Sunday, September 27, 2015

Advances in Bookmaking

Recently a Facebook friend posted a video showing how a book is printed and bound using methods that go back to Gutenberg’s time: composing text with handset, movable type; laying out and locking up pages in lead; printing eight pages at a time with a flatbed hand press; and stitching, trimming, gluing, and binding a single-volume with a leather cover.1

This process—minus the leather cover and all the handwork—reminded me of my second job out of college, at Howell-North Books in Berkeley, California. Howell-North specialized in railroad histories, Western Americana and Californiana, and pretty much anything to do with steam power. Howell-North was unique in the publishing business, being one of three firms in North America at the time that typeset, laid out, printed, stored, and distributed their own books. They actually started as a commercial printer and moved into publishing when they were offered a book manuscript and decided to publish it themselves.

It was a treat for me, who always wanted to write books for a living, to work there as an editor. I got to see the process of taking words into finished volumes at every step. Of course, by the early 1970s, we didn’t use movable type, where every character and symbol is precast as a separate piece of lead. Instead, Howell-North set with Linotype® machines, which stored the letters and punctuation marks as individual hollow molds in a bank called a “matrix case”: one for uppercase, one for lower. As the typesetter composed each line of text—working from specifications for font, type size, leading, and line length provided by the book designer—the matrices would drop down in order into a small rack. The typesetter would check them visually, insert and activate letter and word spacers, and then cast the line in hot lead. Line after line would slide down into a galley tray, and at the end of the job the typesetter would pull a proof for me to read and compare with the marked-up manuscript.

After the galleys had been corrected, the typesetters pulled a clean set and sent them to the book designer, who cut the blocks of paper text apart and laid them out on page forms sized to the intended book’s dimensions and planned number of columns. The designer also placed and sized the photos that would accompany the text, figuring the percentage reduction—or less often, the blowup2—that would make the final image fit on the page. Then she gave the layout to me to write captions that would fit the space allowed. And finally she would spec my caption copy for font, leading, and length.

Once again the pressman would pull an impression of the galley trays, this time on good-quality paper with all the “type lice”—bits of dirt and metal—cleaned away. These page proofs would go to the photography department along with all the original photos. There the photographers would use a large-format camera to make one-to-one negatives of the page proofs and sized, screened negatives—that is, overlaid with a subtle dot pattern during reduction—of the photographs.3 The strippers would then position these various negatives into cutouts in large sheets of opaque red plastic—red because it blocks light just as effectively as black but allows the workers to see the edges of the negatives—according to the designer’s page layouts. They also added rules, page numbers, and headers and footers.

As in the video above, they would “strip in” usually eight pages for each side of a folio or “signature” sheet, making sixteen pages in all. After this complex folio was stripped, the photographers used a vacuum table to hold it against a large sheet of special photographic paper and used ultraviolet light to burn the image onto the paper. The result was a “blueline proof,” which showed the page images all in blue. Once again, I would proofread this blueline, not to look for typos or make changes in the text at this point, but to ensure all the text was in its proper place, photos were correctly sized and placed and not reversed or “flopped,” and the stripping was clean without gaps that would create unwanted lines and shadows.

When the bluelines had been corrected and approved, the burn-in was repeated, but this time on an aluminum sheet covered with lacquer. The ultraviolet light set and hardened the lacquer coating wherever the text, rules, and screened dots of images were shown on the page; the rest of the lacquer could then be wiped away with a solvent. This image in hard lacquer on bare metal was the page that would go to the printing press.4

Howell-North used big, sheet-fed Harris presses for their book work. These machines could print one color of ink on one side of the sixteen-page folio for a large-format book, or thirty-two pages in small format. A printing press like that is a mechanical marvel. A single motive source, the electric motor, sets everything in coordinated motion through a series of gears, chains, belts, and compressors: the pincers, blowers, and suction cups that separate and lift a single sheet of paper from the palletized stack; the multiple rollers that mix, thin, and spread the jellylike ink; the cylinder holding the lacquered aluminum plate, which has been bent end to end around it into a tube aligned with the movement of the sheet; the roller that wets the plate with water, which adheres to the bare aluminum and keeps it from taking up the oily ink; the roller that applies ink to the plate, where it sticks to the lacquered image; the cylinder holding a rubber sheet or “blanket” that takes ink from the plate and immediately transfers it to the paper—and hence “offsets” it, because the paper’s rough surface would otherwise wear away the lacquer on the plate in just a few passes; and the impression cylinder that presses the moving paper up against the blanket so that the paper takes a smooth image. Everything rolls, moves, shifts, and glides in synch, passing sheet after sheet through the press and stacking it in the take-up tray on the other side. I can watch the delicate, stately operation of a large sheet-feed press all day.

