have less than the usual understanding or respect for unintended consequences, it is not as if they are massacring the Cossacks right now. If anything, big business has been overly well-treated by this administration's insistence on bailing out all and only the corporatest of the corporatists.

The problem is the constant perceived need to inflate bubble after bubble, sometimes on what seems like a whim. So many parts of the economy are out of whack with where they should be it is amazing. Keynes cited "sticky wages" as the reason for government stimulus - but really, whose wages are sticky these days? Mine aren't. My company could announce across-the-board 10% cuts tomorrow and lose maybe 10% of its employees, but in the large part remain intact. We would not have much of a choice, and really in private concerns where there is some employee ownership sometimes a pay cut is not the worst thing.

The sticky wages are the government wages. Here in California we get side-by-side headlines of 12% unemployment and public employees complaining about having to forgo their annual 3% cost of living adjustment - the same public employees who earn far more than their private counterparts for less productive tasks. If anything is a good excuse for privatizing state functions during a recession, that must be it: private companies can hire, fire, and adjust wages far more nimbly. And no, it is not because they are cruel evil capitalists, it is because they are beholden to the laws of economics on a day-to-day basis.

The other alternative, which aside from punishing savings in favor of borrowing is relatively equivalent, is inflation. However, the inflation needs to be across-the-board. In this sense, the actions of the Fed buying its own debt then lending the cash to banks through the reserve banking system is probably the most equitable way to go about things. It injects money at the base. Sure, it makes some bankers disproportionately wealthy, but it also inflates the money supply from the bottom and limits ability of politics to dictate economics. Unfortunately, this mechanism seems to have fallen out of favor with the new administration, which prefers to administer the cash based purely on who paid for its election fund. The UAW wants a piece of GM? We can buy that! Swing states are hurting? Let's pour stimulus funds on them so they'll vote democrat in '12!

The big silver lining is that they have spent their political capital early, and set themselves up to have a very rough 2012. As of now, it looks like at least one house of Congress is going to turn Republican, which means my favorite type of federal government - deadlocked. Why is this bad for 2012? Stimulus funds run out in 2011, and if there are enough deficit hawks in one house to prevent a redux, then Obama can't pull a Roosevelt '36. By which I mean, of course, tanking the economy for 3 straight years by feeding special interests and killing golden gooses, then pouring stimulus money on the masses for 12 months leading up to reelection thanks to the illusion of sinking unemployment, only to run out of other people's money after the election and sink the economy even deeper for the next two years.


Space launch - closing a business case

Futron did a great study in (I believe) 2003 that looked at the price elasticity for space launch, and all established markets had essentially none. The reason is that, for military payloads, telecom sats, etc, sticker price of the launch is 3-5% the total system cost (difficult to believe, but true). By comparison, things you could blow at launch up account for 6-10X the cost of the launch itself. Add to that the cost of capital on a multi-billion $$ piece of hardware, and it doesn't take much to realize that the 2 R's - reliability and responsiveness - are much more important than sticker price. The study also found a small but reliable human space flight market, on the order of 5-50 per year sustainably at going costs. It looked at several other options - on-orbit servicing, research, manufacturing - and did not find a business case closing in the near to medium term.

The worst thing - the elasticity is so low that, if you lower your prices the added demand does not keep up. Your revenue goes down as you lower prices! The market actually solves to make space launch as expensive as possible!

It is somewhat bleak, but it also somewhat "IBM broadcasts demand for computers at 2 mainframes per year". I have been able to identify three possible ways out of the trap:

1) Demand elasticity is not the only type of elasticity. There is also supply elasticity, and space has much better characteristics there. Supply elasticity is the inverse of demand elasticity - it is the change in price versus change in units supplied. Launch rate is the most important variable for driving down prices. It's not all paying forward either - with launch rate comes responsiveness, which delivers more value so you can charge more. It also means reliability if you are geared to meet the launch rate (if not you're just doing sloppy work).

2) Reusability. Most people think this only applies if you get a stage back intact, but there is a gradient of reusability. The advantage to spaceflight is probably far greater for recovery of parts. If you can get several engines, turbopumps, computers, and other cost drivers back in good enough shape to do really good post mortems, you will be able to improve both the R's in a remarkable manner. This is far more important than simply trading out manufacturing cost for refurbishing cost early in the industry. Having actual hardware to autopsy against telemetry is extremely useful and would make rocket engineering a little more like automotive engineering and a little less like surgery.

3) Feedback. It is currently best to build extremely expensive satellites, because launch is unresponsive and there is no in-space infrastructure to repair mistakes. The Futron survey did not force execs to consider how they would change their own engineering and development processes in a world where launch was 1/2 or 1/10 the cost - it was mainly asking what the advantage to the business would be for launching current payloads. With high-volume turn-key launch solutions, it starts to make more sense to standardize and modularize payloads. This is good in two ways - first, the payloads are cheaper. That's a good thing simply because when you divide the cost of payload, you multiply the elasticity of the launch by the same factor. If my payload goes from 5% to 20% of total system cost, I will start bargain shopping. Second, it means quantity over quality, and that is great for an industry where launch rate is the primary driver. It leverages demand into supply elasticity.


Been gone for a while...

But, what's 4 months without readers? Why? I went and got a full time job and I love it. I'm still building rockets, but much bigger ones. I'll keep the company name under wraps, but let's just say We're really excited about this upcoming week.

I also moved to Hollywood, which is an experience in itself. Mojave was what it was, and in some ways the iso/desolation was breathtaking. I also dominated the b'ball and the flatball field, competition not being quite as stiff out there.

