Saturday, May 02, 2009

Why Sustainable?

Most often we here “sustainable” in the term “sustainable development.” To answer the question why sustainable, let’s answer the question: “What is development?” Development is creating something new. The purpose of creating something new is to gain an advantage.

Development is using resources to create something that provides an advantage. Past examples of macro development has been power grids, interstate road systems, and government. These systems provide advantages for everyone who participates in the system. Micro development extends into industries, businesses, and people’s lives: i.e. people purchase cell phones to give them an advantage.

Development requires initial investments: the creation of the object. The interstate system in 1956 was the largest project ever undertaken: costing $114 billion dollars (not adjusted for inflation).

The interstate system provided an advantage. Transportation times were shortened substantially. Large trucks are now the backbone of our economy. The advantage the United States received from the interstate system was much larger than the $114 billion dollars invested.

In 2009, the interstate system is a foundation for our efficiency. Original creation of the system was a cost and a benefit for our system. Maintenance of the interestate is a cost, but not a benefit. The entire system does not perform better because a bridge is repaired or replaced. Maintenance does not benefit anyone, except the person receiving payment for maintenance. That’s the paradox of maintenance: it provides no benefit, but it is required to maintain current efficiencies.

With that preface, why sustainable development? The answer: because maintenance provides no benefit. In the United States, we are no longer a blank slate. We have a choice between maintenance and re-creation. Our administration is verbally pushing re-creation with a twist, “sustainable re-creation.”

Schumpeter’s term “creative destruction” applies to wiping out technologies due to advances. American’s would rather create than maintain; we’d rather buy a new car than repair a broken axel. That’s why the administrations fight for sustainable development is so important. New creation and development is easier to sell to American’s than “maintenance.”

However, don’t expect the massive maintenance bill, aka “Stimulus Bill,” to change the marginal productivity of labor. It’s providing much needed maintenance for the current infrastructure; it’s not creating something new, and no advantages will be had.

No comments: