The dragon is roaring ....the worlds fastest growing economy and the most populous nation in the world is rising to challenge the American hegemony.
These are just some of the facts and figures about our neighbour roaring on the otherside of Himayalas.
CHINA has overtaken the US as the world's largest recipient of FDI.(Even India has overtaken the US now).CHINA has overtaken Britain and France to become the fourth largest Economy of the world.(US,Japan and Germany being larger than them).CHINA is expected to become second largest economy by a couple decades ..and the world's largest in another couple of them.
CHINA has the largest number of telephone lines,World's largest army,largest railway network etc...
CHINA has become only the third nation after the US and the erstwhile USSR to send man to space indigenously.CHINA has developed " Neutron Bombs" ,an atomic bomb with extraordinary devastating potentials.(only the US has this currently).
CHINA is already the world's largest importer of foreign goods and services and is expected to become the World's largest exporter also by 2010.(currently the US Germany and Japan are ahead of it).
Since the late seventies when CHINA started their "economic reforms " ,the chinese economy has been growing at an average rate of 9.4% per annum...which has made it the fastest growing economy in the World.But this economic progress at a neck-breaking pace was acheived with its own drawbacks ....like the huge urban-rural divide and the rising diparities in income levels of its 1.3 billion popullation.
When Mao Zedong had captured power in 1949,China was facing almost the same problems as India. .Appaling illitracy,poverty and mass unemployment and rudimentary state of the economy were prominent them.But what is that made them so successful fifty years later and why are Indians still hounded by these age old problems of poverty ,unemployment and illitracy?
India has 26 crores of its people below the poverty-line and about 36crores of people who cannot read and write in even their mother tongue.A huge chunk of the people below the povert line in the world have their dwelling place in India.India ia among the most corrupt nations of the world.
So was following the Nehru propagated socialist system a big failure?
When our neighbour on the other side of Himalayas is rising to challenge the Americans ,India seems to be "missing the bus" on many occasions.
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The End Of History
The End Point and The End Game
http://theendpoint.blogspot.com/
With the fall of the Soviet Union it was widely believed that we had witness the end of history, the end of the historical war between democracy and Marxism. But with the rise of communist China, we are again faced with the historical question: who will be left standing at the end of history?
This time around it looks like the final battle. And the news from the front isn’t good. Communist China, simply by opening its trade door to the world’s capitalists has pretty much captured the means of production along with the technology and the wealth and so the wherewithal to build up its military strength. Does this mean that Marxism is set to dominate the world? Not quite. It is not the rise of worldwide communism that China has in mind, but “socialism with Chinese characteristics.” It is China that has captured the means of production and it is China that seeks to dominate the world. And they intend to do so not by military dominance, but by waging total economic war. A war we are on the verge of losing. And as we lose it, so goes the world. This is China’s end point and end game.
So, before they succeed, we have to get in the game. Not only do we need a vision that pulls our economy out of recession, we also need one that will win the ideological war. That is, we need an end point and end game of our own.
But first, it is necessary to put China’s end game in perspective. To do so, however, we have to take communist/imperialist China temporarily off the board and view them as just another global player.
To begin we have to go back to 1976. That’s the year the United States began running a continuous and mounting trade deficit (a continuous rise in global unemployment). It began as Japan and Germany rebuilt their economies and emerged as formidable competitors, followed by the Asian tigers and then the Asian tyrannosaurus-rex—China. According to economists, however, this should not be a problem. America's trade deficit would be brought into balance as a weakening dollar gives the U.S. a competitive edge, regardless of their technological and low-wage comparative advantages, and bring our current account into balance. In lay terms this would be called a teeter-totter global economy—an up and down game that keeps the global economy balanced. But some players are unwilling to play. As evidenced by China as it pegged its currency to the dollar. If it had not done so their economy would have stagnated as its exchange rate rose to a point where it lost its competitive edge and the global economy would have lost a significant trading partner.
Now, however, since it has become the factory to the world, it has been pressured to reevaluate the yuan and has modestly relented. But since China has become the factory to the world, the benefits are doubtful. As the yuan strengthens, the costs of their exports rise, which translates into fewer exports, and a rise in domestic unemployment. For us it means they export inflation while we export more dollars. So, pursuing this line of thinking could push the global economy into a recession—the seesaw is broke in the middle.
Then there is this: In the real world our competitors distort the currency markets by purchasing dollars (one aspect of pegging) to keep their currencies competitive that become part of their dollar reserves. To date Japan and China have both stashed a trillion dollars under their mattresses.
