In a previous blog post I suggested that the Academy Awards should introduce new award categories to liven things up and keep things fresh.
I realized there’s an additional category that should definitely be included, but it’s a minor challenge to articulate just what it is in only a few words!
The award should be given to the film that most elicits an empathetic sense of dread or doom. This is something that most people would usually feel in their stomach (sometimes called “gut-wrenching”). But it can encompass more, and perhaps even reach an indescribable dimension of negative feeling or negative sensation.
In this prospective category, you’d expect a slasher-type horror film to win, and maybe it usually would, but not always. The most recent film that comes to mind, and one that really excelled in this category, is Beyond The Gates.
So why dread and doom instead of happiness or levity, and what does any of this have to do with 7 senses?
First, apparently we have 6 senses, not 5. According to wikipedia, our 6th sense is actually vestibular, and it governs our sense of physical balance (equilibrioception).
So, if we have a sense of physical balance, might we also have a sense of life balance, or rather, sense when there is impending risk to life or well-being? I would certainly keep as an open question the idea that our physical body can sense very acute situations that threaten life or well-being, in ways that don’t correlate directly to the 6 basic senses.
Then again, maybe it’s all just fear and certain thought patterns. Either way, the prospective category would be a winner. The ability to affect an audience this way is a triumphant selling point for cinema. One might even argue that there are few aspects greater than this! So when you stop and think about it, it’s kind of strange that there’s little in the way of recognition for those who do it skillfully.
Locally we just ended our (first??) quarantine lockdown, and reflecting back on the government’s messaging, the messaging of its supporters, and maybe even the messaging of the masses, I thought an artistic rendition was in order.
Below is my very own inspirational quote poster based on the mash-up of official information we’ve been provided.
Among the things I’ll probably always remember was a trip to the post office early on in the (first??) lockdown. An older woman was waiting in the line that led to the post office lobby. She wasn’t wearing a mask, and also for reasons unknown her appearance wasn’t particularly composed. All of a sudden she started praying out loud – very out loud – addressing the prayer to Jesus and asking that no one come near her.
Not a single person went anywhere near the woman.
Perhaps it’s like they say, the Lord works in mysterious ways.
Things To Do With Cash When There Are Too Many Unknowns
Coronavirus-fueled uncertainty has swept the globe, leading to higher levels of volatility and chaos in the stock market.
If you have money in an IRA (or Roth IRA or 401 K) account, you probably know that there is a penalty for withdrawing it before a certain age. Additionally, if you actively manage the money in your IRA account, things have gotten a lot murkier in the past few weeks. It may not be clear where to allocate the money inside your IRA.
Banks offer their own CDs (FDIC-guaranteed) and money market accounts (not guaranteed), but once again, the money inside an IRA account is basically marooned – you can’t withdraw it to re-invest in bank CDs without the hefty withdrawal penalty.
I discovered there are actually ETFs (exchange-traded funds) that simulate money markets. The symbol MINT is one of them. There are others, and certainly do your own research. Broadly speaking, MINT basically ticks up a penny every day. It’s a tiny increase, with a tiny amount of volatility, but it’s extremely reliable (although not guaranteed), and it beats having cash sitting in your IRA account doing nothing.
Below is a snapshot of what the MINT fund currently invests in.
As you can see, there’s a mix of government bonds, private bonds, and bonds from overseas. Again, it’s basically a money market adapted into a tradable security that, for example, you can purchase inside your IRA account.
(In the days when individual trades cost $5+, this whole idea might never have made sense. Luckily, many of the big brokers have waived trading fees.)
Finally, I almost didn’t even post this because private bonds and foreign bonds are definitely susceptible to “black swan” type crises – like a pandemic! For example, let’s imagine Royal Caribbean issued a private bond and today the MINT fund foolishly purchased it, and then you purchased some shares of MINT. Let’s say COVID-19 leads to people not going on cruises, which leads to Royal Caribbean defaulting on its bond. That means MINT will not pay off its projected profits, and in a worst case scenario you could end up losing money. (And standard money market accounts provided by banks would, likewise, tend to have the same problem.)