My views on this great nation and others like have changed little. I'm a little more cautiously optimistic about the collapse of Western society than I was in January, but a little more pessimistic about the likelihood of a seventies-style economic malaise that seems to be entwining itself into every aspect of our lives. The scarceness of jobs is not going away any time soon, certainly not here in Los Angeles. But the good news is that I think we have reached a breaking point with a lot of Americans, where the government is pushing up against its glass ceiling. Certainly demographics are helpful in some ways here; while we all want our entitlements, we also get more fiscally conservative as we grow older. Ignore Europe if you're means-testing that last statement. Forecast for the year - my favorite government takes hold in November - split houses of congress with slim majorities, and an effectively lame-duck president. A state of California that whose creditors are screaming louder that its special interests. And hopefully a couple/few successful launches. That government is best which governs the least.

The AIDS Miracle that was not

I saw a documentary about AIDS in Zambia last night – “The Lazarus Effect”, free on YouTube Red Channel. I was astounded by the way they talked about ARV’s (anti-retrovirals) – it was like they were just a given. As though, at some point in the early 2000’s, some beneficent hand (God, the Zambian government, Butros Butros Gali) sprinkled them across the land like manna. Not even a mention of the evil capitalist society and the greed-mongering pharmaceutical companies that developed the drugs and now give them away at or below cost to the poor of the world.

I mean, it’s really amazing: AIDS in the United States started out as, and still remains, a disease that primarily effects homosexuals. I am not making a judgment on homosexuality here, but I am making a judgment on human nature. Anywhere else, AIDS would have been ignored at best. Here? We mobilized hundreds of billions over the course of 25 years and we cured it, and now we give it away to the less fortunate. No other culture in human history has ever had the combination of empathy and expendable resources to do something like that. Not even close.

And yet, not a mention of it in the documentary.


The true "downward spiral"

Libertyworks published a great collection of graphs showing plummeting tax revenues for corporate and personal income taxes. Keynesians like to talk about a downward spiral of deflation - money supply drops due to financial crisis, which causes prices to fall; but prices fall faster than wages so companies go out of business, which destroys more capital, which in turn shrinks the money supply, etc. Keynes prescribes massive government deficit spending.

I'm astonished this has lasted 80 years. I pointed out in my last post that deficit spending borrows from the same pool of money that would otherwise be made available to businesses. This was a causal argument. I personally don't buy the sticky wages argument either - in a country with a high savings rate (something else the Fed suppresses, by the way, that would have saved our ass this time around), temporary loss of a job is not a catastrophe and there is plenty of investment cash to replace the jobs lost. That is all assuming that few people employ salary and benefits cuts and furloughs in bad times (again, something that is much more difficult when half of all workers are public employees).

Now, with these graphs, it is also becoming clear why we have a downward spiral at all. Government, in order to pay for its largesse both fiscally and politically, first goes after the most productive members of society first. In response, they stop taking risks, which leads to fewer jobs created, which leads to fewer tax revenues, which leads the government to hit the richest even harder, etc. We see this particular brand of insanity with an executive branch admonishing banks for not lending out one side of the mouth, then auctioning off record piles of debt to them out the other side.



A long word that most people just take on faith. I get the concept of deficit spending, but I find a huge, glaring logical inconsistency. If you are not just printing money (which worked wonders for Zimbabwe and Argentina), you must borrow that money. By borrowing money, you are taking away cash that would otherwise be lent to businesses.

We see this today - the stimulus and TARP funds are in bank reserves right now to shore up bank balance sheets against "toxic assets" with little resale value. But what if they weren't? Where would they go? But where did those TARP funds come from? Banks, somewhere, be they American banks or foreign banks or foreign central banks. Banks with liquid assets, who had invested wisely in the bubble years or got lucky at the crash, and seeing a bad economy, ran to the treasury for "safe" investments. Treasury was all to willing to oblige. But what if their had not been massive deficit spending to finance?

- First, there would have been more demand for the same supply of "safe" treasury assets. This alone would have caused an expansion of the money supply and made the Fed redundant because it would have forced interest rates to zero or even lower.
- As those interest rates dropped, commercial investments would have looked better and better to banks. So banks would have started lending and investing. Currently fashionable argument is that banks aren't lending because the economy is bad. Really, banks aren't lending because the US treasury is offering a sweet deal to finance massive government spending. All that stimulus cash would still have found its way to the market, it just would have been in the form of small business loans, M&A, and mortgages. The current Obama fetish with admonishing bankers for not lending is laughable and see through - it is the direct result of his policies.
- We would also still get plenty of foreign investment. China would start to act like Japan did in the '80's, buying up cheap real estate and taking controlling interests in large American firms. Is this worrisome? Sure. But is it more worrisome than China taking a large interest in the federal government, on which we depend for national security against... China? No, not even remotely.

You can talk about multipliers all you want, but they all apply just as well to private lending; and without deadweight loss incurred by government hamfistedness in the economy. So they apply better to private lending. Banks won't just sit on money if they have it and if the market drives interest down on treasury bonds; they will invest or die. It's the same reason why I'm lathering at the mouth about buying a house as soon as I can; you can get good investments cheap right now.

The main point is, in a fractional reserve system, the amount of liquidity is set by the reserve rate, the rules about what constitutes a collateral asset, and the inflation rate. If government is borrowing to spend, it is taking liquidity from business.


The difference between paying and forcing, blurred again

Matt Taibbi at TrueSlant posts a terrific article about the causes of the financial crisis. I like a lot of his points:

“For what we’ve learned in the last few years as one scandal after another spilled onto the front pages is that the bubble economies of the last two decades were not merely monstrous Ponzi schemes that destroyed trillions in wealth while making a small handful of people rich. They were also a profound expression of the fundamentally criminal nature of our political system, in which state power/largess and the private pursuit of (mostly short-term) profit were brilliantly fused in a kind of ongoing theft scheme that sought to instant-cannibalize all the wealth America had stored up during its postwar glory, in the process keeping politicians in office and bankers in beach homes while continually moving the increasingly inevitable disaster to the future.”

