by Gary Alexander

May 14, 2024

It’s a tough pill to swallow in the middle of an election year, but we need a lot fewer grand solutions to life’s big challenges and a lot more trade-offs: Real-life compromises that meet in the middle ground that satisfies nobody 100%. Let’s accept the reality that neither-side, and nobody, has a monopoly on the truth.

The great economist-philosopher Thomas Sowell turns 94 next month and yet he keeps writing jarringly powerful new books. One of his most insightful sayings came in his 2007 book, “A Conflict of Visions.” It’s a simple 8-word teaser at the end of a long sentence: “There are no solutions, but only trade-offs.”

Thomas Sowell

What does he mean? The “no free lunch” phrase preceding it gives us a clue. If we assume we are all sincere and want the best for ourselves and mankind, why do we separate into warring camps in our solutions? Simply because we want some magic formula, a free lunch, slick solutions, not trade-offs.

Sowell proposed three simple questions to puncture the utopian fantasies of the one-solution crowd: #1: “At what cost?” then #2: “Compared to what alternative,” and finally #3: What’s your hard evidence?

There is something noble about seeking a perfect world, but something far more noble about meeting face-to-face with your neighbors to reach a workable trade-off of mutual needs without one side using coercion. There are so many current examples I could cite to put meat on these theoretical bones, but let me examine one or two of today’s most intractable problems and see if the “solution” is a trade-off.

First, let’s say you believe that climate change is the worst existential threat to mankind, and I disagree. I’d argue that climate change will likely never be our #1 existential-threat. Nuclear war and the ensuing nuclear winter is a logical #1, and I’d say an electromagnetic pulse is an even more likely apocalyptic event. Living in the Pacific Northwest, I’d say a huge quake in the Cascadia subduction zone might be #3.

But focusing just on climate change, your team is now in the driver’s seat, with the Biden Administration trying to limit fossil fuel emissions, mandating more electric vehicles (EVs), giving huge financial breaks to EV buyers, and punishing fossil-fuel operators. Here are some hidden costs in this free-lunch formula.

Consider a typical Tesla Model 3 battery, which contains 300 pounds of minerals, starting with 13 pounds of lithium, which is almost entirely mined overseas. There’s also 18 pounds of cobalt, which is mostly gathered by exploiting child slave labor in the Congo, plus 18 pounds of aluminum, 37 pounds of copper, 92 pounds of nickel and 121 pounds of graphite, virtually all coming from beneath the earth’s surface.

This involves digging, usually with fossil-fuel-powered heavy machinery in far off lands. These mines require new roads, crowded with heavy vehicular traffic, polluting local aquifers, generating toxic waste and demanding enormous quantities of water, all while defying local cultural norms (for details, see “The War Below; Lithium, Copper, and the Global Battle to Power Our Lives” by Ernest Scheyder).

The War Below

Americans try to keep their hands clean by not mining our lithium and cobalt, as it tends to be under some Native American land, or near protected plant species, but the Chinese aren’t so noble. As West Virginia Democratic Senator Joe Manchin said, “We’re so pristine in America, we think someone else will do the dirty work of mining for us. But we’re just in a very vulnerable position,” since China has been scouring the world the past two decades for the key components of EVs – cobalt, lithium, copper and other metals.

At the same time, we are adding enormous demands for electricity, with AI, cloud computing, our many new electronic devices, ever bigger HDTV screens, “mining” Bitcoin, and now these EV mandates, all while our electricity generating power plateaus, likely assuring us some future brownouts or blackouts.

California is a case of ideology-blinded planning. Due to California’s heavily subsidized solar panel installations, the state has too much power in the daytime, but Californians can’t store solar power and most folks need more power at night, so their sunlight goes to waste. In 2022, 95% of the 2.4 million megawatts of electricity the state wasted was solar power. The highest demand comes around 7:00 pm, requiring the state to rely on the natural gas the State is trying to ban. California is also trying to eliminate all nuclear energy, which is more reliable and just as clean as solar, but Americans seem to hate that dirty (yet truly clean) word “nuclear,” as it connotes movies like “The China Syndrome” or “Oppenheimer.” California is also mandating EVs faster than other states but is far behind in its grid and charging stations. It’s a State crippled by rules dreamed up by activists with a religious agenda but without practical plans.

Europe is in a similar ideological bind, creating a “Greener than thou” contest prior to Russia’s invasion of Ukraine. Most nations vowed to reach net-zero greenhouse gas emissions by 2050, but Germany was a low bidder by naming 2045 as their goal. Their ‘energiewende’ became an impossibly expensive road map to renewable energy, including phasing out nuclear in favor of wind and solar with reliance on … Russia’s natural gas. How smart was that? Then, Dutch farmers launched an agrarian right-wing party in protest to super-green regulations, and their party became the nation’s most powerful party this year. This resistance spread to other EU nations, including France, Germany Spain and most of Eastern Europe.

So, let’s not be so either/or. How about a “trade-off” solution: Keep seeking workable, profitable energy alternatives while also encouraging cleaner and more efficient fossil-fuel-based vehicles and power plants to provide the power we so obviously need to meet our demands. After all, China keeps building coal-fired plants to build the ‘clean’ solar panels it sells to us. Let’s count all costs: Windmills require tons of steel, copper and cement to build. Those placed in the ocean impact whale and fish life, and those on land kill flying birds, plus: Any old EV batteries comprise one heck of a hazardous land fill for our future.

Therefore, per Thomas Sowell, it doesn’t matter much whether you or I believe in climate change. The cost of “curing” climate change (the Solution) can be far worse than the costs of just doing the common-sense things we’re already doing – trying to drive and fly less, working from home, using natural gas, buying some EVs, diversifying power sources and searching for better, lower-cost energy sources.

However, if you want to see meaningful reforms, tell China and India to clean up their act. Those nations are not willing to meet the 2050 carbon-neutral deadline but want to push the deadline 10 to 20 years out. Laggards include four of the six largest greenhouse emitters: Brazil, Russia, India and China – the BRICs.

P.S., Just so this column isn’t all about climate change, the world could also have prevented the Ukrainian conflict before it started, or shortly thereafter, without all the death and destruction, by just ceding a small Eastern slice of that nation to the Russian-speaking Ukrainian nationals in the Donbas region (below).

Czechoslovakia map

Czechoslovakia split into two nations peaceably, and Yugoslavia became six nations. It can be done. Then we could stop baiting the Russian bear by surrounding them with NATO adversaries. After all, how would we like it if Canada, Mexico and parts of Texas and California joined an anti-American pact?

This year, recall these key 9-letter words: ECONOMICS examines TRADE-OFFS, not SOLUTIONS!

Here’s your homework assignment – another exercise in “free lunch” solutions vs. trade-offs: President Biden has offered four million voters (er, debt-ridden adult students) college loan forgiveness, and 10 million others a $5,000 debt reduction, while Senator Bernie Sanders has offered a bill creating a $220 billion medical debt forgiveness package for all Americans. What are the trade-offs in (1) added debt service on our $34 trillion national debt at today’s “higher for longer” 5% bond rates on rising debt levels and (2) how does this make other voters feel – those who paid off their debts, or those who never went to college? And (3) What’s next: Credit-card forgiveness for deep-debt divers, or mortgage forgiveness?

Happy “de-coding” of “impossible free lunch” political promises in the next six months of electioneering.

Navellier & Associates owns Tesla (TSLA) per client request only. Gary Alexander does not own Tesla (TSLA), personally.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

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About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

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