So Far From Green, So Close to Brown: Why An Alternative Energy Future is Slow in Coming

Quick! What type of world did you imagine when you were a kid? Did you foresee yourself darting about in a hovercraft much like the cartoon family in the Jetsons? Vacationing on the moon? A lean, mean greener world? How is it that we find ourselves these many years, decades even, down the road and we’re still looking at a society that in so many ways is what it once was: the world that petroleum built? Decades after the Carter-era gasoline shortages, now with the prospect of $6 gasoline looming before us, we have little to show for our grand hopes and great visions. We’re still talking about moving off foreign oil even as the buzzword “energy independence” has become firmly entrenched in our lexicon. So little, so late.

What happened?

Enter another buzzword: “market ready”. This explanation commonly surfaces to explain why an innovation publicized in Popular Science back in the 1970s, test-marketed in the 1980s or touted by industry in the ’90s has yet to materialize. What’s so difficult for us to implement hasn’t been out of reach of others, however. The Japanese have been using bullet trains for over a decade to travel great distances in a matter of minutes, Denmark in the early 1990s harnessed the power-generation potential of cow manure, among other sources, and Brazilians were riding in alternative-fueled buses and cars more than a decade before the trend caught on in North America.

We here in the United States fancy ourselves on the cutting edge of innovation and invention — indeed that our proclivity to bring new tech to the market will keep us economically viable in a cut-throat global economy — so why is it that green technology is market ready for our international neighbors yet a largely unrealized aspiration for us? Worse yet, why are there rumblings that we’re less inclined to care?

The short answer is this: For all the talk of going green our values don’t allow for the accomplishments of the past. Part of the problem stems from a misread of our own history. We forget that major infrastructure improvements were government backed, from the Civil War-era government bonds that financed the first transcontinental railroad to the post-World War II interstate highway system and the subsequent space race that successfully launched us to the moon. In spite of our history — and apparently in place of our collective sense of pride in funding a modern, first-rate society — we have but one seeming priority, exemplified by yet another buzzword: Privatization.

Private investment is idealized, public investment demonized. In spite of the fact that we have universally benefited from the public-private partnerships of the past we’re preoccupied today with either/or solutions. Cautionary buzzwords define the debate for better or for worse. Don’t let government pick the “winners and losers” — Solyndra is the latest poster child for that no-no. Cable news networks and Internet discussion forums have popularized the notion: government doesn’t produce anything valuable, certainly not jobs. Never mind the apparent contradiction — that this notion poorly reflects how Americans working for defense contractors feel nor their predecessors who fed their families during the Great Depression building community colleges, among other things, as part of FDR’s Works Progress Administration.

Today’s debates aren’t characterized by nuance, reason or historical accuracy — they’re about taglines, talking points and buzzwords.

For all the nonsensical generalizations that preoccupy the public mind there are lesser appreciated reasons why there is more talk of change than change itself. Take the high cost of oil. The media blames geopolitical instability in Iran, specifically, and the Mideast in general. Conservatives blame environmentalists for prevailing against refinery permits and the Obama Administration. Overlooked in the scuffle is a clue to a far less appreciated explanation — one that appears in an unexpected place: “The Undefeated“, a documentary on Sarah Palin. Point Thomson, located on Alaska’s North slope, lay idle 30-some years even as the State of Alaska awaited lease-holder, Exxon Mobile, to tap its vast resources. The documentary credits Governor Palin for putting a stop to “petro hoarding” by threatening to revoke the company’s lease for failing to make revenue gains for the State. Then, and only then, did Exxon Mobile sink their drill bits.

So what does this have to do with hovercraft, high-speed rail and green energy — the lofty advances we think so highly of yet see so little of?

A lot.

It turns out we’ve been wrong in how we frame the debate. True, environmentalists — and just about anyone who doesn’t want a refinery in their own backyard — make it difficult to gain permits and to expand much-needed domestic energy production. And yet this too is true: Old energy benefits from such forces.

The very groups Big Oil demonize as “bad for business” are, in fact, good for profits.