Occasionally I feel the need to get something off my chest, and for some reason this topic has come to mind and it’s struck me with a great deal of clarity.
I have never, ever regretted not being an early adopter of something.
Whether it be technology, a fad, a trend, or something else, I invariably and intentionally wait until I see that it makes sense to use or adopt.
My personal opinion is I don’t feel the need to be a guinea pig that discovers and experiences all the problems, all the risk, and all the various wrinkles that need to be ironed out. I have never regretted this philosophy.
Moreover, I realized this would probably be a subject ripe for scientific research and publication. So I searched for “early adopter” on amazon.com and the top results included an ancient technical book dedicated to the niche software subject VoiceXML, and a song by that name performed by the artist “TRAKTOR”.
If those empty search results really do represent a dearth of study on the general subject of early adoption, then my bold prediction is that it’s just a matter of time because this subject is begging to be given a proper academic treatment.
Part of this academic treatment should definitely include higher-level analysis of what various creators and producers can do, given people’s different early adoption habits, as well as the fundamental dynamics of early adoption. For instance, how could a technology maker more intelligently reason about its operations, and more fully optimize its operations, once this specific dynamic is more perfectly understood and taken more conscientiously into account?
In most organizations, there’s going to be a tension between what’s been proven to work, and what’s worth experimenting with for the future. Last time I checked, facebook is a company that experiments a lot; it’s a core value at the company.
Of course, new initiatives aren’t always successful. I can remember a long time back when Monday Night Football selected comedian Dennis Miller to be a commentator. My recollection is that it was not a good idea at all. However, one certainly can’t fault Miller, and although the ABC network was perhaps too lax in screening this experiment beforehand, you can at least credit them for being willing to fail.
Virtually all organizations – no matter how ancient and stoic – have to eventually try something new and risk failure.
Moving along with a simple case study, I can’t really remember the last time I saw much or any of the Academy Awards, but in recent years I more or less remember the headlines surrounding the event. To be pretty general, there were calls for change regarding the award results.
Now, my gut feeling is whether or not the suggested changes were warranted, the Academy Awards was like a sitting duck. It’s perceived lack of experimentation, and more generally any sense of movement or change, inadvertently created a curious vulnerability for it at that point in time.
This is the curious vulnerability: It didn’t really matter if it made sense for the Academy Awards to experiment radically. It also didn’t really matter if the changes demanded by external forces were warranted. Today, by default, an organization is expected to experiment, and more generally, exude a sense of movement or changing – irrespective of what that movement or change is!Organizations that don’t do this are automatically, implicitly, and perhaps subconsciously, considered faulty, if not guilty!
Yes, it seems as though your organization has to propagate a sense of movement or change, even if completely vague, just for the sake of producing that sensation. We’re now several generations past the “MTV generation”, so perhaps it shouldn’t come as too much of a surprise.
In a motto: If you don’t control the conversation about “change” in your organization, the odds are much higher that someone else will.
With respect to the Academy Awards, I think the experimentation that they’d need to embark on to effect that general sense of change would have to go beyond who is the host. The experimentation will have to affect the fundamental nature of the event. For instance, award categories. Perhaps add some new experimental categories, and try them out in the run-up to the actual show. Perhaps include some in the time slot where they kind of just show actors walking into the building. And perhaps others in the days and weeks preceding the actual event.
And to that end, I’ve had musings for some time that are somewhat obscure, but nevertheless interesting and perhaps worthy of some kind of experimentation one day. They probably also cater more to cinephiles than the average consumer, and that, specifically, could be a great part of the experimentation. In my opinion, they’re legitimate categories in their own right.
1. New Experimental Category: Highest Ratio of Trailer Quality to Motion Picture Quality
In other words, it was an incredible trailer for an awful movie.
Of course, it wasn’t necessarily an awful movie. In fact, my current all-time pick for this category is Safe, which was not bad at all.
The bottom line is trailer composition is an art that’s currently not recognized in any way. The producer for the trailer may have the lamest film of all time to work with, but his job is to take that, and from it create the most compelling 60-second preview possible. That is an art!
To drive this home further, Hollywood is approaching $50 billion a year in revenue, and this is easily the most unheralded facet of that cash cow, even though it’s one of the absolute most critical trades. Imagine a Hollywood where all the films were the same, but all the trailers were absolutely awful. I would envision many billions of dollars in lost revenue.
2. New Experimental Category: Greatest Motion Picture Over-Performance
In other words, you saw the poster, you saw the trailer, you knew about the cast, you knew who the director was, and… you were completely shocked at how good the film was.
Similar to before, it doesn’t necessarily mean all those aforementioned ingredients were of low quality. And of course it doesn’t necessarily mean the film is that great.
To drive home the above points, the best film I’ve seen from the recent past is The Dark Knight. However, it wouldn’t be a contender because, although it actually did over-perform, I expected a very high level of quality to begin with.
3. New Experimental Category: Best Scene From A Motion Picture
This is self explanatory, and there are too many possibilities to list right here.
I also think this is a non-cinephile category that could captivate the average consumer.
4. New Experimental Category: Moodiest Motion Picture Film
Wow, now this is a niche experimental category!
I have no idea how to quantify the moodiness of a film, or articulate what this category even really means, but you know it when you see it.
One thing I’m pretty sure of is music tends to play a critical role. That said, this isn’t Best Motion Picture Score or Best Motion Picture Soundtrack.
For me, the film that really stands out is the mostly-unknown 1996 Spanish film by Carlos Saura, Taxi.
Fittingly, the soundtrack featured cult band Mano Negra, which was noteworthy for its very high level of experimentation. Numerous multilingual tracks from the the band’s relevant album Casa Babylon have a very unconventional and original sound, and are worth a listen.
Equally worthy of consideration, with an equally moody score, soundtrack, visuals, and writing, is Yimou Zhang’s 1995 film, Shanghai Triad.
“Fanedits” are one of the newer trends in cinema. It’s when amateurs attempt to edit a film, in an attempt to achieve what they believe is perfection. Their legality is sketchy as is their typical distribution. I encountered the strangest fanedit by accident.
I had received a bargain-bin DVD copy of Pearl Harbor. Since I had never seen it, I eventually decided to view the DVD. It was a 2-disc set, but one of the discs was missing. I figured it must have been the special features.
I was very impressed with the film, instantly captivated by a very interesting cold opening, intrigued by the chosen timeline for the film, and the general pacing and structure felt very, very different and definitely refreshing! I didn’t realize the disc clearly said “Disc 2”, and I was in fact watching the second half of the film like an idiot.
(Eventually, I finally saw the first half of the three-hour film.)
My final analysis is that Pearl-Harbor-the-DVD-Part-2 can actually be viewed as a self-contained film. As for references to things in the first half of the film, they generally turn out to be better when you imagine what happened, or speculate what they might be talking about. Of course, due to time constraints, it’s a common occurrence in films anyway – so in this case you don’t even realize there’s something strange going on.
Pearl-Harbor-the-DVD-Part-2 is better than Pearl-Harbor-the-DVD-Part-1 .
More surprisingly, it’s also better than Pearl-Harbor-the-DVD-Part-1-and-Part-2!
I don’t claim it’s perfect, but I do claim it’s better. Much better, in fact.
Throw away the first disc, and you have the ultimate Pearl Harbor fanedit. If you’ve never seen Pearl Harbor, you’re the next-to-perfect test subject. (In this case the perfect test subject would be completely unaware of what’s going on.) Watch the second half of the film and see for yourself.
Can something more useful than a random film review be gleaned from this? Yes, I believe so. Sometimes, superior quality and solutions can be found in the strangest places. Never close the door on brainstorming methods or approaches. You never know what you’ll find. And sometimes a lack of awareness can open the mind, when otherwise it might be gridlocked with conventional thinking.
I once joked that there must be a Japanese word somewhere for the visceral enjoyment of seeing your current political party torn to shreds after performing pitifully in office. With the general poll numbers that we’re seeing, if there is such a word I think that word might soon become a loan word to the English language.
