Mr. McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.
It’s from The Graduate, a very popular Mike Nichols film from 1967, just in case you don’t already know that. The screenplay is from Buck Henry and Calder Willingham and the movie made Dustin Hoffman a star.
Plastics are everywhere. The modern world is a plastic one. Plastics are made from hydrocarbons. They don’t have to be. You can make plastics from cellulose—rayon is a good example. You can make plastics from bio-molecules like starches and proteins. There are potato plastics and corn plastics and soybean plastics and whatnot.
But what we mean when we say “plastic” is the stuff made from oil and gas. In chemistry things that have a carbon-atom backbone are called “organic.” It was assumed for a long time that certain types of compounds—amino acids are a good example—could only be created by living things. Then a fellow named Wohler synthesized urea (a byproduct of protein metabolism in mammals, secreted in the urine) from “inorganic” compounds. Crushed rocks. Stuff not made of dead things. And people realized that a molecule was a molecule and its origin was not so important. Thus synthetic chemistry was born. People starting making their own molecules that mimicked “natural” ones. Plastics were born.
Plastics are polymers, just like starches. The most famous of all polymers is DNA. But it is the hydrocarbon polymers, mostly made with ethylene, that make up our plastic world. If you take “organic” chemistry in college you don’t learn about herbicide-free farming. You learn about polymers (and other stuff) and it matters not if they occur in nature or are made in a factory. Chemistry is chemistry is chemistry.
The plastics we make from petroleum have made our cars lighter and thus improved the gas mileage. That’s an environmental good. But most of the plastics are “one-use” and then they become garbage. That’s an environmental bad. All technologies are like this. There is no free lunch. Every decision we make about how to use a natural resource will come with consequences. It’s not about a consequence-free invention or innovation: that’s a fantasy. It’s about understanding and appreciating the consequences of our choices. It’s about making informed choices, and choices that value the future, and the well-being of all over short-term gains.
Spend your day looking around you. Think about all the different plastics you encounter. How many of them could you replace with something better? Chemists will continue to innovate and create new plastics. What do we want from these materials? And how do we get there?
Historians used to tell us that the growth of human civilization was broken into three stages: the Stone Age, the Bronze Age, and and Iron Age. Nowadays we know these distinctions to be over-simplified. Nonetheless the emergence of iron and steel in human history was a major turning point.
Bronze is an alloy of copper and tin. Both of these metals have been known since antiquity. The natural ores for both copper and tin are easy to smelt. Temperatures in the 250 to 350 Celsius range (600 Fahrenheit) can be obtained in fireplaces and thus early peoples could work these materials.
Iron is another story. The separation of iron from its ore requires a lot of heat energy. Charcoal is needed to smelt iron ore and more specialized furnaces are required. Temperatures have to be in the 1250 Celsius (2300 Fahrenheit) range. Thus it is reasonable that iron (and steel) emerged later in human history.
One of the key moments in the so-called Industrial Revolution was the invention of the modern blast furnace. Steel is iron that contains small amounts of carbon. Controlling the carbon content changes the brittle pig iron and wrought iron into the tougher and more malleable steel. The blast furnace made the conversion of iron to steel cheaper and more efficient and gave more control over the quality of the final product.
Today steel is made with coke which is a charcoal made from coal, not wood. The demand for “met” (metallurgical) or coking coal is growing even as the demand for thermal coal is declining. The production of virgin steel needs a lot of coke. Recycled scrap steel is worked in an electric arc furnace which does not need coke. Most electric arc furnaces are powered by natural gas which provides the energy for the electric current generation. Steel melts at about 1500 Celsius (2700 Fahrenheit) so you can see that the energy needs are still very high. Recycling of scrap steel is a well-established industry and the energy savings from virgin steel production are significant. Most manufactured steel is recycled as scrap when its lifespan is reached. Think of all the auto junkyards—those are scrap metal stockpiles.
World demand for steel is of course on the increase. As countries like China and India, the two most populous in the world, improve their standards of living they will build more modern-style buildings and consume more modern devices like vehicles and tools. Energy consumption is the true measure of wealth. Americans consume more energy per capita than everyone else. It is only natural that poorer nations will seek to emulate American economic gains and attempt to deliver a better life for their citizens. That means they will consume greater quantities of primary energy sources (coal, oil, natural gas, nuclear fuel) and seek to build more energy generating technologies (solar panels, hydroelectric dams, wind turbines). Demand for all the natural resources will accelerate in the coming decades. This is an inescapable fact of economic growth! Economic growth is the Holy Grail of Western societies and the obvious benefits are plain to all. The rest of the world wants what we take for granted.
But economic growth comes with environmental costs. This is another inescapable fact of modern life. Can we get there without polluting our world to the point of making it un-inhabitable? Yes, but it will take a lot of creative people working together. And we will have to revisit our notions of wealth and freedom and reevaluate our needs regarding comfort, leisure, and consumer goods.