And it’s just not here that there is a problem. Japan holds approximately 600 billion dollars in Treasury securities while China holds nearly 400 billion dollars. This is not altruism. The investment angle aside, they are simply pursuing their own self-interest. By investing in government bonds they further prop up the dollar and in so doing protect their economies while allowing the United States to remain a significant export market.
Yet despite all this the dollar remains weak. And so there is a rise in our exports—but not enough to keep our trade deficit from widening. So how long does the U.S. have to sit at the top while others sit meekly at the bottom? That’s the wrong question. The right question is: How much longer will other nations prop up the dollar and our financial house while allowing us to keep bellying up to the pot while putting less in as we continue to export more dollars?
China and Japan are our major competitors and it’s not necessary to go on down the list, the point is they reflect the world at large—a global economy not only out of balance, but unlikely to be balanced. The reason that it has yet to reach a tipping point is that while they shored up their economies by propping up our financial house, we became a nation of rampant speculators and unrestrained shoppers. Hype in the stock markets over dot.com ventures led to a rapid expansion of paper wealth that fueled an economic boom as well as a boon in capital gains taxes that not only contributed significantly to budget surpluses, but had economists forecasting that they would continue far into the future and within ten years our national debt would be zero. It was the age of irrational exuberance. And when the bubble burst, budget surpluses evaporated, fell into deficit, and the economy itself, in 2001, slipped into recession.
Not so much in response, but for disparate reasons, the nation’s fiscal and monetary arsenal was pretty much deployed. Massive tax cuts (mostly for the wealthy) and massive pork barrel spending by a Republican Congress (trading principle for power) and a maximum cut in interest rates, by a sober Federal Reserve, to rock bottom quickly brought the economy out of recession. But rock bottom interest rates quickly led to a housing boom and a frenzy of speculation in the housing markets and a windfall for homeowners who refinanced and cashed out on their inflated equity and went on a spending spree buying SUV,s, remodeling their homes or moving up, buying high end televisions or whatever their hearts desired. But eventually reality checked in as rising prices soared out of reach for prospective buyers and the bubble collapsed.
Now the economy again is slipping—despite a weak dollar and a rise in exports—into recession (this time with no bubbles in sight). So, again, the Fed is pushing interest rates to rock bottom at the same time providing greater liquidity to the financial markets while the President and Congress throws out a stimulus package of rebates for individuals and tax incentives for businesses. But given that America is an upside down nation facing a credit crunch, rising food and oil prices, and in the midst of a severely slumping housing market, they will not have a sustainable effect.
So here the problem isn't simply with China, nations regardless of ideology seek, or attempt to seek, their own self-interest, and in so doing play a dangerous zero-sum game. A game where economists have no viable answers, other than pursuing more trade agreements, as such politicians are at a lost. We are out of the game.
That said, communist China is very much in the game; their end game is to win the zero-sum game. The backbone of Marxism is that capitalism has gone down a path that ultimately leads to its collapse. For the “bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the whole relations of society… The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere… All established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones… In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal interdependence of nations… The bourgeoisie, by the rapid improvement of production, by the immensely facilitated means of communication, draws all even the most barbarian nations into civilization… The cheap prices of its commodities are the heavy artillery with which batters down all Chinese walls, with which forces the barbarians’ intensely obstinate hatred of foreigners to capitulate… The bourgeoisie has subjected the country to the rule of towns. Has greatly increased the urban population…It is enough to mention the commercial crises that by their periodical return put on trial, each time more threateningly, the existence of the entire bourgeois society… In these crises there breaks out an epidemic that, in all earlier epochs, would seemed an absurdity—the epidemic of overproduction… society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence, industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, to much industry, too much commerce… And here it becomes evident that the bourgeoisie is unfit to be the ruling class in society… It is unfit to rule, because it is incompetent to assure an existence to its slave within this slavery, because it cannot help letting him sink into such a state that it has to feed, instead of being fed by him.”
So said, worldwide unemployment reaches a critical mass, and capitalism collapses. As it does, the workers rise en masse, overthrow the existing order, take control of the means of production, and establish a “dictatorship of the proletariat” that oversees the shift from socialism to communism.
Well, as we know, history didn’t go according to Marx. Lenin and Mao became impatient vultures—instead of waiting for the death of capitalism, they became birds of prey, they wanted to kill now. And to achieve the means to their end, command economies that would bury capitalism, they started on their own people.
So today we are faced with communist China (and to some extent Russia—their favorite monkey). And while their end point hasn’t changed, their end game has. Faced with the concrete reality that centrally planned economies have failed, China opted for the capitalist road and in so doing are now in a position to accelerate the collapse of capitalism. And they have targeted the United States as the first domino. While we shipped them our manufacturing jobs, they gave us the trade finger (say unfair trade practices doesn’t quite cut it). They knew full well that their peg was a cannon in their arsenal. So, together with our loss of jobs we are being pushed to the brink.
