Past Articles Redux

A wonderful source for determining the etymology of a word is wiktionary.com. That describes the word redux as originating from the Latin reducare: to bring back. Its definition is: Of a topic: redone, restore, brought back, revisited. It is the latter word that best applies, since we are about to revisit several subjects that have appeared in this newspaper in past columns, subjects that have suddenly been gaining prominent exposure in the media. The point being, “Aren’t you glad you read about it here first?”

The Tesla Roadster

The cover article of the July 21 st issue of Fortune magazine was a report about the lithium-ion battery-operated Tesla two-seater Roadster, a story first reported here in February 2007, and again in September and October 2007. Fortune even displayed a picture of the car on the cover, whereas our readers were treated to a similar picture a year-and–a-half ago. Our October article reported that the car’s production was delayed, and the Fortune article described in great detail (eight pages worth) the history of the car, the individuals behind it, and the fact that antipathy that developed between the two creators of the company forced one of them out.

However, despite a number of production problems that delayed delivery of the car for a year, the first group of cars, seven of them, have been completed. The major delay was the difficulty in developing a two-gear transmission system. The result is that the first cars will be delivered with a one-gear system that will ultimately be replaced. The excitement about the car relates to its ability to travel some 225 miles on one battery charge, and goes from zero to sixty in less than four seconds. Its cost is up from $100,000 to $109,000.

Joe Nocera, a business writer in The New York Times test-drove the car in mid-July, writing. “I spent an afternoon this week at Tesla Motors, Elon Musk’s (the creator of Pay Pal, and the major investor) electric car company, which finally began shipping its eye-popping all electric roadster to customers in March. It’s a spectacular vehicle…” Much of the interest in the car revolves around the possibility that it may engender enough excitement that a new electric era for automobiles may evolve. (See story below.)

Has the Revolution Started?

In March of this year, a story headlined, “Creative Destruction — the All Electric Car = The End of Oil?” ran in this column. It described how the economic theory of Creative Destruction could transform “the way the automobile industry has worked for the past 100 years.” How an Israeli (now in America) software engineer named Shai Agassi, has sold the Israeli government on the concept of eventually replacing the country’s entire fleet of gasoline powered cars with an all-electric battery operated car that would eliminate the need for imported oil.

Mentioned was the fact that “Agassi has gained the backing of Renault-Nissan’s Chief Executive, Carlos Ghosn, whose company will produce the cars. Ghosn has been quoted as saying, “Zero emissions, zero noise—it will be the most environmentally friendly produced car on the market.”

An article the end of July in The New York Times noted the opening of Nissan’s new U.S. headquarters in Franklin, Tennessee, quoting Mr. Ghosn that Nissan plans to sell all-electric cars in the U.S. by 2010. Interestingly, The Times wrote that “To help its development of electric cars, Nissan said that it would work with the state of Tennessee and its largest electric utility, the Tennessee Valley Authority, to study and perhaps install infrastructure like charging stations.” This is based on the model developed by Shai Agassi that will be implemented in Israel.

The Times article also described how General Motors was working with the nonprofit Electric Power Research Institute, which represents more than 30 large electric utilities in North America, to encourage development of electric vehicles. G.M is developing the Chevrolet Volt, also for introduction in 2010, which can go 40 miles on battery power before switching to its gas-powered engine. This latter information was also outlined in the March Viewpointe article.

Science Fiction? Perhaps Not.

Those were the ending words of last month’s story about Space Solar Power that Viewpointe readers received in the mail exactly one week before The New York Times published a similar story headlined “Harvest the Sun from Space.” I’m not accusing the Times of plagiarism, but here is what The Times wrote: “Science fiction? Actually, no — the technology already exists. A space solar power system would involve building large solar energy collectors in orbit around the earth. These panels would collect far more energy than land-based units, which are hampered by weather low angles of the sun in northern climes and of course the darkness of night.” Consider that stories published in newspapers are submitted perhaps a day or two earlier than the actual publication date. Stories submitted to Viewpointe are done so more than three weeks in advance. Remember the Mel Brooks famous line, “It’s good to be the king.”? It’s good to scoop The New York Times.

Nuclear’s Tangled Economics

That was a headline in the July 7 th issue in Business Week (BW) that discussed John McCain’s solution to our energy problem. The conclusions drawn in that article coincided with those in the alternative energy article that appeared in the July issue of Viewpointe. Business Week pointed out that, “In a mid-June speech, part of a continuing blitz on energy issues, McCain laid out his vision for 100 new nuclear plants — 45 of them to be built by 2030. They would help meet America’s energy needs, and because nukes don’t emit greenhouse gases, they would fight global warming as well.” The Viewpointe article agreed with a caveat: “While nuclear power is an attractive alternative, a number of issues must be considered.”