Here’s a graph that shows the significance of iron processing and steel manufacturing in the overall industrial sector:
Continuing with our look at “the four pillars” of modern civilization I want to talk about the numero uno, cement and concrete.
Concrete is the world’s most ubiquitous and most important building material. The Romans were expert concrete engineers. Some of their remarkable constructions are still standing. Things like grouts, stuccos, and mortars have been around since antiquity. The versatility of modern concrete allows it to be used to make roads, bridges, canals, piers, and all types of buildings. It can be poured in place or pre-cast. It can be used for floors, walls, ceilings, counters, roofs, retaining walls, foundations, benches, tables, and too many other things to list. It is lightweight, durable, fireproof, and a good insulator. We make pipes out of the stuff and those pipes bring us fresh water and carry away our wastewater. It can be shaped, molded, colored, and finished in an astonishing variety of ways. There is no modern world without concrete.
Concrete is actually a “greener” choice than other materials because it can be made locally and thus avoid transport costs (both economic and environmental). It’s easy to work with and does not require particularly specialized skills and tools. Homeowners can do amazing stuff with concrete with a modest investment. Obviously there are applications of concrete that demand engineering and construction expertise but that’s true of any building material. Rough-framing a house with 2 x 4s is accessible to many ordinary folks—building a wooden boat less so.
The problem with concrete is cement. Cement is the necessary ingredient. It’s actually only a small part of the mix. The rock, sand, and gravel (“aggregate”) is the biggest part with water taking up the rest. The cement is the binder that holds it all together and thus the most important part. Concrete is formed when the mix of cement, aggregate, and water “cures” and hardens. It doesn’t dry. When the mix loses water too fast the result is brittle. Water molecules are taken up by the cement and help to form the crystalline matrix that results in the final product. Concretes can take many years to fully cure.
Cement is made from limestone, mostly. Silicates and oxides, primarily from clays, are the other components. The problem is that this stuff has to be heated to very high temperatures. Not only does this kilning process use large amounts of fuel it also releases carbon dioxide as part of the process. Limestone is CaCO3 and when it is cooked it forms “lime” or calcium oxide (CaO). You can see that the leftover stuff is CO2! Ain’t chemistry grand?
Cement is made when limestone and the clay minerals are baked together to form lumps called “clinker.” The clinker is then crushed and gypsum (calcium sulfate, CaSO4) and other additives are mixed in. The stuff is ground to a powder much finer than flour. If you’ve ever gotten Portland cement on your hands or clothes you know what that’s like!
Thomas Edison was a big believer in concrete as a building material and he did a lot of work to improve the kilns and the kilning process to make the manufacturing of cement cheaper and more efficient. He also invented the modern rotary crusher that all cement plants use. He was remarkable in that he concerned himself with so many different things. The light bulb was a tiny part of his many accomplishments.
Here’s the rub. Making cement is very energy intensive. The industry is responsible for, as you can see, a large chunk of greenhouse gas emissions.
On the one hand we have a fabulous building material that can be used for almost anything all over the world by almost anyone. On the other hand we have a key ingredient that requires a highly polluting industrial base to create.
This is the dilemma we face as a civilization. So, we have to come up with alternative ingredients that require less energy and we have to come up with better ways to heat the stuff we already use. Many of these technological problems are solvable. Engineers love these kinds of challenges. I’ve no doubt that we will see many innovations in the coming decade that will “decarbonize” the industry. Unfortunately technological innovation is only one part of the puzzle. The economics have to work, too, and the adoption of new techniques and practices will take time. Environmental problems are social and political problems, not just scientific ones.
Climate change is an obvious existential threat. It will take a global effort to work on it. Mostly those efforts will involve education, awareness, and a willingness to take on a personal responsibility for “doing your part.” And it won’t be easy. Our modern, high-energy, high-consumption way of life will have to evolve. We aren’t going to like it, but we don’t like lots of things but do them anyway because they need to get done.
All this to say be suspicious of the techno-optimists and techno-utopians who claim that science will solve all our problems. It won’t. The problems are ours, created by our values and our institutions. We can only change those things by working together to make a better world, by recognizing our limitations and our past mistakes. Humility and empathy are virtues we are all capable of, and those are the things we need going forward. And curious and creative people who like to learn, grow, and tackle tricky things!
Cement is the key ingredient of concrete. The other two ingredients are aggregate (sand, gravel, etc.) and water. We often use the words “cement” and “concrete” interchangeably but one precedes the other. Cement is the fine, gray powdery stuff we buy in 90-lb. sacks. Concrete is what happens when we mix cement with the aggregate and water, form it into place, and allow it to cure and thus harden. In fact what we call “cement trucks” are really “concrete mixer trucks.”
