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American immigration policy is broken, and it has been broken for 60 years. And few politicians in either party propose a better system. Typically, politicians, pundits, and activists focus on how much immigration we should allow (legal and illegal), but very few of them focus on the far more important issue of what type of immigrants we should allow.

You would not know it from our immigration debate, but very few voters believe in:

• Open borders or

• Zero immigration.

The reality is that the vast majority of Democrats, Republicans, and Independents want some form of legal immigration, but the majority of them dislike illegal immigration. An increasing number of voters are outraged by the recent surge of illegal immigration during the Biden administration. Similar concerns wrack Europe. A feeling that current immigration policies are broken is widespread.

I believe this situation gives supporters of progress an opening for a completely new synthesis that is different from what both the Democratic and Republican parties want, but still very popular. And most importantly, that new synthesis could have a very positive long-term impact on economic growth while minimizing the real and perceived negative consequences of immigration.

Simply put, we need to combine:

1. A complete overhaul of American immigration policy that exclusively allows in highly-skilled workers who can make the greatest contributions to the nation. This means eliminating virtually all other types of legal immigration.

2. Strict enforcement against illegal immigrants both at the border and internally.

3. A nationalistic culture that demands that immigrants and their children assimilate into the broader American culture.

Unfortunately, few politicians, pundits, or activists support this combination of policies. Typically, those who want strict border enforcement say nothing about what types of immigrants we should be allowing into the country. And those who favor skills-based immigration completely ignore what we should do about illegal immigration and legal low-skilled immigration. I think this is a big miss.

We need to accept that there are only so many immigrants that we can absorb into the nation in any year. Polling in developing countries clearly shows that hundreds of millions, if not billions, of people want to immigrate to the United States. With true open borders or an unwillingness to enforce immigration rules, a sizable percentage of them will make the trip. And the more that arrive without repercussions, the more other immigrants will want to come.

The recent surge of illegal immigration since 2020 was likely at least partly due to the perception that the Biden administration was less willing to enforce border laws than the Trump administration. I think that any administration that does not take border enforcement seriously will get similar results.

So, those who favor a skills-based immigration policy need to face the fact that only a small percentage of immigrants who want to come to the United States will be able to do so. Therefore, a skills-based immigration policy is simply not viable without seriously simultaneously restricting low-skilled immigration (both legal and illegal).

It would be politically popular

I believe that this combination of reforms would be very popular with the American people. Voters in both parties strongly support highly skilled immigrants. The idea that Republicans would never support highly skilled immigrants is simply incorrect.

And illegal immigration is becoming increasingly unpopular, though much less so among Democrats.

Voter frustration about illegal immigration is getting so high that mass deportations are now back on the agenda.

In this article, I will not discuss how we strictly enforce against illegal immigrants, though I believe that it should be a fundamental component of any comprehensive immigration reform. Perhaps I will write a separate article on this topic at a later date, although I must confess I know less about this issue. Essentially, I am in favor of whatever policy produces results while being constitutional.

In this article, I will explain why we need a skills-based immigration policy, and how we can most easily implement it.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

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The importance of skills to material progress

In the first book in my book series, From Poverty to Progress, I made the case that we seriously underestimate the importance of skills in using and making technologies. Technological innovation plays a substantial role in promoting progress, but technologies cannot exist without related human skills.

While biological organisms can survive and reproduce without human intervention (except for some domesticated plants and animals), technologies cannot exist without human intervention. For it to survive and reproduce (by getting widely used by humans), technology requires humans to possess highly specialized skills.

Even the simplest technology needs some amount of skill to use. In addition, conceiving of the technology, designing it, building it, and repairing it are important related skills. Until people possess these skills, a specific piece of technology cannot come into being, or if it does, it will not last very long. It will certainly never spread far enough to become an important part of a society’s technological suite.

For this reason, the acquisition and transmission of new skills is a key bottleneck in the ability of technological innovation to deliver real progress for the masses. In other articles, I proposed reforms to our educational and job training systems to improve the skills required in the workforce, particularly for youths. In this article, I want to talk about the role that our immigration policy can play in boosting American skills.

Immigration is one of the most controversial domains of public policy. This should not be surprising, as nothing has a bigger impact on the future of a society than its people. By allowing certain types of people into a nation rather than others, you are shaping the future of your nation. Citizens want to take part in the discussion as to how we do so.

Skilled Immigration In the Past

Ever since the city states of medieval Northern Italy founded the first Commercial societies, the immigration of skilled workers has played an important role in sustaining progress. Skilled immigration enables talented people to relocate to societies where they can put their talents to the best use. When the most talented are given a chance to excel, everyone wins; the person wins, their families win, their community wins, and their nation wins.

Merchants, bankers, and artisans in Commercial societies were particularly mobile. Often starting their professions in small market towns, the most talented had the incentive to move to bigger cities with more opportunities.

The medieval apprenticeship system often created more artisans than could profitably work in cities. Masters recruited apprenticeships as workers for their workshops. The masters returned the favor by promising to train them and give them room and board. Once the apprentice had proven their talents, they became journeymen. Journeymen typically had the skills to run their own workshop, but they lacked the experience and the capital to do so.

Many journeymen chose to immigrate to other cities on the European continent. They had a strong incentive to go to cities where their particular skills were in greater demand than the local labor force could supply. In this way, skills in a particular technology naturally diffused from city to city throughout the continent.

Political instability and the oppression of minorities accelerated the migration of skilled workers. In the 16^th Century, Antwerp was a highly innovative and competitive city with thriving export industries. When Spanish troops sacked the city in 1576 and massacred much of the population, a huge number of the skilled individuals who survived migrated as refugees to Dutch cities. These skilled immigrants laid the foundation for the Dutch Golden era. During the 17^th Century, Dutch cities were the most economically competitive in the entire world, partly due to skilled immigrants from Flanders.

The repression of Protestants in France led to a massive flow of skilled refugees to England and the Netherlands. Each migrant brought valuable skills that enabled entirely new industries to spring up in those two nations. Skilled immigrants from Britain and what is now Germany played a substantial role in promoting the development of American industry.

Today, many of America’s largest and most innovative businesses were founded by immigrants or the children of immigrants. Apple was co-founded by Steve Jobs, the son of a Syrian immigrant. AT&T was founded by Alexander Graham Bell, who immigrated from Scotland and Canada. EBay was founded by Pierre Omidyar, who was born to Iranian parents in France. Google was co-founded by Sergey Brin, who is an immigrant from Russia. Tesla was founded by Elon Musk, an immigrant from South Africa. And this is just a partial list of the stunning contributions that highly-skilled immigrants have made to the American economy.

How the US immigration system works

Despite how controversial immigration policy is, very few American understand how the system actually. If you want to understand the basics, I would recommend reading this primer. The tables below come from that report.

Currently, U.S. immigration law is based on the following principles:

• the reunification of families (the majority of legal immigrants)

• admitting refugees and asylees

• admitting skilled immigrants

• while promoting diversity.

In many cases, these goals conflict with each other. If you assume that only a limited of legal immigrants can be allowed each year (which is the current policy), letting in immigrants from one category means one less immigrant from another category.

Family Reunification

Since the Immigration and Nationality Act of 1965, family reunification has been at the core of U.S. immigration law. Potential legal immigrants who have family members with American citizenship are strongly preferred over any type of other immigrant. In 2022, 58% of legal permanent residents were granted via family-based immigrant visas.

While the total number of immigrants is capped at 675,000 as of 2019, immediate family members are completely uncapped. This is not a trivial exclusion as, in the same year, more than 480,000 immigrants were allowed in for the purposes of family reunification. This exclusion from the overall cap almost guarantees that family reunification will dominant immigrant group.

Immediate relatives are officially defined as:

• Spouses of U.S. citizens

• Unmarried minor children of U.S. citizens (under 21 years old)

• Parents of U.S. citizens

An additional limited number of visas (i.e. they are counted towards the overall cap) are available for the following extended family members:

Typically what this means is that an immigrant comes to the United States, whether illegally or legally, and then acquires American citizenship. Sometimes this is through the standard immigration process, while other times it is through periodic amnesties granted by Congress. The first immigrant can sponsor immediate family members, and then those family members can sponsor additional family members at a later date.

Implementing family reunification in this way has created the phenomenon of chain migration. All it takes is for one immigrant, illegal or legal, to eventually acquire American citizenship, for an entire extended family to do so in the following decades.

Most American citizens whose family members were not recent immigrants have very few relatives who live overseas. This is for the simple reason that American citizens tend to marry other American citizens. This seemingly mundane fact means that our immigration policy is unintentionally biased toward favoring the family members of recent immigrants over other American citizens.

Since immigration from 1965 until about 2007 was dominated by relatively unskilled Mexican immigrants, rules designed to promote family reunification have unintentionally promoted the legal migration of unskilled Mexican workers.

Refugees and Asylees

In addition to the above, each year Congress sets a numerical ceiling for refugee admissions. In 2024, the limit is 125,000. This cap is then broken down into separate limits by region. I am not going to talk much about refugees and asylees, except to say that:

• few refugees and asylees are highly-skilled

• the definition of the terms is so vague and subject to interpretation as to be easily evaded. With the proper coaching from immigration lawyers or NGOs, most people from developing nations can build a plausible case for a “well-founded fear of persecution.”

In addition to the above are a number of categories designed to promote humanitarian relief, including:

• Temporary Protected Status (TPS): people who are in the United States but cannot return to their home country because of “natural disaster,” “extraordinary temporary conditions,” or “ongoing armed conflict” from specifically designated countries or regions within a country.

• Deferred Enforced Departure (DED) provides protection from deportation for individuals whose home countries are unstable, therefore making return dangerous.

• Deferred Action for Childhood Arrivals (DACA) permits certain individuals who were brought to the United States while under the age of 16 to remain in the US.

• Humanitarian parole enables the executive to allow certain individuals to enter the United States, even though they may not meet the definition of a refugee.

  

Skills-based Immigration Today

Unfortunately, the level of highly-skilled legal immigrants is tiny in comparison. And remember that these limits listed below includes dependents, many of whom have few if any skills.

The United States is the nation where the most talented have the greatest chance of achieving personal success. That success not only benefits themselves and their families, but, if given a chance, it will also benefit their cities and the nation as a whole. Unfortunately, encouraging skilled immigration is only a very small part of current American immigration policy. And this is despite the fact that this type of immigration is the most popular type of immigration.

A Progress-based reform agenda should put promoting skilled immigrants to the United States to be at the core of our immigration policy.

The Impact of Immigration

The impact of immigration on American society is one of the most controversial issues in American politics. Multiculturalists and libertarians assert that virtually all immigration is good for the nation and that restricting immigration violates basic human rights. Nativists claim that almost all immigration is bad for the nation as it undermines American culture and creates competition that lowers wages.

Though I cannot possibly present evidence that would convince the true believers on either side, I believe the following:

1. Immigrants with high skills benefit American society because they:

   1. generate more economic growth

   2. pay more in taxes

   3. consume far fewer government benefits

   4. commit far fewer crimes

   5. commit less violence

   6. likely integrate faster into American society

   7. are more likely to have children who do the same

2. Immigrants with low skills (both legal and illegal) provide, at best, mixed benefits for American society as they:

   1. earn far lower incomes

   2. pay much less in taxes

   3. receive higher levels of government benefits

   4. depress per capita GDP (though they increase GDP nominally)

   5. likely take longer to integrate into American society

   6. are more likely to have children that do the same

   7. In addition, there is some evidence that they compete for jobs with low-skilled American jobs, making it more difficult for the existing working-class and poor candidates to earn a living wage in that locale.

Just to give a flavor of the differences we are talking about, let’s look at the net fiscal cost. The estimated lifetime differences based on age and education are enormous. For example, an immigrant that arrives between the ages of 25 and 34 with less than a high school education, the estimated net fiscal cost is $211,603. For the same immigrant with a graduate degree, the estimated net fiscal savings is $1,379.695.

That is more than a $1.5 million difference for just one immigrant! When we are talking about tens of millions of immigrations and their children over the decades that totals trillions of dollar in total.

Those who favor increased immigration often toss around statistics about the overall benefits of immigration while neglecting enormous discrepancies in the costs and benefits between different types of immigrants. This is particularly true on discrepancies based on skills.

Plain and simple: immigrants are not all the same. Some types of immigrants benefit the nation far more than others, and American citizens have the right to choose which ones to admit. Based on opinion polls, it is very clear that they prefer highly skilled immigrants over low skilled workers (legal and illegal).

Skills-based immigration

A new American immigration policy should shift the emphasis of legal immigration from family reunification and refugees to skills and economic benefits to the nation. A complete overhaul of American immigration policy is far beyond the scope of this article. Such a proposal would have to deal with border enforcement, amnesties, and many other issues that are not directly related to the concept of progress. In this article, I want to focus on policies that directly focus on promoting progress.

One possible way to promote progress via skilled immigration would be to copy Canada and Australia. Both nations have a point-based system that is largely designed to acquire as many skilled workers as possible. Some have proposed that we copy such a system. Such a proposal might eliminate all the special categories of immigrants, such as family-based immigrants, the diversity lottery, and separate quotas for refugees and asylum seekers. All immigrants would be placed into one points-based system.

I would be in favor of such a reform, but I do not see the need to overhaul immigration policy when we can offer more targeted reforms. Points-based systems are always highly complicated, as they try to balance many competing goals.

The goal of a Progress-based reform agenda should be to promote skill immigration as much as possible, without getting bogged down in all the implementation details that a comprehensive overhaul of immigration policy would require.

A few simple criteria

I believe that a Progress-based reform agenda should be based upon a few simple changes that would have sweeping effects. To keep the system as simple as possible, all legal immigrants must fulfill the following criteria:

• Mastery of the English language (speaking, verbal comprehension, reading, and writing), and

• One or more of the following:

  • A four-year college degree from an accredited university in an occupation that pays in the top third for bachelor’s degrees in the United States. The median earnings for workers with bachelor’s degrees are currently $67,005 per year and the 75th percentile is $106,004, so this should place the income cutoff at a little under $100,000 (in the US).

  • Demonstrated work experience in such an occupation.

  • The ability to pass skill-based tests that are necessary to be hired in such a field in the United States (discussed in my article on Merit).

  • Being the owner of a business that can realistically be relocated to the United States and employ at least one additional US worker each year for five years.

  • Be willing to invest at least $500,000 in establishing a new job-creating enterprise that employs at least 10 full-time unrelated US workers. Ideally, the amount should go towards manufacturing or physical infrastructure. Real estate should not count towards this amount.

.In other words, everyone admitted must communicate well in English and be highly skilled or willing to invest capital. Family members of American citizens could still be admitted under this new system as long as they still fulfill the above requirements. Refugees and asylum seekers could also still be admitted, as long as they fulfill the above requirements. No immigrants from these categories will be admitted, however, exclusively based on their being in those categories (as is currently the case). To prevent fraud, potential immigrants should be interviewed by industry experts or given skills-based tests.

In theory, every new immigrant could be a refugee or a family member, so this reform does not necessarily cut their numbers. It just sets two additional criteria for all potential legal immigrants.

We could also apply the rule to temporary residents who come to the United States for university schooling.

Who will these new immigrants be?

My guess is that the vast majority of legal immigrants will be admitted based on their earning potential. Though the 2015 report is now a little out of date, The Economic Value of College Majors by Georgetown University gives us a clear idea of which occupations will be favored by the new system.

Here is a key table from that report showing the top third of the 137 occupations examined in the report:

The data from the reports shows new legal immigrants under my proposed system will likely be dominated by:

• engineers

• doctors

• economists

• scientists

• businessmen

• entrepreneurs.

If the goal is to promote material progress in the United States, this is exactly the type of people who we should be encouraging to immigrate. A disproportionate percentage of them will likely be family members of American citizens or refugees, but most of them will not be.

Given how important intelligence is to success in these fields, the new immigrants will likely be far more intelligent than the current national average. Even if they cannot apply that intelligence to their chosen field, that asset will benefit themselves and the American nation. And given that intelligence is a highly heritable trait, this intelligence is likely to be passed on to their children and grandchildren.

Given the geographical dispersals of these occupations, most of these new immigrants will likely come from:

• Europe

• Canada, Australia, New Zealand

• Israel

• East Asia, particularly China, Japan, Taiwan and South Korea

• South Asia, particularly India

• with smaller numbers from Latin America, Africa, and the rest of Asia.

Given the gender and age dispersals of these occupations, new immigrants in this system will likely be young and middle-aged males with very few elderly immigrants or almost no children. The gender imbalance is a bit worrying, but I do not think this irreparably undermines my proposed reform.

The criterion is self-adjusting

One of the great benefits of using earning potential in a specific occupation as the dominant criterion is that it is self-adjusting. If we get too many workers in a specific field, market conditions will lower salaries, so rules will allow fewer immigrants from that occupation. If we get too few workers in a specific field, market conditions will raise salaries. As certain skills become obsolete or suddenly come into demand from employers, this will also show up in the data.

There is no need for immigration bureaucrats to guess what occupations will be in demand in the future. They can just look at the actual salary, which can be updated each year.

Temporary Pause to Immigration

One of the big concerns opponents of immigration express is that immigrants will be in competition for jobs with American citizens, and too many citizens will lose their jobs or have their wages pushed down. While the economy is growing rapidly, I do not think that this is a major concern, but the situation does change during times of recession when unemployment rates increase.

This is also a difficult situation for legal immigrants. During times of economic growth, immigrants can typically find a job relatively quickly. During a recession, however, this is far from the case. While immigrants who arrived a few years earlier may already have established career paths, immigrants who just arrived have no jobs, and no work experience in their new country.

To protect both American citizens and legal immigrants from temporary economic hardship, there should be a temporary pause to immigration when the unemployment rate is 50% higher than its average over the previous ten years. This would stop new immigrants from entering the United States during recessions and give the economy a few years to recover to more typical unemployment rates. This would make it much easier for new immigrants to find jobs.

Once the unemployment rate drops below the threshold, then those “lost slots” under the cap would be shifted to subsequent years so it would not lower the overall amount of legal immigration.

I believe that this would also have a positive effect when it comes to calming concerns about excessive immigration. People are much more likely to be concerned about economic competition from immigrants during times of sluggish economic growth. In general, during times of economic growth, such concerns are much lower as American citizens have much less trouble finding jobs.

Recruiting Overseas Talent

A major goal of every American embassy and consulate should be recruiting skilled workers to immigrate to the United States. The new immigration criteria would give them a simple framework for the type of worker that should be courted.

Paying for targeted advertising campaigns to increase awareness of the new rules would help those who can most benefit the United States to start thinking about the possibilities. Highly targeted speaking tours with professional and business associations should get out the word to the right people with relatively little expense.

In particular, we should recruit entrepreneurs of small businesses that have a real opportunity to grow if they are relocated to the United States. I personally know of a number of entrepreneurs who struggled to expand their businesses in Europe, immigrated to the United States, and then reestablished their businesses on our soil. Using the power of the internet, online supply chains, consignment, and domestic labor, they grew their small businesses into profitable enterprises that employed many American citizens. In doing so, they benefitted themselves, their family, their community, the American economy, and its tax base. This practice should be far more widespread.

There is no reason why large enterprises could not be courted as well. With abundant, affordable energy and housing, lower regulations and taxes and many skilled workers, large enterprises in Europe, Canada and Japan would have excellent reasons for relocating operations to the United States.

As labor costs rise, production in China is becoming increasingly expensive, so many corporations are seriously thinking about relocating. Lower value-added manufacturing that requires low-skilled and low-paid workers will probably relocate to Southeast Asia, but higher value-added sectors may seriously consider the United States. This is particularly true in energy-intensive fields that require skilled labor, for which there would be a strong incentive to relocate production facilities.

Recruiting skilled workers should be a particular focus in repressive regimes that are hostile to the United States. Embassies in Russia, China, Iran, Venezuela, Cuba, Belarus, and Nicaragua could simultaneously help to undermine the economic prospects of those regimes, provide safe harbor for refugees, and promote American economic development. We can thus simultaneously hurt our enemies and help ourselves.

Recruiting skilled workers should also be a priority in affluent nations that give fewer opportunities to the talented, for example, Europe. Here the primary problem is high taxes and regulations that make it hard to start up and scale a business.

In the past, talented Canadians and Europeans flocked to the United States searching for better opportunities, but our current immigration policy makes it much harder for them to do so. A combination of a skills-based immigration policy and active recruitment could bring a new wave of talented Europeans and Canadians to the United States.

Archipelago of Talent

With the exception of Sub-Saharan Africa, world populations are expected to start shrinking within the next few decades. The primary driving force of this change is fertility rates that are substantially below the replacement rate of 2.1. Europe and East Asia are particularly likely to see massively declining population levels over the next century. In the long run, even African populations will start declining.

The world’s progress over the last 200 years has been undergirded by expanding populations. Expanding populations has become such an ever-present phenomenon that we do not know what types of impact a declining population will have on society overall. Those shifts will likely be profound. Some will be good, and some will be bad.

One thing that is clear is that the overall balance of power will be disrupted by declining populations. China and Russia, in particular, are likely to see a drastic drop in their influence in the world over the course of this century due to declining populations.

Public policy to increase fertility rates seems unlikely to work, although my proposed Working Family tax credit may have some positive effects. Many nations have tried paying women to have more children, but these policies have not been very successful. Nor is it clear that pro-natal policies are worth the cost.

If nothing else, the declining human population will be a boon to the natural environment. Declining population combined with urbanization and highly productive agriculture will drastically reduce the land footprint of humanity on the natural environment.

The only method for fighting population decline that seems to have a reasonable chance of success is immigration. I believe that relatively high levels of immigration combined with a skills-based immigration policy will cement American power and influence over the next century.

Let’s assume that the following trends occur over the next few centuries:

1. Low fertility rates cause population declines almost everywhere in the world.

2. The most talented migrate to the United States for greater opportunities.

3. This migration causes the American population and the American economy to keep growing, perhaps the only nation that will experience such growth.

4. Because of ever-increasing levels of talent compared to the rest of the world, the American economy keeps booming. This then creates additional incentives for American policymakers to continue skilled immigration and incentives for the most talented to choose to move to the United States.

For the last 200 years, people have migrated from rural areas to cities for greater opportunities. The vast majority of this trend has been within nations. But what if we expand this trend internationally? What if the combination of the above forces makes the United States the top immigration destination for skilled workers?

What is going to disrupt this positive feedback loop? Well, bad politics, of course, but aside from that, I think that is a stable long-term trend.

In the distant future, let’s say the year 2120, I can foresee a world with a declining population, and the United States making up a higher and higher percentage of the world population. People may complain about American “hyper-power” today, but if this trend occurs, American influence will go far beyond even that. The United States might effectively become the metropolis for the entire world. Obviously, this is not a prediction of the future, but the scenario is not so implausible as it first might seem.