Based on a report from Massachusetts Institute of Technology, the Viewpointe article cited sharply escalating construction costs and spent fuel disposal problems as significant inhibiting factors. BW identified several nuclear power industry executives who concurred with that conclusion. “‘The country badly needs new nuclear plants to deal with the climate issue,’ says John W. Rowe, chief executive officer of Exeloon, currently the largest nuke operator, and chairman of the Nuclear Energy Institute, the industry’s trade group. ‘But they are very expensive, high risk projects.’”

BW explains, “In fact, building new ones won’t happen without hefty government support.” That support would require tax credits “which could be worth more than $140 million per reactor per year.”(My emphasis). Adrian Heymer, senior director for new plant development at the Nuclear Energy Institute says, “I’m not quite sure the number McCain put out is obtainable.” If those tax credits mentioned above ($140 million X 45=$6 billion 300 million) were applied to the implementation of other alternative sources of clean energy, we would benefit from much quicker and much less risky results.

T. Boone Pickens — Blowing In the Wind

If you watch CNBC, it would be difficult to miss the TV commercials featuring T. Boone Pickens promoting his vision of the new world of wind power. The commercials began to run several weeks after his new wind power enterprise was described in the June issue of Viewpointe. Pickens also wrote an opinion piece in the July 7 th edition of the Wall Street Journal titled “My Plan to Escape the Grip of Foreign Oil” citing wind power as the solution.

On July 22 ndThe New York Times ran a very favorable editorial on both the concept and on Pickens himself, although it also pointed out (as did the Viewpointe article) that as “a conservative, he helped underwrite and made no apologies for the Swift Boat campaign against John Kerry.” It also mentioned (as did the Viewpointe article), “his friends in the White House.” Only now, as you will read below, that designation may be overstated.

On July 24 th, one day before this article was submitted for publication, another opinion piece ran in The New York Times, this one written by Timothy Egan, who as part of a group of reporters won a Pulitzer Prize. Titled “The Oil Man Cometh,” Egan writes as follows: “And what the 80 year old Pickens says, in a $58 million campaign, is that we can’t drill our way to lower gas prices. By implication, anybody who tells you otherwise....is a fraud.” Egan quotes Pickens as saying that the attempts by his political party to convince the public that if we just opened up all those forbidden areas to oil drilling, then gas prices would fall “is totally misleading.” He’s not against new drilling, but he is honest enough to say it wouldn’t do anything. Egan skewers Pickens on the Swift Boat deal.

If you would like to see Pickens himself describe his plan (which incidentally is quite compelling), go to http://www.pickensplan.com/. Whatever you may think of Pickens’ politics, the man is no fool.

Infrastructure Insanity — Part I

The term “infrastructure” is rarely seen as a freestanding word. It is normally accompanied by deprecating terms such as “decaying,” “deteriorating,” “deficient,” or “debilitated.” All of these expressions accurately describe the condition of our country’s basic infrastructure assets, but I have introduced a new word, “insanity,” that conveys the fact that there is a total absence of any coherent political approach on a national level to what appears to be a crisis near at hand.

Confirming this conclusion, the director of the American Society of Civil Engineers (ASCE), addressing the 2007 ASCE Annual Civil Engineering Conference last November called attention to the state of the nation’s infrastructure: “Years of deferred infrastructure investment and maintenance, and [the] failure of public officials to act [My emphasis] on infrastructure needs place the public at risk and hinder our country’s economic growth and competitiveness. It is a true crisis.” Unfortunately, like many other crises we are facing, this is one more that requires a monetary solution—at least a trillion and a half dollar solution (and that number is three years old). Let’s first examine the implications of the number one trillion.

At one time, in even recent history, attaining the status of “millionaire” was considered an impossible dream. Yet, in the United States alone there are over 9 million people who can claim that standing. In fact, there are over 400 billionaires in our country, an accomplishment that requires a rethinking of what the word “wealthy” really means. To place that number in context, $1 billion is the equivalent of $1 thousand million. While a number like 1 billion might be understandable, there are some numbers that are truly incomprehensible. For example, it is estimated there are some 70 sextillion stars in the universe—that would be 7 followed by 22 zeros. While a number of that magnitude is well beyond the understanding of ordinary humans, let’s consider another that is significantly smaller but still probably unfathomable to most.

