*
We dare to hope that war abates
And men cast off their precious hates.
Compassion whispers at the door,
But who can hear above the roar?
The world can’t stand another round
Of breaking up and breaking down,
So silent go, and do your chore,
Let whispers of compassion soar.
*
– November, 2008
Category Archives: Reason
Compassion
Reinventing The Canadian Automobile
Reprinted from a December 16, 2008, letter to the Canadian (federal) and Ontario (provincial) governments.
Dear Ministers:
I believe that we should spend as much as is necessary to save the Canadian automotive industry.
But not a penny more.
Any restructuring package obviously needs to make financial sense, but in the end, this isn’t just about money.
- It’s about self-sufficiency and self-reliance.
- It’s about our ability to service the changing needs of our various domestic markets through public and private industry.
- It’s about the viability of our economy during challenging economic times and its sustainability over the long term.
- It’s about being able to move people and things reliably and efficiently from Point A to Point B.
In a country as large and wintry as Canada, the argument for having an automobile is profound ~ sometimes, if only because they have built-in heaters.
If Only We Had Seen This Coming
Imagine if, being able to see this far ahead five years ago, we had instituted a Canadian Automobile Reinvention Initiative in this country. Had this initiative targeted an average 10% fuel efficiency improvement within five years, taxpayers (individuals and corporations) would have been able to retain approximately $4 billion in obviated expenses over the past twelve months. And they would save at least that much in every subsequent year – if not more, due to both incremental and revolutionary advances in technology over time. But let’s return to the present: How do you expect things will look five years from now?
Technological Opportunities
We probably can’t spend our way out of the current economic crisis, but we just might be able to invent a way out of it.
Canada has long been an exporter of ingenious technologies in fields ranging from aerospace, communications and nuclear science …to zippers, insulin and foghorns. Innovation has often been a hallmark of Canadian endeavour – and I don’t see any reason why that shouldn’t apply especially well in this case.
The next significant stage in the development of hybrid [gas:electric] vehicles will be “serial hybrid” technology. (Please have your techies fill you in on this.) The gains in efficiency we witnessed with the introduction of our current crop of hybrid vehicles will be viewed as small in comparison to the next generation of these automobiles. Efficiency gains of at least 30% within 10 years have been widely (and very conservatively) projected. More confident forecasts anticipate fuel economy in the range of 200-500 miles per gallon (at least for small passenger cars) within twenty years!
One of the problems with implementing serial hybrid technology (requiring the electric motor to be the sole engine engaged to the drivetrain) has been the relative absence of high-efficiency variable torque electric motors, but this is now about to change. There have been a number of patents filed over the past few years for devices that will deliver appropriate torque and rotor speeds under the full range of typical motor vehicle operating conditions. Prototypes and production models of some engines are already available. Some of these designs will not only reduce vehicle weight but also the number of parts required to construct the drivetrain. Brake wear will also be reduced in most instances, only adding to the long list of potential benefits.
Recouping the Costs of a “Bailout”
If we’re looking for ways to ensure that we’re paid back for our assistance to the automotive industry, then we must consider increased fuel efficiency to be one of the most effective (though least visible means) of achieving that goal.
Of course, any government financing extended to Canada’s ‘Big Three’ would also require a proper repayment schedule and a reasonable interest premium.
High fuel prices are a drag on the global economy and constitute an insidious form of pseudo-taxation for individuals and corporations alike. Less fuel used, means more money available for personal discretionary spending and more capital for industrial restructuring.
It can easily be argued that the cost of doing nothing is potentially far greater than the cost of a reasonable auto industry reinvestment plan. The broader automotive sector (parts manufacturing, etc.) is particularly sensitive to effects cascading from production slowdowns or stoppages by the ‘Big Three’ – not to mention the deficit in which such companies would immediately find themselves in the case of one or more bankruptcies among the major automakers.
Last time I checked, a penny saved was still a penny earned. By that standard, we stand to make a pretty penny by increasing vehicle fuel efficiency and improving market stability and confidence. And then there’s the matter of making our automobiles more competitive in the world market (and, accordingly, more competitive against foreign products in our own market) by reducing the cost of vehicle production and lowering basic vehicle operating costs while increasing reliability through improved drivetrain simplicity.
