May 28, 2012

Are Europe and Greek Debt like the Titanic and the Iceberg?

After the American Century

Imagine that Europe is a large ocean liner called the Titanic, and that it is sailing straight toward a massive iceberg that has appeared in the Mediterranean off the coast of Greece. The original idea  for the ship was to create watertight compartments (national economies) below deck, so that if one or more of them filled with water (debt), the others would not also fill up. But this original plan was not fully carried out in the actual construction. The ship turns out not to be unsinkable because its compartments are not sufficiently strong, watertight, or numerous.

If I could go back in time and rebuild the Titanic, I would carry out the original design more completely. Greek debt is the iceberg smashing into the Euro, and I would rather each national economy had largely to stand on its own. Unfortunately, the European "reform" that seems to be favored by most leaders today is to remove most of the interior barriers and thicken the outside hull of the ship as a whole. The idea is that superior leadership and regulation from the center will avoid most of the fiscal icebergs of the future, and that when they do come the improved hull with be strong enough. I would rather not make well-functioning economies hostage to the Italians, the Greeks, the Spanish, and the Portuguese, or for that matter to any country that in the future might get itself into financial trouble.

What can Europe learn from this fiasco? I suggest that it ought to learn to keep the national economies more separate, rather than the widespread idea that what Europe needs is more integration. Better, surely, (1) to prevent banks from loaning more than 4% of their total worth to a single country, and (2) to limit how much money any nation can borrow abroad, making it finance a minimum 75% of its own national debt. If its own citizens will not buy most of the debt, why should anyone else?

More than two years ago I argued that Greece should not be bailed out. I wrote then, "Greece cannot pay its bills, even in the short run. With a national debt that is more than 110% of its gross national product, and a deficit of more than 10% for this year, Greece's debt will only get worse unless and until it enacts real reforms. So far it has failed to do enough, and the deficit will only get worse."

Most of what I wrote then is sadly still accurate now, except that the rest of Europe and the IMF have been pumping money into Greece while insisting on draconian reforms. But it has not worked. The choices then as now are either Greece leaves the common currency and goes back to its traditional overspending (with periodic drachma devaluation) or it really puts its house in order. Sadly, the second task is beyond its political capacity, as its recent, failed election process demonstrates.

As the crisis has been prolonged, money has been fleeing the country for safe havens before the collapse which seems to draw slowly but inexorably closer. It is difficult to know precisely how much money has been transferred or carried personally away from Greece, but it is more than €1 billion. This money could have helped keep the economy going. It is like taking blood from a dying man. Adding further to the misery, tourists are wary of booking trips to Greece, because it may descend into financial and political chaos. Why go there when other places are far more stable?

The only bright spot here is that the rest of Europe has had 27 months to prepare itself, by putting some firewalls in place. Whether these are good enough is not clear.

Had the Greeks been hit with a natural disaster like an earthquake, they would deserve sympathy and charity. But for years the Greek insisted on spending more than they could afford. They gave massive pay increases and early retirement to state employees that were not funded by taxation. Tax evasion was massive. There is no reason for the other European states to give or to loan them any more money. Giving them another handout will only delay for a short time the day of reckoning.

May 12, 2012

Education Provides the Infrastructure of Tomorrow

After the American Century              

For decades, the United States had a Department of Health, Education, and Welfare, and while these are no longer joined administratively, politicians all too often seem to think that these three things belong together. They do not. 

Education is part of the fundamental infrastructure a nation needs for the economy to work. Nineteenth-century manufacturers understood this, and supported compulsory education beyond primary school. They did so because numeracy and literary are essential for an industrial economy. And when the US Congress created the Homestead Act of 1862, which sold land very cheaply to settlers willing to take a chance and go West, they also passed a law that gave some of the proceeds from selling that land for the purpose of creating universities. Today, some of these land-grant institutions are among the best in the world. These nineteenth century politicians understood that to develop the economy, the citizens had to be educated. 