There is no real surprise here. But there is tremendous anxiety and an acute sense of danger. We are in a recession, a recession that feeds on itself as unemployment begets more unemployment and recession turns into a great depression; as such, we are faced with the very real prospect of economic collapse that precludes any revolution—China has already captured the means of production. Even so, does this mean that Marx was right?
If so, China has played the game well. Opening their door to the world’s capitalists set off a race to the bottom—the constant search for cheaper wages, lower taxes and weaker environmental and other regulations by capitalists who in the end produce a downward spiral in socio-economic conditions in the United States and other industrial countries—as their respective Atlases shrugged and beat feet to China.
The underlying rationalization, other than exploiting a vast and untapped market (that would benefit America), was that as communist China shifted to free markets, with a rising middle class, there would an inexorable shift to democracy. Anyone that believes that today is wearing some serious rose-tinted glasses.
Meanwhile China got a firm grip on the Shruggers’ financial balls, and as they lobbied Washington—don’t offend them, don’t make them squeeze—their hearts and minds soon followed. The appeasement by previous administrations is now firmly locked into the present administration. And looking over the horizon there is no would-be president that even dares to step out on the yellow brick road.
That said, China, in their quest, was never going to risk a nuclear war (and if they did, did they consider the China syndrome. A doomsday scenario where the U.S.’s thirty-five nuclear power plants melt down and spread nuclear radiation around the world to China). They were never going to risk the means of production. Their end game is total economic war. It is The Art of War: “To subdue the enemy without fighting is the acme of skill.” And while its author, Sun Tzu, lived in 6th century B.C. imperialist China, his ideas are alive today. And their skill is still paramount. Fools still rush in—or are they fellow travelers or just anti-America? It’s hard to tell.
But it is easy to see that the President and would-be presidents, other than the occasional complaining about unfair trade practices and meaningless sanctions by Congress, do not want to offend our “ banker”. Better to focus on NAFTA, North Korea, Iraq, Iran, al qaeda, and illegal aliens—anything but saying these are Marxists whose intentions are to “overthrow the existing order.” As such, it seems like we have pretty much surrendered.
Even so, rumor has it that after the Munich games, China will deploy the nuclear option under the guise: it only makes financial sense to shift from the dollar, from treasuries, and invest in a basket of currencies—is this de-pegging, they are only giving us what we want? Whatever, it is only the senseless that will not see this as an overt act of unrestricted warfare against the democracies of the world. And while China threatens foreclosure, we are working against ourselves, as politicians cannot agree on a plan that forestalls home foreclosures that must include mandating a freeze on the resetting of adjustable rate mortgages.
In the meantime Taiwan has become less of an issue and more of a deception. They too joined the race to bottom and invested heavily in China while approximately one million Taiwanese moved to China to live and work. So at home, Taiwan is paying the price, unemployment is becoming an issue. As such they have already been conquered. And we too are about to be conquered.
They’ve have propped up our economy so they could suck out our jobs, our technology (by hook or crook), our resources, until finally they’ve sucked out our last economic breath. And even if they hold on to their dollars and U.S. bonds, it was a good investment. So what if they lose trillions of dollars, they will suffer no casualties. As our economy heads deeper into recession our credibility in the world’s financial markets wanes, especially as the Fed drops interest to rock bottom. So along with a financial meltdown, the dollar crashes and is no longer accepted in the world’s oil markets. Without imported oil, a sound economy, our military becomes a wounded paper tiger—limping its way back home. When that day comes, China will be in control of the world.
As the U.S. economy falls deeper into a depression, the price of raw resources will plummet in the world's commodity markets, notably oil—and those exporting nations will lose significant revenues. To maintain their economies, they are going to have to sell more for less. And as they do, they will have little choice, they will have to turn to China—who will demand long-term contracts. But in the not so long term, China’s voracious consumption, its need to build so-called modern cities for the remaining four hundred million or so Chinese living in rural poverty, will draw down their oil reserves. And as they continue to put away their bicycles and put a billion cars on the road they will drain their reserves and as they decline, so does their economy. Then what? In a post-American world China is free to do whatever it wants—take whatever it needs.
So Russia and Iran what do you think about that? And how about Bin Laden, what does he think happens as a godless ideology dominates the world (mess with them and they will mess with Mecca—turn yourself in or else)? China is at war with the world. And they are close to achieving their end point--the end of history: the final battle for the survival of the fittest.
