For as long as I can remember, I have always been intrigued by business deals and enterprise. I’ve loved the ideas of economics – especially as they relate to everyday life and culture. Ideas of value in exchange for value; ideas of being able to help other people become better off, and at the same time, being rewarded for the efforts with profit, recompense and wealth, are amazing concepts.
Making money was never a difficult thing for me throughout my life. I owned my own car and possessed a legal driver’s license at the age of 14. I was able to buy my own clothes, pay for all my own education and always have sufficient spending money throughout my growing-up years. It was fun, and very challenging - and very fulfilling. I guess I’ve been a businessman, and entrepreneur, and an economist all my life.
In my post-graduate education, I tried to learn all I could about the formalized ideas of economics. I understood well that the subject of economics was a discipline designed to help people make better choices throughout their lives. I bought “hook, line, and sinker” into the basic economic premise that the root principles of economics included the factors of “scarcity, choice, and cost.”
The idea behind the scarcity, choice, and cost paradigm, is that the commodities or “things” are considered scarce because they have alternative uses – and “we can come up with way more alternative uses for things than there are things.”
There will always be more demands for the commodities than there are commodities – therefore, -- we must ultimately choose how each thing or commodity will be used.
The “cost factor” in the scarcity, choice, and cost paradigm, is experienced in the foregoing of the other alternatives not chosen for the use of that commodity. In other words – the real cost of choosing Alternative “A” is the foregoing of Alternative “B” – what you had to do without. That is known as “lost opportunity cost.”
Our whole discipline of formal economics is built on the concept of scarcity, and how to make good and wise choices based on how to allocate limited or scarce items, when we have unlimited desires and uses for the obviously limited items available.
All of that seemed so natural – so logical – so “matter of fact.” Of course, it made sense!
I also loved the basic fact that nothing successful happens in an economic system until something is actually produced. And generally speaking, that success is built upon the growth factors of “land, labor, capital, and the entrepreneur.”
Throughout my lifetime, I have taught literally thousands of people in formal classes, economic seminars, speaking engagements, published books, and the internet, that those convenient factors of “scarcity, choice, and cost,” were the accepted and basic building blocks for developing an economy and for making good choices in life.
Now, however, I have had over 80 years to observe, and study, and travel, in over 150 countries on this earth. I have had the opportunity to actually see and experience how “this real-world works” and how concepts set into motion consequences.
I have a confession to make – I have come to believe that using the “scarcity, choice, and cost trilogy” – however logical and convenient the factors appear – is simply wrong-headed.
I have come to believe that making “scarcity” the academic, empirical, or experiential basis of our economic system will result in making fallacious calculations regarding reality. Promoting the expectation of scarcity becomes a self-fulling prophecy and it results in ultimate insufficiency and lack.
Focusing on the concept of scarcity squelches invention and ingenuity and encourages greed, entitlement and selfish expansionism. It encourages the idea of a zero-sum game and a closed economy where the participants are required to grab their “fair share” of what presently exists.
I have observed over the years, that many countries and cultures have handled this quandary over “limited supplies and unlimited wants” in a variety of ways. Many of the countries I have visited, where they have dictators and centralized governments, would simply solve the obvious problem by only allowing the elite leaders to have exclusive decision-making powers regarding the country’s assets and inventories -- “We, the elite, are smarter and better equipped to make all the decisions than all the other impaired and un-informed proletariat.” Thereupon, the problem was solved – limited items – but the people have no rights to have unlimited wants. Any other option would be against the law, and contrary actions or thoughts would be punished!
Marx, Engels, and Lenin saw the wealth of the Russian tsars as a scarce pile of “wealthy stuff.” They figured that if they could get their hands on the “golden egg,” they would be able to control it and redistribute enough of it to buy the support of the proletariat. The redistribution would be according to their ideas and dictates of equity.
But their system was inherently flawed because it failed to include any ideas of growth, investment, positive incentive, rewards, enterprise, discovery, or sustainability in the equation. They figured that they would be able to continuously use from the scarce “pile of stuff” that had belonged to the tzars. It never dawned on them that that only production generates wealth, and wealth in form of income pays the bills.
