Documente Academic
Documente Profesional
Documente Cultură
Ocean thermal energy conversion addresses the threats to naval operations and the
security stressors of sea level rise and weather Admiral Locklear identifies by helping to reduce
thermal expansion of the oceans and the movement of heat towards the poles and by sapping the
energy of cyclonic circulations. Since 2009, the U.S. Naval Facilities Engineering
Command has awarded Lockheed Martin $12.5 million to develop critical OTEC
system components and advance the design for an OTEC pilot plant, an essential step in
developing large-scale utility plants. In the humble opinion of this writer, this is an asymmetrically low
response to the threat which can be mitigated by massive deployment of OTEC, which
in turn has the potential to produce nearly twice the output from current primary energy sources. The cost and environmental
drawbacks of conventional OTEC are overcome by using a heat pipe, as much as 1/10th the size of a conventional cold water pipe,
which transfers heat by circulating the working fluid in a closed loop between the hot and cold reservoirs. The crushing problem
associated with circulating a low pressure gas within a small pipe surrounded by high pressure is addressed by a coiled and
pressurized counter-current heat flow system that recaptures the latent heat of condensation of the working fluid and returns it to
With OTEC the navy can become energy self-sufficient in its own
domain and can be relieved of a heavy burden in the Middle East. A win for the
navy. A win for the planet.
the surface, as shown below.
And, the Navy is already developing OTEC they have a pilot plant in
production
Defense News 2k9
(Electricity From the Sea, pg online @
http://edelalon.com/blog/2009/06/electricity-from-the-sea/ //um-ef)
Heat from the tropical sun warms the ocean surface off Guam to an inviting 80 degrees
Fahrenheit. But 3,000 feet below, the ocean remains a bone-chilling 40 degrees. That
temperature difference promises to provide the U.S. Navy with a limitless supply of electricity.
Good thing, too the U.S. military plans to move 8,000 Marines and 17,000 family members to
Guam from Okinawa, Japan, by 2014. But these new residents and the expanded military
installations are likely to overwhelm Guams power grid, which today generates all of its
electricity from imported oil. The Navy thinks ocean thermal energy conversion may be the
answer to Guams future electricity needs and Diego Garcias, Kwajaleins and Hawaiis, too.
Turning the oceans temperature differentials into electricity is not a new idea. The concept was
developed in 1881, and the first functioning ocean thermal energy conversion (OTEC) power
plant was built in Cuba in 1930. But the economics and politics of oil and OTEC have never
aligned quite right for the thermal technology to take off until, possibly, now. With oil prices
uncertain, supplies limited and demand growing, a power plant that runs on warm and cold
water has fresh appeal. The concept sounds relatively simple. Surface water warmed by the sun
is pumped through a heat exchanger, where it heats a fluid with a very low boiling point.
Ammonia works, as do fluorinated carbons and some hydrocarbons. The fluid expands rapidly
as it vaporizes, and pressure from the expanding vapor turns a turbine that turns a generator
that produces electricity. Once it passes through the turbine, the vapor is piped into a condenser,
where cold water from deep in the ocean chills it, returning it to its liquid state. The liquid is
then pumped back to the warm water heat exchanger to repeat the cycle. Thats it. Theres no
fuel other than temperature differentials. Theres no pollution. And OTEC offers an alternative
to dependence on foreign oil. Interest in OTEC was high in the early 1970s, when an Arab oil
embargo against the United States drove oil prices up and made supplies scarce. But when the
embargo ended in 1974, interest in OTEC and other alternative energy sources waned. Startup
Costs Interest is reviving today, but ocean thermal energy conversion still faces some big
hurdles. One is initial cost. An OTEC plant that generates 100 to 200 megawatts of electricity
could produce power at a cost thats competitive with imported oil, said Robert Varley, who
manages OTEC business ventures for Lockheed Martin. Thats enough electricity for 25,000 to
50,000 homes. Such a plant would cost $1.5 billion a lot more than anyone so far has been
willing to invest, Varley said. And before building a 100-megawatt plant, it would be smart to
build a smaller plant say, 10 megawatts to prove the concept and answer engineering
questions, he said. That, too, has been prohibitively expensive. You cant recoup the cost of a
10-megawatt plant because it produces too little power to be profitable, Varley said. So for
decades, ocean thermal energy conversion has remained an intriguing on-again, off-again
science experiment. But that, too, may be changing. In April, the U.S. Navy
announced plans to award a contract late this year for OTEC plant designs to be
used at its base on Diego Garcia in the Indian Ocean and at other Navy locations.
