Category Archives: Social Issues

Thoughts on the Panic of 2008

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While the congress and the various media are grinding their battle axes and taking swings at each other, I hope that we all remember that the absence of suitable regulations on the financial markets is really not the cause of the Panic of 2008. The cause of this trainwreck can be found in the practices and mindsets of certain elite players in the market. This is a pathology of the marketplace, our culture, and ultimately, of human behavior.  

Blaming government for the excesses of the market is like blaming your doctor for your riotous and drunken merrymaking.  In the end, the participants in this orgiastic financial frenzy should be called to account for themselves in front of something like an angry mob. The rest of the herd needs to cull the troublesome members, either through the courts or through social stigma like excommunication or shame.

Obviously, the government was asleep at the wheel in its regulatory duties. But to some extent it was plainly maneuvered out of the way of Wall Street.  While we are hurling epithets at congress, we should not forget that the boards of directors and executives of the troubled corporations have neglected their fiduciary responsibilities to the shareholders. These are the same smug bastards who will hammer you if you miss a mortgage payment. Surely they should be held to a similar accountability as a mortgagee.

As long as we are considering accountability, the show business component of this is the broadcast media (the Fourth Estate). The commercialization and show business aspect of news reporting can only lead to structural biases that favor the needs of the corporation. If news and commentary is regarded as entertainment (ie., Mad Money, Rush Limbaugh, etc), then it is inevitable that it will be conducted like any other carnival enterprise- it becomes a traveling freakshow meant to attract the eyes of a gawking but uncritical public.

It is not in the nature of corporate governance to accept divisions that are not profitable. Important but dry news will be replaced with anything that meets the definition of “compelling”.  Panem et circenses. Celebrity becomes a credential and the drama of controversy becomes more important than the particulars of the case.

If the information feedback loop to other members of the marketplace is filtered by self-serving players, then the equilibrium is fundamentally shifted in favor of the owners of the filter. Inescapably, the broadcast media are part of this whole Panic phenomenon.

UnaTed the Bomber

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An interesting piece of critical analysis of Ted Kaczynski (the Unabomber) and his manifesto can be found at The Technium. Much time has been dedicated to the pathological aspects of Kaczynski and his violent acts. But perhaps not so much energy has been expended on whether or not his writings made any sense in any context.

… the Unabomber is right that choices which begin as optional can over time become less so. First, there are certain technologies (say sewage treatment, vaccinations, traffic lights) that were once matters of choice but that are now mandated and enforced by the system. Then, there are other systematic technologies, like automobiles, which are self-reinforcing. Thousands of other technologies are intertwined into these systemic ones, making it hard for a human to avoid. The more that participate, the more essential it becomes.  Living without these embedded technologies requires more effort, or at least more deliberate alternatives.

The author points out that Kaczynski was concerned about the spread of what Jim Kunstler might call “technological triumphalism” and the lack of options we have in participation. Kaczynski was so concerned that he spent much of his life in a one room shack in the mountains of Montana.  But he did not live like a cave man. There was a certain minimum level of technology he was comfortable with.

Another person might have fashioned these ideas into the core of a brilliant academic or writing career. But for reasons or illness unique to Kaczynski, he followed a darker path by choosing to lob grenades from the margins. No matter how compelling the logic, we need to have social intelligence to temper the indulgence of violence in persuasion.

Indignation of the Self-Righteous Self-Made

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There is an undercurrent of disatisfaction that is surfacing regarding the rescue of homeowners who got themselves into bad mortgage arrangements. Talking heads like the guy on CNBC are going off about how wrong it is that citizens who were more clever about their spending habits should have to pay for the mistakes of those who made bad choices.

As a first order approximation, it is hard to argue that we should line up to provide this payout.  If you make bad judgments based on greed, ignorance, or simple miscalculation, the theory is that in an ideal free market you should be free to suffer the consequences as well as the benefits.

That’s fine. Except that we do not have an ideal free market.  In this particular bust, the risks of mortgage trading were not accurately communicated to investors or even particularly well understood by anyone. The macro effect of a large number of mortgagees who are suddenly unable to deal with a large interest rate uptick in their adjustable rate mortgages (ARM) was under appreciated by most.

Adjustable rate mortgages and the subsequent investment instruments that followed were dreamed up by somebody- but probably not by hourly workers or anyone outside real estate and finance. There was a kind of wink-of-the-eye understanding between banks, mortgage brokers, builders, and the real estate business. Not only was there the invention of the ARM and the degradation of qualification standards, there was a nationwide marketing campaign aimed at marginal buyers. This real estate boom was financed in part by mortgage instruments designed to capture marginal borrowers.

The previous owner of the home that I presently occupy was a mortagage broker who had hit the big time at the start of this bubble.  After the signatures were on paper, he told his wife that she could have the BMW that she had wanted from the equity.  Mortgage brokering was practically a cottage industry and many people were making money.

Real estate agents knew this of course. They knew that easy qualification was available and they continued to do what they always do:  push buyers into the most home they could afford.  It was a sellers market and real estate speculation was rampant. Builders were routinely putting up spec homes and selling them like hotcakes.

This is not just a problem limited to greedy buyers. A whole business phenomenon grew into being around the housing boom. Lending institutions, mortgage brokers, real estate brokers, title companies, builders, and buyers all bought into a dream built upon sand. Buyers may have been guilty of bad judgement, but it was facilitated by entire industry ready and willing to make it happen.  

So, are the angry men we see on television justified in their assertion that they should not be forced to help bail out those facing foreclosure? I suppose the position you take depends on your vision of what civilization should look like. I think  if you investigate the self-righteous self-made, you’ll find that many of them benefitted in part by the distribution of wealth at some scale. Inheritance money, Pell grants, scholarships, good mentoring, good fortune, talented parenting, and many other forms of benefit that are not necessarily distributed by bank deposit. Simple hard work is rarely enough.

The parties involved in this fiasco should bear the brunt of it themselves to a large extent. That means that lending institutions should not be entitled to the profits they were anticipating and the borrowers should not be entitled to large equity on overvalued homes. There should be suffering on the part of all participants.

Fiat Lux! Sen. Gregg’s Moment of Clarity

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Senator Judd Gregg has seen the light. He has had a moment of pure, crystalline insight and has witnessed truth and clarity unfold before his eyes.

Yeah, right.

You have to wonder what kind of pressures were put to bear on him to reject the nomination for commerce secretary. A personal call from Rush Limbaugh? A whisper campaign from conservative cells? Perhaps criticism from the official organ of GOP doctrine, Fox News, was just too much for him. Then again, he might be fickle.

This resignation reduces to one more soldier lining up in the GOP phalanx, preparing for extended battle with the Democrats. It is striking how uniformly GOP soldiers have rejected what many thought was axiomatic– that bipartisanship was, if not necessary, at least highly desirable for the good of the whole.

During the 2008 campaign, the concept of cooperation between parties was pulled frequently from its carrying case by candidate McCain and displayed like sacred icon of civics.

But McCain’s claim of bipartisanship was evidence of the true nature of his bohemian political composition. Bipartisanship and whatever civic merit it might represent is certainly not a plank in the GOP platform. Sen. McCain has shut his maverick hole and is now playing ball with his team.

Sen. Gregg will be rubbed with GOP annointing oil and when the delerium has cleared, he’ll sheepinshly fall into line with the rest.

Dooleysquatt Schwartz and Schmuck PLC

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Looks like the major law firms in the USA are pitching staff overboard. These corporate Zepplins have hit hard times as the money dries up. According to Law Shucks, this year 2,289 people have been laid off from the top tier firms as of this posting. 

It’s prob’ly a good time to getcher self a cheap deevorce, seein’s how there oughtta be a bunch’a hungry attorneys scratchin’ in the gutters.

Reactivity and Risk. Gaussling’s 10th Epistle to the Bohemians.

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A chemical plant performing synthesis is a place where the materials in use are purposely selected for certain attributes of instability. Chemical stability refers to the tendancy of a substance to remain unchanged when exposed to some kind of stimulus. That stimulus may be exposure to heat energy, mechanical shock, or a more precise chemical attack on particular functional groups. Unstable substances have a low threshold to change. Stable substances require more stimulus to cause a change in composition.

Substances that are extremely stable are often not very useful in near-ambient temperature chemical synthesis, i.e., saturated hydrocarbons, metal sulfates, silica, etc.  The lack of lower temperature reactivity (say, up to 200 C) can be compensated for by application of high temperatures. Petroleum refineries take full advantage of high temperature reaction chemistry to alter the composition of otherwise stable hydrocarbons.

We choose stable substances for duty as solvents, diluents, carriers, etc., precisely because of their non-changeability or stability. “Inert” solvents allow chemists to bring molecules into solution for selective transformations. Of course, we all know that most solvents have some influence on the course of a transformation, the point is that we can transform solute materials without the fuss of altering the solvent too.

Chemical synthesis requires the manipulation of reactivity (and therefore stability) to perform useful transformations. Without well placed instability on a molecule, there cannot be efficient, directed synthesis. It is the job of the synthesis chemist to apply the knowledge of reactivity.