The usual conservative versus liberal scapegoating would have us believe that each is the source of the other camp’s problem. Partisan infighting obscures a salient fact hiding in plain sight: Petroleum is more profitable when supplies are scarce. That’s true when scarcity is artificial — a consequence of deregulation-enabled asset bubbles and paper-based commodities speculation. It’s true when there is geopolitical instability in the Mideast or elsewhere. It’s true when mother nature extracts her revenge. It’s true when a man-made disaster occurs. It’s true when poorly crafted regulatory controls choke off competition. And if we are to believe that “peak oil” plays a role — real or imagined — that, too, contributes to scarcity. Whatever or whomever takes the blame, the result is the same: The more costly, dangerous or difficult it is to drill, refine, transport and sell petroleum, the more costs are passed on to consumers — and the higher profits potentially become.

Whether by greed, necessity or conspiracy we arrive at the same place: pain at the gas pump and the rising cost of everything else. In a word: Inflation. Most Americans reportedly believe the Obama Administration could do more to stop the cascading cost of gasoline while others point out that high gas prices benefit the president’s goal of reduced consumption. But why would the President take such a hit to his approval ratings with an election around the corner? Clearly the Administration has a number of tools at its disposal: reform taxation policy, release strategic oil reserves, ease drilling restrictions or renegotiate leases in much the same way Governor Palin did. And yet there’s a competing factor that can’t be ruled out: Just as high prices serve the interests of sustainable energy backers, it paradoxically serves the interests of Big Oil, strange bedfellows though they make.

The economic ramifications may begin at the pump but they don’t end there. Capital is another factor. Renewable energy, to the extent it is more efficient, represents less profit (certainly at a slower pace). Less profit or a longer-return-on-investment equals less interest on the part of private equity and venture capital firms. Without government subsidies or substantial tax breaks to sweeten the deal, investors are bound to shy away from substantial green energy infrastructure investments. Investors often desire large-scale returns, which may necessitate a large-scale project. This objective, in turn, may be at odds with the resource- and location-dependent characteristics of green energy — a patchwork of solutions consisting of wind, water, solar and geothermal technologies, which may not be up to scale or may add undesirable complexity and cost. And there’s yet another problem: Investors typically seek a relatively quick return on their money. Alternative energy lends itself to the perception that consumers are likely to pay less for a more plentiful resource — all of which spells less profit, particularly in the short term. In other words, the best way to hand Big Oil a brown energy monopoly is to privatize green.

If we wholly privatize progress we’re likely to see very little of it.

Solyndra has become a case study in what Big Government does to distort the free market: the wrong incentives, the wrong bets, the wrong outcome. Still, in the long view of history, success is on the side of visionary partnerships. Nations that get things done aren’t necessarily the oldest, wealthiest or the most resource rich: they’re the ones that set aside individual differences to enjoy cooperative achievements.

Whether our personal stake in the issue centers around losses from our own pocketbooks in the form of jobs, price gouging, taxation or inflation — whether we truly care about a cleaner, greener world or not — it will take a village and a vision to bring about change.

Business is people. Government is people. There is no special moral advantage to public or private interests and endeavors — rather a series of relative advantages and disadvantages that must be weighed on an issue-by-issue, case-by-case basis. Whether Big Business or Big Government helps or harms us is up to us — and the incentives we put in place.

We are the problem. We are also the solution.

When we strike a balance our children or grandchildren just might inherit the fantastical, opportunity-filled future they imagine today. Isn’t that all most of us ever really wanted anyhow?

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RESOURCES

History-Altering Decisions: Clinton Signs the Commodities Futures Modernization Act | Newsweek

Big Oil’s Banner Year: Higher Prices, Record Profits, Less Oil | Grist

Perhaps 60 Percent of Today’s Oil Price is Pure Speculation | Geopolitics-Geoeconomics

Speculation Behind High Gas Prices, Report Says | New York Times

America’s Transportation Infrastructure: Life in the Slow Lane | The Economist

Food Crisis: Causes, Consequences and Alternatives | International Viewpoint

Equitable and Sustainable Globalisation: Principles for Global Governance [PDF] | The Evian Group

American Competitiveness: The New Untouchables or The New Half Truth?

