Basics. I learned long ago that I can do 95% of my job by just understanding the basics of science. I am a high level knowledge worker, who is above average in capabilities. Recent graduates often find that their new jobs do not challenge them. However, this generality does not apply to politicians. They have one overriding principal, get re-elected. Promise great things, even things they can't deliver, and when they fail, make bigger promises.
What got the U.S. into the current fix. Cheap money, the housing bubble, etc., we all know the standard lines. Let me get down to the real basics: mis-allocation of resources. We borrowed and spent trillions of dollars to support an unsustainable life style. And capitalism and market forces, like it or not, will punish those mis-allocate resources. Loaning money to someone who can not pay it back is a mis-allocation, i.e., homes, cars, credit cards. Starting a war we can't afford, and probably can't win by almost any standard, is a mis-allocation. But there is something even more fundamental going on here.
Did you know last year that Chinese citizens bought more cars than United States citizens? And, if the Chinese had of been challenging their resources more into their people, instead of supporting our government, the gap in cars, homes, etc. would have been even bigger. China is the biggest producer of steel, concrete, and many other commodities used to furnish, house, and provide jobs for its people. China starts up one new coal-fired power plant every week.
Now lets look to the Middle East. Oil. Oil equals wealth transfer. Opulent structures such as ski slopes in a dessert that runs 120 to 140F in the summer. New cities build by expanding the land into the ocean. This by any sane measure is a mis-allocation for the human race. Where did this wealth come from? Well, the number contributor on a per person basis is the United States. This is where you dollars are being allocated, or should I say mis-allocated. Will market forces punish this mis-allocation. Feel the pain the United States right now, that is the punishment.
Now our government has just come along a committed to spend a couple of trillion dollars in addition to two wars, an under funded social security system, and enormous interest payments on our debt. The question is, how much of this money is a mis-allocation.
Do you know that in the past Argentina, Spain, France, England, China, Rome, etc., were all rich countries at one time. But things changed, the world moved on and the United States got its turn at the top. But, that is all it is. It is not something destined to be by the gods for all time. There is no such thing as a bank, or government that is too big to fail. The big and the mighty, like the dinosaurs, stick around for awhile based on reputation, past successes, credit, etc. Everything I see says to me that America is in economic decline.
There are a lot of drivers for our decline, but at a basic level is that we are not producing enough goods and services to pay for our life style. And, what is the number one thing that we are buying on credit -- energy. Energy is fundamental to our lifestyle. Our lifestyle was built on cheap energy. The day of cheap energy is over. We are getting a brief reprieve since a person (country) laying on the ground (recession/depression) does not consume as much energy.
Why is energy fundamental. Because with enough energy, we are now smart enough to make anything: crops, steel, copper, concrete, aluminum, cars, etc. Sure as ore grades decline, it takes more energy to make copper, steel, etc., but given enough energy we are smart enough to make, to extract from our planet, a living. This may not always be true, for instance, we may one day over-fish our oceans and destroy our ecology to the point that we can make all we need for seven billion people, but my opinion is that we are not quite to the tipping point --- yet. Today, energy is still king.
Whoever has affordable energy resources moving forward will prosper, those that don't will not. The United States is already one of the most energy efficient countries if you measure it on a measure it against our GNP. In short, we are efficient at converting raw materials into products. And we will get better, its in our genes. So what is the problem. We consume too many products (translate too much energy) per person. More than our share based on the energy resources that we have, that the world has.
So out of the $2 trillion we are spending on bailing out our economy and banks, how much is going to alternative energy. $30 billion dollars. You might as well go out into your front yard and piss on the ground, that will help us get more energy just as much as $30 billion dollars. We spend $2 to $3 billion a week on Iraq, not to mention
Afganastran and our general military spending.
Do you realize that France, that we like to make fun of all the time, is much better positioned that the United States with regard to energy. They make something like 70% of their electricity from nuclear power. Their mass transit system makes Americans look like idiots. Our fastest trains go about 100 mph. World standard is 200 miles per hour. Take a guess at how much more efficient a train is than a plane in moving people. My best guess is that a train is about 10 times as efficient as a plane in moving people. I didn't see how much money we are planning on dealing with mass transit, but I suspect it less than the dollars we are spending, and will spend, on pumping up the big three (little three) auto companies. Again, completely out of touch on what is going on at the global scale.
I have always aliened my opinions with mother nature, market forces, and other global forces (such as globalization) since in the end they always prevail against our feeble efforts as humans. There are huge drivers, such as the end of cheap energy, that shape our lives. We either recognize those changes and make adjustments or in the end we are ground up like rocks in front of a glacier.