It’s a precision ballet of heavy metal pieces meeting and matching at tolerances far smaller than a millimeter. If the press couldn’t hold these tolerances, then laying down the different inks and varnishes required for four-color and high-gloss printing would be impossible, resulting in muddy images and misprints. Adjusting the plate and the blanket, running in the ink, and getting everything aligned and registered might take fifty, a hundred, or more sheets during “make ready,” before the pressman prints the first sheet in production.

Finally, the printed sheets go to the bindery for folding, trimming, stitching, and gluing. Most of these processes are now semi-automated—or were at Howell-North when I was there. The difference between modern binding and the handwork shown in the video above is the scale of the machinery. For example, trimming the pages no longer involves pulling a drawknife along the fore edge of a single book. Instead, a stack of paper twelve to eighteen inches thick is positioned in a hydraulic paper cutter that slices down with a guillotine blade that could easily cut a log in two—or remove the operator’s arm.5

Of course, most of even this modernized process is gone now. Linotype® machines and composing in hot metal are considered antiques, and sheet-fed presses laying down just one ink at a time have been replaced by multi-stand, web-fed presses that eat entire rolls of paper and print four colors and two varnishes in a single pass. Still, I’m honored to have worked in the last years of a process that goes back to Johannes Gutenberg.

Everything has become much faster, too. One of the Facebook respondents viewing the above video asked me how long it would take to print a book of 80,000 words using the old methods. My guess was that, if the book topped out at 300-plus pages, or about twenty folios, it would take one person a couple of weeks at minimum—and probably a couple of months, now that I think about it—to set the text, make up the page forms, print the folio pages on both sides, then fold, bind, trim, and cover the book. With printing techniques like those we had at Howell-North, it would take about the same amount of time, except that teams of people would be working in different departments and scheduling that one book project through the shop alongside a dozen others. Oh, and it would be a press run of 80,000 books, not just one.

I have seen two great changes in the bookmaking process over my years in the business. One is how type is assembled and pages are laid out. With the advent of small desktop computers—which were only a gleam in the eyes of Intel’s designers back in the early ’70s—we no longer have to rekeyboard a paper manuscript to set it in type. Page layout software like Corel’s Ventura Publisher® (on which I cut my teeth) or Adobe InDesign® (which I use now) take the word-processed document file as input and let you specify and lay out every part of the book on the screen. They can adjust their output as separate printer’s images, one layer for each color and varnish in the printing process; so that all the printer has to do is reproduce these files as big single negatives for burning the offset plates. This is manuscript to make ready in one step.

The other change involves the different formats used in web pages and epublishing. Because the page dimensions in a browser are no longer fixed—because the user can resize the window on the screen—and because most ereaders allow the user to change type size on the fly, a book designer for these media no longer thinks in terms of a foursquare page. Page designs now “hang” from the upper left-hand corner; the top and left margins are relatively fixed and immobile, while the right and bottom margins float, controlled only by parameters for buffering the text and images. The actual page layout and the reader’s final view depend on the window size and screen dimensions. And since everyone has different fonts associated with his or her browser and/or its underlying operating system, the designer must think in terms of generics like serif or san serif, bold or medium, and single- or double-spaced, rather than trying to specify Goudy Old Style 10/11 light Italic on a 12 pica line.

And finally, today with epublishing and print on demand (POD), all of the printer’s “make ready” process just goes away. After I’ve proofed my book manuscript, invited my beta readers’ comments, and made corrections, I take my final word-processed file in two different directions.

In one format, for ereaders, I use find-and-replace to turn all the manuscript’s type marks, punctuation, and symbols into HTML codes. Then I break the book into chapters and copy them into XHTML file forms that I’ve already worked up with a good cascading style sheet or “CSS.” It’s another step to create the various coordinating files used for conversion: these files put the book chapters and supporting materials in proper order and tell the ereader how to display them. Finally, I convert the file folder into an “epub” file that the reader can open directly with the right software and that Amazon’s Kindle, Barnes & Noble’s Nook, and Apple’s iBooks can convert for their own software and devices. In essence, I’m selling my text directly to the customer. Add a good cover image, enticing blurb, and metadata about the book, plus pricing decisions for the ebook distributor—and I’m in business. The entire book inventory is just a gigabyte or less on the distributor’s servers.

In the other format, I run the word-processed file through InDesign® using page settings I’ve worked up over the last couple of projects. I can alter type font, size, and other details easily on the fly. The software produces a PDF for the book text and cover that I send to my POD service provider to make into finished books by laser printing and perfect binding6—but only when the reader orders it. Again, add a blurb, some metadata, and pricing, and I’m in the bookmaking business with something the reader can actually hold in his or her hand, while the actual inventory held year-to-year is still less than a gigabyte of digital data.

