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Lifeboat Paradox

 

Lifeboat Paradox:

If you are self-disciplined to have and be skilled in the use of a lifeboat, it will not likely be needed.

The written Constitution is a lifeboat. Had we been self-disciplined to follow it and/or amend it via the rigors of Article 5, we could have avoided the great risk today of oil-wars since 1990, oil-dollar funded terrorist, pollution tilting the balance of nature into Climate Change, $18 trillion in Federal debt climbing in tandem with oil imports, resource depletion with US Peak Oil in 1970, bloated Federal government exercising police powers even over individual health. 

On Sept 14, 1787 Dr. Franklin proposed to the Constitutional Convention that a clause be added for the Federal government to fund highways and canals. James Madison recommended this be raised to a power. George Mason reminded the delegates of the problems of the crown transportation monopoly, a risk of Federal repetition of that defect. The proposal was defeated 8 states to 3, with a specific limitation to only fund "post Roads."

In the ratification of the Constitution, James Madison explained the division of sovereignty in Federalist #45:

"The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State."

Infrastructure was to be State sovereignty so the diverse economies of the States would be a defense against Tyranny of the Majority as outlined in Federalist #9 by Hamilton and #10 by Madison.

Early Presidents vetoed internal improvement bills as unconstitutional:

President Madison's veto on Mar 3, 1816, the Bonas Bill (background)

"Having considered the bill this day presented to me entitled 'An act to set apart and pledge certain funds for internal improvements,' and which sets apart and pledges funds 'for constructing roads and canals, and improving the navigation of water courses' . . . I am constrained by the insuperable difficulty I feel in reconciling the bill with the Constitution of the United States to return it with that objection to the House of Representatives. The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers."

“A proposition was made in the Convention to provide for the appointment of a "Secretary of Domestic Affairs," and make it his duty, among other things, "to attend to the opening of roads and navigation and the facilitating communications through the United States." It was referred to a committee, and that appears to have been the last of it. On a subsequent occasion a proposition was made to confer on Congress the power to "provide for the cutting of canals when deemed necessary," which was rejected by the strong majority of eight States to three. Among the reasons given for the rejection of this proposition, it was urged that "the expense in such cases will fall on the United States and the benefits accrue to the places where the canals may be cut."

During the consideration of this proposition a motion was made to enlarge the proposed power for "cutting canals" into a power "to grant charters of incorporation when the interest of the United States might require and the legislative provisions of the individual States may be incompetent;" and the reason assigned by Mr. Madison for the proposed enlargement of the power was that it would "secure an easy communication between the States, which the free intercourse now to be opened seemed to call for. The political obstacles being removed, a removal of the natural ones, as far as possible, ought to follow."

The original proposition and all the amendments were rejected, after deliberate discussion, not on the ground, as so much of that discussion as has been preserved indicates, that no direct grant was necessary, but because it was deemed inexpedient to grant it at all. When it is considered that some of the members of the Convention, who afterwards participated in the organization and administration of the Government, advocated and practiced upon a very liberal construction of the Constitution, grasping at many high powers as implied in its various provisions, not one of them, it is believed, at that day claimed the power to make roads and canals, or improve rivers and harbors, or appropriate money for that purpose. Among our early statesmen of the strict-construction class the opinion was universal, when the subject was first broached, that Congress did not possess the power, although some of them thought it desirable.”

  • President Buchanan on Feb 1, 1860, St. Clair Flats. As this NY Times article from 1860 notes there was anger at the “deliberate disregard of the popular will” in vetoing the bill. There is always a Tyranny of the Majority willing to tax their children to get things they want today. (background)

"For more than thirty years after the adoption of the Federal Constitution the power to appropriate money for the construction of internal improvements was neither claimed nor exercised by Congress. After its commencement, in 1820 and 1821, by very small and modest appropriations for surveys, it advanced with such rapid strides that within the brief period of ten years, according to President Polk, "the sum asked for from the Treasury for various projects amounted to more than $200,000,000." The vetoes of General Jackson and several of his successors have impeded the progress of the system and limited its extent, but have not altogether destroyed it. The time has now arrived for a final decision of the question. If the power exists, a general system should be adopted which would make some approach to justice among all the States, if this be possible.

