It’s the Stupid Economy

Think of this as Volume 14, Number 37 of A-Clue.com, the online newsletter I've written since 1997. Enjoy.

Each of America's great political crises have really been about the economy.

In our time it's about energy coming from devices, as opposed to energy as resources. Resources have  to be transformed by fire to become energy. Devices harness energy from the environment.

There is, in fact, plenty of energy all around us — as much as we could ever use. Coming down from the sky, flowing under the Earth, blowing across our land. What we need are devices that can harness it.

Meanwhile we have a Stupid Economy. It's stupid because there is an economic force stifling growth we feel powerless to get past, because that force seems to control our politics. In this case, it's energy billionaires like the Koch Brothers, the oil power, and to a lesser extent coal.

Look closely at who funds the Republican National Committee, all the "wingnut welfare" groups and Tea Party arcades. Follow the money where it doesn't want you to go and it's the same collection of names — energy men and their bankers.

But their economic time has passed. They can no longer deliver the prosperity they once did. They can only beggar our people as they have been doing for the last decade.

This is because resources have prices, prices that  rise with demand. Every sign of economic growth in the last decade has been accompanied by a rise in energy prices. The only way to break the logjam and create real, sustainable economic growth is by harnessing the energy all around us, through devices.

But the resource industry does not want that. Thus they have captured our politics, not for ideological reasons (as they tell their allies), but to keep the power and subsidies that sustain them. Subsidies like wars in the oilpatch as well as tax credits that make it profitable to drill a mile under the Gulf, even at the risk of a catastrophic failure.

The cost of many devices, like solar cells, can actually fall as a function of Moore's Law. Even for those which don't, like windmills, they're a fixed, sunk cost. Upkeep is minor. Energy creation is as reliable as the energy source passing by them. Everything we can do to further energy as devices benefits the U.S. economy. Even the efforts of rivals like Germany and China benefit America — their devices put a break on energy prices, their knowledge is technology that can be sold and shared.

These logjams are never recognized during the crisis, and it's possible they're underestimated by historians even now:

• People in the early 1970s didn't understand how technology and the content of mens' minds would transform the economy to the detriment of basic manufacturing. They saw, they still see, only social changes coming from that era.
• People in the early 1930s didn't understand that demand was the key to steadily rising manufacturing consumption. Conservatives still see FDR's policies to stimulate demand as being "anti-buisiness" when they were necessary for business' prosperity. They made the middle class possible.
• People in the 1890s and 1900s didn't understand that capital needed to be controlled, and rates on basic inputs regulated, to create a national market with huge manufacturing capacity that could be operated for decades at a profit. They saw a battle between Progressives and Wall Street when in fact TR was working hand-in-glove with progressive businessmen.
• People in the 1850s didn't see the battle between North and South as one between machines and men. They saw slavery through a moral prism, either a necessity or pure evil. The battle had to be fought to unleash the power of invention and manufacturing on the economy.

Looking at the list, I realize many people, even now, don't properly understand past crises. So it should be no surprise that President Obama and his team don't appear to know what they're really up against.

They're up against the same thing that previous crisis Presidents were, regulatory capture by obsolete economic forces.

Al Gore's historical importance, it turns out, is not political, but economic. Gore, and the other backers of all the big alternative energy projects now coursing through universities and into small plants around the country, represent the future of our economy. They are the promise of unlimited energy, energy that is not tied to specific places over which we must maintain political control.

Energy in the future will not be the product of heating resources. It will be the product of intellectual energy, competitive manufacturing and careful planning. Gore's Global Warming debate hid this reality from us,  turning economic progress into a political choice.

As a political choice, the new economy could be defeated (it still can be) by the political forces that control Washington.

It's their myths, their values, their assumptions that need to be directly challenged now, but they need to be challenged in a different way than Gore challenged them.

The real question is one of growth or stagnation. If the President frames the economic question of our time in that way, standing for the growth of energy-as-devices against the stagnation of energy-as-resources, the political back of that stagnation can still be broken.

But here's the sad truth. At the end of the day it doesn't really matter what Obama does, or what America does. These economic forces are inexorable. Solar solutions are declining in price, they decline as demand increases thanks to manufacturing and Moore's Law efficiencies. Oil and coal will never again be able to say that.

So the nation that leads the way will lead the future. The times they are a changing, and those who stand in the way will be trampled.

America can choose to be trampled, simply by carrying on as we have been, assuming that depleting resources are the only way to make things go.

China is recognizing this reality, because their dirty coal is strangling her people, so they're subsidizing green energy. Germany is recognizing this reality, because Europe lacks resources, so they're subsidizing green energy. If we want them to lead the future we can go along right as we've been going. They will bury us.

What makes the present time difficult for many Democrats is that they're missing the central question of our time, and so they're arguing over Nixon-era assumptions of conservative vs. liberal, the abusive marriage of the past. That's where Republicans want to have the argument.

It's time for a divorce. It's time for a new politics of growth, starting with a recognition that a real Green Energy bill is in fact a jobs bill, a transfer of subsidy from no-growth sectors to high-growth sectors, and that all payments from our government to private industry should be seen in that light.

If you're not growing you should get by on your own. If you are we need to invest in you, even if Wall Street doesn't yet see your potential. We've been doing this through our university system for a generation now. The Internet started as a military-funded research project called DARPA, in 1970. Research universities are our growth engines. Local politicians know this. Time for everyone else to understand the implications.

In our past America has always embraced the new economy. In the 1970s we turned toward Hollywood and Silicon Valley, toward intellectual property and Moore's Law. In the 1930s we turned toward mass consumption driving mass production. In the 1900s we regulated capital and industrial inputs so as to solidify the balance sheets of industrial output. In the 1860s we supported machine work over manual labor.

This is the story of America. It's a story of economic progress, not just political choice. The only reason we haven't made the right choice yet, the only reason Americans seem depressed entering the 2010 campaign, is because the choice hasn't been put before us.

There is still time for President Obama to do this. There is not time for us to let this moment pass, and return to it 4 or 8 or 10 years from now, while retaining our economic leadership.

That's why this election matters. It's not just the economy, stupid.

It's the stupid economy.