An Assessment Just Waiting to Happen

by John Brian Shannon

What is the matter with energy? A scientist might say, what is the energy with matter?

There are really only two things in the universe. One is matter and the other is energy. All matter can be turned into energy if you have a large enough or sophisticated enough machine available.

Take the Sun for example. It is a big, hot ball of nuclear fusion taking place somewhere in space not too far away from us, thankfully. If it were too far away, we wouldn’t receive enough energy (mostly in the form of heat and visible, infrared and UV light) to support the many life forms on this planet.

So is the Sun matter, or energy? Our Sun is made up of matter which produces energy using the nuclear fusion process which takes place there on a huge scale.

Our Sun produces energy from its mass using fusion while today’s nuclear reactors produce energy from matter using a highly-efficient process — nuclear fission. Nuclear physics is used to enhance energy production from matter and this process requires certain metallic elements for maximum efficiency.

When we discuss electrical power generation using nuclear power, there are really only a few downsides. All of which cost you a lot of money, unfortunately, as some costs are paid by taxpayers (government-funded R&D and national security, to name just two) while other costs are in the form of electrical bills, paid by electricity users.

One of the highest costs has been the research and development of nuclear materials and nuclear power plant design/engineering to provide electrical power for cities and towns, which began in the cold War era. The United States has borne much of the cost of nuclear power research in the Western nations over the past decades. Such R&D is very costly and continues.

The various fuels used in nuclear reactors are (like many things) hazardous if misused. A crude nuclear bomb, one that a domestic or foreign terrorist could make from a new or ‘spent’ nuclear fuel rod requires a full-blanket approach to security of nuclear plants, processing facilities, transportation of nuclear materials and even uranium mines, which translates to high costs.

Another high cost are the power plants themselves, which must first of all be constructed with very high security in mind, have locations near waterways and the very high levels of design and engineering required for dealing with nuclear materials combine to add to the costs involved.

So far, so good. Because thus far, nuclear power plants in the U.S. and the rest of the Western world have thrived and produced profit for their investors. Whether government or privately-owned, nuclear power is so efficient and has such a small carbon footprint, that it would be almost unimaginable to not have had them adding baseline load to Western power grids all along. Yes, they have been that good, and, for that long!

There is one unsolved externality with regards to nuclear power; What to do with the spent rods? This is one kind of cost which could turn out to become larger than all the other costs put together – IF this part of the nuclear equation isn’t handled properly.

Or, if handled properly, and recognized for the true resource it really is, it could spark a renewed interest in nuclear energy AND could become the greater part of a solution to the entire spent fuel problem!

For decades people have been rightly concerned about the thousands of tons of so-called spent nuclear fuel stockpiles just sitting around in astronomically expensive storage facilities in many Western nations. Which is where some of it must stay for up to 20,000 years or longer, in massive air-conditioned underground bunkers. Were the A/C shut down for more than 36 hours — even once, a catastrophic event of national proportions could occur.

The amount of energy which could be extracted from this spent fuel is truly mind-boggling. With careful usage, these presently useless and costly-to-store materials could power much of North America for decades.

Yes, some government subsidy money would be required in order to ‘burn’ these partially-spent fuel rods and produce plenty of power from them until they are only slightly radioactive and infinitely safer to dispose of – but that will pale in comparison to the amount of subsidy money the U.S. government already spends to securely store, monitor and keep cool, spent nuclear fuel rods for up to 20,000 years!

There are tons of very expensive and toxic matter that is presently sitting around, costing uncountable billions to store and becoming ever more unstable as time goes by. It can become one of the nation’s prime sources of energy by re-processing it and ‘burning it’ as nuclear power generation fuel, and doing so will dramatically increase America’s energy and environmental security.

Which is why I respectfully call on President Barack Obama and Vice President Joe Biden to call for an assessment of all spent, otherwise unused, or unusable, processed nuclear materials of any kind, in the U.S. – much of which could be re-processed or used ‘as is’ for electrical power generation by a new generation of American SMR nuclear reactors, thereby solving the ‘thus far unsolved’ externalities of nuclear power.

John Brian Shannon

ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada

Cited in a United Nations Development Programme Report

by John Brian Shannon

United Nations

In July of this year, the UN asked me to contribute an article to the United Nations Development Programme — and it is now published in a 60-page report.