Even so, this is risky business. Having gone down the capitalist road, they too may have gone down a road of no return. With the fall of the United States, Japan, Germany, India, and other industrial economies immediately go into decline; aided by a falling dollar and a concurrent rise in their currencies and China, despite its peg to dollar, can’t help but follow. Their zero-sum game ultimately threatens their economy.
While the irony for capitalism is that it provided the shovel that will bury us, the irony for China is that its reserve army of unemployed becomes so large that they will rise up and attempt to overthrow the existing order. But revolution, in Marxist theory, is no longer possible (unless the dogs of war cut their leashes and join the revolution). In Marx’s day it was muskets and cannons that revolutionaries faced—today, as we know, it is at least tanks and machine guns. If the Chinese communists have to slaughter millions of Chinese, so be it—what’s another few million more (when your goal is power for the sake of power)? So, in the end, if they do rule the world they will be a country that continues to live in fear of its Orwellian rulers.
Of course China intends on applying the Marxist end point maxim: “From each according to his ability, to each according to his needs.” Some work and some don’t? Whatever, how this plays out is a moot question. The game is not over. Here is where it gets risky.
Bush’s invasion of Iraq was about oil. But it only makes sense (it wasn’t going to be our oil) if it was about keeping China out. They were in the midst of a securing a long-term oil contract with Hussein—no more Saddam, no more pending deal. But today China again is pursuing the same deal. And while it’s not a done deal, yet you have wonder is China influencing Iraqi politicians (the Shiites) to push America out? And once out, they renegotiate all oil contracts in favor of China? The recent move by Iraq to accept no-bid service contracts for existing fields from western oil companies does not mean that they will not do business with China for the development of new fields.
Whatever. Oil is the life-blood of all industrial nations. The ideological struggle between China and the U.S. becomes second fiddle to the battle for peak oil—a war that could bring on the end of all history. Before any of this happens, we have to get in the game.
So what is our end point? The ideological battle began with the industrial revolution and it will end when it comes to a sustainable end—so whither the industrial revolution? Here’s the vision: The lights out factory. Lights out because there are no workers. It is robots with the smarts, dexterity, tactile reflex, and the eye-hand coordination (O.K, some lights) that will assemble (and disassemble for recycling) the components already pretty much produced by machines. Now picture a factory where robots shift from assembling toasters to assembling computers. Here, potentially all various brands of consumer goods (here meant to mean the basic necessities) can be produced and assembled in one factory (scaled to meet local or regional needs)—here we have the ultimate in productivity and efficiency. So as these factories rise throughout the world, the industrial revolution comes to a peaceful end.
Of course the problem is that human slaves are much cheaper than robots. But once the race to the bottom flattens out, hits the bottom of the barrel, there will be a race to the top, a race for full automation.
The problem is that right now is that the free market, driven by pure self-interest continues to produce more unemployment. That has to end before our economy collapses.
Our first move is shift from an economy that is unsustainable to one that is. The second is to put aside the issues and vitriol (at all levels) that divide us and focus on the challenges that are threatening us all. It’s time for a change. It’s time to realize what empowers our marketplace—and so our democracy—is a collective free market will where self-interest rightly understood is that it is in all our best interest to insure the integrity of whole. So there is no point in bemoaning what got us into this mess. The point is we have to shape up and stand together to meet the challenge.
And as we make these key moves, we pull our economy out of recession and away from the specter of collapse—it’s what economists (forget Marx) call creative destruction—in other words, out with the old and in with the new. The lights in the global economy are dimming and we have to get ahead of the curve. We have to get our heads out of the short-term box and start thinking about how we become more self-reliant and more creative. This is our end game.
But before we go there we have to understand the crisis that threatens us all. Total economic war means not only a run on the dollar, our banks and stock markets, but also a run on our supermarkets.
Here, there is a two-edged sword. The skyrocketing in oil prices is impacting food prices (compounded by the absurdity of trading food for fuel). And while high prices will impact the head of the food chain, the conventional farms, and trickle down to the consumer, rising fuel prices can crush the tail of distribution. Our supermarkets are replenished every day. What happens if truckers are priced out of the market and our stores not restocked for a couple of days? Actually, this is a cart before the horse question. Rising oil prices is reducing the purchasing power of consumers producing a tailwind that is driving our economy deeper into recession.
