Saturday, September 13, 2008

Tom Friedman: A Prophet We Must Hear

Friday at noon, I joined about 2,000 Dallasites at a luncheon hosted by the World Affairs Council to hear Tom Friedman discuss his new book, Hot, Flat and Crowded: Why We Need a Green Revolution--and How It Can Renew America.

Friedman's speech challenged me deeply. Everyone needs to read his book, especially both presidential candidates. Clearly, we are in the midst of a gigantic community problem as a nation. (Note: order his book by using the Amazon.com link to the right and below. Your order will help CDM!)

Friedman ridiculed the so-called "Green Revolution." He noted that there has never been a revolution during which no one got hurt. At this point, we may have a green party, but we have no revolution.

What is needed is strong federal leadership that would include establishing and sending a strong "price signal" so that innovators would get serious about investing in clean, sustainable, renewable, national energy.

Even if the entire global warming thing is a hoax (which he points out it is not), Friedman believes that acting as if it is a real threat will lead our nation in exactly the way it should go for the sake of security, world leadership, peace and freedom.

Last Sunday, Friedman appeared on NBC's Meet the Press. I hope you'll take the time to watch his conversation with Tom Brokow here. Friedman made many of the same points during his speech here in Dallas.

Reactions?

13 comments:

c hand said...

"establishing and sending a strong "price signal" so that innovators would get serious about investing in clean, sustainable, renewable, national energy."

Larry, are you sure you want to champion corporate welfare? If you liked the cotton plantations of the old south, you are going to love this. Everyone working hard to inrich the massah landowner.

Anonymous said...

chand, your post here makes no sense. Assuming there is any validity at all to your remark is a mistake. But for the sake of argument, let's say you thesis has some element of truth. I think Larry could say, "So, you prefer that your masters be from the Middle East, Canada, Mexico and Latin America rather than from here in the US where the wealth transfer can serve our nation and our world. Take Larry's advice. Open you mind. Read Friedman.

c hand said...

Can you not see the difference between the free market and corporate welfare? If you buy a gallon of gas from Mexico, that is a transaction not a transfer. You got gas(which you needed more than you needed $4) and mexico gets to buy $4 worth of goods/services from US(which it needs more than it needs the gas) Both sides are better off.

Before you make me a wealthier man, look at the numbers and think about how much corporate welfare you want me to have.

Anonymous said...

chand, wish it were that simple. If the price is $6 or $9 a gallon, you might decide that you don't need the gas, you might be open to other forms of energy that would lead everyone in the national community toward new approaches to energy development. There is no corporate welfare in a price signal, just a built in incentive to break the hold of foreign carbon vapor products on us all. Wake up, bud, the old categories don't work in this new world!

c hand said...

Yes, maybe you do understand. Use of gas follows price.(you drive more with $2 gas, less with $6) That's how a freedom based price mechanism works.

"There is no corporate welfare? Only a (Government built) price signal???????" OK, when is Corp welfare, NOT a Gov built price signal?

Who is against windmills? I am only asking you to look at the amount of corporate welfare dollars that will be sent to me and people like me(landowners where the wind blows). If you are happy with that arangement, I guess I'll learn to live with it. :)

Anonymous said...

Production costs per barrel of oil (according to the Saudi Arabian government, which I think we can count on to underestimate the cost) are $70 per barrel. That means that current prices reflect about a 50% profit margin, and recent prices were at about 100% profit margin. I don't think those prices reflect a free market in energy.

I'd rather pay more to American producers of energy (where we didn't suffer decreases in the buying power of the dollar and where the multiplier effect of the energy purchases [normally 4x] would reverberate throughout the American economy.

In short, C Hand might be right if there were actually a free market in energy--but there isn't.

Anonymous said...

Friedman's (at least mostly) right.

chand - you start with the assumption that oil or any other prices start at some mythical free starting point. They don't. Heard of OPEC? Oil prices are openly artificially inflated from the start - i.e. govt intervention.

And, Anon 9:19, no way oil costs $70 a barrel to produce. It has been only months since oil was selling for $60 a barrel, and I guaranty OPEC was not selling at a loss.

The bottom line is that lots of factors, including govts around the world, already influence the cost of energy. So why not use ours in ways that benefit us (U.S.) by encouraging the next energy breakthrough?

c hand said...

I would guess Saudi production costs to be closer to $7/barrel than $70/barrel.(they were at about $11 a few years ago) But profit margin has nothing to do with the setting the price. Supply/demand/price form the three legged stool in a fungible goods market. OPEC effects price THROUGH supply, not by a magical suspention of economics.
Freedom works better than bureaucratic control.

Larry seems to think that there will be gravy train jobs generated for the poor with this scheme? While, I don't see how they can avoid being the most hurt with inefficient higher costing energy.

I am all for innovation. But this is like someone talking two hundred years ago about shooting all the horses so that somebody else would invent a car. Who is stopping the next great thing?

Larry James said...

chand, the fluctuations in price for fossil fuel is what is blocking the next innovation. No intelligent investor/innovator is going to invest billions when they suspect that the price of fossil fuel will continue to go up and down. A set price signal would free innovators to go forward. When a major system must be replaced, it takes govt leadership to set the stage.

Larry James said...

chand, the fluctuations in price for fossil fuel is what is blocking the next innovation. No intelligent investor/innovator is going to invest billions when they suspect that the price of fossil fuel will continue to go up and down. A set price signal would free innovators to go forward. When a major system must be replaced, it takes govt leadership to set the stage.

Anonymous said...

c hand,

"Freedom works better than bureaucratic control."

But the point is that there is no freedom in energy pricing--Saudi Aramco, owned by the Saudi ruling class, controls price by manipulating supply. Otherwise, Saudi Arabia would increase production until it reached the marginal cost of production--about $100 per barrel--way above the $70per barrel it claims or the $7 per barrel you estimate.

Saudi Arabia has market control.

This is the only Saudi joke I've ever heard:

"What's the best price of oil for Saudi Arabia?

$100 per barrel
$100 per barrel
$1 per barrel
$100 per barrel"

Saudi Arabia jacks the price up as high as it can, then when the industrial nations threaten to take action to shift to alternative fuels, increases production and lowers the price until that effort is abandoned. Then jacks the price back up.

A long-term systematic effort to produce an alternative fuel--one we don't give up on when the Saudis lower oil prices--would take that control away from them.

This isn't a matter of letting the free market work, there isn't one, but of defending ourselves. If the Saudis opened their market, including allowing American ownership of oil fields (if an American company was the high bidder), then we might see if the free market in oil works.

The Saudis aren't going to do that, so we need to level the playing field. Put taxes on
Saudi oil and tax breaks on American-produced alternative energy sources. In ten years, American science, engineering and ingenuity--with a stable market to sell to and no worries about the Saudies increasing production and undercutting their prices--will create energy sources competitive with the cost of Saudi oil. I truly believe that is possible.

At that point, when Saudi oil sells for $30 per barrel again, they can come begging to us for help.

And the United States can tell them that we may help them--when they stop supporting terrorism and afford all their people, especially women, equal rights.

Otherwise, they can eat their oil.

c hand said...

As a corn farmer with plenty of wind to sell, happy days are here again...for me. As for the rest of you poor unfortunates, expect higher energy cost, higher food prices, and negative ecological impact(trees cut down for farm ground, water usage, pesticides, fertilizers)

Anonymous said...

chand, it's not all about you or me. It is about "us" as a nation. Think about it.