Monday, July 27, 2009

By Light of the Midnight Sun

There are strange things done
in the midnight sun
-- Robert W. Service, The Cremation of Sam McGee

When my wife and I took a 25th-anniversary trip to Iceland last week, I wasn't planning to blog about it. But once I got there I found that this 300,000-person country embodied a lot of the issues of the larger world in miniature: alternative energy, the financial crisis, localism vs. globalism, and so on. (And yes, I know I'm exaggerating about the midnight sun. The Arctic Circle only touches Icelandic territory on Grimsey Island. So what I was seeing in Reykjavik was only midnight dusk.)

In this week's Sift:
  • The Global Energy Solution Might Be Local. Iceland has its post-fossil-fuels energy future well in hand. But what does that mean for those of us who don't live on top of a volcano?
  • An Economy in the Kreppa. Iceland had the mother of all banking collapses, and the government wasn't big enough to bail it out. Like our banking collapse, a few people got very rich off of it. And Iceland's government, like ours, isn't eager to investigate its financial power elite. But maybe it's going to happen anyway.
  • How the Republicans Could Come Back. Didn't they used to be the party of small businessmen?
  • Late Summer Reading. David Liss' novels are a way to get an education in spite of yourself. And Peter Abrahams' Echo Falls mysteries fix something that's been bugging me ever since the Hardy Boys.
  • Short Notes. The free market can't fix healthcare, and a big dose of insurance-company money could keep Congress from fixing it too. Pat Buchanan's white male pride. Jon Stewart skewers Lou Dobbs. And more.

The Global Energy Solution Might Be Local
Iceland is a good example of a point I've made before: When people talk about the future of energy, they often frame the question in a way that assumes there's going to be a single answer: Oil is going to be replaced by X, where X is wind or solar or nuclear or some new technology that will let us burn currently dirty or inefficient fossil fuels (like soft coal or tar sands) without wrecking the climate. But rather than one big answer, there might be a lot of little answers depending on local conditions: wind in the Dakotas, solar in Arizona, hydro in Quebec, and
so on.

Well, Iceland has almost no oil to speak of. In fact, the country has been energy-poor for centuries, because they have almost no coal and almost no wood. (Here's a joke I heard: What should you do if you're lost in an Icelandic forest? Stand up.) In a cloudy country that is dark for
weeks at a time, solar is going nowhere. The wind is pretty stiff, but I didn't see a single windmill the entire week. But they do have plenty of underground heat. As Popular Science puts it: "The island is basically one big volcano." And so today, Iceland is starting to think of itself as an energy-rich nation.

In Reykjavik, for example, nobody has a hot-water heater. Or rather, everybody shares one big hot-water heater under the nearby mountains; they pump fresh water down near the magma, let it heat up, and then send it throughout the city in insulated pipes. As a result, everybody's shower smells a little like sulfur. But they don't care, because the hot water is cheap and you never have to worry about your roommate using it all up. (Fortunately, the smell doesn't stick to your skin.)

And you know how most fossil-fuel power plants make electricity? They burn fuel to produce steam, then use the steam to push a turbine. Well, in Iceland you don't have to burn anything to get steam; you just stick a pipe into the ground. So they're well on their way to being self-sufficient in electricity -- at less than half the cost per kilowatt of the other Nordic countries. The only thing they're lacking is transportation fuel, and there's a proposed solution to that too: hydrogen.

The big difference between hydrogen and oil is that there are no hydrogen wells. Making hydrogen requires applying energy to some compound -- like water -- that contains hydrogen. Then you can transport the hydrogen somewhere, burn it, and get your energy back. So hydrogen is more like an energy transmission and storage system than an energy source. You can't, for example, run a car on magma. But if you have magma and lots of water -- which Iceland does -- you can make hydrogen and run a car on that. So far they're at the prototype stage: Some of Reykjavik's buses run on hydrogen, and they've got a prototype fishing boat as well. They're talking about having a "hydrogen economy" by 2050, but the recent economic troubles may have set back this goal.

All in all, Iceland is a happy example for the future of energy. But it's not a one-big-solution: Geothermal energy is never going to light up Times Square. On the other hand, if you're another fossil-fuel-poor island with volcanoes -- Hawaii and New Zealand pop to mind -- Iceland gives you a lot to think about. And even if you don't have volcanoes, you need to look around and say, "What do we have here?"

An Economy in the Kreppa
"Last September somebody stole the economy," our tour guide joked, "and they haven't found it yet." The Icelanders have a name for this: the kreppa. Like a lot of words in Icelandic, just saying it evokes the appropriate tone of voice. Kreppa literally just means crisis, but it rolls off the tongue with a disgusted sound reminiscent of "Oh, crap." English terms like recession or depression just can't capture it.

No first-world country got hit by the economic crisis as suddenly and extremely as Iceland. The industrial revolution didn't really make it to Iceland until the 1960s; museum pieces from the 1950s look a lot like American museum pieces from the 1800s. But they hit the ground running and before long established one of the most affluent societies in Europe. In 2007 they passed Norway to take the top spot on the UN's "best country to live in" list.