If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away.

Henry David Thoreau

In “The New Untouchables “, New York Times columnist Thomas Friedman argues that in this downwardly mobile economy there is no room for average. Extraordinary is what it takes to survive and thrive in the modern workplace.

I get that.

Yet for all my appreciation for education — I hold two degrees so I do, in fact, lean in favor of Friedman’s premise that education is key to American competitiveness — his education-as-a-panacea argument oversteps its reach.

Most strikingly, Friedman’s description of a successful “untouchable” American worker isn’t a portrait of educational endowment at all. Friedman’s favorite descriptors, instead, refer to personality attributes: entrepreneur (risk taker), creative (visionary), analytical (critical thinker), and persuasive (charismatic). The obvious problem with Friedman’s pin-the-tail-on-the-wrong-donkey premise is that temperament is inborn — teachers, let alone parents, cannot instill personality characteristics that are not there to begin with.

Friedman’s eagerness to finger the usual suspects — schools — also ignores six reasons why Americans are at a competitive disadvantage in the global era. Here we examine those realities, and the future these changing times have in store.

First, there are more of us occupying this country — and this planet at large — than ever before. At some point, the mathematics of population growth have to matter. The sheer number of people in today’s workforce suggests more and more people are competing for the same jobs even as we adopt more and more technology to displace human hands. That’s not a sign of a lack of education; it’s a sign that business owners comprehend that productivity gadgets and gizmos don’t require breaks, a salary or workers’ compensation.

It comes down to the numbers.

Second, I would argue the inverse in response to Friedman’s suggestion that there just isn’t enough talent to be had here in the States. Over the past 50-some years there are more colleges turning out more graduates on an annual basis than employers of the past had access to. Many foreign nationals, in fact, come to the US for higher education opportunities. On the flip side, there are only so many engineers, M.B.A.s, lawyers, scientists and the like universities can churn out before higher-end fields become saturated in much the same way low-end jobs are chalk full of contenders.

It’s no longer merely a question of whether there are clear winners and losers on the academic front.

Job scarcity is a threat, in part, because of the decades-long trend of mergers, acquisitions and a globalized labor pool. Consider: There are generally fewer than a dozen heavyweights in a given industry — everything from mainstream media to appliance manufacturing. This trend does not bode well for domestic job expansion. And if jobs aren’t available to begin with, it is tough to gain a competitive advantage even with above-average potential. So what we are seeing, in this author’s opinion, is an over-supply of talent.

But that doesn’t mean the proponents of Friedman’s dire self-fulfilling prophecy won’t get their wish.

With less competition in a given industry there is less demand for the eager young grads institutions of higher learning infuse into the job market each year. With shrinking demand and a greater supply of contenders, salaries may also take a nosedive. America at large may become competitively disadvantaged in the years ahead precisely because the “good jobs” of today are no longer perceived as a source of steady employment or adequate pay thereby diminishing American college students’ willingness to pursue them.

Already, the very cure that causes the “employment insecurity” disease is well underway: Calls for immigration reform permitting more foreign grads to take up permanent residence in the U.S. as a form of “insourced talent” are originating from Google, Microsoft and Susan Hockfield, MIT president and author of an October 19, 2009 Wall Street Journal opinion piece ironically titled “Immigrants Create Jobs and Win Nobels“.

Sure there are a lot of average people who aren’t cut out for the highest levels of business, government and academia. Just the same, there is also an ample supply of bright, talented American citizens who, for all their desirable qualifications and qualities, will nevertheless find themselves competing toe-to-toe against peers who are just as capable and “deserving” of a career break as they are.

Somebody has to lose.

Third, failure to thrive in this Brave New Economy isn’t always linked to failing schools, as Friedman argues. Good health is arguably the number one prerequisite to productivity. Healthcare is such a hot topic precisely because we cannot remain competitive if, as a country, businesses and individuals are increasingly diverting money out of the real economy just to keep up with the skyrocketing cost of healthcare.

