Solving America’s Energy Needs Will Take Better Government, Not Less Government

We search for systemwide solutions that will minimize the cost of competition and that will maximize each citizen’s contribution to society. Many suggest that we eliminate government from the equation and let perfect competition work its way through the economy so that all will have the opportunity to contribute. Yet, America has anything but perfect competition.

The reason Thomas Paine’s pamphlet was so important to the Revolution was that it laid out in clear, laymen’s terms the true purpose of government in the evolution of society to be that merely as a representative extension of man through a larger society and not an ordained right of an individual to rule other men.

It was inspired by and dedicated to the writing of James Thompson’s “Liberty” that exclaimed society should not exist in the extreme of every man for himself. This is to a greater or lesser extent what we have today, built on the economic structure of imperfect capitalism. Why imperfect? many reasons….

One involves our energy system. It’s history is anything but perfect competition as you may know. In the beginning, utilities were something of wild west type competitors. Some emerged through mergers but most went the way of petitioning government to set up regulated monopolies to avoid duplication of assets. What then developed were cost plus entities that served local geographies. Some made better economical choices and were better run than others, resulting in much lower costs to their customers than might be experienced just 50 miles in either direction

And grids were designed to manage a local infrastructure as well. For protection against blackouts, utilities connected to each other and began to devise ways to allow physical power to flow between utilities, but the emerging transmission line structure was haphazard and contained many bottlenecks.

Much later, within the past couple of decades, a means to sell excess power to other utilities as a profit center developed, but it was hampered by several physical and political realities. First, power flows through least resistance physically and not by how utilities sell it. Therefore, there are few financial reasons to fix bottlenecks to the grid. Second, utilities are not purely for profit, they are cost plus, and do not have real competitive reasons to optimize profits, only to ensure they make annual targets to meet dividends and to allow the regulators to grant further expenses to continue building and expanding the utility. Therefore, the nation’s true supply optimization does not occur in a regulated environment.

And with such a regulation hindered system, no utility has the economic incentive to build electric grids to areas that could house wind or solar farms to sell to other utilities. And no utilities have the regulatory incentive to buy from such an economically optimized, national asset. For their incentive is not to optimize profits but to meet barely and consistently their annually set, regulated cost targets so they may increase next year’s costs and gain additional “plus” for their investors who invest for the consistent dividend returns.

America is not designed for perfect competition regarding a major segment of our energy needs. We have been hamstrung by government systems of regulation from the beginning and no outlet exists to fix this monstrosity but by redesign of the government infrastructure.

These are the simple facts that cannot be covered up by free market rhetoric. Every problem must be managed within the complexity of a systemwide solution set that pursues societal optimization.

Robots Haven’t Stolen Men’s Jobs, Capital Flaws Have

For thousands of years, men toiled with nothing more than the work of human hands and draft animals. The vast majority plowed the fields and labored from dawn to dusk. Yet theirs was a life in tune with nature and they were well connected with their sense of God.

After 5,000 years of recorded history, man invented work through carbon based fuel. No longer was production bound by labor alone. Little by little, men’s minds were released from the drudgery of forging furrows in the fields. Year after year, the miracle of the industrial era happened upon us, and the minds of men multiplied output through new inventions of machinery.

Lives that at one time supposedly spanned centuries but that had devolved into just a few decades began to expand again as men were free to create new ways to increase life expectancy. And those lives, while freed from some of the past drudgeries and dreadfulness, were still filled with ever specializing forms of work.

As machinery thrust man into highly productive generations, items such as books that were once expensive luxuries became available to the common man, expanding his access to knowledge even more. And work that had once been deemed that of the most refined now began to thought of as the new drudgeries. These tasks would later be consumed in the information era. Yet, even as drudgeries continued to be eliminated from the workplace, more and more previous luxuries became commonplace, and the masses in wealthier countries began to live better than kings of old.

But they now provided to each other services that heretofore would have seemed frivolous luxuries of the wealthy. Life became ever more livable even while all continued to work. Only that periodically, sometimes without warning, economies would shut down and work would dry up for want of demand.

It seemed that economies were built on credit and that providers of credit could accelerate and decelerate the economy on their whim. They could also pick and choose to whom they would provide credit, and who would prosper from their decision. For when credit was available, man was ever increasingly finding new inventive ways of employment and services to expand livability of mankind. But when credit was pulled, these newly expanded, inventive forms of employment suffered.

Did machinery stop man from working? No, it allowed him to expand his portfolio of work. Did computers stop man from working? No, they exponentially expanded his capacity to devise new work. Did robots stop man from working? No, they eliminated new drudgeries and created opportunities to elevate livability to more of the masses.

Man will work to fill the limitless void of undiscovered livability upon the Earth. Yet the yoke of our capital system flaws must be lifted for that to occur.

Has America Become a Headless Zombie?