Either process takes me a couple of days to a week of fairly focused work, and then the service—either the ebook distributor or the POD printer—requires a couple more days to check and proof my files upon receipt and flag any problems. Compared to Gutenberg, the process is practically instant and cost-free to me, except for an investment in some software and my own time and effort. All the rest is marketing, and that doesn’t change except for the book’s intended reader.7

1. The closest you can get to this process today is books from specialty printers like Andrew Hoyem’s Arion Press in San Francisco. This is bookmaking as fine art.

2. Generally, you get a better image if you reduce the original image in size rather than try to increase it. This originally had to do with reducing, rather than increasing, any minor imperfections in the original camera focus and with the grain size in photographic film—and nowadays the pixel dimensions in digital images.

3. The screen overlay renders the continuous shadings of the original photograph into a pattern of variously sized dots. If you tried to print from the gradations in a shaded area, the ink would simply adhere as one big blob and yield a black patch. The sized dots tick the eye into seeing shades of gray.

4. Howell-North also had an old flatbed press, which used page makeup in cast lead to print directly with type on paper, as in the video. Such a machine did away with all the camerawork, stripping, and bluelining but was even more time-consuming to set up and run—not to mention that the lead was heavy, the type was held in the page frames with a great deal of pressure, and dropping one of the forms practically guaranteed an explosion of type all over the shop. This press was an antique that was virtually abandoned in the shadowy recesses of Howell-North’s vast, shedlike building. I only saw it once, when Robert Howell and Morgan North uncovered it to show a guest, and I never saw it in operation. The last pages this press ever printed were still lying there on its bed in a ton of lead.

5. This equipment is so dangerous that, once the operator has positioned the stack within it, he or she must close a cage over the machine’s opening end and activate the cutter by pressing four switches—one for each hand and foot. Otherwise, carelessly reaching in at the last minute to make “one more little adjustment” would likely shear off a limb.

6. Perfect binding is a technique that grew up in the late ’60s, where instead of stitching the folios or signature sections together, they are glued to the spine of a paperback book with flexible adhesive. The process also works with single pages, but there the early examples tended to be delicate and had a distressing habit, when the reader flipped rapidly through the book, of shooting pages across the room. This led me, at the time, to coin the phrase “Perfect binding—isn’t.”

7. For more on this, see my series on the new world of publishing, including eBook Publishing: The Author’s Toolkit from September 18, 2011. And if you don’t think this blog is part of my marketing efforts, think again.

Sunday, September 20, 2015

Listening Between the Lines

As someone who can be careless in social situations, blankly literal-minded, and too often involved with the tiny universe that revolves inside his own skull, I don’t always listen carefully to the nuances of what other people are trying to tell me. I think this can be a problem with hyperliterate people who get most of their knowledge from books rather than conversations and who tend to commune more with paper or a computer screen than with other people.

This sometimes forces me to think through possible alternate meanings when people speak to me slowly, directly, and with great seriousness. It’s a type of listening akin to reading between the lines.

The notion that spoken words were not always what they seem crystallized for me one morning a couple of weeks ago. I had the tune and lyrics of “We’re Off to See the Wizard” from the 1939 movie running through my head, and I suddenly realized that the song was a plot device foreshadowing the next turning point in the story. The hopeful companions—Dorothy and her three new friends—tell themselves that the Wizard of Oz will grant their wishes because “he surely is a whiz of a wiz,” and this assurance is based on “the wonderful things he does” and also “because, because, because, because … because!” So, when you listen carefully, no actual accomplishments or wizardly achievements are offered as examples of these famous skills. That should set the travelers up for massive disappointment: no brain, no heart, no courage, and no easy ride home are in the offing. In this fantasy world, it pays to listen carefully and analyze the terms of the implied promise.

Sometimes, in talking with the people who are important in our lives, we expect to receive agreement with and confirmation of our ideas, or permission to pursue a certain course. For example, I remember once discussing a book idea with one of my agents, and she replied, “That subject is really important to you, isn’t it?” At the time, I took this as implying that she liked the idea and approved of my trying to write the book. But on reflection, and in the course of our later discussions, I never heard her actually say, “I can market that idea.” I wrote the book anyway, on the strength of her supposedly tacit approval, and of course it went nowhere.

More recently, I was talking with my investment counselor and mentioned a financial move that was counterintuitive, contrary to current market wisdom, and outside of his firm’s capabilities. His response after a moment’s thought was, “I can’t tell you not to do that.” I took this as implying he thought it was probably a good idea but, for legal and fiduciary reasons, could not say so out loud and thereby take responsibility. I realize now—although the move has not yet played out—that what he might actually have been saying was, “If you really think so, and knowing your headstrong character, I’d probably be wasting my breath trying to talk you out of it.”

