This Week’s Clue: The Zero Sum Game

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I have spent some of the last week trying to get inside the heads of America’s political leaders.

To me, they are a foreign country. The idea that we can kill our way out of our problems, the idea that science can be overruled by political will, the projection of hatred in order to maintain support – it seems outside the American experience.

But my first beat was in the oil patch. I drank with George H.W. Bush. I supported conservatives in my early life.

And the only conclusion I can draw is that, at the end, these leaders believe life is a zero sum game.

That is, there’s a limited market. There is limited power. There are
limited resources. If you have, and someone else has not, then you must
fight to protect it.

There are many markets which are finite, on either the supply or
demand side. The supply of diamonds is limited, so controlling all that
supply was essential to the DeBeers business model. You can only eat so
much fast food, or drink so many colas, so the share of market held by
McDonald’s or Coca-Cola has an upper limit.

What oil executives have always feared is monopsony, a monopoly of supply held by
someone else. (This was fine when it was held by the Texas Railroad
Commission back in the day.) Given how easy oil is to extract (once
it’s found), given the expense of bringing on new supply, securing
control of the monopsony has meant power, and losing it a loss of all
power.

I get that. But for most of my career, I have thankfully not lived in that world.

Instead, I’ve lived in the world of Moore’s Law. Supply is not
constrained, and demand doesn’t have to be, if you can just imagine new
things to do with computing power and networks. While demand ran ahead
of supply in the 1980s, and 1990s, it now falls far behind it. Laptops
sell for $499 because Microsoft can’t waste any more MIPs and chip
supplies are abundant. Moore’s Law of Fiber means the Internet backbone
has virtually unlimited capacity, in theory, and Moore’s Law of Radios
means the same is really true in the Last Mile.

In my business, the zero sum game is something you route around. You
overbuild the Bells and cable operators. You encrypt your emails, if
you don’t want them read.

In the Bush-Cheney world, however, the zero sum game is the only
game in town. Failure to retain absolute power means absolute disaster.

And they have made the kind of world they feared. Were America to
leave Iraq tomorrow, the blowback would be horrendous. Saudi supplies
would be threatened. Iran would control the Middle East. And the price
of switching to Russian supplies might reverse the outcome of the Cold
War.

So they think, anyway.

But I don’t live in that world, and I don’t think the rest of us have to live in that world, either.

I believe that, with a proper floor price, Middle East oil can be
replaced, first by Middle West biomass, and then by hydrogen produced
from the Sun, the Earth, and water. I believe there are breakthroughs
to be made. I believe Iceland and Hawaii can become major energy
exporters. So can Arizona.

Those breakthroughs have not yet occurred. The energy equivalent of
the microprocessor is not yet in our hands. But I believe the
equivalent of transistors are within reach. We have solar cell
technology right now.

What helped bring the microprocessor to market, what helped bring
the Internet to our lives, was a government commitment to buy. These
were products of the Cold War. The Apollo program was a Cold War
activity. When government saw an absolute need for breakthroughs, money
was no longer an object, and breakthroughs came.

The essence of what must happen in our time is the replacement of
the Zero Sum Game – its politics, its economics, and its mental
assumptions – with those of Moore’s Law. That’s the only way to
decisively win the present struggle.

I think we’re close. I think we can get there for much less than the
cost of one year in Iraq. And I believe that, in this case, the rising
toll for oil and gas actually works to our advantage. We should take
that advantage, set a floor price for energy, and guarantee a market
for domestic supplies that come in at or below that floor.

I think of this solution as Open Source Politics in action. But I don’t demand credit. I just want to get on with it. 

End the zero sum game.