As populations in the rest of the world decline, this will lead to a “rewilding” of the rest of the world. Agriculture and rural areas will gradually decline in land use, and wild habitats will take their place. Tropical nations might see vast regrowth of forests.

What if the world population in the 2100s keeps declining (as it is projected to), while only one nation keeps growing and keeps getting more skilled? These two factors will probably become a self-sustaining feedback loop. A higher and higher percentage of the world’s population will live in the United States, while more and more land in other nations gets transformed back into wild habitat.

Of course, there are limits to the number of immigrants that the United States can support. But assuming that we can build houses fast enough and create enough jobs, the limit is actually quite high. The Mountain West and Great Plains are still almost devoid of population, with the exception of a few isolated cities. There are no fundamental geographical reasons why dozens of additional cities cannot grow in those regions.

This should be a long-term goal that both Greens and those who favor progress can get behind. Obviously, this will take centuries to accomplish, but it is a worthy long-term goal.

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Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

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Supporters of the Green energy transition typically support massive increases in production of the following technologies:

• Solar power, whether in the form of rooftop photovoltaic or utility-scale

• Wind power, whether onshore or offshore

• Electric vehicles (EV)

In the minds of Greens and most others on the ideological Left, those three technologies are Best Friends Forever. As they see it, Solar and Wind are key to producing carbon-free electricity, while Electric Vehicles are key to applying that carbon-free electricity to the transportation sector.

But what if I told you that these three favorites do not play nice together? What if I told you that to a large extent, Greens must choose between solar/wind and electric vehicles?

The reality is that:

• Solar and wind are only cost-effective in certain regions. The Eastern half of the US, for example, where 80% of Americans live has few solar and wind resources (other than very expensive offshore wind).

• Electric vehicles require a massive amount of electricity to fully recharge them. Both wind and solar are very diffuse at any given moment so they must have massive over-capacity to recharge an EV alone. And the bigger the EV battery, the bigger the problem.

• Most people recharge during the night when they do not need to drive. This makes solar power irrelevant for most electric vehicle owners

• Charging at night also has the advantage of using cheaper electricity and smoothing out the demand curve, so it is something that utilities should encourage.

• Electrical grids with significant amounts of solar and wind have far higher electricity prices than other grids, undermining one of the key advantages of EVs to owners (saved gas cost).

• A fully electrified transportation system is terribly vulnerable to blackouts, which are far more likely in grids with substantial penetration by solar and wind. One 24-hour blackout would cripple a local economy and may take days to recover from. One long blackout in a major transportation hub could disrupt the entire natural economy.

The reality is that Electric Vehicles are far more viable when paired with an electrical grid based on a blend of coal, natural gas, nuclear, and hydroelectric power. The more solar and wind penetrate the market, the greater the disadvantages of electric vehicles become apparent.

Given the very high carbon dioxide emissions of coal, it makes sense for Greens to embrace the Third Energy transition + Electric Vehicles rather than Wind + Solar + Electric Vehicles. This means replacing coal with a blend of natural gas, nuclear, and hydroelectric. The exact blend of the above would be based on geography and local cost structure. In the United States, natural gas has a huge price advantage due to the Shale Gas revolution.

Solar and wind can play a supplementary role in certain geographies, but natural gas, nuclear, and hydro-electric need to do the heavy lifting.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other posts on Energy:

1. Rapidly phasing out fossil fuels is extraordinarily risky

2. We need abundant, affordable, and secure energy

3. We need to complete the Third Energy Transition

4. A Challenge to Greens: Prove that solar/wind replaces coal!

5. There is a better alternative to Green energy policies

6. 16 reasons why Greens should love natural gas

7. Why Greens should love fracking

8. The wonders of CCGT

9. more

A huge weakness of the Green energy policy is that it makes an abundant, affordable, and secure electrical grid impossible with current technology. This in turn makes it far more difficult to expand the Third Energy Transition into the transportation sector.

Many advocates of renewable energy also support widespread electrification within the transportation, commercial, residential, and industrial sectors. Unfortunately, the more the energy sector is based on electricity, the worse the intermittency issues become.

Scaling up wind, solar, and other renewables to generate 100% of electricity would make our electrical grid very unstable. Wind, in particular, generates radically shifting amounts of electricity. And solar generates no electricity at night when consumers typically want to charge their electric vehicles. Adding on the demands of the entire transportation sector will make the situation even worse.

We are already seeing this happen. As I write this book, Switzerland is seriously considering outlawing consumers from recharging their electric cars during the winter of 2022-23 for fear that it will bring down the grid. During the summer of 2022, California asked electric car owners not to charge after 4 PM during summer heat waves. Given that neither Switzerland nor California is very far down the Green energy transition, this is probably just a hint of what is to come.

Widespread electrification of transportation is dependent upon a stable, affordable electrical grid. Only fossil fuels, nuclear, and hydropower can deliver that. That is one of the many reasons why environmentalists should favor these energy sources, not oppose them.

In order to electrify the transportation sector, consumers and corporations are going to have to see very clear economic benefits for doing so. An affordable and stable electrical grid significantly lowers the long-term operating costs of electric vehicles. An expensive and unstable electrical grid pushes consumers and corporations away from investing in electric vehicles.

Transportation makes up about one-third of the energy sector and that proportion increases as a nation experiences progress. In the United States, for example, the transportation sector made up 37% of CO2 emissions from energy consumption in 2021 (EIA). This is significantly greater than the amount of carbon emissions that come from electricity. Failing to fully electrify the transportation system fully guarantees that the Greens will fail to achieve their goals.

Just imagine a nation with an electrical grid based entirely on solar and wind and a transportation sector based on electricity: all cars, trucks, trains, ships, and airplanes. The typical usage pattern for electrical transportation is to drive during the day and then charge during the night.

We know that solar power will be useless for recharging transportation devices during the night, so now we are entirely dependent upon wind. What if there is little to no wind in any particular night? The entire transportation grid temporarily collapses!

• People cannot drive to work or do food shopping;

• buses do not work;

• trains do not work,

• entire supply chains are disrupted for the day.

• At the same time, home electricity, appliances, heating/cooling, and industrial production temporarily shut down.

We already experienced something like that during the Covid lockdowns of 2020 and 2021. Now electricity lockdowns could be a common occurrence, although hopefully far shorter in duration than Covid lockdowns.

But what about batteries? We could vastly over-build our solar and wind production and then store the rest in batteries. And then each night we just transfer the energy into the batteries in electric vehicles. That might work, but as we will see, batteries are highly expensive, their production emits large amounts of carbon, and each transfer leads to losses of electricity.

The prerequisites of electrification

To make people want to switch from ICE to electric cars. we need three things:

1. Very cheap electricity to make up for the high initial cost of the battery.

2. An extremely stable grid that guarantees that vehicles can recharge every night.

3. Ever-declining cost, size, weight, and increasing longevity of electric batteries.

The third is occurring due to rapid technological innovation in the private sector along with government subsidies to guarantee a market (see graphic below).

The first and the second items, however, cannot be achieved with Green energy policies. Rather than making electricity abundant, affordable and secure, Green energy policies make electricity expensive, unstable and constrained. This is the opposite of what we need.

Cheap electricity is particularly important to the goal of electrification of the energy system (not just the electrification of transportation). When electricity is affordable, then consumers, businesses and governments all have incentive to shift towards increase electrification. When electricity is expensive, then consumers and businesses have an incentive to do the opposite and government must spend huge amounts of money on subsidies and distort the market with mandates to achieve the goal of electrification.

For example, the rapid electrification of the Chinese energy system is a direct outcome of cheap coal (which is about as unGreen as you can get). As the figure from RMI shows, there are no high-electrification regions anywhere in the world that also have high electricity prices.

If you look at list of European nations that have higher usage of electricity per capita, they are nations with electrical grids based on nuclear, hydro and geothermal. The Europeans with the largest percentage of their electricity portfolio from wind and solar use significantly less electricity per capita. The reason is simple: their electricity is far more expensive and also here, so people use less of it:

Utility-scale Batteries Are Not A Solution

Some advocates of renewable energy maintain that widespread usage of energy storage will overcome the intermittency disadvantage of renewable energy. They claim that, with widespread installation of utility-scale batteries, we can store electricity when we produce too much and save it for a time when we do not need it.

Battery storage is one of the key technologies that we need to improve over the next century. Innovation in this domain has been one of the most exciting developments over the last few decades. Every few years, new battery chemistries are invented and production costs keep dropping.

Despite this very positive trend, the cost of storing electricity is still very expensive compared to storing fossil fuels. Storing one barrel of oil costs around $1. Storing the energy equivalent of one barrel of oil in Tesla batteries, however, costs a whopping $200. This cost means that the widespread deployment of utility-scale batteries would dramatically increase the costs of our electrical grid (FEE).

To give one example, to store just 3 days of global electrical usage using Tesla megapacks would cost $590 trillion, or six times the world GDP. And if we tried to do so within just a few decades, it would cost significantly more. Worse 3 days of storage is far less than is needed to maintain a stable grid throughout the entire year (Epstein).

Even today, batteries make up about one-quarter of the cost of an electric car. If you do not believe me, look at the cost of electrical cars compared to identical ICE models. Electric cars typically cost one-third more than their ICE version. That is why the federal government believes that it is necessary to give a $7,500 tax rebate for purchasing an electric car. Now apply those additional costs to our electrical grid, which powers over 300 million people, and you can see the cost issue.

Advocates of battery storage also neglect the fact that battery production involves large amounts of carbon emissions. The mining of raw materials such as lithium, nickel, cobalt, and manganese is typically done in developing nations with very lax environmental standards. Transportation and manufacturing of batteries are typically powered by coal. So, to cut carbon emissions, we must produce carbon emissions.

Getting exact carbon emissions is very complicated, but one estimate for the Tesla Model 3 ranges between 3,120 and 15,680 kg of carbon. A good ballpark estimate is that the batteries roughly double the carbon emitted during the production process of cars. In other words, the production of electric vehicles emits roughly double the carbon emissions of a traditional ICE vehicle. And a traditional ICE vehicle is one of the most carbon-intensive products on the market (MIT).

Using the Hornsdale Power Reserve in Australia, the largest utility-scale battery storage in the world, as a model, one author computed that wind plus battery power emits only one-third the amount of carbon that coal does. Unfortunately but not surprisingly, the author of this study neglected to mention that this is almost exactly the savings provided by the most energy-efficient gas turbines. And the gas turbines are much cheaper, so why bother building wind-plus-batteries in the first place (Forbes)?

Advocates of utility-scale batteries also seriously underestimate the scale necessary to keep the electrical grid stable. My guess is that many of them deliberately underestimate the scale, so as not to undermine their cause. In most of the studies that I have seen, they look at the cost of installing only a few hours worth of battery storage.

A few hours’ worth of energy storage would work fine on most summer days when solar power is reasonably efficient due to geography. One only needs a few hours of electricity to get through each night. But when there is a cloudy day, suddenly you need more storage. And wind power is far more erratic than solar power.

Moreover, battery storage needs ramp up enormously when one factors in declining solar power capacity factors outside of the summer. Solar power generates far less electricity during the winter. Solar is also very inefficient during the early spring and late fall.

Wind power can pick up some of the slack, but wind is inherently less predictable. So the actual amount of electricity that would need to be stored must be measured in months, not hours.

In addition to daily and seasonal variations, there are also very sizable annual variations. An entire winter with slow wind production and very low solar production is not at all uncommon. To mitigate the damage to the economy, one would need to store weeks’, or some regions months,’ worth of electricity, not hours.

While it is conceivable that we could produce that many utility-scale batteries, this would be a massive ramp-up in world battery production. Very little of this capacity consists of utility-scale batteries. To produce enough batteries for the world’s electrical grid, production would have to scale up something on the order of 100-fold. That is just not realistic to expect.

Batteries produced annually by the Tesla Gigafactory, the largest battery factory in the world, can store three minutes worth of annual U.S. electrical demand. To increase that time to just 2 days, far less than is needed, would require 1000 years of full-scale production at that plant (FEE).

And remember that we also already need to radically increase battery production to electrify transportation. So realistically materials needed for utility-scale batteries will compete with car batteries. I believe that electrifying transportation should take priority over utility-scale batteries because CCGT can better fill the gap.

Nor are batteries a one-time purchase. Current batteries wear out after 7-15 years and degrade in capacity during that time, so those batteries will need to be replaced periodically. And all of this leads to massive carbon emissions to manufacture the batteries.

For the foreseeable future, utility-scale batteries produced in enough volume to make a 100% renewable electrical grid are just not viable from an economic or environmental perspective. Only nations with widespread hydroelectric or geothermal resources can hope to achieve that goal within one to three decades.

Utility-scale batteries are still necessary

Don’t get me wrong. I think that mass deployment of utility-scale batteries is absolutely essential to maintain the stability of our electric grid. They will likely soon become more cost-effective that Simple Cycle Gas Turbines that function as “peakers” to adjust to rapid changes in demand vs. supply. They are useful regardless of the method for producing electricity.

But scaling up utility-scale batteries to function as peakers for an electrical grid that functions on coal, gas, nuclear and hydro will only require perhaps 1-3 hours worth of battery capacity. Scaling up utility-scale batteries to function as peakers for an electrical grid that functions on solar and wind will only require weeks worth of storage to get through the dark half of the year. This is a minimum 100 times greater cost.

Norway’s Third Energy Transition in Transportation

Norway is a great example of what is needed for zero-carbon electricity to support widespread electric vehicle adoption. Norway is the first nation to push the Third Energy Transition into the transportation sector. With a combination of subsidies, discounts, and mandates, sales of new electric vehicles in Norway have jumped from virtually zero in 2011 to 54% of sales in 2020. Most of the remainder of new cars purchased are either plug-in hybrids or hybrids. Greens have rightfully cheered this transition and claim that Norway is an example of a nation where their policies have succeeded.

But what made the rapid transition to electric vehicles possible is that the Norwegian electrical grid is 95.3% powered by hydroelectric dams, a power source that Greens oppose. An entire electrical grid based upon hydroelectric dams is a dream scenario. Hydroelectric dams can offer very cheap carbon-free base-load power and the ability to modulate with demand. No other power source offers this combination. Unfortunately, this is only possible in regions with extremely abundant hydro resources.

More to the point, Norway has been able to fund the transition to a large extent because it has a massive oil and gas industry. The Norwegian fossil fuels industry generates:

• 49% of all government revenue,

• 33% of the Norwegian economy and

• 64% of its exports (Norsk Petroleum).

Fossil fuel production makes Norway one of the few nations in the world with a higher per capita GDP than the United States. This huge economic boon, combined with an abundant, affordable, and stable electric grid powered by hydroelectric dams makes their electric vehicle policies economically sustainable.

Norway has been able to radically increase electric vehicle car sales, while the rest of Europe has not yet done so, precisely because Norway did not follow Green policies in the rest of their energy system. The Third Energy Transition enables the electrification of transportation, while Green energy policies do not.

The choice is yours

So for the foreseeable future Greens will need to choose among:

1. An electrical grid powered largely by fossil fuels, nuclear, and hydro and the mass deployment of electric vehicles. Natural gas can substitute for coal. This option can be deployed to virtually every nation that can pay for a modern electrical grid.

2. An electrical grid powered largely by solar and wind and continuing widespread use of ICE cars. This option can only be deployed in regions with significant solar and/or wind resources.

3. Widespread use of coal, particularly in Asia where the majority of humanity lives. This make Netzero by 2050 impossible.

So which is it?

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The above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other posts on Energy:

1. Rapidly phasing out fossil fuels is extraordinarily risky

2. We need abundant, affordable, and secure energy

3. We need to complete the Third Energy Transition

4. A Challenge to Greens: Prove that solar/wind replaces coal!

5. There is a better alternative to Green energy policies

6. 16 reasons why Greens should love natural gas

7. Why Greens should love fracking

8. The wonders of CCGT

9. more

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The American university system needs a fundamental rethink of its business model. It faces existential threats that must be overcome in the next generation, including:

• Rapidly growing tuition costs

• Declining number of youths in the 18-23 age range

• Declining percentage of youths within that age range who are choosing to go to college, particularly among boys

• Declining public support for universities

• A declining wage premium for college graduates

• Increasing dependence on foreign student tuition

• A low graduation rate

• Increasing competition from online teaching

• An increasing ideological gap between universities and the general populace

This article is part of a multi-part series on making university tuition more affordable without undermining the quality of education. As a former college professor, I have some unique insights into the problem and how to solve it.

In previous articles, I made the case that:

• Vocational schools are better than college for most youths.

• To lower the cost of tuition, amenities should be a separate optional line item.

• State legislatures should require public universities to radically cut their bureaucracy.

The following is an excerpt from my book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

More Required Courses

Another reason for increasing tuition has been the dramatic decline in the number of required courses. A relatively short list of required courses has been replaced by a large number of optional courses from which students can choose.

Freedom of choice seems like a great thing, but it has serious cost implications. Each additional course requires a new professor who is capable of teaching it, and it shrinks the overall number of students per class. As the number of students per class shrinks, the cost per student goes up as well.

In the past, universities had a large number of required courses. Many of these courses revolved around the concept of a liberal arts education, while others were more science and mathematics-oriented.

Starting in the 1960s, universities began to cut back on the number of required courses. Some required courses have been replaced by breadth requirements, whereby students can choose between many classes within a broad category, such as science, social studies, and foreign languages. Other required courses were simply abolished.

Even within majors, students can typically fulfill many of their requirements by choosing between many different classes. So a history major may no longer be required to take a “History of Western Civilization” course. Instead, that student can choose between courses that focus on Latin America, Africa, East Asia, South Asia, or Central Asia.

Finally, most students can also take a large number of completely optional classes on any topic. In many cases, these optional courses are far less challenging than the previously required courses.

The result has been a dramatic increase in the number of classes. Each requires a professor or teaching assistant, so this increased variety leads to increasing costs, which are then passed on to the tuition bill.

While this may seem like a benefit, the typical college student is often overwhelmed with choices. These choices slow down their progression toward a degree, leading to lower graduation rates and five or six years of tuition payments for those who do graduate.

A Common Curriculum

A very simple reform that would save money, increase graduation rates, and improve the quality of education would be to have more required courses in the freshman and sophomore years. Students should choose between coherent, compatible programs, not hundreds of individual courses. This was widespread before the 1960s, but the pressure to give students greater options has led to their decline.

A typical college experience during that time included required courses filling up the first two years of classes. The second two years were reserved for concentrating on required courses within a specific major that was chosen by the student.

Having a common curriculum for the first two years has many advantages. This lowers the number of courses that a university needs to offer, which limits the number of professors that they need to hire. Or universities could hire more professors to shrink class sizes.

I believe that it also creates a better learning experience for students. I personally went through a one-year Technical Writing program at my local community college.

If memory serves correctly, we took courses every day for three hours straight. Every class had different professors, but the same students. Rather than having different courses at different times and different locations, all of the students had their classes in the same room back-to-back. We got to know each other far better than I ever did when it came to students in more traditional college courses. It was a very enjoyable and intellectually challenging environment.

Each university could establish a core curriculum for the first two years that is in line with their academic orientation. This format might encourage universities to experiment in ways they could not do when students all took different courses.

Some universities might focus the core curriculum on a traditional liberal arts education with many courses in philosophy, history, and language. Others might focus on a science-based or technology-based core curriculum.

Some universities might also break the core curriculum into a handful of meta majors, such as arts, social sciences, science/engineering, health care or business, which students can choose between. Alternatively, the core curriculum might cover a little bit of every track to enable students to make an informed choice on their majors.

By the third year, students would have a solid foundation and then be able to take classes in their declared major. There is no reason why the same general philosophy cannot continue within each major. Rather than having many classes to choose from within each major, each student within the same major would be required to take the same courses.

Having the same classes also makes it possible to schedule those classes back-to-back on the same day. Having experience as both a professor and a student who works full-time, I know how inconvenient schedules are when classes are scattered throughout the week. This is a real inconvenience for professors, students who work, who commute from off-campus housing, or who have parental responsibilities. Clustering all the classes together in time and place makes the college experience much more convenient for everyone.

State Universities Should Specialize

State university systems could also benefit from having different common curriculums. The vast majority of public universities are run by state governments. Typically each state has several universities, state colleges, and community colleges within one overall system.

Universities within the same system almost always have roughly the same curriculum. But what if we change that? What if each university specializes in different fields?

To give one example, the California university system consists of ten university campuses, 23 state campuses, and 115 community college campuses. Rather than have each teach roughly the same courses, each campus could focus on one or a handful of related disciplines.

Each campus might offer the same courses for freshman and sophomore years but specialize in a field for students in their final two years.  Students might attend one campus for the first two years, choose a major, and then attend a different campus that offers courses in that subject for their last two years. Or some campuses might specialize in required courses for the first two years.

One big campus in each metro area that focuses on teaching freshmen and sophomores would enable any student to save money by living at home for their first two years. This specialization would reduce costs while enabling students to receive a high-quality education in the field of their interest.

To be clear, I am not arguing that the federal government should force universities to adopt any of these models. I do believe, however, that state legislatures should use the power of the purse strings to force public universities to adopt cost-effective ways to reduce tuition costs, while still maintaining a high-quality learning experience for students. Enabling students to choose between coherent programs rather than hundreds of individual courses will help to do so.

Major-based Tuition

Another very big problem in universities is the number of majors that lead to jobs that pay far below the average income for college graduates. A major reason why governments subsidize universities is that they teach critical skills that are necessary in the workforce. Some skills, however, are far more valuable to society and therefore pay higher wages. Governments and parents pay hefty tuition bills, largely because they believe that it will lead to higher lifetime incomes.

After they graduate from college, however, many youths face underemployment. About 33% of college graduates are underemployed. Particularly among those who do not get a degree in a technical field, a sizable percentage work in relatively low-paying service jobs that do not require a college degree (Federal Reserve Bank of New York).

And this is not always a short-term situation. A sizable percentage of college graduates are still in non-college jobs a decade after graduating (Burning Glass, Strada).

While parents obsess over getting into the right college, in many ways the choice of majors is more important. There is a huge variability in lifetime incomes based on college majors.

The median annual wage of college-educated workers ages 25-59 varied greatly in 2013. It varied between $136,000 for petroleum engineers and $39,000 for early childhood education. By comparison, the average high-school graduate earned $36,000. Not surprisingly, STEM majors did well, as did those who had studied health care and business. Social sciences came out about average (Carnevale).

Universities can potentially play an important role in promoting long-term economic growth by passing on the key skills needed in the economy. The best method of measuring the importance of those skills is to compare the lifetime earnings of their graduates.