But the distinction, at least for the purposes of this discussion, are not so important. Cement is useless by itself. It is important because it is the key constituent of the most important of all building materials—concrete. Global cement production is an enormous industry, on the order of four billion metric tons per year. A metric ton (or “tonne”) is 1000 kilograms or about 2200 pounds. My 2019 Honda CR-V checks in at 3400 pounds or about 1.5 metric tons, so the world manufactures approximately 2.7 BILLION Honda CR-Vs worth of cement!
The next most important building material is steel. I suppose it is silly to rank concrete above steel, and I don’t mean to imply that one is “above” the other. In fact the two go hand-in-hand. Most concrete is steel-reinforced. Concrete has wonderful compressive strength. It doesn’t crush easily and that’s why it makes good foundations. But it lacks torsional strength. If it is subject to twisting forces it cracks and crumbles and falls apart. Next time you see a construction site look carefully at the various metal rods sticking out of the concrete forms. Freeway overpasses are a good place to see this. Without the reinforcing materials concrete would have very limited applications.
But steels are used as building materials in their own right, of course, and are the preferred substance for car and plane bodies, household goods, tools of all sizes, and so on. The stuff is so ubiquitous it is hardly worth listing the various uses. Just take a look around and you will see some kind of steel wherever you are.
World steel production is about two billion metric tons per year. Steel is an alloy. Its primary constituent is iron. Iron ore is mined globally. Almost all of it goes into steelmaking. Fortunately steel can be recycled and with modern electric arc furnaces less steel needs to be made directly from ore. Iron is found in nature as an oxide and it takes a lot of energy to separate the large mass of oxygen atoms from the iron atoms. The other chemicals used in steel are carbon and manganese which usually account for less than 2% of the alloy. Stainless steels rely on chromium and can contain up to 10% of that metal. Steels have been used, like concretes and mortars, since antiquity.
Nothing so symbolizes the modern world better than plastics. The word means “malleable” but is applied particularly to the hydrocarbon-based stuff we see all around us. It is the replacement of ancient materials (wood, wool, leather, metals, etc.) by plastics that mark our times. World production of plastics is just under 400 million metric tons per year and growing. Most plastics are used in packaging but there are so many other uses mostly because there are a huge variety of plastic types. We are familiar with many of them, from PET (soda bottles) to nylon (rain gear) to polycarbonate (eyeglass lenses) to ABS (keyboards) to PVC (pipes) to polystyrene (yogurt containers).
The feedstock for plastic production is mostly natural gas but crude oil and naphtha are also important. In fact the types of plastics and their production methods are so varied that it is impossible to estimate how much of our hydrocarbon resources are devoted to making plastics. It’s estimated that all the humans on earth weigh a combined 300 million tonnes so that gives you some idea of the scale of plastic production!
The fourth and final pillar of our civilization is ammonia. I’m not talking about the stinky stuff people mop floors with. That’s “household ammonia” or a dilute solution of ammonium hydroxide. Ammonia is gas. Household ammonia is made by bubbling this gas through water.
Ammonia (NH3) is produced from air (the source of the nitrogen) and natural gas (the source of the hydrogen). It’s a very energy-intensive endeavor. Over 200 million metric tons are produced per year. If you want to measure the degree of wealth and industrial development of a country look at their ammonia production. Another indicator would be sulfuric acid. One could argue that sulfuric acid ought to be included as a “pillar” of the modern world.
Ammonia is needed to make fertilizer. Without fertilizer most of us would starve to death. Or, at least, we’d spend our days much like our ancient forbears, laboring in the field from sunup to sunset producing our food. We have more people than ever in history and yet we produce far more food, especially per acre, and a smaller and smaller percentage of our population is directly involved in food production. In olden days everyone was a farmer. Now hardly anyone (in a modern country) is a farmer. This is because of synthetic fertilizers primarily produced from ammonia. Not to mention tractors, herbicides and insecticides, crop breeding, and the rest! The “organic” farmer uses fertilizers, too, just ones made from compost, manure, guano, blood meal, bonemeal, fish emulsion, kelp and the like. Without fertilizer there would be no large-scale food production, organic or otherwise.
Regardless of your personal philosophy, ideology, or political leanings, there are some basic facts about the world that are not arguable. We would do well to study such things. The facts about these physical and biological constraints ought to unify us. We all have to breathe, drink, eat, and be sheltered from the elements. A close look at energetics and ecological principles makes it clear that our political solutions are based on many false assumptions. Let’s strip away the crap and focus on the real problems at hand. A good place to start is with Smil’s “four pillars.” You may disagree with his priorities but you can’t argue with his numbers. In other words, maybe you think we shouldn’t make so much steel and concrete and we should devote that energy to other things. OK, that’s fair. Get your pencil-and-paper out and sketch an alternative!