As soon as they realized they were quickly burning through the scarce “pile of stuff,” it dawned on them that they would be forced to invade their neighbors and rape and pillage the neighbor’s scarce “piles of stuff” in order to survive. Their aggressive expansionism reached countries bordering the Caspian Sea, then, on to Central Asian countries of Kazakhstan, Kyrgyzstan, etc., etc. Finally, in 1981, the game was up – bankruptcy. The scarcity game is a self-fulfilling prophecy. Now we observe again, from the sidelines, as the disparate Russian government is once more being forced to employ expansionism tactics in Ukraine, Poland, etc. in order to meet economic demands.
Here’s what I believe happens when we become incessantly preoccupied with scarcity and depletion as the basis for our economy:
We lose a proper perspective regarding the good things we already possess. We begin to hoard and become stingy toward others.
We abandon an attitude of gratitude and become acutely aware of what other people have in comparison to what we have.
We adopt the idea that we’re entitled to more than we have, and we fear that we might end up with even less.
We spend our time worrying about not having enough, even though we’ve never figured out just how much is enough.
We’re tempted to believe that the reason others have more is because they somehow took our share away from us.
We begin to subconsciously think of ways to redistribute things that others have, so that those things can justifiably become ours.
We become attached to people we consider strong enough to take away things from the people who possess them and redistribute them to us.
Our fear of scarcity, and our preoccupation with perceived inequities, shuts down our creative problem-solving skills and drives us toward deeper dependency on government and other groups that offer to take care of us.
Let me, therefore, submit an alternative paradigm as the basis of our economic thinking. Why not use the trilogy of “Abundance, Choice, and Accomplishment”?
I have become convinced, as an economist, that the doctrine of scarcity promotes bondage – the doctrine of abundance, choice, and accomplishment promotes freedom.
If we envision and promote a world of scarcity and depletion, the natural consequences will be to hoard. covet, and redistribute what others possess to give ourselves the advantage. If we would, however, engage our intelligence, creativity, and ingenuity into discovering a world of abundance, we would find ourselves tapping into a whole new world of resources to meet our needs and desires. We would discover ourselves inventing brand new ways to harness and use resources that had been previously and completely overlooked, because of our belief and presumption in the false doctrine of scarcity.
Being hooked on the addiction to the wrong-headed ideas of the scarcity model has convinced us, for example, that energy has become an endangered resource. Our civilization currently runs on sixteen terawatts of power, and yet we really need to triple or quadruple that amount to meet the energy needs of the twenty-first century.
But instead of discovering how to increase our energy supply, we spend all of our efforts worrying about how to live with less power and arguing over who will control it. We consider selling energy credits or carbon footprints to the highest bidders and passing laws to limit production and consumption. We even discuss ways to decrease demand through population control. All of these so-called solutions to the problem of limited supply are based on our shared belief in deficiency and inadequacy. Those charlatans who have ideas of absolute control of the international energy supply, are more than excited to use the concept of “scarcity” in order to manipulate the world marketplace.
So, wouldn’t it make more sense to base our choices on the possibility and probability of abundance?
Systems matter! Concepts matter!
When I was eleven years old, Dwight D. Eisenhower ran against Adlai Stevenson for the presidency of the United States. I was pretty passionate about the general and even wore an “I Like Ike” badge, wrote a poem, and made a poster for the campaign. World War II was over, and I recall General Eisenhower assuring the American people that the technology used to develop the atom bomb could be harnessed for peaceful purposes.
He talked about nuclear power turning saltwater into freshwater that could be used to irrigate arable land around the world and transform it into a breadbasket for millions of hungry people. He also explained that the harnessed power of the atom could one day be safely used so that shortages of electricity would never occur again anywhere on the earth.
After his election in 1952, President Eisenhower spoke to the fledgling United Nations organization in New York City and laid out the plan for his Atoms for Peace program:
“The United States pledges before you—and therefore before the world—its determination to help solve the fearful atomic dilemma—to devote its entire heart and mind to find the way by which the miraculous inventiveness of man shall not be dedicated to his death but consecrated to his life.”