I guess I am becoming more convinced that both the conservative and liberal movements in America are bankrupt. Americans pick our teams and cheer them on like we are high school rivals. Yet have the Republicans really helped most Americans succeed or is Middle America being left behind? And have the Democrats uplifted the down trodden or even helped to save a smidgeon of their hard earned equity in America’s future?

We know America has been sliding for the past forty years. In all that time, which movement created a true vision of America leading the world toward a brighter future? Which drew all Americans together toward a common goal? We heard the catch phrases for the past twenty election cycles, but who backed up their words with unifying actions? Which movement rallied us to any cause? If we are to be honest, which was the last to truly inspire America?

Which movement stood up for Middle America? Which protected our economy from elitist gutting? Which has made any real attempt to create a fair process of keeping Americans in their homes and in their jobs? Which saw the demise of our factories and jobs while the decay was occurring, and made it a priority to return America to prominence before we fell into crisis?

Which even attempts to project a comprehensive understanding of the dilemma that America faces? Which is really going to take on the Chinese now that we have let our economic horse out of the barn? Which has made any effort to protect our country from the coming dollar plunder? Which has earnestly attempted to help America become less energy dependent? Which has prioritized balancing internal defense, border defense, homeland defense, and national defense while preserving American’s freedom, including our economic freedom?

Which movement has led the way toward a productive and competitive America? Which stood for savings, responsible government, reinvestment, retooling, and modern education? Which has since prioritized our government spending and created a sane way toward fiscal responsibility? Which is talking honestly to the American people of the shared sacrifice it will take for America to recover?

America has become a headless zombie. Our best and brightest entered the international financial lobotomy track. They proceeded to take our future overseas and our headless public servants aided their robbery. Which stood up to the corporate and banking mobs who stole from us before our very eyes? Which held international banks to the fire afterward and required that they share in America’s sacrifice? Which is calling for our businesses to show social responsibility? Which truly took on the Fed for its reckless behavior?

If Americans are to be honest, we would have to answer neither movement to the questions above. None of us feel very good about our home teams. And the other team doesn’t look very promising either. If this were a real game, we would all be hoping that the half time show would cheer our woes. But it is not a game.

Loyalty is earned and I just don’t feel a loyalty to either movement. When America’s leadership reattaches its brain and heart, perhaps America’s zombie attack will be over. We might even see a movement emerge to form a new party from which the American people can rally around. That party might possess the vision to lead once again.

Will leadership have to bubble up from the next generation when America hits rock bottom? It appears to this humble servant that headless zombies are entrenched in both parties and that transformational leadership does not exist within their current ranks. The next four years are guaranteed to bring adversity. We can perhaps only hope that amongst the ranks of Presidential and Congressional hopefuls our coming adversity will force true transformational leadership to rise up to meet it.

Yes, America Can Quickly Turnaround, Here’s How:

America is a melting pot of concerns and of people dynamically and distributively acting to improve our nation. But when any one issue overwhelms the others, it drowns out their focus and support. A lack of Jobs has become that screaming voice. While Government’s role is far more than just support of business, with an entire nation affected by 25 percent un and under employment, the focus is on helping them to create employment. It is the equivalent of a Maslow’s theory of Government.

Within that Maslow’s theory concept, the sooner we right our course, the sooner we can expand our collective consciousness again. The following is a win-win, Middle America construct for dramatic economic turnaround that can quickly right our course, that is Government proactive, yet balanced with pro-business, private initiative, free market principles.

A lot more must be done than the following to right our course but as a focus on a quick turnaround, the following is a good start. First, we have to restart the economy with increased consumer demand and business credit and elimination of debt overhang:

Job placement
• Implement distributive job placement through small business job voucher plan
• Place all able Americans in jobs through voucher program
• Guarantee voucher program will exist for a minimum of 24 months before any reductions
• Guarantee reductions based on unemployment figures

Debt isolation and swap for equity:
• Require voluntary complete appraisal of all commercial and residential properties – owner pays
• Enforce mark down of all properties to appraisal by banks if accepted by owners
• Allow banks to swap ownership equity for debt to the amount written down
• Require banks that cannot carry higher equity to merge or restructure

Credit repair
• Institute a credit amnesty program
• Enforce the credit institutions raising credit scores 20 points and eliminate bad credit info two months in arrears for every clean month
• Eliminate foreclosures, workouts, and bankruptcies with 30 months clean record

Business loans and grants
• Provide business grants to small business to cover equity portion of SBA business loans tied to guarantees to hire new full time employees
• Assuming a business loan requires a 200,000 per employee, grants of $40,000 per new job would be required. 15 million jobs would cost an investment of up to $600 billion of which half would return in personal and corporate taxes over a two year period.
• Increase government guarantees on bank loans to small business to 100 percent for first two years of originations
• Provide direct SBA loans for businesses unsuccessful at finding bankers to accept 20 percent

Second, we have to right our long term course. Ideas that are being touted by Republicans [with caveats to ensure savings are not funneled offshore], and **a few additional ideas** will help our longer term economic position.