In both the United States and Denmark recent studies have underlined the centrality of education and research to a strong economy. A US report warns that in the last decade the nation has not kept pace with others in science and technology education. A Danish study shows that people with higher educations rapidly pay so much in taxes that within just two years society has gotten back its investment in them - this in a society where there is no tuition and the state therefore knows with some precision just how much it costs to educate each student. Even humanities students, whom politicians often disparage as pursuing useless knowledge, turn out to repay the cost of their education after working for just two years, almost as quickly as the scientists and doctors, who, of course, cost more to train. 

Education is the heart of tomorrow's infrastructure. It has the power to transform people's lives, to assist people who otherwise might be helpless to make vital contributions. A blind person with a good education can work and contribute to society in many ways. I went to college with a blind man who now is a judge in the United States. Without an education, he would likely have been a lifelong recipient of welfare.

Welfare rescues people in need. Welfare may help a child to greater success later in life or help a struggling parent who later becomes self-sufficient again. But welfare is not, on the whole, an activity that can or should be justified because it is profitable. Education is another matter. A good educational system will make society more entrepreneurial, richer, more agile, more adaptable, or in short, more able to meet the challenges of the future. 

Unhappily, politicians keep forgetting this fact. The response to the world economic crisis of 2008-2009 in all too many places was to cut back on education. In 2010 California imposed severe cutbacks on its schools and universities, which already had had their spending slashed in earlier years. A state which was once a model for others, with a powerful educational sector driving economic growth, seems to have lost its way. In many schools 30% of the staff have been fired, libraries closed, and class sizes increased by 25 percent or more. At universities, required courses are not always available, and some students will not graduate on time because they literally cannot get into a course they need. And those who do get registered may not get a seat, as the classrooms often are not large enough to hold the expanded sections. 

The failure to fund education adequately is hurting the Californian economy both short- and long-term. When people do not graduate on time, they to not repay the cost of their education as quickly. And when fewer people get an education at all and more people get a compromised education, the economy will be hurt for the entire lifetime of that generation. For a state, this is not just stupid, but self-destructive. In Denmark, national and local authorities have slashed budgets, closed schools, and created a high unemployment rate among newly trained teachers. The actual number of teachers has declined by 8% in primary school, which is a sign of very real political stupidity. At universities, there is almost no hiring, and those retired are often not replaced. A generation is being thrown away, or rather being driven away.

For people with skills are mobile. A survey found that half of all Danish workers find the idea of taking their skills elsewhere in Europe attractive. In the United States, people have always been quick to pull up stakes and try their luck in another part of the country. In 2008 135,000 more people left California than moved in, a trend that is accelerating. Often those who leave are among the most talented, such as a student who gets a scholarship, or the newly graduated student. The young often vote with their feet. The old fashioned kind of infrastructure like roads and bridges stays put. But a world-class scientist can be lured away, and an unemployed PhD will not usually linger where no one wants her, and a newly trained teacher or nurse who cannot get a job may go abroad. Thousands od the best trained Greeks and Spaniards are leaving for work elsewhere, and quite possibly they will never come back.

If education is infrastructure, it is mobile infrastructure. A society that cuts education will lose not only the skills of (and the higher taxes that would have been paid by) those it never trained - it will also lose some of the best new people it has most recently trained. Imagine that one country invests millions in a new highly mobile bridge, but then decides not to use it. Instead, another country imports this mobile bridge without paying anything for it, puts it into use and immediately begins to profit from the tolls (income taxes), and from the improved efficiency in transport that the bridge provides. Education is that kind of infrastructure. Denmark and California (and many others) have built and abandoned the infrastructure of tomorrow.

May 11, 2012

Election 2012: Romney the Bully? Gay Marriage and the Election

After the American Century

The Gay Marriage issue has turned into the worst sort of public relations for Romney, who now comes across in his youth as a rich kid, who was an insensitive, intolerant Mormon bully. That was an unexpected bonus for the Democrats. How did this happen?

When President Obama announced yesterday that he supported gay marriage, he did not do so because there was pressure on him to do so. Nor did he say this because Joe Biden "inadvertently" said he supported gay marriage last week. Anyone who believes that is naive. Biden and then other prominent Democrats came out in favor of gay marriage as trial balloons, to see how the public would react. 

On an emotional issue of this kind, Obama does not just casually make a statement. We can be sure that his staff consulted carefully on this issue and laid out a strategy to make the most of it. The goal here is not to win the gay vote, which is likely Democratic anyway. The goal is to force Romney to make a hard choice. Either he can come out against gay marriage and alienate moderates or he can alienate the Republican right, which already distrusts him, by remaining silent on the issue or saying that gay marriage ought to be allowed. Romney wants desperately to move to the center and look moderate, in order to win over the Independent and moderate voters. Obama is forcing Romney to make a hard choice. He cannot afford to create a rift with the Republican right, but he also cannot afford to embrace them too closely if he wants to become president. 

What is fascinating in this case is not the specific issue but the way that the Democrats are using what has been a Republican issue and making it their own.Obama and his advisers evidently have decided that bringing up such issues can exacerbate the divisions in the Republican Party. At the same time, they surely have calculated the potential effect on voting in swing states before going ahead with this plan. Put another way, this announcement makes Obama stronger in New York and California, which he would win anyway, and weaker in Alabama and Mississippi, which he has little chance of winning. The key question is whether this strategy will help him to win the swing states, especially Florida, Virginia, Ohio, Indiana, New Hampshire, Colorado, New Mexico, and Nevada. 

Romney when in High School

Obama got an unexpected bonus from this strategy, when it came out that Romney, when in high school, was one of a group of bullies who persecuted one of their fellow students, This was in Michigan, and he was the son of the Governor, attending a private school. The student he attacked had long hair and was gay, though apparently not yet "out of the closet" at the time. Romney and his buddies chased him, caught him, held him down, and clipped his hair off. Apparently this bullying was directed more at the long hair and the presumably left-leaning principles that tended to go with it. This act reveals an intolerant, vigilante side of Romney that moderates will find unpalatable. Ganging up on people and persecuting them because they are different suggests an arrogance and insensitivity unacceptable to much of the public, though it could help Romney hang on to the KKK vote.

May 09, 2012

Danish and American Medical Systems, a Basic Comparison

After the American Century 

Americans often hear that the Obama medical plan is socialistic. It is not, as anyone living in France, Germany, England, Holland, or the Nordic countries knows. The fundamental difference can be stated quickly and easily. In Europe, taxes pay for medical care, and you do not need to buy insurance. All residents have a card that they show when visiting a hospital or doctor, and they do not pay anything for their treatment. Furthermore, Europeans live longer than Americans.

Americans have to pay for insurance to avoid paying medical bills. Even so most  policies have rather large "deductables." Often the pateint must pay the first $500 or $1000 or more before the coverage kicks in. There are situations where the insurance company refuses to pay, for whatever reason. And of course there are lots of forms to fill out.

Having experienced the Danish and the British systems first hand, I can say that one of the great things about them is that the patient does not have to fill out forms, save receipts, make copies, or anything like that. You show up, get cared for, and go home. The only administration fromteh patient's point of view  is a simple swipe of a card. That is a socialist system.

What Americans now have is not socialism, but a hybrid system. The health care is still often private, private insurance companies get their hands on a lot of the money that flows through the system, and patients still have to pay quite a bit, by European standards. The Americans have largely private delivery of service, mostly private insurance, and the whole thing costs almost twice as much per person as in Europe.  Europeans have largely public delivery of service and only supplemental private insurance, but not so many people have that. I do not have private insurance for example, and even if I did have such a policy it would not cover the really big operations, which are almost all done in the public hospitals, which alone have the facilities and the research-based expertise. 

Which system is better? In terms of cost, the Americans pay a great deal more, overall, and yet millions of people have not had coverage until recently, and all must buy health insurance.  In the Nordic countries, everyone is covered and the total cost per capita is much lower. In Denmark, Sweden, Germany and France the annual costs (2008) were in each case close to about $3750 per capita. In the same year, according to the Kaiser Family Foundation, the US was spending twice as much, or $7500 per person. Partly this is because in Europe malpractice suits are relatively rare and pay infinitely less than in the US. Tthis in turn means that there is none of that expensive malpractice insurance. I do not mean to say Danish doctors never make mistakes, but the system automatically covers the costs of mistakes that can be rectified, so no one sues to get back extra medical costs, though they may sue for mistakes that cannot be corrected and fatal errors.

In terms of life expectancy, Danes live on average about four months longer than Americans (78.8 vs. 78.5 years). The results are even better in Germany (80.2), France (81.5), and England (80.2). Perhaps Americans should look more closely at Canada, where life expectancy is 81.5, fully three years longer than in the US. (All of these statistics come from the CIA World Factbook.) Putting this another way, because care is universal in Canada and Europe, the poor are generally healthier than in the US, where they often have to go to emergency rooms for treatment and do not have a regular doctor.

In both the UK and Denmark I know from personal experience that I can choose my own doctor, and I also have the right to change doctors if I want a different one. 

I am not going to say that the Nordic system is perfect, but it works well, and I have a bit of extra information, as my wife works in quality control at one of the Danish hospitals. 

For Americans who hate the Obama plan because it seems to rob them of their freedom, think of how free from worry you would be if medical care was a certainty, regardless of your wealth or whether you had a job or not. From Europe, the problem with the Obama plan is that it does not go far enough, leaving so much in private hands and building so much profit-making into the system. Think how much less expensive it would be without all those insurance company salaries, lawyer fees, accountants, court cases, malpractice payments, etc.

So, where do I stand on the Obama plan? It is probably the best that Americans can do at this time, as a compromise between the warring factions. I see nothing wrong with compelling all drivers to have a license to drive, and by the same token see no reason why people should not be compelled to have at least basic health insurance. Yet, if entire states want to opt out of the system, I think that ought to be allowed, with the understanding that then ALL the citizens of that state would have to go over to the local alternative programs or lack thereof. Opting out would create expensive complexity, I fear, but the federal system could and perhaps should allow that choice. Many companies have employees in several states, and administering such variety will be a headache. Moreover, some families have breadwinners in more than one state, creating further possible complexities,

The bottom line: the European system is preferable, supplying care to all citizens and eliminating individual economic ruin for those who have severe illness or who are victims of nasty accidents. No doubt the best care is often the most expensive care, which only wealthy people can afford, in exclusive private hospitals. But very good care is possible at much lower cost than Americans have been accustomed to paying.

Final thought. Japan's average medical costs per person are fully $1000 less than in Europe, but its citizens live longer than in any other large industrial country: 83.9 years. That is more than 5 years longer than in the US. There is no correlation between how much money a nation spends on health care and how long its citizens live.

May 05, 2012

Technology: Avoid Multitasking and Put All Your Eggs in One Basket.

After the American Century                               

A new study has confirmed that my writing habits a couple of years ago were better than those I have today. No one was examining my behavior directly, but this is an inescapable conclusion from a study made of office workers, reported on in the New York Times. Each wore heart monitors and the study examined stress levels and computer use. It found that people who continually checked their email were less effective and had higher levels of stress than those who mostly worked off-line.

This result does not surprise me. For some years I intentionally did not hook up my home computer to the Internet, so that I could not be distracted from writing by in-coming emails and by the temptations of surfing the net. There was a computer downstairs where I could do those things, so I was not cut off. Those were productive years, and I will try to shut off the email most of the time at home again.