In a previous blog post, I stated that solutions to address the national debt can only be deemed credible if they actually have a reasonable chance of being accepted by both major parties. In the days since that blog post, just as in the days before it, we have seen what we always see: politicians basically talking past each other, touting pet policy ideas that are or will be dead on arrival.
But what’s truly remarkable is the number of credible solutions you can actually come up with off the top of your head, without even putting that much effort into it, and how our so-called leaders in Washington somehow can’t operate similarly.
So without further ado, here are my top 5 government optimizations that are indeed credible national debt solutions. I will list them in order of increasing impactfulness.
Scrap the televised State of the Union. This now-painfully-outdated requirement in the Constitution has slowly mutated into the absolute biggest waste of time and money in America. A perfunctory written report from the President to Congress would satisfy the requirement. It’s time to trim the fat!
Create a national workforce administration to intelligently utilize prison labor, with the goal of offloading government projects and government work to prison inmates. This is a win/win. Prisoners represent a large, untapped labor pool. For each individual prisoner, it would provide a positive, constructive purpose; a way to create a bigger, better résumé while serving their sentence; and presumably a merit system that could reduce their sentence. For the federal government, it provides cheap labor to throw at federal projects that would otherwise be more expensive. They could also accept bids from state and local governments for use of the labor, and the state and local governments would benefit in the same manner. The same type of workforce administration could possibly be devised for homeless U.S. citizens, and it might be wise to keeps these two administrations tightly coupled; inherent differences would probably prevent them from being merged completely.
Create a national workforce administration to intelligently utilize military personnel, with the goal of offloading government projects and government work to military personnel. Same as solution #2 above, but with the following specific differences. In order to receive college benefits and any other negotiated enlistment benefits, military recruits must perform 3 months in the workforce service on the back end of their military service. The requirement gets waived if the individual is seriously injured, has served in an extensive number of active tours, has his enlistment lengthened, or satisfies the 3-month requirement during the main enlistment time frame. The idea behind that last clause is that if soldiers are stationed somewhere (e.g. Germany or the Middle East), and it’s deemed that the peace-time situation does not require a full presence at all times, then some soldiers can be cycled out to perform some or all of their workforce duty within their regular enlistment period. During times of peace, this should provide a major windfall for this prospective workforce; in times of war, the impact wouldn’t be as great and might be zero.
Monetize state assets via advertising. Yes, some things like the front of the White House should be off limits. But other things – like the exterior sides and certain interiors of a Navy destroyer – must be open for discussion. Money has to be balanced with dignity and function. Sports stadiums figured it out decades ago. Why is our government behind the curve?
Create a National Monument of Debt Philanthropists and Heroes. If I can walk into a hospital and see the silver, gold, and platinum donors for some pet project at that hospital, why can’t a find a way to donate to solve the federal debt problem? If I can visit monuments dedicated to war heroes, why can’t we create a monument dedicated to those citizens who might help us avert a financial defeat? If we created a simple mechanism by which corporate, group, individual, and anonymous donors could provide tax-deductible donations to be used only for national debt obligations, and also provided visibility and status for the greatest among those philanthropists, those donors will eventually donate a significant amount of money.
I think this last one is interesting to brainstorm a little. You want micro-donations, and you also want mega-donations. So create a monument space catering to both donation sizes.
For micro-donations, you have an enormous, next-generation TitanTron-esque digital display. In front of the TitanTron, you have a sprawling landscape for picnics and BBQs. People who submit micro-donations online can submit their name. For larger donations, they can upload additional text (e.g. quotes, shout outs, etc). Perhaps a picture for larger donations, and possibly even video for the largest micro-donations. Video content above a certain time length requires an additional donation. And for a few dollars more, they can have their content displayed completely ad-free. In return, they receive access-code/log-in information that can be used to always determine the next day and time that their content will scroll across the Individual HeroesTitanTron. Then, you can make a trip out of it – vaguely like the Mecca pilgrimage. Take your family and friends to Washington D.C., see the standard attractions, and then have a BBQ picnic just in time to see and take selfies with your Individual Hero name/picture/video for 10 seconds or so, of course with important Washington D.C. buildings and monuments perfectly framed in the background. Artists can bid to have their music played when non-audio content is displayed; of course free music can also be used. If the people-watching aspect of the TitanTron content ever took on a life of its own and started drawing big enough crowds, you could even charge a small fee to enter the park, and of course add a gift shop. (People who are scheduled to have their content displayed on that day always get in free.) And of course, you can brainstorm any number of secondary uses for this enormous, next-generation display during very special holidays and similar events.