Just don’t neglect the basic science and math. If you don’t put numbers on your notions, you’re just adding to the babble. I can’t measure the babble but there’s certainly too much of it.
Tyrone Power was something of a Brad Pitt/George Clooney heartthrob in 1947, famous for swashbuckling roles and manly action movies. The former Marine pilot was a serious actor however, and wanted to stretch himself to play more complex figures. He convinced his studio bosses to buy William Lindsay Gresham’s recently-released novel Nightmare Alley and make a movie of it, casting himself in the lead. The movie was a flop then but has cemented itself as a noir classic today.
Gresham, it seems, was a dark soul. Fighting in Spain for the doomed Republican cause against Franco’s Fascists, he heard stories of carnival life from a fellow traveler. Gresham was particularly enthralled (and horrified) by the geek, a peculiar attraction in these roadshows, a man so desperate he made his livelihood in a cage biting off the heads of chickens and snakes. I should note that Billboard continued to place ads by carnivals looking for geeks up until the 1960s.
In the story an ambitious, intelligent, but aimless young man, Stanton Carlisle, takes a job in a carnival. Like Gresham he’s shocked by the depravity of the geek and vows to never let himself get so low. In fact he climbs the ranks of the carny hierarchy to the mind-reading act, ultimately stealing the secrets from an older performer and then killing him to cover up his theft. Carlisle leaves the two-bit tent parade with one of the young women in the show and they make it on the vaudeville circuit and settle in New York City. But life as a “mentalist” is still too low-brow for Stanton and he decides to go for the big time and he enters the “spook racket.” Spiritualism was popular stuff then—séances, communicating with the dead, that sort of thing. Stanton attempts his biggest con, fleecing a rich industrialist with a shady past with an elaborate con involving a long-dead girlfriend. In the end his young partner can’t follow through on the deception and the whole scheme falls apart. Stanton had hooked up with a crooked psychologist, Dr. Lillith Ritter, who was a silent partner in the grift. She winds up double-crossing him so even the payoff goes sour.
Carlisle goes on the lam and, in the end, finds that his only choice is to become, you guessed it, the carnival geek. It’s a dark tale, to be sure. Gresham’s nightmare alley is life itself. It’s a recurring motif in the novel, a vision of the walls closing in and a desperate run to a daylight escape that Stan never reaches. Gresham himself was an alcoholic and his life was a series of tragedies despite the success of his book. He wrote extensively on carnivals, con men, hucksters, fake spiritualists and the like and his work today is considered authoritative. He committed suicide in 1962 at the age of 53.
The movie had to be tamed a bit, this was Hollywood after all, but much of the book’s bleakness remains. Power is superb and he’s backed by noir stalwart Coleen Gray as Molly, his luckless assistant, and Helen Walker does a terrifying femme fatale as the coolly detached Dr. Ritter. The producers even built a full working carnival and hired some genuine acts to give the film authenticity. The novel is far more depraved and cynical and revels in the underground argot of that subculture but it is thoroughly gripping. It’s structured using a tarot deck (all the chapters are the cards of the major arcana) and the symbolism is woven throughout. In the movie former vaudevillian Joan Blondell gets the role of Mademoiselle Zeena, the fortune-teller who first takes Stan under her wing. Unlike her protégé she takes the readings of the cards seriously and they foreshadow his fall.
There’s a remake of Nightmare Alley out there. Director Guillermo del Toro’s big budget feature was released in December. I’ll get a look at it soon I hope and report back. I’m intrigued, for sure.
The carnival circuit may be a thing of the past but we certainly are not without its barkers and come-ons and phony acts. The working carny saw the world filled with rubes and suckers. Anyone not in on the “gaff” was fair game for a shakedown. That was small-time stuff, though. We live in the big-time world of grift, from Donald Trump to Elon Musk to Mark Zuckerberg to Dr. Oz, and those guys mean business. They work on a global scale, not just on small-town hicks. Whether it’s crypto-currency or multi-level marketing we live in a new golden age for the con man.
Keep your wallet in your pocket. And watch the movie (or read the book) if you need reminding!
Hawai’i is 2400 miles from California and 3800 miles from Japan. It is literally in the middle of nowhere. It is one the most remote places on earth, yet it is inhabited by 1.5 million people.
How do people live in such a place, let alone have a modern civilization?
Simple: jet fuel. Hawai’i consumes a lot of jet fuel. Sixty percent of all the petroleum products consumed in the Aloha State are jet fuels. There’s obviously a big military presence in Hawai’i and one expects they are big consumers of both aviation and marine fuels.
But one has to get to Hawai’i first, and that means jet travel. Going by boat means at least five or six days. That’s too slow for modern folks.
Jet fuel is mostly kerosene-based. Kerosene is sometimes called paraffin or lamp oil. Kerosene is distilled from crude oil between 150 and 275 degrees Celsius. It’s about 80% as dense as water. Most of the hydrocarbons in kerosene contain between nine and twenty carbon atoms per molecule.
