How we got here: Economic trends – energy

[Working backward from the year 2000 toward America’s beginnings.]

So much for the military course of the United States in the twentieth century. Now we need to return to the year 2000, and go over the same years once again, this time looking at economics.

Economic Trends

Militarily, the U.S. moved, in the twentieth century, from regional player to global colossus. Beginning again at the year 2000, looking at economics, we see a picture that (as always when we’re dealing with history) may be read many different ways.

Here is one reading: America’s economic performance in the 20th century is still impressive, but in some ways it peaked a couple decades after World War II ended, and then began to decline.

Maybe. But here is another reading: Economically, America in the 20th century reinvented itself successfully at least three times, and is probably in the process of doing so again.

Which way is most correct, only time will tell. Let’s look at the story.

At the end of the 20th century, several American industries that had been crucial to its earlier success were no longer viable. Take the steel industry. You could find a couple of modern steel mills, but mostly if you wanted steel or products made of steel, like ships, you had to turn to Asian manufacturers such as Korea. Take electronics, a much more modern  industry that America had pioneered. Electronic instruments and gadgets no longer were made in America. Even the iconic Apple computer had parts made  in China and other places overseas. In the 1980s, a fire in one of two factories on Taiwan that made silicon chips caused a crisis in the American computer industry. Even service jobs such as hotlines were being farmed out to lower-cost English-speaking countries such as India. A pessimist might ask, where is the future for an industrial economy that keeps losing its pre-eminence in basic industries?

Yet, at the same time, new industries were springing up that promised to replace those lost. In 1986 the world watched a two-person airplane circle the world in 10 days without landing and without refueling. Not everyone who kept track of the Voyager flight, though, noticed that it was designed to showcase the strength, durability, and light weight of new composite materials as a replacement for the aluminum skins airplanes had depended upon for half a century. And, in those same years, few noticed another development that promised to become a huge new industry: 3D printing. An optimist might ask, with new composite materials and 3D printing, who needs the old steel industry? It’s cheaper and easier to substitute new materials, and fabricate them in a new way, and import whatever steel we need for other uses.

Time will tell which way of seeing things is more correct. Chances are, it will turn out to be a mixture of both.

Energy

The energy-production situation, too, is a half-full or half-empty situation. The oil shocks of the 1970s and the intractable problems of nuclear safety and storage (both of which we will look at below) pose severe challenges to the country’s economic development and even sustainability. Yet alternative sources of energy abound and, at century’s end, are beginning to be successfully deployed overseas, as their manufacturing costs plummet and their efficiency increases. So, at century’s end, the country appears to be in a race between exhaustion of its domestic sources of energy (leading to increased dependence upon undependable foreign sources of oil) and development and deployment of alternative sources that will supplement and/or replace them.

Nuclear: In 1979, the nuclear plant at Three Mile Island, Pennsylvania, suffered an accident. The utility claimed that no radiation escaped. Maybe.  In any case it served as a wake-up call (which, of course, no one in authority responded to) that not only had the nuclear industry not found a way to clean up its waste; it was not as safe as it liked to pretend to be. Or course, seven years later, in the Ukraine area of the then-Soviet Union, the explosion at Chernobyl provided a much louder wake-up call, which of course no one in authority responded to, in this case because the Chernobyl reactor was of a different type than American reactors which were, of course, safe. (The fact that the Chernobyl reactor disaster resulted in the abandonment of a huge area in the middle of the Soviet Union’s most productive agricultural heartland was not seen as relevant by those promoting nuclear power in the United States. After all, the types of reactors were different, and American reactors were safe. The fact that some had been built on earthquake faults made no difference.) Still, despite all the pronouncements of safety, those pushing nuclear power found it harder to push. People balked.

Oil: in 1973 and again in 1979, the oil-producing countries of the Mideast flexed their economic power and were, perhaps, surprised to see just how powerful they were. In 1973 it was in protest against America’s support for Israel in its brief war with Egypt. In 1979, following the fall of the shah, it began as a protest of his being allowed into New York for medical treatment, and escalated. The Organization of Petroleum Exporting Countries (OPEC) included countries outside of the Mideast, of course, but that didn’t make any difference to their economic interests. Once the price of oil went up, it went up, and nobody was going to sell for any less than what they could get. (And, indeed, why should they? Isn’t that what everyone does? Isn’t that the law of supply and demand? But Americans watching gasoline and home-heating-oil prices skyrocket were not inclined to be reasonable about the question.)

And why was it that the country had become dependent on foreign oil? Because, for decades, we have followed a policy that might uncharitably be described as “drain America first.” Efforts at conservation and energy-efficiency were always regarded as somehow defeatist, as if America had a right to as much energy as it wanted, at whatever price it felt reasonable, regardless how much it wasted. You can’t waste forever. Sooner or later, you reap the consequences. In the late 1960s or early 1970s, domestic oil supply was no longer able to meet domestic demand.

If your supply no longer meets demand, you are at a major fork in the road. You either (1)increase your own supply (domestic drilling and production) or (2) decrease your demand (conservation combined with efficiency improvements combined with development of alternative energy sources) or (3) take steps to assure the supply of overseas oil, which of course means meddling with other governments.

No reason why a rational policy would choose only one of these, of course. But successive administrations (other than Jimmy Carter’s) took it for granted that only option number three was viable. The results were predictable and somehow struck people as surprising.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.