Particularly when underemployment is such a widespread problem among college graduates, it will also benefit young people if their chosen major is more focused on viable employment after graduation. Our society tells young people that, in order to be successful, they should “go to college,” but the evidence is clear that this is not enough. Just as important is choosing a major that leads to gainful employment.

Taxpayers also have a vested interest in ensuring that money being spent in state universities goes toward the acquisition of critical skills necessary for economic growth. Public universities should not be solely devoted to promoting long-term economic growth, but it should at least be a part of their goal.

State legislatures should seriously consider charging tuition based on the declared major of the student. They could establish a sliding scale where the majors that paid the highest get the most state support in the form of subsidized tuition. Students who choose majors that lead to jobs that pay well below average would receive no state subsidies. This would mean that they paid higher tuition fees.

The market is very good at rewarding those who learn skills that benefit others. Consumers buy products based on what they want or need. Businesses that produce those products broaden their product range and have a strong incentive to hire more skilled workers to make those products. Over time, this increases the salaries of coveted workers, while not doing so for others.

It is no secret that many students and most parents want a college degree leading to a field that pays well. Unfortunately, many students who choose majors that pay relatively poorly still expect to live a comfortable professional-class lifestyle. If parents are willing to pay for those choices, they should be allowed to, but taxpayers should not be forced to do so too.

Departments that repeatedly produce students who earn incomes well below the average for college graduates should not be subsidized by taxpayers. This does not mean that those departments should be shut down. Those departments can still fundraise from philanthropic sources and alumni. And some professors in those departments will be needed to teach required courses. This would effectively mean that those departments function more like private universities.

Setting up a competition between departments to ensure that their students acquire the skills for long-term success should be encouraged. Currently, departments have no institutional incentive to ensure that students get what they need. This should not spell the end of social sciences or humanities, but it will force them to analyze what their students need to learn in the long run and monitor results.

College Drop-Out Rate

While there is often talk about high-school dropout rates, relatively little is said about the problem of college dropout rates. Only about 40% of those who go to college obtain either a 2-year or 4-year degree by their mid-twenties. Only 19% of full-time students who attend four-year schools graduate within four years. Moreover, only 56% graduate within six years.

Most universities do not mind, because longer time periods increase the level of tuition that they harvest from students. And universities get paid regardless of whether or not a student graduates. The worst possible outcome, not receiving a degree while incurring a large debt load, is becoming increasingly common. This wastes taxpayers’ and parents’ money (Complete College America).

This results in higher levels of college debt and lost wages. Each additional year of four-year college attendance costs $22,826 in higher tuition and living expenses and $45,327 in lost wages. Each additional year for 2-year Associate degrees costs over $50,000 (Complete College America).

Minimum Course Load

One important reason why college students do not graduate is that they are not taking enough courses. Students who take enough courses to graduate within four years have much higher graduation rates than students who take fewer classes (Complete College America).

Universities that require students to take a full course load have much higher graduation rates than universities that do not. In combination with lower spending on amenities and more affordable tuition, this one simple requirement could shift the emphasis of the college experience back to education (Complete College America).

State legislatures should seriously consider mandating all students who enter a four-year public university under the age 25 to enroll in enough courses to graduate within four years. The same requirement should be made for 2-year Associate degrees and 1- to 2-year certificates. In addition, the federal government should mandate that any student who receives tuition subsidies or government-backed loans do the same.

We know that students can do this, because it was a routine schedule in the past. In combination with my previously-discussed reforms, a minimum course load would be possible and effective today.

With lower tuition fees, students will have to work less in gainful employment, giving them more time to focus on their studies. And with fewer on-campus amenities, they will have fewer distractions from their studies. Students who need to work to pay for living expenses will still have plenty of time in the evenings and the summer to work.

Obviously, not all students have the luxury of taking a full course load. Older students, in particular, have family and work obligations. That is why I suggest that, in order to be fair to older students with full-time jobs and family, we should exempt students who first enroll in college at age 25 or higher.

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The above is an excerpt from my book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

This article is part of a multi-part series on making university tuition more affordable without undermining the quality of education. As a former college professor, I have some unique insights into the problem and how to solve it.

In previous articles, I made the case that:

• Vocational schools are better than college for most youths.

• To lower the cost of tuition, amenities should be a separate optional line item.

In this article, I will argue that universities need to radically cut the amount of non-academic jobs in the university bureaucracy.

The following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

Cutting Bureaucracy

Another major factor in our rapidly increasing tuition costs is bureaucratization. Over the last 50 years, the number of non-academic administrators per student has grown rapidly.

Between 1993 and 2007, the number of full-time administrators per 100 students increased by 39%, so they now make up double the number of employees dedicated to education. After adjusting for inflation, the cost of these administrators increased by 61%. In most universities, the majority of employees are not directly engaged in education or research. The lion’s share of this additional cost is paid for by state and federal governments (Greene).

Unfortunately, this growth in bureaucracy has accelerated over the last decade. The increase in hiring for Diversity, Equity, and Inclusion is particularly explosive. Ivy League universities now average a 1:1 ratio of administrators to students. In 2002-03 Yale University employed 3,500 administrators and managers, while it had 5,300 students. By 2021 Yale had more than 5,000 administrators and managers to 4,700 students (Chronicle of Higher Education).

There is absolutely no evidence that this ever-growing bureaucracy improves the quality of the education. In many cases, these administrators increase the quality of the amenities in the college experience, but, as discussed earlier, this is a double-edged sword. The better the amenities, the greater the distraction students have from academic work.

Moreover, these bureaucrats actually do something. They have built a huge administrative apparatus that has undermined the academic freedom of professors and the free speech of students. Far from creating an open learning experience, they are turning campuses into hives of groupthink mentality.

These bureaucrats have also empowered a relatively small proportion of left-wing students and professors to intimidate the entire campus. Because these administrators are well to the left of center in their politics, they often abuse their power by enforcing the rules differently, based on the politics of the perpetrators. Centrists and conservatives are punished far more severely for the same act compared to left-wing activists.

This has created an atmosphere on many campuses where Critical theory is the dominant ideology. Critical theory activists increasingly politicize all campus activities, and campus administrators allow them to intimidate anyone with a different opinion.

State Legislatures need to demand cuts

Given the huge negative impact on campus culture as well as spiraling tuition fee increases, state legislatures should fight back by mandating that state universities cut back on the total compensation package of non-academic employees. State universities are typically governed by a board of regents, but the state legislature has the power of the purse strings. They need to start using this power to lower the cost of going to college.

A simple mandate to the board of regents to cut the total compensation package of non-academic personal by 10% each year would at the very least stop tuition increases. More likely, it would cause tuition fees to finally start moving downwards.

In return, state legislatures should shift some of the savings towards investments in information technology and automation. This would enable universities to burden their academics with far fewer administrators. State legislatures could also shift some of the savings to increasing the salaries of adjunct professors, who teach the bulk of the classes in many universities.

State university regents and administrators will probably howl in protest that this is impossible to achieve, but they will be wrong. History shows it. If universities could function well in the 1970s with far fewer administrative personnel and virtually no digital technology, there is no reason why the same number of personnel cannot run them today.

A model of slimmer bureaucracies

We do not need to reinvent the university, we can just go back to what worked in the past. Virtually every one of these universities existed in 1970, and they all had dramatically lower levels of bureaucracy at that time. And remember that this was at a time when there were no personal computers or the internet. Digital technology should make it easier for a small number of administrators to do their job effectively.

Each state legislature and board of regents should look back through their records to the early 1970s, when college bureaucracies were much slimmer. If a person’s job title (or something approximating it) did not exist in the early 1970s, they should seriously think about eliminating that position. If the ratio between the number of employees with that job title per student was significantly lower in the early 1970s, they should seriously cut back on the number of personnel with that job title. With those two simple criteria, we could make substantial cuts to administrative costs without lowering academic quality.

In particular, state universities should cut back on the quantity and compensation package of upper- and middle-level bureaucrats. Because of their relatively high salaries, those people will make up a significant percentage of the total compensation package of non-academic employees.

Notice that I am not advocating cutting the compensation package of any job titles that are directly related to education. By radically cutting back on non-academic bureaucrats, we can shift the focus of universities back to education.

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The above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

In a previous article, I made the case that college is not the best option for most youths. In fact, I argue that too many youths are going to college. The result is that only about half actually graduate with a four-year degree, and many of them get a job in a field other than their degree.

Going to university makes a great deal of sense for youths in the Top 25% of intelligence and academic aptitude, particularly if they want to pursue a career in law, business, finance, engineering, or physical sciences. However few youths from working-class and lower-income families fit into that category. If they do, of course, they should have the opportunity to do so and compete as equals with those from higher-income families, but it should not be considered the default pathway to success.

The vast majority of the content that is taught in universities is simply not relevant for the vast majority of youths from working-class and lower-income families. And, yes, I used to be a professor so I know a little bit about the subject.

I do believe, however, that going to a four-year university is a viable goal for the Top 25% of intelligence and academic aptitude. We also need to make sure that all students have the opportunity to go to college regardless of their class background. Particularly for academically talented youths from working-class and lower-income families, the cost of college tuition has become a major barrier to their Upward Mobility.

I have already written that universities should make admissions decisions based on merit. In this series of articles, I will suggest ways that universities can dramatically cut the cost of tuition without damaging the quality of education.

The following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

Making College Affordable

The four-year college degree has become the de facto entrance criteria into the American professional class. It is also the way that many young people learn valuable skills related to their future careers. For this reason, society has an interest in ensuring that public universities are effective, affordable, and fair.

America’s universities have a serious affordability problem. Tuition and other costs associated with getting a college degree have grown far faster than the overall rate of inflation. While college is supposed to be a means of elevating the talented regardless of their background, it often does the opposite.

Amenities

A big part of the problem is that universities have forgotten that their primary goal is to educate students. To compete against other universities in the Best Colleges rankings that come out every year, they have added more and more amenities, which have driven up the cost of tuition. Moreover, many of these amenities have become so enticing and time-consuming that they distract students from focusing on their studies.

Among the most important amenities are the buildings, landscaping, gyms, social activities, sports teams, dorms, and technology. Since all of these amenities can easily be compared visually during visits, universities have the incentive to look their best.

There are only three problems:

• First, none of these amenities have anything to do with education.

• Second, these amenities are expensive.

• Third, these amenities distract students from focusing on their studies.

Ever-increasing spending on amenities is one of the main drivers in the inflation of college tuition fees. In the 2010-11 school year, colleges spent $499 billion. Less than 30% of that amount goes to instruction. Almost half of that spending went to non-instructional services, such as student services, public service and academic support. Every year, the percentage of spending that goes to education declines (National Center for Education Statistics).

Universities are becoming more and more like Club Med with books. And unfortunately, the Club Med side keeps growing in terms of both time and money, while the books side keeps shrinking in terms of time devoted (if not money).

If affluent parents want to send their children to a four-year resort with books, and they are willing to pay the entire bill themselves, that is fine. I do not think that it is good for society overall, but parents should be able to spend their money as they choose.

However, when bright working-class or poor students cannot attend college because those amenities have ramped up the cost of tuition to ridiculous levels, you are interfering with the societal good. We want the most academically talented from all classes to be able to go to college even if they happen to be born into families with average or below-average incomes.

It becomes even worse when taxpayers are expected to pick up the tab for those affluent youths to attend a four-year resort with books. Asking working class and poor families to pay the bill for talented youths to go to college is one thing, but when the bulk of the costs go on unnecessary amenities, that seems grossly unfair.

Unfortunately, financial aid only makes the problem worse. Government financial aid to students is much like “affordable housing.” It does not lower the cost, it just temporarily shifts the cost and feeds the cost-inflation cycle. Universities know that they can keep raising tuition because students will not pay the final tab. Governments will. Universities also fear that spending less on amenities will cause them to fall behind other universities in the prestige game.

Less Time In Studies

Not surprisingly, given all the money being devoted to college amenities, full-time students are spending less and less time on their studies. There are simply too many distractions.

Based on data from the Bureau of Labor Statistics Time Use Survey from 2003-2014, the average full-time student devotes only 2.76 hours per day to the classroom, research, and homework. This comes to 19.3 hours per week, basically a part-time job. Ironically, high school students devote 10 hours per week more to their academic work than much older college students (BLS).

In fairness to them, some of this time deficit is made up for in paid employment. Full-time college students work an average of 16.3 hours per week for a total of 35.6 hours on education and work. This number is deceptive, however, as 40% of full-time college students do not have any paid employment. The combined work effort of non-employed college students is much closer to part-time workers than full-time workers (BLS).

Most full-time college students do not take the full course load. They deliberately take a lighter course load and stretch the “college experience” to five or six years. This helps to maximize their free time during the process. The unfortunate result is that only 19% of students graduate from non-flagship universities within four years. And every year they take adds to the tuition cost, the debt load, and the lost wages. (Rosenbaum).

Given that full-time workers routinely work 40 hours per week, it is hard to see why non-employed college students spend less time on their studies than younger and presumably less mature high-school students.

Make Amenities Optional

Because the four-year college degree has become the de facto criteria for entrance into the American professional class, and virtually all of our future leaders will come from that class, society has a strong interest in reducing tuition costs.

We need to shift the incentive structure of universities toward making tuition more affordable. We can do so by allowing students and their parents to decide what level of amenities they are willing to pay for. Public universities and private universities that accept government funding should be required to separate tuition costs from other non-academic costs.

Currently, tuition and all the amenities that the “college experience” has to offer are lumped into one price. Students are forced to pay for the college experience regardless of whether they want to or not. Just as importantly, taxpayers are forced to do so as well. We need to give students and governments the option of paying for education only.

This may seem like a radical change, but it is not. Students already have the option of paying for on-campus housing and meals separately from their tuition bill. No one is forced to pay for the housing or meals of other students. Students and their parents can choose whether they want to pay for housing and meals based on their own personal circumstances. College amenities should be the same.

In practice this would mean that students could choose from a range of four different items on the college menu:

• Tuition (required for all students)

• Housing

• Meals

• Other amenities. Amenities may either be collected as user fees, annual fees per amenity, or as a lump sum covering all activities at the university’s discretion.

Tuition costs would only include the costs to pay for the:

• Compensation package for professors, teacher’s assistants, and anyone whose sole job responsibility is teaching students or conducting academic research.

• Construction, maintenance, and repair of buildings devoted exclusively to classrooms and student academic activities.

• Classroom or student lab materials.

Federal and state financial aid or student loans should never pay for amenities, as they are expensive and in no way connected to students learning the valuable skills that societies need to pass on to their children.

State universities are funded partially by tuition fees and partially from direct government subsidies. I believe that direct government subsidies for education makes a great deal of sense. However, direct government subsidies for on-campus amenities has no clear societal good. At the very least, a separate budget for amenities would force state legislatures to discuss the appropriate level of taxpayer subsidies. My guess is that many would then choose education over amenities.

If students are given a choice as to whether they (or more likely their parents) are willing to pay for amenities, many will choose not to do so. The new payment system will also make it painfully clear how much of our current college tuition goes to non-academic amenities. Again, if affluent parents wanted to pay for those amenities out of their own pockets, they would be able to do so. But no one else would be forced to attend college.

Student Loans

As I write, President Biden has just signed an executive order canceling a substantial portion of student debt.  Many supporters of this order claim that this is a means of countering college tuition inflation. 

I believe that this measure will only make the inflation of college tuition worse, as it is telling universities that, no matter how high they raise tuition, the taxpayers will bail them out. When one takes into consideration the fact that a substantial percentage of the money goes to pay for non-academic activities for students from upper-income families, it is a particularly misguided policy.

My proposed payment system will also have a big impact on student loans. Student loans to pay for amenities look very different to both taxpayers and private financial firms than purely academic tuition. If private financial firms want to give what are effectively consumer loans to pay for amenities, they may do so. But the government should never subsidize this system, directly or indirectly.

Student loans to pay exclusively for tuition seem a far more legitimate candidate for taxpayer subsidy. In my next book in this series, Upward Mobility, I will go into more detail on how we can enable lower-income students to go to college. Here I will only say that taxpayers should never have to subsidize non-academic college activities.

I will continue this series on how to lower university tuition costs in future articles.

Subscribe now

The above is an excerpt from my book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

In previous articles, I made the case that most Western development theories are not very useful for developing nations. Reforming institutions, begging for more foreign aid, promoting democracy and human rights, and sustainable development are all very unlikely the create long-term widely-shared economic growth.

In the previous article in this series, I made the case that developing nations should focus their scarce resources on creating higher-value-added export industries to inject wealth into their nation. The question that I want to answer today is:

How do developing nations do that?

The following is an excerpt from my book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price on my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• Why export industries matter so much

• Why Developing nations need to create thriving export industries

• more

A Viable Export Strategy

Developing nations should learn to implement Hidalgo and Haussmann’s analogy that I mentioned in the previous article: think like a monkey who wants to move from one side of the forest with a few bananas to the other side of the forest with many bananas, while not going hungry along the way. I particularly recommend that government officials, entrepreneurs, engineers, and venture capitalists in developing nations learn to think that way.

I recommend that anyone who lives in a developing nation read their book: The Atlas of Economic Complexity (my summary of this book) and study the companion website (unfortunately since the publication of my book much of this website is now pay-gated and reorganized). The section for each nation that is currently labeled “Country Profiles” reveals economic statistics that are more actionable, timely, and specific than I have seen anywhere else.

The most relevant section for each nation is currently entitled “New Product Opportunities.” This section lists all of the industries that their theory predicts that the selected nation should invest resources in promoting. The site does not explain exactly how to do so, but I hope that as their theory attracts more attention from developing nations, they can gradually learn how to do so by trial and error.

As I mentioned in my previous article, the logic of this viewpoint leads to a clear economic learning strategy for developing nations:

1. Identify all your existing domestic industries.

2. Identify other industries that are closely related to existing industries and which also produce equal or higher added value.

3. Leverage the necessary technologies, skills, organizations, and capital from existing industries to learn the skills needed for the new industry and use the advantage of cheaper labor to outcompete richer nations. This will often involve selling an existing product at a cheaper price than richer nations can produce it for. It also involves focusing on the low end of the market, where price is more important than quality, while leaving richer nations to focus on the higher end of the market.

4. Keep repeating the process for decades.

Now let’s get into to the details of how leaders of developing nations can actually do this. A reasonable starting point for a long-term development strategy via exports would include:

1. Select a few industries recommended by the website to focus on. These are industries that are similar to pre-existing export industries with a higher potential for profitable export. Because they are similar to existing industries, the potential for “jumping” to that industry successfully is much higher.

2. Collate all information that is currently available on the internet about the knowledge and skills that are needed within the target industries.

3. If necessary, translate that information into the native language.

4. Publish that information onto one website, so citizens of their nation can easily find them.

5. Organize conferences and networks of managers, entrepreneurs, engineers, skilled workers, and venture capitalists who have a detailed knowledge of the existing adjacent industries within their nations.

6. Focus the discussion on what those actors already know about the current industry, and how they might leverage that knowledge and skills to apply in the new target industry.

7. Identify “missing skills” that the nations do not have but need to grow the new target industry.

8. Pay foreign industry experts to give lectures, write articles and create videos that specifically address the needs of both the target industry and the nation in question. A particular focus should be on the missing skills.

9. Provide venture capital to entrepreneurs who are willing to found new companies in the target industry.

10. Provide seed money to establish local venture capital companies, so that funding sources can shift from the government to private equity in the long run.

11. Continue that funding for a few years, but then make further funding based upon clear, transparent export metrics. If other citizens of other nations are willing to buy a company’s product, that company must be doing something right. This gives evidence for a further round of funding. If not, funding should be cut off.

12. Pay foreign industry experts to provide on-the-job training to new employees. In the past, this required them to relocate to foreign countries, but short visits and digital conferencing may now be an adequate substitute. These meetings should “train the trainer” so that, after a local employee gains the necessary expertise, they could then do face-to-face training with other employees on site.

13. Establish departments within public universities and secondary education that are specifically designed to teach critical skills to future entrepreneurs, engineers, skilled workers, and venture capitalists. Most likely, foreign experts will be needed for instruction, at least at the start. As the economy changes, this curriculum should be constantly updated to reflect those changes.

14. Keep experimenting. It will take time to learn what works.

15. Compare notes with other developing nations who are trying similar strategies, to learn what they learned.

According to the other schools of thought that I discussed earlier, none of this is necessary because these efforts are not focused on what matters. But I do not believe that free trade, fighting corruption, or establishing property rights will help developing nations build profitable export industries. Nor do I believe that foreign aid for education, sanitation, and health care will do so; nor will democracy, political rights, or sustainable development. None of the other proposed strategies are focused enough to make a difference in what matters: higher value-added export industries.

My proposed strategy also has many important advantages over the competing proposals coming from the other schools:

• It leverages the money, knowledge, and skills of wealthy nations without requiring consent from their governments or multilateral organizations.

• It does not require massive reform of institutions or constitutions.

• It does not require foreign aid or large amounts of domestic funding.

• It does not require a massive transition to democracy and freedom.

• It does not require many different departments to cooperate.

• It does not threaten authoritarian leaders who run the nation (more on this later).

• It is the only strategy that focuses on the Five Keys to Progress.

Whereas the other proposals require some sort of agreement from domestic political leadership, multilateral organizations, or foreign governments, one small department with a relatively small budget can implement my proposal. This gives it a huge advantage over the other proposals.

It is quite conceivable that one particularly energetic Minister of the Economy or lower-level official within the same department might be able to start the process without much budget or approval from above.

Most of my proposal involves figuring out what needs to be learned, learning those skills, and then getting the right people together to coordinate their actions. Depending upon the industry at hand, initial seed money may not need to be extravagant.

High-level leaders may prefer not to know too many of the details of what is going on so that they can rely on plausible deniability if it all fails.

I believe that developing nations should focus on perfecting this strategy to gradually build higher-value-added export industries that are competitive on the world market. This strategy will enable developing nations to gradually leverage all the existing technology, skills, organizations, and capital to build new industries.

Over decades, this process can build a thriving economy that experiences progress. So many nations have transformed themselves within one generation that I refuse to believe that it is impossible.

There are two important problems with my proposal: the most important is that, because it has never been tried before, it might well fail. Failure is the most likely outcome of all new experiments, but that does not mean that one should not try.

We know that nations have made the transition from poverty to progress, so something works. And by thinking through how previous nations did do (as opposed to listening to the theories and ideologies of other schools), developing nations might be able to radically speed up the process.

With the proper knowledge and the right people, evolutionary processes can be accelerated. That is exactly why understanding the real causes of modern progress in wealthy nations is so critical.