Because of the inherent instability of reactive and flammable materials, chemical plants must require that certain behaviors, procedures, and knowledge be set into a formal structure. Actions and conditions must give predictable consequences. This structure is comprised of a set of standard- operating procedures, equipment, test methods, and safety requirements.

It seems silly to go to the trouble of detailing the merits of running a safe plant, but it is worth pointing out the layers of requirements on an operating plant. 

  1. Preservation of life, health, and the environment
  2. Compliance with federal, state, and local regulations
  3. To provide for the uninterrupted flow of goods and services in the conduct of business
  4. To qualify for affordable business insurance
  5. To be a good neighbor and stable source of gainful employment for all concerned

A company in the business of manufacture is exposed to many kinds of liability. A chemical manufacturing plant is subject to modes of failure and liability that set it apart somewhat. 

One result of chemical manufacture that sets it apart from other forms of industry is the combination of unknown risk and dread fear. For communities in the vicinity of chemical operations, fear comes from the combination of the unknown as new risks, unknown effects, or delayed effects with the dreaded possibility of catastrophic or fatal consequences, inequitable consequences, involuntary effects, and high risk to future generations (see: Perilous Progress: Managing the Hazards of Technology, Edited by Kates, Hohenemser, and Kasperson, 1985, Westview Press, Boulder, Colorado, p 108. ISBN 0-8133-7025-6).

While the neighbors of a furniture factory may be annoyed by the presence of a nearby woodworking shop, it is unlikely that the neighbors will be stirred into existential dread by its presence. The hazards of a woodworking plant are easy to imagine and therefore, easier to rank into the grand list of life’s dangers.

Chemical and nuclear risk perception score at the extreme ranges of risk perception. Both domains involve an agent of potential harm that is poorly understood by most people. Ionizing radiation is inherently destructive to tissues, but the exact relationship between quality and dose to risk is fuzzy at low level exposure. And because it cannot be sensed directly, fear of it’s presence can induce disturbing excursions of imagination and dread.

Fear of chemicals is widespread in the industrialized world. The downside to chemical operations has been immortalized by numerous well known industrial calamities like Love Canal (Hooker Chemical), Bhopal, numerous dioxin fiascos, PCB’s, or occupational exposure to asbestos or chromium (VI). There are a great many chemical items of commerce that are unavoidably hazardous to health.

Because of the risks associated with toxicity or exposure to hazardous energy from machines, chemicals, radiation, heat, noise, gravity, sharp implements, etc., the many layers of government have established agencies and a regulatory structure to diminish risk exposure to workers specifically and citizens generally.

The purpose of the chemical industry is to produce goods and services for people who want or need the value of it’s output. Like the ad says- “We don’t make the surfboard, we make it better”. Well, making the surfboard better inevitably requires that certain kinds of hazards be unleashed and managed. The expectation that hazardous materials can be eliminated in manufacturing is a fantasy. The manipulation of instability is inherent to chemical transformation. Zeroing out hazards has to come from the demand side of the market.

A Constitution in Need of a Few Revisions

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An article in the Alantic Monthly by Garrett Epps entitled “The Founders Great Mistake” offers some observations on weaknesses in the US constitution regarding the Presidency.  In particular –

The most dangerous presidential malfunction might be called the “runaway presidency.” The Framers were fearful of making the president too dependent on Congress; short of impeachment—the atomic bomb of domestic politics—there are no means by which a president can be reined in politically during his term. Taking advantage of this deficiency, runaway presidents have at times committed the country to courses of action that the voters never approved—or ones they even rejected.

Epps offers several examples of runaway presidency. The example of Andrew Johnson is particularly good-

Andrew Johnson was the next unelected runaway. Politically, he had been an afterthought. But after Lincoln’s assassination, Johnson adopted a pro-Southern Reconstruction policy. He treated the party that had nominated him with such scorn that many contemporaries came to believe he was preparing to use the Army to break up Congress by force. After Johnson rebuffed any attempt at compromise, the Republican House impeached him, but the Senate, by one vote, refused to remove him from office. His obduracy crippled Reconstruction; in fact, we still haven’t fully recovered from that crisis.

Epps, a law professor at the University of Baltimore, points out the origin of the mysterious electoral college-

The system that the Framers developed for electing the president was, unfortunately, as flawed as their design of the office itself. When Madison opened discussion on presidential election in Philadelphia, he opined that “the people at large” were the “fittest” electorate. But he immediately conceded that popular election would hurt the South, which had many slaves and few voters relative to the North. To get around this “difficulty,” he proposed using state electors. Electoral-vote strength was based on a state’s total population, not on its number of voters—and the South received representation for three-fifths of its slaves both in the House of Representatives and in the Electoral College.