What a vast field would the exercise of this power open for jobbing and corruption! Members of Congress, from an honest desire to promote the interest of their constituents, would struggle for improvements within their own districts, and the body itself must necessarily be converted into an arena where each would endeavor to obtain from the Treasury as much money as possible for his own locality. The temptation would prove irresistible. A system of " logrolling " (I know no word so expressive) would be inaugurated, under which the Treasury would be exhausted and the Federal Government be deprived of the means necessary to execute those great powers clearly confided to it by the Constitution for the purpose of promoting the interests and vindicating the honor of the country.

In direct violation of Divided Sovereignty, Federal taxing to build coal/oil-fired "internal improvements" create civilization Killers:

  • Climate Change
  • Resource depletion (US Peak Oil in 1970)
  • Religious wars funded by oil-dollars.
  • NSA police state survailence to protect against oil-funded terrorist.
  • Pepetual oil-wars since 1990.
  • Mortgaging the liberty of children with $18 trillion in Federal debt to fund oil-wars and subsidize foreign oil purchases.
  • Shifting America's economy from producing to consuming.
  • Shifting the American dream from personal liberty to borrowing to buy a house, car and oil.

As President Buchanan noted in his veto of "internal improvements", for the first 30 years under the Constitution, Congress did not agressively violate the "post Roads" and "harbor" clauses. President's Madison through Buchanan vetoed such Pork Barreling. But subsequently, Henry Clay's efforts to implement the American System of Federal infrastructure projects gained strength during the Civil War. A tipping point in harnessing the American people to Federal infrastructure was reached in 1913. A Tyranny of the Majority formed that wanted less liberty and to expand Federal confiscation of wealth to achieve what they believed was "social good":

  • The 16th Amendment implemented the Income Tax. 
  • The Federal Reserve was created so the Federal government could borrow against its ability to tax future labor.
  • The 17th Amendment changed election of Senators from State Legislatures to popular election. The cost of political corruption was reduced from having to buy half a state legislature, to merely contributing to the election of a Senator. The power of States to prevent Federal encroachment on State sovereignty and from borrowing and taxing the people was greatly reduced.
  • In 1917 Congress passed the 18th Amendment to expand Federal police powers to deprive liberty to beer.
  • In 1918, instead of raising taxes to go into World War I, President Truman borrowed $30 billion against the power to tax future labor to repay the debt. Communications, power and transportation infrastructures were monopolized/socialized as "natural monopolies."
  • In 1935 President Roosevelt removed energy self-reliance as a market force with the Rurual Electrification Administration. The entire distributed energy industry that had sold 600,000 windmills was wiped out. Over time those windmills were mostly abandoned in favor of the coal-fired central grid subsidized by Federal and state monopolies. Progress towards achieving what Thomas Edison noted as partical in 1910 was arrested:

"Sunshine is spread out thin and so is electricity. Perhaps they are the same, Sunshine is a form of energy, and the winds and the tides are manifestations of energy.”

“Do we use them? Oh, no! We burn up wood and coal, as renters burn up the front fence for fuel. We live like squatters, not as if we owned the property.

“There must surely come a time when heat and power will be stored in unlimited quantities in every community, all gathered by natural forces. Electricity ought to be as cheap as oxygen...."

  • The Federal-Aid Highway Act of 1956 removed efficiency as a market force and the survival of America was subordinated to a dependence on moving two tons to move a person by burning oil. Since US Peak Oil in 1970, the survival of America was subordinated to a foreign power, imported oil. Civilizatiion Killers were incrementally created by a Tyranny of the Majority.

Liberty and the "general welfare"

Liberty has two facets that create the “general welfare”.

  • The book, The Wisdom of Crowds provides many case studies of Wisdom from the Many; how the aggregated wisdom of all of us, each acting in our own self-interest is wiser than the wisest of us at choosing between choices. Who sets the choices becomes critically important.
  • Liberty is also society’s tolerance for disruptive minorities. There is no minority as tiny and disruptive as inventors.

