Solving Problems 101

To solve a problem, one must do two things first.

1. Identify the problem correctly; and
2. Identify the entire problem - both its short term and long term parts.

Congress, of course, fails to do either #1 or #2 correctly almost all the time.

What are the major problems facing America now?

I. Energy.
II. Transportation.
III. Jobs.
IV. Wasteful borrowing.

I and II are connected. III and IV are connected.

I. Energy: Within the lives of the current younger generation in America, the fundamental source of transportation energy in the US will change as oil will dry up ... literally. The energy density of gasoline has made it a wonderful source to portable energy to power vehicles. The Earth has now been nearly fully explored and the huge populations of the former Third World are now consuming huge amounts of oil. Demand has increased and can further increase, yet supply is hitting the brick wall. Recent discoveries of new sources of natural gas will help wean us off oil, as will tar sands. Other costlier sources of hydrocarbons will stretch this major energy problem out as oil prices rise gradually. The brick wall in 40 years can become an 80 year grinding, slow process of change.

II. Transportation. Unfortunately, since WW II the cheap gasoline has produced enormous urban sprawl. That sprawl increases demand for energy and causes huge losses in people's time and energy use in traffic jams and wasteful travel in commerce. Anyone with a couple decades of experience driving in a metropolis has seen this problem grow in intensity and extent. Airports have also gotten more and more crowded and busy; they have grown so much that simply getting in and out of them takes a serious share of the total travel time. The costs have grown and the efficiency has fallen. That old trends must stop & reverse.

III. Jobs: The Panic of 2008 and its ensuing Great Recession has created a HUGE loss of productive capacity in America, viz. those 15% of productive people now either unemployed or underemployed. Those people span all generations from the young to the retired. Many - most of those people can and want to be more productive. They want to earn more and want to work harder. The Federal budget deficit as a percentage of GDP is about 10%. Has it occurred to no one in leadership that the Federal budget deficit is directly related to the unemployment and underemployment of its people? Putting those 15% of the nation's people to productive work would SOLVE the Federal budget deficit problem.

IV. Wasteful Borrowing. DEBT IS NOT EVIL NOR BAD INTRINSICALLY. But borrowing money to waste the money is. Borrowing to dig a hole and fill it up is a total waste. Borrowing money to build a factory can be good IF the factory is useful. Borrowing to build up the nation's productive capacity is good - that money from debt is used for true investment that produces a return ... a profit that can repay the debt (interest and principal). The debt of a nation need NEVER be repaid. Has the debt of AT&T or IBM or General Electric or Exxon - all 100+ year old corporations - ever been entirely repaid? No. They continue to borrow money and invest it wisely. They borrow more and more, yet have no problem paying their debt service. The same applies to the US.

GM borrowed stupidly for decades, to overpay its unionized workforce to buy labor peace and overpaid its executives to keep them happy slurping at the trough; it invested in other businesses outside its core. Over time, that cannot be sustained and GM went bankrupt while competitors in the US south prospered. Borrowing to waste money leads to bankruptcy.

The same analysis applies to the US and to the States. They must cease wasteful borrowing.

Those are the problems. For the rest of this week I will post solutions.

Word of the Day

"Fardel" - noun [$100] Archaic. Used by W. B. Yeats.
Fardel means 1. a bundle; 2. a burden.
Sentence: The great fardel of problems identified above can be solved with ruthless logic and facts.