The electoral college was merely a scheme to manipulate the weighting of ballots in states with a low fraction of voters among the population. In other words, it was a “duct tape and baling wire fix” to accomodate the slave states embarrassingly low fraction of voting adults. This antebellum artifact should be abandoned in favor of simple vote counting.

The citizens of the USA need to have a better mechanism with which to fire a President who is crooked or incompetent. The provision for impeachment carries a high threshold for activation. A president must engage in some kind of serious malfeasance to provoke the congress to vote for impeachment. But the application of this provision has been very nonlinear. Clinton was impeached for lying about consensual sex. Bush arguably lied or at least tolerated falsehoods leading to the invasion of Iraq and the resulting civil war with tens of thousands of deaths. Depending on the congress for an even application of its powers is a sketchy proposition.

The framers of the constitution did not anticipate the situation where an incompetent president might be elected by “low-information voters”.  A government that has usurped the consensus of the electorate and is allowed to remain in play because of a fixed period of tenure is a government that serves only itself.  This is wrong and we should not stand for it.

Chemist Alert! NFPA 400 to be posted in May 2009.

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The National Fire Protection Association (NFPA) is an international nonprofit organization dedicated to the prevention of fire related incidents. The have recently pitched a set of regulations as NFPA 400 pertaining to the storage of hazardous materials. The comment period is long over and soon the rules will be issued as a published document.  While the NFPA is not a regulating body, their rules are widely adopted by government organizations and promulgated.

If you have not taken the chance to review some of these documents, it is well worth your time as a chemical professional to do so. Why? Because the practice of chemistry is being dramatically necked-down in terms of the kinds of chemistry that can be practiced and the manner in which materials are stored. Not only is your local fire marshal packing a stack of NFPA based fire codes, but a whole host of federal regulators are armed with regulations from Homeland Security, EPA (i.e., TSCA), DOT, REACH, and an alphabet soup of regulatory coverage aimed at every conceivable substance.

Organizations that oversee chemical operations include the chemical industry, hospitals, agriculture, mining, and academia. All organizations are under the obligation to provide a safe workplace for the employees. It makes sense to minimize employee exposure to risk. But the web of applicable regulations for any given chemical operation is expanding by the day.

Not only is an organization obliged to conduct business in compliance, but quite often there is the requirement of self-reporting of noncompliance. An organization finding itself out of compliance is an organization in need of legal representation. The nuances relating to most any kind of regulation are such that your average company president will generally be unwilling to settle the malfeasance with the regulatory agency without the help of an attorney. This is the point where a jet of cash starts flying out of the company coffers.

So, the question of the effect on academic chemistry arises.  Academic chemistry departments are seeing increased coverage under the regulatory umbrella as well. Should academic research labs have some sort of dispensation given the nature of the activity? Given that OSHA regulations may not be applicable to students, academic labs are already under somewhat less scrutiny. More to the point, how much government intrusion should researchers accept in relation to the kinds of chemicals they work with and store and the kinds of risks that are taken during research?

This is important for a very good reason. The issuance of proposed rules by organizations like NFPA results in regulatory pressures that eventually find their way to individual researchers. But the researchers don’t hear about it directly from NFPA. The University Health and Safety department hears about the regulations (or guidelines) and they apply requirements on chemistry departments. Faculty being faculty, they’ll perform a gritching ritual and eventually comply.

Generally, the arrival of new regulations results in new constraints. The end result is that the department has to spend more to operate the labs and students receive less experience with interesting chemistry. This whole unfortunate trend of increasing government oversight of all things chemical will eventually neuter US chemical education and industry leaving a bland and uncompetitive culture averse to risk.

I hate to be critical of fire safety people. But I also hate to see chemical education and research hamstrung by well intended parties who have devised highly detailed and extensive rules that will seep into every aspect of the chemical sciences. I am aware of absolutely no pushback of any kind when it comes to this matter.

Empty Seat on the Carbon Bandwagon

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Sometimes it is best to simply shut up and link to a superior post. This is such a time. In a recent posting, one writer, Harold Ambler, comes out against Al Gore in the global warming debate. While I am skeptical about his assertions on the effect of the solar flux on the earths geomagnetic dynamo, I think Ambler otherwise brings together quite a few good points I have seen elsewhere.

The ticket to my seat on the carbon bandwagon will soon post on Ebay.

Microsoft finds new method to deposit eggs in host

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A Microsoft patent application claiming pay-as-you-go computing has appeared. The claimed method will apparently allow you to pay for only the capacity and tools that you select. A commentary can be found on ars technica.

Imagine being a lab rat and watching the lab tech prepare a new type of surgical device for use on you. That’s about how I feel right now after hearing this news.