Unsustaianability-A Threat To America!

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This is NOT supposed to happen. Stocks, gold and bonds are ALL going up in price while unemployment rises and signs of inflation from food to tires are surfacing. The reason for this freak moment in economics is “UNSUSTAINABILITY.”

Unsustainability may be one of those invented words like locavore that will soon be part of our culture. It represents our economy’s slide into public policy that enriches legacy vested interests at the expense of the common good.

Example numero uno is oil. I am NOT picking on the oil companies. They are doing what they were created to do, namely find and deliver oil. Oil managers are fulfilling their legal fiduciary responsibilities to the financial satisfaction of their stockholders.

BUT, in terms of the common good, continuing to base the U.S. economy on oil that is either sourced from other countries or that poses a high environmental risk is not sustainable. It is commonly understood among economists that our addiction to oil is eroding our economic foundation because we finance our oil addiction with money borrowed from China that pays for both the oil we import and a military budget that funds the protection of someone else’s oil fields.

The obvious solution is to raise the price of gasoline and other petroleum products to reflect this “unsustainability” (in economics this is called including the “externality costs” in the price of a product). Doing so would create a “price stimulus” for oil alternatives like electric cars made in the USA that are fueled with energy sourced within the U.S. The result would be increases in jobs and a stronger U.S. economy.

So why not do something this obvious? A key point is that we are not shifting from oil to alternative energy solutions due to a lack of technology solutions. We are not shifting to alternative energy because it can’t compete on full cost accounting economics. We are not shifting to alternative energy because we have a political system that will not do what is in the best interest of the common good. And while this election season has surfaced strong voter frustration with politicians and big business the number one reason why we are not adopting alternative energy is consumer resistance to change. Quoting the infamous Pogo cartoon, “We have met the enemy and he is us.” Polls continue to document that over 80% of us are against any type of increased tax upon gasoline. What politician would pursue a change in public policy in the face of that type of voter resistance?

Are we then trapped in a “Tragedy of the Commons?” The concept of a Tragedy of the Commons comes from when our cities were built around a grassy common available to all for the grazing of their livestock. The tragedy occurred when combined self-interest overgrazed the commons, ruining it for all.

The solution to a Tragedy of the Commons situation is awareness and leadership. It would appear that we have reached an inflection point where a vast majority of Americans are displeased with our public policy. What we are lacking is leadership where mass-media rhetoric overwhelms reason. Reasoned economics would readilty explain that a tax on oil does not mean higher taxes for all. A tax on oil would shift more of a tax burden upon those who consume a higher share of oil and a lowering of the tax burden upon those who find ways to use less oil. And over time as all consumers see the value of using less imported oil a shift in demand will occur that benefits our economy and almost all consumers/taxpayers. But confront this logic are those who seek to capture headlines rather than solutions.

At a point very soon this all will come crashing down upon our heads. Adding over a trillion dollars per year of new Federal debt is not sustainable. The Federal Reserve’s policy of pumping money into the economy is creating investor flight toward “assets” like gold, oil, stocks and bonds which is not sustainable. We are rapidly approaching a crisis of “unsustainability.” At that point we will have to adopt alternative energy. Unfortunately the price to be paid for shifting to alternative energy as a result of crisis and not reasoned public policy will be economic suffering in the form of job losses, less funding of needed societal programs like education and a further erosion in the value of savings.

But there is an alternative. Business including Walmart and P&G are discovering that consumers will buy competitively priced sustainable goods and services. Products from certified coffees to organic cotton clothing to “green” household cleaners are achieving double digit revenue growth even in this down economy. The key to success is aligning a product’s value with values. A keynote example of this effort in alternative energy and transportation is the Nissan Leaf. It is a five door all-electric car that seat five with five and can handle almost 90% of the daily driving requirements most of us place upon our cars. And Nissan is leasing the Leaf in California for less than $200 per month!!! The promise that for America is that we will implement public policy taht unleashes entrepreneurship to enable a path that overcomes this crisis of unsustainability, offering the restoration of our jobs, economy and environment.

About Bill Roth

Bill Roth is the founder of Earth 2017, author of The Secret Green Sauce and a nationally-followed contributor to Entrepreneur.com, Triple Pundit, The Green Economy Post and Media Post on best business practices emerging from the smart, healthy and green global economy. He coaches entrepreneurs, business and community leaders on how to grow revenues, profits and jobs by going smart and green.
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