Beyond that, few esoteric explanations matter when perfectly down-to-earth explanations suffice. When an individual charged with hiring decisions has too many promising applicants to choose from among, what assets wins out on the last round of interviews? That extra year or two of experience? Those additional GPA points? Or would it be more honest to conclude that it comes down to how well an applicant clicks with his or her interviewers? Hands-on experience, even a social or physical attribute — whatever it may be that fits a manager’s self-styled view of the proper candidate — is just as likely to make the deciding difference.

On the flip side of the coin, there is a perverse disincentive to hire the best qualified candidates. For one, they tend to be more experienced and/or highly educated, thereby commanding greater salaries. For another, few people in the position to do so hire individuals with the obvious capacity to perform so impressively that it will ultimately threaten their own job security. Friedman is right in the sense that education and talent ought to insulate Americans from the pitfalls of a failing global experiment.

Unfortunately, it does not.

Fourth, where one lives also figures largely into one’s ability to compete. Like the tough-luck stories that abound on the streets of Hollywood, those who flock to saturated markets — Los Angeles, New York, etc. — may, ironically, find fewer opportunities to leave a lasting, positive impression due to the sheer number of people in the area who are equally worthy of consideration. An over-supply of applicants for a given position, in turn, may make it more challenging for employers to select optimal talent vs. expedient talent. Translation? Being a big fish in a vast ocean still makes you a little fish. To argue, therefore, that education can somehow imbue success and that lack of it underlies a failure is a misnomer.

It’s impossible to underestimate the economics of supply and demand.

Fifth, it’s a mistake to assume that a Third World factory worker is more “competitive” as Todd Martin, former PepsiCo and Kraft Europe executive, suggests to Friedman. Third World workers come inexpensively, and that’s one competitive disadvantage that will only heighten the more educated the American workforce becomes. Why? Because talent doesn’t come cheaply — nor do the salaries of increasingly educated job seekers struggling to repay oppressive student loan debts as a direct result of their herculean efforts to rise head-and-shoulders above the crowd.

Getting noticed in an increasingly competitive job market only ups the ante — and the price tag of success.

Sixth, the assumption that Third World products are better made by virtue of their “efficiency” is also flawed. When frequent replacements and upgrades are factored into the cost of ownership, inexpensively manufactured Third World goods are, ironically, quite pricey. Case-in-point: In 2005 I replaced a 30-some-year-old GE refrigerator made in the US as well as an old but functioning washer and dryer. If I had to do it all over again, I wouldn’t trade anything old and working for something new, sleek and modern. Why? Because the major appliances I purchased new in 2005 — all have had repeated major breakdowns requiring multiple service calls, dozens of hours on the phone, weeks waiting for parts.

Even when consumers spend top dollar, the manufacturing source and quality of today’s big-ticket items are often quite similar — with merely a change of window dressing to imply otherwise. That’s what happens when there are so many market consolidations that an appearance of choice is just that: little more than a dozen or so name badges owned, in truth, by the same handful of Big Players. It is almost laughable the degree to which consumers on complaint websites proclaim that they will never buy brand “X” again, only to unwittingly state that they intend to replace such-and-such item with brand “Y” — yet another brand or subsidiary of the very same company who manufactures brand X!

Market concentration doesn’t grow jobs any more reliably than it promotes healthy competition.

Sparing one another the hassle and headaches of poor quality goods isn’t the only reason to care, however. The build-it-to-last ethic of decades past was, perhaps, the ultimate expression of “Green“. Why? Because durable goods were seemingly less likely to break down, destined for a landfill in an absurdly short time frame. By contrast, “planned obsolescence” is the new norm, with a trend of shrinking manufacturer warranties to attest to the low vote of confidence manufacturers assign to their own products. Longevity isn’t a valued trait in a disposable society, but if we really want to go Green perhaps we should rethink the “dept-trap consumerism” cheaply designed and manufactured products facilitate. Sadly, modern rhetoric would have us believe that pride in one’s workmanship — a refusal to sell junk to unsuspecting consumers — is “noncompetitive”.