And in February, the Navy began feasibility studies for an OTEC plant to meet a significant
amount of the current and future electrical power needs for Guam. The Navy wants plants that
can also produce fresh drinking water. Thats a slightly different design from the OTEC plant
described above. That first plan is a closed-cycle generator, so-called because the fluid that is
converted into vapor and back into liquid is used over and over again and never leaves the
system. The Navy favors an open-cycle system in which warm seawater is injected into a lowpressure chamber. There, because of the low pressure, a portion of the water flashes into steam,
which drives a turbine to generate electricity. When it turns into steam, the seawater leaves its
salt behind, and when it leaves the turbine, it can be condensed into fresh water for drinking,
irrigation and other uses. In 1993, an experimental land-based open-cycle OTEC plant in Hawaii
was able to produce 50 kilowatts of net power, according to the U.S. Energy Department. Net
power is the total power produced minus the electricity thats needed to keep the power plant
running. The pumps that OTEC plants use to draw cold water up from the deep require a lot of
electricity. In 1979, for instance, a 50-kilowatt OTEC plant mounted on a Navy barge moored off
Hawaii produced 52 kilowatts of electricity, but consumed all but 15 kilowatts. Technical
Challenges Although the science is sound, there remain some technical challenges to building a
large OTEC power plant. One is building a 3,000-foot-long, large-diameter, cold-water pipe that
can withstand the ocean environment. Lockheed is working under a $1.2 million contract with
the Energy Department to build prototype pipes out of fiberglass and composite materials.
From an engineering standpoint, its doable, Varley said. The actual metric is how cheap can
we build it. Passing electrical current through water breaks the water molecules into hydrogen
and oxygen, which are then captured. Hydrogen can be used as a fuel or it can be combined with
nitrogen from the air to make ammonia. Ammonia is also a fuel it has been used to power
buses and rocket planes and has a plethora of industrial purposes.
Politics
1NC
OTEC is unpopular in Congress environmentalists, costs, and
bureaucracy link alone turns investment
Becca Friedman, Doctoral Student, Department of Government at Georgetown
University, formerly Research Associate at Council on Foreign Relations Examining
the Future of Ocean Thermal Energy Conversion, Harvard Political Review, 32014 , http://www.oceanenergycouncil.com/index.php/OTEC-News/Examining-thefuture-of-Ocean-Thermal-Energy-Conversion.html DA: 6/5/14
Although it may seem like an environmentalists fantasy, experts in oceanic energy contend that the technology to
provide a truly infinite source of power to the United States already exists in the form of Ocean Thermal Energy
a lack of
governmental support and the need for risky capital investment have stalled OTEC in its
Conversion (OTEC). Despite enthusiastic projections and promising prototypes, however,
research and development phase. Regardless, oceanic energy experts have high hopes. Dr. Joseph Huang, Senior
Scientist at the National Oceanic and Atmospheric Administration and former leader of a Department of Energy
team on oceanic energy, told the HPR, If we can use one percent of the energy [generated by OTEC] for electricity
and other things, the potential is so big. It is more than 100 to 1000 times more than the current consumption of
worldwide energy. The potential is huge. There is not any other renewable energy that can compare with OTEC.