Under the Federal communications monopoly, liberty was restricted. Americans experienced nearly a century of rotary telephones. After liberty was restored in 1982, niche markets formed a Darwinian crucible in which innovators offered choices and customers elevated or allowed to fail those choices based on perceived value. Long dormant innovations such as the Internet (1969) and radio telephones (1946) scaled to commercial viability. 

The Constitution's mandate for the Federal government to "provide" for the defense of liberty supports the peoples ability create the "general welfare". The Constitution specifically limits the Federal government to only "promote" this ability of the people exercising their liberty to provide the "general welfare".

Background documents:

 

Cheap Oil is Gone Forever

Assuming that secure access to cheap oil will always be available, America's economy, our jobs, morphed over the last 50 years from self-reliance into dependence.  The myth of cheap secure oil is gone forever.  Politics, decreasing supply and/or expanding demand will erratically push oil prices higher.

Increasing demand may overtake supply as populations grow and the economies of China and India modernize.  Or, after Peak Oil, supplies will decline below demand.  Of the 65 largest oil-producing countries, 54 have peaked and oil production is now in decline.  The tripling of oil prices between 2000 and 2006 is a strong indicator that demand is pushing against supply and/or oil has peaked and availability will soon begin a relentless decline.

Regardless of cause, increased demand or supply shortage, the age of cheap oil is gone forever and our economy is coasting on the last momentum of that era:

·       www.gao.gov search for “07-283”  GAO report on Peak Oil

·       http://abc.net.au/4corners/special_eds/20060710/  Web cast documentary.

We have two or three years to embrace the idea that cheap oil is gone and to channel the current momentum in our economy from a base of cheap oil to invent our future.

There is plenty of room to adjust.  For example, about four billion of the eight billion miles Americans drive every day are highly repetitive.  Yet we use energy and create congestion moving a ton to move a person.  Striving to move only the person saves 27 cents per passenger mile.  If we act while there is momentum in our current economy, ingenuity can preempt waste, harvesting profits to fund the shift.

Nature of an Economy

The economy is a confederation of upside-down pyramids.

An Up-Side-Down Pyramid model of the economy illustrates how each of us scrambles to find a niche and profit by adding more value than we consume in the competition.  By embracing personal accountability, with leadership and momentum to guide efforts, we can adapt our current economic engine to sustainable power sources.

That same model indicates that if we do not adapt before Peak Oil, or demand for oil exceeding supply, or political instability or Global Warming consequences, the pyramid will collapse with 30-70% unemployment being the most optimistic possibility.  A complete shredding of social fabric is possible.  The 10 worst famines of the 20th Century happened when this social structure collapsed forcing many to compete for few resources; most resulted from government policies.

 

 

Natural resources

Life depends on nature; clean air, clean water, sun light, earth, threads from which we fabricate our living, our social and economic structures.

Individuals

  • The economy is a confederation of working individuals who profit by adding more value than the cost to compete.
  • Each individual is an upside-down pyramid:
  • The base is resources consumed to compete.
  • Our outstretched arms are the value we add.  How far they extend depends on our will and ability to trust, transact, and transport that added value. 
  • Power is the will and ability to act applied to achieving an objective (Clausewitz).  At a fundamental level, self-interest supplies the components of "will and ability".  Individual self-interests, jobs, power the economy.

Industries and Communities

  • Self-interest dictates cooperation and collaboration.  My interests are best served by focusing my time and resources through my strongest talents.  I rely on the talents of others to grow food, mine mineral, have babies, manufacture goods, protect us and other needs and wants of our physical and social nature. 
  • Individuals form alliances, communities, industries, and nations so they can specialize to amplifying individual value added while driving down the cost to compete. 
  • As with individuals, the profit of these structural institutions is the value they create minus the resources consumed to compete for their existence.
  • These institutions are powered by their members; held together by abilities to trust, transact, and transport.

Churn

The economy is constantly churning.  Individuals and institutions scramble to sustain their base, exploit their talents and build relationships that amplify their efforts and resources.   Driven by the will and ability to win we Trust, Transact and Transport knitting our economy into being:

  • Trust:                Risking that someone else will deliver value more than harm is essential; giving terms in a contract, investing in stock.  Trust expands slowly with good experience, evaporates with bad.  Strong self-confidence, self-reliance and shared objectives expand trust.
  • Transact:          Specialization requires trading resources with others to cover all needs and wants. 
  • Transport:        Resources must flow to need.  Just as your body needs a circulation system to stream resources to need and waste to disposal, the life of a complex economy depends on transport.