Budget
• Cap and trade budget
• Require trade of budget within same time period for all new initiatives including salary adjustments
• Require a phased in balanced budget

Taxes
• Reduce corporate tax rate [for domestic business only] and eliminate tax loop holes
• [Eliminate tax deferral of profits that stay overseas]
• [Eliminate taxes for all overseas funds that are re-invested in American business infrastructure]
• [Reduce death taxes that are reinvested in American enterprises]
• **Do not implement Romney’s regional tax plan**

Regulations
• Place a moratorium on regulations
• Cap regulation costs
• Enforce a regulatory prioritization cap and trade of regulation costs

Trade
• [Require economic impact study and public review and comment period for all proposed trade treaties, and a minimum of net nuetral benefit excluding corporate profit]
• Enforce existing treaties with China

Energy
•**Invest in research and development of solar and wind in areas that most promise cost reductions**
• **Build solar and wind economic zones large enough for a 20 percent supply of energy needs**
• **Invest in transmission to those zones**
• **Provide 100 percent, interest free loans for all conservation projects that can show 5 year payback and require payback only from energy savings**

The Right Alternative Energy Policy is Critical to America’s Survival, the Wrong Policy Could Hasten Her Fall

A buddy of mine built his Taekwondo studio several miles from the nearest city sewer system. However, city policy required him to connect to the sewer rather than to use a much less costly septic system. The additional cost imposed by the city to run several miles of pipe that would be large enough to handle the sewage of the population that would eventually make its way out toward his studio made building at that location cost prohibitive given their regulations.

This example demonstrates two things; one the cost of regulation sometimes means the loss of otherwise viable businesses. Second, the way America goes about infrastructure development can impact how we view the competitiveness of businesses. In the taekwondo example, this man belongs to an association of over 1,300 studios and has the most profitable of all the studios in the country, yet the irresponsibly misplaced infrastructure policy of the city made it appear otherwise.

When I left the energy industry back in the ’90s, the cost of electricity made from wind was about 160 percent of the cost of that made from natural gas. Therefore, based on economic proformas, no business would logically invest in wind power. But what made wind energy more expensive? For one, the cost of placing electric lines out to wind projects to connect them to the grid made them less economical. Certainly, if there were much larger wind farms using the same electric grid, the cost of connecting would have been much less and the viability of wind much greater.

Another issue with looking at alternative energy purely from an MBA’s spread sheet is that it does not care about the nation state, only the industrial state (our burgeoning multinational corporations). When two thirds of the cost of an oil fired power plant’s electrical energy is sent to Saudi Arabia, the transfer of wealth from America to the Saudis is not reflected in the calculations. The above the line profit benefit may be greater to the company with oil fired power, but that may not translate to the economic benefit to our nation state, America. Without understanding that the two motives are different, the United States will continue to be dictated to by nonaligned motives of our MNCs to the detriment of our future viability as a nation state.

Additionally, by not looking at the potential lifecycle cost of oil as it relates to the exponentially growing demand for oil and the parabolic reduction in supply of this dwindling resource, we are potentially creating a nationally damaging bias toward hydrocarbonically created electricity. Hydrocarbon fuels are facing an exponentially increasing price that is not reflected in current utility business models that base decisions on relatively short time frames. At some point, the exponentially growing price of hydrocarbons will make the less steeply growing price of a more highly capitalized alternative energy plant competitive even from an MBA perspective.

This potential presents several issues. First, if America is caught off guard by quickly rising foreign fuel prices having failed to invest in alternative energy technology and having failed to build the capacity to react quickly with new sources of energy, the cost to America of much higher energy prices over a long ramp up time will be much greater than the additional cost of investing now to create a technological base for alternative energy.

However, the way we go about investing in alternative energy is just as important as the fact that we should be investing now. A recent post discussed that China was building a wind energy farm in Texas. How is America building technological expertise when we export technology development to China? How is America reinvesting maximum dollars back into American resources by investing in China’s wind energy company? This is one simple example of how a national strategy of alternative energy development can have a horribly ironic and ineffective implementation when the overall goals of our national strategy are not carried out through all aspects of development.

If we are to achieve a sustainable America into the 21st century, America must vigorously pursue an energy policy designed to enhance our nation’s core skill in producing alternative energy. It must think in terms of the nation state and not our highly political and well lobbied industrial states. It must pursue scale of grandeur that creates economies of scale instead of continuing to compare projects on a flawed vision of limited size. America will soon face a future of capacity limited by our failure to plan for diminished hydrocarbons and our short sided vision, resulting strategies, and flawed implementation driven by highly manipulative industrial states that our courts have given citizenship status could be our down fall if we do not recognize it in time to react.