The Science of OTEC French physicist George Claude first explored the science of OTEC in the early twentieth
century, and he built an experimental design in 1929. Unfortunately for Claude, the high maintenance needed for
an OTEC plant, especially given the frequency of storms in tropical ocean climates, caused him to abandon the
project. Nevertheless, his work demonstrated that the difference in temperature between the surface layer and the
depths of the ocean was enough to generate power, using the warmer water as the heat source and the cooler
water as a heat sink. OTEC takes warm water and pressurizes it so that it becomes steam, then uses the steam to
power a turbine which creates power, and completes the cycle by using the cold water to return the steam to its
liquid state. Huge Capital, Huge Risks Despite the sound science, a fully functioning OTEC prototype has yet to be
developed. The high costs of building even a model pose the main barrier . Although
piecemeal experiments have proven the effectiveness of the individual components, a large-scale plant has never
been built. Luis Vega of the Pacific International Center for High Technology Research estimated in an OTEC
summary presentation that a commercial-size five-megawatt OTEC plant could cost from 80 to 100 million dollars
over five years. According to Terry Penney, the Technology Manager at the National Renewable Energy Laboratory,
the combination of cost and risk is OTECs main liability. Weve talked to inventors and other constituents over the
years, and its still a matter of huge capital investment and a huge risk, and there are many [alternate forms of
energy] that are less risky that could produce power with the same certainty, Penney told the HPR. Moreover,
OTEC is highly vulnerable to the elements in the marine environment. Big storms or a hurricane like Katrina could
completely disrupt energy production by mangling the OTEC plants. Were a country completely dependent on
oceanic energy, severe weather could be debilitating. In addition, there is a risk that the salt water surrounding an
OTEC plant would cause the machinery to rust or corrode or fill up with seaweed or mud, according to a
National Renewable Energy Laboratory spokesman.
OTECs development. According to Penney, people do not want to see OTEC plants when they look at the
ocean. When they see a disruption of the pristine marine landscape , they think pollution.
Given the risks, costs, and uncertain popularity of OTEC, it seems unlikely that
federal support for OTEC is forthcoming. Jim Anderson, co-founder of Sea Solar Power Inc., a
company specializing in OTEC technology, told the HPR, Years ago in the 80s, there was a small
[governmental] program for OTEC and it was abandoned That philosophy has carried
forth to this day. There are a few people in the Department of Energy who have blocked government funding
for this. Its not the Democrats, not the Republicans. Its a bureaucratic issue. OTEC is
not completely off the governments radar, however. This past year, for the first time in a decade, Congress
debated reviving the oceanic energy program in the energy bill, although the
proposal was ultimately defeated. OTEC even enjoys some support on a state level. Hawaii s National
Energy Laboratory, for example, conducts OTEC research around the islands. For now, though, American interests in
OTEC promise to remain largely academic. The Naval Research Academy and Oregon State University are
conducting research programs off the coasts of Oahu and Oregon , respectively.
2NC
Costs PC Dems oppose
PGB 8 (Politics & Government Business, Blunt: Congress Now the Only Obstacle
Between American People and Abundant, Affordable and Homegrown Energy, 7-28,
Lexis)
House Republican Whip Roy Blunt (Mo.) issued the following statement today ahead of the president's expected
announcement that he will lift an 18-year old executive ban on responsible energy exploration along our nation's
Outer Continental Shelf. The decision leaves Congress as the last remaining hurdle to producing billions of barrels of
American oil -- and trillions of cubic feet of American natural gas -- for the American people. " With
the
decision today to lift the ban on the responsible development of America's deep-ocean
energy, only one obstacle remains between the American people and accessing the abundant
reserves of homegrown energy that are rightfully theirs: Democrats in Washington, D.C. "Unfortunately,
president's
reports indicate the only energy-related legislation we'll see this week is a bill to 'unlock' an energy field we've
already been exploring for 25 years, along with an effort to advance the once-failed, and thoroughly discredited
'Use It or Lose It' language. Needless to say, neither plan will help the millions of American families struggling in a
world of $4 gas, $150 oil, and prohibitively high electricity rates. "Back in 1990 when this executive ban was first
established, oil sold for $18 and $1.20 could get you a gallon of gas just about anywhere in the country. Almost a
nation's energy outlook has changed more than anyone could've predicted back
but reflexive Democratic arguments against responsible, homegrown energy
production have not.