Unfortunately, a lot of Iceland's apparent wealth was based on easy credit and a massive deregulation of the banks in 2001. In October The Guardian quoted an Icelandic chef:
When everyone was extremely rich in Iceland - you know, last month, it was with money that they never have earned. Now those who were extremely rich are just normally rich, but they think they are poor. They were spoilt, spending billions.
An auto salesman explains how it worked.
Customers would come in and we would apply for credit online for them, a 100 per cent loan, and they can drive away in their new Range Rover. It took ten minutes, it was very easy. But 60 to 70 per cent of those loans were in foreign currency, Japanese yen or Swiss francs, and they have gone up 90 per cent as the krona burns. A car worth 5 million krona now has a 9 million loan on it; how are people going to make those payments?
You can make a public morality play out of this, just as people do here. But there's also a private corruption angle -- just as there is here. Kaupthing, their biggest bank, loaned its officers huge amounts of money to buy Kaupthing stock -- and apparently forgave a bunch of those loans just before everything blew up. IceNews outlines a complicated arrangement that allowed a banker to build his dream house with other people's money and keep it after everything went bust.

And there's a bailout. The Icelandic government -- supported by only 300,000 people, remember -- has wound up holding a huge amount of debt. The natives are unhappy, to say the least. After an initial investigation that has been characterized as "a joke", officials imported an experienced fraud investigator from France.

In the background of all this is the proposal for Iceland to join the EU and start using the euro instead of the krona. Iceland has submitted its application, and the EU is likely to jump it ahead of various eastern European candidates. But it will be interesting to see how the Icelanders vote. Iceland's people would be less than a tenth of a percent of the population of the EU. And while Iceland's society is very European in terms of laws, markets, education, social services, and so on, the island also has a strong local pride. They identify with their Viking heritage. They take great pride in their language, which is so close to Old Norse that their schoolchildren can still read the ancient sagas in the original. It would be easy to imagine all that getting swamped in the vast mass of the EU.

How the Republicans Could Come Back
The tour guide I quoted in the last article was actually more than that: He also owned the tour bus and drove it. In other words, he was a small businessman -- the kind of person who used to be the backbone of the Republican Party in the US.

He told stories about corrupt politicians, the kind of stories that are amusing, but also make a person skeptical of government and government programs. He mentioned sensible things that Iceland does that it will have to stop doing if it joins the European Union -- because the one-size-fits-all regulations that come out of Brussels don't take Iceland's specific situations into account. He joked about avoiding taxes -- clearly he thought it was OK if you could get away with it, a sort of contest between the government and its citizens.

But he also expressed some satisfaction in paying taxes, because in a small country like Iceland you can see exactly where the money goes. He took pride in the services that Iceland provides for it's citizens: its healthcare, its education, its world-leading geothermal energy policy, and so on. It was clearly important to him that Iceland isn't some little backwater country where beggars collapse in the streets or desperate teens are forced into prostitution. I didn't hear him express
any social hatred -- no racism or sexism, no resentment of the unemployed or people of different religions or lifestyles. He seemed as skeptical of bigness in business as bigness in government. He thought that "about thirty people" profited hugely from the events that led to the kreppa, and they weren't heroes to him.

Here's what I found striking: In America, I used to hear this point of view all the time. The pre-Reagan Republican Party had a strand of enlightened conservatism -- people who shared progressive values, but doubted that government was the right vehicle for achieving them. Like small businessmen, they were pragmatic and evidence-based. They believed in budgets, and were against spending money just to "do something" about a problem. But if a program worked -- as, say, the FDIC or Social Security proved to do -- then they were for it, even if it wasn't something they would have designed. Socially, they saw the costs of change sooner than its benefits, and that made them generally support the status quo. But once change arrived, they were quick to accept it as the new status quo. They didn't march in Selma for civil rights, but afterward, why would they want to go back to Jim Crow and give up their black customers? They hadn't been feminists, but if a female-led business provided a good service at a good price, what was the big deal? And if that new immigrant with an unpronouncable name turned out to be a hard worker, hire his cousin too.

You can still meet people like that in the United States, but you never see them on political talk shows. The Republican Party does not represent them any more, so they are basically voiceless in American national politics. Today the Republican agenda is set by large corporations, militarists, the very rich, and evangelicals -- not small businesspeople. Republican positions on the major issues are ideological, not pragmatic. (Imagine one of today's Republican leaders saying, "I was against gay marriage at first, but they've been doing it in Massachusetts for a while now, and it seems to work OK." Not gonna happen.) Some Republican positions are just corrupt, like taking Exxon's view of global warming or Cigna's stand on healthcare. And if the evangelicals are against teaching evolution, well, who cares where our next generation of biologists will come from?