Jet fuel is not aviation gasoline (“av gas”). That stuff is used in internal combustion, spark-fired engines. Av gas fuels your buddy’s Cessna and is similar to motor vehicle gas. Jet fuel is more like diesel.
Big jets rely on gas turbine engines. They are called turbofans because they use a big fan or a set of fans to suck air into the combustion chamber and then expel the exhaust to provide thrust.
A passenger jet weighs 400 to 500 tons. A Ford F-150 weighs about two tons, so a jetliner is about the same as 200+ pickups! No wonder they need turbofans.
A jetliner is a mini-civilization. It takes a portion of the populace (and all their needs) to someplace else and promises to bring them home again. Once a jetliner lands on your shores there’s no going back. You are now connected to the rest of the world. And the jetliner leaves people behind who make sure the next jets arrive (and depart) safely. Now your land has been colonized by the jetliner people and life will never be the same.
The jetliner people made Hawai’i into the 50th state. That’s good for me because I’m an American and I can go to Hawai’i without much trouble. That is, if you don’t consider gigantic jets and airports “much trouble.” I’m jetliner-ing to the Big Island tomorrow and I’ll let you know how things are working out there.
The last time I was on an airplane flight was in 2008. That was international—we went to México. In a couple of weeks I’m getting on a plane for a trip to the Big Island—Hawai’i. It’s a domestic flight of course but it doesn’t feel like it. It’s almost 2400 miles from the airport in San Francisco to the one in Kona. That’s about two hundred miles less than the distance from San Francisco to JFK airport in New York City. But the flight to Hawai’i is entirely over the Pacific Ocean!
Jet travel changed the world forever. Cargo ships take five days to cover the SF to Oahu route with extra days needed for the outer islands. Our 737 will make the trip in less than six hours. And a regular middle class guy like me can actually afford the fares!
When you search for fares on Google you get stuff like this:
This is not our flight, just the result of a MFR-KOA (Medford, Oregon to Kona, Hawai’i) entry in the search box. And I clicked on the circle-i “information” icon under the 664 kg CO2 to get the pop-up.
Average fuel consumption over the entire flight of a 737 (takeoffs and landings take a lot, cruising not so much) is about 2400 kg per hour. For a six-hour flight that’s 14,400 kg or about 18,000 liters (4800 gallons). A 737 can carry over 6000 gallons of fuel and fly over 3000 miles without refueling.
Using the graphic above I’m going to estimate that a six-hour flight makes 600 kg of C02. (I’m splitting the difference between 556 and 664.) That’s 100 kg/hour. PER PASSENGER! Here’s a link to how Google comes up with these numbers.
There are about 180 seats on the Boeing 737 we’ll be flying. 600 kg times 180 is 108,000 kg of CO2! How is that possible? We are only burning 14,400 kg of fuel! But fuel does not burn by itself. It requires oxygen. A modern jet engine consumes over 400 kg of air per second. That’s how it is possible to produce so much exhaust.
Let’s put it all in perspective. Our friends at Our World in Data (a remarkable site) say aviation accounts for about 2.5% of global CO2 emissions. Here in the States, we account for about 16% of all emissions from domestic flights. (Calculating the contributions of international flights is a little trickier and I’m flying domestic so I’m sticking with these numbers.)
The U.S. retains its familiar role as world leader. We make the most airplane exhaust!
It seems the only way the world will get a handle on global air pollution and the climate impacts of greenhouse gases is by some sort of carbon pricing. Whether it is cap-and-trade, a carbon tax, or some other scheme, we have to start including the externalities that our activities produce. Nothing is for free. If flying makes a goddamn mess, then we have to bear the cost of the cleanup. And we all know the best way to keep things clean is not to make a mess in the first place!
I’ll be polluting my way over to Hawai’i in a couple of weeks, like I mentioned. We will fly to Kona but will stay in Hilo. I’m really excited about being on the windward side of the Big Island where it is rainy and wet. I live in a near-desert so I need a break from sere, arid landscapes. We are going to watch some baseball at the University and then have a week of adventures. I’m going to buy a really nice Aloha shirt and some groovy board shorts. I’ve been given so many recommendations of places to go and things to do that I figure no matter what we actually do it will all be really fun. I’m a pretty relaxed, happy-go-lucky traveler. If I’m in new place I enjoy myself just kicking around and living life. And drinking beer, of course. My first selfie will probably be at the Hilo Brewing Company. I’ll bet that Mauna Kea Pale Ale is mighty tasty!
What’s a fair bet? To me, a fair bet is one is which the payoff accounts for the odds of the outcome. Say I’m flipping a coin with you. Each of us puts a dollar on the table. If it comes up heads I get both bucks. If it comes up tails then you get ’em. That’s fair. The outcome—heads or tails—is a fifty-fifty chance. My risk (one dollar) is equal to my reward (one dollar).