During this off-line productive period, in Technology Matters, among many other things I wrote about the myth of multitasking, citing various reports that have found people are less effective when trying to do several things at once. In one sense, this is surely obvious. When writing an article, it is not a good thing to be interrupted to reply to an email, because it breaks the concentration. The office workers in the new study jumped from one window to another on their computers frequently. Those hooked up to the email did so 37 times every hour. On average they were looking at any one page for 97 seconds. Those disconnected stayed changed windows only 17 times an hour, or once every 211 seconds. Of course every time one changes from one window to another it does not mean one is changing tasks. When I create a powerpoint presentation, for example, I am continually jumping from one window to another as I search for images, look at the paper it is to accompany, and so forth.  I will shift back and forth between the same two or three windows when doing this or many other tasks. But email generally is not on the same topic as whatever one was working on, and the difference between those with and without email strongly suggest how disruptive it can be.

When such disruptions continue all day, the result is stress, not least because one is continually being reminded of new tasks, unfinished business, and possible problems. Mark Twain's Pudd'nhead Wilson once wisely advised against the popular wisdom of "Don't put all your eggs in one basket." To the contrary, he declared, "Put all your eggs in one basket, and watch that basket."

To be productive with the Internet always at hand requires new habits of attention.

May 02, 2012

Technology: Energy Rationing or Quotas? America VS. Europe, 2100

After the American Century

In the following, I imagine the world energy situation in 2100, based on cultural differences between Europe and the United States.

During the twenty-first century, every nation responded to global warming and the accompanying shift away from fossil fuels to non-polluting, renewable energies. Norway produced virtually all of its electricity from waterpower, and with the addition of windmills and ocean current generation, it became a major electricity exporter after its North Sea oil fields ran out. With the exceptions of Dubai and the Arab Emirates, however, few oil exporting nations made a graceful transition to sustainability, and some ended in bankruptcy. In contrast, solar power gave Greece, Spain, Italy, and North Africa near self-sufficiency. France continued to develop its nuclear system, supplemented by wind energy along the Atlantic coast and solar arrays in the south. Most nations developed a mix of generating sources. This was also the case in the United States, where solar power became the dominant energy form in the Southwest and California, thermal power in selected western locations, windmills in the Great Plains, and wind and current driven turbines off the coast of New England. The United States also continued to burn large amounts of coal, to the distress of environmentalists. The energy footprint of different nations, or regions with nations, varied considerably. At one extreme lay Norway, with virtually no pollution or CO2 emissions. At the other extreme was Russia, which still burned wood, coal, gas, and the remains of its once vast oil reserves. Several of the largest industrial nations of the twentieth century, notably Russia, Britain, and the United States, remained the world's largest polluters. They had attained much greater energy efficiency, but had failed to achieve energy independence, and as a result paid a hefty price for energy imports and CO2 offsets. One economist estimated that on average energy imports to the United States had reduced its growth rate by 1% for every year of the century. 

Yet despite variations in supply and self-sufficiency, there were many similarities between nations. Large private cars and gasoline automobiles could only be seen in museums. They had been replaced by lightweight electric or hybrid electric/ethanol cars.  All nations rewrote their building codes, requiring that new houses be heavily insulated and largely self-sufficient for heating and cooling. To do this, they adopted the heat exchange technologies and housing designs pioneered in Germany before 2010. Heat pumps were widely in use, and many people chose spring-driven models that were wound up manually, usually by riding a stationary bicycle. Thus they could help heat the house and get a workout at the same time. As these heat pumps might suggest, during the early decades of the twenty-first century many hoped that an array of "technological fixes" would permit the high-energy society to keep expanding as before. Entrepreneurs and inventors created longer-lasting batteries, more efficient, cheaper, windmills and durable solar panels that snapped together to cover exterior walls and roofs. New home appliances used energy ever more parsimoniously. Nevertheless, the technological fix was in some ways a mirage.