Changing the Life Blood of our Economy

We are experienced with Churn.  Microcomputers and the Internet did not just happen.  First, individuals like Bill Gates and Steve Jobs defined and pursued opportunity.  With expanding clarity of the opportunity more and more individuals pooled resources and ingenuity combining talents into companies and industries.  Another thread of ingenuity are networks; leverage this value and again talents are combined and opportunities are pursued.  Looking from the outside it must have looked like fish in a school, individuals moving nearly in unison; close up, it was chaos, wildly inventive while guided by a systems engineering framework and wise policy.  The system engineering came from voluntary standards, guides which were replaced by new innovations.  Policy wisdom came from the FCC; there is a greater good.  Communication networks rights of way had priority over local jurisdictions. Ingenuity had priority and attempted to serve the common good.

By embracing our individual sense of accountability and opportunity we can reduce oil consumption by 7% per year.  Example, there is a 27 cent per passenger mile profit in changing moving a ton to move a person towards moving just the person.  There are many techniques and technologies, jobs that can harvest this profit from four billion passenger miles a day.  The “Green Rush” can follow the successful ingenuity pattern of computers and networks. 

In transportation and energy policy, ingenuity, attempting to serve the common good, requires rights of way so innovations can find and serve the need.  As momentum and experience grows, systems engineering standards will emerge, succeed and be displace by the next wave of innovation.

We can change the lifeblood of our economy from oil to ingenuity.

Delay is failure

Innovation is unlikely if we lose momentum and the economy slides into less trust, fewer transactions and a collapse of transport.

Nearly everyone is aware that airlines struggled and many declared Chapter 11 Bankruptcy with the increase in fuel costs after 9/11.  There are a lot more farmers hanging on the edge because of those same unstable fuel prices.  Over time we can adapt to anything.  Short-term oil price shocks are highly correlated with recessions and depressions. 

Any major event in the Middle East could cause oil speculation to jump to $5 a gallon.  Farmers already at their maximum credit limits cannot buy fuel.  Fewer fields get planted.  Corn and wheat futures go through the roof.  Escalating food and transportation costs force working families to choose between rent and food.  The housing market already stressed collapses.  Work for construction trades and manufacturing evaporates.  Real estate and bank loans default.  Confidence shatters, transportation collapses as moving a ton to move a person is no longer affordable.

How many weeks of food is in your house?  If trucks cannot resupply your grocery store how long will your family be comfortable and confident?  Would you keep your job if farmers are planting 50% of normal?  If truckers are hauling 50% of normal? 

Current transportation policy blocks commercialization, the schooling dynamic where the ingenuity of a few can rally the talents of the many to exploit breakthrough solutions of a few.  The flexible dynamics of the Up-Side-Down Pyramid is frozen, brittle.  Only systems approved can be tried.  Only systems in operation are approved, an infinite loop of ever decreasing ingenuity.  No room for the Wright Brothers, the Henry Fords, the Bill Gates, Steve Jobs or Ed Andersons.  Solar powered JPods that can be privately funded and operated at a profit are denied right of way to commercialize.  The strength of the many cannot reinforce the ingenuity of the few without commercialization.

Instead of focusing on adding more value than the cost to compete, transportation policy focuses on subsidies, less value than the cost to compete.  Where can we get our grant? How much Federal Funding is there?  Policy approves buses and trains that require subsidies.  Policy, faced with severe consequences from Peak Oil, increasing gas prices, embargoes, wars to protect oil, and Global Warming, approves highway expansion that will increase our oil addiction.  Reality is about to impact our economy made brittle by policy.

Empowering

Communications network policy works; ingenuity is the economic lifeblood of the Internet.  Ingenuity can flourish or fail based on the value created minus the cost to compete.  It will be chaotic but our economy can adapt and shift creating new jobs, new companies, new industries as ingenuity replaces oil as the lifeblood of our economy.

Contact

Bill James, bill.james@jpods.com, (612) 414-4211         March 31, 2007

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