Recommendation: The Science of Discworld series

The late Terry Pratchett was a British author of a series of fantasy books about “Discworld”, a mythical world where magic rules. Many years ago I picked up one of his books in a bookstore and skimmed it and put it back, thinking it was just fantasy, which is not a genre that really interests me. That was a big mistake. Many years later, desperate for something to read on a trip, I picked up The Science of Discworld (1999) in an English village store and discovered how foolish I had been to discount him earlier. Pratchett’s Discworld stories in fact examine very profound issues, like the nature of time, with a wicked British sense of humor and playful sense of irony. Once one realizes that he is using his magical Discworld to comment on the nature of science and of human behavior, his stories take on much deeper meaning, but all cloaked in his wonderful and whimsical sense of humor.

The four books in the Science of Discworld series are a collaboration between Pratchett and two of his best friends, Ian Steward, a mathematician (who used to write the Mathematical Recreation column in Scientific American), and Jack Cohen, a reproductive biologist. Stewart and Cohn have also coauthored several other very, very good books, including The Collapse of Chaos: Discovering Simplicity in a Complex World (1994), Figments of Reality: The Evolution of the Curious Mind (1997), and What Does a Martian Look Like? The Science of Extraterrestrial Life (2002.

In the Science of Discworld series, a Pratchett story about the wizards of Unseen University (a spoof of British university life) is interleaved, chapter by chapter, with chapters by Stewart and Cohen discussing the science involved, but discussed with the same sort of wry humor as Pratchett’s. It is at once profoundly enlightening and wonderfully humorous and readable.

The first book in the series, The Science of Discworld: A Novel, deals with the history of the cosmos and the earth. The second book, The Science of Discworld II: The Globe deals with the development of the human mind and the evolution of culture, language, and art. The Science of Discworld III: Darwin’s Watch deals with the nature of evolution, And the fourth and last book in the series, The Science of Discworld IV: Judgement Day takes on the really big questions in life, the universe, God, and the meaning of life, again with wonderful wit and humor.

I have started to reread these books, or, more accurately, this time to listen to them as I do my morning walk – the audiobooks are very good. Michael Fenton Stevens and Stephen Briggs do a great job reading. The books can be read in any order, but it helps to read them in order because there is a certain amount of character development. It also helps if one has already read some of the other Discworld novels, because one will already be acquainted with some of the characters that reappear and some of the features of Discworld.

I can’t recommend these books highly enough if one is interested in the big questions in life, in philosophy and in science.  

The Afghan withdrawal

 The US is withdrawing most of its troops (finally!!) from Afghanistan. Meanwhile the Taliban are steadily re-taking territory as the Western troops leave, and have already recaptured 50 of Afghanistan’s approximately 400 districts. US intelligence experts expect Kabul, the capital, to fall within six months or so of the US exit.

Some columnists are sharply criticizing President Biden for the withdrawal. It seems to me the real lesson is that if 20 years of American presence, blood and treasure was not enough to give Afghanistan a government that could stand, another 20 years of American presence is not likely to be any more effective.  If Washington policy makers had studied history, we might have learned this lesson from Alexander the Great, or from the Mongol empire of Genghis Khan, or from several of the Persian empires, or the British, or even more recently from the Russians, none of whom were any more successful at taming Afghanistan than we have been.   

 

The tax question

President Biden is proposing to spend several trillion dollars (current estimates are around $4-6 trillion, if he can get it through Congress) on a bunch of things like infrastructure that certainly sound like good things to do. The question, as always, is how to pay for it. In general, we American voters want lots of stuff from the government - a generous social safety net, a strong military, good roads, subsidized or free education, lots of special interest subsidies, etc - but don’t really want to pay for it. Raising taxes is the third rail of America politics.

And politicians in both parties in recent decades have gotten around the reluctance of voters to pay more taxes by simply borrowing more to pay for their pet schemes. They have borrowed so much that the US is now in the select company of nations like Greece and Venezuela in terms of debt to GDP. (as of first quarter 2021, the “official” US federal debt is 127.5% of GDP. The real debt, counting the off-the-books unfunded future commitments to federal pensions, military health services, Social Security and Medicare, is some 5-10 times greater, depending on how it is calculated)

So Biden is making one of the two perennial promises that politicians make, to tax the rich and corporations more (the other perennial political promise is to find money by reducing “waste, fraud, and abuse”). In the end neither of these two promises ever gets fulfilled, and neither ever produces the amount of new revenue projected, so whatever is being proposed in the end gets funded mostly by more debt. That will almost certainly be the case this time too.

