Thursday, May 1, 2008

Milken It: Part Two

Went back to Beverly Hills for another round of the Milken Institute's Global Conference today. A lot of discussion of biofuels. A mention of the fact that the world should be ruled by philosopher kings with PhDs in economics. And plenty of half-complete and incoherent thoughts spinning in my head.

Here are some questions from my notes, in no particular order:

-There was quite a bit of reference made today to the power of the US corn industry. There was total acknowledgment that that power is an economically bad thing. There was acknowledgment that that power is ultimately the product of corruption. And everyone laughed about it. Are we really resigned to a government held hostage by a greedy special interest group that doesn't want to have to compete?

-A panel of investors agreed that all the pieces are in place to keep plenty of capital flowing into cleantech, if oil stays above USD 70 per barrel. What happens if it drops below USD 70 per barrel?

-Should we discuss in a serious way how we ought to adapt to climate change? Or would that be resignation and thus counterproductive? How about geoengineering? Should we think about it or talk about it (geoengineering, for those that haven't heard the word, is doing crazy stuff like shooting particles into the atmosphere to deflect sunlight and cool the poles)? It feels apocalyptic, but it is a potential "solution," and there might come a time when it's our only weapon against catastrophe. Might it be good to have that weapon ready? What if we started a conversation with: yeah, this stuff is crazy, but there might come a point at which doing something crazy is better than doing nothing at all? Would that be psychologically acceptable? Would something like that push us to strive harder for sustainable solutions, or would it lead to feelings of helplessness and resignation?

-Apparently California has a "de-coupled system" in which electron producers and electron distributors make more money if they help electron consumers consume less. Is that true? If so, how did they pull that off? And why don't other states replicate the California system?

-You have a handful of money. There are three basic things you can do with it. You can spend it and get instant gratification. You can save it for when you really want to use it. Or you can invest it: risking that you might lose it but hoping it'll grow. If you spend it all, you don't have any leftover for savings or investment, and if you save or invest it, you don't get to spend it; you need to consume a little less in the short term. As a society, we're at a point at which we really ought to make some long term investments. For one, we ought to support the creation of a sustainable energy economy. We ought to allocate a solid chunk of our available capital to investment. If we do that, the prudent (or, if you'd rather, economical) response would be to live a little leaner, to consume less (as an economy: government bodies and individual people). Apparently, however, American political leaders can't accept trains of thought like that. In order to get elected, politicians have to promise lots of investment and lots of consumption (as governments and for their constituencies). The problem with that is that, once the investment has been made, there's no more cash for consumption. Unless you go borrow some. And thus the American way of life. Should we be worried? Are we really incapable of voting for leaders that ask us to consume less now in order to allocate more resources to creating a sustainable future?

Note: Over lunch today, we watched Michael Milken interview Arnold Schwarzenegger. It was a discussion about investment in infrastructure (roads, bridges, schools, power transmission lines), and, somehow, it was highly entertaining. Not as entertaining as this, but a good time nonetheless.