Tweet On Nov 2, 2011, Senator Tom Udall of New Mexico introduced a Constitutional Amendment that would overturn the Citizens United decision of the Supreme Court (Technorati / WSJ).

The managers of Bank of America, who accepted $45 billion in TARP money, and decided to pay back its customers with a $5 per month fee for the privilege of holding a debit card, recently recently decided to reverse course on the fee for debit cards ( CBS Miami /Oregon Live).

Meanwhile, back on the streets, the authorities appear to believe that a show of force and the use of force by the police will quell the demonstrations. Yet the opposite is the case. As the cops overreact – pepper spraying 4 women in NYC (NY Times / YouTube), running over a lawyer for the Occupiers (CBS / Daily Mail / Salon / Yahoo) people get angrier and join the Occupation – causing the police to either moderate or escalate their response.

After a US Marine Corps veteran of the Iraq war was injured in Oakland other veterans come to occupations all over the country. They came quoting Smedley Darlington Butler, the Marine Corps General who wrote “War is a Racket,” ISBN: 978-1434407009, and figured in the events described in “The Plot to Seize The White House,” by Jules Archer, ISBN: 978-1602390362.

These are examples of balancing feedback loops, as described by Dana Meadows in Thinking in Systems, A Primer, ISBN: 978-1603580557. (A researcher with Jay Forrester at MIT and Dartmouth, Meadows founded the Sustainability Institute.)

The initial arguments that “they are young, educated, and unemployed … they should go get a job” are countered by “If they could get jobs they’d be working,” and “look for yourself – they’re not all kids.”

The Murdoch media (Fox News / NY Post / Wall Street Journal) paint the Occupiers as crazy. People go to talk to the Occupiers and realize that some of what they say makes sense – and most of what they say makes more sense than some of the comments made by people running for President.

Writing in the NY Times, Alice Speri said (here) “Occupy Wall Street has an image of being mostly white.” Deeper into the same article she wrote “A survey conducted at Zuccotti Park by Fordham University a month into the protests … found that 68 percent of the protesters were white, 10 percent were black, 10 percent were Hispanic, 7 percent were Asian and 5 percent were from other races.”  And the demographics at Zuccotti Park closely match the demographics of the USA. According to the United States Census Bureau, quickfacts.census.gov, the USA is 63.7% white, 12.6% black, 16.3% Hispanic, 4.8% Asian, 2.6% other. So yes, 68% of the protesters are white, while only 63.7% of the population is white, and  blacks and Hispanics, are slightly underrepresented at Zuccotti Park. But 7% of the protesters are Asian and 5% are “Other”; while Asians and “Others” constitute 4.8% and 2.6% of the population, respectively. Does that mean the protesters are overwhelmingly Asian? Or overwhelmingly “Other”? I think it is more reasonable to conclude that the protesters match the demographics of the USA.

The Occupiers are angry. But they are also, like the “Dancing Guy” and the “First Followers” (YouTube) leading a movement.

Meadows, Forrester, and other systems thinkers know that all bubbles pop, all positive feedback mechanisms are eventually moderated. My question is not whether the Republicans and Tea Partiers will overreach in attempting to actualize Rush Limbaugh’s Jan. 16, 09 wish that Obama fails (Limbaugh / You Tube). It’s clear that they are. The questions are “By how much will they overreach?” and “What will be the reaction?”

(And as I wrote, here, “it is patriotic to question the wisdom and judgment of the President. However, a hope that the President fails is hope that the United States fails. This is many things, but it isn’t patriotic. Working to actualize that hope is treason.”)

Index to recent posts on Occupy Wall Street.

1. It’s The Feedback; It’s Always The Feedback, 11/3/11, here.
   
2. Occupy Wall Street News is Fit To Print, 10/30/11, here.
   
3. Occupy Wall Street – Demands, 10/28/11, here,
4. Progressive Tax Policy, 10/28/11, here,
5. Occupy Wall Street – Why are They There?, 10/19/11, here,
6. Corporations Are NOT People, 10/13/11, here,
7. Protesting Marked Cards and a Stacked Deck, 9/22/11, here,
8. Saving the Economy, Part Deux, 9/12/11, here,
9. Nuclear Power: Present Tense, 9/12/11, here,
10. Saving the Economy, Numero Uno, 9/12/11, here,
11. Zuccotti, the song, unmixed mp3,    lyrics in pdf,

What would I #AskObama (on Twitter or in person)?

1: #AskObama Economists think in terms of resources. How do we change the conversation to think in terms of processes, systems, interactions?

2: #AskObama Neoclassical Economics: Resources & Wastes. Ecological Economics: Systems: Stocks, Flows, Processes. Burn Coal: Fuel ergo Waste. Solar: No fuel ergo no waste.

3: #AskObama Ecological Economics: “Like neoclassical but a better understanding of time and costs.” Marlboro MBA Managing for Sustainability.

At 2pm EDT, July 6, 2011, President Obama will participate in the first Twitter town hall at the White House to discuss the economy and jobs with Americans across the country. The entire event will be streamed live at WhiteHouse.gov. Right now, thousands of people are talking about the event and asking questions on Twitter, using the #AskObama hashtag.  Take a moment to join the conversation and ask your own question.

Tweet After Chernobyl, Hans Bethe, pictured at left, said “the Chernobyl disaster tells us about the deficiencies of the Soviet political and administrative system rather than about problems with nuclear power” (PBS).  Dr. Bethe is right.  Managing nuclear power and our energy infrastructure is not limited to physics and engineering. It also involves economics, human ecology, national security and systems dynamics. It is logical to conclude that because the Chernobyl disaster was a hydrogen explosion in a badly designed nuclear power plant brought about by Soviet style mis-management, nuclear technology can be implemented safely. However, the data from Three Mile Island and Fukushima suggest that nuclear power, when implemented safely, is too expensive to compete with alternatives (hence the industry needs loan guarantees here in the USA). We need to think about energy in the context of Systems Dynamics, as discussed in “Thinking in Systems,” by Dr. Donella Meadows, also pictured at left, of MIT, Dartmouth, and the Sustainability Institute.

Similar arguments have been advanced after Fukushima. “As long as we don’t build them near earthquake faults, especially earthquake faults near oceans …” While the probability of an accident is low (altho business as usual does raise some concerns) the probability of an accident that occurs being catastrophic is very high!

Looking at Indian Point, which is on an earthquake fault, and thinking about systems, Chernobyl, Three Mile Island, and Fukushima …

The area within a 50 mile radius of Indian Point includes New York City, Westchester, Rockland, and Nassau counties of New York, western Connecticut, and northern New Jersey. About 20 million people live there. Entergy says it’s “Safe, Secure, and Vital.” Others – who live near the plant – say it’s not safe, not secure, not vital, and Should Be Closed!

Indian Point is owned by Entergy, which has recently agreed to to notify state regulators of any major changes to the company’s administrative and financial operations, here.

The Price Anderson Nuclear Industries Indemnity Act (described here on the home pages of the NRC) limits the liability of a nuclear accident to $7 billion.  If we look at Chernobyl and Fukushima as examples, in the event of an accident,the area outside the plant would become a ghost town. Let’s do the math: $7.0 billion divided by 20 million people is … $7,000,000,000 divided by 20,000,000 people … $350 per person.  This includes privately owned residential real estate, commercial real estate, public community owned properties such as public schools, from elementary schools up to City College, infrastructure such as the George Washington Bridge, and properties such as Columbia University, New York University, etc.

In the event of a catastrophic accident at Indian Point, whether caused by nuclear engineering, or something akin to Soviet style mismanagement, the owners of Indian Point and their insurers would be on the hook for $350 per person for everyone who lives in or owns property in New York City, Westchester, Rockland, Nassau, Western Connecticut and Northern New Jersey. While it is true that real estate values have dropped somewhat in recent years, it is reasonable to assume that the 20 million people and others with interests in this area have a net worth somewhat greater than $350 per capita.

Matthew Wald, in the New York Times, Friday, May 13, 2011, wrote, “Disaster Plan Problems Found at U.S. Nuclear Plants” (click here).  Wald and Hiroko Tabuchi also reported “Japanese Reactor Damage Is Worse Than Expected” here,

In a development that is likely to delay efforts to bring the Fukushima Daiichi Nuclear Power Station under control, the plant’s operator said Thursday that one reactor, No. 1, had sustained much more damage than originally thought and was leaking water.

There is less water than expected, water levels are about 1.0 meters below the bottom of the fuel rods normal position. …Junichi Matsumoto, a Tepco spokesman said “Exposed fuel has probably melted and slumped to the bottom of the vessel”. However, temperatures are cooler than expected – between 100 and 120 degrees Celsius / 212 to 248 degrees Fahrenheit.

David Lochbaum, of the Union of Concerned Scientists, was quoted “As bad as things are, they’re getting better.”

As Craig Bennett, in the Guardian, UK, wrote (here), “Fukushima shows us the real cost of nuclear power…. The economics of nuclear power don’t add up – which is even more reason to invest in renewable energy. ”

The real probablility of a nuclear disaster is such that we have had three since 1979. Indian Point, in 1979, Chernobyl in 1986, and Fukushima in 2011. All were exacerbated by multiple factors and a reinforcing feedback.

At Three Mile Island and at Fukushima, failures in the cooling system led to bigger problems. At Chernobyl it was the design of the cooling system – graphite tips – that led to the explosion.

Fukushima

1. Earthquake triggers a tsunami.
2. Tsunami knocks out backup power.
3. Disrupts cooling systems.
4. Magor leaks of radioactive materials into the Pacific Ocean.

Three Mile Island Event, described at Nuclear Tourist,

1. A valve between the condenser and the pump on the secondary side failed in the closed position, which reduced the amount of water being supplied to the steam generator; the main feedwater pumps and the turbine tripped within seconds.
2. All the water on the secondary side boiled within minutes.
3. The emergency feedwater pumps, which started as expected, were unable to inject water into the steam generators because several valves in the system were closed.

Chernobyl

According to the Nuclear Tourist, prior to Fukushima, here,

“The accident was by far the most devastating in the history of nuclear power, Emergency workers were exposed to high doses of radiation; the surrounding population to far less, An increased number of radiation-related thyroid cancers is now evident, Other than thyroid cancer, long term health impacts from radiation have not been detected, Severe environmental impacts were short-term, Low-level radioactive contamination will persist for decades, Chernobyl-type reactors have been upgraded for safety, Assistance for affected areas and populations remains essential, Principal examples of assistance activities in the United Nations system.”