Here’s where we get cut to the bone. What happens when rising unemployment pushes our economy into a depression and impacts those unable to afford food? In a free market when demand goes down production is cut back. In the case of rising oil prices, the weak are priced out the market, and resort to bicycles, or walking, or whatever. And as they do prices go down to the point where they can enter the market again. But in the case of factory farming the unit price goes up and the weak are priced out of the supermarket (soup lines and food stamps are not going to cut it). But they are not about to roll over and die. They will resort to stealing. And when stealing becomes endemic, people panic and hording becomes widespread. And when they go back for more they find the food markets under new management—Old Mother Hubbard standing at the door with her arms crossed; no more food for you. And so as people turn away from supermarkets, they turn on each other, “a war of all against all.” This is the art of war. Let the enemy destroy themselves.
And second as our economy slips deeper into recession it falls into what is known, in economic jargon, as a liquidity trap. As the Fed pushes interest rates to rock bottom and flood the banks with cash it just sets there, as recession forces consumers to cut back on spending and so firms cut back on production, investment and workers. As they do the opportunity for investments dim and venture capitalists cut back and sit on their hands and the economy freefalls.
The usual economic remedy is to resort to what is called in the trade: helicopter money—throwing out a hundred and sixty billion dollars in tax rebates and tax incentives into the wind in the vain hope that our economy will step over the trap.
The usual isn’t working. We have to put our economy on a war footing. And as we engage in economic war we set off an investment and spending multiplier effect—a ripple effect that creates new jobs and hence more spending and more investment. And as it does the Fed does what it can to provide the necessary liquidity—without any fear of long-term inflation. Scarcity is the source of inflation—it is the economic problem, and sustainable development is the answer.
On the energy front our end game will depend on stable oil prices. Yet, oil has, or will shortly reach peak production; reflected by the canaries in the futures markets reading the handwriting on the wall (and as the economy heads into recession they will reverse their bets). And even if oil hasn’t reach peak, the buffer of excess capacity is thin, and any disruption in production sends prices skyrocketing. Even so, when oil does reach peak, there is a plateau of production—how wide depends how fast we shift to renewable sustainable energy and sustainable development.
Peak oil is an historical turning point just as threatening as the rise of communist China. We have to understand that it is in our national interest to dramatically reduce our consumption of oil (even as prices drop). Our national security depends on it, as well as our international credibility. The United States, with five percent of world’s population, consumes one-quarter of the world’s supply of oil—more than China, India, Japan and Germany combined. If the rest of the world is to prosper, if our nation is to survive, we are going to have to take the lead--we have to be the agent of change. We have a narrow window of opportunity and the sash cord of rising oil prices if not arrested, will slam it shut.
Of course change is underway. Airlines, struggling to survive, are grounding planes. And drivers are restricting and altering driving habits, shifting to public transportation and turning to rail for their commutes. But unless others, those that don’t care or the affluent who remain aloof to the crisis, don’t curtail their consumption, and limit their driving and flying to essential trips, we’ll lose the war before we even get into battle.
A unfortunate, but unavoidable outcome is that cutting back on travel means some businesses, large and small, may suffer, and some workers will lose jobs, but it is a small sacrifice as we invest in sustainable enterprises that puts us on a path to economic recovery. And while for some, as they shift professions, they’ll see in a decline in their life styles, but they’ll have a job, so while they may move down, many more will move up to better jobs with better pay.
That said our first line of defense is energy. While coal provides 50 percent of our electricity its costs are rising along with those of natural gas. To fight this war we are going to need to rely on new stocks of sustainable electricity, stabilizing the price of coal and natural gas (we are at war, and if coal and natural gas industries seek to defend their self interest they serve only to weaken the war effort). This is the path to energy independence, and it’s going to require immediate and significant investment—we can’t think in terms of ten years down the road, we have to accomplish energy independence within five years. And that may be too long. But shifting to electricity means nothing unless the automakers quickly shift to producing inexpensive A to B electric cars. Or consider Air Cars that run on compressed air (if proven to be viable). If not, there is no path to energy independence and we’ll remain on the oil track—heading us away from the front lines.
To fortify our energy line we have to invest in those technologies that can be quickly be developed and deployed. On the energy front we have a choice of windmills, photovoltaic solar thermal power, deep geothermal, and so on. While not eliminating the development of any, still, we should focus on those that are the most viable and the most promising.
While it makes sense to immediately begin installing solar arrays on homes that use natural gas or oil—financed by loans or second mortgages whose monthly payment matches or reduces their monthly energy bill—it also makes sense to focus on solar thermal technology at the same time.
For example: Ausra, an up and coming entrant into the renewable energy field, have embraced the technology that has significantly reduced the costs of bringing on line base load (day and night) solar thermal energy to the point where it is becoming competitive with coal-fired and nuclear power plants. Currently they have completed an automated factory in Las Vegas that produces the necessary components for their domestic power plants—and eventually, as they spread throughout the country these components can be produced for export. The problem is that the proof is in the pudding. Yet, we have to believe in something, do something, before our economy turns to mush.