generation later, our
then -
OTEC unpopular---NIMBYism
OEC 14 (03/14) http://www.oceanenergycouncil.com/examining-future-oceanthermal-energy-conversion/Non-profit organization advocating the development and
implementation of ocean renewable energy, articles published through review of
various studies/artciles,
Even environmentalists have impeded OTECs development. According to Penney,
people do not want to see OTEC plants when they look at the ocean. When they see
a disruption of the pristine marine landscape, they think pollution . Given the risks,
costs, and uncertain popularity of OTEC, it seems unlikely that federal support for OTEC
is forthcoming. Jim Anderson, co-founder of Sea Solar Power Inc., a company specializing in OTEC
technology, told the HPR, Years ago in the 80s, there was a small [governmental] program for OTEC and it was
abandonedThat philosophy has carried forth to this day. There are a few people in the Department of Energy who
have blocked government funding for this. Its not the Democrats, not the Republicans. Its a bureaucratic issue.
nationwide. Siting for renewables certainly has gotten very challenging. - Nathanael
Greene, NRDC "Siting for renewables certainly has gotten very challenging," said
Nathanael Greene, director of renewable energy policy at the Natural Resources
Defense Council. In California, public opposition has successfully blocked or stalled
major wind and solar energy projects, many of them in wilderness areas. But it is
not just big projects that are attracting opposition. A homeowners' association in
Palos Verdes, Calif., in December rejected the installation of household rooftop solar
panels in the community. In Amesbury, Mass., residents are trying to block a
developer's plan to erect enough solar panels to power 16 homes. wind-nimbyhorizontal"It's not 'not in my backyard,' it's everybody's backyard," a nearby
neighbor told the local Eagle Tribune. Researchers say that, while public opinion
polls show strong support for renewables as an antidote to energy production that
contributes to climate change, the support wanes if the proposed project is nearby.
In Oklahoma, the Osage Nation filed a lawsuit to block the construction of an
8,300-acre wind farm. The tribe was concerned that 94 wind turbines and their
network of electrical lines and roads would harm the tallgrass prairie. "In some
areas, those big projects just cannot get over those hurdles," said Frank Maisano, an
energy specialist with the Washington, D.C.-based law firm Bracewell & Guiliani,
which represents the wind power industry. wind-nimby-tallIn Michigan, a $235
million, 56-turbine wind farm was greeted by a public protest and a lawsuit to block
the project. Among the reasons for opposition: Turbine noise and diminished
property values. The 101-megawatt project was to be completed in 2012. Now, the
completion date is uncertain. Meanwhile, efforts to build a 200-turbine, 1,000megawatt offshore wind farm in Lake Michigan have stalled in the face of public
hearings packed with irate residents and skeptical local officials. To the east, in
Ontario, legislators in February enacted a moratorium on all off-shore projects two
years after passing the Green Energy Act calling for a 20 percent increase in
renewable energy generation by 2015. A University of California, Santa Barbara,
study [pdf] identified the basis for that opposition. Wind power in general has
overwhelming support roughly 72 percent of the public say they support it. But
when a site is close to home, support drops to 53 percent, researchers found. "A
distrust of developer objectives, and lack of local ownership [are] the foremost
reasons why they oppose wind farms," the study concluded.