According to Richard Rhodes, author of “Nuclear Renewal“, Penguin Books, described here on Frontline, on PBS,

“The immediate cause of the Chernobyl accident was a mismanaged electrical-engineering experiment. Engineers with no knowledge of reactor physics were interested to see if they could draw electricity from the turbine generator of the Number 4 reactor unit to run water pumps during an emergency when the turbine was no longer being driven by the reactor but was still spinning inertially. The engineers needed the reactor to wind up the turbine; then they planned to idle it to 2.5 percent power. Unexpected electrical demand on the afternoon of April 29 delayed the experiment until eleven o’clock that night. When the experimenters finally started, they felt pressed to make up for lost time, so they reduced the reactor’s power level too rapidly. That mistake caused a rapid buildup of neutron-absorbing fission by products in the reactor core, which poisoned the reaction. To compensate, the operators withdrew a majority of the reactor’s control rods, but even with the rods withdrawn, they were unable to increase the power level to more than 30 megawatts, a low level of operation at which the reactor’s instability potential is at its worst and that the Chernobyl plant’s own safety rules forbade.

At that point, writes Russian nuclear engineer Grigori Medvedev, “there were two options: increasing the power immediately, or waiting twenty-four hours for the poisons to dissipate. [Deputy chief engineer Dyatlov] should have waited…But he [had an experiment to conduct and he] was unwilling to stop…He ordered an immediate increase in the power of the reactor.” Reluctantly the operators complied. By 1 a.m. on April 26, they stabilized the reactor at 200 megawatts. It was still poisoned and increasingly difficult to control. More control rods came out. A minimum reserve for an RBMK reactor is supposed to be 30 control rods. At the end, the Number 4 unit was down to only six control rods, with 205 rods withdrawn.

The experimenters allowed this dangerous condition to develop even though they had deliberately bypassed and disconnected every important safety system, including the emergency core-cooling system. They had also disconnected every backup electrical system, down to and including diesel generators, that would have allowed them to operate the reactor controls in the event of an emergency.

At 1:23 in the morning, the engineers proceeded with their experiment by shutting down the turbine generator. That reduced the electrical supply to the reactor’s water pumps, which in turn reduced the flow of cooling water through the reactor. In the coolant channels within the graphite-uranium fuel core, the water began to boil.

Graphite facilitates the fission chain reaction in a graphite reactor by slowing neutrons. Coolant water in such a reactor absorbs neutrons, thus acting as a poison. When the coolant water in the Number 4 Chernobyl unit began turning to steam, that change of phase reduced its density and made it a less effective neutron absorber. With more neutrons becoming available and few control rods inserted to absorb them, the chain reaction accelerated. The power level in the reactor began to rise.

The operators noticed the power surge and realized they needed to reduce reactivity quickly by inserting more control rods. They hit the red button of the emergency power-reduction system. Motors began driving all 205 control rods as well as the emergency protection rods into the reactor core.

But the control rods had a design flaw that now proved deadly: their tips were made of graphite. The graphite tips attached to a hollow segment one meter (3.28 feet long), which attached in turn to a five-meter absorbent segment. When the 205 control rods began driving into the surging Number 4 reactor, the graphite tip went in first. Rather than reduce the reaction, the graphite tips increased it. The control rods displaced water from the rod channels as well, increasing reactivity further. All hell broke loose–The reactor exploded.

The explosion was chemical, driven by gases and steam generated by the core runaway, not by nuclear reactions; no commercial nuclear reactor contains a high enough concentration of U-235 or plutonium to cause a nuclear explosion.

Adi Narayan compared Fukushima, Chernobyl, Three Mile Island on Bloomberg News, here, on March 17, 2011, a week after the disaster started in Japan.

“Radiation leaks from Tokyo Electric Power Co.’s earthquake-stricken reactors in northeastern Japan represent the worst nuclear power accident since the meltdown at Chernobyl, Ukraine, almost 25 years ago, scientists say.”

This is also described on “Chernobyl, Reality and Myth,” here. Chernobyl and Three Mile Island are described here, by Marc de Piolenc, who concludes “Far from causing a loss of confidence by the public in nuclear power, TMI should have bolstered it!”  What de Piolenc and other writers, miss, is that nuclear power and energy infrastructure is not limited to physics and engineering; it also involves economics, human ecology, national security and systems dynamics. The people on Wall Street understand this.

As described by Jane and Michael Hoffman in their 2008 book Green Your Place in the New Energy Revolution, and Al Gore in Earth in the Balance, in 1992, nuclear power was “killed” by the dynamics of the systems.  While accidents may be improbable, but when a accident occurs, as we have seen in Three Mile Island, Chernobyl, and Fukushima, the probability is very high that it will be catastrophic. At the very least the investors will see their assets transformed into liabilities.  There are safer, easier, more reliable, and faster ways to make money.

An artist’s view is here.

But the last words are provided by Mycle Schneider, writing “Nuclear Power in a Post-Fukushima World” for the Worldwatch Institute, draft available (pdf):

“In the United States, the share of renewables in new capacity additions skyrocketed from 2 percent in 2004 to 55 percent in 2009, with no new nuclear coming on line. In 2010, for the first time, worldwide cumulated installed capacity of wind turbines (193 gigawatts), biomass and waste-to-energy plants (65 GW), and solar power (43 GW) reached 381 GW, outpacing the installed nuclear capacity of 375 GW prior to the Fukushima disaster. Total investment in renewable energy technologies has been estimated at $243 billion in 2010.”

