written 7 February 2021
published 14 February 2021
One of the serious limitations of traditional capitalism is the "silo effect", where each economic unit is treated as an isolated entity, to turn a profit or die on its own. The real world is much more cooperative.
Large corporations have addressed this to some extent by vertical integration, where several stages in a particular industry operate under one corporate umbrella. This allows a more profitable sector of the process to subsidize an essential, but less profitable sector. But vertical integration is relatively limited, and can create problems with anti-social monopolistic tendencies. Furthermore, large social issues can't be addressed by this kind of business model.
For example, after WW2, Britain had the opportunity to rebuild their entire economy, and instituted a national health system as part of the solution. At the time, most homes were heated by burning coal, which made sense given the strong British coal industry. However, the very high health costs from breathing the poisonous air were born entirely by individuals, who had no power to change the fundamental situation. When the government began funding those costs, they immediately considered ways to reduce them. Their solution was to pay for the conversion of all the heating systems from coal to something less polluting. The resulting health care savings more than made up for the one-time upfront conversion cost, let alone that the entire population was healthier. This is the benefit of whole systems planning.
Several decades ago, Amory Lovins, of the Rocky Mountain Institute, calculated that America would be money ahead to retire every low mileage gas automobile, and give everyone a high mileage car for free. This one-time expense would save the country money over the long term, as well as reducing dependence on foreign oil, and all the military expenses associated with that geo-political exposure. Of course, this suggestion was ignored as being too socialist, and threatening to the massive profits of the oil companies.
Recently, a similar suggestion has been made with regard to electric vehicles. This time the issue is not the cost of foreign oil, but the crisis of climate change and the real threat of near-term human extinction. A swift transition away from fossil fueled transportation could be accomplished by recycling every gas and diesel burning vehicle and subsidizing the replacement with a zero-carbon vehicle, either electric or hydrogen fueled. To make it equitable across the population, the poorest would get the car for free, with the subsidy reducing as the ability to pay increased. While large, this investment is modest compared to the total collapse of the economy, and should be evaluated.
But whole system thinking can be applied at a local scale as well. The Ukiah Unified School District recently installed canopy solar arrays at three of their schools outside the city limits, in PG&E territory. This makes good sense, given the higher cost of PG&E power, which will continue increasing over time. These arrays will provide power for decades at a fixed cost less than the current PG&E rates, making them a prudent investment. However, there is no battery storage included in these systems, so they will be useless in a power emergency. While the arrays are immediately cost effective, batteries costs are significant, and the school electrical systems would need to be upgraded and changed to allow for emergency operation when the grid is down. Because the school system has to show a profit for every investment, the community is less resilient in an emergency.
A whole system investment would apply emergency preparedness funding to augment the innovative investment the school system has already made. With adequate battery storage, appropriate inverter electronics, and the necessary infrastructure upgrades, these schools could be important assets in an emergency. With new efficient HVAC upgrades, which is also an asset dealing with Covid, assembly areas could operate as cooling centers, or shelters, in an emergency. If the cafeteria was powered as well, sheltered people could be feed, and the whole community would be more resilient.
This kind of investment is outside the limitations of competitive capitalism, but well within the ideals of socialist government, where the goal is not short-term fiscal return, but long-term social endurance. We already experience the world changing very rapidly, and building resilient systems, before they are needed, is becoming more important each year.