Despite the many innovations, for decades per capita energy consumption continued to grow, though more slowly than in the twentieth century. If consumers used less energy in any one device, they wanted a never-ending flood of new appliances and gadgets. They bought larger television and computer screens. They wanted more elaborate kitchens. They wanted cars every few years and new mobile phones and laptops even more often. They also wanted a car for every adult. Reductions in energy consumption were the most cost-effective approach to combating global warming, but they proved difficult to achieve in practice. Families found it "natural" to have a home of 140 to 200 square meters, and they resisted attempts to downsize to a more environmentally sustainable 80-100 square meters. The pace of change was slow. It took forty years to eliminate inefficient automobiles and appliances, and even longer to retrofit and rebuild the housing stock. Curbing energy use ultimately proved to be less a technical problem than a human problem. The public had to embrace new energy habits.

Attempts to solve this social problem ranged widely, from the United States, whose strategy relied on the marketplace and individualistic choice, to the other extreme represented by Germany, The Netherlands and Scandinavia, which chose a centralized, top-down approach. While the same technologies were available everywhere, the social organization of energy varied tremendously. Americans felt that every person had the right to use as much energy as he or she was able to produce or to buy from others. Every US resident was allotted an annual energy ration, creating a market where every adult and child was permitted to sell unused personal rations. The federal government guaranteed a minimum price, but it seldom needed to purchase unused rations because demand usually exceeded supply. To make up for the shortfall, Americans purchased Canadian surpluses, or bought the more expensive international energy transfers outside North America. Americans became highly ware of energy tradeoffs, cycling when they could instead of driving, holding house temperatures lower, buying houses with lower ceilings, replacing old appliances with more energy-efficient units. Every year, a few homeless persons with virtually untouched energy rations were paid handsomely to become official members of households in order to gain access to their ration. This was legal, so long as the homeless person moved in for at least half the year. A few people became celebrities by flaunting a retro high-energy lifestyle, notably John "Kilowatt" King, who routinely exhausted his ration in the first two weeks of the year. There were also examples of conspicuous non-consumption, typically environmentalists who bought but did not use extra rations, in this way lowering CO2 emissions and driving up energy prices. A few refused to be part of the rationing system, living completely off-grid. But most managed to live comfortably on their ration. Some cultivated a low-energy lifestyle and made a tidy income selling their unused rations. 

Controls over this system were far from perfect. Rural areas had persistent problems with unlicensed wood burning, which illegally released CO2 and allowed some citizens to appear far more energy-efficient than they were. Occasionally, a family quietly buried a loved one and then delayed reporting the death, in order to retain the deceased's energy ration as long as possible. In public places such as coffee shops, airports, and libraries, some people stole energy. Every electric car, computer, mobile telephone, or other portable electrical device contained a chip that automatically charged a person's account for public electricity use. However, the black market offered pirate adapter plugs that falsified consumer identities and sent the electric bills to innocent third parties. A whole police division focused on stolen rations and energy identity fraud. The American ration system also rewarded anyone who increased the non-polluting energy supply with a correspondingly larger ration, leading many to install vast arrays of solar panels or a windmill park far in excess of their own needs. Thus, despite the quota system, the wealthy often used far more energy than the middle-class or the poor. Yet overall, the American rationing system encouraged energy savings and rewarded homeowners who installed solar and wind power. However, the result was inefficient, insofar as most Americans still wanted single-family housing and preferred to commute to work from the suburbs. The American system also it made various forms of energy fraud attractive, and, for a price, it permitted people to exceed their rations.