investment required, for renewable energy infrastructure, is not only massive, but needs to be
deployed, in a shorter span of time, simultaneously all over the world . There is no basic infrastructure in
renewable energy industry, in existence, to make this change. Meanwhile, the unabated emission of carbon dioxide, by fossil fuels, is certainly, causing
global warming. There are many skeptics, on the science on global warming. Such skepticism does not stem from the fact, that they have a concrete
proof, but, such skepticism serves, their vested interest. Politicians,
Politics/Spending Links
OTEC extremely expensive and causes political controversy
trades off with other investment
Green Diary 11 Green Diary, part of a network by Author, Speaker, Global
Trainer and Publisher, 2011 (The good, the bad and the ugly about ocean thermal
energy conversion, Green Diary, November 10th, Available Online at
http://www.greendiary.com/good-bad-ugly-ocean-thermal-energy-conversion.html,
Accessed 7/29/14)
The bad Transportation The OTEC plants need large pipes, nearly 3km long, for
transporting the cold water from 1000m below the surface of the ocean to the
plants on the shore. The cost of constructing the large pipes accounts for about
75% of the design cost. Discharging of the cold and warm seawater The warm
and cold water discharged from the OTEC plants could affect the temperature of the
coastal fringes. To avoid any adverse impact, the used seawater needs to be
discharged at comparable temperature gradients. This further escalates the
construction and maintenance costs of the plants. Can this be avoided? The
high costs involved in transportation of cold seawater and construction of discharge
pipes could be resolved by building floating OTEC facilities. However, a floating
plant requires high mooring and maintenance cost. The ugly Cost The high
construction and maintenance cost are the major deterrents in using OTEC as a
renewable power source. The cost of producing electricity by an OTEC unit is
approximately $0.07 per KW-hour. Developing countries lack the resource for
constructing OTEC plants. Political concerns The floating OTEC plants are
essentially artificial islands. Location of these facilities on the sea might lead to
political debates regarding the jurisdiction of the region. The boundary disputed
that might erupt would inhibit utilization of the solar energy trapped in the
seawater. Why are we so critical? The major criticism against the OTEC plant is the
exorbitant cost of constructing the infrastructure for the facilities. The huge
investment needed for building the OTEC plants would create a dearth of
resources that might be otherwise used for financing the social sector.
Spending Links/Solvency
Costs over 1 billion dollars just for first plant - Too expensive
for widespread adoption even with economies of scale
Cooper et al 09 This paper was presented at the 2009 Offshore Technology
Conference held in Houston, Texas, USA (D.J. Cooper, L.E. Meyer, R.J. Varley,
Lockheed Martin Corporation, OTEC Commercialization Challenges, Offshore
Technology Conference, 4/17/2009, http://www.gl-nobledenton.com/en/news.php?
myPath=/en/news/11739.php)
Figure 5 is a simplistic view of capital cost amortization but serves as a good example of OTEC scalability (data in
the figure do not include ordinate is the cost of electricity assuming 11% return on investment after 20 years. For
ranges for the Navy base at Diego Garcia in the Indian Ocean, the Hawaiian island of Oahu, and typical values for
market. Energy costs are higher there than on the mainland. Follow-on plants will benefit from in-place processes
and procedures and from manufacturing learning curves. Additional savings should be available from multi-plant
orders and technology innovation.
At the present time, despite the fact that OTEC systems have no fuel costs and can produce useful by-products,
the high initial cost of building such power plants makes OTEC generated electricity
more expensive than conventional alternatives. As such, OTEC systems at the present
time are restricted to experimental and demonstration units. Island nations which currently
rely on expensive, imported fossil fuels for electrical generation are the most promising market for OTEC. More
experience in building OTEC power plants and standardized plant designs could bring OTEC costs down in the
Case
Solvency
OTEC cant solve- too expensive, vulnerable to storms, and itll
corrode
Friedman 14 Becca Friedman is a writer for the Ocean Energy Council,
EXAMINING THE FUTURE OF OCEAN THERMAL ENERGY CONVERSION, March 2014,
http://www.oceanenergycouncil.com/examining-future-ocean-thermal-energyconversion//OF
Despite the sound science, a fully functioning OTEC prototype has yet to
be developed. The high costs of building even a model pose the main barrier. Although
piecemeal experiments have proven the effectiveness of the individual components, a large-scale plant has
never been built. Luis Vega of the Pacific International Center for High Technology Research estimated in an
OTEC summary presentation that a commercial-size five-megawatt OTEC plant could cost
from 80 to 100 million dollars over five years. According to Terry Penney, the Technology Manager at the
Huge Capital, Huge Risks
National Renewable Energy Laboratory, the combination of cost and risk is OTECs main liability. Weve talked to
Warming Indicts
****They have one internal link card from 1997 come on now
would decrease
atmospheric CO2 concentration at a rate of about one ppm/year . By controlling the amount
of fertilizer applied to the worlds oceans, the temperature of the planet could thus be
controlled. With respect to dimethyl sulfide, a metabolic waste product of oceanic
phytoplankton and the primary source of sulfate aerosol and cloud condensation
nucleii in the remote marine atmosphere, an increase would upgrade cloud
formation and subsequent albedo, which would reduce the global temperature.
