Posted by: goalpath | May 28, 2009

Will Technology Save the U.S. Economy?

Bailouts haven’t done much to help our faltering economy, so how could technology save the economy? What would you do with $100 billion? Spend it wisely we hope. That is what President Obama and the U.S. Congress are hoping. That’s the amount in the stimulus package devoted to discovery, development and implementation of technologies in energy, healthcare, a smart grid, broadband and R&D.  

The short answer to the question is yes, technology can and should save our economy. In the short term, most experts believe that this infusion of capital into the various technology sectors will produce 3 million new jobs over the next two years. And most economists also agree that 80-90% of new economic growth comes from advancements in science and technology.

The breakdown of allocated dollars is as follows: Energy – Renewable energy incentives will be $200 billion which are primarily tax credits to individuals, companies, utilities and research. $16.8 billion will be given out in grants for energy efficiency and renewable-energy research. Health-care – total allotment for this sector is $19.6 billion. Most of this money will go to health-care providers who upgrade, standardize and utilize electronic record keeping systems.  Smart Grid – The government has allotted $11.0 billion for this sector. You might be amazed at just how much electricity is lost during transmission. Research and Development — $19 billion, with the majority of the funding going to the National Institutes of Health, National Science Foundation, Department of Energy, NASA and Department of Defense.  Miscellaneous Funding  — $8.4 billion going to loan guarantees for renewable energies and transmission technologies.

So what would be the downside of the government’s new stimulus package? First, let me say that there is a lot more upside than downside with this plan. And yes, $101.9 billion is a lot of money regardless of how it is spent. There are a few areas where the money might not be going to the right sectors. But that is a very small part of the total package. For example, investments in extending broadband into rural areas and some of the proposed renewable energy projects might take too long to get a reasonable return on the investment. 

Extending fiber optic cable to rural areas might not be the best use of stimulus monies. A small portion of the stimulus plan calls for extending broadband reach to underserved areas and some experts believe that is not a good idea. It would have been a good idea 5 or 6 years ago. Of those who don’t currently have broadband today, less than 5% say they would like to have it, but that leaves over 95% who say they don’t want it, either because they don’t feel they need it or because it would be too expensive at the current pricing.

In the area of renewable energy, some worry that there are some areas of renewable energy that will never be cost effective. Remember ethanol? The government has spent millions helping growers, refiners and producers in the ethanol sector, yet it still requires more energy to produce than it saves. Others worry that the smart grid might run high power transmission lines to remote solar installations and wind farms that produce energy that is too expensive to compete with more traditional sources like coal or natural gas. The price of oil and natural gass will determine just how competitive renewable energy is in the future.

In the coming years, I believe that the technological advancements in generating these renewable energy sources will make them competitive. One of the major benefits of the stimulus plan is that it will protect these renewable energy companies from coming completely unraveled due to market forces in the faltering economy. The advancements in this field need to be pursued even if they aren’t financially feasible today.

Company executives in the renewable energy fields, like solar, wind and biofuels point out that they have been hanging on by a thread just to stay in business. Yes, there are some areas that might never come to fruition because of the cost of production. But if we don’t help them through the next few years, then the U.S. could very possibly remain dependent on foreign oil until the Middle Eastern oil companies pump out their last barrels of crude.

Bottom line. If the bulk of these funds are used wisely and America is able to begin creating more green jobs and move towards a renewable energy economy, then this money will have been well spent. We certainly need to come up with a plan that will help our citizens go back to work, particularly in the manufacturing sectors. If the stimulus package accomplishes that and moves us in the direction of energy independence, then all these billions of taxpayer dollars will have accomplished the stated goals of the stimulus package. If not, then you best fire up your human powered pedal generators. You will need them soon to light your homes and power your laptops and TV’s.

Do you have an opinion? Are you a Baby Boomer? If so, why not consider joining our web community at www.boomer-insight.com. It takes less than a minute to sign up and you can participate in our polls, forums and discussions on important issues facing America like stimulus packages and renewable energy funding. Our goal is to attract enough members so we can affect policy decisions in Washington in a positive manner. We are open 24/7. Thanks for your support.

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