in economics, rant, sociology

The dawning of a new age…

Many of my co-workers (within my department) commute. Only I live within the actual city limits of my workplace. I live about four miles away. The one other who also lived in the city of Dayton has moved farther away. There are a lot of people in my department that live significantly farther away. Many live about ten miles away, several live thirty to sixty miles away. Yes, that’s commutes of sixty to ninety minutes.

This led me to suggest that the managers sit down and ponder the economic situation. The mean rise in gas prices is likely to continue (in the long run). This can – and will – have huge effects on our economy. I suggested a brainstorming session. What would the worst-case scenarios be? The next-worst-case scenarios? What could (or should) we do in those situations? How could we lay the bureaucratic groundwork *now* so that we minimize the effect on our workplace (and workers)?

There’s two things that struck me about this conversation that I’d like to share. First, the suggestion was seen as a surprising, novel – and even somewhat radical – idea. I got that impression from nonverbal cues, so I might be wrong. I hope I am, because this is exactly the sort of strategy that businesses need to adopt *yesterday*. Living quarter to quarter (or month to month) as a business is going to find you trapped when market conditions radically shift about you. The groundwork needed to shift with the market often takes more time that the market shifting. Normally, this is absorbed by new businesses arising and old businesses failing. I am concerned that a radical market shift (say, from a supply shock from oil) would cause more failing than arising.

The second thing is even more troubling. It is the lack of understanding of the real, total effects of oil prices (and shortages). It isn’t just the effect gas prices has on your personal driving habits and budget. The rising price of oil (proximally due to a negative real inflation rate, long-term due to traditional supply and demand factors) is not going away. We always think of gas prices because it affects us directly, but oil is much more central to our way of life. The keys I’m typing on are made of plastic – that is, oil. The price of the keyboard was determined, in part, by cheap transportation. Hell, most of Wal*Mart’s current business model is built on cheap, just-in-time transportation and delivery. The single-use syringes at your doctor’s office, the plastic wrap on billions of containers – all are derived at least partially from oil.

These effects are rarely considered in our public discourse, and that is frightening. The promise of high oil prices is an end to disposable consumer culture, a change to renewable energy. As oil prices outstrip its convenience – and especially when it does so rapidly – alternatives become more attractive. But this requires the public – at least businesspeople – to recognize and seize these opportunities. I don’t see it happening yet, and that worries me. Instead, I see a general cluelessness, a presumption that things will just get back to “normal”.

They won’t.

It reminds me of my experience at a box store yesterday. I had brought in my own canvas bags, and the cashier kept trying to put my stuff in plastic bags. “I suppose we’ll all slowly have to get used to ’em,” she said. “It will change pretty quickly,” I replied, “when the rising price of oil makes the cheap plastic bags more expensive quickly.”

She was so stunned that she forgot to say “Have a nice day.”

Later note: Literally hours after I had written the above, I ran across Amory Lovins’ TED talk and Winning the Oil Endgame. Aside from the all-too-common “I figured out the same thing another person did without knowing of them” effect, I have mixed feelings about it. Not about the concept or work of Mr. Lovins and his collaborators, but about the fact that this stuff has been out there for years and hasn’t been more widely seized upon.

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  1. David, you’re very correct in your article. I think there are a few logistic bugs with your proposal, but it’s definitely a good starting point. We’re going to have to get inventive in changing behaviors faster than economic forces require them to change. (Which, by the by, is where I think our posts differ. Yours is much more proactive with suggestions than mine, which concentrates more on analyzing the current and short-run situation.) Thanks for the comment!

  2. Hi Steve-
    it was an idea- trying to change behaviors that really hurt our country. Plus- I’m really sick of businesses getting incentives to build in corn fields.
    Maybe, with the new administration, there will be room for new ideas.

  3. its funny because I see this situation in several cities where employees commute up to an hour and refuse to move closer to their jobs.
    this is a habit we all have to break.

    and gas is central to our lives from the products we consume, the grass we cut, and the items we purchase.

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