2 gigatons carbon/year could be removed to mitigate the greenhouse effect. This amount
Specifically, the mean temperature might be reduced by 1.3Jthrough a 30% increase in albedo resulting from the
biogenic sulfate induced cloud formation.
latitudes and colder temperatures, the total volume of gas in the almosphere is changed little (OTC/MSG 1985).
On the other hand, when fossil fuels are burned, the CO2 produced is "new," formed by combining carbon from
a complex set of environmental conditions and chemical reactions, only a worst-case order of magnitude (at best),
estimate of CO2 release by OTEC operations (OTC/MSG 1985; MSG 1985) is discussed here.
At an OTEC
facility, CO2 may be released to the atmosphere (Table 1, Figure 2). Residence time and pressure
shifts are insufficient to allow significant gas evolution from the cold-water reservoir, a confined space through
which water passes rapidly (Morse 1984). After discharge, CO2 or other gas concentrations in the effluent would
approach equilibrium with gases at that point of discharge, as a worst case, in the mixed layer. The maximum CO2
that could evolve due to OTEC operations is the difference between the CO2 in deep and surface waters. For
example, the CO2 concentration in surface water is approximately 2.0 mmole/kg seawater (Takahashi et al. 1970).
Water from 700 m contains approximately 2.4 mmole CO2/kg (Takahashi et al. 1970). Therefore, the maximum
CO2 released would be 0.4 mmole/kg, or 0.018 g/kg. If a 40-MW OTEC plant pumps 90 m3/sec (7.8 109 kg/day)
of deep water to the surface, approximately 1.4 105 kg of CO2 could be released each day if all excess CO2 was
outgassed (OTC/MSG 1985).
factories and electricity production. The gas responsible for the most warming is carbon dioxide, also called CO2.
Economy
Daniel Goldfarb is program director of Americans for Energy
Leadership. This guys is obviously not gonna talk shit about
Energy Leadership.
Your evidence says its dangerous for environment
United States Department of Commerce 81(Prepared by the Office of
Ocean Minerals and Energy for the Department of Commerce. "Ocean Thermal
Energy Conversion Report to Congress: Fiscal Year 1981"
http://www.gpo.gov/fdsys/pkg/CZIC-tk1056-u55a-1981/html/CZIC-tk1056-u55a1981.htm accessed 7/7/14)
Potential effects from commercial OTEC plants, although less than those from equivalent fossil fuel plants,
include climatic disturbances resulting from releasing carbon dioxide and cooling
the sea surface. Significant atmospheric effects are not expected as a result of single-plant deployments.
However, large scale deployment could result in carbon dioxide releases and seasurface cooling of a magnitude that may affect climate . Local air quality is not
expected to be significantly affected by emissions from industrial OTEC plants
producing energy-intensive products such as aluminum or ammonia. Building land-based
OTEC plants, like any heavy industrial construction, may destroy terrestrial habitats and increase noise levels and
Economy is resilient
Zumbrun & Varghese 5/9 2012, *Joshua Zumbrun and Romy Varghese are writers for
Bloomberg Businessweek, Feds Plosser Says U.S. Economy Proving Resilient to Shocks,
http://www.businessweek.com/news/2012-05-09/fed-s-plosser-says-u-dot-s-dot-economyproving-resilient-to-shocks, AJ
Philadelphia Federal Reserve Bank President Charles Plosser said the U.S. economy has
proven remarkably resilient to shocks that can damage growth, including
surging oil prices and natural disasters. The economy has now grown for 11
consecutive quarters, Plosser said today according to remarks prepared for a speech at the
Philadelphia Fed. Growth is not robust. But growth in the past year has continued despite
significant risks and external and internal headwinds. The U.S. economy has a
history of being remarkably resilient, said Plosser, who doesnt have a vote on policy this
year. These shocks held GDP growth to less than 1 percent in the first half of 2011, and
many analysts were concerned that the economy was heading toward a double dip. Yet, the
economy proved resilient and growth picked up in the second half of the year.
http://www.iveybusinessjournal.com/departments/viewpoint/don%E2%80%99tcount-the-us-out) (Karusala)
Blinkers work with some horses but they are no way to run a business. Take the blinkers off and the U.S. has a
lot going for it:
it is not as if the U.S. economy has not come back from big trouble before.