“As of April 1, 2011, there were 437 nuclear reactors operating in the world – seven fewer than in 2002.”

I am not opposed to nuclear power. Looking at the data, however, it is clearly not competitive with solar, wind power, or renewables.

For more on the potential of renewable energy,  as outlined by the Intergovernmental Panel on Climate Change, click here.

in black and white, because some ideas are.

Tweet    During the Great Depression the Classical Economists said “Unemployment is voluntary. Business owners will not voluntarily keep the means of production idle.”  While he had been a student of classical economics, John Maynard Keynes observed that the data didn’t fit the theory. And, he reasoned, if the observable data don’t fit the theory, the theory must be flawed.   “Business owners are risk averse,” he saw. “A employee needs to be productive, needs to make widgets. But if no one is buying widgets, then contrary to classical theory, factory owners will fire workers and keep capital idle rather than hire workers to create excess inventory. That’s just common sense.”

We see this today.

When unemployment was low, for example in the United States during the tech boom of the 1990′s, people acted on the premise that “There is so much work that we could hire and good people and train them.”  Today hiring managers seem to be acting on the premise that “There are so many people looking for work that they can wait for the perfect candidate.” Perfection being unattainable, jobs go unfilled. This is ok, in this context, because

• “Budgets are tight.”
• “The future is uncertain.”
• “Money not spent on a new hire can be saved or used to pay down debt.”

Keynes also observed that the government is an employer that does not need to worry about going out of business. Building infrastructure is government employment that is investment for the future. These observations are as valid today as they were 80 years ago.

Back to the problem of today’s unemployment, we also see hiring managers faced with dozens, perhaps hundreds, of qualified applicants, including many who are out of work, and many who are “over-qualified.”  Suppose a hiring manager has 100 resumes. Each has two pages and a one-page cover letter.  At one minute per page, it would take 300 minutes – 5 hours – to read the resumes and cover letters.  Assuming half are qualified applicants, and the hiring managers throws darts, he or she has a 50/50 chance of finding someone good. While no one with integrity would do that; HR must read resumes and talk to people on the phone trying to send the hiring managers a reasonable number of the best resumes. The level of specialization in today’s world makes the job harder. If someone talks slowly in a phone interview are they thoughtful, looking up the answer on the Internet, or stupid? Again, with 20 or 50 new resumes each day, why not wait?  HR and hiring managers may say “these applicants seem to be really good, but are they? let’s see who else is out there.”

The decision to hire the employer closes the door to all other candidates. If the new employee doesn’t work out, which may not be evident for 3 to 6 months, the employer has to fire the employee – which costs time and money, and and then go thru another round of search, weed out, and ultimately hire.  From the employer’s perspective the biggest risks are that the prospective employee is either incapable of doing the job, as advertised on the resume, or unwilling to do the job, and as promised in the sales call that is the interview.

But let’s take a step back. Let’s look at the economy from 30,000 feet, or 10,000 meters, and look thru the lens of “sustainability.”  Consider what our competitors in other countries are doing. Every developed country except the United States has a single payer health care system which covers every citizen and even tourists. A high speed rail system links people in Europe from Madrid to Rome, Paris, Berlin, Vienna, Amsterdam, and London. Germany is replacing their nuclear plants – which 10 years ago provided 29% of their electricity and today provide 20% – with clean, renewable, sustainable energy from wind, solar, and combined cycle hydro and biofuel systems.  What about a domestic high speed rail infrastructure efficiently linking cities from Boston to Miami, New York to San Francisco, LA to Seattle (and Vancouver) and Chicago to Denver to Dallas, Houston, Austin, Reno, LA, and Mexico?

Can we do this? How long would it take? How much would it cost? What is the multiplier? How many jobs would be created? We have 14 or 15 million unemployed people, millions others who have been out of work so long that they are not counted, and countless more who are underemployed! How many jobs would we create building a sustainable energy infrastructure and a high speed rail infrastructure?  With wind turbines offshore of the East Coast in up and down the Great Plains and solar modules on the roof of our homes, schools, office buildings, stores and factories? And with insulation and cogeneration basically doubling building energy efficiency?  Can we retrain unemployed coal miners in manufacture of solar modules, mounting systems and wind turbines?  The answer is of course. The questions that matter are “How much would it cost?” and “Can we afford not to?”

In the last 210 years we – humanity – have increased atmospheric carbon dioxide from 290 parts per million and about 2.8 trillion tons to 390 ppm and 3.6 trillion tons.  Looking at the data Arrhenius concluded that increasing carbon dioxide in the atmosphere would make summers warmer in Scandinavia. He was right.  However, we now know that burning fossil fuels contributes to storms, floods, the death of coral reefs and the challenged food supply of climate change. We also know that domestic oil production peaked in 1971 and international production is peaking now.  Do we want to blow up every last mountain in Appalachia for coal?  Do we want to destroy water supplies for methane?  Don’t we realize that sooner or later we, or our children, will have to shift the energy paradigm to one that is sustainable?  And beyond that, fuel free energy systems cost less. While this actually hurts GDP – GDP measures spends not value – repair of the damages caused by the earthquake – tsunami – nuclear disaster at Fukushima (IAEC Log) and the Deepwater Horizon will contribute to GDP – but these decrease Genuine Progress Index (wiki). These are ‘Uneconomic Growth.” Fuel free energy systems contribute to the Genuine Progress Index and other indices that measure wealth and happiness.

