Political-Economics and Ted Lasso

Is this really the best way to solve complex problems?

What is there not to like about Apple’s “Ted Lasso?” The very fictional story of an American college football coach who finds himself coaching a struggling British soccer club. Great characters, good plots, plenty of humor and the endless comparison of Yanks and Brits.

But alas, the writers of Ted Lasso (as with many other writers) cannot contain themselves, they feel compelled to interject their personal political-economic opinion into an otherwise very entertaining show. I can only wonder what their background in finance and economic theory is. Should we be influenced by them?

Such political-economic opinion appeared in the Season 2 episode, “Man City”, when Sam’s father informed him over the phone that the corrupt corporation, Cerithium Oil, had been forced out of Nigeria. (Remember, this is fiction).

Is anyone surprised that an oil corporation is once again the bad guy? Is it also safe to assume that they were earning fictional, unholy profits? Not paying their fictional taxes?

Given that there are millions of corporations, it is quite reasonable to assume that some are truly corrupt. Perhaps even some that are involved in fossil fuels. But this was obviously not a random choice, as it has become politically popular to blame excessively profitable corporations for just about all our economic, social, and environmental problems. Oil companies in particular; they might as well have a bullseye painted on their backs.

Who needs these oil companies anyway? Well, just about all of us. According to the EPA, in the U.S. about 62% of electricity is generated by fossil fuel power plants (coal and natural gas), about 64% globally.

Meanwhile, here is an incomplete list of Apple’s products: iMac, iPhone, iPad, iCloud, iWatch, Apple TV, etc. What do they all have in common? They require electricity to operate, which sadly does not grow on an electricity tree.

I can’t make this up. A very profitable corporation (Apple), exclusively selling products that require electricity, produces a TV show (created, distributed, and viewed using electricity), subliminally preaching to us that it is the other corporations, the ones that enable the generation of most of the world’s electricity, that are in fact the bad ones!

Sorry Apple, you can’t have it both ways. In fact, none of us can have it both ways. Until we make tremendous global progress in implementing alternative electrical power generating solutions, most of the electricity that our global modern society depends on will continue to require the burning of fossil fuels for many years to come.

The Biden administration is presently pushing for trillions in funding to convert the source of power of the U.S. electrical grid away from fossil fuels, utilizing green sources such as wind and solar. It is estimated that the cost of this conversion will be in the neighborhood of $4.5 to $5.5 trillion, a very large amount of wealth for our society.

While there is little debate that our electrical grid is a major component of our carbon footprint, even if this were accomplished on budget and on time, several items to consider:

  • That wealth had to come from somewhere, something needs to give. There is a finite amount of excess wealth in our economy.
  • While this is technically an investment in infrastructure, unless you believe in the power of make-work projects, it will not return a financial ROI.
  • We will end up with the same amount of electricity, and given the recent events in Europe, it is quite possible that our electricity will cost a lot more in the future, even after adjusting for inflation, while being less reliable.
  • An electrical grid must be stable. Once the mix of unpredictable supply sources such as wind and solar exceed 50%, the system can easily become unstable. We will need to maintain a system of “power on demand” supply sources, i.e. keep operational the existing fossil-fuel power plants as backups.
  • Most importantly, while wealthy nations such as the U.S. may have trillions of excess wealth available to purchase solar panels, wind turbines and batteries to replace today’s perfectly operational power plants, developing countries such as China and India do not, and will not.
  • The good news is that this expenditure of wealth will have reduced our carbon footprint. The bad news is that the carbon footprint of the rest of the world continued to increase.

Consider the following graph. Note that even if the U.S. were to reduce its carbon footprint by half over the next 20 years, the growth rate of China and India will cancel this reduction.

Here is an idea. Rather than pretending that all government spending is somehow a wealth creating exercise, or that a first-world U.S. focused solution is somehow a global solution, why not instead use some of that precious excess wealth to develop safe, economical, next-generation nuclear power, something that Bill Gates has been promoting?

Today nuclear power supplies 10% of the world’s electricity, carbon free. A very attractive feature is that a nuclear power plant is like a traditional coal powered plant in that it is a stand-alone, power-on-demand approach. In other words, it can be a drop-in replacement for the carbon spewing coal powered plant utilizing the existing power grid, no need to add in super-expensive energy storage devices such as batteries.

First convince China and India to convert their coal plants to relatively cleaner natural gas, and then to next-gen nuclear. If the economics make more sense, the chances of it happening dramatically increase.

All of this assumes that we have this trillions of excess wealth available. Does anyone really think that we have been accumulating excess wealth lately? The higher level of inflation and recent wage reports strongly suggests otherwise; that we are collectively poorer than we were two years ago, that there is less wealth available for this needed investment.

Meaning that perhaps we should emphasize a solution that will accomplish global goals while being cost-effective, and not blindly rush into a political “solution.”

A distributed economy, competition, free markets, and corporations are required to create this massive amount of wealth required to smartly reduce our carbon footprint. But as we slowly lurched towards to more centralized, less efficient economy, in the name of “fighting global warming”, I can only wonder where this excess wealth is going to come from.

Guess we will just have to raise the taxes on billionaires and millionaires even more.

Want to learn more?

www.WTHisAnEconomy.com

Eric Johnson is a husband, father, engineer, pilot, surfer, investor and amateur astronomer who has read a lot of books on economics.