The Speculist

Late last month columnist Michael Ventura wrote a remarkable horror story about America’s future for the Austin Chronicle.

Apparently America is doomed because of rising oil prices. Nice of Ventura to let us know. Gives us a chance to plan for the whole mediocrity gig. Ventura’s article is well written, logical....and quite wrong. I invite you to read the whole thing and return here for the pep talk you’ll need after reading it.

Ventura has decided, with some relish it seems, that America will cease to be a superpower. I don’t disagree with his outline of our challenges. While his timetable seems accelerated, I don’t doubt that the price of petroleum is going to skyrocket in the coming years. Output has probably peaked, while our demand in this country continues to climb. And the colossus developing economies in China and India will soon be competing for a larger share of this resource.

Ventura’s logic fails in two respects. First, he is considering America’s challenges without also considering what we have going for us. Also, Ventura is working from the hypothesis that the U.S rose to power solely because of oil. By gobbling up this resource, this thinking is, the United States became a hyperpower. Of course petroleum did fuel our rise to dominance, but petroleum is a world resource. Our country was able to demand a lion’s share of this resource because we were already set up to succeed and other societies were set up to fail.

In 1998 Ralph Peters wrote, “National success is eccentric. But national failure is programmed and predictable.” He then outlined seven “failure factors” - the reasons why societies fail. They are:

• Restrictions on the free flow of information.

• The subjugation of women.

• Inability to accept responsibility for individual or collective failure.

• The extended family or clan as the basic unit of social organization. (rather than being able to hire the best person for the job, the job must go to never-do-well second cousin Herb)

• Domination by a restrictive religion.

• A low valuation of education, and

• Low prestige assigned to work.

A country will suffer if any of these factors become part of its culture. If the culture is able to self-correct, it will improve its chances for success - every time. But often societies are ideologically committed to a failure factor - as China is to the restriction of information and the Islamic world is to...all of these factors. Societies burdened with failure factors have an impossible time keeping pace with countries that aren't.

The failure factors are sliding scales. If we were to assign "10" as the perfect score for each category, the United States would not score 70. But historically we have valued liberty for individuals and accountability in leadership. It was thought that such a system would maximize individual happiness. It has certainly done that, but it has also produced a remarkably powerful country. Right makes might.

The United States is also the beneficiary of remarkable network strength. Of course there's the country itself. The United States is a huge free trade zone dominated by a single language and few barriers to commerce. Canada and Mexico were brought into this network with NAFTA. And soon, Central America will be brought into the economic network with CAFTA. And America's social and economic sphere of influence is global.

But let's assume that Ventura is right about petroleum slipping away. It won't be gone so much as prohibitively priced - priced to the point that we have to limit our energy consumption or find a new source of energy.

I’m betting on the new source of energy.

This is not just blind optimism. There’s accelerating development in every field of human knowledge. Moore’s law keeps delivering faster processors, which provide us the power to accomplish more intellectually in a shorter period of time than ever before.

Speaking of network strength, the Internet isn't going away. The Internet provides a way for knowledge workers to work anywhere - even in those suburbs and rural areas that Ventura thinks are going to become backwater ghettos. Telecommuting has been limited to a great extent because people are still expected to come into an office. Expectations may change with $6.00 per gallon gas.

The Internet also provides instant and universal access to the world of knowledge. It will be instrumental in helping scientists find a petroleum replacement.

What will replace petroleum? Hydrogen suffered a set-back recently when the National Academy of Engineering concluded that, if achievable, a hydrogen economy is “several decades” away.

"Several decades" has a way of becoming one decade if sufficient resources are devoted to the problem. Our mild flirtation with this research would become a committed love affair if petroleum prices skyrocket. But hydrogen isn't even my favorite energy alternative. Our country should explore the possibility of clean nuclear energy produced from helium-3.

UPDATE: Here's another energy idea.