Nicole Polozzi, as "Snooki"

Are there differences between Fukushima Dai-ichi and Chernobyl?

And is Fukushima worse than Chernobyl?

A teenager might say “Du-uh!”

My friends from Brooklyn might ask “Is the Pope Catholic?”

Even “Snooki” and “The Situation” might ask “Are you stoopid or what?”

But the people at CNN, ProPublica and the NY Times are asking nuclear power industry experts. That’s like asking Charlie Sheen if cocaine is bad, or asking Lindsay Lohan if she really stole that necklace. They should be asking people like Amory Lovins at the Rocky Mountain Institute, Roger Saillant at Case Western’s Fowler Center for Sustainable Value, Jeremy Grantham at GMO, Cary Krosinsky at Columbia University CERC, anyone connected with academic programs in Sustainability, such as at Marlboro College, the Presidio, Bainbridge, ecological economics, systems dynamics, etc.

So for the record – here are six real differences (as opposed to the nonsense at Pro Publica here and here) and two major points of congruence.

Chernobyl Reactor, courtesy of OnLine USA News

1. Chernobyl was one reactor in a complex of three. Fukushima Dai-ishi has six, all shut down. Four are in states of emergency. In addition, six more reactors, three each, at the Fukushima Diani and Onagawa nuclear complexes are in states of emergency.
2. Chernobyl is in the forests of Ukraine. Fukushima is on the shores of the Pacific. while the cloud from Chernobyl dispersed radIoactive particles over Europe and North America, triggering birth defects at least as far away as Turkey, much of the radioactive pollutants stayed local. Fukushima is flushing radioactive materials into the Pacific. “Local” has one meaning in soils and another meaning in oceans.
3. The disaster at Chernobyl was unknown outside Pripyat and Moscow for a few days after it happened.  It was discovered by nuclear engineers in at two plants in Sweden who noticed high levels of radioactive particles outside their plants and normal levels inside the plants. They triangulated the cloud to Chernobyl. That was 1986 – before the Internet as we know it. It took 3 days to a week for the world to know what happened. We are watching the disaster at Fukushira Dai-ichi as it happens.
4. Japan is about 200 – 250 miles wide, east to west, at Fukushima. The U. S. says “stay 50 miles away.” Translation: “This event is rendering uninhabitable an area roughly the shape of semicircle with a 50 mile radius on Japan’s eastern shores 100 to 150 miles north of Tokyo. Half of the semicircle is in the Pacific. How many people lived there? What was the value of the land before the earthquake – tsunami – meltdown?
5. In 1986 Ukraine was a Soviet Republic. It was not a major component of the global economy. Japan is the number 3 economy in the world. Economic troubles in Japan may adversely effect conditions in the U. S. and Europe.
6. Chernobyl was human error. Fukushima was an earthquake,of 9.0 on the Richter scale followed by a tsunami followed by 154 aftershocks greater than 5.0, 27 of which were greater than 6.0. It was an “act of God.”

There are two major points of congruence:

1. We are still, 25 years after the event, witnessing after-effects of Chernobyl. We will be witnessing the after-effects of Chernobyl and Fukushima Dai-ichi for the 50 to 100 years.
2. Both are manifestations of human arrogance. And we still think we can control nature and the universe. We must learn we can not even control ourselves.

We should, with all deliberate speed, decommission every nuclear power plant. They all leak radiation.

But what to use to generate the power?

Coal? Under normal conditions coal releases more radioactive materials than nuclear power – because coal is a mixture of mostly carbon with impurities including arsenic, lead, mercury, zinc, and thorium and uranium, and the wastes are not regulated or controlled.

Oil? Natural gas? How do we extract oil and natural gas? What are the costs economists call “externalities?” The costs we push onto the government (i.e. the taxpayers) and the costs we push onto our children?

We MUST move to a sustainable energy paradigm.  Solar, wind, geothermal, and the negawatt virtual turbines of conservation and efficiency!

——–

Fifth in a series on the economics, ecological economics, finance, logistics, and systems dynamics of nuclear power in the light of the ongoing catastrophe at Fukushima.

Index to the series

1. Earthquake, Tsunami and Energy Policy, March 11-13, 2011. Here.
2. After Fukushima, Wall Street Bearish on Nuclear Power. March 14, 2011. Here.
3. Fukushima: Worse than Chernobyl? Here.
4. Fukushima: GE Mark 1: Unsustainable by Design. Here
5. Is Fukushima Dai-icha Worse Than Chernobyl? Here.

Tweet

“Join me in setting a new goal:  By 2035, 80 percent of America’s electricity will come from clean energy sources.”  – President Barack Obama, State of the Union, January 25, 2011.

When a mouse makes noise, only other mice and local cats take notice. When a lion roars, however, everyone notices; other lions, elephants, zebras, gazelles, smaller cats, mice ….

New Jersey is one of 27 states, which, like the District of Columbia, have a Renewable Portfolio Standard, or RPS, mandating that by a certain date, a specific target of a renewable energy capacity will be deployed. An additional five states have non-binding goals. (This are listed by the U. S. Dept. of Energy at Energy Efficiency and Renewable Energy.)