Energy Efficiency as a Matter of National Security
The current global economic malaise is much bigger than our experience of it in Canada ~ heck, it’s big enough to subdue that vast, economic giant to our south. Its effects stretch completely around the world, leaving few–if any–places untouched. As we have witnessed in both economic and military terms in recent years, insecurity anywhere affects security everywhere. Hence, a global problem is also a Canadian problem.
When a government, like the one in Tehran, can provoke a worldwide petroleum price spike by simply threatening to close the Strait of Hormuz, we are left with few options to directly combat such a ‘security tax’. But increased fuel efficiency acts as a direct hedge against this form of economic ‘attack’. Canada may be energy self-sufficient, but many of our best friends and trading partners are not. And they will become increasingly dependent upon us (and our resources) as time rolls on.
Many electric motors manufactured today use Rare Earth Elements (such as neodymium) in their Permanent Magnet motor assemblies. This constitutes an additional risk since more than 90% of worldwide REE production comes from China whose production is expected to crest in just a few years’ time — just as their own industrial consumption begins to outstrip their ability to mine more of these critical elements. There are several variable torque electric motor designs which do not use REEs and would therefore not be sensitive to shortfalls in availability, or even possible embargoes.
Perhaps it’s time for a ‘Made in Canada’ solution
If we were to make available $1 billion dollars for each of our three main domestic automakers in the form of government-guaranteed lines of credit, this would allow each of the manufacturers to continue operations while only drawing on funds as they need them.
We could also offer a grant to each company of another $1 billion if they would participate in a joint effort to improve the efficiency of Canadian automobiles through the development of a uniquely Canadian, next-generation, serial hybrid vehicle architecture.
A development corporation (funded to the tune of $1 billion ~ making our running total $7 billion) could be formed to retain any unique intellectual property generated by this co-development work, in which all participating companies would share. Stakeholders would include the ‘Big Three’ and the Government of Canada, but direct positions would also be open to qualified regional and national manufacturers, as well as to key international technology contributors. Eventual revenues from the licensing of these technologies to the world market would enrich each of the participants in direct proportion to their technical contributions to the project.
I haven’t mentioned the environment as an excellent reason for limiting our release of greenhouse gases and other pollutants, but the link is obvious. The trick is to do it without damaging our economy in the process. Or better still, to do it while improving the state of our economy. If asked, most Canadians would probably say that they consider themselves to be environmentalists or conservationists to some degree. That’s great, but it’s very difficult for me to imagine how we can be responsible stewards of G-d’s good earth unless–and until–we become proper managers of our technology and more mindful of its impact on the greater whole.
The regrettable oversight committed by our automakers, in construing a demand for vehicles that consumers would ultimately prove unwilling to buy, serves to demonstrate the high cost associated with making mistakes in today’s turbulent markets.
As I see it, our best choice now is to stabilise the Canadian auto sector through wise reinvestment that focuses on innovation and efficiency; supports Canadian autoworkers and their families; better positions all our energy- and transportation-dependent industries for the future; and puts Canada back on the technological leader board.
The auto industry clearly needs a “Manhattan Project” (or maybe a Peterborough Project) to quickly develop the sorts of cars that Canadians truly want to buy; the sorts of cars that will save them money at the pumps and offer power and performance comparable to—or exceeding—their expectations of purely gas-powered vehicles.
Build a better car and Canadians will warm up to it quickly ~ especially in winter.
Baggage
.
You can’t drive fast enough to get away
from the werewolf in your back seat.
.– 1997
Our False Sense of CyberSecurity
This week, we learned about a wave of successful on-line hacks of the US electrical grid. We also heard about a fast-evolving virus (Conficker C) that has been actively organising millions of infected/enslaved PCs worldwide into a very formidable (and potentially malevolent) Botnet.
On-line insecurity is nothing new, but it always represents a risk.
Some people might give these stories a second thought, but their third thought would probably be, “Nah, [insert name of responsible organisation here] will take care of it.”
We have long relied upon groups like Microsoft, Symantec and “the government” to shield us from the not-so-nice elements of network computing, but is it reasonable to assume that they will always be successful in defending us?