US corporations are already subject to a 21% federal tax rate. So (to channel Dr Phil) how is that working for us? Go here for a list of 55 major U.S. corporations that paid no tax whatever in 2020. Indeed, some got millions of dollars back from the government instead, giving them a negative tax rate. And those are just the ones that did it legally, and in the U.S., using all the tax loopholes that Congress has given them over the years. Then there are the ones that use tax havens. See here for how a Microsoft subsidiary “in Ireland” (where it has no employees and only a law office address), by being “resident” in Bermuda, paid no taxes on $315 billion in profits in 2020.

President Biden seems to be succeeding in getting other nations to agree in principle to a uniform minimum 15% tax on multinational corporation, but already the British want to exclude British financial services (to stay comparative after Brexit), and Ireland wants an exemption for smaller nations (to level the playing field against larger nations). By the time the lobbyists and special interest groups get finished, whatever deal finally emerges, if any, will likely have so many exemptions and loopholes that it will make little difference.

And how about the rich? The rich are already subject to a top federal tax rate of 37%. Again, how is that working for us?  The recent leak of IRS tax data to ProPublica on the wealthy tells the tale. The previous post showed that the four richest people in the US (Warren Buffet, Jeff Bazos, Michael Bloomberg, and Elon Musk) paid federal taxes at rates ranging from one tenth of one percent to just over three percent. An analysis by ProPublica of the tax records of the 25 richest people from 2014 to 2018 shows they paid an average federal tax rate of 3.4% - LEGALLY!

None of this is particularly surprising., We have all known for a long time that big corporations and the rich can afford to hire the legal and accounting talent to evade their taxes, and to buy the votes in Congress to slip their loopholes into normal bills. For example, did you know the 2021 COVID relief bill, supposedly needed for urgent relief in the pandemic, also included a tax break for brewers, and another for NASCAR owners? The previous COVID bill even included a tax break for racehorse owners!

The bottom line here is that I seriously doubt that President Biden’s promise to tax the rich and corporations more will amount to much. Oh, he may well succeed in getting some legislation passed that he can brag about, but I doubt very much that it will make a significant difference in the revenue collected by the federal government, since the government doesn’t seem to be able to enforce on major corporations or the rich the tax rates that are supposedly already in place.

Still, I suppose promising to tax corporations and the rich more is good politics, and perhaps most voters are naïve enough to believe the promises.  But in the end, all this new spending will almost certainly be funded mostly by more debt, pushing the U.S. even further into the danger zone. And in the end it is our own foolishness as voters that is allowing this to happen.

Taxing the rich - lots of luck!

 Biden thinks he is going to pay for his trillions of dollars of spending by taxing the rich and corporations more. And if you believe that I have a bridge to sell  you.

This graphic showed up after ProPublica got hold of (probably illegally) the tax returns of lots of rich people:

What are the odds that Biden can get them to pay even at the rate that you and I pay, let alone at the 39.6% rate he is proposing.

The realities of reducing our carbon footprint

I can never tell whether journalists, activist, and politicians are just ignorant, or whether they understand perfectly well that they are lying and just don’t care.

This comes to mind as I read yet another glowing article by some journalist about how president Xi of China is promising that China will be carbon-neutral by 2060 (with the implied question of why can’t the U.S. do the same?). Of course, talk is cheap. Xi can promise anything he likes. In fact China is currently the world’s largest producer of CO₂ (28% of global CO₂ emissions), and despite Xi’s pledge is currently massively expanding the number of coal-fired power plants.  In 2020 alone China brought on-line 38.4 gigawatts of new coal-fired power plants, more than three times as much new coal-fired power as the rest of the world put together, and has another 247 gigawatts of coal-fired power plants (184 new plants) currently in construction or planning. Why? Because China doesn’t have much oil, but it does have a lot of coal, and it is hell-bent on becoming a first-world nation as fast as it can. It is clear that global warming fears simply aren’t going to deter China from industrializing as fast as it can, whatever Xi pledges to an incredulous media.

Nor is China alone. India, another massive nation trying to grow into the first world, gets about three-quarters of its power from coal-fired plants, and is planning to build more, because for India coal is cheaper than any other energy source, and India too is not going to stop industrializing just to please those of us in the wealthy first world.

These two examples are just the tip of the iceberg when it comes to discussing what would really be needed to reduce global greenhouse gas production. But let’s just look at our own country, since we are in fact the second highest producer of greenhouse gases (15% of global CO₂ emissions). Transportation accounts for 29% of that, electric power generation for 28%, and industry for 22%, with smaller amounts for other sectors. So let’s start with transportation.