In New Jersey the RPS is 22.5%, about 1.6 gigawatts (GW), by 2021. New Jersey today, in January, 2011, has about 300 megawatts of renewable energy capacity.  I am confident that New Jersey will meet, and possibly exceed its RPS goal. We started with 9.0 kilowatts (KW) of photovoltaic solar in 2001. We were up to 211 megawatts (MW), by the end of September, 2010, and we added an additional 24 MW in December, 2010. Even when you factor in 30 MW of biomass, 8 mw of wind power, and 1.5 mw of fuel cells, this is less than 20% of the goal of 1.6 gw. (This is shown at the NJ Clean Energy Program Renewable Energy Technologies page.) However paradigm shifts are systems phenomena. They occur at exponential rates.  We went from 9.0 kw in 2001 to 211 mw in mid-2010, to 360 mw  by the end of 2010.  In December, 2010, we added an additional 10% – moving from 236 mw to 260 mw.  We are hitting the handle of the hockey stick.

California’s RPS is 33% by 2030. In Texas, the RPS calls for 5,880 MW by 2015. California , New Jersey and Texas are the roaring mice in domestic US clean energy policy. And a cat – the lion in the Oval Office – the President of the United States – has listened to the mice in California, New Jersey, and Texas. Last night he roared.

Courtesy of the White House.

In his “State of the Union” address, January 25, 2011, President Obama set a lofty goal: “80% clean electric generation by 2035.” While I think we can do better – 100% clean renewable sustainable energy by 2025 – Obama’s goal is specific, measurable, achievable, realistic, and time-bound. It’s SMART. It’s also wise.

As a President should, Obama is thinking, and thinking long term.  We at Popular Logistics wish him success because success for a President means a better future for the nation.

-

Two observations.

1. There is no such thing as “Clean Coal.” Even if we capture and sequester all the carbon dioxide produced from burning coal, which is expensive, there are still impurities, such as arsenic, lead, mercury, uranium, zinc in coal. And mining and processing coal is a very dirty business.
2. Nuclear is heavily regulated. We exercise tighter control over the wastes. In practice, nuclear power is arguably cleaner than coal. But in reality, things happen.

One question is “Can we achieve Obama’s Clean Electricity Goal?” But a better question is “How can we achieve this goal? ” My back of the envelope response is:

• 100 gigawatts offshore wind,
• 100 gigawatts land based wind,
• 50 gigagwatts solar,
• 75 gigawatts stored micro-hydro or biofuel, for when the sun isn’t shining and the wind isn’t blowing.

And as Amory Lovins, of the Rocky Mountain Institute, says, “The cheapest unit of energy is the ‘Negawatt’ – the energy you don’t have to buy.”  How much can we reduce our energy requirements? How much can we gain by conservation?

Oyster Creek, courtesy of Nukeworker.com

Chicago, Illinois based Exelon Corporation recently announced that it will close the Oyster Creek nuclear power plant in 2019. (NY Times, NJ.com AP). Oyster Creek, in Lacey, New Jersey, is the nation’s oldest operating nuclear power plant. It’s roughly 75 miles south of New York City and 60 miles east of Philadelphia. Exelon was recently granted a 20-year extension on its operating license by the Nuclear Regulatory Commission despite the wishes of local environmentalists, environmental groups, and people concerned about evacuations in the event of an emergency, and public concerns from the NJ Department of Environmental Protection.

The plant uses a single pass cooling system which sucks in 500 Billion gallons of cool water each year (click here) from Barnegat Bay, heats it 20 to 30 degrees, and returns the heated water to the bay. This kills billions of adult and juvenile fish, clams, crabs, and shrimp, and hundreds of billions, if not  trillions of hatchlings, less than a centimeter in length. This has had a negative effect – possibly a disastrous effect – on the fish and wildlife populations of Barnegat Bay during the 40 year operating life of the plant to date. The NJ DEP demanded that Exelon retrofit the plant with cooling towers.

Exelon claims the cooling towers would cost $600 million, roughly $1.00 per watt for the 610 megawatt reactor. Other estimates for the cooling towers range from $200 million to $800 million. Exelon decided to close the plant rather than spend the money on the cooling towers and other maintenance.  This is a gain for current Exelon shareholders as they defer a hundreds of millions on capital improvments, and corresponding hundreds of millions of liabilities, while they collect revenues and realize profits from the sale of electricity for the next nine years.

Oyster Creek, aerial view.

While cooling towers would not pump heated water into the bay, they would pump steam into the atmosphere – which would have other environmental effects. Looked at from a systems perspectives, nuclear power is a technology for generating electricity, heat, radioactive wastes, which also presents national security challenges.

Dan Yurman, writing in The Energy  Collective, suggests that there might be more to Oyster Creek than the economics of avoiding the expense of the cooling towers. “In a December 9 message to subscribers,” he writes, “Morningstar called Oyster Creek the ‘lowest margin plant’ for Exelon, and said that it had been plagued by ‘relatively high operating costs.’”

Like Vermont Yankee (click here) and Indian Point (here), Oyster Creek is associated with leaks of tritium (here). Dennis Zannoni, the former nuclear safety engineer for the New Jersey Department of Environmental Protection, has long held that Exelon was not managing Oyster Creek safely (click here) and its operating license should have been revoked, not renewed. We wrote here about Kerry Beal, the whistleblower who exposed guards sleeping on the job at the Peach Bottom Nuclear Power Plant, and who was fired in 2007 by Exelon Nuclear.

The federal Environmental Protection Agency is expected to draft regulations in 2011 under Section 316 of the Clean Water Act to require power plants to reduce their thermal discharges into the nation’s waterways. This could have significant implications for other power plants, such as Indian Point, on the Hudson River, and the Salem plant on the Delaware.