On September 11, 2001, many millions of Americans (and, globally, many hundreds of millions more) followed in horror and disbelief the events of that tragic day. The tools of destruction appeared to be nothing more than box cutters, duct tape, some flight training and, of course, four passenger jets laden with aviation fuel. Twenty-or-so fervent radicals (and their controllers) had succeeded in turning these mundane emblems of Western society into deadly weapons of massive destruction.
No one seemed to spend much time openly investigating whether compromises in digital infrastructure contributed directly or indirectly to the terrible outcome, but there are several clues which point to the possibility that this may be true:
The GPS Downgrade
On September 12th, GPS (global positioning system) resolution for unlicensed commercial and consumer use was reduced from 10 metres to 100 metres, even though there had been no formal acknowledgment that GPS had been used by the hijackers to guide the planes to their fatal destinies. In fact, the guidance gear aboard the aircraft would have been far superior to that which could be bought at the retail level by the attackers. This could be viewed as strictly a precautionary manoeuvre by the government, because there was no way of knowing whether further attacks were forthcoming, or it could have been based on a suspicion that the aircraft may have been guided to their targets by complicated auto-pilot reprogramming in the cockpit — or even remote control. Each of the targeted planes carried on-board remote guidance and control systems designed to permit air traffic control (ATC) to assume command in the event of pilot incapacitation.
(I heard the report of the GPS downgrade during a newscast by CFRB 1010AM on September 12th and verified the information on-line the next day but can find no links to those stories today. Sorry, you’ll have to do your own digging on that one.)
One of the hijackers (Ziad Jarrah) attempted to purchase four handheld GPS units from a flight store on August 22, 2001, but was only able to purchase one, along with some aeronautical charts. Zacarias Moussawi (the so-called “20th hijacker” who did not make it onto his flight or was for some other reason not included in the operation) tried to purchase some GPS equipment, asking whether it could be used for aeronautics. I don’t know if any GPS units were taken aboard any of the four flights; that didn’t appear to be covered in the official 9/11 Report. (PDF – 7.2 MB)
Slacker Flight Students
By some accounts, the hijackers who took their pre-attack flight training in the United States were poor students. However, they wouldn’t need to be very well-trained if all they had to do was to keep the flight crew from disengaging the auto-pilot. (The remote guidance systems installed in the planes required that the auto-pilot be engaged in order for remote control to be established.) Flying a large jet at high speed and low altitude takes a very good pilot with top-notch training. This is especially true in the case of the Pentagon strike because of the building’s relatively low physical profile.
“He [Hani Hanjour] was a pain in the rear. We didn’t want him back at our school because he was not serious about becoming a good pilot.”
— Duncan Hastie, Owner, CRM Airline Training Center in Scottsdale, Ariz.
Despite failing his flight certification and being graded unfavourably by several flight instructors, Hanjour is thought to have been at the controls of the flight that slammed into the Pentagon on September 11th — an assault requiring a high degree of skill.
One Year Later
Just over a year after the 9-11 attacks, the terror of random shootings gripped the Beltway. The first fatality in the area was James Martin, an employee of the National Oceanic and Atmospheric Administration (NOAA). In June, 2002, Mr. Martin cleaned, wiped and delivered ten retired NOAA computers to a school (PDF – pg.4) as part of a giving program that he personally championed.
(Note: NOAA’s network is directly linked to the US Air Traffic Control network because of the need for accurate and immediate weather reports.)
We may never know whether Mr. Martin found some evidence of unauthorised access in those federal machines, but if he had, he probably would have reported it to the FBI. Any such reports would be forwarded to the National Infrastructure Protection Center (NIPC) and would certainly have come across the desk of the NIPC-FBI liaison at the fledgling InfraGard program.
InfraGard is an information sharing and analysis effort serving the interests and combining the knowledge base of a wide range of members. At its most basic level, InfraGard is a partnership between the Federal Bureau of Investigation and the private sector. InfraGard is an association of businesses, academic institutions, state and local law enforcement agencies, and other participants dedicated to sharing information and intelligence to prevent hostile acts against the United States. InfraGard Chapters are geographically linked with FBI Field Office territories.