Then, behind and to the sides of the micro-donations TitanTron, you have the No Limit Donors park. Unlike traditional plaque-based donation systems, mega-donors will have a plaque sized to their donation size, most likely snapped to various integer values. For example, you could set it so that if someone somehow donated $20 trillion, a permanent, indelible No Limit Donor physical plaque would be built for him that is half a mile tall. Based on a calculation like that, you just scale down from there. And you aim to have a system where a good-sized rectangular square is what comes up the most often. What’s important is that you create an incentive to have the biggest.
Americans donate almost a half a trillion dollars a year, and the bottom line is the United States government is not competing for any of those dollars! If curing Cancer is worthwhile, then so is averting an grave nation-wide meltdown, which could easily lead to severe worldwide chaos. Offering personalized immortality on what would be the nation’s biggest stage is a very compelling value proposition.
If you’ve been vaguely aware of recent oil news, you may have heard conspiracy ideas and theories regarding the current administration’s dealings with Russia and OPEC (the oil cartel dominated by the Middle East), and how our administration is and may be attempting to coerce them into increasing oil output – thus lowering the price of oil, and very indirectly, the price of gasoline at the gas station.
Should we be conspiring with Russia and OPEC on oil matters?
That’s right, thanks to shale and fracking, the U.S. is set to produce more oil than anyone else! In an increasingly competitive world that buys, for example, fewer American automobiles, oil is now one of America’s top products, and it could easily become America’s flagship, top-selling product. What do you do when you have the most of something, and that something is extremely valuable and extremely finite? Well, what you don’t do is attempt to sabotage the price of that commodity, in what can only be characterized as the laziest, least-thought-out, most off-the-cuff policy in recent memory.
Through intelligent taxation, and intelligent supply cuts† coordinated with Russia and OPEC, we can charge the rest of the world much, much more for our extremely valuable, extremely finite oil reserves, and in doing so, balance our respective budgets, transform our yearly deficits into yearly surpluses, and ultimately, at some point in the future, we can have some hope of paying off the U.S. national debt.‡ (Moreover, as oil profitability increases, the United States’ transition to becoming a net oil exporter happens faster, becomes more pronounced, and naturally, becomes more profitable. This is the textbook definition of a “virtuous feedback cycle”, and in this case, it’s very, very virtuous. Conversely, in the case of low oil prices, we are projected to always be a net oil importer; i.e. be energy dependent on foreign nations that are sometimes hostile. This phenomenon is due to many variables, and the easiest one to remember is that our particular oil rigs have to shut down when the price of oil is too low; if oil is more profitable, they can afford to look for more of it, and perhaps build a new oil rig close to your property, at which point you and your neighbors will start receiving royalties.)
My back-of-the-envelope estimate for the amount of profit¶ lost, over 30 years, when comparing the low-oil-price scenario to the high-oil-price scenario is $20 trillion ($20,000,000,000,000) – roughly our current national debt. I’m not an expert, and I certainly encourage you to come up with your own estimate.
Once our oil reserves are depleted§, that’s it! When it’s gone, it’s truly gone. We’ll never have it again, and we’ll never be able to sell it again! So why are we trying to deplete this trillion-dollar resource at the lowest possible prices!?
