{"id":156,"date":"2013-04-03T14:12:59","date_gmt":"2013-04-03T20:12:59","guid":{"rendered":"http:\/\/lasg.org\/wordpress\/?p=156"},"modified":"2013-04-03T14:12:59","modified_gmt":"2013-04-03T20:12:59","slug":"dark-inflation","status":"publish","type":"post","link":"https:\/\/lasg.org\/wordpress\/2013\/04\/03\/dark-inflation\/","title":{"rendered":"Dark inflation"},"content":{"rendered":"

Last Thursday evening (March 28), the Study Group held a public discussion to share and elicit others\u2019 perspectives on the \u201cLong Emergency<\/a>\u201d we are entering (to use James Kunstler\u2019s<\/a> phrase).<\/p>\n

As explained then, I believe this capital-C Crisis has begun to indirectly affect nuclear projects, as illustrated by what might be called \u201cdark inflation\u201d in National Nuclear Security Administration (NNSA) capital projects and programs.  \u201cDark inflation,\u201d for lack of a better term, is the mystery left when the usual explanations for NNSA cost overruns are weighed and found wanting.[1]<\/a><\/p>\n

Superficially the causes of NNSA cost overruns are fairly straightforward.  Organized greed in various simple forms causes much of the cost run-up and would merit a book-length study.  Deception, bureaucratic cowardice, and incompetence (usually involving rosy or entirely fabulous assumptions) cause another increment.[2]<\/a>  The special crony-capitalistic arrangements that define the political environment of large NNSA projects cause another increment, which is related to the power imbalance between contractors and the federal government.  At the three nuclear labs this amounts to a kind of blackmail, based on the power given lab directors by the annual stockpile certification process.[3]<\/a>  Increases in commodity prices are another cause.  And so on.[4]<\/a><\/p>\n

Even before (but especially since) the retirement of David Hobson (R-OH), the above cost-inflating factors have never been discussed in official Washington with any degree of honesty or clarity.  Doing so would expose the corrupt foundations of the nuclear security enterprise to an uncomfortable degree.  These and similar factors are however sufficient to explain all<\/i> of what is unique and extreme about NNSA\u2019s cost inflation and project failures, at least on the surface.<\/p>\n

But even if we account for the normalized political cowardice and the institutional myths and practices that almost mandate NNSA administrative failure,[5]<\/a> and include in our accounting private-sector greed empowered by cartel contracting arrangements,[6]<\/a> some mystery remains.  Humpty-Dumpty is falling, and all the best nuclear managers and management systems in the world will not be able to put him together again.  In my opinion, the United States cannot efficiently build<\/i> and safely operate<\/i> new, large, unique, dangerous nuclear facilities and reactors, any more than the U.S. could now build Saturn rockets or put a man on the moon.<\/span><\/p>\n

Oh we could go to the moon<\/i>, you may say, if we really wanted to<\/i>.  I think not.  I also suggest that our focus on earthly problems instead of lunar ones is now necessary and an indication of the changed circumstances in which we find ourselves.  We don\u2019t have the energy, literally and culturally, for such crude exhibitionism.  Nor can we afford the perchlorate contamination.<\/p>\n

In part our nuclear blinders have slipped a little.  We now see that most of the facilities we built in the 1970s (few were built in the 1980s) really never were as safe (or safely-located) as their promoters claimed; many of us knew this at the time.  But the problem is more than one of perception.<\/p>\n

\u201cDark inflation\u201d is just one possible name for the mysterious part of the cost increases that occur when high-vaulting technical ambitions \u2013 nuclear, in this case \u2013 collide with inchoate industrial, economic, and social decline.<\/p>\n

There is at least some awareness of this phenomenon in the nuclear weapons complex itself.   In February 2013, Charlie McMillan, director of Los Alamos National Laboratory (LANL), said:<\/p>\n