Electric vehicles are the current fad among the well-off (the rest can’t afford them). Of course there is a dirty little secret about electric vehicles that is usually ignored, and that is that the power to charge their batteries comes from a power plant somewhere, likely burning coal, oil or gas (currently about 65% of US power), in which case the electric car is a worse polluter than a gasoline-powered vehicle, especially if one factors in the ~10% power loss in transmission, and the ~10-15% loss in the battery charge/discharge process. And it has incurred the enormous environmental impacts engendered by mining the lithium and cobalt needed in its batteries – but that all happens in other nations, so we can pretend it doesn’t matter. And we are conveniently ignoring for the moment the enormous problem we will have when all those batteries reach end-of-life and need to be disposed of safely or recycled, with no infrastructure in place to do either.

In fact, all electric vehicles do is shift energy use out of the transportation column and into the electricity-producing column. They do nothing to reduce total energy use, and reducing total energy use is the only thing that will really reduce CO₂ production.

No, if we really want to make a dent in the CO₂ produced by transportation we simply need to stop traveling so much. That means the well-off (that’s us!) need to stop flying off to Florida to board a cruise ship, or flying to Europe to sightsee, or driving off on a whim to visit distant relatives. That means CEOs and the really wealthy need to stop using their private jets (a person in a private jet emits up to 20 times as much CO₂ on their trip as taking a commercial flight), and give up their yachts. The irony of John Kerry, climate change advocate, flying alone in a private jet to Iceland in 2020 to receive an award for his climate change efforts, is obvious.

Lots of luck getting Americans to stop traveling and give up their love affair with cars. For that matter, most of the country outside of city centers is built around car travel – if your supermarket or job is 5-10 or more miles away, as it is for most people, how are you going to survive without a car? What are the odds we can get everyone to use bicycles? What would be the cost of completely redesigning all of America to put most people within walking distance of their stores and jobs, or even of building and maintaining enough public transportation to reach almost everyone, including in the suburbs and rural areas? Get real!!!!

Then there is all that wonderful stuff in the local supermarket and delivered to our doorstep from Amazon. Ever thought about how it gets to you? Or about all the shipping involved in the supply chain that grew or made it? It’s lovely to get out-of-season fruit from our local store, or wonderful butter from Ireland or lamb from New Zealand or steaks from Idaho or cheese from Wisconsin or almonds from California. It’s wonderful that Amazon can get my latest computer accessory (likely made and shipped from China) to my door in two days. But all of that required shipping. Think we can get Americans to accept supermarkets that only contain locally-grown foods and stores that contain only locally-produced items? Not likely!

Again, that’s just the tip of the iceberg for transportation. The implications are much more far-reaching and complex. For example, we haven’t even touched on the disruptions in the job markets or the economy that such changes would product, nor the political backlash that those disruptions would drive.

Now let’s consider electrical generation (28% of US CO₂ production). The current fads in this field are for wind farms and solar panels, and there are companies with good lobbyists and political connections that are making a lot of money from these fads. President Biden seems especially enamored of them, as was President Obama. (Trump ignored the whole issue, perhaps because he didn’t own any companies in the field). But the reality, as is so often the case with initiatives driven more by ideology than by economics, are proving not to be as rosy as promised by the hype. The current generation of wind farms are proving to have more downtime and more maintenance costs than expected. For example, the blades, made of fiberglass because of their immense size, turn out to be more fragile than expected.

Globally, Germany has made the largest investment ($100+ billion thus far) in these innovations, and to date their CO₂ production has changed little because of the low-grade and heavily-polluting lignite coal they are needing to burn to fill in for the failure of their renewable energy systems to provide 7/24 grid stability (though the COVID shutdown helped their statistics a bit temporarily), but their electricity prices (~30 cents/kWh) are about 50% higher than the EU average.

A recent study in England revealed that for UK offshore wind farms, the operating costs exceeded the revenue (without subsidies) by the end of the first year, and got progressively worse as time went on. One might think newer generators would be more reliable than older ones, but in the UK at least, the newer, larger wind turbines have a higher failure rate than the older ones.

In the US we have already exploited almost all the good hydroelectric sites. If we really wanted to reduce our CO₂ from electric generation we would build more nuclear power plants. The current generation are much cheaper to build and much safer. But the American public has an irrational fear of nuclear power, even though the deaths worldwide from nuclear power accidents (including even Chernobyl) are many orders of magnitude less than from polluting hydrocarbon-burning power plants. Even the hyper-vigilant Sierra Club recognizes that.