Whatever it takes, our goal is energy independence and without a sustainable supply of energy, any vision is powerless.
So said, on the consumer front we can invest in factories today where various brands share the same assembly line of robots and workers—from breakfast cereals (packaged in reusable plastic containers) to toasters, microwaves, refrigerators, computers, and so on—bringing down unit costs. And as we as do, we take it upon ourselves to produce untainted and cradle to cradle products. And while it may be improbable to compete with worker’s that barely have subsistence incomes, nonetheless, we just have to cut back on superfluous spending. Think of it in terms of organic food, you may pay more, but our nation becomes healthier (and this applies also to domestically produced steel). Here’s how we wean ourselves from China while creating new jobs.
On the agriculture front there is controlled-environmental (indoor) farms that can provide cities with a local sustainable food supply while playing a significant part in meeting the challenges of severe droughts and weather (that appears to worsening on both fronts), looming worldwide water shortages, along with rising oil costs and rising food prices.
While there are variations of CEF's, they all are pretty much based on hydroponics and tout the same economic efficiencies. They all can be located within cities or neighborhoods. They all run on electricity, require no pesticides, herbicides nor conventional fertilizers (all derived from fossil fuels). They produce crops year around, and depending on the technology, use from one-tenth to one-twentieth the water of conventional farms. They not only use less water, they can use recycled water from the surrounding communities.
One up and running venture was the phytofarm (re: Discover magazine December 1988, The Green Machine: Indoor Farming). This is a fully enclosed farm fed by artificial lighting where one acre can produce 100 times the yield of conventional farms (in the dead of winter). And while it was geared (literally) to produce leafy greens and herbs, there is practically nothing that cannot be grown indoors—albeit it would require a shift to growing some food in composted earth pots. Yet, while the project had a successful run for a number of years, in the end it lost out due to high-energy costs and closed its doors in the early 1990s. But with rising fuel costs, it becomes competitive, and we can open its doors again.
In the meantime greenhouses are up and running. And they are in the process of literally reaching new heights. Visionaries are proposing vertical farms—high rises with greenhouses stacked on one another (check out the technology on the internet). Yet they have not gotten off the ground, and so their technology remains unproven. But as venture capitalists get off their hands and get to work, this could quickly change.
And it has to change quickly. Without indoor farming the only choice for a world increasing in population while running out of oil and fresh water, is famine and death.
Here, we have to take the lead, and as we Johnny Appleseed these farms throughout the country, or economy grows as well as our confidence while taking the pressure off of conventional farms—that we’ll depend on well into the future. And consider this: While it’s O.K. to throw out money from helicopters to the people, imagine, instead of throwing billions into the wind, those tax rebates were invested in sustainable enterprises. A hundred billion dollars could have immediately funded the construction of three hundred and thirty vertical farms at a cost, at the high end, of three hundred million per building.
But investing in sustainable energy and sustainable agriculture is not going to be enough. We need a major construction boom. And it is not going to happen within the confines of urban sprawl. Nor should it. We are not addicted to oil, but to a pattern of development that is unsustainable.
To live here, cars and light trucks are a necessary fact of life. Not only a fact but are a status symbol (the bigger the better), but a fact and status that reflects our decline. Today owners of SUV’s and their light (heavy weight) truck cousins are feeling the pain at the pump and are not only upside in their loans, but are finding that their resale value have significantly dropped—they are stuck with a dinosaur or at best a lawn ornament.
But as some grieve their demise, understand they played a significant role in the depletion of our oil reserves, and now as we turn to the world for more, they are a major factor in driving up world prices, slowing down the global economy, pushing up our trade deficits while pushing the dollar to the edge of credibility. And in their production and use they produce air pollution as well as heat—pollutants that contribute significantly to global warming. And too, as they roll off of assembly lines they demand too much energy and resources for their infrastructure—and there are never enough highways. So there is a constant need to tear down homes and businesses to expand their capacity. And even as we enter and exit them, our roads are clogged. And just consider the costs of traffic lights. At the top end they cost $250,000 per intersection to regulate their flow—so, if we don’t find ourselves inching our way to work on our super-highways, we find ourselves idling away our time and our gasoline at intersections.
Sprawl is a phenomenon that survives by feeding on itself as it adds on more suburbs (and longer commutes). But since the housing crisis is in play, as we drift towards a depression few will be buying existing homes no matter if their prices do bottom out. More people will rent houses, move into smaller apartments, or move in with family and friends or rent rooms. The only new home construction here will be that of cardboard boxes (made in China) as more people lose their jobs.
Productivity is the hallmark of capitalism and the source of our prosperity. But in the case or urban sprawl prices and taxes go up while efficiency goes down. Meanwhile, as it grows, it reaches out for more water, food, energy and land. But it is the demand for land that is the primary threat as it bids up the price of real estate. The thing is, as the price of real estate went up, so did the sale price of everything, and to keep up to it was necessary for wages to go up—setting off a price/wage spiral that in itself is unsustainable. Nonetheless economists have always viewed homes and high-rises as assets—good investments. In reality they are a source of inflation driven by sprawl. And eventually, regardless of the current housing crisis, stagnating and declining wages would have brought on a similar crisis.
While economists refuse to believe that cities and their sprawling suburbs are a source of inflation, nonetheless the marketplace has been signaling all along, with high prices, for a better product. And while some cities proudly wear the sustainable label, they are among the most expensive places to live and do business. So even as they embrace indoor farming, they need to embrace the idea of competition to stabilize their cost of living.
It’s time to move beyond sprawl and shift our growing population to new cities. This isn’t to say we shouldn’t revitalize those cities on the edge, but with an expected seventy million per year population increase, we are going need a lot more cities. Cities that not only work hand in hand with nature, but do more with less. So out with old and in with the new. To do so, enlightened planners, politicians and investors are going to have to take the lead. And to a small to degree, they already have under the rubric of new urbanism. They have taken an old idea and made it new (check out Garden Cities of Tomorrow on the internet—here you will find the seeds for sustainable cities). Their plan is to reshape sprawl by building urban centers where homes and businesses are mixed within a short walk and travel is shifted to public transportation. But from here it is a short step to begin to build whole new cities (connected by railroads carrying passengers, cars, trucks, construction equipment and freight)—whose construction will ripple throughout the economy revitalizing our industrial, service, and tourist sectors (where taking the train is part of the package—while our auto infrastructure needs investment, more so does our railroad industry). Here, in the new cities, while some workers will be sending money back to their families, others become would-be homebuyers and lenders can feel confident in providing them with mortgage loans that will help finance their development. Here too there is a safe haven for those displaced by wildfires, droughts, floods, hurricanes, and tornadoes.
So first these investors and developers survey our regions, our nation for a sustainable niche and inexpensive land (owned entirely by the developers—no speculators here) and begin building new cities. And as they come up on exceeding the limits of the region, we move on and build new cities in other regions. This is a long neglected vision put forward by enlightened urban planners. We can neglect it no more.
And while there are many willing architects with their plans for cities (especially those who have gone to China to show them—instead of aping and outdoing the car-choked ego-centric cities of the west, look at us we are more stupid than you—this is how cities should be built) what’s one more model?
First, however, these are sustainable city planners and the first thing they plan for is either to eliminate cars, or greatly reduce their number. And second, these architects fully embrace green building and innovative technologies.
That said, this is how I see it: clusters of neighborhoods (linked by elevated transportation arteries shared by electric vehicles, bikes, pedestrians and rapid transit systems) will form the city. These neighborhoods are large terraced multi-storied structure sheltering thousands. Here their terraces are reserved for greenhouses and homes and their centers for fully controlled-environment farms, factories, convention centers and stadiums.
So, as you walk out into your neighborhood you encounter not hallways, but wide walkways, allies and breezeways lined with schools, libraries, theaters, businesses, shops, and restaurants—all within walking distance. And when you go to the first floor, at ground level you find barns (for pigs, beef and dairy cows, and chickens that are butchered—harvested next door) opening onto natural habitant mixed with organic farms, orchards, parks, playgrounds, and golf courses.
Here, instead of sending our table and produce straps, our unwanted leftovers, dry bread, spoiled fruit to landfills, we recycled them to neighborhood barnyards or to community organic orchards and gardens.
In their development, in the short-term they create hundreds of thousand jobs as we prepare for their building, and as they rise they will provide a steady stream of employment. And as they rise, existing cities will benefit as they provide the logistical support. And as the economy reboots people again can afford vacations, venture capitalists and locals can confidently invest in local sustainable enterprises (we have more than enough casinos and theme parks) further bootstrapping their economies. So as cities rise and sprawl stabilizes those homebuilders and high-rise developers can finish their projects and become part of the solution.
Not only do sustainable cities provide a sustainable stable source of energy, food and sustainable products, not only do they more with less, not only promote the rebuilding of our industrial base but they provide the economic benefit of lower taxes (since the infrastructure is fixed, so then are taxes), lower prices and greater efficiency. And as these cities rise they provide shelter from extreme weather and as they rise worldwide they become the long-term solution to global warming. So, altogether our economy becomes more efficient and robust and the world becomes a better place for all its inhabitants.