In contrast to the individualistic, market-oriented American model, the traditional welfare states of Scandinavia, Germany, and Holland did not permit any citizen to exceed the personal energy quota. In all of these nations, individual energy consumption was strictly monitored, with a energy statement issued at the end of the month, just like a phone bill. An energy bar code was mandatory on credit cards, and exceeding the quota was immediately punished. Attempted purchases in excess of the limit were denied. As a result, when deciding whether to buy an item made of plastic or wood or metal, consumers looked at both the price and the energy quota deduction. At times, it made more sense to purchase a more expensive item because it "cost" less in energy terms. The bar code was also on the personal identity card used in health and human services. While medical tests and hospital care remained cost-free, the energy required to conduct diagnostic tests, such as a CAT-scan or blood test was deducted from the patient's annual quota, though it could not be more than 7% of it. Surgery and medical treatment (as opposed to tests) were exempted from this system. In contrast to the United States, there was no market in unused energy rations. Nevertheless, everyone knew the economic value of energy points, and at times friends and relatives helped one another by putting purchases on their credit cards, particularly near the end of the energy year. At this time any energy unconsumed was credited as an individual tax deduction, retired from the national pool, and sold on the international energy credit market. To help citizens live within their quotas, government dictated that all new housing had to be multiple-unit apartment buildings or row houses, which required fewer resources per inhabitant to construct and inhabit. Their common walls reduced energy losses, and they concentrated the population, making mass transit more efficient. 

The welfare states also reduced their 25% VAT to 10%, and imposed new energy taxes (ET) instead. The ET was based on the amount of electricity and hydrocarbon fuel needed to produce and ship an item. This form of taxation put a premium on buying locally-made products and on transporting goods in new wind-blown ships. The second age of sail featured containerized catamarans, with supplemental solar power. Goods moved more slowly, but the smaller ships could enter more harbors and bring containers closer to their final destinations. As a result of such energy policies, by 2100 the Northern European welfare states collectively had all but eliminated carbon emissions. At the same time, per capita energy consumption had fallen by more than half. There were few class differences in this area. Indeed, the wealthy tended to purchase the most energy efficient cars and appliances, in order to maximize their tax break from unused energy. 

The two systems of distribution (rationing vs. quotas) led to different generating systems. That in Northern Europe was more centralized and more standardized in its components. It was controlled from the top-down. The American system was more decentralized, diverse in its components, and controlled by market forces under federal regulation. Where the American rationing system permitted homeowners to use more energy if they installed extra solar panels or windmills, the Northern European quota system mandated more collective forms of living that by law had to include solar and wind generation, as appropriate to the site. While Europeans did not permit anyone to be off grid, Americans had made it a constitutional right.

Overall, Americans had halved personal consumption, and non-polluting energies supplied 60% of their total supply. Yet, oil and gas imports continued, and the United States remained one of the world's most polluting nations. Its energy consumption was almost double the European average and three times the Chinese average. American energy overconsumption continued because consumers long resisted reforms that came more easily in India, China, and Japan, where the high-energy style of life and wasteful habits had never become as entrenched. Indeed, it had been an "Asian century", as Europe had grown slowly and the United States performed erratically. The sprawling high energy cities of the South and West fared particularly badly. Their boom from 1945 until 2010 had built up a sprawling infrastructure that was uncompetitive when energy became expensive. The economy was so inextricably intertwined with intensive energy use that the rising costs for oil, gas, and coal proved lethal to growth. Politically conservative, the region resisted both urban re-concentration and conversion to zero emissions.

Yet if the twenty-first century belonged to efficient energy regimes, global warming affected almost all nations. A few areas benefited from it, notably mountainous Norway. In the southern Saharan desert, higher temperatures brought monsoon rains that made the region greener than it had been for two thousand years. Simultaneously, an enormous solar-powered Libyan project desalinated sea water and transformed the northern Sahara through irrigation. It was impressive in scale, but it scarcely removed as much water from the sea as it flowed into from the melting glaciers of Greenland and the thawing permafrost of Canada and Siberia. Deserts spread in the United States, Mexico, China, and Australia, and new desert areas appeared in Russia and India. Low-lying regions such as Bangladesh and some island nations had to permanently evacuate millions of people. Northern regions whose growing seasons once had been too short for agriculture, could now be farmed, and these areas attracted millions of drought and flood refugees. Their resettlement demanded more resources than conventional aid organizations could muster and forced governments to find comprehensive solutions, including building entirely new cities.