So, have other nations used my proposed strategy? No, not if you focus on the details. But I think that if you look at strategies that Commercial societies in Northwest Europe used, what European nations used to industrialize in the 19th Century, and what Asian nations did at a later date, I believe that there are strong resemblances.

Because historical societies did not have the benefits of the theory of economic complexity, nor its associated books and websites, they were forced to rely on the idea of ratcheting up export industries via “learning by doing”. I have every confidence that current developing nations can get even better results with the help of those critical resources.

Moreover, based upon a study of history, it is plausible that previous nations followed a similar strategy without necessarily being clear in their minds as to what they were doing. They may have just solved one problem at a time, copied others, and gradually worked their way through my proposed list without realizing it.

Because they did not do this regularly within a relatively short period, there was no reason for national governments to develop a formal methodology. And each of these nations, feeling that they were in competition with all the others, had a strong reason not to enlighten the rest of the world, let alone publish it in a book as I do.

Note: If you are interested in doing a deeper dive into the theory of Economic Complexity, I would recommend that you start by reading the following summaries from my library of online book summaries in the following order:

1. “Atlas of Economic Complexity: Mapping Paths to Prosperity” by Hausmann, Hidalgo et al

2. Observatory of Economic Complexity (this is a free online website displaying data related to economic complexity)

3. “The Product Space Conditions the Development of Nations” by many

4. “Economic Development as Self-Discovery” by Hausmann and Rodrik

5. “Discovering Southern and East Africa’s Industrial Opportunities” by Cesar Hidalgo

6. “Shooting High or Low: Do Countries Benefit from Entering Unrelated Activities” by many

7. “Linking Economic Complexity, Institutions and Income Inequality” by Hartmann, Hidalgo et al

What Does the Great Leader Think?

The other problem with my proposal is that some authoritarian leaders and all totalitarian leaders would never accept it. Lower-level officials might try it on their own initiative thinking that “this is what the Great Leader would want if only I could talk with him.” But once their superiors found out about these attempts, they would squash the effort.

High-value export industries create wealth. Authoritarian leaders want to monopolize as much wealth as they can and then redistribute most of it to supporters with a particular focus on security services. This is how authoritarian regimes maintain their power. As strange as it may sound to rich Westerners, many leaders do not want productive wealth in the parts of the economy that they do not control.

Ultimately it comes down to the individual preferences of the leader and their highest-level supporters. They might feel threatened by my proposal, and they might not. Remember, they are trying to balance a desire to not let rival power bases emerge with the need to promote economic growth to maintain their legitimacy. Individual leaders will have different preferences, and those preferences will vary over time.

While I am sure that many authoritarian and all totalitarian leaders would ruthlessly suppress any hints of implementing my proposal, I believe that most leaders in developing nations would not. And some leaders might enthusiastically support it. So while my proposal may not work for every developing nation at all times, I am confident that it can be put into practice by more than a few nations.

The beautiful thing about my proposal is that it is flexible enough to apply to all developing nations (and probably wealthy ones too), and it is self-sustaining. If a nation gets real results by establishing one new export industry, this builds political support for trying the methodology out on another industry.

Success in building one industry also leads to learning, so hopefully, nations will get better at it with each try. With each victory, the department that oversees the effort will get more and more political legitimacy and bigger budgets (assuming the highest leaders like the effort, of course).

Better yet is the effect on the rest of the economy. Employees in high-value export industries will probably earn higher than average incomes. Those employees will spend money in the local economy and provide markets for small local businesses.

The tax base would also be broadened. Some of the revenue will undoubtedly be stolen by corrupt officials or wasted on useless programs, but some of it might be used for investing in infrastructure, sanitation, health care, and education. Either way, the money coming in will get support from at least some actors, corrupt or not.

Most importantly, the nation will learn valuable skills, implement new technology, start up new institutions and get new sources of working capital. All of this can then be used for starting the next industry. If properly implemented and maintained, it could create many competitive exporting industries in a relatively short period.

Subscribe now

The above was an excerpt from my book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price on my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• Why export industries matter so much

• Why Developing nations need to create thriving export industries

• more

In previous articles, I made the case that most Western development theories are not very useful for developing nations. Reforming institutions, begging for more foreign aid, promoting democracy and human rights, and sustainable development are all very unlikely the create long-term widely-shared economic growth.

Wealthy Western nations can help developing nations by:

• Keeping their own material progress going

• Maintaining the global trade system

But let’s face it. There is only so much wealthy Western nations can do to help.

So how can developing nations ratchet themselves up from poverty to progress?

Using the concept of the Five Keys to Progress, I narrowed down the list of necessary preconditions for material progress to identify what developing nations are missing:

Key #1: A highly efficient food production and distribution system. With the exception of Sub-Saharan Africa and a few other nations, most developing nations have productive enough agriculture to feed themselves. Thanks to the global trade network, they can supplement their domestic food production with imports.

Key #2: Trade-based cities packed with a large number of free citizens possessing a wide variety of skills. Fortunately, virtually every developing nation has large cities and the trend towards urbanization seems inevitable.

Key #3: Decentralized political, economic, religious, and ideological power. Except for a few hardline totalitarian nations, such as North Korea, there is already enough non-violent competition between institutions to get the ball of progress rolling if all the other conditions apply. Fortunately, there is no evidence that nations need democracy, free markets or good institutions in order to start progress.

Today I want to make the case that the most important goal for developing nations is to create thriving export industries (Key #4) that can compete in the global market. It is only in this way that they can inject wealth into their local economies.

The following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price on my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• Why export industries matter so much

• more

Regardless of how productive agriculture, energy systems, or innovative cities are, for progress to take place, a society must have at least one high-value-added industry that exports to the rest of the world. These industries inject wealth into the region and accelerate economic growth. Other than expanding energy usage, I believe this is by far the most effective strategy that developing nations can implement to initiate progress and keep it going.

For current developing nations, I would reword the general principle a bit to “having as many export industries as possible, and each of those industries should be as high-value-added as possible given the current state.” The wealth created by high-value-added export industries can then be spent locally by its employees, generating demand for a gaggle of smaller local businesses. This wealth also creates a steady revenue stream for governments to invest in education, health, transportation, sanitation, and energy infrastructure.

By exporting to the rest of the world, an industry radically increases the potential demand for its goods. Except for the United States and perhaps China, no nation has the domestic demand necessary for large-scale industry without exporting to the rest of the world.

If a farm or city is restricted to customers within its borders, its economy has far less growth potential. And the more value the industry generates, the higher the potential profits. That is why high-value-added industries that are competitive enough to export to the rest of the world are so critical to promoting progress within a region.

The nature of the industry that is needed varies greatly over time. In the distant past, a mineral or crop might have been sufficient. More typically today, it requires some form of manufacturing. Textiles, steel, and consumer electronics are all industries that played critical roles in various nations during their initial industrialization.

To successfully export, a city needs the necessary technologies, skills, social organizations, and capital. These factors are typically acquired by copying them from richer regions that already have them, modifying them for the local environment, and then slowly learning by doing. Skilled immigrants from richer nations often play a critical training role in the learning of new skills.

The emerging discipline of Economic Complexity gives us the best understanding of how this process works. Cesar Hidalgo and Ricardo Hausmann have played pioneering roles in this field. Hidalgo and Hausmann argue that modern societies acquire productive knowledge by distributing that knowledge among many specialized workers. Organizations and markets then combine that knowledge to make useful products. This fits in nicely with my observations about How Progress Works.

If you are interested in doing a deeper dive into the theory of Economic Complexity, I would recommend that you start by reading the following summaries from my library of online book summaries in the following order:

1. “Atlas of Economic Complexity: Mapping Paths to Prosperity” by Hausmann, Hidalgo et al

2. Observatory of Economic Complexity (this is a free online website displaying data related to economic complexity)

3. “The Product Space Conditions the Development of Nations” by many

4. “Economic Development as Self-Discovery” by Hausmann and Rodrik

5. “Discovering Southern and East Africa’s Industrial Opportunities” by Cesar Hidalgo

6. “Shooting High or Low: Do Countries Benefit from Entering Unrelated Activities” by many

7. “Linking Economic Complexity, Institutions and Income Inequality” by Hartmann, Hidalgo et al

The skills needed for industries can only be taught face-to-face. Typically, people learn through face-to-face guidance from people who have already mastered the skills. This makes knowledge transfer across long distances very difficult.

And transferring some of the necessary skills for an export industry is not enough. An export industry needs all the necessary skills. If an industry is missing only one key skill, it cannot be competitive.

This places poorer nations in a Catch-22 situation. They cannot create high-value-added industries until they acquire the necessary skills, but they cannot acquire the necessary skills until they already have a functioning industry. This creates a fundamental gap that developing nations have difficulty bridging.

On the face of it, this appears to make economic growth impossible. Fortunately, we know from history that economic growth is possible.

The theory of economic complexity gives us the key intellectual breakthrough that industries are related to each other because they share common skills. For example, manufacturing shoes is closely related to manufacturing hats, because they share common production skills. Those same industries are far less related to manufacturing tractors or pharmaceuticals because those industries require very different skills.

And skills are not the only factor. Related industries also require similar technologies and organizational needs. This makes it theoretically possible for poor nations to leverage the limited knowledge that they have from current sectors of the economy to other related sectors that offer higher value.

Voyage of the Monkey

Hidalgo and Hausmann use the analogy of a monkey traveling through a forest in search of food. The monkey is on one side of the forest with few bananas (limited export options) and wants to get to the other side of the forest with many bananas (many profitable high-value-added export industries). The monkey can only travel one branch at-a-time, and it must survive each step by consuming bananas (i.e. acquiring the energy to survive).

So what does the monkey do? He gradually moves to the nearest branch with more bananas than the one he is currently on. He then uses the energy gained from the bananas (i.e. the technologies, skills, organizations, and capital) to go to the next branch. It is a long, slow process, but eventually, the monkey reaches the part of the forest with many bananas. This assumes, of course, that there are branches that are sufficiently close to each other along the way. Hidalgo and Hausmann’s breakthrough is that they show through sophisticated statistical techniques that there is a pathway of branches from one side of the forest to the other.

Hidalgo and Hausmann represent all existing export industries with the following Product Space map (you can think of this as the forest that the monkey needs to travel through):

This viewpoint gives us a clear understanding of how economies developed both in the past and the present. Commercial societies in northern Italy, Flanders, Netherlands, and England pioneered the innovations that created high-value-added industries. This was a long, slow process because they had no one to copy at first. There was a huge amount of learning by doing, with many mistakes along the way. As long as four of the Five Keys to Progress created the necessary preconditions for progress, they could keep experimenting and innovating for centuries.

Eventually, this led to the critical breakthrough of the Industrial Revolution in Britain. This largely involved the application of fossil fuels to the critical transportation, communication, agricultural, and materials sectors. Industrial technologies overcame some, but not all, of the geographical constraints on progress.

Today, developing nations face a different problem. All of the necessary technologies, skills, and organizations have already been invented, so they only need to copy them rather than creating them from scratch. However, because skills typically require a face-to-face transfer, it is hard for people in developing nations to learn everything they need to know. Worse, they face highly competitive industries in the richer nations that are vastly more productive. The one important advantage that developing nations have is cheaper labor.

The logic of this viewpoint leads to a clear economic learning strategy for developing nations:

1. Identify all your existing domestic industries.

2. Identify other industries that are closely related to existing industries and which also produce equal or higher added value.

3. Leverage the necessary technologies, skills, organizations, and capital from existing industries to learn the skills needed for the new industry and use the advantage of cheaper labor to outcompete richer nations. This will often involve selling an existing product at a cheaper price than richer nations can produce it for. It also involves focusing on the low end of the market, where price is more important than quality, while leaving richer nations to focus on the higher end of the market.

4. Keep repeating the process for decades.

It is a nice theory, but does it work? Hidalgo, Hausmann, and others give compelling evidence that economic complexity is a useful concept, but it is not yet clear whether it can be put into practice.

By statistical analysis, Hidalgo and Hausmann show that complexity explains 73% of the variation in income across 128 countries. They also show that the difference between national income and level of complexity is the single best predictor of future economic growth. In other words, poor countries that have established a beachhead in higher-value-added products experience much higher growth rates in the immediate future than those that do not.

Free Trade or Fair Trade?

For centuries there have been bitter economic debates between free traders who abhor industrial policy and economic nationalists who see tariffs as crucial for promoting national economic growth. Overall, I am convinced by the arguments of free traders that industrial policies often lead to bad economic outcomes by subsidizing failing companies and those with insider connections.

I believe, however, that the theory of economic complexity creates a compelling middle ground. Instead of government bureaucrats “picking winners” based on political pressures, let the economic data do so. If government bureaucrats are forced by law to only pick industries that comply with the above algorithm, this might greatly reduce corruption and incorrect guesses.

As I mentioned before, it is still very unclear what specific policies a government should implement once they have identified an industry. I do think further research and inexpensive experimentation are warranted in this area. The theory just makes too much sense to be completely wrong.

So how can developing nations implement this idea? That is the topic of my next article in this series.

Subscribe now

The above was an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price on my website, or you can purchase for full price on Amazon.

Other books in my “From Poverty to Progress” book series:

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• Why export industries matter so much

• more

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing? (this article)

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

Assessing the Five Keys

In previous articles, I assessed the quality of the advice given by Western development experts. It is pretty clear their advice is largely based on theory and ideology, not what has actually worked in the past.

So we are left with none of the four schools giving very useful advice. It should not be surprising that developing nations are getting increasingly skeptical of Western advice and finding their own path.

So should we just give up and insist that nothing works?

No, and if you doubt me, take a look at my first book, From Poverty to Progress. Despite poor advice from Western experts, progress is happening all over the globe. Better yet, that progress is particularly strong in the poorest nations.

So if we take the advice of most experts, nothing works in theory, but a great deal of it works in practice!

We must do better. We must focus on the Five Keys to Progress.

Below I assess the current state of developing nations to see how they measure up against the Five Keys to Progress. Both wealthy nations and developing nations need to keep their focus on their relative levels of the Five Keys to Progress. Think of the Five Keys as a scorecard that enables nations to see what is most important to focus on while in their current state.

As conditions change, the scorecard changes. As the scorecard changes, the necessary strategy and policies change as well. But the focus should always be on the Five Keys to Progress.

It is important to keep in mind, however, that there are vast differences between developing nations. Some export massive amounts of petroleum and natural gas, while others export none. Some have very large populations, while some are tiny islands with few inhabitants. Some border wealthy nations, while others are far away and have no ocean ports. Some have tropical climates, while a few have temperate climates.

Some have a history of European colonialism, while others were never conquered. Some have a recent history of Communism, while most do not. Some are democracies, while others are authoritarian or totalitarian regimes. Developing nations also diverge greatly by language, religion, ethnicity, and history.

Most importantly, developing nations diverge greatly by current levels of per capita GDP (PPP). Some nations, such as Taiwan and South Korea, are as rich as many European nations and have highly diverse export-based economies. Other nations such as Brazil, China, India, Indonesia, Mexico and Turkey are much poorer but have experienced significant economic growth over the last 30 years. Then there are nations such as Afghanistan, Liberia, Congo and Haiti who are still living in serious poverty (although, as I show in my book, From Poverty to Progress, the 20 poorest nations in 1990 have improved faster than the rest of the world).

As a reminder, the Five Keys to Progress are:

1. A highly efficient food production and distribution system.

2. Trade-based cities

3. Decentralized political, economic, religious, and ideological power.

4. At least one high-value-added industry that exports to the rest of the world.

5. Widespread use of fossil fuels.

Key #1: Productive Agriculture

The first key (agriculture) is largely a solved problem. By that, I mean that:

• we know what works, and

• the vast majority of developing nations are moving in the right direction.

The main exception is Sub-Saharan Africa, which has far less productive agricultural systems than other developing nations.

Agriculture is far more productive than it was two centuries ago, and it is likely to keep getting more productive. We also have a global distribution system that moves the food surplus from the most important grain producers (USA, Australia, Canada, France, Argentina, Russia, and Ukraine) to poor nations. Famine has been virtually eliminated and undernourishment is also rapidly declining.

I have already outlined the benefits of a Second Green Revolution in Sub-Saharan Africa and the dangers of opposition to modern agricultural technologies. This is probably more of a problem with the politics in wealthy nations than anything that developing nations can deal with themselves. So, unless a nation has a particularly unproductive agricultural system (for example Sub-Saharan Africa), it is probably wise to focus efforts elsewhere.

Just don’t completely ignore farmers; they are a foundation of progress.

Key #2: Cities

The second key (cities) is also already a solved problem. More than half of humanity now lives in cities, and virtually every developing nation has either high rates of urbanization or rates that are rapidly increasing. It is difficult to see how this can be reversed. As I showed in my first book, the massive slums that haunted our imagination in the late 20th Century are disappearing rapidly (see graphic below).

Of course, governments can do more in this area. They need to ensure that housing stays affordable by not restricting home construction, particularly on the outskirts of metro areas. This is largely a matter of not following Western practices of using land regulation to force density. Affordability is far more important than density.

Governments can also make cities more livable and functional by building a foundation upon which the vast decentralized problem-solving network of people living in cities can solve problems.

Governments should ensure that energy, transportation, and communication for their cities’ infrastructures get constructed and well maintained. This might be by direct government services or by the government giving private companies incentives to do so.

In addition, low-cost investment in education to promote literacy, numeracy, and advanced technical knowledge, such as engineering, can increase the level and diversity of skills in cities. Finally, basic investments in vaccinations, sanitation, water filtration, and public health can have a significant positive impact on the quality of life in urban areas.

All of this makes sense to most people and to a large extent, it is already happening. Governments in developing nations are doing so by copying the infrastructure, institutions, and policies that are already working in wealthy nations.

So all of this is a solved problem in the sense that we know what works, and developing nations are moving in the right direction. Sure, they can do more, but I doubt that doing so will be the most effective use of scarce revenues.

And most importantly, where does the money to pay for all of this investment come from? Most developing nations are already realistically doing all they can in this area.

In this domain, I agree with William Easterly. Foreign aid has a very bad track record of accomplishing these tasks. Authoritarian leaders and corrupt officials use the money for their self-interest, so much of that money only reinforces the problem. And wealthy nations do not have infinite resources of goodwill to spend the trillions of dollars necessary to make it happen.

Developing nations must find a solution that is not dependent upon generous foreign aid or large increases in government revenue. More on this later…

Highly cost-effective investments, such as those that I mentioned above seem reasonable, but they do not get to the heart of the problem.

Key #3: Decentralization of Power

The third key (decentralized political, economic, religious, and ideological power) is a difficult problem to solve. From the fall of the Soviet Union to about 2005, non-Western nations across the world made an incredible shift to democracy and freedom.

But then, around 2005, progress in this domain slowed down and even reversed somewhat. Fortunately, this reversal did not slow down economic growth.

In this area again, I agree with William Easterly. Convincing political and economic elites that they should undermine their own power is not realistic. Just like monarchies in 18th Century Europe, many of those elites fear progress because of what it might do to their power base. They do not want to create economic wealth in people who might use that wealth to threaten their political power. But like elected politicians in rich nations, they know that promoting long-term economic growth is critical to maintaining the legitimacy of their regime.

Like the 19th Century monarchies of Germany, Austria-Hungary, Italy, Russia, and Japan, modern-day dictators are desperately trying to get the benefits of progress without that same progress undermining their regime. As the post-World War I collapse of those empires shows, this is a difficult balancing act that can lead to very bad results.

Fortunately, there is no evidence that nations need democracy, free markets or good institutions in order to start progress. Very few nations have been democratic before they transitioned to a state of progress. And many authoritarian regimes in Europe and East Asia have been able to initiate economic growth before it inevitably undermined their power and their nation transitioned to democracy.

I believe strongly in democracy and political rights. I think that they have worked in so many different cultures that they can function in any nation. Polls clearly show that the vast majority of people on Planet Earth want them (Pew).

But I am not sure that promoting democracy and political rights in developing nations will by itself lead to long-term economic growth. Except for a few hardline totalitarian nations, such as North Korea, there is already enough non-violent competition between institutions to get the ball of progress rolling if all the other conditions apply. The other conditions are the remaining Keys to Progress.

Proposals That Might Actually Work

Unlike the other four schools that we already discussed, I am hesitant to offer advice to developing nations. They have rightly grown skeptical of such advice and have largely followed their own path.

In addition, there are enormous variations between them. It is difficult to offer useful advice to China, Congo, Argentina, Honduras, Bhutan, Moldova, Iraq, and Palestine because they all live in very different circumstances. To cover so many different nations with so many different circumstances, one has to keep the advice very general, and this interferes with the advice being actionable. It is hard to find the right balance, but here goes.

My advice to leaders in developing nations would be:

1. Do not try to do everything. You have few resources, so you must focus on what matters most. With proper prioritization and solving the most important problems first, you can unlock solutions to all the other problems.

2. Do not follow the advice of current Western experts. Their advice is based on theory and ideology, not what has worked in the past.

3. Stay positive. Despite the bad advice coming from Western experts, many other developing nations have improved the lives of their citizens greatly over the last few decades.

4. Look to the actual history of how societies transformed from poverty to progress, not theory or ideology.

5. Focus intensely on the Five Keys to Progress.

6. In particular, look at the fourth key: a society must have at least one high-value-added export industries.

7. And do not listen to Greens who are trying to undermine the fifth key: widespread usage of fossil fuels.

All Five Keys to Progress matter, but I believe that the fourth (export industries) and fifth keys (fossil fuels) are the most relevant to developing nations today. I will go into much more detail on each in subsequent articles.

Subscribe now

Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing? (this article)

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

As I mentioned in a previous article, there are four major schools of thought among Western experts on how poor nations can develop, there are four major schools of thought among Western experts on how poor nations can develop:

• Economist school, who advise developing nations to establish good institutions and free markets

• Foreign aid school, who urge wealthy nations to spend more on foreign aid to assist developing nations to get out of “poverty traps”.

• Rights school, who believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. Once the people have those rights, their nations can grow their way out of their poverty.

• Sustainable development school that focuses heavily on renewable energy and less resource-intensive agriculture, transportation, and manufacturing.

In this article, I will compare the advice given by the “Sustainable development” school to what we have learned from how wealthy nations achieved their wealth in the past.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

What the Sustainable Development School believes

The fourth school of thought among Western development experts focuses on what they call “sustainable development.” Exactly what this term means is a little unclear, but it focuses quite heavily on:

• renewable energy

• less resource-intensive agriculture, transportation, and manufacturing

• above all, avoiding the need to use fossil fuels

The sustainable development school believes that a greener version of the Industrial Revolution is possible and will lead to better outcomes for the natural environment and poor people in developing nations. They believe that more traditional paths to prosperity will seriously hurt the natural environment, so developing nations need to find a different path.