Every few days I see another article or TV segment about how to rebuild the Republican Party. To me it seems simple: Become the party of small business again. And I don't mean "Say nice things about small business" or "Have big corporate shills use small-business words to frame their global agenda." I mean, give real power to the kinds of people who run small businesses. Be pragmatic and evidence-based. Stay close to your communities, and listen to what the customers and employees are saying. Keep a budget. Be honest about what things cost -- even wars. Recognize that everything has to be paid for, but that some things are worth paying for.

I'll give you an example. My favorite part of The Omnivore's Dilemma is the chapter Michael Pollan spends with a Virginia farmer who has completely thought through the ecology of his particular 400 acres. The farmer slaughters chickens for his customers, but government health regulations make it completely impractical for him or any small consortium of his fellow farmers slaughter any larger animals. It's a bad joke, because the small-farm meat is much healthier than what you can get from a big packing operation. But think it through politically: Democrats represent the regulator's point of view; Republicans represent the big meat-packers who don't want competition. Nobody represents the small farmers, or the customers who want to buy from them.

Speak for that guy, Republicans. That's the way back.

Late Summer Reading: David Liss and Peter Abrahams
One effortless way to get a better, more intuitive understanding of how the modern world works is to read historical novels about how it got to be this way. That's the speciality of David Liss, whose novels are full of interesting characters, suspense, intrigue, an occasional murder -- and fascinating insight in some of our more mysterious institutions.

The Coffee Trader is set in the world's first modern commodity exchange: Amsterdam in the mid-1600s, the time when European society was just finding out about this strange new beverage from the Ottoman Empire. This was the first time in history when a class of people made their living by trading pieces of paper -- promises to deliver commodities rather than the commodities themselves -- and a lot of the market manipulations thatare still in use today were brand new.

The Whiskey Rebels
is set in the new United States of 1791-92, a period of wrangling about what this new nation would be about. Was this really going to be a place where all people -- or at least all white male people -- were equal? Or was it going to be England all over again? The conflict was symbolized by Treasury Secretary Alexander Hamilton's favorite child: the Bank of the United States. Liss' plot revolves around a conspiracy to bring down the bank and get revenge on Hamilton for his pro-big-money policies. All the arguments about the government bailing out undeserving speculators happen in their original and simplest form -- at a time when you could go down to the Treasury Secretary's office in Philadelphia and wait until he had time to see you.

Peter Abrahams is fixing a mistake that has dogged teen detective novels since the days of the Hardy Boys and Nancy Drew: the fictional teens are just way too focused. Abrahams' 13-year-old detective Ingrid Levin-Hill is more like the teens I know: pulled in a hundred directions at once. She wants to get a part in the community theater play, her soccer team is starting the play-offs, there's a boy who seems to like her, her older brother's a jerk, her math teacher hates her, the richest family in town wants to push her grandfather off his farm -- and oh by the way there's a dead body that she knows something about and is afraid to tell the police. Maybe she'll just have to solve the mystery herself, in between practices, rehearsals, and pop quizzes.

Abrahams has written three Ingrid novels so far (the Echo Falls mysteries), and they all get their titles and themes from the plays Ingrid is trying out for. Start with Down the Rabbit Hole, where she wants to be Alice.

Short Notes
Paul Krugman lends his Nobel-prize-winning economic authority to the same argument I was making a few weeks ago: The free market can't solve healthcare.

Conservatives swear up and down that they're not racists. But somehow they can't stop doing stuff like this. And when it blows up in their faces, they portray themselves as the victims. Oh, the poor conservatives! Evil liberals call them racists when they're being racists. It's so unfair!

In a discussion with Rachel Maddow about the whiteness and maleness of the Supreme Court throughout our history, Pat Buchanan expresses his white male pride: "White men were 100% of the people who wrote the Constitution, 100% of the people who signed the Declaration of Independence, ..."

It's weird how different these same facts look if you change your perspective: Everybody but white males was locked out when the ground rules for our country were being written. I love the Constitution as much as anybody, but it's not a source of white male pride to me that we didn't let anybody else participate. And I have to wonder what else I'm supposed to be proud of. I mean, we really kicked those Native Americans' butts. And did you see Hiroshima when we got through with it?

Trust Steven Colbert to give Buchanan's outburst the respect it deserves.

And Jon Stewart skewers Lou Dobbs for indulging the Obama-birth-certificate nonsense.

Independent of what? During the healthcare debate, Republicans in Congress have been quoting numbers from the "nonpartisan" or "independent" Lewin Group. Lewin, it turns out, is a wholly owned subsidiary of UnitedHealth Group, an insurance company.

And those blue-dog Democrats who are dragging their feet about passing a healthcare plan? They're being well paid for their efforts.

What if you could ignore the political reality of vested interests and their lobbyists, and could just design a healthcare system that works?
A lot of journalists have eulogized Walter Cronkite recently. But Glenn Greenwald is the only one I've heard make this point: What we admire about Cronkite is completely absent in today's major-network journalism. At certain key moments in his career, Cronkite told the public that what the government was saying wasn't true. Today's network journalists don't think that's their job.

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