I’m in the credits on page 2 and my article is published in full starting on page 26. The full report is downloadable as a PDF. Click here to download — you may need to click again when a new window opens.

GREEN ECONOMY IN ACTION: Articles and Excerpts that Illustrate Green Economy and Sustainable Development Efforts
August 2012

I would like to thank Hussein Abaza, who is the former Chief of the Economics and Trade Branch of the United Nations Environment Programme (UNEP) and a person who has contributed unstintingly in the service of our civilization in several UN organizations for over 30 years.

I would be remiss if I did not express my appreciation to Veerle Vandeweerd, Director, Environment and Energy Group Bureau for Development Policy, United Nations Development Programme.

Grateful thanks also to Marjolaine Côté, Special Assistant to the Director Environment and Energy Group Bureau for Development Policy, United Nations Development Programme.

Thanks due to Serena Bedwal, Environment and Energy Group Bureau for Development Policy United Nations Development Programme

Many thanks to Danielle Crittenden my Managing Editor at Huffington Post Canada who was the first editor to approve and publish the first version of this article which was titled As China Goes Green What Is Canada Waiting For?

I also owe thanks to Emma Ellwood-Russell, my editor at EcoPoint™ who published a later version of this article titled China Goes Green and to EnergyBoom.com which also published the last variant of this article China Motivated to Adopt Sustainable Energy Solutions.

The UNDP elected to generously provide a link to the EcoPoint™ website in the United Nations Development Programme report.

Please take a few moments to look over this 60 page report. I would be very interested to hear your comments about any part of it. Thank you.

John Brian Shannon

Related articles
ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada

Let’s Just Blame the 47 Percent For Everything!

by John Brian Shannon

I was pleased to find Simon Johnson’s brilliant article in today’s edition of Project Syndicate, entitled; “Mitt and the Moochers” — the best summary of America’s economic situation that I have yet seen.

The psychology of the present paradigm is very odd indeed.

It approximates the following statement; Blame 47% of the population, the mostly blue-collar working people and taxpayers for the combined failures of the banksters, a few corporations and some inept government regulations — and then at length, when some of the 47% complain about getting blamed for a situation not of their creation, just default to calling them ‘victims’ in the pejorative sense of the word.

Oh, and let’s make the 47% pay to fix the damage they didn’t cause.

Those who were the first to benefit from the $12.8 trillion dollars of corporate welfare — are among the first ones to criticize 47% of Americans, most of whom;

“pay a great deal of tax on their earnings, property, and goods purchased. They also work hard to make a living in a country where median household income has declined to a level last seen in the mid-1990’s.” — Simon Johnson

In a general way, I take these developments as a sign that the formerly deep roots of American egalitarianism are getting shallower and we are now seeing the beginnings of a class-based society.

“the emergence of global megabanks was not a market outcome; these banks are government-sponsored and subsidized enterprises, propped up by taxpayers. (This is as true in Europe today as it is in the US.)” — Simon Johnson

All of the above are egregious enough in their own right. But what I take greatest offense at are those corporations which having made poor decisions, then line-up to receive billions of corporate welfare — whereby the government effectively rewards those organizations with heavy doses of cash for their poor performance — while corporations and companies which made good decisions all along are comparatively weakened.

It is a sure sign of the apocalypse, when corporations which invested in better decisions do not receive federal ‘reward’ money, but lesser performers do. No lasting good can come of this state of affairs… in fact, it is to weep.

John Brian Shannon

Related articles
ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada

Looking Through the Wrong End of the Telescope Won’t Fix the Economy

by John Brian Shannon

Quick, think fast! Why is there a huge liquidity trap in America?

If you can answer that question, then you’re not ‘looking through the wrong end of the telescope’ blaming the symptoms, instead of the root causes of the present American economic problem. Which, some other people (not you and me) are probably doing right now.

Let’s call some of those people 2012 Republican politicians.

The present excess-liquidity situation has come about as a result of some economic policies of the United States, which gained traction during President Reagan’s first term in office. It was a different world then and the 40th President acted swiftly and responsibly to restart the U.S. economy. I quote the New York Times reportage of President Reagan’s inauguration speech.

He said “progress may be slow,” but his “first priorities” would be to “get government back within its means, and to lighten out punitive tax burden,” a reference to his campaign pledge to balance the Federal budget and cut personal taxes to 30 percent in three years. – The New York Times, quoting President Ronald Reagan’s inaugural speech of January 20, 1981.