Sustainable Development Isn’t

Of all the four schools of thought, this is the one that I have the most problems with. While the school has some good ideas, their proposals are potentially quite dangerous for developing nations to follow.

The fundamental problem is that sustainable development:

• Is not sustainable economically,

• Nor will it lead to economic development.

• Nor will it even lead to much improvement for the natural environment.

What is sustainable?

First of all, what does “sustainable” actually mean? How do we figure out whether a policy or practice is sustainable or not? Presumably, it requires some form of numeric calculation; but what is the formula to calculate sustainability? And what are we trying to sustain? Sustained for what timeframe?

The entire school is strangely silent on these key questions.

It is a political compromise

In practice, the word “sustainable” has no meaning other than “what Greens think is a good idea.” It feels like international development agencies have cobbled together a concept that connects what economists want with what environmentalists want. It is more a political compromise between two Western schools of thought than a real reform agenda.

International development agencies promote this agenda, not because they have any evidence that the policies work, but because it creates a stronger political alliance within wealthy nations to support aid and reform abroad. But what is good politics in wealthy nations is not necessarily good in triggering progress in developing nations.

There is no evidence, for example, that those who support sustainable development have done any of the mathematical calculations to determine if a specific policy or practice actually is sustainable.

Economics works faster than the environment

In practice, how sustainable a specific technology is far more dependent upon economics, not on its effect on the environment. Most technologies or new organizations collapse long before they butt up against any limits created by nature. And when they do so, all of society has a very strong incentive to create a better solution. That is exactly how the vast, decentralized problem-solving network works.

So the word “sustainable” appears to be nothing but a feel-good political buzzword. It may make activists feel good to say it, but it is not actionable, because no one is quite sure how to evaluate the long-term impact on the environment before technology has been implemented.

The time frame is too long

More to the point, why should poor nations care about whether the current practice can be sustained for 50 years? They have far more immediate problems, and they will be much more equipped to deal with those future problems if they are far wealthier. Within 50 years, technologies and practices are guaranteed to be very different regardless of their environmental consequences.

Sustainable development undermines the 5 Keys

If we leave aside where sustainable development overlaps the institutional reforms that economists want, we are left with two policies that seriously undermine two of the Five Keys to Progress. Since I believe that the Five Keys to Progress are the fundamental preconditions of human material progress, that is a big deal. Promoting long-term economic growth in developing nations should be about growing the Five Keys rather than undermining them.

Agricultural technologies are essential for developing nations

More specifically, the policies promoted by the Sustainable Development school undermine the first Key to Progress: A highly efficient food production and distribution system. This productivity enables societies to overcome geographical constraints to food production so that large numbers of people can focus on solving problems other than getting enough food to eat.

Those who promote sustainable development are hostile to essential agricultural technologies:

• tractors

• herbicides

• nitrogen fertilizer

• new GMO crops

• irrigation

• and many essential agricultural technologies and practices.

The Sustainable Development school is correct that, for some regions and individuals, these practices are not “appropriate.” But those practices should not be deemed inappropriate because they conflict with Green ideology or harm the environment. They should be deemed inappropriate when they do not lead to more productive agriculture.

Far too often, those who promote sustainable development romanticize traditional agricultural practices and show photos of happy farmers hand-tilling the soil. But let’s look at the reality of these practices: thousands of years of poverty at a level that we have difficulty imagining in modern Western societies.

More to the point, farmers in developing nations want the latest technologies. They are not always able to figure out how to pay for them, but that should be dealt with directly by helping them do so. I myself loan monthly to farmers in poor nations via Kiva.org. I suggest that you do the same.

It is not modern agricultural technologies that are “inappropriate.” It is the advice that environmentalists in the West who have never been farmers in their lives give to farmers in developing nations.

And deliberately trying to stop agricultural research by wealthy governments and corporations is just as bad. Of course, we should be concerned about the possible negative effects of modern agricultural technologies.

The single best way to help preserve the environment is to increase agricultural productivity. This will reduce the amount of land needed to grow food, and some of it can thus transition back into wild habitat.

This is not a utopian idea. The United States reached “peak farm acreage” around 1950. Farm acreage in the United States and other wealthy nations has been declining since that time. Globally we appear to have reached peak farm acreage sometime after 2000 (Our World in Data).

The key reason for this trend is the improving agricultural productivity caused by technological innovation. There is every reason to believe that further innovation can do the same in developing nations.

Fossil fuels are essential for developing nations

And the advice that those who promote Sustainable Development give in the field of energy is far more dangerous. The policies promoted by the Sustainable Development school undermine the fifth Key to Progress: Widespread use of fossil fuels.

The incredible energy density of fossil fuels injects vast amounts of useful energy into society enabling it to solve a wide variety of problems. Without this energy, life would return to the daily struggle for survival that dominated most of human history.

The Sustainable Development school opposes energy sources such as:

• petroleum

• coal

• natural gas

• nuclear and

• hydroelectric

Wind and solar is not a viable option at scale

Instead, the Sustainable Development school push solar, wind, and other renewable energy sources. (By the way “renewable” is another buzzword that actually means “what Greens think is a good idea”).

Developing nations desperately need to rapidly increase their energy usage and build modern electrical grids. Thinking that solar and wind can do it by themselves is both naïve and dangerous.

I have already written articles about how difficult, if not impossible, for the United States to replace coal-burning power plants (only one source of fossil fuels) with wind and solar. And I have written another article about how much harder it would be in Asian nations. If the United States and the richest nations in Asia cannot do it, what are the remainder of developing nations to do?

Both solar and wind vary greatly by geography. Most developing nations have few regions where the wind is strong enough to be a cost-effective source of energy. Very few regions outside of the oceans, the Great Plains in the United States, the North Sea, Argentina, and interior China have wide-spread onshore wind resources.

And while tropical nations have plenty of sun and lower latitudes, they also have humid atmospheres that undermine solar efficiency. And what are nations with tropical forests to do? Do environmentalists propose that these trees be cut down to make way for acres of solar panels?

Don’t laugh; it is happening in wealthy nations, and it is terrible for the environment. Worse is biomass, which effectively burns forests in the name of helping the environment.

The fact that no wealthy nation has come even close to an electrical grid based 100% on solar and wind makes it seems extremely unlikely that developing nations can do so. And electricity accounts for only 18% of global carbon emissions, so even 100% success within the electrical grid does not get you very far.

The reality is that developing nations need fossil fuels, hydroelectric dams, and nuclear power just as much and even more than wealthy nations do. That is why those energy sources make up well over 80% of all energy use. And that is why the widespread usage of fossil fuels is one of the Five Keys to Progress.

Given that not one single nation has made the transition from poverty to progress based on the principles of sustainable development, I find this advice very dangerous for developing nations. Moreover, I am skeptical that following their policies will help the environment much either.

That is why all developing nations choose some blend of petroleum, coal, natural gas, nuclear, and hydroelectric to power their energy systems. None use solar or wind in sufficient abundance to come even close to a majority of their energy production. That should tell you something.

Telling wealthy nations that they should slow down economic growth in favor of saving the natural environment by eliminating fossil fuels is terrible advice. Telling developing nations that they should do so is a moral outrage.

Rich people might as well tell poor people to just accept poverty and learn to enjoy it. Fortunately, developing nations are having none of it. Sure they build solar and wind in some locations, but they do not even attempt to build them at a scale large enough so that they do not need widespread usage of fossil fuels.

Subscribe now

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

As I mentioned in a previous article, there are four major schools of thought among Western experts on how poor nations can develop, there are four major schools of thought among Western experts on how poor nations can develop:

• Economist school, who advise developing nations to establish good institutions and free markets

• Foreign aid school, who urge wealthy nations to spend more on foreign aid to assist developing nations to get out of “poverty traps”.

• Rights school, who believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. Once the people have those rights, their nations can grow their way out of their poverty.

• Sustainable development school that focuses heavily on renewable energy and less resource-intensive agriculture, transportation, and manufacturing.

In this article, I will compare the advice given by the “Rights” school to what we have learned from how wealthy nations achieved their wealth in the past.

The following is an excerpt from my book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price on my website, or you can purchase for full price on Amazon.

Subscribe now

You can read other articles on related topics, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• What Western experts tell developing nations

• more

What developing nations can do to help themselves:

• Why export industries matter so much

• more

What the Rights School believes

The third school of thought among Western advice for developing nations focuses on individual rights. William Easterly is the key thinker in this school. Here are a few summaries of his works in my library of online book summaries:

• The Tyranny of Experts: Economist, Dictators and the Forgotten Rights of the Poor (his most important book)

And a few of his articles:

• “The European Origins of Economic Development” by Easterly and Levine

• “Tropics, Germs, and Crops: How Endowments Influence Economic Development” by Easterly and Levine

• “Africa’s Growth Tragedy: Policy and Ethnic Divisions” by Easterly and Levine

The Rights school of thought believes that developing nations are run by authoritarian regimes that will not reform their institutions because it is against their self-interest. They also believe that these regimes channel foreign aid into strengthening those authoritarian power structures rather than helping the poor. For obvious reasons, Easterly and his followers are hostile to foreign aid NGOs and they return the favor.

The Rights school believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. They believe that democracy is one of those freedoms. Once the people have those rights, their nations can grow their way out of their poverty.

Where I agree

First of all that I want to point out where I agree with William Easterly. Most of the other Western schools of thought advising developing nations are quite naive about the goals of the political leaders of those nations. Many leaders in developing nations are authoritarian or even totalitarian. Their only interest is staying in power, and they will divert foreign aid in pursuit of that goal.

As I mentioned in a previous article, leaders in authoritarian nations are driven by two imperatives:

1. The Domestic Security imperative: Do not allow rival elites to rise up to challenge your rule. This makes economic growth potentially dangerous as such growth potentially leads to new centers of wealth and power.

2. The Natural Security imperative: Do not allow the militaries of foreign rivals to conquer you. Ideally, you should conquer them first.

Money is a key resource to keep rival elites from rising up to challenge their rule. Political elites channel foreign aid money to their supporters and starve supporters of opposition forces of foreign aid. Because foreign aid NGOs need the support of the government, they have no choice but to diver their aid in the same way. This means that foreign aid often entrenches existing political elites at the expense of the poorest people in the nation.

Even democratically elected leaders in developing nations operate in the same manner to increase their chances of winning the next election. Funneling money to supporters is a time-honored tradition in almost all societies. Leaders in developing nations often view foreign aid as “easy money” that they can use for purposes very different from the intention of the original donors.

Many Western experts and foreign aid NGOs are either:

• Very naive about the power dynamics within developing nations, or

• Prefer to look the other way so they:

  • do not turn off donors or

  • miss opportunities to help at least some of the poor.

Rather than assisting a developing nation to transform itself, foreign aid often just entrenches existing elites.

In addition, Easterly and I share the view that developing nations will have to go through much the same changes that wealthy nations went through. By studying their economic and political history of early industrializers, we both believe that we can offer better policy options for developing nations.

Why Rights Are Not Enough

William Easterly’s more skeptical advice on the actual results of foreign aid is based upon an incisive analysis of how authoritarian regimes function, but it is not clear that his advice is actionable. Easterly is correct to say that Britain, the United States, Northern Italy, and the Netherlands had significant political rights and at least somewhat democratic governance. Those rights and their democracy took centuries to grow and did so within unique geographical and political environments.

But what is a reformer living within an authoritarian regime to do? They cannot change geography, nor can they wait for centuries.

They could become political activists opposing the regime and build a non-violent mass movement against that regime. They might also be willing to use violence in the name of freedom. Since all nations that are currently democracies with freedom initially established those freedoms through mass movements and at least some political violence, this may be unavoidable.

After the Revolution, what now?

So let’s just assume that the reformers win. They overthrow the authoritarian regime with some mixture of violence and non-violence.

Then what?

There is no evidence that democracy and human rights lead to economic growth Perhaps Easterly would say that you can follow the advice of the economists to build good institutions, or maybe he has another plan. I am not clear on this point.

Such a fledgling democratic regime desperately needs economic growth to provide some stability. Otherwise, opponents will take advantage of the inevitable instability that follows the revolution. Maybe the opponents will be better, and maybe they will be worse. But all reformers are left in basically the same situation.

What should they do now?

What is Ukraine to do?

Let’s look at the example of Ukraine. I am aware that the recent Russian invasion changes how we look at the nation and not all developing nations fear foreign invasion by a Great Power, but the Ukraine’s situation is not that unusual.

In 1991, Ukraine declared its independence from the Soviet Union. This was a huge achievement, but political independence has not led to economic growth, political stability, or a reduction in corruption. One can make the case that Ukraine’s material situation is worse today than under the Soviet Union.

My personal experience with Revolution

For the past 20 years, the Ukrainian people have tried to win their basic human rights and establish democratic governance. You might say that it all started in the Orange Revolution of 2004-05.

By sheer coincidence, I was in Ukraine as a tourist during that heady time. It is hard to describe the tension and excitement. After a corrupt Presidential election, demonstrators shut down Khreshchatyk with a massive tent city.

Khreshchatyk is the major avenue that runs right through the middle of downtown Kyiv. Khreshchatyk is 1.2 kilometers long and is 6 car lanes wide with very broad sign walks. It is huge!

Khreshchatyk is about the size of Champs-Élysées in Paris, but it is even more significant economic, political, and cultural hub for Ukraine. It is pretty hard to get anywhere in downtown Kyiv without driving through Khreshchatyk. And virtually even important institution in Ukraine has its headquarters in or near Khreshchatyk. To shut down Khreshchatyk is to shut down Ukraine.

In order to keep the police and army from retaking Khreshchatyk at night, protestors formed massive tent cities that covered the entire street (remember, the street is 1.2 km long and six lanes wide!). The protestors formed their own Orange Guard to police the Tent City, keep it peaceful, and keep the police and army out.

As I was packing my bags for the flight, there was rampant speculation that President Yanukovych would send in the tanks to crush the demonstrations. It looked like it had a real chance to become a new Tiananmen Square massacre.

Here are a few photos that I took at the time that give you an idea of what it was like.

As someone who has studied revolutions my entire life, it was intoxicating to see it at first hand. The combination of hope, naivete, fear, uncertainty, and expectation is hard to explain.

Fortunately, by the time I arrived in Kyiv, the previous President had already admitted defeat, and it become more of a celebration than a prelude to violence.

When I was in Kyiv many Ukrainians asked me “You are an American. What should we do now?”

I really had no idea how to answer the question. Despite getting caught up in the enthusiasm, I knew that the hard part was still to come. And unfortunately, life did not get better for Ukraine. Ukraine had another revolution in 2014. This one was more violent. Worse, a war was coming.

Now obviously, most developing nations do not have Russia breathing down their neck, but put yourself in their shoes.

What should you do?

So while I have great sympathy for those who fight against tyranny and establish democratic governance and human rights, I am not sure that they know how to create long-term widely shared economic growth. And without that growth, all the gains of democratic governance and human rights can be fleeting.

If Ukrainian leaders had been able to create long-term widely shared economic growth, maybe they could have avoided the second revolution and Russian invasion. Unfortunately, Ukraine is like many other countries stuck in poverty and seemingly with no way out.

Just like the other three schools of thought, there is no evidence that Easterly’s proposals will lead to a transition to progress. The freedom and democratic governance that he argues for are great things. I wish all nations had them, but they do not cause progress by themselves. Like all the other supposed causes, they are one of the many results of progress.

So while Easterly and the Rights school make some good points, it is not clear that they have a template for action for developing nations.

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Most of the above was an excerpt from my book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price on my website, or you can purchase for full price on Amazon. The official publication date is Oct 1, 2023.

You can read other articles on related topics, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• What Western experts tell developing nations

• more

What developing nations can do to help themselves:

• Why export industries matter so much

• more

As I mentioned in a previous article, there are four major schools of thought among Western experts on how poor nations can develop:

• Economist school, who advise developing nations to establish good institutions and free markets

• Foreign aid school, who urge wealthy nations to spend more on foreign aid to assist developing nations to get out of “poverty traps”.

• Right school, who believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. Once the people have those rights, their nations can grow their way out of their poverty.

• Sustainable development school that focuses heavily on renewable energy and less resource-intensive agriculture, transportation, and manufacturing.

In this article, I will compare the advice given by the “Foreign Aid” school to what we have learned from how wealthy nations achieved their wealth in the past.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

What the Foreign Aid School believes

The second school of thought for Western advice for developing nations is dominated by development experts and non-governmental organizations (NGOs). Jeffrey Sachs is the key thinker in this school.

The Foreign aid school, as I will call it, believes that wealthy nations and individuals should spend more on foreign aid to assist developing nations to get out of “poverty traps”. They believe that poor nations are trapped in poverty that only can be overcome with foreign aid.

In general, they argue for increased foreign aid that is targeted at improving education, sanitation, and health care. Once this foreign aid overcomes the poverty traps, these people believe that developing nations can grow into wealthier nations.

Why Foreign Aid Advocates Are Wrong

The advice of foreign aid experts has even bigger problems than the Economist school. Their advice is heavily dependent upon the willingness of wealthy nations to spend lots of money on foreign aid. It is even more heavily dependent upon wealthy nations doing so wisely, and local officials in developing nations not stealing the money to use for their own purposes.

The Foreign aid school views better health care, sanitation, and education as the desired outcome. It is unclear to the extent that they believe that these outcomes is an intermediate step toward self-sustaining economic growth or as an end in itself.

Unfortunately, Foreign aid school presents no evidence that significant gains in health care, sanitation, and education cause long-term widely shared economic growth. To the best of my knowledge, no evidence supports their case in this area.

I believe that the evidence is very clear that significant gains in health care, sanitation, education, and other development metrics are the result of long-term economic growth.

Nor does Foreign aid school have much evidence that the people living in developing nations live in poverty traps in all these domains. As we see more Asian nations transform themselves without significant amounts of foreign aid, it looks like an increasingly unreasonable assumption.

And if a poor nation does not experience long-term economic growth, how will they pay for these programs in the long run? It is naïve to believe that wealthy nations will keep foreign aid flowing forever. At some point in time, developing nations need to take the lead. Without economic growth, I do not see any way out of this conundrum.

Just like economists, foreign aid development experts point to very good things that are the result of progress, not the cause of it.

Health care, sanitation, and education are all good things, but they do not create progress or economic growth. And just like economists give unrealistic advice to overhaul institutions, building a health care, sanitation, and education system is very expensive and time-consuming.

If done correctly, building a health care, sanitation, and education system will lead to benefits that voters will notice, and perhaps it will create a self-sustaining feedback loop for increased funding. But then that leads back to the problem of where the money comes from in the first place, and what you spend it on when you get it.

While well-intentioned, I do not see how foreign aid or domestic government spending in health care, sanitation, and education will lead to long-term sustained economic growth in developing nations. It might make a difference in the quality of poor people’s lives, but that should not be the main goal. Self-sustaining domestic progress based on long-term widely shared economic growth should be the goal.

A nation trapped in poverty with a sophisticated and expensive health care, sanitation, and education infrastructure is simply not sustainable. The economic system will not have a broad enough tax base to fund that infrastructure. Nor is it clear that the infrastructure can be achieved, even with massive amounts of foreign aid.

Ironically, while this school of thought focuses on “poverty traps,” they are advising developing nations to create a different type of poverty trap. Developing nations need to create economic growth, and building vast social infrastructures wastes valuable resources that would be far more effective if used for other purposes.

We need a better path forward.

So what should you do?

Does that mean that you should not donate to foreign aid organizations?

No.

Helping other people who are less well off than you is an inherent good even if it does not lead to long-term widely shared economic growth. Health, education, and sanitation are inherently good things.

Focus on Results, not Feelings

But far too many foreign aid organizations make decisions based on:

• How donors feel

• How aid workers feel

• How the practice makes the organization look (i.e. public relations).

To be truly effective, however, foreign aid organizations should:

• Be based on methods that show proven results (ideally with long-term studies using randomized controlled trials)

• Not on making you feel good about yourself

• Not on showing how much you care

• Not on relieving your guilt for having more than other people

My hope is that NGOs will shift their focus to the ultimate goal of promoting long-term widely shared economic growth, but in the short term focusing on Results rather than Good Intentions would be a good first step.

Use your donations to support organizations that show demonstrated Results in developing nations. If NGOs focused 10% of their revenue on identifying practices in randomized controlled trials, that would be even better.

Most people simply do not realize the vast differences in impact differing NGOs have.

But if long-term widely-shared economic growth is the goal, I don’t see that the Foreign aid school has many solutions to offer.

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Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

As I mentioned in a previous article, there are four major schools of thought among Western experts on how poor nations can develop:

• Institutional school, who advise developing nations to establish good institutions and free markets

• Foreign aid school, who urge wealthy nations to spend more on foreign aid to assist developing nations to get out of “poverty traps”.

• Right school, who believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. Once the people have those rights, their nations can grow their way out of their poverty.

• Sustainable development school that focuses heavily on renewable energy and less resource-intensive agriculture, transportation, and manufacturing.

In this article, I will compare the advice given by the Economist school to what we have learned from how wealthy nations achieved their wealth in the past.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

Institutional School

The Institutional School is composed of economists, political scientists, and development economists who advise developing nations to overhaul their political and economic institutions. Though the school is dominated by a focus on political institutions, it is ironically dominated by economists who believe in free-market economies. The Institutional School believes that good institutions build the foundations that enable self-interested individuals to solve problems that benefit all of society.

The Institutional School believes that, if developing nations make the following reforms, free markets and long-term economic growth will naturally emerge.:

• implement free trade,

• reduce corruption,

• establish the rule of law and property rights,

• eliminate counter-productive government interventions in the economy, and

• build legal and law enforcement institutions to enforce those principles.

Those free markets will then usher their nations into prosperity. This school of thought is sometimes called the “Washington Consensus.”

Why Economists Are Wrong

The economists are correct in that lowering corruption, establishing the rule of law, free trade, and property rights, eliminating counter-productive government interventions in the economy, and building legal and law enforcement institutions to enforce those principles are all good things. But I disagree that these are essential factors in triggering long-term economic growth. I see all those factors as many of the benefits of what takes place after a nation initiates progress.

To the best of my knowledge, no nation has established all of the supposed keys proposed by economists before triggering economic growth. Every previous nation that experienced long-term economic growth lacked many or all of these factors before the growth period started.

I would suggest that economists are experts at keeping economic growth going, but they do not have a useful model for getting it started in the first place. This “problem of origins” and confusing cause and effect are endemic to the study of progress.

In response, many economic historians who focus on the origins of the Industrial Revolution and who believe in the important role of institutions point to Britain and the United States as models. They claim that those two nations are examples that illustrate their point.