Imposed fear, greed, and political manipulation, pretty much sabotaged President Eisenhower’s dream. In the ensuing years, technological advances in atomic research lagged behind, even as the universal knowledge base kept growing exponentially. The vision never faded, and now, for the first time, information and technology are catching up with our dreams and ambitions, not just in the area of atomic power, but in so many other areas.
I am still cheering for and believing in the optimistic commitment of President Dwight Eisenhower – “I still Like Ike.” I would like to look at just one example of the possibilities of pursuing this idea of abundance rather than scarcity:
One of the most effective contemporary organizations dedicated to carrying out Eisenhower’s Atoms for Peace dream is Terra Power. Dr. Nathan Myhrvold, one of the brightest minds in the world today, and his colleagues at Terra Power still believe that “nuclear energy is the only proven generation source that can provide the large-scale, base load electricity needed to meet the world’s growing energy demands.”
Generation 4 nuclear energy as a preferred, affordable, and safe alternative to fossil fuels and other energy sources has never been in a stronger position, and the energy industry is now seeing the potential benefits. Unfortunately, the continual bashing of nuclear energy over the past forty years nearly drowned out the triumphs and essentially brought construction of new facilities to a standstill. Whenever nuclear energy is mentioned, people are programed to think of the Chernobyl disaster in 1986 or the reactor meltdown in Fukushima, Japan, in 2011. These catastrophes were indeed tragic, but the risks should not prevent us from forging ahead with research and construction while making every effort to prevent future disasters. Despite these challenges and setbacks, however, nuclear-energy research and technology have made huge strides in recent years toward safer and more effective energy production.
In recent years, Terra Power and its founder, Bill Gates, began developing the traveling wave reactor (TWR), which Dr. Myhrvold claims is the world’s most simplified passive fast-breeder reactor. Terra Power states the TWR cannot melt down, has no moving parts, and can shut down its own reactors without human help or interference. Since the TWR doesn’t require any nuclear enrichment, the risks and problems associated with handling spent fuel rods and storing nuclear waste are eliminated.
The hotter-burning Generation 4 technologies make a whole lot of sense. The TWR’s small reactors can be designed to burn liquid fluoride thorium, which is four times more available than uranium and doesn’t produce any long-lasting nuclear waste, since the waste is burned up. The liquid thorium could solve two problems at the same time by meeting the fuel needs of the TWR and burning up the existing supply of spent fuel rods. According to Dr. Myhrvold, " We could power the world for the next one thousand years just burning and disposing of the depleted uranium and spent fuel rods on today’s stockpiles.”
Terra Power, Toshiba, and Westinghouse are also developing a Generation 4 small modular reactor called the SMR. The SMR, which is about the size of a refrigerator, can be manufactured, assembled, and sealed at a controlled assembly plant. These reactors are designed to operate for decades—some models have a sixty-year service life—and can safely store their own spent fuel. The size of the reactor makes it much easier to cool, and it also uses less fuel.
Unlike conventional reactors, SMRs can be installed underground, which makes them less susceptible to earthquake damage, and when they reach the end of the line, they can be safely returned to the factory for dismantling and disposal. Apparently, some models even come with their own sealed burial casks. Several SMRs are also designed to run on thorium rather than uranium.
Terra Power, in collaboration with the Gates Foundation, wanted to invent a safe, cost-effective, and convenient power supply that can be built, buried, and forgotten. When the SMR technology is eventually approved, it will be used not only in the United States but also in the developing world, where dams, windmills, and electric distribution grids are too time consuming and costly to erect.
When the peddlers of doom, gloom, and fear are hawking their wares of “scarcity, scarcity, and scarcity” at the top of their lungs, it’s prime time for brave, forward-thinking, and creative folks to articulate a message of hope, possibility, and abundance. I wonder just how far advanced we would already be, had we not wasted so much of our efforts and ingenuity trying to prove why such ideas of nuclear power possibilities would not work. My bet is, that we would have already been several generations ahead of where we are presently. But thanks to you, President Eisenhower, for your bold dream to harness the power of the atom for peaceful purposes. There is no scarcity of energy!
Next Week: Confessions of an Economist Part 2: (continued)