Climate change fostered the professions of engineering, urban planning, architecture, and design. Some nations built entirely new cities, and all extensively rebuilt existing ones. Where modern cities had been built around transportation systems, the new cities forced transport underground. The twenty-first century replaced sprawl with concentration, investing heavily in mass transit, bicycle lanes, and new people moving technologies. Where Los Angeles, Houston, or Phoenix once devoted more than half their total area to automobiles, the new cities put electric vehicles and mass transit under the narrower streets, and sought to reduce the surface space given to automobiles to less than 10%, while giving at least 20% to parks and other green areas. The few roads that remained were for delivery vans, ambulances, fire trucks, and the police. In colder climates, some towns revived R. Buckminster Fuller's idea of placing a geodesic dome over an entire municipality, reducing wind chill, harvesting passive solar energy, and visually enhancing the sense of community. However, the same technology was used to reify social divisions in domed, air-conditioned neighborhoods for wealthy persons in Indonesia, India, Texas, and Mexico. Nevertheless, overall the twenty-first century witnessed a renaissance in urban design that rediscovered the spatial traditions of the compact cities that predated industrialization.

A typical apartment building in the Dutch new city of Niew Haarlem exemplifies the energy efficient urban ideal. Built in 2085, the 12-story building is energy self-sufficient. It is so well-insulated that the heat from lights and appliances suffice for warmth. Its outer walls and roof are covered with solar panels, and there are two large windmills on the roof. The flats are extremely soundproof, so neighbors do not bother one another. While the apartments are not large, they are well laid out, drawing on traditions of Dutch yacht design. Built-in cabinets and drawers abound. For those who want interior complexity, some flats have multiple levels that provide spatial variety. Few residents need or even want a car, because the city of 300,000 is so compact that all areas can easily be reached by bicycle, walking, or mass transit, usually within twenty minutes. High-speed electric trains connect the city to Amsterdam and other major cities. Shopping for many small items occurs locally, but most goods can also be bought on-line or by cell phone. Orders are delivered to the concierge in the foyer of the building, usually within 24 hours. Every year the residents receive a tax deduction because their building is so energy-efficient. Indeed, the residents have a friendly competition to see how much extra energy they can generate using the workout machines in the basement gym, that looks out on a sunken garden where they grow herbs and vegetables. The energy surplus is sold on the international CO2 offset market and put into the building's maintenance fund.

There turn out to be unexpected benefits to living in such a town. With almost no traffic noise or pollution, it has many outdoor cafes and restaurants, and it has become something of a mecca for musicians and street performers, who provide entertainment of a high standard. The cost of medical care is lower, since there are virtually no traffic accidents or chronic conditions related to pollution, and because its citizens walk more and therefore are a bit healthier. The city is so quiet that stress levels are low and hearing loss is uncommon. Employees miss few work days due to illness. The local population has a life-expectancy above the already high Dutch average. Best of all, because energy efficiency has been woven into all aspects of local life, it has become naturalized. In stark contrast to the United States, in Europe, energy has faded away as a domestic political issue.
        In foreign affairs, however, the European Union made global warming and energy efficiency central issues and the focus of its international aid. Indeed, the EU has built new zero-emissions cities in Indonesia, Angola, and Bolivia. The rising seas have cost Europeans dearly in terms of ever-higher dikes and defenses against storms. Indeed, the government has moved much of the population inland, away from the worst dangers of flooding, in the process constructing fourteen new cities resembling Niew Haarlem. Europeans do not understand why a few nations still have not eliminated carbon emissions. They do not understand why all nations have not built energy-efficient cities to counteract the ravages of global warming. They are gratified that New Zealand, China and India are moving in the right direction. But they feel that wealthy, resource-rich nations, such as the United States, Australia, Russia, Brazil, and Argentina, no longer have any excuse for their failure to do likewise. After all, most of the technologies needed to build such cities and to eliminate carbon emissions already existed in 2012.