You can bet your life that once our oil reserves are finally depleted, but our gigantic debt and deficit remain, fingers will be pointed and limitless questions will be asked about why we didn’t make America stronger by taking full advantage of our potential oil wealth. The downhearted headlines will be predictable: “Squandered Oil Wealth Fades Away In Rear View Mirror As America Mired In Hazardous Record Debt”. (In fact, this is actually one of the main complaints that radical terrorists in Saudi Arabia have always had with their government. Everyone in Saudi Arabia knows there is immense oil wealth under the sand, but yet their country has perpetually carried oversized deficits and debts. For some reason they view this as incomprehensible!… And continuing yet even further with that side topic, entire books could be written on how terrorist organizations, and specifically terrorist recruitment, feed off of poverty and weakened economies. Meanwhile, to exaggerate slightly, Al-Qaeda’s cost for the 9/11 attacks was 10 or 20 plane tickets and a value pack of box cutters. With similar expenses for their other attacks, it becomes clear that, just as it is with every other oil issue, the solution does not exist at the lower end of oil prices.)
There are two things you can know with absolute certainty. One is that no other country will voluntarily pay down our national debt for us. The other is that they will all fervently – and, eventually, some of them violently – demand that we pay them when their American treasury bonds mature. We will need to find extraordinary sources of income‖, and charging foreign nations a higher (and arguably more fair) price for our precious natural resources is one of the few ways to achieve that goal.
Meanwhile, we are being sold a ludicrous self-sabotage strategy as an ingenious, indirect way of lowering gasoline prices by dimes, nickels, and pennies. This line of thinking hits every possible dead end, signaling that, as suggested above, it hasn’t actually been thought out. Feel free to follow along in the next four paragraphs if you’d like to see for yourself.
First, the voters who could theoretically be “bribed” by this Republican administration’s scheme are obviously lower-income citizens. Unfortunately, these Americans spend all their time making ends meet. They don’t have much time to keep up with current events, much less politicians. More to the point, they don’t vote, don’t care about voting, don’t want to vote, and have decided at some point that voting won’t improve their lives in any tangible way – at least not enough to make voting worth their time.
On the flip side of that coin, you have low-income citizens that do make the effort to vote. And these are 99.9999999% institutional Democrat voters.Registered Democrats and people who have decided in the past that what makes sense for them is to vote Democrat. These voters already know how they’re going to vote, and are not going to be swayed by a modest change in gasoline prices. (In fact, the modest change in gasoline prices will ultimately amount to little more than anecdotal water cooler talk.)
The last segment of low-income voters, who actually vote, but might not vote Democrat, are habitual Democrat voters who are disaffected. This demographic will defect or not defect based on the president’s many other grandiose policies※ – not the price of gasoline. (Similarly, the president was propelled into office by these grandiose ideas and policies – not the price of gasoline.) In other words, even within this ultra-ultra-low percentage, inconsequential voting bloc, it will still not make any tangible difference!
Finally, we have countless “tax credit” systems and schemes embedded into our local, state, and federal taxes. These tax credits are everywhere, and are used for everything. I’m being extremely sarcastic when I now ask you to brace yourselves and try to follow along: We simply take the enormous oil profits, and then give a small fraction of those profits back to citizens as a “gasoline credit” when they pay their taxes, or even as a yearly check (similar to the George W. Bush rebate checks). You are charging the rest of the world a much higher price for your commodity, and then using some of those profits to subsidize gasoline purchases made inside America. Not exactly rocket science.₡
In this specific case, one might speculate that our president may be more infatuated with the idea of being a populist, and the idea of hatching a hard-boiled, seemingly-scuzzy diplomatic deal to achieve some kind of indirect, minor populist outcome, than actually achieving tangible national goals that are much more significant, much more populist, and much less complicated. (Not to mention, much more “America First”. Why is the president promoting simulated “tax cuts” for the rest of the world, paid for by lost U.S. oil wealth? From now on, when you hear the words “oil price” and “the world” in the same statement, you can correctly translate that into a receipt indicating much money America received in exchange for its extremely finite oil. “High” means America tried everything possible, and we charged foreign nations the most we possibly could. “Low” means America got very little for it; basically a yard sale for our natural resources. Similarly, when you hear someone calling for foreign nations to produce more oil, that is correctly translated as increased competition for American oil exports.)