Personal and corporate tax rates have dramatically fallen since then and the plan to cut the tax rates and add unprecedented billions of dollars of stimulus spending to the economy (much of it went to U.S. defense contractors) worked to grow the American economy and the economies of other Western nations, such as the UK, Canada and Spain. Yes, it was that much stimulus.

Cold War allies such as Canada, received generous NASA and U.S. defense-related contracts from the administration, which in turn helped to boost the economies of Western alliesthereby helping the U.S. economy.

How’s that?

During Ronald Reagan’s terms in office, most cars and trucks registered in Canada were manufactured by U.S. corporations and the same held true for so-called ‘white goods’ (refrigerators, stoves, dishwashers, etc.) and large volumes of many other products — especially construction industry products and materials. Not to mention Canada’s purchase of 110 F-18’s in 1981.

When your allies have money, they place orders with U.S. corporations. When your allies don’t have enough money to purchase American goods and services, sales fall off dramatically.

Of course, there was much more to it than that. America was deep in the economic doldrums in 1980/81 and the American psyche was still reeling from the Vietnam War, a recession and a loss of American prestige following the dual shocks of the Arab Oil Embargo and the American hostages in Iran.

President Reagan stepped up and hit a ‘home-run’ every day for the U.S.A and got America to believe in itself again. The President authorized the Chrysler bailout, other bailouts and some exceptional mergers so that companies would not be forced to shut their doors and take all those middle-class jobs with them.

Economically speaking, by adding significant hundreds of billions of stimulus dollars to the U.S. economy (perhaps as much as 1 trillion dollars, depending on who is doing the counting) and lowering personal and corporate tax rates, the Reagan administration employed a two-pronged approach to foster growth in the American economy. And it worked.

Fast-forward to 2012. Trying to employ those same policies now when we have reached a state of diminishing returns on them (as there isn’t much left to cut without shutting down America) can only be called tinkering with the economy. Back in the 1980’s huge cuts in tax rates were possible and allowed a decade-long spending spree by American citizens and corporations.

Now that personal and corporate taxes are so low and have been for some time, there is no longer room for huge tax cuts of 10% or more. All the juice has been squeezed out of that lemon.

The policies which allowed huge growth in the 1980’s (mega-stimulus and tax cuts) were financed by running massive deficits which were never paid off — as President Reagan had responsibly promised would eventually happen.

When governments run obscene deficits designed to stimulate the economy during times of economic crisis it is an utterly logical thing to do. When successive governments don’t return to balanced budgets and don’t paydown the accumulated government debt during the ‘good times’ as John Maynard Keynes suggested, governments ability to assist in subsequent recessions are constrained (for a telling article on that, read here) – but this time around the constraint is the liquidity trap.

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Now we have people writing to members of Congress, to the media and to each other, asking for fixes to the symptoms of the economic problem, instead of the cause. It gets worse, we now have candidates for high office blaming the symptoms instead of the cause.

Why are we in a liquidity trap? The answer my friend, is right below.

A liquidity trap is a situation described in Keynesian economics in which injections of cash into the private banking system by a central bank fail to lower interest rates and hence fail to stimulate economic growth.

A liquidity trap is caused when people [or corporations] hoard cash because they expect an adverse event such as deflation, insufficient aggregate demand, or war. Signature characteristics of a liquidity trap are short-term interest rates that are near zero and fluctuations in the monetary base that fail to translate into fluctuations in general price levels. – Wikipedia

How can injections of cash into the private banking system by a central bank lower the interest rates when the interest rates are effectively zero?

What we are left with; The banks are full to the top with deposited money from individuals and corporations. There is low demand for goods and services. There is little demand for money to loan. There is little incentive for banks to loan money as there is presently such a small ‘spread’ between prime rate and mortgage rates. There is little room for personal and corporate tax rate cuts — as the largest cuts have already taken place over the past 30 years.

What all of this means is the government has little in the way of actual controls over the economy. When both major levers (monetary and fiscal) don’t work, all that is left is minor tinkering.

When two of the most important economic levers are temporarily out of order, we just can’t stand around blaming the symptoms or wishing for a better day. It is now the time to bring in other levers to spur the economy like a reasonable (export) tariff of say, 5-8% on all raw resource exports, such as petroleum (the U.S. is a net exporter of petroleum) coal, minerals and metals.