But again, if we really want to make a difference we simply need to use less electricity. But we have built a whole national infrastructure based on the profligate use of electricity. Indeed, it is one of our major vulnerabilities. Think about what happens when the electricity goes off. We can’t heat or cool or light our homes and offices. We can’t run our computers, which closes down most businesses. Our phones don’t work. Most industrial processes shut down. In a supermarket we can’t even buy stuff “manually”, because only the computer knows the price of each item (and most clerks these days couldn’t add up the bill and tax without a computer anyway). We can’t even charge up our lovely new electric car! But then we couldn’t gas up our old gas-guzzler either, because the pumps at the gas station that pump the gas from the underground tank are electric!

So now think about the implications of drastically reducing our electricity use. This is more than just swapping out our old incandescent light bulbs for LEDs (though that is worth doing).  Forget about bitcoins (bitcoin mining uses more energy than all of Argentina). Forget about streaming movies or social media or roaming the internet or using your cell phone or ordering from Amazon (the server farms that support those services use more energy than all of Great Britain, including Scotland, Wales and Ireland). Set your air conditioning to 78º and your electric furnace to 55º.  And figure that most things that you buy will cost a lot more, because the industries that make those things will have to cut way back to save power, so the supplies will be limited. Oh, and food will also cost a lot more, because producing the fertilizer and pumping the water that makes our farmers so efficient takes a lot of electric energy.

If anything, the implications of significantly reducing our use of electric power are even more far reaching than in the transportation field. What are the odds that Americans, spoiled as they are by their first-world amenities, can be persuaded to make these changes?  

I could go on. In agriculture, for example, we really ought to all give up eating meat, whose production uses an enormous amount of energy as well as increasingly-scarce water. And we ought to stop making things out of plastic, which by the way is poisoning the earth as well. And we ought to repurpose old buildings instead of building new ones, because concrete and steel and aluminum production use prodigious amounts of energy. But you get the point – significantly reducing CO₂ production will take a lot more than the few current fads being pushed by politicians and activists, and will face massive cultural resistance.

That isn’t to say that we ought not to do these things, just that it will be a lot harder and far more disruptive than the naïve politicians and activists seem to realize. And I seriously doubt (a) that countries like China and India can be persuaded to give up their dreams of reaching first-world status, and (b) that Americans, especially the very well-off elites who are the loudest activists for climate change (and the heaviest users of energy), can actually be persuaded to give up their toys and their amenities. Al Gore won a Nobel Prize for his climate change work, but his main house in Nashville (he has three) uses as much electricity as 34 normal homes. Just heating his swimming pool uses as much electricity as 6 normal homes!

Bill Gates, in his recent excellent new book on climate change, How to Avoid a Climate Disaster, pins his hopes on technology.  Technology can certainly help, but I doubt it will be enough. To make a real difference will require fundamentally changing the culture worldwide, and that is a lot harder, especially when the climate activists and politicians seem to be so naïve about what is really required.

In the end the fact to most nations (including the US) are depopulating themselves right now may make the biggest difference. Less people is, at least potentially, less energy use.  

Is hyper-inflation a real worry?

Starting with the administration of George W. Bush successive administrations of both parties (Bush, Obama, Trump) have incurred increasingly large federal deficits. Bush added $3.3 trillion to the federal deficit, Obama added another $6.8 trillion over his eight years, Trump added almost as much, $6.6 trillion, in just 4 years, and now the Biden administration has proposed adding another $6 trillion or so just in his first year. Meanwhile the Federal Reserve has been printing (or its electronic equivalent) new money at a great rate.  Should we be worried? Will this bring on hyperinflation?

Well, the Fed chairman says no. Yes, he says, there might be a slight “temporary” uptick in prices reflecting pent-up demand after the COVID lockdown, but not to worry. The Fed, he says, is sure that things will settle down shortly and inflation will surely stay around 2% or just a bit more. Should we believe him?

Warren Buffet, speaking at this year’s shareholder’s meeting, says inflation is already here. He sees it every day in the prices of his companies’ raw materials, and says we ought to worry about it.

Dr. Michael Burry, who so accurately predicted the 2008 meltdown (and made a fortune for his investors by betting against the “common wisdom”), is similarly pessimistic and has been saying so in his Twitter account, citing a great deal of historical data to support his contention. The feds were so worried that his twitter messages might affect the market that they asked him to get off of twitter, which he did.

Dr. Nouriel Roubin, who also famously predicted the 2008 crash (and was ridiculed at the time as “Dr. Doom’ for his pessimism), also says we are headed for a world of hurt.