Casinos don’t work that way, of course. If they paid “true odds” they’d go out of business. A casino has a lot of overhead so they have to get a cut of all the transactions (the bets) in order to keep the lights on. Take roulette, for example. There are 38 numbers on the table (1-36 plus 0 and 00). If I bet on “red” I’m betting on 18 of those 38 numbers. The odds of getting red are 18/38 or about 47%. That means the house wins 53% of the time.
The house pays 2-to-1 on a red bet. But I have 38/18 chance (53%) of losing that bet! That is, I have about 2.11-to-1 odds against me (38÷18 ≈ 2.11) but I only get 2-to-1 if I win. So the house makes a little bit (0.11) on every bet.
“The house always wins.” This is a truism. All gamblers know this. Yet they continue to gamble. And interestingly, gambling is becoming more and more acceptable as a form of recreation. Once confined to Nevada and New Jersey legal gambling now exists in thirty states due to the emergence of tribal casinos. Not only that, on-line betting has exploded and America’s professional sports organizations have endorsed and embraced fans betting on games. This was unthinkable only a few years ago.
I have to say that this new-found, relaxed attitude about gambling is a bad thing. People are going to be stupid and throw away money that should be used to feed and clothe their children. And the sports industry, already engorged with TV and merchandising money, will only grow fatter and uglier, and the juvenile, anti-social attitudes it celebrates will only become more normalized. That being said, regulating behavior like gambling by making it illegal certainly does not stop people from throwing away their money (and their lives). I can live with gambling being legal. What I don’t like is making gambling seem like harmless fun. It’s not. It’s a gigantic money pit that people throw themselves into and then get chewed up and spit out, much worse for wear than if they hadn’t.
I’m obviously not talking about a Super Bowl pool. Or a handshake bet on a ballgame in a bar. I’m talking about apps on your phone that allow you to monetize every sports opinion your feeble brain can hold. It’s too easy, and there’s too much money involved, and when those two conditions are met bad shit will follow.
The problem with professional gambling houses is that they don’t play fair. I gave you an example of how the house wins on every bet in roulette even if they have to pay out. OK, fine, they have to make a living. As long as the odds and payouts are transparent the gambler can at least see what’s coming. If a gambler gets really lucky and the house starts paying out big money, the pit bosses make every effort to stop the run. They change the dealers, for example, and try to “break the momentum” of the win streak while they ply the players with free drinks delivered by pretty girls, anything to throw them off their game. All of that is perfectly legal. They have betting rules like pot limits, too. In the end, houses can simply close the tables if bettors win too much. A casino can just stop doing business if they see a winning run they don’t like. It’s bad for business and your reputation to do that but going out of business is worse.
Sports betting oddsmakers are really good at what they do. They “pick ’em” with winning regularity. If the big books agree on a result it is almost always a good bet to play the favorite. The average individual bettor really doesn’t have access to better or timelier information and thus cannot come to a consensus about the odds on a game. The pros can do this and so the part-time player, amateur, or wannabe-pro has no chance. They will lose more often than win over the long run if they bet against the odds.
I came across a paper by Lisandro Kaunitz, Shenjun Zhong, and Javier Kreiner titled Beating the bookies with their own numbers—and how the online sports betting market is rigged. (I was directed there by Tyler Cowen’s blog.) These three people figured that most bets were priced correctly. But they also figured that meant some small but significant number of bets were not priced correctly. These bets inadvertently favored the bettor. In order to attract betting on an underdog oddsmakers give enticing payout possibilities. They “sweeten the deal” for the riskier bets. And oddsmakers have to hedge, too. So they have mispriced bets out there to move money around and balance their risks. The writers of the paper figured out how to identify these opportunities. When they tried out their model with hypothetical bets they were successful and made money. They switched to real money and starting winning consistently.
Then the other shoe dropped. The on-line betting places simply starting restricting them from betting. The bookmakers placed limits on the bet amounts and what contests could be bet on, ultimately rendering the strategy impossible to implement. The authors describe it as “discrimination against successful clients.” That’s certainly true. The game is rigged.
If we are going to allow and even encourage betting then we should certainly require the industry to “play fair.” The SEC regulates much of the securities market. When I buy a stock or an ETF I have access to all kinds of information about the investments, the costs, and the nature of the risks. This is required by law. Investing is gambling and amateurs get hosed all the time by the big boys but at least there is some oversight by the authorities and some remedies available to the retail customer. Not so with sports betting.
In the end, gambling is stupid. Leave it to the pros. Have fun at work with lottery pools and NCAA bracket-ology. Slap a twenty on the bar now and then to spice up a TV contest and when you win buy the loser a beer. Like I said, have fun. But stay away from the betting apps. Serious betting isn’t fun—that’s why they call it serious.