Of course, you can drive yourself nuts trying to put too many conflicting interpretations on what people say. If every apparent “yes” means “no,” and every “um” is an artful dodge against taking responsibility for agreeing—or not—then a person could quickly arrive at the conclusion that nobody means what they are saying, everyone is grinning behind his or her hand, and deeply meaningful human communication is impossible.

Still, humans evolved the power of speech and learned the skills of language long before they learned effective techniques of hunting, gathering, herding, and farming—and way longer before they learned to put words into written symbols with inflected meaning. Human emotional bonds are strong, social relationships run deep, and the ability to cover naked meaning with a subtle fan dance of polite obfuscation and half-truths is a survival skill.

In the case of a family member, who will be with you always, and whose anger and enmity you dare not arouse, you quickly learn to say that the failure of the hunt or the meagerness of the gather was not actually his or her fault—when no one else could possibly be responsible. In the case of an author whom the agent does not want to alienate, or a financial client whom the advisor wants to keep, you learn to suggest that a proposed course of action is acceptable—when you really want to drag him up by the ears, scream in his face, and throw things.

As Miss Manners® would tell you, it’s not your business to express your opinion on every subject, especially when the result would be hurt feelings and/or lowered esteem on both sides. Civilization is the business of greasing the gears of social interaction, so that every disjunction of opinion does not become open conflict, and every social conflict does not swell to the point where knives are drawn. Juliet’s cousin Tybalt, in his violent interactions with Romeo and his friends, is direct proof of this concept.

So polite people, those who were well brought up by discerning mothers and who have read the right kind of books—long on Henry James, shorter on Henry Miller—learn to mask their thoughts and feelings until their true responses are better hidden than the faces at a Venetian carnival. Again, it’s a survival technique, one that keeps you off the point of a dagger and lets everybody remain friends.

And the higher skill is to use that veiled language as a weapon itself. The best social wits can use words that cut but never show an edge. They give no overt cause for offense but leave the wiser heads in the room no doubt about what has been implied and who has been gored. This kind of verbal swordplay can be as delicate and subtle as fencing with a foil or as naked and brutal—for those with the wit to discern it—as slashing with a saber.

But for those of us who are socially awkward, literal-minded, and too wrapped up in our own books—even if we’ve read Henry James—this kind of social interaction can be difficult. We can hear “yes” when a subtle “no” was meant. We can wear the clown’s funny hat and red bulb nose without even knowing it. And we can stabbed a dozen times in quick succession and still think we are talking to friends. And sometimes we can dance off to an interview with a wizard, singing our hearts out, and never suspect the disappointment to come.

Sunday, September 13, 2015

Plot Like a River

Writing a novel is unlike any other kind of writing. In writing a short story, you can sit down with a great idea, nearly fully formed in your head, and in a blaze of inspiration hope to establish it in ordered prose from beginning to end in one session. Maybe the process will take you two or three writing sessions, but the idea will stay fresh and active in your mind, fixed and ready to write down, over those two or three days.

Working in nonfiction, as I have found from my jobs as both technical writer and employee communicator, is usually a simple matter of focusing your mind. Once you have finished interviewing your subject matter experts and witnesses, along with researching background material, the task is just to describe the known facts, actions, or events and put them in their best order. You may order them chronologically, or from specific events to general principles, or from general to specific, or from cause to effect, or any other method in the rhetorical toolbox. Then all you have to do is find the opening insight, phrase, or quote—and you’re off to the races against time and deadline.1

But a novel is a much bigger undertaking. If the short story is a street scene, the novel is a county-wide country landscape. You can hold the general theme, story arc, and aspects of your main characters in your mind for the time it takes to write, which is usually some months or a year. But all the weight of action and detail that make up the twists and turns of the plot, the intentions, incidents, and ideas moving the characters forward, and the content of their dialogue—this has to accumulate relatively slowly over time and be accrued separately from the actual “production” writing.2

And so we come to the dreaded “O-word,” the outline.

Some writers are allergic to outlining and prefer the seat of the pants—or “pantser”—approach. These writers can take an initial idea, sit down at the keyboard or with a notebook, and start writing whatever each day’s inspiration and imagination brings them. It may be an exciting way to write, not knowing ahead of time where the story will take you. It’s like putting your kayak in at the head of the river without studying the map ahead of time. You never know what rapids or waterfalls might lie just around the next bend, or what long dull stretches of quiet water await you in marshy swamps. And in those swamps you can lose your way and end up paddling in circles.