He nails it pretty well. In a word, the US financial system is a giant compulsory Ponzi scheme, with politicians and business executives at the top and the rest of us getting screwed. The blame for the crisis should be shared, he says, and letting either the Wall Streeters or the politicians off the hook is dogmatic. It’s similar to the Rand/Marx dichotomy that isn’t: “There is some small class of people who have great power and use it to steal from everyone else. Invariably, I belong to the second group.” It’s a teens-level redux of class warfare.

Taibbi suggests that both the politicians funneling dirty money to election funds, and the businesspeople providing that money by taking their points off toxic deals and buying vacation homes in the Caribbean, were both equally guilty:

“This GSE story is a big one, but if it gets used as a path back to a “The Market Reacted Rationally” version of history, we’re screwed. It has to be looked at as an important part of a diabolical whole, a symbiotic scheme in which the banks and the state were irreversibly intertwined in an enterprise that on both sides was never about market economics, but crime. Because otherwise… the diversionary notion that one side or the other is wholly to blame is part of what makes the whole scam possible.”

I cannot quite buy this evil incarnate at the top of the mountain theory. Taibbi ignores the difference in projected power between two groups of people. Businesses can only balance the books in their favor, politicians can use force against any form of blowback. There is a qualititative difference there, and just following the money does not quite tell the story. For instance, I’ve pointed out before that bankers’ actions were perfectly rational if one considers the implicit guarantee from the Fed, Treasury, and Congress that they would not be allowed to fail – by forceful edict. There were two ways this trading could have played out when the system crashed. In the market version, conservative banks who had eschewed growth for the last decade would watch as the paper tigers of the BoA’s and Citigroups collapsed, and use their hard-won capital to purchase the remains at pennies on the dollar. This happened in a few cases, like Wells Fargo picking up Wachovia, but it was not to the extent that it should have been to break up the too-big-to-fails once and for all. In the corporatist version, the government would step in and save bad banks from their bad investments using money forcefully extracted from taxpayers. This happened and is still happening and will happen for the next 50 years.

Rationality does not just mean seeing bad investments for what they are and avoiding them. Taibbi ignores game theory. Rationality requires weighing the risks including the reactions of others. If there is a player in the game who can tilt the field in your favor unfairly, game theory suggests you court that player and play the tilted field. That is exactly what Wall Street did – rationally. The only short term gains here were election cycles.


The Avatar post!

Maybe twice a year I see a movie that is worth the money and the 2-3 hours. Usually such a movie has a great story line, but for the most part those are tapped out. What I really want from a movie is something that will put me in another world. It could be an understated character-and-atmosphere film like No Country for Old Men, or it could be a comedy or horror flick that suspends certain rules of society and follows them to logical conclusion like The Devil's Rejects or Old School.

I would also lump into this category movies like The Matrix, which don't so much place me in another world with their story and characters, as with the technology they use to tell build the world. These films are more about world building than they are about storytelling. Avatar is a tremendous example of this - certainly the best since The Matrix, and maybe the best since The Wizard of Oz made color the technical standard of the future. Not only was the 3D experience completely immersive, but it seamlessly integrated the computer world with the cellulite.

There were a number of times when I truly felt like I was inside the world. There were the exquisite scenes where the main character was learning to fly, and the battle that included floating mountains in mist, aircraft and helicopters, and flying pterosaurs. But there was also a quality of depth to the faces during conversations which placed you right in the circle. Where past 3D films looked something like a diorama, with 2D cutouts at different 3D depths, there was a gradualism in the Avatar 3D world.

An then there was the story. Because you can make a great movie with only effects, but you cannot make a truly groundbreaking one without a story. On the one hand, I enjoyed the love story quite a bit (but then I'm a sap). It was felt natural, and I've got to say 'em are some hot aliens. I found the rest of the story to be vapid and empty, though. It retreaded ground already trod to death, and it did so with no shades of gray or ballsy plot twists or even depth of character. 3D movie, 1D characters was something I saw a lot on the internet - and it is true. The story itself is the same old Silent Spring re-telling about how humans of the future, and by metaphor the present, are ruled by large corporations which are driven solely by a profit motive that inexorably leads to the destruction of the environment and aboriginal cultures with the help of corrupt military mercenaries.

The best part about the movie’s “pantheism” or “gaiaism” or whatever is that it unwittingly (I presume) blows a fatal hole in its own metaphor. Obviously, if the biomass of Earth were sentient and communicative as the biomass on Pandora was, one would have to approach things like, say, mining and forestry, quite differently. In the context of the movie’s world, the response of the main characters is quite ethical and reasonable. Although, on the other hand, the response of the businesspeople is clearly allegorical and lacks any depth whatsoever… Giovanni Ribisi’s momentary pauses for effect notwithstanding, of course.

The problem for the holier than thou set is that it bears no parallel to reality. If you are not dealing with sentient plant life, then it makes perfect sense to cut down the tree. Likewise, it makes perfect sense to replant the tree and foster a diverse forest ecosystem around it once you are done with the area, provided of course you own the property and hope to continue to be able to make money off it for generations. And if you are mining, it makes a great deal of sense to reclaim the land when the mine closes, so you don’t get a bad rep for you company and therefore end up shut out of other rich resources by the people who live nearby. The fatal conceit is the idea that reality must support your faith, that ideally science must find a justification for your beliefs, when in fact the converse is true.

