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Culture War Roundup for the week of July 17, 2023

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There is something I really like in this Ygeslias article. Whatever is causing more partisan politics it’s not the economy. We’ve done well the past few years.

https://www.slowboring.com/p/how-obama-and-trump-and-biden-beat

  1. Macroeconomic management has been actually really good the last 15 years. Someone can argue we could have had a few million more people employed between 2010-1016, but that’s like 2% of gdp. Trump did close that gap and I’m not sure if he was brilliant or lucky but he yelled at the Fed for being too hawkish.

  2. I like how he led with the shale Revolution. I’ve been saying this for years. Tech gets all the fan fare but if Tech was the Jordan of the economy American energy independence over this time frame was the Scottie Pippen in creating wealth for America. I think part of the reason it doesn’t get the fanfare is because it doesn’t create 12 figure networth people. Its a constant costs business versus moat building business. Of course if the businesses are not as profitable then the surplus value went to consumers in the form of lower energy costs versus companies having high margins. Also likely led to America not needing to write giant checks to the Saudis which meant our trade deficit could fund other things and those depend more on price leading to the strong dollar. People working in constant-costs businesses (farming, manufacturing, energy) tend to vote red; people working in wide moat with ability to extract economic rents or winner take all markets tend to vote blue. Someday I should write a long article on this because I have not seen anyone write about it. But the split in voting patterns makes a lot of sense based on the economics of their business. It would even make sense to have different tax regimes for these businesses but would be impossibly hard to execute. As a driver of political views it seems as powerful as male-female splits which seems a lot more talked about.

  3. I think maga and the left like to cite American wealth not making it to the middle class etc. But honestly this much wealth creation can’t just be consumed by the 1% it pretty much has to flow to others. Perhaps, the middle class isn’t doing as well as we want them to be doing but the counter factual (Europe) would be poorer than what we got.

  4. The GDP numbers are more pronounced because we calculate things in currencies and the cited figures were when the dollar was weak. The gap has definitely shifted in favor of the US but I do think this overstates the change.

  5. The Tea Party seems underrated to me. They put a halt to more government spending. Less fiscal policy meant the fed could keep rates lower which basically crowded-in private investment in tech and shale and a host of things with cheap money. The current situation is the opposite of this where we increased federal spending from about 20.5% last decade to 24% now. And that’s caused a massive change in rates to get inflation close to target.

  6. Culture Wars seem to have little to do with economic mismanagement by either side. I think the right is correct that the fall of small towns is bad but I think that largely came from economic forces (like productivity) gains that couldn’t be prevented. And there small towns have also been hurt by the people (probably like myself) who would be logical local elites moving away.

  7. As much as national divorce or something always sound appealing it’s just going to make us all poorer. To break up economic integration would make our economy much more like Europe. We would run into something like Brussels that is ineffective at macro management and lose the economy of scale.

Shale was a major mistake by the US. Shale oil is short lived compared to conventional oil with high decline rates and is expensive to extract. The shale boom will not be a long term solution. Shale caused a 10-20 year boom which will be followed by a decline. Meanwhile, the US is missing valuable years transitioning away from fossil fuels. The world is building public transit and high speed rail at record rates, the US is investing in short term shale oil as its long term energy solution. Cheap natural gas has allowed for construction of energy inefficient buildings and a lack of investment in efficient heating/cooling systems. The US is seriously lagging behind in walkable and bikeable cities due to cheap gas. Even when it comes to electric vehicles the US is somewhat behind

As for the energy grid, the US is lagging behind in nuclear with an older fleet of reactors than Europe and only 1 of 60 reactors planned for construction in the world are in the US. The US is lagging behind in renewables, and overall investments in the energy transition

The shale boom absolutely benefited the US. However, other parts of the world have ripped of a sizeable chunk of the bandaid regarding getting off fossil fuels.

The same entities that oppose shale also make nuclear expensive and hydro and everything. While there are some genuine green activists that would be happy with decarbonization, there are many more who use that as an excuse for the real goal of de-electrification.

As someone who considers themselves a green activist, de-electrification isn't really the goal per se.

The problem is that the cut-off date for a smooth, clean and orderly transition away from using fossil fuels is the far-off future of...1974. De-electrification isn't a goal anymore than having a car stop when it runs out of gas is a goal. There's no energy source that can take the place of petroleum and fossil fuels - nothing has the massive amounts of existing infrastructure, body of knowledge, energy density and EROEI to take their place, and the costs of retrofitting our society with the technology required to maintain current living standards with the far lower energy budget that renewables provide are so massive that it would not be possible from within the constraints of the current society.

Shale in particular is a really bad idea, because it has incredibly high depletion rates, lower EROEI than regular crude and causes substantial environmental damage. Those costs might not show up on a fracking company's balance sheet, but those consequences will show up elsewhere in society, in the form of less usable farmland, medical issues, water-pollution, etc. The main reason that shale looks good at the moment is the combination of unaccounted externalities, incredibly low interest rates/money-printing and a paucity of conventional light, sweet crude. This isn't a case of the environmentalists just wanting less electricity usage because civilisation is bad, but more along the lines of pointing out that eating the seed corn is actually a bad idea rather than a brand new strategy that older people were too dumb to see the benefits of, even if you have a new accounting system which claims that there's nothing wrong with eating said seed corn.

Even if I took all of your post as sincere and true, I'd still be running into confusion as to why the environmental movement has caused nuclear to 10x in price, inflation adjusted. The confusion isn't, "why does this particular person dislike shale?" It is, "why does the general movement of people who dislike shale also dislike nuclear?"

