Showing posts with label free stuff. Show all posts
Showing posts with label free stuff. Show all posts

Wednesday, February 24, 2016

Free stuff in a cold universe



It is night in the Colorado Rockies and it’s brutally cold. Above the tree line, vast snow fields glimmer in pale moonlight. The few alpine animals that survive here, such as marmots and pikas, hibernate or munch stored grasses in their burrows, surviving from stored fat that was laboriously accumulated during the short summer growing season.

This is a severe ecosystem, where energy is meager and survival is not assured. It is an effective laboratory to illustrate the physical world in which we live and the preeminent role played by energy.

In the world of our everyday experience, smartphones and supermarkets, commuter trains and college tuition, we measure abundance and scarcity in terms of money. But money is a human invention, a proxy for effort and achievement, risk and reward. In the stark physical universe we inhabit, energy is the only true currency.

We can see that on a macro scale by viewing the development of human energy infrastructure across the ages.  The Deutsches Museum in Munich, Germany, offers a sweeping view, from the discovery of fire to the latest in nuclear fusion research. (If you can’t visit in person, a virtual visit on their website is highly recommended).

Human history has been fraught with efforts to wrest energy from our physical world and to direct, store, and utilize it. It is no accident that northern realms far outpaced the southern in this regard. Winter is a harsh taskmaster, and failure is met by death. Northern societies were stressed and challenged by their low available-energy environment, compelled to innovate to survive.

Abundant sunshine and warm temperatures made human survival much easier near the equator. But without the challenge of fundamental survival, there was little drive to innovate and develop beyond basic needs. Fires for cooking and oxen for plowing were more than adequate for thousands of years.

It is interesting to contemplate the particular circumstances that brought us to this point. Eons ago, a massive collision knocked the Earth off its perpendicular axis. This tilted axis gave us seasons – spring, summer, fall, and winter. The periods of balmy weather invited humans to migrate away from the equator, but the winters drove them to innovate. This innovation led to energy and transportation and manufacturing infrastructures which created great wealth. Most likely, you can thank that giant whack for the British Empire, the iPhone, and the Mall of America.

Which brings us to the topic of free stuff. What stuff, exactly, is free? In the context of the physical universe in which we exist, it is not likely that much of anything is free.

We have been told that the air is free. But is it? For air to be useful to us, we must breathe, inhaling and exhaling, and exchange carbon dioxide for oxygen. All this requires energy, the only true currency. Air is not free.

How about wind? We are assured that the wind is free. But to harness it, one must build and maintain devices, whether a sailing vessel of the old British Empire or an advanced wind turbine. Just ask the people of Portsmouth, RI, who are tearing down a broken wind turbine and are left with an unpaid $1.5 million mortgage. Wind is not free.

But surely water is free, isn’t it? Water for sustenance, water for irrigation, must be treated and transported. The Romans built elaborate, expensive aqueducts to support their citizenry. The City of Attleboro, likewise, spends millions to provide clean drinking water. Water is not free.

In all of the above cases, we must expend energy (or funds representing energy) to utilize what many consider free resources. There is no free stuff. Consider that alpine marmot, hibernating in its burrow as the temperatures plunge below zero. His survival depends on husbanding the energy he has stored as fat. He knows in his genes that nothing is free.

So in this silly season of political theater, beware of promises of free stuff. We always pay – it is the nature of our universe.






Monday, April 8, 2013

More free stuff!



What a week it’s been in politics.

On the campaign trail in California, President Obama cried out, “Free stuff! More free stuff!” The administration is again pushing banks to make taxpayer-subsidized mortgages to those with weaker credit ratings. While it is laudable to want folks to own houses, we continue to pursue policies that increase risk in the housing market. Have we learned nothing from the Great Recession?

While those on the left love to hate corporations and their profits, it is instructive to observe how the profit motive works. A corporation is simply a group of people. Groups of stockholders amass capital, labor, and know-how to provide something that the public wants. They do this because they desire to make a return on their capital investment. In the process, they create jobs, pay wages to employees, and shell out huge sums of taxes to state, local, and Federal government coffers. Evil stuff, huh?

Now the key to making a profit is to avoid booking a loss. In the banking scenario, that means loans must be granted conservatively. Defaulted loans (such as home foreclosures) are very expensive, and many successful (performing) loans are required to offset the expense of each failing one. As a result, banks extend mortgages very carefully, controlling the risk they are undertaking by assessing the ability of mortgagees to repay their loans. You might say that banks are conservative precisely because of their profit motive.

And that they are, until Uncle Sugar steps in with promises to subsidize losses. This reduces the risk that banks face and makes them less conservative, more willing to make loans to those who wouldn’t otherwise qualify. This is precisely what happened in the run-up to 2008 and we are still all paying for the collapse.

There is another path. The safest and most effective way of getting more folks into their own homes is to make sure that they have good jobs. Government policies should focus on economic growth and job creation. (A recent Pew poll revealed that both Democratic and Republican voters agree on this simple priority). Instead of more free stuff, let’s rely on economic growth and the dignity of work.

Because, at heart, we really understand that nothing is free. Someone always pays.