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Sunday, October 5, 2008

Cry for U.S.: We’re Argentina

Through about the middle of the last century, Argentina was one of the wealthiest countries in the world. In the post war period, however, the country went from riches to rags; not the direction you expect, or hope, to see such changes take.

In significant part, this slide was the result of poor economic decisions (too much borrowing, not enough repaying; sound familiar?), a bloody series of coups, and a military more concerned with internal rather than external enemies (they began disappearing and torturing alleged enemies of the state in secret prisons; sound familiar?).

But the other key piece is that the products that had made the country wealthy—the export of beef and grain at the top of the list—slid in value as competition increased. The country needed to diversify and invest in changing key sectors of the economy.

It didn’t.

Not soon enough. Not fast enough.

Sound familiar?

We wrote that $25 billion check to the American automobile industry a few days back—another loan.

But Congress was only able (finally!) to renew the anemic tax breaks that have (intermittently) sustained the alternative energy industry in the US, by folding it into this week’s bailout of Wall Street, and adding a “sweetener” that provides support for “alternative” energy sources like oil sands and liquification of coal.

Meanwhile, Warren Buffet just bought a chunk of a Chinese company that manufactures lithium ion batteries for electric cars. They’re looking to bring both the batteries and the cars here.

I’ll confess that I haven’t read Tom Friedman’s “Hot, Flat, and Crowded.” But the subtitle, “Why We Need a Green Revolution—And How it Can Renew America” tells me everything I need to know.

We’ve wasted decades stuck in the idiot conviction that “we can’t afford alternative energy technology.”

Whether that was ever true or not, it’s not true now: we can’t afford not to pursue alternative energy technologies.

And while we dither, squabble, and chant about offshore drilling, China and India are moving to develop these alternatives:

Buffet isn’t investing in China to make a philosophical point; he’s investing to make money.

Our recent appeasement of India’s nuclear industry is unfortunate; China’s rising militarism is worrying; but the greater threat is that we will end up buying rather than selling the technologies that will make possible our surviving (start with that) and hopefully prospering into the next century.

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