I usually—and that’s a key word here, “usually,” because I don’t always follow this process—need a folder full of imagined details, plot twists, dialogue fragments, and partial action scenes before I can sit down to write even the first words in production. I will have pulled these pieces together over something like eighteen months to three years from the time the idea of the new novel occurs to me.3

The process of assembling a novel’s outline is, for me, like building the cradle that will frame the hull of a ship or the scaffolding within which the walls of a building will rise. This is “falsework” in the sense that it’s not complete, not meant to be finished, and is infinitely subject to change, both while it’s being assembled and sometimes in the middle of constructing the actual story. After all, it’s easier to rip out a framework of loosely tacked wood or bamboo and realign it than to tear out the solid ribs and plating of the actual ship or knock down and rebuild walls in the nearly finished building.4

Another image I use for writing is that of planning a road trip. If you are driving out of the San Francisco Bay Area, it helps to know whether you’re going straight east toward Reno, Salt Lake City, Chicago, and eventually the East Coast, or south to Los Angeles or Las Vegas, through Arizona and Texas, and ultimately to Florida. Choice of destination determines your initial route over the East Bay Hills. To plan this trip, you then look at maps, space out your overnight stays at motels and resorts, and check the mileage between fuel stops. You mentally traverse the route at the “10,000-foot level.” And that’s roughly the scale of your outline. It covers the big arcs of the trip, often with bits of action and dialogue woven in as signposts. The actual writing then becomes walking the ground and experiencing the level of event and detail that the reader will encounter in the actual story.

When I prepare an outline ahead of production writing, it is usually accurate to the level of chapter and scene, will show the character’s point of view in each scene, and describe the necessary action and dialogue to be covered. All that’s left is to do the actual writing. And the bet with myself is at the very least to unfold and explicate the action described in the outline. If I can do better—coming up with a richer version, more detail, and a new plot twist—then I’m ahead for the day. Sometimes, though, I find that an outlined passage which took two sentences to describe actually needs to break the action down with three or four scenes and extended dialogue. Sometimes, also, I find that those two sentences in the outline are all the action is worth, and then I have to improvise. This is all good, because I’m a pretty fair improviser, and that’s what creativity is all about. It makes the story richer.

But the book I’m working on now, which is the sequel to Me: A Novel of Self-Discovery, has taken a different path. I knew from the beginning—that is, from the decision to write this sequel as my next project—the general shape that the story would take and where it would end. I could describe that shape for myself in about fifty words. And so, thinking that I knew everything about the book, I started with an outline covering only the first two or three chapters. I had solid ideas about the one new human character and how she would interact with the computer program known as “Multiple Entity.” And the rest, I thought, would be easy because the setting and other characters were already established.

So I “pantsed” it. And I’m still working from an outline that advances only one or two chapters at a time, with much sketchier scene creation, barely ahead of the actual production writing. It probably would have taken longer for me to “noodle” the book over two or three years, collecting ideas and details slowly, then write the outline over three to six months, and finally write the whole book over another six to nine months. But the way this book is going—fits and starts while I grope toward the next chapter—only seems longer.

So I’ve discovered a new way to write a book, other than the ship’s cradle, building scaffold, or road trip. I call it experiencing a plot like a river, and I am following the river as it organically develops. When you plan an outline, this organic process takes place in miniature, with many chances to intervene and change the dynamics, but now I’m living with the book at the water-level view of the paddler in a kayak—and I can only hope not to become mired in the swamps.

A river has many tributaries—these are the story lines of the main characters and the subplots that support, echo, and relieve the main action. Each has its own headwater or starting place. The choice of character and starting point is easy and flexible. The writer with a single goal in mind for all of them is advised to place those starting points generally on the same continent and in the same watershed as the main river, but otherwise all the choices are open.

As the flow in each stream moves downhill, it acquires a mass of detail, like adjoining streams and runoff from the surrounding countryside. In the early flow, it’s relatively easy to guide the tributary down, say, the left side of the valley rather than the right, and to move west around a hill or other obstacle rather than east. Choices are still open and the storyline can be bent at will.

But as the stories of the individual characters start to link up and the subplots interweave, the arc of the novel becomes more established. The riverbed becomes deeper, carries a greater weight of water—expressed as detail, the outcomes of actions, and necessary consequences—with more inertia behind the flow. The story becomes harder to change and more insistent on taking a particular course.