New Jersey has 311 megawatts of solar energy, about 221 which were installed between June 30, 2009 and Sept. 30, 2010. The energy from Oyster Creek and the other nuclear power plants can easily be supplied by new photovoltaic solar systems and wind turbines. These clean, renewable and sustainable energy technologies operate with significantly lower environmental externalities – no radioactive or other hazardous wastes, no national security concerns, no fuel, therefore no mines, wells, fuel processing and transportation.

The Furman Paradox: “You want to be ahead of the curve, but not too far ahead. When the word on the street is sell, and you understand something others don’t, it may be time to buy. And remember, it’s a systems phenomenon, look for the feedback.”

The Cornick Postulate: “There are things that seem too good to be true, and yet are true – love, a child, sunset. These cannot be bought and sold; these are non-transactional phenomena.”

“Microsoft sells different flavors of soda. Apple sells water, coffee, tea, beer, wine, vodka, cheese, meats, breads, … and it also sells soda.”

Stock Price and Corporate Valuations

On Oct. 28, 2010, Apple closed at 305.24, about 4% below its the historic high of 319, reached on October 18, 2010. Apple’s earnings per share, EPS, is $15.15. It’s price earnings ratio, P/E, is 20.147. It’s market capitalization is $279.59 Billion.

That same day, Microsoft closed at $26.28, at 45% of it’s historic high of 57.625, reached on 12/17/1999. Microsoft’s EPS is 2.11, P/E ratio is 12.48, and market capitalization is $227.42 Billion, $52 Billion less than that of Apple.

If you look at a graph of their stock prices, Microsoft climbed spectacularly from 1986 to 1999, then plummeted and has been basically flat since it crashed in 2000. Apple climbed much more slowly, until recently, and may still be rising. However, while the graph may tell one thousand words, it doesn’t tell the whole story. And there are two flaws:

1. The graph is an approximation of the stock price of AAPL and MSFT from the period of 1980 to 2010. It is neither complete, detailed, or rigorous. Complete details can be found on the Internet. The graph shows that Microsoft grew during the ‘80’s and ‘90’s then spiked dramatically and crashed around 2000. Actual high point was Dec. 17, 1999. The low of 21 reached on Dec. 29, 2000. Apple was doing pretty badly during the ‘90’s, however, since Steve Jobs return in the mid to late 90’s turned around. The stock price increased to 100 in 2007 or 2008 to 318 earlier this month.
2. The graph doesn’t show the increase in market capitalization. An investment in Microsoft of about $3,000 at the IPO in March, ’86 would have been worth about $1.0 Million at the peak in Dec. ’99, and would still be worth about $455,000 today, an increase of 15,200%. Apple and Microsoft went from Million-Dollar companies in the early 1980s to companies worth $280 and $227 Billion, respectively today.

But perhaps the real insight is to view of these curves from a systems thinking perspective. Is the Microsoft stock price curve an example of overshoot and collapse? Will it recover or has it reached a steady state? Is Apple peaking? Is it about to collapse? Will it drop, and stabilize, like Microsoft, to a point less than half of it’s peak? And if so, if not now, when?

OS X, Windows 7, Windows 2008 Server

Windows Logo, TM Microsoft

A quick glance at computers running Microsoft Windows 7 and Apple OS X show a superficial resemblance between the operating systems and other software. Both are graphical user interfaces that can run similar applications software, including Microsoft Office, Sun / Oracle Open Office, Microsoft Internet Explorer (ver. 5.0 and earlier on the Mac), Mozilla Firefox, Apple Safari, Google Chrome and iTunes. However, Microsoft Windows 7 is more like it’s predecessors Microsoft Windows Vista, XP, 2000, and NT than its distant cousins, OS X (and Linux).

There are three current editions of Windows 7; “Windows 7 Home,” priced at $119.99, “Windows 7 Professional” priced at $199.99, and “Windows 7 Ultimate”, priced at $219.99.And there are seven editions of Windows 2008 Server, named: “Enterprise”, “Datacenter”, “Standard”, “Itanium”, “Web”, “Foundation”, and “HPC”. These range in price from about $300 to about $3000, depending on the size of the institution, whether it is an educational institution, a non-profit, or a for-profit corporation.  That’s 10 Different Current Editions of MS Windows!

Apple Logo, TM Apple, with a galaxy in the background

There are Two Different Current Editions of Apple OS X; one for the laptop / desktop, and one for the server.

The second best thing about Windows 7 is that it uses less memory and crashes less frequently than Windows Vista.It is not surprising that this is not highlighted on the Microsoft web-site. However, the best thing about Windows 7, according to a friend of mine who uses it, is the voice-to-speech software – you can use a microphone to dictate into your PC, and it translates what you’ve stated into a text file, or commands. I could have dictated this document. Rather than type “microsoft.com” people can say “microsoft dot com”. It’s just like “Star Trek“. This is great for people who can’t type. Yet it is not discussed on Microsoft’s own web site highlighting the “great” features of the product.

A computer running Microsoft Windows needs “Professional” or “Ultimate” to work in a corporate “domain.” A computer running Microsoft Windows in a home or college setting can run “Windows 7 Home.” However, this paper discusses the stock prices and corporate strategies of Apple and Microsoft; it does not focus on the different editions of their Operating Systems.

