How would you spend $50 billion?
Last week I talked about how Warren Buffett got both the American credit rating, and the utility of gold very wrong.
This week, Warren Buffett has made a similarly provocative statement, but one I am more sympathetic to. From the New York Times:
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
While I agree that this is a fundamentally absurd situation, and that so-called “progressive” American taxation is now regressive, alas, the economics of the situation are nothing like as simple as Buffett makes out. Namely, if the system is rigged to favour the rich, then the system is rigged to favour the rich. Stating that fact doesn’t change the 20% youth unemployment rate, the record numbers of Americans claiming food stamps, and the simple reality that not enough jobs are being created to fill the supply of people graduating from school, college and being laid off. Tax reform will not directly address any of America’s problems with malfunctioning infrastructure, its dependence on Chinese imports, or its citizens’ addiction to debt: raising taxes on the rich might help pay down the deficit, but so too would cutting spending on wars and the military industrial complex. But while tax reform cannot directly solve these problems, Warren Buffett and his “progressive oligarch” friends can. How?
Job creation. Investment in infrastructure. Investment in young people. Look at the humungous of levels bank reserves. There is cash just sitting idly that could instead be channeled into real investment in jobs and infrastructure — the kind that Paul Krugman calls for, just without the government involvement (or the Alien invasion). No doubt government has its own role to play. But why run sheepishly into the arms of government when the private sector has the means and resources to solve many of the humanity’s challenges — and at a profit? So without further ado, here’s where I would invest my money ($50 billion), if I were Warren Buffet:
- Carbon-Scrubbing Trees:
While we don’t know exactly what effects climate change will have on Earth, we do know that keeping Earth’s carbon dioxide level as close to the pre-industrial baseline as possible is undoubtedly a good insurance policy. And doing so could undoubtedly create a lot of jobs. Carbon scrubbing trees allow us to do that by removing carbon dioxide from the air and releasing oxygen using a carbon dioxide removal process called “humidity swing.”
- Synthetic Oil
The biggest advantage of investing in technology and infrastructure that can remove carbon dioxide from the air? It means that we can continue pumping out carbon dioxide, but with a clear conscience. And there is technology that exists today — namely oil-excreting photosynthetic bacteria — that allows for the creation of synthetic oil, at a cost of just $20-30 a barrel. From Joule:
Free of the land and resource constraints that hinder biofuels, Joule will directly target fossil fuel replacement with unprecedented volumes of renewable diesel, at a fraction of the land use incurred by current methods. At full-scale production the company projects delivery of up to 15,000 gallons of diesel per acre annually, at costs as low as $20 per barrel equivalent including subsidies.
While solar energy may not in the short term be able to meet all of our energy needs, the solar energy hitting the earth exceeds the total energy consumed by humanity by a factor of over 20,000 times. More solar energy hits the world in a day, than we use in fifty years, at current rates. And it is about time we set about harnessing it. The Desertec project — and other such similar large-scale solar projects — invests not only in improving solar technology, but in developing the infrastructure to – for example — meet Europe and Africa’s energy needs by covering parts of the Sahara Desert — land with little other economic use — with solar panels.
- Social Media
Memo to the Pentagon: Want to spread democracy across the globe? What is more cost effective: trillions of war spending in Iraq, Afghanistan and Libya or millions of venture capital in Facebook and Twitter? And which did more to democratise the Middle East? In light of the Arab Spring only Karl Rove would say the military intervention was more cost effective.
- 3-D Printing
Want to manufacture less in China? Here’s how: take manufacturing out of the factory, and bring it into the home and small business. From Wikipedia:
Standard applications include design visualization, prototyping/CAD, metal casting, architecture, education, geospatial, healthcare and entertainment/retail. Other applications would include reconstructing fossils in paleontology, replicating ancient and priceless artifacts in archaeology, reconstructing bones and body parts in forensic pathology and reconstructing heavily damaged evidence acquired from crime scene investigations.
3D printing technology is currently being studied by biotechnology firms and academia for possible use in tissue engineering applications where organs and body parts are built using inkjet techniques. Layers of living cells are deposited onto a gel medium and slowly built up to form three dimensional structures. Several terms have been used to refer to this field of research: Organ printing, bio-printing, and computer-aided tissue engineering among others. 3D printing can produce a personalized hip replacement in one pass, with the ball permanently inside the socket, and even at current printing resolutions the unit will not require polishing.
The use of 3D scanning technologies allow the replication of real objects without the use of molding techniques, that in many cases can be more expensive, more difficult, or too invasive to be performed; particularly with precious or delicate cultural heritage artifacts where the direct contact of the molding substances could harm the surface of the original object.
What’s needed? More investment to bring the cost down, and create a new range of beautiful, standardised and transportable 3-D printers, that can do for 3-D printing what the PC did for computing.
- Space Mining
Concerned about resource scarcity? There’s plenty more up there. Last year, scientists confirmed that there was water on the moon. And there are metals and hydrocarbons abundant in asteroids. From Anthonares:
When planetary bodies form, the heat from their formation melts them and allows for planetoids of sufficient size to differentiate. Differentiation means that heavy elements sink to the core of the body while lighter elements remain on the surface. This is what happened on the Earth, which is why we have a metallic core. Since iron and nickel are nowhere near as heavy as some of the other metals, why don’t we have a lead and uranium core? Well, we do, kind of. But due to the nature of the iron and nickel nuclei, they are the last elements that are readily formed in the fusion in stellar cores. Heavier elements must all be formed in supernovae, thus they are far less abundant throughout the solar system. Likewise, metallic asteroids do possess copper, silver, gold, and all other such elements as well, though not in abundances anywhere near as large as those of their primary constituents.
If I can venture into the realm of speculation a bit, asteroid prospecting will be an important endeavour because somewhere exists an asteroid rich in copper, and another in silver or gold. But even if a “typical” M- or S-type asteroid is mined, significant quantities of all these metals will accumulate. These rarer metals will be vital to continued development on Earth and may be used to subsidize the extraction of iron and nickel that are, for now, plentiful on Earth. These metals would then be used for space infrastructure development. The trade revenue earned from sending back rare metals could then be used to purchase value-added goods such as electronics and health supplies. Perhaps the platinum group metals will be the catalyst (heh, heh) for profitable asteroid mining, but once we’ve paid the price to develop infrastructure there, we might find it far cheaper to extract nearly pure metals in space and send them back home.
I am barely scratching the surface here. To ensure the sustainability and viability of humanity on planet Earth into the 22nd Century and beyond, there is so much left to accomplish. Let’s just do it.