Their argument implies that they believe that Britain and the United States effectively implemented what Western economists advise developing nations to implement today, and the result was the Industrial Revolution. While there is some truth to these claims, this school of thought seriously misrepresents the reality of Britain and the United States in the 19th Century.

This is not how rich nations actually got rich

Both Britain and the United States in the 19th Century had serious problems with corruption, counter-productive economic policies, tariffs, and legal systems that worked to the benefit of the rich and powerful. Britain and the United States also often went to war to promote trade. Britain built an entire empire. Both nations also had a serious problem of traditional Agrarian elites biasing economic policy to support their self-interest. I will write more on many of these points in future articles, but here is just one example of the endemic problem of ballot fraud in American history.

It was only well into the 20th Century that one can find a model of what modern economists would consider “good government” in both Britain and the United States. So the supposed causes came long after decades or even centuries of economic growth. And later in the 20th Century, both nations built expansive welfare states that the school believes undermine, or at least do not contribute to, economic growth.

So there is no period in either British or American history that this economic school can use as a model. Moreover, most of the policies that this school advocates came after both nations industrialized.

And Britain and the United States are the best cases for these theories. All other nations’ economic histories depart widely from the predictions of this economic school of thought.

This is putting theory before what actually happened

There is an implicit assumption that, if developing nations overhaul their institutions and policies to match those of 20th-century Britain and the United States while not building an expansive welfare state as those two nations did, then developing nations can transition to economic growth without doing anything else.

Given that the Institutional school cannot point to any nation that fits the pure model, it is hard to get away from the fact that Institutionalists seem to be giving advice based on economic theory, not what has actually worked in the past.

As I mentioned in the first book in this series, From Poverty to Progress, Britain and the United States were unusual because they were Commercial Societies long before they industrialized. This was also true of Northern Italy, Belgium, and the Netherlands. While they were Commercial societies and had not yet industrialized, they all made some progress in building what we now call “good government,” but they were far from what experts recommend developing nations should do today.

If the institutions and policies of Britain and the United States were not good enough to fit the model and it took centuries of evolution as Commercial societies to get where they did, what are open-minded reformers in developing nations supposed to do? It is just not realistic to expect developing nations to overhaul all their political, legal, and economic institutions and wait for decades or centuries for economic benefits.

Not a successful track record

And many of the nations that have tried to follow the recommendations of Western economists, particularly in Latin America, have not had impressive results. Given that some of the counter-productive government interventions that the school wants to cut benefit important political constituencies and poor people, it seems like political suicide to follow this advice in the face of evidence that it often (and perhaps always) does not work.

I think that most of the advice given by institutional economists is very helpful for a nation that has already experienced significant periods of economic growth and wants to use some of the political capital that it gains from that growth to implement a reform agenda. But that is very different from what the economists say they propose.

The Institutional school wants to reform institutions first. In politics, the sequencing of policy actions is critical.

What would you do?

But even if the Institutional school is correct, it is not clear what a dedicated reformer should do. The proposed institutional reform agenda is actually a very long and unprioritized list. Reforming even one institution is very difficult and time-consuming. It is also liable to create serious political enemies within those institutions.

Imagine yourself as a dedicated reformer elected as President of a very poor nation. You have limited political capital, and if you do not show results fast, you might be overthrown by a revolution or coup.

• Which reform do you implement first?

• How exactly do you reform even one institution that is functioning poorly?

• What is the exact sequence of reforms that work best?

• How soon will they show results?

• What reforms have been implemented by developing nations that are best practices to follow?

It is easy to see why developing nations are increasingly skeptical of advice from this school. Again, I am not arguing that the reform proposals are bad, only that they are unlikely to lead to sustained economic growth. It is only after that primary has been achieved that the Institutional school gives some useful advice for how to keep it going.

And this school is the dominant school of development advice in the West. The other schools offer even worse advice.

Subscribe now

Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

In my first book, From Poverty to Progress, I developed a theory as to why societies transform from a state of poverty to a state of progress.As a reminder, I use the following working definition of progress:

“the sustained improvement in the material standard of living of a large group of people over a long period of time.”

If you want to understand why I use this definition here and in more detail here. After a lifetime of studying history, I developed the concept of the Five Keys to Progress to explain the necessary preconditions for a society to transform from a state of poverty to a state of progress.

Once a society achieves the Five Keys to Progress, it transforms into a vast decentralized problem-solving network. My concept of How Progress Works explains the day-to-day human behaviors within that network which create material progress once the Five Keys to Progress evolve.

Most of my second book, Promoting Progress, focuses on policy reform proposals that wealthy nations should implement to keep their progress going. In this series of Substack articles, I present a number of policy reform proposals to enable developing nations to join in on the progress of wealthier nations.

In this article, I would like to review some of the key theories presented by Western development experts for how poor nations can develop. In subsequent articles, I will compare these theories to what we have learned from how wealthy nations achieved their wealth in the past.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

Current Expert Advice

Economic development in developing nations (formerly known as “Third World nations”) is a controversial domain of academic inquiry. I believe that most advice given to developing nations by Western experts is misguided, albeit well-intentioned. Before outlining my proposals, I will briefly overview the currently proposed alternatives.

Institutionalist School

Currently, there are four schools of thought among Western experts who advise developing nations. Institutionalists believe that good institutions build the foundations that enable self-interested individuals to solve problems that benefit all of society.

The Institutional School believes that, if developing nations make the following reforms, free markets and long-term economic growth will naturally emerge:

• implement free trade,

• reduce corruption,

• establish the rule of law and property rights,

• eliminate counter-productive government interventions in the economy, and

• build legal and law enforcement institutions to enforce those principles.

Those free markets will then usher their nations into prosperity. This school of thought is sometimes called the “Washington Consensus.”

I assess the usefulness of this school’s advice for the leaders of developing nations in this article.

Foreign Aid School

The second school of thought is dominated by development experts and non-governmental organizations (NGOs). Jeffrey Sachs is the key thinker in this school.

The “foreign aid” school, as I will call it, believe that wealthy nations and individuals should spend more on foreign aid to assist developing nations to get out of “poverty traps”. They believe that poor nations are trapped in poverty that only can be overcome with foreign aid. In general, they argue for increased foreign aid that is targeted at improving education, sanitation, and health care. Once this foreign aid overcomes the poverty traps, these people believe that developing nations can grow into wealthier nations.

I assess the usefulness of this school’s advice for the leaders of developing nations in this article.

The Rights School

The third school of thought focuses on individual rights. William Easterly is the key thinker in this school. This school of thought believes that developing nations are run by authoritarian regimes that will not reform their institutions because it is against their self-interest. The school also believes that these regimes channel foreign aid into strengthening those authoritarian power structures rather than helping the poor.

This school believes that the poor in all nations need the same political freedoms that wealthy nations enjoy. They believe that democracy is one of those freedoms. Once the people have those rights, their nations can grow their way out of their poverty.

Sustainable Development School

The fourth school of thought focuses on what they call “sustainable development.” Exactly what this term means is a little unclear, but it focuses quite heavily on renewable energy and less resource-intensive agriculture, transportation, and manufacturing.

The sustainable development school believes that a greener version of the Industrial Revolution is possible and will lead to better outcomes for the natural environment and poor people in developing nations. They believe that more traditional paths to prosperity will seriously hurt the natural environment, so developing nations need to find a different path.

The Wrong Keys

For the most part, I do not oppose much of what is said by any of these schools. I just think that they all miss the point because they do not understand the importance of the Five Keys to Progress. And, because of that, their proposals have not achieved the desired results.

Moreover, it is not clear that any of these schools have produced positive results for developing nations. In fact, the current progress in developing nations has come largely from developing nations ignoring Western experts and following very different paths.

When viewed from a very high level, one can see that all four schools have a perspective somewhat similar to mine. I believe that once a society establishes the Five Keys to Progress, societies will naturally experience progress and individuals will work to solve their own problems without help from outside.

The difference is that we all believe in different keys to progress. Economists believe that good institutions and free markets are the keys to progress. Development experts believe that foreign aid in the areas of education, sanitation, and health is the key to progress. The rights school believes that individual rights and democracy are the keys to progress. The sustainable development school believes that green energy and agricultural technologies are the keys to progress while protecting the environment.

We all agree that there are a few keys to progress, but we all disagree as to which they are. So who is correct?

I believe that all four of the competing schools of thought are talking about factors that matter. But I also believe that none of the current schools give very helpful advice to developing nations. So in upcoming articles I will go through them one by one so that I can explain why.

Subscribe now

Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

In my book series and Substack column, I focus on the concept of the Five Keys to Progress. I believe that the Five Keys to Progress is an essential unifying concept for understanding human material progress. They are critical because they are the necessary preconditions for a society changing from a state of poverty to a state of progress, and they are actionable in today’s world. In other words, the concept not only helps to understand the world but also how to make it better.

I have already written several articles explaining how Northwest Europe achieved the first Key: A highly efficient food production and distribution system. This enables societies to overcome geographical constraints to food production so that large numbers of people can focus on solving problems other than getting enough food to eat.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

Subscribe now

Food has been the critical constraint on innovation and progress throughout the vast bulk of human history. Over the last 10,000 years increasing food production per unit of human labor has been a key driving force in progress.

I know that this fact is very hard for modern readers to relate to, but it is true. Today when we are hungry, we go to the refrigerator or pantry. When the refrigerator or pantry is empty, we go to the grocery store. Easy, right?

Well, no. Not for our ancestors.  

While getting enough food to survive is easy in modern societies, it was an epic task for our ancestors. For the overwhelming majority of our ancestors, the quest to acquire enough food to survive took up the majority of their waking hours. It was an obsession, and all of society was organized around the most effective means to do so within the local environment.

Before one can innovate, one must first survive. To survive, one must eat large amounts of food. If one has to spend the vast majority of one’s time focused on acquiring food, one cannot devote much time to innovating non-agricultural skills, technologies, and organizations. Our ancestors effectively traded time for food.

The vast majority of mankind devoted the bulk of their waking hours to the quest to produce enough food to eat. Very gradually over time, they innovated new technologies, skills, and processes that enabled more effective means of producing and distributing food. This quest for food production was so all-encompassing that we can categorize entire societies by how they did so.

This quest for food greatly affected where we lived. Until the last few centuries, humans had to disperse geographically to acquire food, because the subsistence technology of the day was not productive enough for one family to grow enough of a food surplus to support urban populations. The endless drudgery of acquiring food has stifled the human potential for innovation and progress for millennia.

There is only so much food that can be acquired from any one acre of land with simple technology. With technological innovation, we have been able to radically increase this amount, but for any given natural environment and a suite of technologies, there is a fixed amount of food that can be produced per acre.

So humanity dispersed to survive. They had no choice. Survival comes first.

But this dispersal undermined the ability of large numbers of people to interact regularly. Dispersal made it harder to copy technologies, skills, and organizations. With far fewer models to copy, innovation and diffusion were far slower than they could have been.

To make things worse, the type of food that can be produced in any specific area is highly constrained. In some regions, fishing or hunting marine mammals is possible, but not in most areas. In other regions, hunting big game is possible, but not in most areas. In some areas, cultivating rice is possible, but not wheat or corn. In other areas, cultivating wheat is possible, but not other staple crops.

Since food production and distribution is not something that one individual can do, the entire society had to be sculpted around the type of food that could be produced. Technologies, skills, organizations, and values of societies were all greatly affected by what type of food could be produced in their geographical environment.

What is more, each one of these food types had very different amounts of energy and nutrients relative to the human work effort. This meant that some societies had huge advantages over others, simply because they lived in regions with the most cost-effective food sources.

Some geographical regions simply could not support much food production, so they doomed their residents to be trapped in poverty. Fortunately, there was one important exception to this rule: Northwest Europe and the regions settled by Northwest Europeans. While other agricultural systems hardly changed for thousands of years, these regions have undergone many transformations. Each of these transformations resulted in a significantly increased food surplus per family of farmers.

As I document in my first book, From Poverty to Progress, those regions repeatedly transformed their agricultural systems by innovating new technologies, skills, processes, and institutions. The achievements laid the foundations for the growth of Commercial societies in Northern Italy, Flanders, Netherlands, and Southeast England. The result was the first widely-shared progress on planet Earth.

Later agricultural transformations in Commercial societies laid a strong foundation for the Industrial Revolution in Britain. The Industrial Revolution included the invention of agricultural, food processing, food storage, and transportation technologies that spread those benefits even wider. Agricultural productivity accelerated rapidly in Britain, Northwest Europe, the United States, Australia, and New Zealand. In particular, the United States was able to turn the prairies of the Midwest into massive export industries that enabled other nations to specialize in crops other than grain. While it took centuries for the benefits to spread beyond a few regions, today we have an astoundingly productive world agricultural system.

The Green Revolution

The Green Revolution of the 1950s, 60s, and 70s accelerated the trend even further and spread the benefits to Latin America and Asia. The Green Revolution consisted of new agricultural technologies such as:

• bioengineering of high-yield varieties of cereals

• animal breeding

• chemical fertilizers, pesticides, herbicides, fungicides, and

• irrigation.

These technologies enabled much greater mechanization of agriculture in Asia, which enabled peasants to generate a food surplus that enabled their children to migrate to cities and get jobs in emerging manufacturing industries.

The Green Revolution laid the foundation for the industrialization of South Korea, Taiwan, Hong Kong, Singapore, China, India, and parts of Southeast Asia. The Green Revolution had a mixed impact on Latin America because that region was unable to develop competitive export industries (the Fourth Key to Progress).

Global Food Distribution System

Today’s modern food surpluses are based on the following:

1.     The application of modern agricultural technology, most of which is based upon fossil fuels, fossil fuel byproducts, and genetic research.

2.     Regional specialization in food production

3.     The global trade system.

The combination of these three factors has effectively overcome the greatest constraint to progress in virtually every society in history: geographical constraints on food production and distribution. All of these factors were created by Western nations that first experienced progress, particularly the United States. Developing nations enjoy the benefits of that progress to the extent that they can copy modern agricultural technologies.

The Limits of the Green Revolution

Unfortunately, the Green Revolution had relatively little impact on Sub-Saharan Africa. This is the primary reason why that region has experienced the least progress over the last century. A key factor is that agricultural innovation is heavily constrained by local geography.

Africa’s geography is particularly challenging. Africa consists mainly of Desert, Tropical Forests, and Tropical Grasslands (or Savanna). The non-Forest ecoregions in Africa experience extremes in precipitation. Rain is almost entirely concentrated in the rainy season, while the dry season is close to Desert conditions. Many regions also have relatively unproductive soil.

Previous agricultural researchers deliberately targeted Asia and Latin America because the regions had geography better suited for plow-based cereal agriculture. Africa’s agricultural system, which was largely based on hand-tilled root vegetables presented different and in some ways more difficult challenges.

In addition to geographical differences between Sub-Saharan Africa and the rest of the world, the region also suffers from great geographical variability within the region. Geographical heterogeneity is far greater in Sub-Saharan Africa than in any other region in the world. Among the differences are soil, acidity, moisture, and temperature, all of which are critical to agriculture. There are even substantial differences in these characteristics within small plots of land. These geographical variations mean that one big solution or set of solutions (i.e. the Green Revolution) does not work for the entire continent (Suri and Udry).

Opposition to Green Revolution

Another reason that the Green Revolution failed to impact Sub-Saharan Africa was due to intense opposition from Green activists. Ironically, the Greens strongly opposed, and still oppose the Green Revolution.

Today political activists, NGOs, and multilateral aid institutions attack the foundations of agricultural productivity in the name of “sustainability.” Research and use of fertilizers, genetically modified organisms, pesticides, irrigation, and other agricultural technologies have been brought to an almost complete halt in the poorest countries. Nor do wealthy nations do much to take up the slack.

Greens have demonized wide swaths of agricultural research that are desperately needed by developing nations and can create better products in rich nations. Some have even stooped to physically destroying experiments to create new crops, such as Golden rice, that can save millions of children from malnutrition and death. Governments are afraid to fund many studies in the field for fear of backlash from the Greens.

The major successes of the Green Revolution in Asia and Latin America occurred in the 1950s, 60s, and 70s before the Green movement became politically influential among international NGOs. For this reason, Greens failed to stop the Green Revolution in Asia and Latin America in the earlier phase, but they succeeded in doing so in the later phases of the revolution.

Agricultural productivity in Sub-Saharan Africa (except for South Africa) since 1960 has lagged far behind trends in the rest of the world. These yield gaps are largely due to differing levels of technologies. In particular, the usage of fertilizer and irrigation in Sub-Saharan Africa lags far behind the rest of the world (Suri and Udry).

Some researchers have claimed that impoverished African farmers do not have the capital to invest in the latest technology, but limits in their ability to finance investments using credit explain only a small part of the problem. Nor is the problem with crop insurance or a lack of information (Suri and Udry). 

A Second Green Revolution

We need a Second Green Revolution that dramatically increases agricultural productivity in Sub-Saharan Africa and other poor developing nations. A Second Green Revolution would enable local farmers to grow more crops, enabling rural people to migrate to more productive cities and increase the amount of wild habitat by reducing farm acreage.

Public agricultural universities played a key role in making American agriculture the most productive in the world. In addition, that funding played a key role in promoting the Green Revolution that drastically increased agricultural productivity in Latin America and Asia.

Without these critical increases in agricultural productivity, most developing nations would still be rural, as their people would have had to remain dispersed to grow crops. Just as increased agricultural productivity promoted the growth of Commercial societies in Europe and their later industrialization, so did it promote today’s transformational economic growth in Asia.

In a previous article, I argued that innovation prizes are the most cost-effective means to trigger breakthrough innovation. Obviously, governments in Sub-Saharan Africa do not have the financial resources to sponsor innovation prizes. But governments in wealthy nations and NGOs that raise money from the same nations do have the financial resources.

We should create innovation prizes that enable developing nations, particularly in Sub-Saharan Africa, to radically increase the productivity of local agriculture. This will not only greatly increase the standard of living in those regions, but also reduce the human footprint on natural habitats. Low-productivity agriculture promotes poverty and habitat degradation, while high-productivity agriculture promotes wealth and reduces farm acreage.

A Second Green Revolution targeting Sub-Saharan Africa, preferably funded via prizes, could have a profound positive effect on the region. Latin America, Asia, and wealthy nations in North America and Europe would also benefit. Given the current political climate, the United States seems to be the only country with the potential to initiate another Green Revolution, and they have not done so yet because of ideology.

Agricultural research funded by the American government and American corporations was critical to making progress on farm productivity. American agricultural universities and the US Department of Agriculture have played a leading role in this for well over a century. We need more of this, not less. It is probably the single most effective way to expand wild habitat, so it is disturbing that environmentalists are so strongly against it.

Admittedly the intense geographical variations within Sub-Saharan Africa will make it difficult to design effective innovation prizes. We will most likely need an entire constellation of innovation prizes that focus on specific crops and specific sub-regions within the continent.

The best solution is not clear to me at this point, but I have confidence that if Western governments, agricultural corporations, and agricultural research stations come together with local African agricultural research stations and farmers, they can come up with effective prize designs that can enable a few carefully chosen pilot projects. If those first innovation prizes yield results, then the concept can be expanded to many more innovation prizes that span the continent.

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Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

You can read other articles on developing nations, including:

Why developing nations are still poor:

• Why are there such huge variations in income across the globe?

• Why isn't the entire world rich?

• A compelling explanation for Poverty and Inequality

What wealthy nations can do to help developing nations:

• What wealthy nations can do to help developing nations

• Let's preserve the global trade system

• We need a Green Revolution 2.0 for Africa

• more

What developing nations can do to help themselves:

• What ingredients are developing nations missing?

• Why export industries matter so much

• How developing nations can create competitive export industries

• Why Developing nations need to create thriving export industries

• Why Developing nations need to use more fossil fuels

• more

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To promote long-term economic growth, developing nations desperately need abundant, affordable, and secure energy systems. In particular, they need advanced electrical grids that enable every home, industry, and commercial building to harness the awesome power of electricity.

Western nations take for granted the ability to plug in lights, kitchen appliances, computers, air conditioning, and other electric-powered products. They also take for granted battery-powered products that recharge via those same wall outlets. Most electric and battery-powered products are far cheaper than the alternative, but they need a robust electrical grid to function.

Few investments would do more to promote long-term widely-shared economic growth in developing nations than a robust electrical grid. Unfortunately, this is diametrically opposed to Green ideology because this goal cannot be accomplished without fossil fuels, nuclear or hydroelectric power. And Greens oppose all of them.

Concern for increasing global carbon emissions is legitimate, but we cannot implement policies that undermine progress in wealthy nations and throw out the possibility of progress in developing nations. We must first promote progress and secondly, we must mitigate the negative side-effects of that progress on the natural environment. One of those negative side effects is climate change. Another is air and water pollution.

Fortunately, there is a way to do so, but such a policy would be very different from current Green policies.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other posts on Energy:

1. There is a better alternative to Green energy policies

2. Rapidly phasing out fossil fuels is extraordinarily risky

3. We need abundant, affordable, and secure energy

4. We need to complete the Third Energy Transition

5. A Challenge to Greens: Prove that solar/wind replaces coal!

6. 16 reasons why Greens should love natural gas

7. Why Greens should love fracking

8. The wonders of CCGT

9. more

   ---

The Failure of Green Energy Policies

Despite investing trillions of dollars in renewable energy sources, governments implementing Green energy policies have not been able to substantially lower global carbon emissions. While the increase in global carbon emissions has slowed a bit, the trend is still upward. So by their own criteria, Green energy policies have failed.

Renewable energy sources have not substituted for fossil fuels (as is the declared goal). Renewable energy sources have been in addition to fossil fuels. That is why Green energy policies will inevitably fail to lower global carbon emissions.

Since 1990, annual global carbon emissions have increased from 22.76 to 37.12 billion tons. The percentage of fossil fuels in global energy production has dropped only slightly from 85% to about 83%. In the United States, fossil fuels make up 79% of energy use, and it is not much different in Europe. If you believe that it is essential to radically reduce the global usage of fossil fuels to avoid a global catastrophe, then current Green policies must be regarded as a huge policy failure (Our World In Data).

Rather than admit that their energy policy is failing, Greens want to double down on failure by spending even more money. A lack of funding, however, is clearly not the problem. The amount of money invested in renewable energy over the last three decades probably makes it the single largest peacetime government program in world history. There is no reason to believe that additional resources will fundamentally change the outcome.

The fundamental problem is that the Greens opposed the Third Energy Transition, which would enable us to replace coal-burning with natural gas, nuclear, and hydroelectric power. Coal is by far the worst carbon and pollution emitter and solar and wind cannot replace coal at scale.