Why are we attempting to sabotage the price of one of our most valuable, most finite commodities? And attempting to do so at a very unique time when we have the largest amount of that commodity? This is not dominance. This is a major violation of our business, economic, and national interests.
† This would require a new regulatory agency to coordinate American supply cuts in a meaningful way that makes sense. The United States is a free market, except when we’re not. For instance, it’s illegal to have a powerful domestic monopoly, and our military industrial complex can’t sell weapons to North Korea. And the list goes on an on. When there’s a compelling reason for state intervention or guidance, the United States does not hesitate to act and make the necessary adjustments. The advent of America becoming a major oil exporter in a trillion dollar market is clearly way beyond the threshold that is required. It clearly makes sense to take the necessary steps that will benefit America and all American oil companies, collectively. Indeed, this is the very reason OPEC was formed. Oil exporting nations realized it made no sense to fight each other tooth and nail in the marketplace and in the process make very little profit. If OPEC can figure that out, I don’t see why we can’t.
‡ As it stands, America shows no credible interest in becoming financially solvent, and we pay off American treasury bonds by selling more American treasury bonds. Therefore, an impending corollary to the issue of our national debt, is the issue of who exactly is going to keep purchasing our American treasury bonds – effectively financing our existing national debt – if we cannot or will not show initiative – any initiative whatsoever – to become financially solvent. If America acts like a deadbeat consumer, then other countries will stop financing our national debt for us. The national debt is our national credit card. You can’t keep running up debt on your credit card without demonstrating to your lenders a credible plan for how you will become financially solvent; otherwise, they eventually cut you off, and if you then default, they send in debt collectors.
¶ Generally speaking, profit equals revenue minus costs, and as you’d expect, that’s the value that’s being estimated. However, regardless of how much it costs to produce a single barrel of oil, a healthy part of those costs are cycled back into the economy. Whether it’s more steel being purchased, or more oil rig workers being employed, there are maybe a dozen industries that get “put to work” so that a barrel of oil can be produced. Said differently, the total price of a barrel of oil, and certainly each barrel that is exported abroad for sale, is as close to “pure profit” as you will find in the American economy.
§ There are many competing models that estimate when oil will run out. When it’s your well being on the line, it makes sense to be conservative and assume oil will run out sooner rather than later. However, it actually doesn’t matter. From America’s point of view, the same financial end result will occur once the world has transitioned to renewable energy, and this transition is already in progress. Either way, we will no longer be able to sell this natural resource for significant profit; the window of opportunity is right now.
‖ Hint: Since no interest group is willing to give up its special project(s) or operation(s), the solution, realistically, is to find new, extraordinary sources of income, hopefully matched with improved efficiencies in existing projects and operations.
※ Taking a look at just one of these huge, sweeping policies, we are now in the middle of a bitter trade war with China. Superficially it’s over legitimate trade disputes, but under the surface, it’s also about confronting a strategic competitor. (My only opinion on the matter is that we should either have the trade war, or not have it. Having a muddled, implication-less skirmish makes little sense to me.) And so, what I do not understand is why, in the middle of this huge, strategic confrontation with China, this anti-China administration is simultaneously angling to have our extremely precious oil practically given away for free to China – allowing them to continue development at breakneck speeds, on the cheap, thanks to us?… I can only refer back to the original thesis for this blog post.
₡ Not surprisingly, this is exactly what Saudi Arabia does. Since they’re a major oil exporter, they don’t sabotage their own oil industry in order to shave cents off the price of internal gasoline usage. Instead, for that particular objective, they simply set the price of gasoline inside Saudi Arabia – and in the past it’s been extremely cheap. In our case, I suspect a rebate or tax credit system is much more workable – funded by taxation on oil profits above a certain baseline. Although it’s an extraordinary measure aimed at bringing down the price of American gasoline, it’s no less extraordinary than the haphazard, fly-by-the-seat-of-your-pants self-sabotage of America’s energy industry. If we believe the price of American gasoline is that important, then by all means, we can afford to take extraordinary measures, but let’s make sure they actually make sense.