On the facility front we also must innovate.  I am concerned that in the current fiscal environment, it may no longer be practical to build large, high-hazard nuclear facilities.  A new path forward is needed. Following the decision to delay construction on the CMRR Nuclear Facility, I have challenged the team at Los Alamos to explore alternatives that would provide the capabilities of CMRR but do that in ways that would be simpler.  Based on the work they have done over the last year, I believe we should look at designing and building small, individual facilities to meet specific tasks of supporting the stockpile.<\/p>\n

It may seem easier to envision a large signature facility that does all things nuclear. But the reality is \u2013 the time frames needed to build them have simply become too long.<\/p><\/blockquote>\n

Long time-frames mean more exposure to dark inflation.  (Ordinary<\/i> inflation does not increase the real cost of long-term projects because present-value cost calculations, if competently done, remove it.)<\/p>\n

Dark inflation exposes projects to risks.  Chief among these is the possibility that inherent weaknesses in the project\u2019s raison d\u2019etre<\/i> may be discovered.<\/p>\n

McMillan is not alone in this assessment.  An independent government analyst said to me this year, \u201cThe days of the \u2018big-box nuclear facility\u2019 may be over.\u201d  He did not say why.<\/p>\n

I agree with these negative assessments (but not with the supposed need for new small individual plutonium facilities \u2013 the \u201ccharm bracelet\u201d or \u201cBrussels sprouts\u201d plan as somebody recently called it).  And I think much more change is coming, and much sooner than official Washington realizes.  Dark inflation, not just of costs but of the risks of not completing projects and the risk of not being able to operating them safely and cost-effectively, is increasing.<\/p>\n

Returning to last Thursday\u2019s discussion, we aimed at a glimpse of the big picture some of us see behind these inflating risks, over and above what must now be seen as ordinary<\/i> poor management.<\/p>\n

I want to explain, as succinctly as I can: why real economic growth is over and will never return; why complexity, long project gestation, and expense are more potent problems than in the past for large-scale technical endeavors (including those to which we might turn for energy); why New Mexico<\/i> now faces an unprecedented economic and environmental crisis, more so than most or perhaps all other states; and what all this means for liberal reform, assuming there ever is any \u2013 namely, it will be overtaken by events (OBE).<\/p>\n

I want to dispel the widespread misconception on the political left and<\/i> right about the permanence of today’s apparent <\/i>economic and social arrangements.  Somehow people think that the world of, say, five or ten years from now will be fairly similar to today’s.  It won’t be.  I say \u201capparent\u201d because what we think we see today is largely a product of our cultural imagination and propaganda.  When the smoke and mirrors fail, the apparent change could be very sudden, even faster than the actual change, which as transmitted and amplified through our bankrupt financial system could be quite fast indeed.<\/p><\/blockquote>\n

We had an interesting discussion Thursday and I want to summarize it in another post.  Meanwhile, as regards one of the main topics we lightly covered \u2013oil production, now at an apparent historic peak \u2013 we\u2019ve posted a few useful recent references<\/a> on our web site.<\/p>\n

It almost goes without saying that few of us \u201csee\u201d resource issues, such as the efficiency of our primary energy sources.   We see only prices and economic conditions.  Any underlying resources issues, any inflation they cause, and any decrement of growth related to them, will always be \u201cdark\u201d to us.  Such issues are of course expressed in a social, political, and institutional context that we generally take for granted and believe (for good historic reasons) to be difficult to change.<\/p>\n

But very great changes are willy-nilly upon us.  What can\u2019t continue, won\u2019t.<\/p>\n

Next time I want to take up in a little more detail why assumptions of economic normalcy for the remainder of the present decade are misplaced.<\/p>\n

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 <\/p>\n

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[1]<\/a> In July of 2011 we prepared a talk for the Council for International Relations (CIR) in Santa Fe on why the trends loosely described under the \u201cdark inflation\u201d moniker were in the process of making nuclear power permanently obsolete (\u201cNuclear Power: In Terminal Decline, But Still Very Dangerous & Distracting,<\/a>\u201d video).<\/p>\n<\/div>\n

