Tuesday, February 19, 2008

The Solid State Revolution

Most folks in the business and energy worlds tend to think that the best way to solve our environmental and resource depletion issues is to let the "proverbial" market work. And indeed, there is much to be said for the way the capitalist banking and financial system works. But "allowing the market to work" as a philosophical cure all for our pressing problems should not be conflated with the rather remarkable system of capital creation that so called free economies employ.

You probably remember from your economics 301 class how the system creates capital. You might remember a question similiar to this on your final. If the Federal Reserve requirement is 5% and there is one trillion dollars in the system, how much money can be created if there are no leaks in the system? The solution requires you to take the reciprocal of .05 or 20 and multiply it by 1 trillion. The correct answer on the quiz is not 20 trillion though, you must subtract the original trillion, and thus write down 19 trillion to get credit on the question.

The "realization" that our banking system creates capital out of thin air stuck with me ever since that day in class 40 years ago. Never again would not paying a loan back be a an unpardonable sin against some grandmothers savings. Rather, it became more like a speeding ticket on a four lane highway. Of course, if you got too many tickets, you might lose your drivers licence and your driving record would be blemished for a certain time.

So, in our banking system, money is not loaned, rather, a credit is extended. It's an important distinction. If a banker loans me 100,000.00 and I put it my bank account in his bank, the bank's reserves are actually increased by that amount. As I spend it and pay it back, that particular bank may see its reserves go up or down, but the expansion of money supply is captured by other banks and institutions.

I say this because I think it is necessary to differentiate what is a rather remarkable aspect of the capitalist system with the notion that markets "solve all problems".

Now don't get me wrong, well considered and fairly designed markets are an efficient way to arbitrate flows of power. But really fair so called "free markets" are paradoxically, heavily regulated. The New York Stock Exchange is a good example.

But markets that only trade on a portion of the true costs of the goods that are being exchanged are fake markets. They are to "fair trade" what Fox News is to "fair and balanced."

If the costs of solar electricity are compared with the cost of electricity from a coal plant without including the costs of the emitted CO2 and the other pollutants, the market is "rigged" in favor of the fuel that has externalized or socialized these costs.

Similiarly, if the costs of supporting an army and a navy to defend our strategic supply lines is not included in the price of oil from foreign soils, a portion of your gasoline price is now in your income tax burden. But, the market and the consumer do not recognize it, and thus, the pricing signals are incomplete and perverse results occur. (like war)

Capitalists understand the concept of externalizing costs much better than you might imagine. It is a centuries old strategy to dump your trash into the commons to avoid having to put the price of disposing it or recycling it onto your product.

Thus, unless and until markets are properly designed and regulated to capture all of the true costs, they become "faux markets" that are not only inefficient, they are often perverse in their results. And they cannot be counted on to provide results or solutions that reflect the best path.

"Letting the market work" would have never created the national network of railroads that knitted 19th century America together. "Letting the market work" would have never created the Interstate system of roads that super glued the American landscape into the rivers of commerce and corporate franchises it is today.

"Letting the market work" would have never brought electricity to the rural areas.

Consequently, in my judgment, "letting the market work" to solve our looming problems of climate change and resource depletion will be as effective and sane as "letting the generals of commerce and industry work" to solve the issue of growing authoritarianism and corporatization of our social institutions.

No, we need a vision, and a plan to make that vision a reality.

That vision would include all those things that our human culture does rather well. And it would exclude those things that fail us.

From a technological perspective, we need to move towards an advanced civilization that uses energy in a fundamentally different way.

We must fundamentally transform our very technological social being from the primitive system that runs our world today, to a unified photonic solid state energy web that is capable of providing pollution free, long term, affordable energy to a unified transportation and stationary sector.

Everything becomes solid state. Our homes will have walls that glow. These same walls will draw the energy from your body when you are too warm and deliver it back when you are cold.

Our transportation devices must morph as this new age of technological sophistication emerges. We may charge our personal transportation devices inductively from buried plates in our roads and surfaces, conveniently finding the charge billed to the transportation section of your electric bill.

All energy will come from the light energy that surrounds us. Almost every human made structure that sees this light will convert photons to useable electrons. That energy will power an electric grid that is smart and strong in solid state capacitance. Energy, in the form of electrons, photons, and electro- magnetic vibration will move almost effortlessly and seemlessly between our sun and ourselves.

Within this new photonic unified energy system, a new, smarter, more humane economic paradigm will grow.

And just as we have done when we built the other great public infrastructures of our culture, we will use the magic of the capitalists reserve requirement to create the money to build this energy system for us all, not just those of us with privilege.

And we will "let the market work" within that frame.

As Benjamin Franklin once said,

"Failure to Prepare,

Is Preparing to Fail".

Let us Plan to Survive.
photo courtesy of the new Solid State Revolution

Labels: ,


Anonymous Anonymous said...

Feb 19, 2008
This is a profound world changing vision of a future that will work. A vision worthy of Nicoli Tesler.

1:09 PM  
Anonymous Anonymous said...

This solid state post is terrific.

What is needed - a total change.

I nominate you for resident visionary of the new Obama? presidency.

10:23 AM  

Post a Comment

<< Home