The way most people feel about economics is that it is "magic". It is a total mystery to them. When the talking heads on TV start talking about economics, the average person's eyes frost over. It all goes right by them. 99% of every thing deals in some way with economics and 99% of the people are mentally asleep on the subject. It is a very serious problem. Global Warming is an economic problem, not a social problem. The war on terrorism is an economic problem not a security problem. To make my point, I want to give some examples.
How about global warming that has spun off all the efforts on green energy, wind mills, electric cars and solar panels? It is all economics, but first we need to define economics a little better. I like the "quality of life" definition. Ask the simple question, " How does it affect the quality of life today and into the future?" Simple, right? Take global warming. Nothing significant is going to happen today or tomorrow, so when? Far into the future, bad things are supposed to happen. People now live in cities that are in fixed locations, so if weather changes, what is going to happen to those cities? Big question? Look at Detroit. It's population has dropped by half in just 30 years, while the population of other cities have doubled in the same length of time. If that is the case, what are we worried about? Cities that are in the wrong spots will decline and cities in the right spots will expand. We are not talking about global warming causing all that much change in the next 30 years, are we?
To do anything about global warming, if it is even possible to do anything, will mean that the quality of life today will have to decline. Hey, there is no free lunch. If you want to take wealth today and spend it on something that will only apply to the distant future, it means that your quality of life will have to go down today. Even if it does not go down, it mean that it will not be able to go up to the level that it would have if your wealth had not been spent on global warming.
Now, back to economics. What does the quality of life depend on? Wealth and wealth per person. This means that the wealth of a country has to be divided by the number of people in that country, not just look at the size of the national pot. Switzerland has a small GNP, but they also have a small population. This means that the wealth per person is high and thus they have a very high quality of life. Higher than the USA where we have the largest GNP in the world, but it is divided among a lot more people. Look at China who has the second largest GNP, but also has the largest population. Do you see where this is going? If you do, follow the next point.
What do you think determines the GNP of a country or that of its population? It is not "magic" as many people seem to think. The formula is simple. First, the rules of the game keep changing. What worked 100 or 1,000 years ago does not work the same way today. That's first. Wealth is what determines quality of life, nothing else. It is a contest here on Earth between different countries and like a game, some players help and some hurt. There are only a few items that have the most affect and those are, (1) Energy, (2) Food, (3) Intellect, (4) Modest population and (5) Effort. Simple isn't it? Did you notice that a strong back or keen eye sight are not on the list? These used to be high on the list 250 years ago, but not today. How does the USA score on the above items? It would be interesting to see how we stack up.
First, energy. We are in the top 5 in this department. We have oil, gas and coal, more than 98% of countries around the world. We are on top in this department. Next, food. We are doing very well here too. We have more good land and weather than any other country in the world. Only China has more farm land, but we have much of the best. We are in the top 2 or 3 in this department. How about intellect? This is one of the big items of the future and it is one that we can do some thing about and so can our competitors. In this department we are about 25th or 30th. This means that there are at least 25 or 30 countries who do much better in this area than we do. I feel that this item is going to keep getting bigger and bigger and the USA is going to keep going down further. If we are 25th now, it is not going to be long before we are 40th or 50th and that will cancel any of the other natural advantages that we might have had. Next modest population. The USA has a low population density by world standards and that means the pie is divided between fewer people. That is good in terms of quality of life. Each person here has more of the "natural" things in the USA. For example, coal, oil, gas and farm land. Now for the last item, effort. How do we rank there? I don't know of a ranking, but given the decline in every thing that requires effort, we have to say that we are among the worst. In this department, I would have to rank us about 50th. Our poor level of education is only an indication of the attitude of our population when it comes to hard work. It is going to get much worse before it gets better.
Where does all the waste of our wealth on global warming fit into this? We have stopped working on the creation of wealth and quality of life and assume that the current quality of life will continue without the need for any effort. We are making our energy more expensive rather than cheaper. We are making our food more expensive rather than cheaper. Our kids are getting dumber rather than smarter when we need more smart people than every before to just keep up. We have no control on our borders and thus have a population that is increasing faster than our generation of wealth. This means that as individuals, we are getting poorer and thus are looking at a lower quality of life. Finally, we don't seem to want to work hard and this means that we will get even poorer and have an even lower quality of life. I know what is going to happen and I know that my grand kids are going to have a lower quality of life than I have had and I started out in the charity ward of the hospital.