A number of others, most with somewhat less impressive credentials, have also been warning about impending fiscal catastrophe from the massive and growing debt, and the Feds money-printing spree, but then there are always doomsayer around, so it is hard to know how to evaluate this.

So how about looking at hard data instead of just opinions (hard data? What a concept!). First, what about the claim that the Fed has been “printing’ enormous amounts of new money. Here is a current chart of the M1 money supply from the Federal Reserve itself, from Jan 2016 to the present. As you can see, about 35% of the money now in circulation has been created just since February of 2020. That’s a lot of new money to have “printed”.

Inflationary pressures typically move through the economy like a pig through a python, starting with basic commodities and moving through the supply chain to eventually raise the price of finished goods.

So how about commodity prices? Here is a chart of the price of lumber (per 1000 board feet). Framing (with wood) makes up about 20% of a new-house cost. Builders estimate that the recent rise in wood prices just to date will add about $35,000 to the price of an average new house.

Here is a chart of steel prices over the past year:

Here is the price of Lithium Carbonate over the past year, critical in making the electric car batteries of which Biden is so enamored:

Here is the price of cement, critical to most construction, over the past year:

Looks to me like the data support Buffet, Roubini, and Burry’s worries.

Thinking about money

The Biden administration is on track to generate the largest federal deficit, as a percentage of GDP, of any American president in history. Besides the $1.9 trillion in COVID relief just passed, the administration proposes about another $4 trillion in new infrastructure and social spending, on top of the government’s normal operating expenses (about $4.8 trillion in 2020), all essentially without raising taxes. Yes, I know there is a proposal to tax the rich and corporations more, supposedly enough to pay for all of this, but by the time the lobbyists and the corporate accountants and the tax lawyers are through this is not likely to happen. As it is, 90 of the largest U.S. corporations don’t pay any taxes today, despite the supposed 21% corporate tax rate, and most of the really wealthy also have lots of legal ways to shelter their income.

And in any case, if we confiscated ALL the income of the wealthiest 1% it would hardly make a dent in the deficit (do the math; it is revealing). And corporate taxes in any case currently make up only about 7% of federal income, so even doubling it doesn’t make that much difference. So in the end most of this additional spending will almost certainly just add to the federal debt, currently at about $28 trillion, already more than the nation’s annual GDP (about $21 trillion in 2020).

And this fiscal deficit is actually minuscule compared to the unfunded (and off-books) obligations the U.S., government already carries for Medicare and Social Security and federal and military pensions, a total estimated to run somewhere between $100-250 trillion, depending on what assumptions one makes about future growth rates, demographics, and trends. By comparison, the federal government’s total annual income is only about $3.5 trillion, clearly nowhere near enough to ever pay for these unfunded obligations.

All of which makes me think about the nature of money.

Bitcoin and its other digital cousins (Dogecoin, Ethereum, etc) are an interesting phenomena. They are currencies backed by ….  absolutely nothing! In essence they are like the emperor’s new clothes. They have value as long as, and only as long as, everyone agrees to pretend that they have value. Yet speculators are bidding up the price of these currencies to astronomical heights.  That certainly sounds like a crazy scheme to me.

But wait a second. The American dollars is also backed by ….  absolutely nothing! Oh, not quite nothing. It is backed by “the full faith and credit of the American government”.  But what exactly does that phrase mean? If I loan the US government some money (which is what I do when I buy a treasury bond), what exactly does the government’s “full faith and credit” actually mean? It means they promise to redeem my bond when it comes due with US dollars, which they can always do because they can always print (or its electronic equivalent) more dollars. But the dollar is actually not backed by anything either. So like bitcoins, this system works as long as, and only as long as, everyone agrees to pretend that the emperor actually has clothes on – so long as we all agree to pretend that dollars have value.

In fact, the government “prints” new money all the time. About 35% of the dollars currently in circulation have been “created” by the Federal Reserve over the past 12 months (the fancy euphemism for this is “quantitative easing”, which sounds ever so much more sophisticated than just “printing more money”). In theory I guess the government can always pay off its debts, however large, by just “creating” new dollars – electronically adding a few zeros to the balance. Does this worry you? It worries me.

The danger then isn’t that the government won’t have the dollars to pay off its debt – they can always print more dollars. The danger is that people will decide the dollar isn’t worth that much any more in purchasing power (that’s called inflation). And in fact, if one studies history there are a whole string of nations and empires that overspent, accumulated great debt, and then failed when their currency as a consequence became essentially worthless. Apparently, US politicians don’t study history, and neither do voters.