Strategies

De Wit & Meyer, in Strategy Synthesis, wrote “Adding a lemon-flavoured Coke to the product portfolio is interesting, maybe important, but not a stretegic change, while branching out into bottled water was – it was a major departure from Coca-Cola’s traditional business system”

Apple’s mission statement seems to be “Explore the way people use information processing technology. Develop new ways to do things. Focus on the user interface. Think Different!” Thus they observed that a simple technology for storing audio files, the mp3 file, was being used by the technically hip to store and swap copies of songs. By building a better “mousetrap” and integrating the iPod with iTunes software – which they give away – Apple became the biggest music publisher on the planet. The iPod/iTunes system also drove sales of iMacs. Children in middle school and high school own iPods. When faced with the Mac v PC decision, when, for example, they go off to college, many naturally choose Mac rather than PCs.

In the 80′s and ’90′s Microsoft made four strategic moves.

1. Write a graphical user interface – Windows, circa ’86, two years after Apple introduced the Mac, and three years after Apple introduce the Lisa.
2. Integrate their word processor, spreadsheet, and e-mail software Word, Excel, and Outlook, into a bundled product, MS Office, and integrate it with Windows.
3. Develop a “Back-Office Suite,” which is basically composed of MS SQL Server, a database manager like Oracle, MS Exchange, an E-Mail system, add an e-mail component to Office, and a couple of other technologies, such as Active Directory, designed to facilitate use of SQL server and Exchange.
4. Aug. 6, 1997, Microsoft invested $150 Million in Apple, in return for non-voting shares.

Moves 1 and 2 gave Microsoft a very strong leg up on the competition – Word Perfect, WordStar, for word processing and Lotus 1-2-3 for spreadsheets. Why learn three user interfaces when all you really needed to learn is one user interface, more or less, because each have the same basic command structure? Move 3 and advanced “server-class” computers from Compaq, Dell, HP, IBM, gave Microsoft the ability to compete with Oracle, Sybase, Informix databases and versions of Unix from HP and Sun. Move 4, according to Wired, “breathe[d] new life into a [then] struggling Silicon Valley icon.” (http://www.wired.com/thisdayintech/2009/08/dayintech_0806/). For the next few years, because of sales of Office and the different margins on hardware and software, Microsoft made more money than Apple with the sale of each Mac. Writers in the blogosphere contend that the investment also supported Microsoft’s contention that it was not a monopolist since it enabled a competitor to survive.

But lately, Microsoft doesn’t seem to have done much other than protect its profits, and profits of $4 Billion on revenues of $14.5 Billion are pretty good, and should be protected, and protect its share of the market, as they should, given the size of the market and Microsoft’s share. Bill Gates and Steve Ballmer may have read “Sun Tsu, The Art of War” but they appear to be focused on protecting their flank, If they are digging Maginot Lines, Apple is flying over and circumventing the lines with lower total costs of ownership on the iMac (they don’t crash often, they are not as suseptible to viruses as Windows machines) and with things like iPods, iPhones, iPads, iTunes, the App Store, and other new things – which drive sales of iMacs.

Microsoft just announced that the new version of MS Office for the Mac will have a functioning version of the Outlook e-mail software application. This supports my hypothesis that Microsoft is protecting its flank: thinking “people are buying Macs, they are buying Office for the Mac, they need our email software.” It will also facilitate the integration of Macs into the corporate world.

Meanwhile, the Apple iPad … doesn’t have a keyboard, a hard drive, or any moving parts. It will run for about 25 hours on a full charge. It will display documents, spreadsheets, images, presentations, and of course, e-mail and web-pages – it is a perfect device for salespeople, consultants, and people who want to read books, newspapers, browse the web, check their e-mail, and do all sorts of other information oriented work and play. It is probably water resistant. It is the perfect device for salespeople or consultants. It will also facilitate the integration of Macs into the corporate world.

So in terms of strategy, Microsoft sells different flavors of soda. Apple sells water, coffee, tea, beer, wine, vodka, cheese, meats, breads, fruits, vegetables … and it also sells soda.

- Notes

1. Bob deWit, Ron Meyer, Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage, Cengage Learning Business Press; 3 edition (April 9, 2010), ISBN: 978-1408018996
   
2. “Apple, the New Microsoft,” by Henry Blodget, 8/31/09, Business Insider, http://www.businessinsider.com/henry-blodget-apple-the-new-microsoft-2009-8
3. “Apple stock rise could have meant $4.5 Billion for Microsoft,” by Chris Foresman, ARS Technica, http://arstechnica.com/microsoft/news/2010/05/apples-stock-rise-could-have-meant-5-billion-for-microsoft.ars
4. “Microsoft’s equity in Apple”, Justin Hartman, 11/23/07, http://justinhartman.com/2007/11/23/microsofts-equity-in-apple/
5. “This Day In Tech, 8/6/97”, but John C. Abel, Wired, on 8/6/09, http://www.wired.com/thisdayintech/2009/08/dayintech_0806/
6. Stock data on Google Finance: Apple: http://www.google.com/finance?q=aapl, Microsoft: http://www.google.com/finance?q=msft
7. Microsoft Web Page describing the edition of Windows 7: http://www.microsoft.com/windows/windows-7/compare/versions.aspx
8. Microsoft Web Page describing the editions of Windows 2008 Server. :  http://www.microsoft.com/windowsserver2008/en/us/r2-compare-roles.aspx