When the story arrives in sight of the sea, it has become almost unstoppable, a force of nature, like the Mississippi or the Colorado. It has only one way to go, and the author is hard pressed to resist it. The author’s imagination finds it impossible to change that course without retreating far upstream and taking entirely different paths from the headwaters. You would have to rip up whole chapters and go back to earlier and earlier in the book in order to effect a change.4

And then—or so I suppose, because I haven’t gotten that far yet with the ME sequel—the story line finally reaches the sea. It spreads out again, dropping plot lines like silt in a delta. Individual character arcs and subplots resolve in different places, but always along the shore of that same sea, until finally the main characters end up absorbed in the nameless deep.

When you work from an outline, you always know something about where you’re going, because you’ve been there before, at least at the 10,000-foot level or from the perspective of a loose scaffold. When you set yourself upon the river, you are letting the raw force of your imagination steer your boat from day to day. You don’t always know exactly how it will end. And that’s scary.

1. I once discussed my writing process with my supervisor in Employee Communications supervisor, who was marveling at how fast and easily I could turn out newsletter and magazine articles. I said that, in an article, all the facts were known, and it was just a matter of getting them down on paper. This surely beat staring at the wall above a typewriter at five o’clock in the morning, wondering what the characters in my novel were going to do or say next.

2. At least in my case it does. There may be writers who can make up all the events, settings, details, and dialogue as they go along, rather than gather them in a file or document over months and years as they think about and expand on the storyline and its meaning. I often will invent a bit of action or description on the spot, in the heat of writing, but most of it has to come in off hours, while I’m doing something else and just “noodling” the book. (Some of my best ideas come in the shower with hot water hitting my right shoulder.) Then I must collect the action or bit of dialogue in a note on a yellow sticky or three-by-five pad and enter it in the correct place in the novel’s Notes folder or its Outline document.

3. Sometimes, this process of building up notions, details, and fragments has gone on almost my whole life. The basic idea for The Professor’s Mistress occurred to me while I was still in college. I spent forty years considering and refining the details, then blended the underlying story back into the universe, story line, and characters of my much later novel The Judge’s Daughter. Some wine takes a lifetime to mature.
       Another aspect of my process is this joining of two or more book streams. Often my story ideas are inadequate on their own, or their development reaches a logical dead zone, a swamp. Then the notion will come to me for blending two of them together—say, use this character in that setting—and the creative energy starts up again.

4. This reticence of mine about tearing up writing in production probably comes from the way I visualize and execute a story. Once I’ve put the story into a detailed form, with weighed and acceptable words in order, that becomes, in my mind, the story’s history, the “what happened.” It becomes something I’ve witnessed and now believe to be true and actual fact. Knocking that down and trying something else feels like ripping up railroad tracks that are already laid on ties in a graded roadbed and seated with gravel ballast. I would have to clear my head of the actual story before that can happen.

Sunday, September 6, 2015

Conceptual Tools

When I worked at the engineering company back in the 1970s, we had just acquired a master planning project with PT Krakatau Steel, an Indonesian company, to help set up a new steel mill in the middle of the jungle. The contract had originally been awarded to the Soviets, but they had apparently muffed it. One of the stories I heard at the time would help explain why.

Any industrial complex starting from the ground up in a remote location involves a lot more to be planned, designed, and built than just the core facilities. In addition to the steel furnaces, rolling mill, and probably a coking plant, you have to build transportation by road and rail to the site, warehousing for both incoming construction materials and eventually for the mill’s raw materials and outgoing product, housing for construction workers and later for plant operators and administrators, and usually some form of supporting community with a water supply and a power plant. It was the latter that had gotten the Soviets into trouble. At some point midway through the planning process—and long before they had any need of it—the Soviet team heard that Hitachi in Japan had taken return on a turbine-generator unit from another customer and were offering it for sale at a reduced price, say, sixty or seventy percent of the original purchase price.

The Soviet planners, thinking they were making a wonderful deal with significant cost savings on behalf of their Indonesian client, bought the generator and had it shipped to the site. This was, of course, several years before ground for the power plant had actually been broken. But the Soviets probably thought that was a good thing, because they could then modify the steam system design to meet the turbine’s established specs, which were already close to the project requirements. And shipping the unit to the site immediately saved them the cost of warehousing it somewhere else, probably back with Hitachi in Japan. So the purchase looked like a smart deal from several angles.

What they found in practice was a whole other matter. First, a turbine-generator for an industrial-scale power plant is a huge beast, at least the size of a boxcar if not a large house. But it’s also a delicate beast. The turbine wheels and blades are precisely designed, machined, and assembled for each stage of expansion and cooling as the high-pressure steam passes from one wheel to the next. The shaft turns on glass-smooth bearings so that just a whisper of steam will start it moving and keep it turning. The generator is wrapped with miles of copper wire to develop the electro-magnetic current, and the rotor and stator move on more bearings so that the magnet surfaces almost make contact within precise tolerances. The whole thing ships inside a huge crate made of strong wooden beams lapped with high-quality plywood.