If the Greens could pivot and embrace the Third Energy Transition, we could:

1. Create an energy system that is abundant, affordable, and secure. This will keep human material progress going. This should include both wealthy and developing nations.

2. Mitigate the negative side-effects of that progress on the natural environment. This includes carbon emissions, air pollution, water pollution, wild habitat destruction, extinctions, and human health concerns.

Unfortunately, their extreme hostility to fossil fuels will not allow them to do that.

Green Opposition to Nuclear Power

This would not be the first time that Green energy policy has led to the opposite of their desired intentions. The massive expansion of coal usage in Asia did not have to happen.

Asian nations essentially adopted coal because it was the cheapest and most widely available energy source in their region. But it is not difficult to imagine a different world where nuclear energy is cost-competitive with coal.

Wealthy Western nations as well as Communist nations widely adopted nuclear power in the 1960s and 70s. The United States, Canada, the Soviet Union, France, Belgium, Finland, Sweden, Switzerland, Czechoslovakia, and other nations mounted serious nuclear programs.

During the 1960s and 70s, nuclear power seemed to be the energy source of the future. As is typical in new industries, as designs and construction techniques improved, costs dropped substantially. Lower costs built political support for further expansion, and the industry triggered a major energy transition. The nuclear industry bragged that electricity would soon become “too cheap to meter.”

The energy crises of the 1970s appeared to give nuclear power a major boost. Up until that time, oil-fired power plants were widespread, so dramatic increases in oil prices caused nations to look for alternatives. As natural gas was still in its infancy, the choice was clear: coal or nuclear.

Unfortunately, coal was the big winner. The single biggest reason why coal won was the mobilization of the environmental movement against nuclear power. Opposition started in the late 1960s, but then ramped up quickly in the 1970s. The incidents at Three Mile Island (no injuries or deaths) and Chernobyl (an obsolete design that was far less safe than Western designs) caused a wave of fear regarding nuclear power.

Public opinion turned from strongly supportive towards nuclear power to strongly opposed. In response, government regulations radically increased in their complexity, and construction costs performed a U-Turn. Whereas construction costs of nuclear plants in the United States had been dropping rapidly, they suddenly increased, so the energy source was no longer competitive with coal (Lane).

If the trend of declining cost of nuclear power had continued to the present day, nuclear power would be around 10% of its current cost. At such costs, every nation would have favored construction of nuclear-powered plants over coal. World carbon emissions would be 11Gt lower (Lane).

If nuclear plant construction costs had been much cheaper than coal over the last 30 years, Asia probably would have built nuclear plants rather than coal plants. We might have had radically lower global carbon emissions right now. But to my knowledge, no climate change activists have acknowledged the movement’s responsibility for vast amounts of carbon emissions.

Environmentalist opposition to nuclear power played a major role in Europe and the United States rapidly constructing coal plants during the 1970s and 1980s. Those coal plants were by far the biggest reason for increased carbon emissions in the West over the last 50 years.

And the biggest reason for coal’s victory was the environmental movement. That is right. The very same movement that today says that carbon emissions are a threat to human existence favored high-emissions coal over zero-emissions nuclear. Think about that for a minute.

If the environmentalist movement had been as pro-nuclear in the 1970s as they are pro-renewable today, government policy under Democratic administrations would have subsidized nuclear power instead of strangling it with regulations. The nuclear industry might have scaled up much faster, so that it could reduce production costs. These high production costs were created, not by technology, which almost always gets cheaper, but by government regulation. These regulations were put in place due to fears promoted by environmentalists.

I know that most Greens, like most people involved in politics, are just repeating what they have heard other people say, but at some point, they need to focus on practical solutions that might require them to change their policy stances. We instead need to focus on results. The results of Green opposition to nuclear power greatly increased global carbon emissions.

Green Opposition to Natural Gas

In the 1980s and early 1990s, the environmental movement was largely in favor of natural gas. Natural gas was correctly viewed as the only reasonable alternative to coal and nuclear power. As climate change became their all-consuming focus, environmentalists began to lump natural gas together with coal as a fossil fuel that needs to be eliminated as rapidly as possible.

Now climate activists are overwhelmingly opposed to natural gas. Climate activists work hard to ban fracking and new pipeline construction. They even oppose pipelines that will capture flaring natural gas that is being released directly into the atmosphere (essentially free natural gas that would reduce methane emissions). At this point, it seems impossible to change their minds, regardless of the facts.

This is a shame, as the Green prejudice against natural gas is the single biggest barrier to creating a workable energy policy that promotes human progress while mitigating damage to the environment.

Green Opposition to Hydro Power

Nor is nuclear power the only carbon-free energy source that is opposed by environmentalists. Environmentalists are also opposed to the construction of new hydroelectric dams. Many environmentalists also campaign to decommission existing hydroelectric dams. If one truly believes that we face a climate catastrophe, this makes no sense whatsoever.

Hydroelectric dams are by far the most widespread renewable energy sources. After decades of subsidies for wind and solar, they are still far behind hydropower in total global electricity generation.

Of the eight nations who have more than 30% of their total energy source coming from renewables, every single one of them has hydroelectric power as their primary source (Iceland, Norway, Sweden, Switzerland, New Zealand, Brazil, Canada and Austria). And yet you almost never hear about this accomplishment (Our World in Data).

Biomass and Biofuels

To make up for the intermittency of solar and wind, Greens advocate using biomass power plants. They also advocate using biofuels instead of petroleum.

Biomass and biofuels are not Green energy sources. They are very bad for the environment. Solid biofuels emit between 94 and 110 kg of carbon dioxide per gigajoule of energy, while bituminous coal emits about 95 kg and natural gas about 53 kg. Agricultural byproducts, peat and solid byproducts do even worse. This alone should disqualify biomass biofuels as a Green source of energy (Climate Registry).

Burning wood to generate energy on a small scale is perfectly acceptable. Burning wood left over from sawmills and manufacturing wood products also makes sense; manufacturing biofuels from algae does as well. Unfortunately, biomass has gone way beyond that and the natural environment is suffering.

Every material that mankind can find in nature for food or energy production can also be used by other living species. Driven by evolution, living species find a way to exploit every possible natural resource to survive. Land and trees are particularly valuable natural resources that nature needs.

Trees are tremendously important for thousands of woodland species of plants and animals. Burning wood at scale makes absolutely no economic or environmental sense. It is more expensive and more damaging to the environment than fossil fuels, which no known living species relies on for its survival. In addition, with the exception of open-pit coal mining, fossil fuels use far less of the land that could potentially be used for wild habitat.

Unfortunately, Green energy policies are actively subsidizing burning wood in the name of saving the environment. To avoid using natural gas, Greens support burning wood at times when solar and wind are unavailable.

This practice is particularly egregious in the United Kingdom. In order to pretend to meet their emissions goals, the UK recently started burning wood products in their coal-burning power plants. Because the UK has limited forest stocks, they import wood from the United States. That wood is cut, transported via truck, shipped using fossil fuels, and then burned.

Because the wood is harvested in a foreign country, the emissions do not count towards the UK’s national emissions goals. So, in the name of saving the planet, the UK is clear-cutting forests in the United States. It is hard to see this as anything other than a Green accounting fraud.

Biomass and biofuels are worse for the environment than coal and more expensive than natural gas. There is absolutely no reason to support either fuel source.

So Greens have opposed the three best energy technologies to replace coal-burning power plants:

• Natural gas

• Nuclear

• Hydroelectric dams

And Greens support technologies that emit more carbon than petroleum:

• Biomass

• Biofuels

And in addition to the policy preferences that I discussed above, Greens are opposed to virtually all other realistic solutions, including:

• Carbon capture and sequestration

• Adaptation

• Geo-engineering

• Stopping immigration (which would keep emissions in the wealthy nations much lower)

Is there a viable alternative?

Fortunately, there is an alternative that much more closely aligns with human material progress by continuing the Third Energy Transition that has been delayed by Green political opposition.

We need to:

1. Create an energy system that is abundant, affordable, and secure. This will keep human material progress going. This should include both wealthy and developing nations.

2. Mitigate the negative side-effects of that progress on the natural environment. This includes carbon emissions, air pollution, water pollution, wild habitat destruction, extinctions, and human health concerns.

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Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other posts on Energy:

1. Rapidly phasing out fossil fuels is extraordinarily risky

2. We need abundant, affordable, and secure energy

3. We need to complete the Third Energy Transition

4. A Challenge to Greens: Prove that solar/wind replaces coal!

5. 16 reasons why Greens should love natural gas

6. Why Greens should love fracking

7. The wonders of CCGT

8. more

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In a recent post, I claimed that Innovation prizes are an underutilized means for accelerating technological innovation in a cost-effective manner.

Advantages of Innovation Prizes

To recap a bit, Innovation prizes have many advantages:

1. The single biggest advantage is that, if the proposed solution does not meet the criteria, innovation prizes cost the taxpayers almost no money.

2. Leverage the efforts of a constellation of individuals, start-ups, and established companies.

3. Focus on outputs (i.e. results), rather than inputs (i.e. how those results are achieved). All of the other strategies for promoting innovation focus on inputs.

4. Encourage experts in completely different domains to get involved. While experts in a certain domain often have a knowledge advantage, that advantage is often undone by a group-think mentality.

5. Encourage outsiders and iconoclasts to get involved. While scorned by experts, these people often offer simple solutions that are missed by experts who are so immersed in their field that they get tunnel vision.

6. Encourage individuals with contrarian ideas within established institutions to quit, form their own institutions, and test their ideas in the field.

7. Do not require the government to find new institutions and ramp up the hiring of experts.

8. Have zero costs in the short run, so it is possible for the government to create a large number of prizes very quickly.

For all of the reasons above, I believe that innovation prizes should become the default method through which the government and other institutions promote technological innovation.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

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An Energy Prize

To give one example of where an innovation prize could have a transformative effect on society, let’s look at energy.

With the possible exception of food production, energy is the type of technology that has the largest impact on human societies. Since modern agriculture has largely solved the food problem that has dominated most of human history, innovating a new energy technology seems very likely to be the most transformative technological breakthrough for the immediate future.

A new energy source that is cheaper and denser than fossil fuels, that is widely available across the nation and the globe, and also has little or no radiation, pollution, or carbon emissions would be one of the greatest technological breakthroughs of the 21^st Century. A new abundant, secure, carbon-free energy source that is significantly cheaper than fossil fuels would fundamentally change the world for the better.

Greens and Ecomodernists who think that we can do this with solar, wind, electric vehicles, and batteries are either deliberately destructive or very naive. The technologies are nowhere near enough to accomplish their celebrated goal of global NetZero by 2050. Worse, the results of trying to do so will lead to:

• only a tiny effect on future global temperatures (i.e. far less than one degree)

• tens of trillions of wasted dollars (spending is now over $1 trillion per year and growing)

• economic stagnation

• downward mobility for the poor and working class in wealthy nations and developing nations being trapped in poverty forever.

Fortunately, there is a viable energy alternative. We should build an energy system that is based on a blend of natural gas, nuclear, and hydroelectric power. The exact blend will be determined by geography and local cost structure. In the United States, this is clearly natural gas, particularly shale gas.

In the long run, however, we need a transformative energy source that has all the benefits of fossil fuels and few of the drawbacks. If such a new energy technology existed, wealthy nations would receive a far better energy system than the one that currently exists. Both fossil fuels and renewable energy sources would become obsolete, once such a system could be widely rolled out.

Wealthy nations would no longer have to spend trillions to import fossil fuels. Carbon emissions and pollution would drop like a rock. It is difficult for me to conceive of innovation as profound as this for the next century.

A far superior source of energy would lower the cost of living and greatly boost economic growth, while having a positive impact on the natural environment. The new energy source would also create a new high-value-added industry to create jobs and exports.

If this energy source were far better than coal China, India, Indonesia, and the rest of Asia would immediately stop building fossil fuel-burning power plants and purchase this new technology. In the long run, they would likely decommission all or most of their existing coal-burning power plants.

Poorer developing nations in Africa and Latin America could also build an energy infrastructure far more easily than with current technology. In the same way that mobile devices enabled these countries to avoid the enormous cost of building a landline infrastructure, the equivalent might happen in the energy sector.

Such an innovation would also be devastating to the authoritarian regimes of Iran, Saudi Arabia, Russia, and other oil- and gas-exporting nations. Without huge export earnings from fossil fuels, those nations will be forced to reform their economic and political structures. More importantly, their regional influence would be seriously curtailed.

For this reason, I believe that the government should offer a $100 billion prize to the first individual or group who can design it and produce a working prototype. This may seem like a huge amount of money (and it is), but the amount is trivial in comparison to the trillions of dollars and Euros spent thus far on fossil fuels and Green energy systems.

More to the point, the benefits of such an energy technology to society would be hundreds of times greater. $100 billion, while a huge incentive, would be a bargain price for such a technology.

To win a prize, the individual or group must do all the following:

1. Must have design specs and a working prototype that is fully testable.

2. Must offer a total cost of operation per unit of energy that is significantly lower than coal, natural gas, or petroleum. This total cost should include the cost of construction, fuel, operations, maintenance, and decommissioning.

3. Must output its energy in the form of electricity or be easily capable of being transformed into electricity, so it can be easily integrated into an electrical grid.

4. Must output energy as either a steady 24/7 stream for months at a time, or be capable of being fully modulated (i.e. the energy output can be cranked up or down) with little effort.

5. Must have a capacity factor of at least 80% (i.e. it can produce at least 80% of its theoretical output over the year).

6. Must rely on materials that are widely available in North America and preferably the rest of the world.

7. Must not be more land intensive (the total area of the plant) than a standard fossil fuel power plant.

8. Must produce little or no radiation, carbon emissions, pollutants, or other known threats to human health and safety.

9. Must be capable of being manufactured or constructed at scale. Ideally, this would consist of a mass production plan.

10. Must be capable of being safely manufactured, transported, and constructed near major metropolitan areas.

This energy prize should not choose technologies, but I want to single out one with particular promise to illustrate the possibilities.

.

Nuclear Fusion

Nuclear fusion has the potential to revolutionize our future. It creates energy by fusing simple atoms together to create more complex atoms. The reaction creates very little radiation, no carbon dioxide, and no pollution. Most importantly, the net energy created far exceeds any current energy source, including fossil fuels and nuclear fission (the type of nuclear energy currently being produced).

One specific type of nuclear fusion is particularly promising: hydrogen-boron fusion. It creates energy by fusing hydrogen and boron (two very common elements) into lithium, and it creates electricity directly without the need for steam turbines. The lithium could then be used as a raw material for the construction of batteries.

Nuclear fusion is not in any way theoretical, as it relies on proven physical reactions. Nuclear fusion is the process that makes the sun work. There is no reason why it cannot be made to work on Planet Earth.

For decades, nuclear fusion seemed more like science fiction than science fact. However, in December 2022, scientists at Lawrence Livermore lab finally achieved net energy. They created an extremely short fusion reaction in a lab that generated about 50% more energy than was input into the system.

This is a major milestone in nuclear fusion research. It not only proves that we can create energy with nuclear fusion, but now we can constantly run experiments to make the reactions last longer and generate more net energy. The only problem is that we do not know if the technology can cost-effectively produce energy.

We have already seen that the wealthy nations have gone through two Energy Transitions and are currently in the middle of a third. Nuclear fusion might well be the Fourth Energy Transition that would be at least as important as the first three.

Current energy companies have no incentive to create such a transition. The research costs are too high and the pay-offs seem too remote, as they are possibly decades in the future. Meanwhile, governments are largely ignoring the possibilities because of their fixation on solar and wind.

The dominant government research program in the field, ITER Tokamak, has placed all its bets on a different type of fusion energy that is probably far more expensive. So far, the project has consumed over $14 billion of government funding, and the likelihood that it will produce energy that is cheaper than fossil fuels is very low. At the same time, governments around the world have funded trillions of dollars in renewable energy.

Meanwhile, a gaggle of small companies are building prototypes for other, more promising types of fusion technologies with little or no government funding. Many of them claim that they can produce energy far more cheaply than fossil fuels. That remains to be seen, but not following up on this possibility seems foolhardy.

A large prize would enable energy scientists to go in completely new directions that are currently impossible due to the centralized “put all your eggs in one basket” approach that is typical of government projects.

With the enactment of a $100 billion research prize, venture capitalists would come out of the woodwork to fund those companies and create new ones. If that is not enough money to provide strong incentives, we can increase the amount. The wonderful thing about prizes is that, if they do not produce results, it does not cost the taxpayers any money.

So what exactly is the downside?

To be clear, I do not predict a nuclear fusion breakthrough within the next 10 years or even 100 years. Many companies do, and I am optimistic that one will achieve a breakthrough, but it remains to be seen.

I do however predict that, with the right incentive structure, we can at least find out if nuclear fusion or some other energy technology is a potential replacement for fossil fuels within 20-30 years. With the proper funding, we can probably create a working prototype within a decade.

Other possible energy sources

And nuclear fusion may not be the energy source that triggers the Fourth Energy Transition. Perhaps it is a fundamental breakthrough in solar, wind, geothermal, or other renewable resource. Perhaps it is small modular nuclear fission reactors. Or perhaps it is an energy source that only a few supposed crackpots are currently dreaming about.

Geothermal energy, in particular, is a renewable energy source that has not been fully explored. For some reason, Greens are far less enthusiastic about geothermal energy than solar, wind, and biomass.

Geothermal energy exploits intense underground heat caused by radioactive decay in the Earth’s mantle. Current geothermal energy only exploits the very few geographical areas where heat plumes penetrate upward through the crust, so it is near the surface. Drilling deep into the mantle, however, may unlock massive amounts of renewable, high-capacity energy. A $100-billion innovation prize may create the economic incentive to fully exploit this vast energy resource.

Other Innovation Prizes

Once one starts thinking about scaling up innovation prizes, the true possibilities emerge. What about better insulation for walls, doors, and windows, electric airplanes, or solar-powered cars?

Nor is there a reason not to expand the idea to solving difficult social problems. What about cures for mental illness or substance abuse, the best means to teach reading to children, low-cost housing for the homeless, and using digital technologies to isolate non-violent criminals and parolees in their own homes rather than in prisons? These are just a few ideas that I came up with off the top of my head. There are thousands more problems that can potentially be solved by innovation prizes.

We have become so used to the idea that the government needs to solve a problem directly that we ignore the possibilities of other sectors. The private sector is extremely good at solving problems, far better than the government in most cases. Unfortunately, there are many domains where there is no profit incentive. Rather than give up on the private sector and assume that the government can solve the problem itself, we should reformulate the problem. Innovation prizes would enable us to do that.

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Since the late 1980s, Greens have been trying to replace fossil fuels with renewable energy sources, particularly solar and wind. The focus of this effort has been on wealthy Western nations. A counter-trend has been a massive increase in coal usage in China and the rest of Asia. The result has been a massive geographical shift of carbon emissions from the wealthy Western nations to China and the rest of Asia.

In a previous article, I argued that those who wish to radically reduce global carbon emissions need to stop focusing on wealthy Western nations and shift their focus to Asia, particularly China. This article seeks to understand why coal burning has increased so rapidly in China, India, Indonesia, and many other Asian nations.

Disadvantages of Coal

While coal has many advantages, particularly to developing nations, coal has very serious negative side effects on the natural environment and human health. Greens have very good reasons for being against coal, but they fail to acknowledge how much worse coal is compared to other energy sources that they equally despise.

1. Except for wood, coal emits more carbon dioxide per unit of energy than any other source (Climate Registry).

2. Pollution from coal plants causes approximately one million deaths each year around the world. This is a far higher death rate than any other energy source (WHO).

3. Coal mining is a notoriously dangerous occupation.

4. Open-pit mining devastates large areas of land, and it takes decades for vegetation to regrow after the mine closes.

5. Tailings, overburden, and chemicals from mines clog up and poison downstream rivers and lakes.

6. Coal power plants must be run almost 24-7 to function economically. Cycling coal plants off and on seriously undermines their efficiency and life expectancy.

So why do Asians keep using more coal?

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other posts on Energy:

1. Rapidly phasing out fossil fuels is extraordinarily risky

2. We need abundant, affordable, and secure energy

3. We need to complete the Third Energy Transition

4. A Challenge to Greens: Prove that solar/wind replaces coal!

5. There is a better alternative to Green energy policies

6. 16 reasons why Greens should love natural gas

7. Why Greens should love fracking

8. The wonders of CCGT

9. more

   ---

Advantages of Coal

Asian governments are not stupid or short-sighted in their use of coal. It has been a rational choice focused on the long-term benefits of economic growth.

Coal has many advantages, particularly for developing nations:

1. Except for wood, coal is the most widely available energy source by geography. Most nations have little or no cost-effective reserves of petroleum, solar, wind, or geothermal power. The vast majority of nations have at least some coal reserves.

2. Coal is a far denser energy source than wood, solar, wind, or geothermal (density is essentially the amount of energy per unit of mass).

3. Coal is relatively easy and cost-effective to extract, transport, store, and combust.

4. Coal-burning power plants are relatively cheap to construct, depending upon their size.

5. Coal provides reliable base-load power (i.e. 24/7/365) for the electrical grid as well as having many industrial applications.

6. Coal can be converted to a liquid or gas, if necessary. Coal-burning power plants can also be used to charge electric cars and buses. This reduces the need to import petroleum.

China and the rest of Asia are clearly going through the First Energy Transition (from wood and human/animal muscle power to coal) for exactly the same reason that Europe, North America, and Japan did so in the past. Coal is far more affordable, abundant, and secure than renewable energy either in the form of wood, wind, or solar.

And there is no sign that this trend will stop. As of July 2022, China has officially announced, pre-permitted, permitted, or is in the middle of construction of coal plants that will emit an estimated 44,000 million tons of carbon dioxide over their lifetime. When one adds in similar plants in the rest of the world, the estimate comes to 74,000 tons of total future carbon emissions (Global Power Plant Tracker by End Coal).

Until wealthy Western nations develop an energy source that has all the advantages of coal but without any of the disadvantages of coal, China, India, and the rest of Asia will keep building more coal-fired power plants. No amount of trying to guilt-tripping them will make a difference.

We need a transformative energy source that has all the benefits of fossil fuels and few of the drawbacks. If such a new energy technology existed, wealthy nations would receive a far better energy system than the one that currently exists. Both fossil fuels and renewable energy sources would become obsolete, once such a system could be widely rolled out.

In an upcoming article, I will show how wealthy Western nations can innovate a transformative new energy source.

Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order my e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other posts on Energy:

1. Rapidly phasing out fossil fuels is extraordinarily risky

2. We need abundant, affordable, and secure energy

3. We need to complete the Third Energy Transition

4. A Challenge to Greens: Prove that solar/wind replaces coal!

5. There is a better alternative to Green energy policies

6. 16 reasons why Greens should love natural gas

7. Why Greens should love fracking

8. The wonders of CCGT

9. more

Subscribe now

Subscribe now

My guess is that virtually every Progress Studies researcher believes that increasing the rate of technological innovation is a cost-effective means for accelerating material progress. The best means to do so, however, is quite controversial.

Governments have a wide variety of strategies through which they can stimulate desired innovation:

1. Direct government research and development

2. Tax exemptions for private-sector research and development

3. Funding of university research

4. Purchasing large amounts of a new technology from the private sector

5. Regulations and mandates

For the sake of brevity, I do not want to go into details on all of these strategies. I will, however, go into one key weakness that all of them share.

Centralization of Funding

All of the innovation strategies that I mentioned above involve a centralized government directly or indirectly funding research and development. They all involve elected officials or policy experts choosing which projects to fund. This inevitably means that other potential solutions are starved for funding.

The problem is that, when technology does not exist, it is very difficult to know which ideas can lead to useful technologies and which ideas will lead to dead-ends. We need a method for funding technological innovation that does not pick potential winners up front and hope that, with the proper funding. they can be turned into cost-effective solutions. We need a funding solution that only spends taxpayers’ money when the problem is solved. Fortunately, there is such a method.

The following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other articles on Technology and Innovation:

• Understanding Technological Innovation

• Technological Innovation is like solving a jigsaw puzzle

• My response to the Techno-Optimist Manifesto

• Technology is useless without the skills to use it

• All of human history in one graphic

• Book review: "The Nature of Technology: What It Is and How It Evolves" by W. Brian Arthur (podcast)

• more

Innovation Prizes

I believe that the most cost-effective means of stimulating socially desirable innovation is via innovation prizes. An innovation prize is where an institution promises to pay a cash prize for any individual or group of individuals who solve a specific problem.

Innovation prizes have a long, but not so famous, history. One of the most famous examples was the Longitude Prize in 18^th Century Britain. To promote the power of both the Royal Navy and merchant shipping, Parliament offered a prize of £10 million to the first team that offered a practical method for the precise determination of a ship’s longitude at sea (Sobel).

A more recent example of an innovation prize has been the XPRIZE Foundation, which has offered substantial prizes for radical breakthrough innovations that benefit humanity. XPRIZE started in the field of space exploration and has subsequently branched off into the fields of super-efficient vehicles, oil clean-up, health care sensors, ocean acidification, education, literacy, and pandemic mitigation.

Ideally, an innovation prize:

1. Identifies an important problem that the government or private sector is not solving or cannot solve.

2. Sets a specific amount for the prize to be awarded in the future.

3. Establishes very specific, transparent, and verifiable metrics for earning the prize.

4. Is open to as broad an audience as possible.

Advantages of Innovation Prizes

Innovation prizes have many advantages over the other strategies that I mentioned earlier. The single biggest advantage is that, if the proposed solution does not meet the criteria, innovation prizes cost the taxpayers almost no money. Most of the other strategies require the government to spend significant amounts of money or defer on raised revenue regardless of the result. This alone is a huge advantage that prizes have over all other strategies.

Innovation prizes are the perfect method for leveraging the efforts of a constellation of individuals, start-ups, and established companies. Rather than creating a large centralized bureaucracy to solve a problem, prizes promote a large number of small-scale experiments by different organizations.

In other words, just like progress itself, prizes work on evolutionary principles. Prizes encourage decentralized experimentation and allow the best solution to survive. If all attempts fail, then no money is lost, but if one succeeds, it will be an important step forward for society.

Innovation prizes also offer the advantage of focusing on outputs (i.e. results), rather than inputs (i.e. how those results are achieved). All of the other strategies for promoting innovation focus on inputs. Innovation prizes, when correctly designed, focus exclusively on outputs. And it is outputs that matter because that is what affects society.

Because innovation is focused on the unknown, it is not clear how a problem should be solved. There are typically many potential pathways to doing so, and all institutions and individuals have different ideas as to which pathway is preferred.

An incorrect decision on the best pathway early in a project is likely to lead to a dead end. And it may not be clear that a dead end has been hit until after an organization invests millions or even billions of dollars. Ideally, governments should encourage all of those potential pathways to be fully explored, while only rewarding the groups that followed the correct path.

Most government subsidies for technological innovation favor one or a small number of established institutions to the exclusion of the rest of society. Prizes enable a single individual or a small informal group to compete on equal terms with giant established institutions. This dramatically increases the potential number of proposed solutions. The greater the number and the wider the diversity of solutions, the more likely that the problem will be solved.

Innovation prizes also encourage experts in completely different domains to get involved. While experts in a certain domain often have a knowledge advantage, that advantage is often undone by a group-think mentality. Often the best solutions come from applying slight variations on tested solutions in one domain into a different domain. Prizes make that much more likely.

Prizes also encourage outsiders and iconoclasts to get involved. While scorned by experts, these people often offer simple solutions that are missed by experts who are so immersed in their field that they get tunnel vision.

Prizes encourage individuals with contrarian ideas within established institutions to quit, form their own institutions, and test their ideas in the field. Rather than being stymied by bureaucratic politics, prizes can enable iconoclasts to put their potentially revolutionary ideas into practice.

Prizes do not require the government to find new institutions and ramp up the hiring of experts. One of the major problems of direct government research projects is that they require established institutions and expensive, long-term funding streams. The method also requires hiring a large number of experts in their domain. If those institutions already exist, this is less of a problem, but funding is always a problem. And remember that all this funding is required, even if the institution fails to achieve its goals.

Prizes also have zero costs in the short run, so it is possible for the government to create a large number of prizes very quickly. The new prize system would then compete with already-existing government research institutes. If the prizes yield better results than existing models, then funding could shift away from government research institutes to more prizes. If the prizes fail to produce results, then there is no financial loss.

For all of the reasons above, innovation prizes should become the default method through which the government and other institutions promote technological innovation. If we take advantage of the unique benefits of innovation prizes, we can also leverage in other institutions that have already contributed heavily to innovation.

Innovation prizes also have some disadvantages. One of the biggest is that they do not provide funding for individuals and organizations while they are working to solve the problem. For governments and society in general, this is a huge advantage, but for those who are trying to solve the problem, it is a huge disadvantage.

Innovation prizes encourage individuals and organizations to devote years of their lives and vast sums of money to solving a problem knowing full well that they will most likely fail. They might fail because the problem is unsolvable with current technology, or they might fail because some other group can implement a better solution.

For innovation prizes to work, we need a set of mediating organizations between the prize itself and the people who work to solve the problem. This set of institutions would provide funding for those individuals and organizations before they actually win the prize. Presumably they would do so in return for a share of the prize. Given that so many different groups would be trying to solve the problem, this would be a high-risk, high-reward financial industry.

We have a word for that: venture capital.

Expanding Venture Capital

Venture capital is a critical financial institution that specializes in high-risk, high-reward loans to entrepreneurs. As any entrepreneur knows, raising capital is one of the key challenges to scaling up a new business. With the right amount of funding, “crazy ideas” can grow into major sectors of the future economy.

Venture capitalists in the private sector are experts at vetting new, untested ideas and deciding which ones should be funded. The field is particularly active in the digital technology industry.

Today, the single greatest geographical concentration of venture capital firms is on Sand Hill Road in Menlo Park, California. Menlo Park is on the edge of Silicon Valley, the heartland of the digital technology industry. Sequoia Capital, Kleiner Perkins, Andreessen Horowitz, Lightspeed, IVP, GCV and Greylock are just a few of the legendary venture capital firms concentrated in one very small geographical area.

Ironically, I lived most of my childhood just a few blocks away from the headquarters of all of these legendary venture capital firms, and this was just as they were getting started in the 1970s. Many of my relatives were indirectly involved in the early Silicon Valley technology sector. I have since followed up with more than 20 years in my own career in the field.

Venture capital is so critical to technological and organizational innovation, and innovation is so critical to material progress, that we should look for ways to grow the field to solve a broader range of problems. Such expertise deserves to have a broader impact on society.

My hope is that, once innovation prizes become a standard practice of governments, an entire new sector of venture capital will spring into being. Today venture capital is associated with digital technology because that is where investors have the best opportunity to make huge returns. But there is no inherent reason why venture capital should be restricted to that domain. With the right incentives, we could get venture capital to spread into entirely new domains.

Obviously, the amount of the prize and the total number of prizes will play an important role in determining whether venture capitalists find the potential pay-offs enticing. My guess is that current venture capitalists will stay away from innovation prizes, so they can focus on their current field of expertise. My hope is that a whole new generation of socially-conscious venture capitalists will found new institutions that focus largely on innovation prizes.

A new generation of venture capitalists would have a strong incentive to contact individuals and organizations who are attempting to win a specific innovation prize. They might even recruit individuals and institutions to start working on the problem. These venture capitalists would then use their skills to identify which individuals or groups stand the best chance of winning the prize. They could then offer them capital in exchange for a promised percentage of the prize earnings. Since the amount of the prize is known, this is a fairly easy calculation.

Crowd-Funding

It is also not too difficult to imagine something like Kickstarter springing up around innovation prizes. Kickstarter is a crowd-financing website where individuals or companies can list their proposed products and request donations to help them design and produce their ideas. Usually, people who donate larger amounts get something in return, such as the actual product when it is completed.

Something similar could emerge for innovation prizes. Anyone who is attempting to win a prize could create a page via which individuals could donate to the cause. Depending upon the desires of the individual, a donation might give them a small portion of the earnings. Or it might just give them the satisfaction of knowing that their money is going towards a good cause. The site might also include a way for venture capitalists to easily contact the individual.

Social Entrepreneurs

Because innovation prizes are focused on socially beneficial solutions, an entirely new type of person might get involved. When prizes are focused on solving important societal problems rather than just creating a new product, “do-gooders” get into the action. When people can combine technical expertise with a desire to change the world for the better, they can achieve impressive results.

The combination of bettering mankind and being able to earn lots of money is a potent combination. If dozens of innovation prizes in the amount of billions of dollars went public, this would attract a great deal of attention from people wanting to make money and also those who want to help humanity.

Between a large prize, an emerging venture capitalist sector and Kickstarter-like crowd-financing, it is not difficult to imagine a Silicon-Valley-like culture emerging around solving important social problems via innovation prizes. The more prizes, and the greater their amount, the more likely such a culture is to emerge.

There is absolutely no reason why innovation prizes should be restricted to the U.S. federal government. Foreign governments, state governments, local governments, non-profits and billionaire philanthropists could also get in on the action. They could either create separate prizes with different goals and criteria, or they could pool their resources together to increase the total amount of the prize.

Successful Prizes

It is important to note that many innovation prizes fail to achieve results. If implemented incorrectly, prizes might not achieve positive results that exceed their significant pay-out cost. Some of this is due to the prize itself, and other failures are due to the inherent riskiness of innovation. We can, however, increase the likelihood of a prize inspiring success by creating innovation prizes with the following characteristics:

1. The prize should be focused on an important problem that current market incentives are not able to solve in the desired timescale. Prizes should not be subsidizing normal private-sector research and development. Nor should they focus on trivial issues that few care about.

2. The goals of the prize should be relatively uncontroversial politically. If either party or substantial sections of American society think achieving the goal is inherently bad, this will tend to undermine the political legitimacy of all prizes.

3. The prize amount should be substantial enough to motivate people, but not more than the actual benefits to society.

4. The criteria should be focused on the desired outcome, not how it is achieved or a certain technology or method. Ideally, the criteria should be about solving a problem and not a specific solution, though this can be hard to achieve in practice.

5. The criteria should be very specific, measurable, and potentially achievable. This is probably the most important characteristic. The criteria must be very well designed.

6. The prize should be as available to as broad a demographic as possible. It should not be restricted to government agencies, established institutions or credentialed experts. Even supposed crackpots should be eligible. Earnings should also not be restricted to any one nation.

7. The prize and its criteria should be transparent to all of society on the internet. Ideally, the prize would also be widely advertised by media and social media.

8. The government should follow through on delivering the prize as stated in the criteria. Obviously, this is critical. If the government gets a reputation for reneging on its prizes, trust will collapse and so will the entire prize system.

Prize-generation process

Successful prizes are more likely to come out of a solid process. The prize-generation process should go something like this:

1. Individuals and groups identify a societal problem that currently does not have a profit incentive that enables the private sector to solve it. They pressure elected officials to establish a prize.

2. Elected officials negotiate amongst themselves for the overall amount of money that should be devoted to the prize.

3. Experts in the field both in the government, academia, and non-profits recommend criteria that an innovation must meet or surpass.

4. The prize along with the amounts and criteria are published on one highly-visible government website.

5. Individuals, informal groups, and formal institutions launch projects to earn the prize. Some may do so publicly to acquire financing, while others might do so quietly.

6. Government or independent third-party institutions validate the fact that the criteria have been fulfilled.

7. Once the criteria are met, the prize is paid out to the inventors.

8. The inventors then pass part of their earnings to venture capitalists and donors who helped them finance their efforts (if they agreed to do so beforehand).

9. The solution is then implemented at scale by either the inventor or an organization that has purchased the rights.

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It Is Not About the West

For the past 40 years, Green energy policies have focused on wealthy Western nations. The current consensus among climate activists as to how to fight climate change emerged in the 1980s: the West should decarbonize by rapidly replacing fossil fuels with solar, wind, and other renewables. The argument went that this would give room for developing countries to grow economically using fossil fuels and later transition to renewables when they become rich enough to do so.

Back in the 1980s and early 1990s, this idea made some sense. Global carbon emissions in 1990 were 22.75 trillion tons. In that year the United States, Canada, Europe, and Japan emitted the majority of carbon emissions. In such a world, an exclusive focus on wealthy nations made some sense (Global Carbon Project 2021).

The United Nations Framework Convention on Climate Change in 1992 and the subsequent Kyoto Protocol of 1997 were built on this political consensus. By the time of the Copenhagen Accord of 2009, however, the assumptions behind this political consensus had collapsed. No one, least of all the climate activists, foresaw what was to come in the three decades after 1990.

The entire geography of carbon emissions has radically shifted from wealthy Western nations to developing nations in Asia, particularly China, India, and Indonesia. Yet Green rhetoric has not adapted to this massive change.

Most of the following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other articles on Energy:

1. Rapidly phasing out fossil fuels is extraordinarily risky

2. We need abundant, affordable, and secure energy

3. We need to complete the Third Energy Transition

4. A Challenge to Greens: Prove that solar/wind replaces coal!

5. There is a better alternative to Green energy policies

6. 16 reasons why Greens should love natural gas

7. Why Greens should love fracking

8. The wonders of CCGT

9. Why Greens should stop focusing on the West (this article)

10. more

Transition from Coal, Not Fossil Fuels

Once you cut through all the ideology and all the doomsday rhetoric, we can identify practical solutions that lower global carbon emissions faster than Green proposals without endangering world economic growth.

The big problem with air pollution and carbon emissions is not fossil fuels in general, but more specifically coal. One area where I agree with environmentalists is the dangers of coal. Wherever there are no huge cost disparities between coal and petroleum, natural gas, nuclear, or hydroelectric, I would avoid coal if possible.

Note that the above graphic actually greatly underestimates the reduction in carbon dioxide emissions by using natural gas. It lumps together very energy-efficient Combined Cycle Gas Turbines (CCGT) with much less energy-efficient natural gas Simple Cycle peakers. New CCGT plants reduce carbon emissions by about two-thirds compared to existing coal plants.

Coal is the worst carbon emitter (apart from wood) and by far the worst air and water polluter. Ending the use of coal is a very realistic goal in many nations, as long as they do not try to do so exclusively with solar and wind.

Unfortunately, coal is currently the cheapest form of energy in many regions. This is exactly why developing nations have built so many coal plants. Wealthy nations need a better alternative to coal than pushing solar and wind.

Since we are on the topic of coal use, I should mention China, India, and Indonesia. China alone consumes more than half of all coal burned in the world. India and Indonesia are second and third on the list. Together these three nations consume two-thirds of all coal used in the world. Unfortunately, environmentalists ignore this crucial fact (Global Energy Monitor).

If the goal is to reduce global carbon emissions as fast as possible without endangering economic growth in developing nations, it is far more cost-effective to transition those three nations from coal to a blend of natural gas, nuclear and hydroelectric power than for the West to install solar and wind. If those three nations can make the transition, then it will be easier for all the other developing nations to do so as well.

ABC… It Is All Bout China (and the rest of Asia)

Rather than focusing on wealthy Western nations, those who want to reduce carbon emissions need to think globally. Climate emissions are no longer a Western problem. Now carbon emissions are mainly an Asian problem.

Between 1990 and 2020 the geographical distribution of carbon emissions changed radically. Now China alone emits more carbon than North America, the European Union, and Japan combined. In those 30 years, China increased its annual carbon emissions by 381%, while India increased its emissions by 302.7% (Global Carbon Project 2021).

In 2020, China alone emitted 30% of world carbon emissions, by far the highest of any nation. India is now the third leading carbon emitter. Even worse, for future emissions, a bevy of Asian nations are rapidly increasing their emissions as well. In 2020, Asia made up a full 53% of all global carbon emissions, and there is every reason to expect this share to grow in the future (Global Carbon Project 2021).

And just recently cumulative carbon dioxide emissions by China over the last 174 years has surpassed the entire EU and is closing in on the USA.

Greens and the Left in general have not integrated this fundamental geographical change into their worldview. They still behave as if carbon emissions are concentrated in rich Western nations, and so they assume that is where the biggest reductions are needed.

Quite frankly, if you do not have a climate change solution that involves China and the rest of Asia, then you do not have a workable solution at all. And the Greens do not have a solution that involves China and the rest of Asia. China and the rest of Asia have essentially ignored climate change while pretending to care.

We have reached a point where the future trend of Western emissions does not matter very much. Their carbon emissions will decline regardless of public policy. Going forward, it is all about China and the rest of Asia.

ABC… It Is All Bout Coal (in China)

What caused this enormous increase in carbon emissions in China and the rest of Asia? It was overwhelmingly the construction of coal-burning power plants. While it is clear that this trend is bad for the natural environment, it is important to understand why so many Asian nations are turning to coal for their primary energy needs.

Why did so many Asian nations construct coal-burning power plants? There are four reasons:

1. Abundant, affordable, and secure energy is essential for long-term economic growth.

2. The leaders of Asian nations want their economies to grow to maintain public support and national security, and increase their influence in the world.

3. Most Asian nations have substantial domestic coal fields. This coal can be burned to create abundant, affordable, and secure electricity. Coal can also be combusted directly in their economically critical export industries.

4. Most Asian nations have no other energy source that can offer all the benefits of coal.

As long as these four factors remain in effect, Asian nations will continue to construct coal-burning power plants. The effects of this trend dwarf any countervailing trends in rich Western nations.

With a few exceptions, developing nations have chosen coal as their primary energy source. China is the premier example of this trend. Between 2000 and 2021 China built 1,011 GW (gigawatts) of coal power plants. This made up 81.6% of all new power plants constructed in the entire world!

For comparison, a very large coal plant puts out about 1 GW of electricity, and all coal plants in the United States together put out 217.8 GW. This is barely 20% of the capacity that China constructed in just 20 years. So, in 20 years, China constructed five times the amount of coal plants that currently exist in the United States (Global Power Plant Tracker by End Coal)!

While China has been the global leader in the construction of coal-burning power plants, it was not alone. Other Asia countries also constructed a large number of coal power plants. Between 2000 and 2021, India added 188.6 GW, while Indonesia added 34 GW. Other Asian countries such as Japan (26.3 GW), South Korea (28.2 GW), and Vietnam (22.8 GW) also built substantial numbers of coal plants. In total, over 90% of all new power plants constructed over the last thirty years were in Asia (Global Power Plant Tracker by End Coal).

And there is no sign that this trend will stop. As of July 2022, China has officially announced, pre-permitted, permitted, or is in the middle of construction of coal plants that will emit an estimated 44,000 million tons of carbon dioxide over their lifetime. When one adds in similar plants in the rest of the world, the estimate comes to 74,000 tons of total future carbon emissions (Global Power Plant Tracker by End Coal).

Meanwhile, carbon emissions in the United States and European emissions declined by almost 20%. Europe started reducing carbon emissions in the 1980s when they started decommissioning older coal plants in favor of nuclear and natural gas. The United States did the same starting around 2006 with the Shale Revolution. These reductions of carbon emissions are largely due to the Third Energy Transition involving natural gas, nuclear, and hydroelectric power.

One might think that climate activists would rapidly update their rhetoric and proposed policies to shift from the western nations to Asia, particularly China. Nothing of the sort happened. Virtually all the political focus of climate activists has been on the United States (15% of global emissions) and the EU (10% of global emissions). So, while Asia emits more than double the amount of carbon of the USA and EU combined, Asia get very little political attention.

At best, climate change activists claim that solar and wind are cheaper than coal, so it is short-sighted of Asia to continue building coal plants. As we shall see, this is a very dubious assumption.

Regardless of whether I am right, China, India, Indonesia, and the rest of Asia apparently agree with me as they are rapidly building coal-burning power plants. Though this trend has slowed substantially, there is no widespread move to decommission coal plants in favor of wind/solar in Asia.

Given that China alone has carbon emissions greater than the United States, Canada, and the European Union combined, attempts to lower global carbon emissions with renewable energy in the West are like Don Quixote tilting at windmills. They are not even focused on the location of the real problem, which is in Asia.

So what is your proposal?

Any movement that is aiming for global Netzero in 2050 must have a proposal for how to decommission coal-burning power plants in China, India, and the rest of Asia without disrupting their economic growth. Given the enormity of their present and future carbon emission, to not have one is disingenuous. And to be successful, the proposal must be in the economic self-interest of those nations to follow the proposal. Here is my proposal.

If you do not have a plan for Asian coal, then you do not have a plan!

Most of the above is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series:

See also my other posts on Energy:

1. Rapidly phasing out fossil fuels is extraordinarily risky

2. We need abundant, affordable, and secure energy

3. We need to complete the Third Energy Transition

4. A Challenge to Greens: Prove that solar/wind replaces coal!

5. There is a better alternative to Green energy policies

6. 16 reasons why Greens should love natural gas

7. Why Greens should love fracking

8. The wonders of CCGT

9. Why Greens should stop focusing on the West (this article)

10. more

Subscribe now

The following is an excerpt from my second book Promoting Progress: A Radical New Agenda to Create Abundance for All. You can order e-books at a discounted price at my website, or you can purchase full-price ebooks, paperback, or hardcovers on Amazon.

Other books in my “From Poverty to Progress” book series: