The concept of 5 Whys is generally applied in process improvement to get to the root cause of a failure; though the practice of asking why is generally useful if you want to get to the root of an issue.<\/p>\n\t
I saw in the news recently more talk of cold fusion, thorium reactors and other means of cheap, clean energy. \u00a0Cheap, clean energy would transform our world forever.<\/p>\n\t
Before we take a look at what cheap energy would do, let’s think about what expensive energy does. \u00a0The most common example is an increase in the price of oil, which affects all energy prices (and all prices in general as energy is always an input). \u00a0The price (of oil) often goes up when supply (of oil) goes down; demand is pretty constant in the short term….then what happens? \u00a0We wait in line at the gas station, all prices go up, economic activity goes down (since more money is being spent on energy and less leftover for other items), and anxiety goes up. \u00a0We get a recession\/depression.<\/p>\n\t
So what about the opposite? \u00a0What if energy suddenly became very cheap, and to boot it was non-polluting? That would be great right?<\/p>\n\t
Well, the\u00a0economy\u00a0would boom everywhere (except oil dependent nations). \u00a0We would usher in a new era of prosperity. \u00a0Everything would become cheaper to make. \u00a0Prospects for nearly everything would look great; capacity would expand, companies would hire and grow. \u00a0Negative energy shocks very predictably create recessions (economists can at least agree on that); the opposite would create a boom.<\/p>\n\t
Is there a drawback? \u00a0Yes. \u00a0Even if the energy was non-polluting it would be bad for the environment. \u00a0Why? \u00a0People all over the world would suddenly be able to buy things they couldn’t before because all things would be more affordable as the price of the energy inputs used to make them decreased. \u00a0In the US, we already have most of the material goods we need, but for the majority of the planet an increase in buying power means they want STUFF. \u00a0They want a house; they want clothes; they want a TV, a car, etc.<\/p>\n\t
All of these things require environmental resources to make. \u00a0If a billion people could suddenly buy TVs and cars; we’d need to the extract the raw materials to make that stuff. \u00a0What if it weren’t 1 billion; what if it were 2? 3 billion? How many TVs and cars could we make without running out of stuff? \u00a0Is there enough asphalt to make the roads for those cars to drive on?<\/p>\n\t
I guess the question is: \u00a0What is the current bottleneck to making all that stuff?<\/strong><\/p>\n\t Is the price of energy a bottleneck? \u00a0Is raw materials already a bottleneck? Are skilled people the bottleneck? Is land the bottleneck? Are\u00a0capital\u00a0goods (machinery) the bottleneck? \u00a0Finally is demand the bottleneck?<\/p>\n\t Let’s take them one by one:<\/p>\n\t Is the price of energy a bottleneck?<\/strong> I would say somewhat yes, since cheaper energy will surely cause more production. \u00a0Energy might be the primary bottleneck. \u00a0Put another way, price of inputs is one of the bottlenecks.<\/p>\n\t Is raw materials already a bottleneck?<\/strong> I would say no. \u00a0I have never heard of a company not making something because the raw materials aren’t there. \u00a0I’ve heard of the raw materials being too expensive (which cheaper energy would help), but I’ve never heard of them not existing.<\/p>\n\t Are skilled people the bottleneck?<\/strong> Perhaps this one has some merit. \u00a0If the world were filled with more productive individuals that had excellent skills in their area, production would become easier. \u00a0This is a tough one, since governments must be stable, infrastructure must exist, etc. for people to be able to use their skills. \u00a0That might be a bottleneck to more production. \u00a0This is an issue nations often deal with. \u00a0People don’t produce because the nation is corrupt, there is no infrastructure; it isn’t worth it to produce.<\/p>\n\t Is land the bottleneck?<\/strong> Not land period, but perhaps land rights, which is somewhat a question of stable governments and\u00a0private property. \u00a0I do think this is a peripheral bottleneck, but not the main, systemic one as it is localized.<\/p>\n\t Are\u00a0capital\u00a0goods (machinery) the bottleneck?<\/strong> This is related to the infrastructure question. \u00a0I think in many countries this is an issue. \u00a0The capital goods don’t exist to facilitate production. \u00a0It is quite the loop huh? \u00a0Which comes first, the chicken or the egg? In general I would say no, this is not the bottleneck, since making more stuff would create the demand to make the capital goods. \u00a0Capital goods are an effect, not a cause.<\/p>\n\t Finally is demand the bottleneck?<\/strong> So this is an interesting question, one that economists grapple with: Would we produce more if more were demanded or are we at maximum capacity already? If we are at maximum capacity, what would increase capacity? If you think demand is the bottleneck what you must really be saying is that money is the bottleneck, since if you asked someone if they wanted a car, surely they would say yes (except perhaps if you lived in a desert)? \u00a0The theoretical demand is there; it just can’t be back up with buying power.<\/p>\n\t Scratch all that. \u00a0Here is what I think is the bottleneck: \u00a0Technology<\/strong>…more specifically ease of production. \u00a0Hear me out.<\/p>\n\t When we invented the printing press, we saw a boom in books, because they became easy to produce. \u00a0Anything that becomes easy to produce, becomes relatively cheap and widely available. \u00a0Cars are not widely available because they are hard to produce. \u00a0If cars were as easy to make as pencils, more people would have them. \u00a0Same with computers; if computers were super cheap and easy to make….we would all have them (even people in deserts). \u00a0If we could invent a 3D printing technology that could make anything for which a blueprint was available with a few raw materials…most things would get really cheap.<\/p>\n\t Anyone see an issue with this logic?\n<\/p>\n","protected":false},"excerpt":{"rendered":" The concept of 5 Whys is generally applied in process improvement to get to the root cause of a failure; though the practice of asking why is generally useful if you want to get to the root of an issue. I saw in the news recently more talk of cold fusion, thorium reactors and other […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0},"categories":[1],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p3IMYj-8i","jetpack-related-posts":[{"id":193,"url":"http:\/\/chasingeden.com\/?p=193","url_meta":{"origin":514,"position":0},"title":"Health Care, Alternative Energy and the Cost of Doing Nothing: Are people getting dumber?","author":"kellio","date":"August 6, 2009","format":false,"excerpt":"Sometimes I think so.\u00a0 It can't be true though.\u00a0 IQs are going up (Flynn Effect).\u00a0 I do think people are uniformed, but certainly people have always been uninformed.\u00a0 With the Internet providing more information that we can ever\u00a0possibly wade though, and college attendance at an all time high, there is\u2026","rel":"","context":"In "Inside My Head"","block_context":{"text":"Inside My Head","link":"http:\/\/chasingeden.com\/?cat=9"},"img":{"alt_text":"health_care_costs","src":"https:\/\/i0.wp.com\/chasingeden.com\/wordpress\/wp-content\/uploads\/2009\/08\/health_care_costs.bmp?resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/chasingeden.com\/wordpress\/wp-content\/uploads\/2009\/08\/health_care_costs.bmp?resize=350%2C200 1x, https:\/\/i0.wp.com\/chasingeden.com\/wordpress\/wp-content\/uploads\/2009\/08\/health_care_costs.bmp?resize=525%2C300 1.5x"},"classes":[]},{"id":78,"url":"http:\/\/chasingeden.com\/?p=78","url_meta":{"origin":514,"position":1},"title":"Fiat currency vs. Gas, Food and Home prices","author":"kellio","date":"May 27, 2008","format":false,"excerpt":"I keep hearing all this crap from the media about rising\u00a0food prices.\u00a0 And then they talk about the price of gas.\u00a0 And then they talk about the falling home prices (which aren't really falling, but simply returning to a more reasonable level after being inflated themselves). 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