And if you think of yourself as a serious bettor, then I suggest you read Kaunitz, Zhong, and Kreiner’s paper. And if you can’t do the relatively straightforward math they discuss then change to another field or go back to school because that’s way better than getting schooled!
Here in the States we consume the most oil in the whole wide world. It’s worth noting that America consumes a lot of oil because Americans consume a lot of oil. Note the per capita figures! Only the Canadians and Saudi Arabians can match or beat the Americans.
Germany and Japan are modern countries with high standards of living, representative governments, and the rule of law. Note that per person they consume about half as much oil as we do here at home. Another modern, civilized place is South Korea. They use more energy than Germany and Japan but less than the U.S. (per capita). That’s most likely due to more a more extreme winter climate. Both Japan and Germany modernized sooner than South Korea and thus have more developed and more sophisticated infrastructures. Countries improve their energy efficiency over time. They get better at utilizing their resources. All three nations are dependent on large imports of crude oil and refined products as they have little or no domestic oil industry.
Canada is a very large country and of course it has very cold winters. To maintain their standard of living they have to consume a lot of oil. Canadians, like their southern neighbors, have huge transportation needs. Big countries need big roads and lots of trucks, planes, and ships. All require oil. Saudi Arabia also has an extreme climate, just in the opposite direction, and their energy needs involve not only cooling but the desalination of salt water. The Arabian peninsula is mostly desert. The sheikhs that run that place are also very grandiose fellows and love big, flashy, capital-intensive building projects. Those need a lot of oil. Canada, the U.S., and that Middle Eastern Kingdom are blessed with very large domestic oil reserves. So large in fact that they all export oil.
Russia exports a lot of oil. About 10% of the global supply. In fact, if you have a lot of oil, you export a lot of it. Countries don’t supply their needs exclusively with their own oil. The U.S. and Canada, for example, both import oil despite being major world producers.
Oil is a global commodity. International markets determine the price. Even OPEC can’t set oil benchmarks any more as the worldwide demand is too large and too inter-connected for any one entity to control the outcomes.
We hear a lot about “energy independence.” American politicians and pundits of all political stripes pull out this canard whenever we see spikes in oil prices. We have this notion that we can drill and pump and refine and consume in an entirely domestic market. It’s sort of a quaint, 19th century idea of how capitalism works.
We don’t live in that world. Oil in the U.S. (and other modern democracies) is produced by oil companies, not governments. Oil companies have shareholders and other investors and they are obligated to create returns for those folks. So they sell oil on the international market. Oil companies need a steady supply of crude for their refineries. So they buy oil on the international market in order to manage their inventories. Think of the world as a giant bathtub filled with oil. There are lots of spigots—some dumping oil in, some sucking oil out. The bathtub goes up and down, and the rates of change set the prices.
I can’t imagine any thinking person supporting Putin’s invasion of the Ukraine. He’s a crude, stupid bully, and moreover a powerful and dangerous one. Whether the sanctions (including the oil import ban) will have the impact on his regime and his ambitions that the West is seeking I can’t say. I hope so, but I don’t have a crystal ball. And I don’t have a deep enough understanding of economics or international relations.
But I do know that this problem of higher oil prices is as much our making as it is Putin’s. We are gluttonous consumers of the stuff. We can’t get enough of it. Our entire vision of the American Way and the American Dream depends on massive expenditures of energy, and that energy comes mostly from oil.
We have always enjoyed relatively low prices for things like gasoline. Lately gas prices have taken off as well as prices for heating fuels and other important petroleum products. Those price increases hit consumers hard as they ripple through the entire economy. Everything costs more when it costs more to transport stuff. Those low prices are a thing of the past and not just because of Putin and the Ukraine.
Oil is messy stuff. The impacts of oil exploration, production, refining, distribution, and consumption are enormous. We pollute our air, water, and soil with oil and its by-products. The consequences are real. People get sick and die. Locales become uninhabitable. Natural regions and their wildlife are altered and disrupted, even destroyed. These things are called “externalities” by economists. Prices for commodities don’t generally include the costs of these externalities. In other words, when we pollute our world we don’t pay the price at the pump. We pay it later, but it’s dispersed, and we don’t see it.
Californians know a little about this. We pay more for our gas because it has to meet certain clean-burning standards. And excise taxes are high because 40 million people beat the hell out of the roads and freeways. So some of the externalities are included in the price we pay. These things work, actually. If you remember the air quality in the LA basin in the 1970s, for example, and compare it to today, it’s way, way better now even though there are more people and more cars.
This is only going to continue. Just about every strategy for combating the impacts of climate change involves paying higher prices for energy because we have to include more and more externalities. Prices for energy in developed countries are generally pretty low because modern societies depend on large per capita consumption rates. We can’t have wealth and freedom without abundant, low-cost energy sources.