Likewise for the Na’Vi. We hear things like “We don’t have anything they want.” A perfectly true statement for a people who apparently never get sick thanks to the protection of their planetary organism and live quite fantastical lives flying on their neurologically-joined pets and not-breaking their “natural carbon fiber reinforced” bones and and living harmoniously within just heirarchical tribal structures and transferring their consciousness intact to the biomass organism when they do die. And if that was representative of the lives of pre-technical humans or, say, modern Islamic societies, then it would be a valid metaphor to the intrusions of the Western world into our developing neighbors.

But it’s not. The fact is, poor people do live brutal lives, both at the hands of nature and at the hands of their neighbors. They do want medicine, education, surplus food, and cell phones; regardless of whether they particularly like the people they are getting them from. And they are led by demagogues who twist their words, feed them false information, and promise things that they have no intention of delivering.

It did not need to be this way. Star Wars was groundbreaking both for its technology and its story, as was The Wizard of Oz, and 2001: A Space Odyssey. If the stakeholders had had some balls, there were a lot of places to take the plot besides a dramatic re-telling of Silent Spring with some Little Bighorn mixed in. But in the end, Cameron et al. went the safe route. The produced a technical masterpiece on the bare minimum story, and it is still a great movie.


How to actually keep airplanes from blowing up

In light of the recent underwear bomber episode, and the equally ridiculous and useless rules set up by our bureauverlords to protect their jobs (the answer to government failure is... more government!), I thought I would weigh in on how to really keep airplanes safe. Allow guns on board.

I am quite certain that terrorist incidents would virtually disappear if we did this - just let anybody on a plane without screening of any kind. On an average flight, you would be almost guaranteed to have several retired military, law enforcement, and good ol' rednecks strapped and ready to waste a prospective terrorist or hijacker.

The first objection is, as usual from people who take what the government says without question, "we can't do that! Everyone would be shooting up planes." Right, and if heroine was legal I guess you would go stick a needle in your arm tomorrow. There is a growing body of research that suggests violent crime rates drop significantly when gun laws are softened. It's the age old truth that criminals with guns can usually avoid cops, and they are not afraid of citizens with knives. Didn't 9/11 show us that our elaborate security theater had done nothing less than make use mortally vulnerable to such treacherous weapons as box cutters? And did it not also show us that, given either a reasonable chance of success, or an overwhelming reason to try, ordinary citizens are our best defense against random acts of violence? Yes and yes.

The second objection is more rational, which is "but don't guns put holes in planes?" That one suggests some caution. After all, if the brave and intelligent Dutch tourist who stopped pantsbomber had been packing a .44, the cure could very well have been much worse than the disease. In that case, how's this for a compromise. Offer a course for military, law enforcement, and maybe ordinary citizens to become licensed "reserve air deputees." Once licensed, these deputees would be allowed to discreetly carry weapons on their person onto commercial airplanes. Of course, there would be a restriction on type of weapon - high-caliber handguns, explosives, rifles, and shotguns would be of little use in a close-quarters airliner fight. However, small caliber and non-lethal weapons like .22's and similar low-power handguns, tasers, mace, etc, would be allowed on. The key word is "discreetly" - the RADs would go through the same screening process as normal passengers, they would be required not to show their weapon to anyone, and they would be required to have their weapons on their persons at all times. The point is to make sure a terrorist can't know how many RADs are on a given flight, or where they are sitting.

The course would teach people the dos and don'ts of airliner combat. The course would cover small-caliber handguns, as well as non-lethal weapons like mace and tasers. Users would be instructed in an airliner mockup about things like where a small caliber bullet is least likely to cause explosive decompression, whether bullets will penetrate different types of partitions, what kinds of proximity effects a cloud of mace has, and so one. It might also cover such things as basic hostage situations, simple forms of non-verbal communication, ways to improvise weapons and/or create diversions with things commonly available in an airliner bathroom or galley, ways to contact the ground from the cabin, and steps to take in case of loss of crew. The class need not be especially long or expensive - probably no more than two days or several two-hour evening sessions should do - one could commandeer a derelict DC-8 in Mojave and shoot it full of any number of holes.

The worst case scenario is that several terrorists would take the course and be allowed on a plane with a gun. However, this is still better than the current scenario. First of all, there would be the requisity background checks. Anyone who took the course would be automatically red flagged by the FBI, and any commonalities where several people on the same flight took the same course, or were funded by the same organization, or have sketchy backgrounds, would come out. This would have stopped at least the Reids and Abdulmutallabs. Second, the worst that would happen is they would get on with a small gun - there would still be screening for explosives, large caliber weapons, etc. All this would not necessarily have stopped 9/11 however. But, potential terrorists would have no way of knowing how many other passengers were carrying weapons, or where they were. This is the most important line of defense. Terrorists are willing to lose their own lives; and if there is a 3.7% chance that they will go to jail because an air marshall happens to be riding then so be it. But if those odds went to close to 100% that there would be at least one and likely several people with the weapons and training to make every attempt at martyrdom as pathetic as pantsbomber, regardless of what kind of heat the terrorists were packing, then they will move on rather quickly.

There could, of course, be automated rules in place to put the odds even more in our favor. There would obviously be flags raised when an aberrant number of RADs chose a given flight. RADs could show up to the airport, and be either deputized (allowed to keep their weapon on their person) or demoted (with their weapon placed in checked bags or in safe storage at the airport police station) at random for their flight that day, so that no one could ever know whether he would be allowed a weapon on board for a given flight. Likewise, we could limit the total RADs on each flight to no more than 2% of passengers, or no more than 5 total RADs, or so on. We could arrange it so that the RADs on a given flight had a wide variety of birthplace, hometown, religion, ethnicity, and education, to reduce the likelihood of collaborators. RADs could be seated together without their knowledge, with air marshalls secretly seated around them, in any suspicious case. But this is all just working the odds. The point is, the program would open the RADs up to so much scrutiny that it would probably be unprofitable for a terrorist organization to attempt infiltration.

