- Special Sections
- Public Notices
As individuals we spend most of our lives planning resource allocation. Initially our only resource is our own time and effort (unless we were born rich).
Later, if we use this resource wisely, we will accumulate wealth and will be able to also allocate resources with our spending priorities. Many people (perhaps most in the more developed countries) use what we will call plan A. Accumulate wealth by any means available; so as to later have multiple spending options.
Plan B is the opposite, spend time, effort and thought doing what you think is important and what you are capable of. Plan C combines the two. Get a good education and/or extensive training in order to be more effective in both A and B.
Governments are similar in that they must have in place a strategy to develop, focus and control available resources. Their only rational approach is to use some variation of plan C.
A critical part of plan C is to accumulate the knowledge and wisdom that will enable decision makers to wisely allocate the resources they will later control. The financial mess the world is now in can be largely attributed to our neglect of this requirement in our planning.
Human resources (labor and thought); natural resources (materials in the earth’s crust); energy; and finally, industrial resources (machines, both mechanical and thinking) are the primary categories of resources
At the level of governments and above (international or global), resource allocation is 100 percent controlled by spending. We recruit and pay our planners, our thinkers and our politicians. The relative number and the emphasis placed in various areas are entirely determined by the associated budgets.
It is therefore clear that the interplay of economic theory and government policy should be foremost on the minds of our best thinkers.
Over a period of time (particularly the last 20 years), we have allocated resources very unwisely. Multi-million dollar homes, huge defense budgets, neglected infrastructure, inadequate research, and under-funded entitlements are just a few examples. To correct these problems at this late date requires re-allocating trillions of dollars of resources to neglected areas.
Unfortunately no mechanism exists to take money away from where it has been or is being unwisely spent. (Inflation does this to some extent) so our only option is to print or borrow lots of new money.
In a capitalist society this method of resource allocation is the only available option.
The problem is that it is largely incompatible with our high-tech society.
Often, research and engineering breakthroughs abruptly and discontinuously make new resources with enormous capability available. An example is the repurposing of both natural and human resources to do new things and thus accomplish much more than was previously possible.
Nanotech and re-education are two of the better known techniques. At the same time these breakthroughs can render previous techniques obsolete, creating huge dislocations in society.
The good news is that there are more than enough resources available in all categories if used wisely. Our immediate problems primarily involve unused and underutilized resources as well misused and misdirected resources. Unemployment is a sign of all of the above. There are idle machines, factories operating far below their potential, and goods and services being produced that no one wants.
Simultaneously many of both the necessities and luxuries of life are unavailable or are substantially overpriced. Lack of new financing is a major issue and is primarily due to previously misdirected resources and the fact that there is no easy way to redirect or recover these losses. Again, printing new money is about the only option.
From a more sophisticated point of view this is not really a problem because the true value of all available resources is orders of magnitude beyond any of these figures. And with every technological breakthrough this value jumps as much as another order of magnitude.
In short, much smarter allocation of resources is vital for our future. Creation of new resources is straightforward through research and development, and should be a priority. Unintended consequences of our spending need much more careful examination.
Sustainability issues involve repurposing of natural resources and should be also be given very high priority. Quality of life issues should be given much more weight in all decisions involving future resource allocation.
A closely related problem is that too many individuals use plan A and find the best way to accumulate wealth is to opportunistically prey on society’s weaknesses and idiosyncrasies. Financial rewards commensurate with true value added to societies wellbeing must become the normal practice!
Art Morse is the president of Los Alamos Center for Science and Economic Policy.