When you ship this beast into the center of the jungle and lay it down on a patch of shaved dirt, without the proper inspection, security, and environmental controls found in any competent warehouse, you invite calamity. Moisture, corrosion, insects, and other surprises arrive to attack those delicately machine parts. Local residents face the terrible dilemma of either watching all that free, top-quality lumber just sit there or taking it for their next housing project when no one is looking. Within six months to a year, and long before it was supposed to be installed during construction, the Hitachi turbine-generator was sitting naked in the jungle and rapidly corroding into a dead lump of steel and copper worth nothing to anyone.

Any competent mechanical engineer might have foreseen this physical deterioration. Rather than ship the generator to the site ahead of time, the Soviets should have factored into their purchase decision the cost of warehousing the unit with Hitachi or a third party for several years. This would have shown how much real saving, in terms of all their projected costs, that sixty or seventy percent reduction in price actually represented.

But even this level of sophistication would still be thinking like a Soviet—which means thinking like an economic child of the 19th century.

As good Marxist-Leninists, the Soviet planning team had only one standard of economic value: the labor input to make the generator unit. Hitachi’s Japanese engineers had labored and been paid to design the machine. Their machinists had been paid for their effort in shaping the steel, assembling the turbine, and winding the generator’s copper core. And at some earlier point, miners digging copper ore in Africa and iron ore in Australia had been compensated by Hitachi when the conglomerate paid the price of those raw materials. The Soviets figured they were merely trading a certain number of rubles, or their Indonesian client’s rupiahs, to cover all this embedded labor cost. And that value chain in labor represented the sum of the transaction: the turbine-generator had a fixed cost based on the labor inputs, and if Hitachi was willing to sell it at a reduced price and eat the difference—because some previous customer had ordered the unit but didn’t need it anymore—well, that was just bad luck for the foolish capitalists who ran Hitachi! In the Soviet view, the generator itself had only static value, unchanging no matter when it was made, when the project planners needed it at the site, or what they might have done with the money in the meantime.

The American planners at my engineering company, capitalists that they were, could have told you in about six seconds that the Hitachi turbine-generator was a bad deal at almost any price reduction. They laughed at the Soviets for thinking that snapping it up was a such a lucky opportunity.

My engineering company routinely ran a sophisticated computer program1 that correlated a project’s schedule with the estimated cost of all materials and equipment, labor costs in each skill category, logistics and shipping costs, and current financial factors like interest rates, inflation, and the relevant currency exchange. The schedule program was based on a Gantt chart—a type of bar chart developed a century ago but still the basis of almost all project software—which breaks the whole effort down into separate work packages and puts them in the correct sequential order. So, for example, you know that you have to complete the site grading and excavation before you can lay rebar for the foundation, and you must complete the rebar installation before you can pour the concrete around and over it. This means the steel rebar itself must be purchased and moved to the site a certain number of days before the excavation period ends, in order for the task of cutting and bending, then laying and tying the bars, to begin on time.

The Gantt chart can be a massive piece of work, accounting for every contract, material, and work package on a project.2 And the chart itself is not a static object which you write up once, before breaking ground on the job, and then just follow along and check off boxes. Instead, the chart is a living image of the project itself over time. So, for example, if your supplier is late delivering the rebar, you note that, and the chart automatically adjusts the dates and deliveries for all dependent work packages downstream in time. Or a really sophisticated Gantt program may offer adjustments that you can accept in your basic assumptions and task planning to make up for the delay. Each work package also includes a “slack” or “float” period, built in at the task’s beginning and end. These periods show the amount of time by which each step’s start or finish date can be delayed without delaying the next step or the overall project’s completion date. The float provides flexibility in both planning and execution.

With this scheduling capability in hand, and knowing what your estimated costs are for each task in the project, what kind of cash flow you will need to complete that task on time, and what your next planned expenditures are in order—plus what the interest rate or the cost of that money is, the inflation rate that will eat away at any money you hold onto too long, and how currency exchange on an international project is shifting those relative values day to day—you can pretty well plan for a least-cost, maximum-value project turnaround.

Such a planning and estimating computer program—accounting for all aspects of the project, not just the labor value of component parts, materials, and construction effort—would have told the Soviets that even knocking thirty or forty percent off the generator’s purchase price wouldn’t make up for the cost of borrowing the money so far ahead of time and paying interest on it for a couple of years. That’s why big pieces of equipment are called “capital goods.” They represent an investment in money that must be borrowed up front3 and paid for with interest. You balance the cost of that money with its purchasing power today, what inflation will do to that value tomorrow, and what sort of return on investment the purchased part will contribute to your financial situation once it goes into service.

The capital good stands in place of all the other uses to which that money might be put and the increase in value over its own cost it will eventually produce. These are collectively called “opportunity costs” versus “sunk costs” under the rubric of the “time value of money.” In this frame of reference, sinking a big wad of expensive money into a turbine-generator that will sit idle for a couple of years—even before the project can start installing it and hooking it up to make electricity, and long before the completed steel mill actually needs that electricity—well, that’s just stupid. And it’s stupid even before taking into account that the precisely machined and intricately balanced turbine and its lovely wooden crating will rot in the jungle and turn into junk.

What separates the late 20th and early 21st centuries in the Western world from every other place and time in history is the sophistication of our mathematical and conceptual tools. These are often simple equations involving present value, future value, expected time periods, and projected interest rate. You can solve them with a stick in the sand, as Pythagoras might have. But the other distinction we have is fast computer processing power linked to sophisticated programming which lets us chain these equations together and compare multiple cases at one time dealing with many slippery, sliding, and competing variables. But before the computer programs can do their work, you must have the concepts.

We are no longer sending thousands of people out with picks and pry bars to spend the next twenty years cutting a million limestone blocks out of a quarry and stacking them up into a pyramid, all to just sit there and honor the vanity of a dead pharaoh. When we build something in the modern world, it has to work, have purpose, and create value. The money we spend on a project represents both that money’s initial purchasing power, the time and cost associated with building or waiting, and the potential return to be made on all potentially competing projects. Analysis of all these factors allows us, as a society, to weigh correctly the choice of building, say, a dam to provide hydroelectric power and a stable water supply, or a thousand miles of new railroad track to move goods, or a new runway at the local airport to move people into and out of the region, or a new office building to provide those people with a place to work.

We in the West don’t spend money and build projects or buy goods because of a politician’s whim or vanity, or because it seems like a good idea at the time, or because we can make a killing on someone else’s turbine deal that went south. We know when and what to build because we have conceptual tools—plus the judgment and self-restraint to use them—that underpin a modern and sophisticated view of economics. By comparison, cultures and societies that view money as a fixed commodity, or a simple exchange of labor for purchasing power, will always be on the outside and lagging behind the Western world. They will build the wrong things, in the wrong amounts, at the wrong time—a deadly error in a fast-moving world. Just ask the Chinese about all those apartments in the desert.

Money is not gold coins or any kind of object. Money is a form of energy, a dynamic thing, like electric current in a wire or the flow of water in a pipe. Money is not a byproduct of labor but an input all its own.4 In use, it acquires force and multiplies its energy, just as a thrown baseball has more apparent mass on impact than one that’s just sitting on the ground. It is our appreciation of this effect, captured in our conceptual tools, that has made Western civilization different from any that has come before. We’ve been developing new ideas about money and its uses since the Italian bankers of the 15th century. So we are now about five or six centuries ahead of everybody else and their antique concepts.

The rest of the world thinks we just have more money. What they don’t understand is we have more and better ideas!

1. This was back in the days when the computer was an IBM 370 in the basement. Today you could run this sort of software on your laptop or even your smartphone. The company considered this planning and estimating software to be their own proprietary invention, but that just meant the planning department experts had written their own program code. The principles were commonly known and widely practiced throughout the construction industry in the Western world.

2. The Gantt chart, if managed properly, will tell you how many toilet bowls are planned for the restrooms in the administration building—along with all the plumbing fittings and knobs on the stall doors. It will also tell you who has bid to supply them, what they will cost, what the lead time is for purchase and delivery, when they were ordered, when they are due to arrive on site, when they did arrive, and how many workers will be needed to install them in the time allowed on the schedule. Running a Gantt chart means you take nothing for granted.

3. Nobody these days starts a long-term project by saving up ahead of time and then paying out cash from his checking account for each material purchase and contract payment. Yes, you can earn some interest on your savings, but you must also watch the purchasing power of your money erode with inflation. In the real world, you finance step by step and watch the sliding interest and inflation rates carefully.
       This raises the question of why, right now, we aren’t seeing a massive outpouring of construction projects for new manufacturing and infrastructure, given that the interest cost of money is near zero and the eroding power of inflation is also vastly muted. For one thing, banks have no incentive to lend when the money won’t earn a payback. For another, businesses that have money would rather spend it buying back their own stock and reducing their liabilities than on increasing their holdings and indebtedness to create productive capacity they’re not sure they’ll need. This time of zero interest and near-zero inflation feels eerie, like the eye of a hurricane after the financial buffeting we’ve all been through in the last couple of decades. And everyone is wondering what the other side of this dead zone is going to bring.

4. See The Economy as an Ecology from November 14, 2011.