Fact is, the cops are never there when you need them. At any level of spending that won't kill mass air travel, we are not going to cover enough flights with air marshalls to make terrorists think twice.


A newer, Americaner space program

Early signs point to the Obama administration taking the Augustine Commission's advice and turning astronaut launch to LEO over to contract bidders like ULA and SpaceX. I'm sure the sausage making will be ugly and the result will be less than ideally appetizing, but it is the first big-ticket sign of a slow, necessary change in NASA that has been happening at least since SpaceX was founded in 2003(ish) and SpaceShipOne launched in 2004. Centennial Challenges, the COTS A-C program, and the ISS resupply contracts were earlier steps of increasing size. Humans to LEO would be a lot more long-term and carry a price tag that actually takes a bite out of key congressional districts. Of course, it adds the same amount in a much more efficient way to other congressional districts, but for some reason that is never included in the accounting.

Politically, space is not important. NASA is an $18B annual bargaining chip to buy off various constituencies. That's not surprising, in fact it is typical. It has led slowly and inexorably to a federal agency much like any other federal agency that is not directly accountable to the voters (ie, all of them). Absent other influences, this leads to one way of thinking:
1) People who fly are people who die. The general public is not interested or wowed by spaceflight, they could care less. Only bad things can happen for politicians when astronauts fly. To a lesser extent, this is also true of multi-million or -billion dollar satellites and probes as well. The ideal NASA program from a politician's point of view is one that spends the maximum amount of money on the minimum amount of flights. The result: massive overhead is designed into the programs. Overhead doesn't kill anyone. It doesn't do anything, in fact.

Absent other influences. There are always other influences, but until recently they have been small fries. It took enormous political capital to get Shuttle up, and no one is going to get behind something like that again. So what is currently leading the push toward commercial?

Former NASA administrator Michael Griffin saw it clearly when he railed about "the Gap" after the Shuttle was sunsetted. He reacted the wrong way, as do all politicians, by grasping tighter to the status quo and assuming he could steer funding and/or change the way a massive bureaucracy gets things done. But his assessment of the problem was correct. It is politically embarrassing to buy things from Russians.

Faced with this nationally important strategic fact, and a commercial industry ready and willing to come to the rescue, it seems likely that on the order of $5B will finally be skimmed of the NASA pork cream pie to actually get something done. The NASA boondoggle will still get their $5B annual to work on paper rockets - this time called "heavy lift vehicles" - that are not strategically important to most political careers. They can overrun the cost and schedule on these while never flying anything useful until the next sellable scam comes along. But the agency will finally be doing something useful with a real chunk of its cash, and that's a good thing.


Little people in the White House! Noooooo!

Following up on two reality-TV stars crashing the state dinner a month ago, we now have a story of two tourists who showed up to the WH on the wrong day and were invited to join a Veterans Day breakfast.

I for one don't see that this is an issue. I can't imagine how it could be. Are we really pissed off that ordinary Americans were able to get some candid face time with the President? Have we devolved to royal courts? I disagree with a lot of the things Obama does, but this is nothing but good. I've said for some time that the whole standing army/Praetorian Guard is a sign that a person has way too much power. Secret Services in good times turn into SS and NKVDs in bad times. Look it up.


The truth shall set you free...

Climategate, paradoxically, may lead to a renewed push and more money for climate science, and this is a good thing. Hear me out.

Climate science relies on extremely nonlinear models. When you rely on extremely nonlinear models, the rules for statistical analysis change completely. In a linear model, you can expect a small change in inputs to result in a small change in output. In a nonlinear model, even a minute, undetectable change can correspond to any of three states. If the system is overdamped, it will behave similarly to a linear model and the small change will not affect results greatly. If the model is chaotic, it will oscillate between some odd number of quasi-stable states (this is possibly what we saw with the last decade's level or cooling temperatures, the system was perturbed to another state). If the model is underdamped, then you're in trouble - the result will be highly unpredictable.

So the statistical bar for nonlinear systems is much higher than that for linear systems. In linear systems, you need to statistically correlate results to observations, and if they correlate better than the alternative then your model is better than the alternative. I am not a climate scientist, in fact I am not a scientist at all - just a lowly engineer. I am not familiar with the climate science literature so it's possible that all I am about to say is common practice, although it doesn't show from the CRU code and data. And I am at something of a hobbyist level at this chaos stuff, so all this might be completely wrong, but my take is as follows:

With nonlinear systems, you need to do more work. You need to be able to statistically isolate each combination of variables and determine whether its effect is overdamped, underdamped, or chaotic. If it is underdamped, you can just look at results. Ie, "With the measured CO2 concentration over the past N decades, we can say that the relationship to temperature is a*log_b(CO2) with P% error bounds on a and b of alpha and beta."

If the variable provokes a chaotic response, you need to isolate the periodicity of the system under various perturbations. In other words, if you find that CO2 level in the atmosphere leads to discrete but repeating jumps in global temperature, you can predict the effect a perturbation has within a given range of inputs - you can never fully predict what will happen when the period doubles or halves, because it may go nonlinear at any new level of CO2 concentration. If you can find two period doublings in the data, then you might even be able to project it forward or backwards several period doublings, because the level of input at each doubling and the discrete levels of output follow a rule of proportionality. But again, this is highly speculative because chaotic systems can go nonlinear (underdamped) at any time. In other words, if your input leads to chaotic outputs, you now have to bound your model to those regions where you can calibrate. At best you can venture a guess a period doubling or two ahead and behind, but again, the whole system could stop doubling in an orderly fashion and just go haywire. Obviously, this is a far greater task than with linear models - you go from correlating one set of outputs to one set inputs, to correlating every combination of input against every output and isolating discrete contributions for those combination. The statement you can make here is "For the last N decades of CO2 data, we can predict that the effect on T will follow one of the following curves [f1a(CO2),f2a(CO2), ... , fna(CO2)] within the range C1 to C2 with Pa% probability, and one of the following curves [f1b(CO2),f2b(CO2), ... , fnb(CO2)] from C2 to C3 with Pb% probability. We can also predict a relationship within the bounds [f1c(CO2),f2c(CO2)] for concentrations from C3 to C4, and [f1d(CO2),f2d(CO2)] for C0 to C1, with a lower degree of probability, and with an inverse probability of the system response devolving into noise."