You appear to have a specific view on shale that is far more specific and niche than 99.99% of people who oppose shale could ever express. I like shale because it is an avenue that circumvents the anti-energy caucus for now. I am in favor of all cheap energy, hydro, coal, oil, shale, etc. As long as it foils the anti-energy people, and keeps us advancing towards a day where energy is actually sustainable, I am good. The people who think they can force it via regulation are evil or naive. So called "green" energy is already overinvested, and mostly rubbish.

Even if I took all of your post as sincere and true

For the record, I am being entirely sincere - and, to the best of my knowledge, true.

I'd still be running into confusion as to why the environmental movement has caused nuclear to 10x in price, inflation adjusted. The confusion isn't, "why does this particular person dislike shale?"

I don't believe the environmental movement has caused nuclear to inflate in price to such an absurd degree, but the position I take on nuclear is simple: show me the money. If it was possible to actually generate nuclear power sustainably and profitably, why hasn't anyone done it yet? How has the western environmentalist movement managed to trick every single government on the planet, including ones who are manifestly and directly opposed to them and the horse they rode in on? Too-cheap-to-meter nuclear power has been just a few years in the future for the entirety of my life, and it would be such a geopolitical game-changer that there's no way even the US government would ignore it. Can you honestly and earnestly say that Vladimir Putin, Xi Jinping and Ali Khamenei are all so terrified of the US environmental movement that they are turning down technology that would immediately and dramatically change the geopolitical balance of power in their favour and crush the petrodollar? The environmental movement cannot even get western governments to agree to slow down the rate of increase of fossil fuel consumption, but they have a total veto over this kind of technology across the entire world? I can't see any way to square this circle, when the answer "It just isn't economical" explains it perfectly.

It is, "why does the general movement of people who dislike shale also dislike nuclear?"

Pollution and environmental damage is the unifying concern for the "general movement" as far as I can tell. If you believe that those sources of energy are only profitable because of unaccounted-for externalities, making them more expensive via regulation et al is an extremely sensible goal, and actually optimal in the long term.

I like shale because it is an avenue that circumvents the anti-energy caucus for now. I am in favor of all cheap energy, hydro, coal, oil, shale, etc. As long as it foils the anti-energy people, and keeps us advancing towards a day where energy is actually sustainable, I am good.

This is an incredibly dangerous and short-sighted belief! How confident are you that those energy sources are not bridges to nowhere or have ultimate costs which leave us further behind? I'm extremely confident that shale in particular falls into this category - an illusion that looks worthwhile simply because the actual costs have been converted into externalities that aren't accounted for, on top of being in a financial system which distorts economic realities and conditions. I believe the rationalist community term for this concept is "deceptive local maxima" but I may have just imagined this.

So called "green" energy is already overinvested, and mostly rubbish.

Green energy is far from overinvested - hydro and geothermal in particular seem like fertile ground for future investment, but you're right that it is mostly rubbish. Renewable energy sources simply cannot provide the same amount of energy fossil fuels do, and the lifestyles they can sustainably and comfortably support are most definitely not the incredibly extravagant ones that people in first world societies currently live. But that doesn't mean they're overinvested when you view them in the proper context. To use a metaphor I've stolen from someone else, a parachute is a terrible investment. You lower the resale value the moment you get it out of the box, you're gonna have trouble using it more than once, and ultimately you're going to be losing money on the purchase. But if you're aware that you're going to be pushed out of a plane at high altitude tomorrow morning, the parachute looks like a much smarter purchase than some FAANG shares.

For what it’s worth, nuclear does push the border of too-cheap-to-meter. The cost per megawatt is pretty low, and the high cost of shutdown and spinup makes operators want to keep it running. So they tend to bid it pretty low in energy markets, roughly comparable to renewable sources. Certainly much lower than combined-cycle natural gas.

I would love nothing more than to be proven wrong on this front. Can you show me the nuclear power system that can run sustainably and profitably without government subsidies? As far as I can tell this doesn't exist anywhere on Earth, and the French nuclear system is currently being nationalised by the government due to the massive amounts of debt they had to take on (for what it's worth, I think that if a power generating system is taking on copious amounts of unsustainable debt to the point it requires nationalisation, it probably isn't very profitable).

I'd actually go so far as to say that in 2023, there are no non-fossil fuel power systems that can be run sustainably without government subsidies. And even then, governments are playing a global game where the flow of fossil fuels are tied to geopolitics.

I was working in China during the Great Solar Adoption. Endless fields of them, blanketing dozens upon dozens of factories. What they don't tell you is that photovoltaics are incredibly toxic to handle, dispose of, and manufacture, they require regular cleaning before the efficiency generation drops precipitously, they don't last anywhere near what they're supposed to and produce incredible amounts of dangerous e-waste. They were only adopted because of incredibly generous government tax benefits and subsidies, as well as awards for reaching a significant % of total power generation from solar, and kickbacks to companies manufacturing solar panels.

Current state of renewables simply don't scale, not if we want to maintain the same quality of life. Maintain, not improve. There is no solution. You can shit up people's quality of life, but you'll get pushback, especially as the shit won't be evenly applied.

Honestly the only energy sources I have hope for are geothermal and nuclear. And nuclear has a long list of caveats in that even in the face of overwhelming security precautions, black swan events can have outsized disparate impact. I hope we crack fusion regardless.

There is definitely a way to make our world much more ecologically sustainable - bomb all non-agrarian Third World countries to glass. If "degrowth mindset" is in vogue, might as well go all the way and yank the ladder out from countries seeking to take advantage of readily accessible cheap fuel to industrialize.

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