Monday, November 3, 2014

Scarcity and an Abundance of Self Interest

Don't confuse good sales with good will

Over the last few days I've seen a few good pieces about natural resources: Pilita Clark wrote about world water scarcity, Brad Plumer wrote about water markets for the U.S. West, Tom Randall argues that technology can replace fuel, while Noah Smith suggests that a victory by renewable energy is a victory of good over evil.

Most human endeavors are a tussle between the haves and have nots. Now before you navigate away from this post please know that I'm not about to go on some redistribution rant. My rant will be confined to those standing in the way of change and a dynamic economy.

Oh, you know know you are: politicians who gerrymander districts to ensure continual election, agribusinesses playing the food security card to scare consumers, energy companies playing the will-we-freeze-in-the-dark security card, pharmaceutical firms selling sickcare rather than healthcare. Entrenched interests and current players use the fear of job loss and higher consumer prices to restrict markets and rend favors from politicians in the form of subsidies, mandates, special treatment, and impediments to newcomers. These are not failed markets but purposely stunted and stifled markets.

Personally, I play the conservation card because I hate waste. If necessity is the mother of invention then scarcity is the watchman of waste. As I've written before, sustainability is not just an environmental concept but one for all human endeavors. If I use less energy today, I'll have more to spend elsewhere in the economy and maybe save a little extra for the kids on the side. This is true not only for natural resources (including our surrounding environment) but also for the good faith and credit of the United States (read excessive debt).

Look, I got it – change is scary. Change from an old economy based on brawn and natural resources to a new economy based on brains and technological innovation means hard times for workers dependent on the old economy without a path to the new.

In the face of change, industries and groups clinging to the old economy will feel and claim that they're at war with enemies foreign (other countries and companies) and domestic (sometimes, their own government). More likely they're facing obsolesce, competition, and a shortsighted government incapable or unwilling to change.

The word "entitlement" often conjures up the vision of cash or government-provided benefit given to an individual. But it can also be directed at individuals and groups that see themselves entitled to sell their goods and services regardless of side effects, use under-priced public resources for greater-than-normal private profit, and constrain labor and capital markets. Believe it or not, companies and resources owners sometimes (gasp!) pick their own best interests over workers and consumers. In turn, workers and consumers need to apply their resources (skills and cash, respectively) where it serves their best interests.

Fear is the product of uncertainty. With due respect to FDR we shouldn't fear fear but, instead, fear intractable interests and inattentive, inactive government that heals squeaky wheels and prefers a well-greased palm to a well-lit path for change.

The next time you hear someone claim they're fighting for jobs and the average Joe, stop for a second to ask: "Whose interests are you interested in?" My guess is that it's not yours or mine.