Examples abound such as after the Civil War, after the financial panic of 1907,
after the Great Depression, and after World War II. America gets mightily
distracted from time to time and is certainly prone to procrastination and denial but
their North Star is that they are the number-one economy in the world and there is no quit in them.
First,
America has an astonishing capacity to focus when their back is to the wall and
today certainly qualifies as one of those times. Those who would count America out should reflect on a
controversial quote attributed to the Japanese admiral who planned and led the attack on Pearl Harbor in 1941,
Istook Imamate, I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.
Todays America is now awake and resolved. and the challenge is nothing short of the place of the American
economy in the world.
at about 15 trillion dollars, the U.S. economy is massive, and with mass
comes momentum. Even with its current problems, the sheer momentum of the U.S.
economy gives it the time to sort itself out that no one else has.
Second,
Among major developed economies, Canada, Australia and Germany certainly look better at the moment than
emerging countries access to their import market and a U.S. willing to give the world a hard currency on which
If the U.S. is in permanent decline, why does the world head for the
U.S. dollar and U.S. Treasury securities whenever there is a crisis ?
to base trade.
many of the problems the U.S. faces are a result of far too much
government and household debt. The process of reducing debt by paying it off is
called deleveraging and deleveraging from high levels is always traumatic for the economy involved . It
is a mistake to equate permanent U.S. decline with the predictable difficulties of
deleveraging.
Fourth,
It is also important to note that U.S. government debt is denominated in U.S. dollars. There are grim inflationary
when your debts are in the currency you print, it takes the
issue of insolvency off the table and buys time.
implications attached, but
increases in taxes and cuts to spending can close that gap meaningfully; the unused borrowing capacity is a
bridge to a more sustainable financial situation.
This is not to underestimate the political problems associated with tax increases and spending cuts. Regardless,
the situation would be immeasurably worse without the tax room, borrowing room and spending-cut room.
Sixth, successful market economies are not driven by governments. They are driven by corporations run by
the likes
of Wal-Mart, Exxon Mobil, General Electric, Hewlett-Packard, Procter and Gamble,
Costco, Apple, Microsoft, Johnson & Johnson , Kraft, Boeing and Caterpillar. But the depth of
lower-profile but highly competitive corporations is truly astonishing .
executives who know how to compete. In this regard, no one can touch America. Everyone knows
The power and capability of Americas corporate sector is one of Americas greatest but least appreciated
The financial crisis and its aftermath did not have many pluses, but one of the few was
spurred the U.S. corporate sector to get its products, costs, staffing levels,
systems and balance sheets into fighting trim. It matters, too, that corporate America
is loaded with cash.
assets.
that it
Seventh, anyone writing off America should read The Doomsday Myth by Charles Maurice and Charles Smithson
(Hoover Institution Press, 1984). Citing numerous examples of resource shortages that popular opinion said
would become catastrophic, Maurice and Smithson make a point that can be generalized: innovation driven by
market economics finds solutions time and again to problems that at the moment seem insurmountable. When
faced with doomsday, people react with energy and ingenuity, usually to good effect. Just because America
seems to have unsolvable problems at the moment does not mean solutions will not be found.
America has three other things that matter going for it. The U.S. fertility
rate is close to replacement, which makes American demographics decidedly
positive relative to many developed countries . including Canada. The U.S. is still the
destination of choice for many of the worlds best and brightest. No country can
touch Americas elite universities for cutting edge research.
Finally,
There is a big difference between being in the ditch and being down for the count. America is certainly in the
ditch but I fully expect a return to the road. The great financier J. P. Morgan famously said in reference to
America when it was down: Remember, my son, that any man who is a bear on the future of this country will
go broke. Good advice! Regrettable he is not available for the sky-is-falling cable news and Sunday talk shows.