Finally, if your variable ends up provoking an underdamped response, you're almost, but not quite, SOL. Your output will fluctuate unpredictably - it is indistinguishable from noise. You can do a couple things with this: you can again bound the input to the range where you can isolate the calibration data, and prove that the nonlinear response is bound as well - ie, "With the levels of CO2 we have measured over N decades, we can predict with P% confidence that the nonlinearity from these concentrations in the model will be no greater than 0.1%C." The other thing you can do is various tricks to linearize the model. In this case, you must prove that your linearized response is correlated with actual data BUT - you cannot predict what will happen to the portion of the signal from your nonlinear variables outside the envelope of observation. In other words, forecasting what will happen when CO2 levels reach 4X their current levels, and higher than at any point in the past where you have good data, is not meaningful.

The only way you can get a confidence bound in this situation seems to be by sensitivity analysis of your entire model - run each variable independently, and in every combination, through the full range of error for the variable. You are essentially looking for where the output falls off a cliff - either the noise goes way up or there is a discrete change. Then you look back at your calibration data and find similar trends in the data, and determine the probability that the actual climate conditions when those trends happened were the going through the same state change as the input conditions that caused the similar trend in the model. There may be several "similar" trending events in the model and in the calibration data, so at this point you need a lot of both to get a meaningful cross-section with which to check the nonlinear model response.

In summary, probably the most important point about the nonlinear system is that you need much better data, with much more rigorous analysis, than for linear systems. It seems like some of the techniques used by the CRU researchers - interpolating data between stations, correcting for movement of stations, smoothing averages over time - were fine for linear systems but grossly inadequate for nonlinear systems. Interpolation and correction errors can grow wildly (or in discrete steps) in nonlinear systems, and it is precisely the instantaneous variations in the data that tell you when a system has gone non-linear. When dealing with highly non-linear systems, you should be extremely wary of any trend predictions... often the best you can do is "And if we reach this point the outputs go completely haywire and six slightly different models predict six hugely different outcomes, so it's probably a good idea to not get to this point if we can help it."

Climate scientist will protest that what I am asking is impossible, and rightly so - you need data to do any experiment, and saying your data is invalid because we can find some degree of nonlinearity in the system where an arbitrary level of error leads to arbitrarily unpredictable results is the same as saying your experiment is impossible. True enough.

Which brings us back to the first point - climate science getting more money. There will now be a huge bias against using legacy data sets, especially unpublished ones, and so we will likely see a return to the raw data and a more persistent push to make that data less error-prone. The fact that garbage in is so much more damaging with nonlinear systems means typical statistical tools used for linear systems are not valid, and data fidelity is of utmost importance. I hope that this leads to a new push in the climate science world - and the scientific world in general - to completely reevaluate statistical and data gathering procedures for highly nonlinear systems. I have always thought that climate science should be nonlinear physics that happens to be dealing with a climate dataset. We will deal with more and more nonlinear systems problems as we move on towards K1 level of civilization, and if the outgrowth of Climategate is a new set of scientific methods to deal with them then we have all won.



Powerline blog has a story about a recent Fed forecast of a slow recovery for the economy. Well... duh. Put me solidly among those who aren't convinced there is a recovery - the current bump is very likely the result of massive and unsustainable deficit spending.

The reasoning behind the slowness is that banks aren't lending. Well... duh. Here's some of the things they are looking at:

1. The bailout kept a huge amount of bad investments in the banking system that should have been purged through bankruptcy and pennies-on-the-dollar sales last Autumn. The resulting revaluation would have been extremely painful (as if what happened instead wasn't...), but it would have placed real income in the hands of healthy institutions rather than keeping deflated balance sheets on life support. We would have probably lost a lot of "too big to exist" banks, and in their place we would have some new names and a few old names with right-sized financing capabilities. Instead, we have a bunch of flailing brontosauri - giant institutions on cash-swallowing life support keeping the mammals around the fringe.

2. Barney Frank won't shut up. The regulations bill coming down the pike is the typical DC disaster. Long after the public has realized that maybe banks were just operating under instructions from the FDIC, FMA, FHMCA, GMA, CRA, and the rest of the alphabet soup of agencies that so blatantly fell into the "irrational exuberance" trap (probably for kickbacks... but that only happens in Central America, right?), this congress is trying to create a veritable pterodactyl. Banks don't want to move when doing so could break the law in a year. It is quite clear at this point to everyone in finance, and not clear at all to most of the voters, that banks do what the government says. If the government says to lend to questionable borrowers, you either lend or you get pushed out of business. I don't even know if lifting the regulatory burden would do anything good... the industry needs to be weened slowly from the Federal teat. Instead, BF wants to do the opposite.

3. Business sucks right now. The stock market is back to neutral. Housing may be bottoming out, but that's like saying the Michael Jordan had a "bad night" when he scored only 35 - it's really back to where it should be. IPO regulations have all but killed the venture capital industry as an agent of growth. The American government is currently acting like one big barrier to entry. To top it off, American people are shocked into saving, which is good, but their savings are going to feed the flailing brontosaurus. Instead of contributing lending cash to institutions on good footing, they are contributing the disappearing money that should have been destroyed months ago in bankruptcy court. So yeah, investment isn't going too well right now.

4. The government is using all the credit. True. Any cash that is in the system - from foreign government or US banks - seems to be flowing directly to the Treasury. People with money are spending it on treasury bills, notes, and bonds, which is kind of like a self-fulfilling bet on another turndown... although, another turndown without inflation, which is very unlikely. The point is, there's so much "safe" government debt out there, why would any institution actually do the hard work of building a portfolio? This kills big companies, because they have to out-price government bonds. Yields grow, profit dies, and people get layed off.

5. Finally, the fundamental flaw has not been fixed, if anything it has been further fundamentalized and flawed. We as an economy are in a precarious spot. We charge 5x more for our time than anyone else. As protectionism slowly falls away, the problem will get worse. I know a lot of laborers, and I feel for them, but I honestly can't look them in the eye and say that they should really be able to work for 5x as much as an Indian or Mexican who is willing to do the same work. The US needs to continue to create new industries better than anyone else, it is regression to the mean for us. But we are choking that off with inane immigration policies that treat smart people like slaves and kick them out of the country, and treat hard working people like criminals and force them under the table where they lower wage rates for everyone. Not to mention all the things in 3) that are killing wealth creation. And when we do create wealth, our politicians sic on the creators legally, rhetorically, and financially. It's unsustainable.


Damaging climate science by defending it

Big news this week on the global warming front. A month or two ago, I said essentially that yes, we need to worry about global warming, eventually, but it is not an existential emergency and we don't know nearly the beginnings of enough yet to call it such. By contrast to, say, a 10,000 year meteor strike, of which we know most of the science yet spend pitifully little time, money, and political capital on, anthropogenic climate change provides way too many cushy jobs for people who want to call themselves scientists but don't want to do the work.

I ended by saying something like, humanity's waste heat will start being a problem in a few decades, and focusing on carbon is probably distracting from the main issue. I thought that might be a bit of a low swipe at an easy target. Turns out I was quite right. A group at the University of East Anglia's Hadley Climatic Research Centre was hacked this week, and their emails show a group of partisans who certainly seem more devoted to a cause than a truth. Refusing to release data to other scientists they thought were "not predictable," publshing refutations of criticisms without bothering to go back and look at the pertinent data and calculations, politicking to discredit the editorial staff and contributors to journals that hold a skeptical view.

This is, of course, unavoidable when a scientific group's proclamations get ahead of their evidence. It is an effect analogous to a government making bold proclamations about the future without the resources to make them happen, then resorting to muggery and lies when things go differently.

It is too bad really. We live in a world that is smaller every day, and we are within a few orders of magnitude of being a K1 civilization. When that happens, we will have control over the physical planet, able to harness as much power as the Earth itself puts out for humanity's means. It sounds vaguely u- or dys- topian, but it is not something that we will wake up able to do once we buy enough iPods. It is something that humans will achieve in small pieces. Looking at what the Earth has to offer, we are a long way from understanding or harnessing or affecting things below the surface. We can't affect the macro-scale inertial properties of the planet - its orbit, insolation, and so on. We are far from being able to regulate the oceans like we do, say, rivers and lakes.

No, our first tests are going to be the atmosphere and the biosphere. We must be able to managed the energy budget of the atmosphere, as well as the several chemical cycles that it participates in. Likewise, we need to be able to maintain a healthy and diverse biosphere. We are already well along on the latter, having stabilized most temperate forests, and hopefully we will be able to do the same things to better manage topsoil, tropical forests, and desert-prone regions. I am optimistic. The climate is the next hurdle, and we know pitifully little about it. Defending pet positions under the guise of science, using any tools other than open experimentation, hurts us all.


Questions from the HSF committee... a running monologue

Vision Restoration is a blog dedicated to... well, if I say it it will sound trite or corny or jargony. The "Vision" stands for W.'s Vision for Space Exploration, which was a very promising roadmap for building up the nation's civil spacefaring infrastructure in politically palatable chunks. The "Restoration" is because NASA lifers and congressrodents with NASA centers quickly gutted the positive parts and turned the whole thing into a long-running jobs program. Obama commissioned a panel to find out what the fuck happened, and they returned pretty much the same recommendations that the VSE people came up with 6 years earlier... and, for that matter, pretty much the same suggestions that a similar commission in 1994 came up with. Namely:
  1. NASA does not have enough money to do anything meaningful outside low Earth orbit (LEO), at least not the ways NASA has to do things thanks to aforementioned b's & c's.
  2. We will never develop the infrastructure and technology to change that fact unless NASA loses its literal deathgrip on the LEO launch and space-station market and lets commercial companies do what they do - try, fail, and then try better.
Vision Restoration has a series of Deep Questions for the HSF Committee in a sort of open-letter format. I'm just going to scat while I read the music.
"1. Are beyond-LEO exploration and fitting the budget really incompatible?

Two of the goals in the Committee's
charter were to fit the budget and to enable beyond-LEO exploration. However, only two of the options presented by the Committee fit the budget, and neither of these options enable beyond-LEO exploration in a meaningful time frame.
True enough. But let's be real: what is "meaningful time frame?" I would argue 4 years, maybe 6 if we're lucky. It took the VSE about 2 to get fully gutted, and that was with the same party in the WH and both HoC's. Apollo was essentially dead in the cradle after 9 years, and even that took an assassinated war-hero President followed by a spendthrift from the South who couldn't imagine his good fortune at having a massive industrial cock-off to throw money at his region. Either of the two budget-fitting options are going to lead the same place due to economical realities; one of them gets there sooner.

The big-ticket potatoes in the current Constellation soup are as follows:
  1. A medium-lift rocket to get humans into orbit (Ares I)
  2. A pod to carry those humans into orbit, and also into deep space (Orion)
  3. A heavy-lift rocket to lift supplies and the lunar lander (Ares V)
  4. The lunar lander (Altair)
Of these, there is only a pressing nationals need for #1, and the first half of #2. It is politically unacceptable and economic seppuku to keep buying rides to the ISS from Russians. These are what we're really deciding on. Everything else is gravy on the gravy train that is NASA jobs. The committee presented 5 options and 3 sub-options, but there were really only 3 realistic choices.
  • The first was the program of record. It is an "option" because DC might have just gotten to the point where they see literally no point to NASA beyond buying votes in districts with NASA centers. This would be a quick, silent kill of the US civil space program. It would continue on in budget alone, but American space capability would essentially be done until the military or private industry took it up.
  • The second was the second choice, with budget constrained to current sizes. It assumed that the civil human spaceflight program had some utility besides graft, and therefore it arranged for basic human spaceflight capabilities to LEO to be picked up by competent organizations (not NASA) on a fixed-price basis. At the same time, it still managed to throw the majority of taxpayer money down the rathole of a heavy lift vehicle we won't need for a hundred years, a deep space capsule that we can't launch, and a moon lander that... well, it's a fucking moon lander and we can't even get to LEO after 2011, so figure out how serious they are about that one.
  • The third option wasn't presented because it was as much a political fairy tale as #2 was a technical and economic fairy tale. It was discussed in some of the meetings by Jeff Greason and Sally Ride, though, and it was as follows: shut down NASA centers that design vehicles. Contract each vehicle out to 3-4 commercial vendors on the COTS model. This is how a private company would do things. Private companies probably aren't quite there yet. But it was what could be if this was a market.
"2. Why wasn't a Phase I EELV HLV or similar HLV included in any options?
...It also wouldn't be bad if a smaller HLV encourages us to perfect our skills at refueling, ISRU, reusable space-only craft, frequent low-cost launch, docking, and assembly. All of these skills may find productive use outside NASA exploration. Enabling such capabilities may prove to be more important than NASA's actual exploration itself.
That's an easy one. Because it might work. The committee knew, as anyone who takes an honest look knows, that HLV's are the exact opposite of what is needed. We need more launches. A lot more launches. Since there's no obvious demand for lots more launches, that means we need to launch smaller things, more. And that means that we need to pour our effort into on-orbit assembly, on-orbit propellant storage, and clustered smallsat technologies. A working HLV would destroy NASA. If they had an HLV, not only would they need the huge overhead required to maintain it, but they would need something to launch on it to justify the expense. And they can't pay for both the overhead and the mission.

NASA's ideal is to only pay for one of them. Given the choice between overhead and mission, overhead is clearly the safer option. Missions can fail; the worst thing overhead can do is not succeed - at which it is very successful. NASA wants to pay people to design rockets that will never fly at anything beyond experimental capacity and flight rates. That is why the only serious HLV options were NASA-made. And if NASA senses themselve getting too close to an actual operational system, we will find that the requirements creep every higher. Unlike with medium lift, no private entities are in a position to call that bluff, and if I'm right about the economic drivers of space exploration, they won't be for at least a hundred years. So it's a nice, safe kitty.
"3. Should Earth orbit be included in the Flexible Path?
there are Earth orbits beyond LEO that could be useful for satellite servicing, remote sensing, and other purposes.
This is an interesting bit of foreshadowing. The answer is, of course, yes. Once there is an infrastructure in LEO, and some more long-term paper projects are inevitably cancelled in a fit of righteous congressional dollar-smelling, NASA will find itself in much the same uninspiring place as it finds itself now, only pushed out past the Van Allen belts. NASA will someday cling to MEO and GEO manned missions like it does today to LEO manned missions, after it fails miserably to even dent Lunar or deep-space manned missions. And once again, private industry will outpace NASA's capabilities there, just as it is currently doing in LEO. And then NASA or whatever or whoever plays the role then will bounce to the next place, maybe the Lagrange points or the Moon or NEOs, and so on ad infinitum. That may sound cynical, but it's the ad infinitum that is important.
"4. Should Venus orbit be included in the Flexible Path?
Cool idea. Obscure and over-reaching, but cool nonetheless. Let's tackle this one again in 2060. When I am... 80 years old. Sigh.
"5. What is the real goal of human space exploration?

The Augustine Committee's report states the following:

A human landing followed by an extended human presence on Mars stands prominently above all other opportunities for exploration.
I guess all government space committees have to come through with some sort of sci-fi geek vaseline like this. To their credit, the HSF committed kept it short. Their real stated ultimate goal was not Mars - it was permanent human settlement of space. Now that is a real goal. The concept of going to Mars, or even the Moon right now, is ridiculous and arrogant. We are not close. It is almost too bad we managed Apollo; it distorted everyone's view of what is really possible. You can climb a mountain, and you can build a road up the mountain. If you climb it, it will be quite quick and easy. But if you want to make it a routine, you have to build a road. And building a road is phenomenally, incomparably harder than climbing.

I love climbing mountains, don't get me wrong. And maybe it's the proper thing to do in space. Perhaps space is so hostile and foreign that living and working there is not a reasonable thing to expect to be able to do, ever. In which case, save up some money and take a trip to Mars, by all means. Or, you know, mortgage your country's future, whatever. Lots of suicidal people climb Everest. But if you believe that settlement and commerce are the true reasons for the frontier, then you need to start building that road. And that's not glamourous. It took a lot more work, and no doubt killed more people, to build the road from Kathmandu to Base Camp, than it did to climb from Base Camp to the summit. But without the first, the second was not possible.