As much as we’ve seen politicians and pundits debate over where to put the bread knife over the economy, there is one idea coming from the right that almost sounds like a plausible way to kickstart western economies and it comes from Mitt Romney, others have suggested it too but I’m jealous of Mitt’s hair so I’ll pick on him.
While virtually every economist in the world is saying we need to create temporary jobs to just give aggregate demand a cattle rod up the backside, Mitt has decided it would be a good idea to commit the United States to 30 years of shale oil and gas drilling. Now I can think of at least 10 jobs that this might create, the only trouble is that fossil fuel reserves will start to run out in 30 years or so and with Mitt’s grand energy security proposal all the infrastructure and education development in the mean time will have gone into a vanishing resource.
I’m not really sure why but it seems to have become a rather dominant theory that the way to get out of the pull of recession is to create a few permenant energy jobs rather than lots of temporary infrastructure development jobs. But think about all the market downturns you can remember in your lifetime, for me it’s the recession of the early 90s, the dotcom crash and obviously the new and improved recession 2.0. They were all preceded by a bubble in a particular trade, be it housing, the internet or tech, but afterwards the economy never lands back in the same area, growth always moves to something else because the industry that led to the downturn is still trying to recover. One of the main components of the economy in the last decade was oil speculation, it provided the liquidity investment banks needed to quickly trade loan obligations Over-The-Counter, with these transactions now somewhat discouraged oil speculation will drop once there is a new bubble as investors will be unwilling to support a massively inflated commodity when there is a rising tech or some other sector that is more attractive.
My point here is that when the economy eventually recovers it will be amidst a new bubble as it always has. The problem is that no-one knows what the bubble will be, there haven’t really been any startling advances in technology since ’08 that could realistically lead to a boom in new startups that normally precedes a bubble. It could be quantum computing, green energy, hell it could be body augmentation, no-one knows. The one thing I can say is that any nation that attempts to build its economic growth for the next 20-30 years on a diminishing source of power is going to be severely dissapointed when countries that are already advanced in renewable energy like France, Germany and Norway are able to maintain much higher production efficiency.