All talk of going Green aside, standardized manufacturing processes have made it difficult to make the case that company “A” is making a better product than “B” or “C”. Consequently, the maxim “You get what you pay for” has never been more suspect. True, you may get more for your money, but that does not necessarily translate into significantly better quality. What differs most dramatically is the amount of money corporations throw into slick ad campaigns, and the perception consumers have of branding and value.

It would be one thing if high-end boutiques were selling products made by First World craftspeople with higher price tags thanks to First World production costs. But when both low-end retailers and high-end retailers are selling inexpensively made foreign goods, who, exactly, are they fooling? Fairly or not, Third World origination suggests that income and human rights disparities favor corporate bottom lines. In the Third World, after all, it is not uncommon for workers to be denied bathroom breaks, sick days, maternity leave and most of the other benefits and protections Americans consider “civilized”. It is not surprising, then, that workers are more productive when they spend most of their lives in the confines of a factory, fearful that their only other option is a life of abject poverty and/or prostitution.

In short, the Third World is the modern-day economic equivalent of the pre-Civil War Old South: a place for slave-like child and adult labor, often conducted under sweatshop conditions. As if that weren’t questionable enough, outsourcing trends pose an unacceptable risk to national security as well.

So how does all of this tie in?

Unless Americans are willing to stoop to similar lows to compete with workers abroad, it’s not possible to rationally conclude that education, talent or entrepreneurship on the part of American workers will level the economic playing field anytime soon. America’s competitive disadvantage, rather, speaks to corporate opportunism — and to the politicians in recent decades who have crafted immigration, economic, trade and taxation policies that have enabled such heavily skewed commerce to become the norm.

Moreover, if being properly educated, creative or analytical adequately described, as Friedman suggests, the entirety of American competitiveness, I suspect we would see fewer reckless gambles on Wall Street and more evidence of long-range thinkers putting the brakes on short-term gain (scams) in the lead up to the Great Recession. In the real world, however, the “right reasons” are not always the cause for getting ahead — or, conversely, for falling behind.

THE WAKE UP CALL

So why care whether or not a newspaper columnists gets it so wrong? Because generalizations and simplifications aren’t a starting point for progress. Economists are projecting a ~10 percent national unemployment rate that’s here to stay for the foreseeable future. That can only mean more bankruptcies, more foreclosures and a greater amount of “dead weight” on America’s ability to compete. Only by taking a long, hard look at the unvarnished truth do we have any hope of fingering the right culprits, crafting the right solutions and ultimately reviving Main Street before the American Dream becomes a distant memory of a bygone era.

Doing nothing is not an option.

If Middle Class wages continue to decline as we move further into the 21st Century, who will consume the products and services entrepreneurs on both sides of the oceanic divide offer? Will young Americans, contemplating the grimness of their economic future and/or the need for ever-more costly and impressive academic résumés opt for traditional marriage and family life — the nation’s greatest driver of new purchases, everything from strollers and diapers to single family homes and minivans? Should Main Street’s economic House of Cards continue to crumble, will Third World workers have their own Friedmans urging them to blame themselves when factory orders dwindle and the newly affluent in Asia and India begin to see their own hopes and dreams falter? Or will they see it — we see it — for what it is: globalized economic forces beyond any single individual’s immediate control?

As kind-hearted as sweatshop proponents paint it — that throwing out more life preservers will rescue Third World residents from a life of “primitive agriculture” — building more life preservers than boats is a plausible scenario. Economic growth, after all, relies on expansion. For much of the world’s history markets were local, national, then regional. Globalization isn’t a sure-fire path to success: It’s an experiment that presupposes that natural resources will support endless growth. And it begs a simple but profound question: What happens when all markets are tapped out?

Working and Middle Class people — the majority of us — may not be the most educated, creative or adequately prepared lot, to hear Friedman and his corporate pal, Todd Martin, hash it out. But that doesn’t change the reality that the American Middle Class must earn a living wage in order for the economy — ours and theirs — to thrive. Yet it is telling that in Louisiana, a state with fewer college grads to begin with, Curt Eysink, director of the Louisiana Workforce Commission, indicates that there is an oversupply of degreed residents “we cannot employ” because job growth projections favor vocational trades and the service sector — primarily low-wage occupations such as ticket-takers, cashiers and customer service representatives that are not so prone to the insourcing/outsourcing phenomena.