And as it does, as we channel investments into IPO’S for those enterprises, those entrepreneurs who rise to meet the sustainable challenge, the stock markets too becomes robust and produce their most important product—taxes on capital gains. So along with ending the tax cuts for the wealthy and a cut in military spending as the world shifts from conflict to cooperation, we pay down our debt, and eventual surpluses can be used to underwrite health care and the social security system. In the long term, when cities are fully sustainable, and stock markets stabilize and decline, they will provide their citizens with health care and provide for the social security of the elderly.
Cities are also the key to stabilizing global population growth. As nations modernize and urbanize their citizens have fewer children that fall below the replacement rate. As such their populations stabilize and then somewhat decline in the long term. There is, however a problem in the short-term. As countries modernize and urbanize they create what economists term mature economies, that is, along with a decline in population there is a decline in home construction and infrastructure and so a decline in economic growth and tax revenues threatening their entitlement packages. So most industrial nations turn to immigration as an answer to maintain their economies, to keep their population stable and the social fabric tightly knit. But immigrants do not easily assimilate and have more children exceeding the replacement rate and in so doing create social stress. Especially in the United States where immigration goes beyond what is necessary to maintain a stable population—it’s betting on growth to sustain its economy. Nonetheless, immigration will remain a fact of life in the short term. In the long term, as new cities rise in their homelands, immigration will decline.
Meanwhile, the U.S. is being invaded by millions of illegal immigrants. This is a problem because politicians haven’t come up with a simple guest worker program. There’s no point in sending them back. Have them provide the necessary information, give them a work card, and let them find jobs on their own. Putting up a border fence is not the answer. What we should be doing is mending fences—on both sides. If our economy is going recover, if we are going to pursue sustainable projects, we are going to need those workers from Mexico.
And as far as closing the borders to drug dealers, it is no time (is there a right time?) to be getting high, sober up, take that money and invest in the defense of your nation. And as to terrorists, no trespassing signs, no matter how high or wide, are going to keep them out.
In the meantime, we’ll work together with our neighbors Canada and Mexico in the development of sustainable cities—utilizing our workers, our resources, and our will to provide prosperity for all North Americans.
And what works for us, can work throughout the world. The industrialized nations should form an economic coalition (the moral equivalent to war) to assist the Palestinians, the nations of Afghanistan and Pakistan (first developing sustainable food and energy projects), and other nations, in the development of new cities that in turn sustain the economies of those participating countries. And Iraq should consider forming a coalition government, take its oil wealth, while it can, build up its infrastructure and begin the construction of their new cities (separating the factions or not).
Regardless what criticism may arise, this is a war economy, and it is how we win the ideological battle--it is how we fight World War III. A war that will be led by our captains of industry—those who contribute positively to the economy in contrast to the robber barons that simply take. This is not to say that the President, Congress, the Federal Reserve, governments at all levels and the people will not have a significant role to play—it means that if our corporate CEO,s, those who focus on the bottom line and their personal wealth and those geniuses who focus on exploiting currency and financial markets don’t step up, they put the war effort at risk.
There is also something that all nations should consider: that it is in their best interest to shift to a global economy where trade is no longer a zero-sum game, but a sustainable end game where everyone wins--it's about cooperation and balancing trade. There is a huge amount of work to make the transition to would-be sustainable cities and that requires that nations with a trade surplus, who are shifting their economies (their workers) to the development of new cities, turn to those nations with a trade imbalance--an imbalance in employment--take their foreign reserves and invest in or directly trade for whatever is necessary to facilitate and expedite the building of their cities.
Certainly, development cannot exceed available resources, but given a sustainable agenda and paced development (and perhaps a simplified city design that reflects the realities of available resources) there are no market uncertainties and investors and producers can feel confident in bringing the necessary commodities to market. While the people of developing nations can feel confident that their leaders will channel their resource revenues into the development of new cities--as a condition imposed by those enlightened countries that import those resources.
Now, those jobs going to China, India and elsewhere is a good thing. Instead of a zero-sum game, instead of a world teetering on the abyss of nuclear war, we now have a global alliance for peace and sustainability.
Humankind was conceived in ignorance. What is done is done. There’s no going back. If we remain ignorant, if we seek revenge for past injustices, if we don’t seek redemption for past transgressions—well, we are just too stupid to live. Freedom, rightly understood is that it is the spirit of the mind, the advance of knowledge that allows us to hurdle the obstacles that we created in our infancy. And as we put away our childish ways, we allow history to continue and so allow the truth, the underlying of reality of everything, to will out. This is God’s will.
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