Ultimately, the transition to lower-impact, less polluting energy sources will require enormous expenditures of both dollars and fossil fuels. Producing a solar panel, for example, needs a hell of a lot of electricity! We are all going to pay for this. In the short term, we’ll see lots of fluctuations. But the long-term trends are pretty clear. Energy prices will go up. Consumer costs will go up. A larger and larger share of our income, over the long haul, will go to cover our energy needs. And to taxes as well as governments will take an increasing role in national energy strategies that will include the associated external costs.
This doesn’t have to be a bad thing. Maybe it will force us to think more like conservationists. Maybe we’ll be encouraged to be less wasteful and to consume resources more thoughtfully. There are happy people in this world who enjoy high standards of living as well as personal liberty and yet don’t waste as much energy as we do here at home. What can we learn from them?
In a confidence game, the grift is usually separated into “short” and “long” cons. In Revolutionary Suicide*, Huey P. Newton talked about how he used to run a short con on merchants. He described (pp. 86-87) how he would distract them when they were making change and thus could walk away with ten bucks after starting with a fiver, or twenty if starting with a ten. It was petty stuff, but it was still a con. It relied on the charisma of the con artist and the trusting nature of the mark.
The long con is best exemplified by Bernie Madoff. He bilked people for nearly twenty years and despite many red flags flew under the enforcement radar due to his many relationships with powerful and influential people. The people he screwed over had been so taken in by his apparent financial brilliance (not to mention his well-polished reputation) that they, even up to the end, refused to believe they’d been ripped off by an amoral creep.
It helps to be handsome and fashionably dressed. Apparently this asshole created a fake company (a design and advertising agency) in London called Madbird and recruited people from all over the globe to come work for him. He was passionate, eager, articulate and quite convincing. Dozens of well-meaning people took the bait and logged hours of uncompensated work supposedly building a client base. It was all a sham. There was no company. And no money, either. All of these people had been promised salaries and bonuses at a future date. Those never materialized, of course.
The sad part, besides the folks who got hosed, is that there is a real company called Madbird in Olympia, Washington who do actual work and aren’t screwing anyone over. Imagine having to cover your ass because of some prick in another country.
One of the reasons the Ali Ayad bubble burst is that the BBC reporters used a simple internet search on the company’s address. Here’s what they found:
We all know how to use Google’s street view these days. If you do that on the address listed (182 High Street) here is what you see:
Funny how it turns out to be a law office. And so convenient to have a Subway right next door!
How is it possible for someone to bilk and bedevil all these people? For starters, the pandemic has put many into financially precarious positions. Folks are desperately looking for work and eager to seize any opportunity. Con artists understand vulnerability and exploit it. Secondly, it is easy to fake things in the digital age. Apparently much of the Redbird website consisted of stolen images and fictional bios. Finally, any of us are capable of being fooled. Con artists know that even the smartest and most skeptical of people can be victimized if the pitch is sufficiently tailored to them. In fact, intelligent people often fall victim to scams because they are convinced that they cannot be scammed!
I’ve been fascinated by con artists since the 1973 movie The Sting (a classic long con). In that movie, charming small-time rogues (Robert Redford and Paul Newman) manage to rip off a big-shot gangster (Robert Shaw). It’s all very feel-good because Shaw’s character is a baddie, and they have to overcome his naturally suspicious and conniving nature. But most cons target regular people who don’t have those traits. Everyday folks are mostly trusting of others because societies run on trust. Con artists know this and exploit it.
One of the few scholarly treatments of con artists is David W. Maurer’s 1940 book The Big Con: the classic story of the confidence man and the confidence trick. Many of the practitioners of the grift revealed elements of their craft and a truism emerged: “you can’t cheat an honest man.” The con artists relied on the greed of the mark to string him along. An honest man would recognize that the opportunity he was presented with was “too good to be true” and thus could not be taken advantage of.
But that’s not entirely true. Lots of honest, well-intentioned people get conned, mostly because criminals are not only slick but also don’t give a shit about who they hurt. Most ordinary citizens aren’t like that and thus don’t “think like a crook.”
The internet age has given the con artist a new platform and new tools. It’s bad enough we have to worry about identity theft, we shouldn’t have to deal with jerks like Ali Ayad, too. I suppose the old maxim of caveat emptor (buyer beware) is more important than ever these days. In America’s Wild West it was “keep an eye on your gold and a hand on your gun.” For those of us at home and behind our computers, it’s more like “keep your wallet in your pocket and your finger off the ENTER key!”
Be sure to check out BBC reporter Catrin Nye attempting to confront Ayad about his bullshit. His passive-aggressive and dissimulating responses are the obvious products of a morally corrupt person. His 90,000 Instagram followers ought to take a second look.
*Newton’s book is really quite remarkable and worthy of a read.
Mark C. O'Connor 