Former U.S. Vice President and Nobel Laureate Al Gore today delivered a groundbreaking speech calling for the United States to get 100% of it's electricity from environmentally friendly renewable sources such as solar, wind, and geothermal.
I strongly support his plan and suggest we extend it and gain from it by extending the results to the developing world.
Please read his speech at http://www.wecansolveit.org/content/pages/304/.
With all the talk about NAFTA recently, particularly in the Ohio Democratic primary run up, it seems the right time to talk about why this discussion is largely moot.
Leapfrog Effect nations grow rapidly but they often start from a position significantly under developed compared to the U.S., Europe, Japan, and other Innovation Nations. It's reasonable to expect that they won't have processes and procedures in place to provide the kinds of environmental and safety protections we take for granted.
The thing is, they can Leapfrog to those standards just like they can for technology. Innovation Nations, like the U.S. already have developed, tested, and refined solutions to many of these issues. Of course, over the years we've gotten better at it so, for example, modern bridges are better built than the ones we built thirty years ago. A Leapfrog Nation can start building using the best of these standards that they can afford and at 8% growth, each year they can bump up a notch.
Implementation of new regulations normally comes in response to a problem. Recently we've seen China suffering from a major bridge collapse, toxic chemical spills that cut water supplies to millions, mine safety issues, air pollution concerns raised by the upcoming Olympic games in Beijing, and a strong awareness of global warming and other ecological issues.
China is responding to these issues aggressively and over the next decades the effectiveness of regulations in China may well exceed that of the Innovation Nations due to the Leapfrog Effect.
If either of the current Democratic contenders wins this Fall and follows through on promises to renegotiate NAFTA don't be surprised if they win concessions to have Mexico agree to what it has already done to improve, making this whole issue not much more than politics without real substance.
Good jobs can be found for workers in Ohio and throughout the U.S. but those aren't the jobs we're losing to productivity improvements and lower labor costs. They are the skilled work that capable Americans do well. Jobs in energy and natural resource management technologies, technologies that Leapfrog and Innovation Nations alike need.
All of the current Presidential candidates have plans for "green-collar" jobs. I wholeheartedly support that idea. Now what is needed is development of the green marketplace. It's not just the domestic and developed world marketplace that these "green-collar" workers should be serving, it's the Leapfrog Effect nations who need green technology and products that they can afford and use.
Developed (Innovation Nations) and developing (Leapfrog Effect Nations) have differing needs for green products and we should be marketing and developing solutions that meet both needs. Renewable energy production demonstrates my point. To be viable in the Innovation Nations it must be highly reliable, available 24/7/365, and cost effective, or at least close to cost effective. Leapfrog Effect Nations often don't even have electricity in many locations. Less reliable time-of-day availability, something Innovation Nations would never accept, is still a huge upgrade for Leapfrog Nations.
Take, for example, a solar electric solution. Without costly storage it only produces electricity during the day. Day workers in a factory could take advantage of the electricity to use electrically driven machinery, have adequate lighting, and take advantage of other more modern manufacturing tools and techniques.
With financial success generated by the increased productivity the factory can invest in electric storage technology and additional generating capacity to add another work shift, and eventually, a third.
Continuing success would likely result in increased pay for workers, and an increased demand by them for electricity in their homes.
I think you can see the path from here. Each increase in productivity allows for an increase in the standard of living and an increase in the demand for goods and services that goes along with that standard. In the Leapfrog Effect Nations that growth rate can be very rapid indeed.
If we want all the "green-collar" jobs, we need to work equally hard to develop these Leapfrog Effect marketplaces for our worker's products. If we don't someone else will.
Let's go feed some frogs.
There is not much good news on the U.S. economy these days.
The sub-prime mortgage crisis is hitting hard and it seems that more is yet to come.
Consumer confidence is falling with a reading in the Reuters/University of Michigan poll of 70.8 for February down from 78.4 in January, a 13 year low.
The Federal Reserve, in an effort to stimulate growth and ease credit supplies, keeps lowering interest rates. The Fed has cut the Federal Funds rate from 5.25% to 3.0% since last September with more cuts expected. Each cut has a couple of negative side effects that further reduce the value of the Dollar and raise inflation (still a historically low 2.1% compared with the 1790-2000 rate of 3.77%).
Late last week the U.S. Gross Domestic Product (GDP), which measures the economy as a whole, grew at an annual rate of a mere 0.6% in the 4th quarter of 2007 as compared with 4.9% the previous quarter (to give you a little long-term perspective, GDP growth averaged 3.5% annually between 1790 and 2000).
Job losses are also on the rise with new jobless claims rising to 373,000 well above the estimate of 350,000.
Finally, the U.S. Dollar is weak, falling to a record low last week against the Euro of $1.5179 Dollars per Euro, the weakest for the Dollar since the inception of the Euro in 1999.
All of this bad news adds up to real problems for Americans in the form of higher prices for globally priced items such as food, gasoline, metals, imported products, hmmm...most of the things we buy.
There is, however, a real opportunity for Americans. In a global economy, where work is done where it is most cost-effective (not just cheapest; quality, efficiency, delivery costs, ease of management, etc. all get factored in), the decline of the U.S. Dollar makes American workers and products more competitive.
We may just be getting exactly what we need to transition our labor force into the global economy - an opportunity to compete.
Higher prices for goods don't translate into similarly higher prices for services since that work is usually performed within the U.S. by American workers. I believe that this will lead to more service-oriented jobs and a relative decline in consumption within the U.S.
Leapfrog Nations will continue to consume and grow and herein lies our best opportunity. We can become the world leader in supplying the developing world with innovative sustainable goods and the services needed to deploy them.
