Emails range from spam to how to get more information on topics to asking for solutions – the economy being the current leader. I’m flattered. The solutions for an economic recovery lie in the opportunities that solving current problems create. We have two obvious economic sectors in need of new innovations, credit and powering the energy using tools and equipment we need. Lets look into the one that matters here – energy and fuel use.

There are only the inputs of capital, products, labor and management to produce energy and fuels to sell. While many thoughts center on new, alternative, renewable and other labels to consider, more supply is a broad, deep and essentially uncountable range of possibilities without a firm certainty about which are the best, lowest cost or most sustainable ones. Thinking that government could or should pick which should get incentives is problematic at best and disastrous at worst. The odds are that government would choose things less advantageous than what the market will do. Its fully justified to support innovation, creativity, inventiveness even so far as assisting capital formation in pilot facilities across the widest possible range, but to go further is choosing the winner before the game is played.

What will address the economy and the need to add vitality is the huge array of things that use energy. Incentives for replacing these tools with more efficient ones would be a solid, long term and beneficial move by government. Many believe, daftly, that taxing gasoline, carbon or some other trick to drive up the energy cost will be a worthy solution. Nothing could be further from reality. Diverting people’s expenditures to ever more costly energy and fuel removes the money from being available to buy more efficient and conserving tools and equipment.  Surely the past year has made that clear.   It’s much better to have more work powered by less energy than less work powered by more energy.

How to get there? The sale and or ownership of low efficiency tools and equipment needs penalized heavily. Renewing registrations for autos, trucks, planes and other big fuel users need considered for increased costs of ownership. The idea that a new 40-MPG car pays the same annual registration fee as a similarly priced 15-MPG car is simply nuts. Renewal fees tend to go down over the life of cars, while the least inefficient ones should more sensibly go up. The idea is to replace them with much more efficient ones. The incentive could be to get out from under a crushing annual cost. The principle can work across much of the whole of the tools and equipment that people use from furnaces in homes, to electric motors in factories on to construction equipment – most everything but the smallest devices.

Incentives and penalties applied to tools and equipment directly answers the need for conserving and gaining efficiency. They also drive manufacturing, sales, services and investment purchases over inefficient consumption. They push savings over wasting both in cash and resources.

And its much much more fair. A tax on energy and fuels will fall hardest on those with the smaller incomes so pushing the recession or depression along deeper and longer. The trade in, second hand ownership and rush to competition will get the benefits to those people sooner if we as a society choose to upgrade our tools and equipment instead of a punitive and economically dumb energy and fuel taxes. It is worthwhile to be sure that the widest possible part of the society is enabled to participate in a better economy than to insure some part will be disadvantaged and set back for long periods of time.

Economic growth comes from change. So lets make some wise changes and get on with a growing economy again.


11 Comments so far

  1. Matt in NC on January 14, 2009 11:23 AM

    You would be rewarding the rich who buy new cars and penalizing the poor who cannot afford to. Plus – you are not taking into consideration the energy spent on construction of the car. For the older car – that energy is a sunk cost.

  2. MPA on January 14, 2010 8:35 PM

    Very nice information. Thanks for this.

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