\n

[2]<\/a> See \u201cDelusion and Deception in Large Infrastructure Projects: Two Models for Explaining & Preventing Executive Disaster,<\/a>\u201d Flyvbjerg, Garbulo, Lovallo, California Management Review,<\/em> Vol. 51, No. 2 Winter 2009 (pdf).  This paper discusses the prevalence of, motives for, and world-wide practice of \u201clow-balling\u201d project costs, a problem of crisis proportions at NNSA.<\/p>\n<\/div>\n

\n

[3]<\/a> This practice was instituted as part of a political bargain for laboratory acquiescence to the Comprehensive Test Ban Treaty (CTBT) in 1996.<\/p>\n<\/div>\n

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[4]<\/a> I do not include the often-mentioned \u201cincreasing safety standards\u201d in this list because safety and environmental standards have not<\/i> particularly increased over the past two decades and are in any case closely tied to the institutional excellence necessary to recruit, retain, and motivate skilled labor, especially but not exclusively, at the weapons labs.<\/p>\n<\/div>\n

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[5]<\/a> A broader set of myths and political requirements almost mandate administrative failure at the Department of Energy (DOE).  DOE does good work in some places.  But it is also our national department of hoped-for technological salvation for many problems and crises that are mostly non-technical in nature.  DOE is a place where the post-World War II promise of a scientific \u201cendless frontier\u201d has been converted into increasingly-sterile science sinecures and grants, many if not most of which have more political than technical merit.   For example, we hope \u201cinnovation,\u201d including DOE-stimulated innovation, will overcome the self-imposed economic catastrophe of industrial offshoring, a core component of neoliberal economic policy.  It won\u2019t.  We look to DOE to find even better<\/i> new sources of energy, rather than implementing the renewable energy sources at hand and conserving the energy we have.  To a dramatic extent DOE expends its funds through politically-connected contractors and untouchable laboratory fiefdoms.  It is the most privatized federal department.  Regarding this last see Damon Hill and Greg Mello, \u201cCompetition – or Collusion? Privatization and Crony Capitalism in the Nuclear Weapons Complex: Some Questions from New Mexico,<\/a>\u201d pdf, May 30, 2006.<\/p>\n<\/div>\n

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[6]<\/a> Cf. Damon Hill and Greg Mello, \u201cCompetition – or Collusion? Privatization and Crony Capitalism in the Nuclear Weapons Complex: Some Questions from New Mexico,<\/a>\u201d pdf, May 30, 2006; \u201cDeclining Federal Oversight at Los Alamos, Increasing Production Incentives: A Dangerous Divergence,<\/a>\u201d Defense Nuclear Facilities Safety Board presentation, Greg Mello, Mar 22, 2006; Damon Hill and Greg Mello, \u201cAbout the LANS partners<\/a>,\u201d Jan 18, 2006.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Last Thursday evening (March 28), the Study Group held a public discussion to share and elicit others\u2019 perspectives on the \u201cLong Emergency\u201d we are entering (to use James Kunstler\u2019s phrase). As explained then, I believe this capital-C Crisis has begun to indirectly affect nuclear projects, as illustrated by what might be called \u201cdark inflation\u201d in… Read More »Dark inflation<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","neve_meta_reading_time":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[12],"tags":[],"class_list":["post-156","post","type-post","status-publish","format-standard","hentry","category-commentary"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p2ZtEt-2w","_links":{"self":[{"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/posts\/156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/comments?post=156"}],"version-history":[{"count":15,"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/posts\/156\/revisions"}],"predecessor-version":[{"id":173,"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/posts\/156\/revisions\/173"}],"wp:attachment":[{"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/media?parent=156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/categories?post=156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lasg.org\/wordpress\/wp-json\/wp\/v2\/tags?post=156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}