Now we’re talking real money

With so many billionaires today, obviously the next measure of true wealth would be the $1 trillion ($1,000,000,000,000) mark. Imagine having one million million dollars, or its equivalent, one thousand billion dollars. Unimaginable, you say? If that does not adequately describe the full dimensions of that number, consider this: One trillion dollar bills placed end to end would reach 96.9 million miles, slightly more than the distance to the sun. Or think of this—one trillion seconds equals 31,546 years. However the most illustrative description was posted in Current Events, reading as follows:

“Let’s start with one billion [dollars]. If you spent $1,000 a day every day without fail, you would spend $365,000 in a normal year. You would spend $36,525,000 in a century. So, if you started spending $1000 a day starting January 1, 0000, you would be spending $1,000 per day through the end of the Roman Empire, the collapse of the Mayan civilization, the Middle Ages, the Crusades, the Black Plague, the Renaissance, the European conquest of the New World, the Industrial Revolution, the American Revolution, the French Revolution, the Russian Revolution, World Wars I and II, the Cold War, the end of the 20 th Century, and would finally reach one billion dollars a little more than one-third of the way through the 28 th century. Now, repeat that 999 more times and that gets you to one trillion dollars.”

Mega Trends

While the prefix “Mega” can be defined as “Large”, it has also been identified with the number one million. Thus, Mega doesn’t begin to recognize the magnitude of the term “one trillion.” Yet, it is appropriate to use it when explaining a phenomenon in the making as a mega-trend. One of the major mega-trends of the last century, starting in the 1950’s, and continuing through the 1960’s was the enormous growth of infrastructure, not only in the United Sates, but in Europe as well. This was one of the engines that drove the prosperity of the post-war economy, creating a wealth effect and what turned out to be a consumer driven economy. So, what exactly is “infrastructure,” why is it so critical at this time, and what insanities are involved?

In-fra-struc-ture

The American Heritage Dictionary defines the term “infrastructure” as “The basic facilities , services , and installations needed for the functioning of community or society, such as transportation and communication systems, water and power lines, and public institutions including schools, post offices, and prisons.” In today’s world, that definition has been upgraded to include a new phrase—critical infrastructure. This latest interpretation was created as a result of the U.S. Patriot Act and the Homeland Security Department. I acknowledge that there are some infrastructure services that are critical to the nation’s survival, and are therefore of more significant importance However, for purposes of this article, we will concentrate on the conventional definition.

Historical benchmarks

It should first be recognized that infrastructure services have been traditionally financed, built, owned, and operated by governmental entities—federal, state, city, or local. This notion was originally inspired by none other than Thomas Jefferson, who in 1808 ordered his Treasury Secretary, Albert Gallatin to create a national plan to address the country’s needs related to ports, roads, and inland waterways. The object was to encourage settlement and facilitate trade, especially among independent farmers who were scattered across the land. Several states responded, including New York, resulting in the implementation of one of the most influential projects, the Erie Canal, that improved the development of commerce throughout the country.

In 1862, under President Lincoln, the Homestead Act was executed (granting 160 free acres to each family that agreed to farm them), and combined with the Pacific Railway Act, a national transport system was developed. As the years progressed, numerous other national imperatives were implemented wherein a nationwide system of state universities was instituted; irrigation river restoration and dam projects (undertaken under Theodore Roosevelt in 1908 (ultimately resulting in hydroelectric power) were created; and one of the most influential contributions was the National Toll Road and Free Road system (under Franklin D. Roosevelt) that became the basis for the post war development of the Interstate Highway system advanced by President Eisenhower.

America 2050 plan

Since this year is the bi-centennial of the Gallatin Plan, and the centennial of the Teddy Roosevelt initiative, The Lincoln Institute of Land Policy, funded in part by the Rockefeller Foundation, formed a joint venture to “examine new strategies for investing in vital transportation water, and energy infrastructure systems to position America for equitable and prosperous economic growth.” The plan, titled America 2050, considers how to insure the country’s growth and development in the face of rapid population growth and demographic change in the 21 st Century. (It is both unfortunate and sad that neither the current administration nor Congress recognized the significance of the 100 and 200-year celebrations by forwarding a dramatic plan of their own—where is Thomas Jefferson when we need him?)

The introduction to the plan provides a very important lesson. It states: “The growth of this nation is due in part to far-sighted investments that built the nation’s canals, railroads, power generation projects, bridges, and roads, and protected the nation’s environmental heritage, including its forests, wetlands, coastlines, parks, drinking water, and clean air. America has a history of national plans that shaped development.”[My emphasis.]

It then points out that “America faces a host of challenges in the coming century, all of which will have profound impacts on the nation’s future growth and development. Global economic restructuring, rising fuel and household costs, climate change, deteriorating infrastructure, all require strategies to maximize the nation’s continued prosperity, opportunity and quality of life.”

Where is Thomas Jefferson when we need him?

It is the next paragraph however, that relates most closely to, and indeed confirms the essence of the Infrastructure Insanity headline above: “In the face of these challenges though, America is flying blind. No national strategy exists to build and manage the infrastructure systems needed to sustain inclusive economic growth and our competitive position in the global economy, and to secure a healthy environment for our children and grandchildren.” [My emphasis.]

Part II of this article will delineate what my second headline choice could have been—Infrastructure Inanities.