Is this a sign of things to come?

Without the discretionary income Middle Class Joes and Janes inject into the marketplace, globalized economies may become relegated to a small percentage of elite income earners pitching their products and services to other elite individuals. This may be a recipe for modern-day feudalism, but it’s no way to protect and preserve the merits of free-market capitalism, let alone a profitable market share.

As dire as it all sounds, this isn’t about being pessimistic. Opening our collective eyes is the first step in defending what matters most: family, community, culture — the United States itself. If that means rethinking our definition of progress in the 21st Century sans the usual set of partisan blinders, so be it.

This is no time for subterfuge.

If Friedman wishes to talk about education, he ought to contemplate the wisdom no book learning apparently can impart in America’s best and brightest CEOs and newspaper columnists: The foresight to realize one’s employees/coworkers are also one’s customers/consumers. That means that success at the top of the economic pyramid is only as long-lived as the Middle Class foundation upon which it rests. Excuse it, deny it, defend it, ignore it: the race to the bottom is a very real risk when good intentions go too far.

It’s foolhardy — and a threat to democracy itself — for a transnational conglomerate, an economy, a nation, to conduct business using the lowest common denominator as a competitive yardstick. And yet, globalization promises to outsource gain even as it insources pain. At best, this implies that if and when international economic and trade equilibrium is achieved Third World laborers will nevertheless be unable to sustain the lifestyle Americans have taken for granted — if only by virtue of how thin finite natural resources are stretched — whereas Americans should anticipate “economic insecurity” as a way of life. That’s why Friedman and friends argue so passionately that being wildly successful — untouchable thanks to one’s creativity, innovativeness and education — is the only position of safety (familiarity). The rest of us, apparently, are destined for a mediocre economic melting pot in a neocapitalist New World Order.

Cliché though it may sound, the proactive response to an uncertain future is civic engagement: voting wisely with one’s ballot and one’s pocketbook in support the kind of economy one wishes to see. For if there’s any silver lining to this Great Recession, it’s in bringing an abstract global issue close enough to home that we can reach out, touch it — and change it.

It’s not too late.

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Resources:

America Out of Work: Is Double-Digit Unemployment Here to Stay? |TIME

Obama Adviser Summers Rejects ‘New Normal’ of Slow U.S. Growth | Bloomberg

U.S. Job Seekers Exceed Openings by Record Ratio | NYT

Are You Prepared for a Jobs Depression? | ere.net

How Long will America Lead the World? | Newsweek

Cap and Trade Dementia | The American Spectator

Schools As Scapegoats | The American Prospect

Is it Time to Retrain Business Schools? | NYT

Go Global, Young Manager | Financial Post

Is a College Degree Worthless?/MSN Money

Don’t Get That College Degree! | NY Post

Cat Gets GED: Why GPAs, Degrees and Job Titles May Be Worthless | ITBusinessEdge

Too Many Doctorates Chase Too Few Jobs | San Francisco Chronical

The Three-Year Solution | Newsweek

Asking for Student Loan Forgiveness | Businessweek

Middle Class Facing Decline in Expectations, Economic Power | Retail Traffic

21st Century Skills, Education & Competitiveness (PDF)

Jay Mathews: Why I don’t Like 21st Century Reports | Washington Post

Friedman: U.S. Education System Endangering Global Competitiveness | Education Futures

A New Look at American Competitiveness | Entrepreneurship

The World’s New Superpower | Salon

The Almighty Renminbi? | NYT

The End of the Dollar Spells the Rise of a New Order |The Independent (UK)

China will Overtake America, the Only Question is When |The Independent (UK)

China’s Economy | Brookings Institution

Lax Oversight, Globalization Erode Product Safety | CNN

Technology Made to be Broken | CSMonitor

Appliance Anxiety — Replace It or Fix It? | NYT