During last week's Democratic debate between Senator Hillary Clinton and Senator Barack Obama in Ohio, a state with many manufacturing jobs, both mentioned 'green' jobs and opportunities for Ohio to become a leader in manufacturing 'green' equipment such as wind turbines. I wholeheartedly agree with the idea - but let's take it further, let's take it where they really need the equipment, let's take it to the Leapfrog Nations!
There will be domestic opportunities, as well, with prices for fuel and food continuing to surge. Increases in conservation and 'greener' products and processes with fuel a certain amount of the economy with good jobs in construction, engineering, and manufacturing leading the way.
From my admittedly long-term macro-economic perspective this economic slowdown (perhaps recession) could have a silver lining. If our leadership can see these advantages and recognize the opportunties that exist in the Leapfrog Nations then America might just be able to remain the richest and most powerful nation on earth for a long time to come.
Let's go feed some frogs!
America rode the industrial revolution to our preeminent position in the world. The industrial revolution peaked just before World War II; the postindustrial computer revolution likely peaked in 2000.
So, what’s next? Energy.
The Leapfrog Effect happens when nations without existing infrastructure skip the usual cycles of invention and innovation to leapfrog directly to modern technology.
Explosive growth in India, China, and other developing nations is due to the Leapfrog Effect. India, for example, had 90 million cell phone users in 2005, up from just 3.6 million in 2000 according to the International Telecommunications Union. Leapfrog Effects can be seen throughout developing countries. What took us 200 years to invent, produce, install, improve, and upgrade is available to Leapfrog Effect nations now. Economic readiness is all they need to raise their standards of living and productivity. Global investors are ready to help and reap the rewards of rapid productivity growth.
Developing nations will continue to leapfrog ahead. They want cars, televisions, modern kitchens, good lighting, nice homes and offices, and all the other energy consuming products and services we take for granted. The frogs are hungry.
How can the world sustain this growth? Roughly 1 billion people have our modern standard of living. Another 3 billion people in China, India, and other nations are exploiting the Leapfrog Effect, a potential four-fold increase in energy demand.
Energy is the critical issue for the next few decades. If no action is taken, the world risks global recession and wars over oil and other resources. Oil has, or soon will, reach peak production, according to the Oil Dependency Analysis Centre.
Well-run countries throughout the world are concerned with the impact rapid growth will have on their and the world’s environment. They welcome solutions to the problems of pollution, global warming, and resource availability.
Energy is not just about who owns the oil, coal, or uranium mines, where the rivers flow fast, the wind blows strong, or the sun shines bright every day. It is about the knowledge that drives technologies for the gamut of energy products. It’s about efficiency, production, storage, transmission, installation, waste disposal, engineering, science, and development. It’s everything from light bulbs to trains to building materials to power plants to drinking water. Anything that makes or uses energy is in play.
America must become the world leader and innovator in energy technologies.
Our market is in the Leapfrog Effect nations. Developed nations are burdened with infrastructure; 50 year life-cycles on existing coal plants, 20 years on cars, and so forth. Developing nations can leapfrog directly to the new efficient technologies.
Let’s provide them with sustainable energy technology, create good jobs for Americans, support America’s ascendancy, make some money, prevent some wars, improve global health, raise global living standards, and save the environment, all at the same time.
In a global economy we want Americans to hold the high paying jobs and to own the patents. America is the world leader in computers; we must take the same lead in energy technology. We need to invent and deliver the systems, products, processes, and engineers that 3 billion people need. We can even use them ourselves.
Globalization presents unprecedented challenges. Companies are global. Work is done wherever it costs least. Better tools, methods, and processes compound each year to create efficiencies we call productivity growth. Leapfrog Effects are producing rapid productivity growth in developing nations. Productivity growth is the real profit investors are looking for but it can also cause job loss in mature industries.
We bemoan the loss of manufacturing jobs; something that has been happening steadily since manufacturing peaked just over 65 years ago. We blame China but China is feeling the Leapfrog Effect in their manufacturing jobs. The Conference Board reports that between 1995 and 2004 China lost 15 million manufacturing jobs compared to 2 million in the US. Rapid growth means rapid change in Leapfrog Effect nations.
This is not a new trend. U.S. census figures show steady declines first in agricultural, then in manufacturing jobs. At first, this is not too painful, but in later years the strain hits workers hard. For example, in 1810 84% of all workers were farmers. In 1820 79% were farmers, a net loss of 6% all farmers in 10 years. By 1970 just 3.8% were farmers. In 1980 that was down to 2.9%, a net loss of 24% of all farmers in 10 years! No wonder farmers protested. Imagine the difficulties Leapfrog Effect nations will encounter.
We are witnessing the beginning of the same trend in computers. Technological progress, careers, and investments will continue but it’s time to start planning our children’s future and the second careers of some of our computer experts.
Americans need to understand these trends so they can plan their lives. Our government needs to understand them so it can advance our common interests.
There are no easy answers but America excels as a nation when we have a challenge. Solutions must include those that can be adopted soon by the Leapfrog Effect nations.
Our success depends on taking the initiative. If we don’t Europe, Japan, or even the developing countries themselves, will.
America has an opportunity to retain its ascendancy, improve the environment, and do it all in an economically practical way that benefits not only Americans but the Leapfrog Effect nations as well. A stable global economy is in everyone’s best interest.
Any real solution to these global problems must be based on a sound economic model. Government has an important role to support our common objectives, communicate our global mission, and to facilitate the economic and ecological goals of the Leapfrog Plan.
Let’s go feed some frogs.