— from the InfraGard website
Although the InfraGard program has since been expanded to include physical threats, it was primarily concerned in 2001 with the identification and containment of cyber threats to key digital infrastructure systems, including: electrical grids, water provision and treatment facilities, nuclear installations and commercial aviation systems.
The FBI analyst leading the program was Linda Franklin, who (like Martin) also happened to be killed by the Beltway Snipers. Ms. Franklin, shot down in front of her husband in the parking lot of a Home Depot in Fairfax, Virginia, was the driving force behind the InfraGard program, though her relative importance (with respect to cyber-security) was played down in most media reports. InfraGard established the Linda Franklin National Achievement Award in 2003.
Rest in peace, Linda, James, et al.
The ’Net Result
Technologically advanced societies rely heavily on the technology they create.
That’s both a strength and a weakness; a double-edged sword.
Is it possible to live by it without dying by it?
© 2009
On the Current State of Currency
The Chinese are doing it.
So are the Russians and the Venezuelans.
“Doing what?” you might ask.
Answer: Proposing new international currency standards.
Since everyone seems to be getting in on the act, I thought I’d post my own thoughts on the subject. I’m no economist, but judging by some of the concepts being advanced lately, I feel sure that I can come up with something better than the half-baked ideas being flogged by the world’s political ‘elite’.
First of all, I’d like to address our present de facto standard for international trade: the US Dollar.
The Trek from Bretton Woods
Even before the end of the Second World War, the 44 Allied Nations put together an agreement at Bretton Woods, New Hampshire, which led to the establishment of the International Monetary Fund (IMF) and the World Bank. Subsequently, in 1947, a comprehensive plan was devised to aid Europe in its post-war reconstruction; this was officially called the European Recovery Program (ERP) and popularly called the Marshall Plan in honour of U.S. Secretary of State George Marshall who championed the initiative.
Since the US economy was the strongest and most prolific in the world, it made sense to balance these new financial systems using US dollars, which consequently resulted in all three major international oil markets (Brent Crude, WTI and UAE Dubai Crude) and the world’s two major oil bourses (NYMEX and IPE [later ICE]) being denominated in ‘American’ dollars.
The system worked quite well until the mid-1960s. In 1971, when the United States completely decoupled its currency from the Gold Standard, all signatory nations of the Bretton Woods agreements had to decide between: a) abandoning the security of those financial treaties; or b) accepting the US dollar as their default foreign reserve currency. By early 1976, all major world currencies were “floating”, but the US dollar remained the central pinion around which all other currencies revolved.
Most economists at the time probably agreed that this was far from an ideal solution, but they also seemed to agree that most of the other proposed options were worse.
Bretton Woods, along with its contingent cascade of financial paradigms, should have incorporated provisions for its own evolution. By the mid-1960s, there should already have been a new regime in place; one that could have assured financial stability for both developed and developing countries; and that may even have avoided the clash between OPEC and the United States in the early 1970s.
As unfair as it might seem to some that the US dollar should enjoy such preeminence, the imbalance is also less obviously–but no less practically–unfair to the United States, by having allowed its economy to expand in an unsustainable manner. The recent international economic implosion is an indirect–but inescapable–result of that unbalanced growth, and few countries will be as severely impacted by it as the United States, itself.
Options and Intrigues Abound
Lately, Russia has been mumbling about returning to the Gold Standard and China has been talking up the extended use of SDRs (Special Drawing Rights provided under the aegis of the IMF) as possible means for re-balancing the international currency regime. The Chinese proposal (given some applause by US Treasury Secretary Timothy Geithner) would require that SDRs be denominated across a basket of prominent national currencies, rather than being pegged to the US dollar, as they are now. The Russian notion of returning to the Gold Standard would ultimately favour those nations (like Russia) that have significant (in-vault or in-ground) gold reserves.
Neither of these solutions seem very practical to me, though they are a good deal more viable than the concept put forward by Venezuelan president Hugo Chavez, who would seek to have international foreign reserves denominated in a new petro-dollar; i.e., based on the price of oil. Of course, Venezuela has plenty of oil, and Mr. Chavez has been talking with Iran and other OPEC members in an effort to get them on-side. So far, the only other country that seems to be interested, not surprisingly, is Iran.