This would begin to add cash to the federal coffers from day one and every penny should be used to stimulate actual jobs.

The U.S. could hire 100,000 additional police as President Clinton once did – many of whom are still paying taxes and contributing to their local economies, by the way.

Also, more teachers, or teachers with higher credentials could be educating a better future workforce.

‘Shovel-ready’ national infrastructure programs could create jobs for out-of-work and under-employed labourers.

Want to create demand in the economy? Give a few million Americans jobs! Watch how much tax revenue is generated. Watch the sales of everything from work-appropriate clothing, to cars, gasoline, home appliances and so much more, skyrocket in less than a year and continue to contribute to the economy.

People don’t want food stamps if they have a good-paying job. People don’t want welfare if they have a decent job. And people don’t want to burden social agencies when they can afford to live independently.

Looking through the right end of the telescope, there’s nothing but solutions in all directions. A moderate tariff on raw resource exports is a good place to start.

John Brian Shannon

ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada

 

Why Resource-based Economies Need Tariffs

by John Brian Shannon

Joseph E. Stiglitz, Nobel laureate in economics and Professor at Columbia University has noted the problems inherent to resource-based economies in his recent and excellent article; “From Resource Curse to Blessing” which I urge you to read. Early into his piece, he says;

“On average, resource-rich countries have done even more poorly than countries without resources. They have grown more slowly, and with greater inequality – just the opposite of what one would expect.” — Stiglitz

The usual solution to the inevitable slowing of a resource-based economy is to facilitate ever more extraction — in the hopes that more resource dollars will stimulate growth and compensate for the lack of progress in other sectors.

Time and time again this fails to work and to make matters worse, other sectors of the economy grow weaker in almost direct correlation with mounting resource exports. Manufacturing often takes the greatest hit.

Moreover, resource-rich countries often do not pursue sustainable growth strategies. They fail to recognize that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer. Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments. — Stiglitz

The government line on this is usually; “We should concentrate on what we do best.” Which is fine except that in so doing, the rest of the economy slowly slips toward the day when the government must then announce; ‘The majority of the resources are gone, we now must rebuild our economy from scratch.” This is when economists are finally consulted and listened to — but are then expected to solve the entire problem by the weekend, with nothing more than a magic wand and an algebraic/transcendental incantation.

Resource-based economies should commit to robust and long-term economic development throughout the economy well before such cantrip is required.

Real development requires exploring all possible linkages: training local workers, developing small and medium-size enterprises to provide inputs for mining operations and oil and gas companies, domestic processing, and integrating the natural resources into the country’s economic structure. Of course, today, these countries may not have a comparative advantage in many of these activities, and some will argue that countries should stick to their strengths. From this perspective, these countries’ comparative advantage is having other countries exploit their resources.

That is wrong. What matters is dynamic comparative advantage, or comparative advantage in the long run, which can be shaped. Forty years ago, South Korea had a comparative advantage in growing rice. Had it stuck to that strength, it would not be the industrial giant that it is today. It might be the world’s most efficient rice grower, but it would still be poor. — Stiglitz

The problem of course, is how to fund the necessary investment in the non-resource economy. And what level of funding do non-resource sectors enjoy at the present? Less than you might imagine.

Of all solutions, the simplest usually work best. Which is why a nominal export tax is a necessary ingredient to any resource-based economy to assist the national economy maintain a quantitative balance.

After all, taxing natural resources at high rates will not cause them to disappear, which means that countries whose major source of revenue is natural resources can use them to finance education, health care, development, and redistribution. — Stiglitz

There is little need for domestic resource taxes in nations where the majority of resources are exported. Such ‘recycling’ of citizen’s money adds little ‘new money’ to the economy and irritates voters, while the most efficient economic performance enhancement available comes from export tariffs and FDI.

Both export tariffs and FDI revenue streams represent new money entering the system which means unlike domestic taxation, citizens are not paying for other citizens employment programs — foreign interests will be paying that bill.

When resource-based economies implement a 5% to 8% export tariff on every exported tonne of coal/metals/minerals, or barrel of oil, their economies will fire on all cylinders — and with little complaint from the rapidly growing and resource-hungry nations.

John Brian Shannon