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Thursday, October 02, 2003

Just One Point

Bret, I enjoyed reading your response. I agree with you that there's no way that we should discontinue innovation because it is the best bet for keeping us ahead of the unsustainability curve. Although I think the Earth has in some ways been damaged by human beings, it also has proven amazingly compatible to living things for the past 65 million years or so. That's a pretty good track record. Nonetheless, because systems do sometimes act in catastrophic ways when a certain point is reached, it may be appropriate to proceed with some caution as we unleash major new dynamics upon the only ecosystem we have. The problem, of course, is that there is no other Earth on which we can run experiments, so everything is a guess. Is the quantity of hydrocarbons we've put into our atmosphere a problem for the Earth? Who knows? Probably not. And, as you point out, it's likely to not be a problem anymore at all when some new form of energy is economic (which, in practice, may mean when it falls considerably below the cost of hydrocarbons before being adopted because of the capital cost of building a new delivery infrastructure). Our atmostpheric hydrocarbon problem may eventually look similar to the urban horseshit removal problem of the 19th century.

I also accept your point that technological advancement tends to accompany economic growth (although it probably would be interesting to examine the data over longer periods of time than the past 20 years). You've helped me clarify the thinking around my question, and given me insight into the answer. What I was getting at is whether progress -- technological and social -- can be decoupled from economic expansion. Economic expansion seems to be the easiest way to fuel progress, but are there other ways? For example, can we progress without economic growth through efficiency improvements and through redirection of resources. Efficiency improvement is ground that many have been over, so I'll not spend much time on it. I'll simply make the point that capital investments (such as our highway system or the as-yet-unknown infrastructure for the fuel of the future) can unleash incredible efficiencies, that translate into lower costs for consumers and lower revenues for producers, i.e., negative growth for the industry that provides the fuel (although not necessarily lower profitability).

It is resource redirection, though, that interests me most. Let's take the defense industry. I suppose I could do a little research and come up with a more precise figure, but I'll settle for guessing. My guess is that more than $50 billion per year in salaries are paid to U.S. workers associated with the defense industry. And those are high-innovation people, to say the least. As you know, those kind of people can produce many times their cost in value. So, let's say you take away a big chunk of production from defense and let the free market redirect it to other industries that actually produce things that make people's lives better. If you could hold all other things constant (which of course you can't), then no net growth would result, but much progress.

Once I get to my next question (in a day or two), I'll suggest a scenario where we also could unleash the productive power of a vast number of tax lawyers, tax accountants, and tax experts as well (assuming they are not genetically disposed to zero-sum occupations).

So, how do we tap all this? Well, we have to have the right goals. And, as far as I'm concerned, most goals are only good if progress toward them can be measured in some way. With regard to defense, the goal should be to eventually go out of that business. One good measure is the percent of GDP spent on defense. The additional measure I like, though, is the ratio of defense spending to "peace" spending, something akin to foreign aid -- except that spending by the aid recipient on military goods wouldn't count. This measure is currently somewhere around 30:1 or more. Now, I realize that increasing peace spending doesn't necessarily result in direct progress for U.S. citizens, at least not immediately. But, if it can make other countries and people friendlier, then the increased security is worth a lot. Call it bribing if you want. Will bribes work better than guns? I think they will. And you can make them contingent on certain conditions. Do you really think bribes wouldn't work in North Korea for a lot less money than the military capability necessary to contain that country's potential for destruction? On a purely rational basis, wouldn't it have made sense to offer Saddam Hussein ten billion dollars a year for five years and the lifting of sanctions in return for complete openness to American inspectors, business people, engineering firms, and tourists. My guess is that within a few years, the idea of undoing all the benefits that would be created would seem absurd. As it is now, the approach we've used has quickly gotten us into much deeper economic shit. I don't oppose the amount of funds being requested now for Iraq -- we probably should be spending even more to try to restabilize the place -- but I do bridle at the fact that we've gotten to this point, and I'm skeptical (but not unredeemably so) about the effectiveness of the spending we are doing. If good things are happening -- as pundits like Joe Scarborough claim -- then we definitely need to be publicizing more measures associated with those efforts. Can't Bush even remember and repeat a few facts like the number of schools and hospitals that have been built or opened in the past 3 months, or the number of neighborhoods that are newly receiving reliable power within the past week? (The unfortunate thing is I'm not sure he even cares about those things. If he does, he's not a very good salesman.)

Another unproductive occupation that could be redirected with only slightly enlightened policies: anyone whose primary responsibility has to do with countering illegal drug production or use. There's a lot of wasted productive capacity out there.

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