Pegging global economic well-being to a single currency or a single commodity would be to invite the same sort of disaster that followed the Great Tulip Collapse of 1673.
To my way of thinking, the Chinese are the closest to an actual solution, but their idea of a “meta-dollar” comprised of a handful of prominent currencies is still prone to some of the same problems we’ve encountered under the current US dollar-centric model.
The CVG System
My idea hinges on the establishment of a relative value index based on Commonly Valued Goods (CVGs) and the promotion of strong national currencies.
Through existing world commodities markets, we know the expected yields of thousands of real products upon which the world collectively depends. This includes foodstuffs like corn, wheat and rice, as well as useful materials such as cotton, gold and petroleum. The relative demands for each of these goods, along with their respective availabilities, determines their price. Individual national and regional markets will vary in their demand for each of these products, but every economy on earth will require access to most of these goods on a regular basis to feed and clothe its population, as well as to drive and energise sustainable economic growth.
Having an international ‘meta-currency’ based on the value of a basket of real goods is reasonably preferable to predicating it on any single commodity (whether oil, gold or tulips) in the same way that increasing the basket of currencies proposed by the Chinese to include the coins of all developed and developing realms (G20±) is preferable to selecting a much smaller sampling of national monies.
By interlinking these baskets of goods and currencies (and adding a logistical means/cost dimension for delivering these goods where and when they are needed) we should be able to arrive at a formula that is grounded in real-world supply and demand, rather than in the more ethereal world of speculation. Think of it as a scale, with a mix of currencies (the coin basket) on one end of the beam, counterbalanced by a mix of commonly valued goods (the bread basket?) on the other.
Under such a regime, FOREX would be need to be removed from market speculation, instead becoming a domain reserved solely for international transactions. National currencies would be shielded from the vagaries of the market and be more reflective of their true, respective measures of GDP/GNP.
As more countries progress from under-developed to developing status, the basket of currencies would expand to include them. Until that time comes, their currencies would be tied to the international currency basket (rather than the US dollar), making them less susceptible to swings in the price of oil, other commodities, or any other “standard” to which their economies may be tied.
In this way, no reserve currency would actually be required as each nation could purchase goods using its own money — or credits extended by the World Bank, in the case of those countries requiring international assistance.
Repatriation of the US Dollar
The trickiest bit of this whole exercise is how to withdraw the US dollar from its current position as the de facto world reserve currency without causing a massive devaluation of the dollar and all the financial drama that such a move would surely entail.
We have all gotten fairly used to the idea of treating debt/credit as money, so that might make it easier to resolve the problem.
China currently holds somewhere in excess of $1 trillion of US foreign debt and has been growing increasingly anxious about its ability to collect on that sum, short of selling it off to third parties at discounted prices and effectively destroying their primary overseas export market. It also has a total foreign reserve cache of nearly $2 trillion (about 70% of which is in US dollars). The US economy, with an accumulated deficit of over $10 trillion, is certainly in no position to buy back its own debt.
So what to do?
Let’s Look to Marshall Again
In the aftermath of the Second World War, the Marshall Plan was largely funded by the United States with US dollars heavily leveraged by US industrial expertise. The goal was the reconstruction of European infrastructure, particularly its manufacturing and transportation systems.
What if we were to take the same sort of approach with respect to Third World infrastructure development with special emphasis on desalination plants, water treatment facilities, crop production, education, disaster preparedness, etc.?
E.g. China would exchange almost $3 trillion worth of foreign currency and foreign IOUs for an equivalent measure of Commonly Valued Goods credits. The US and other nations would accept and repatriate all foreign reserve moneys created under their imprimatur in order to balance their national accounts. Repatriated foreign debt, on the other hand, would be converted to CVG credits and made available for critical development projects in under-developed nations.
If world debt was “magically” converted into a Critical Infrastructure Fund for under-developed nations, just imagine how much better off the world would be. Our baskets (both literal and figurative) would soon be overflowing.
The cure for our economic malaise is not to create an international “super-currency” to save us from ourselves, but to build up and maintain our respective national currencies and economies while strengthening the ties that bind us together in common pursuit of all that is good.
© 2009
imahd.ca 