In the first part of this series, I did not mention start-ups. But I will be mentioning them in a lot in this instalment. In getting to this point some readers may have noticed that some of the things I’ve said we need either don’t exist yet or are not commercialised.

So there are two significant requirements here: funding innovation and scaling up innovation.

Tesla is a useful case-study using basic metrics. They are almost 20 years old, have raised approx $20 billion and today have a market cap of around $95 billion. Their cars are light years beyond their competitors because they focus

on a clear goal that began with a blank piece of paper and they currently have made an enormous profit on their investment capital.

In spite of all their apparent success, they only overtook Nissan as the largest seller of electric cars in December 2019. In 2019 there were approx 17 million light vehicle units sold in the USA, Tesla sales in this figure were 192,000, a fraction of the market. The US obsession with giant trucks like the Ford F-150 is part of the reason for this (12 million of the figure was “light trucks”) and will be addressed by the controversial CyberTruck, but it still shows that even a company as feted as Tesla, in reality, has barely made a dent in the industry, let alone changed it. I am confident it will in time, but we don’t have time.

For me, this means the start-up model doesn’t address the problem very well due to the time restrictions. However we shouldn’t throw the baby out with the bathwater, we have seen the innovation power-driven by the free-thinking nature of start-ups and it would be incredibly remiss not to harness this.

We must also remember that most honest start-ups acknowledge that their roots took a grip on government-sponsored fundamental research, this must also be utilised to its full potential. Returning to the http://www.departmentof.energy/ chart, there are thousands of little things relative to the major items detailed earlier in the article that must be solved. Any item that has 0.1 on the chart is an approx $25 billion market opportunity, so taking this as your calculation base, explore the chart and remember they all need to be solved. The opportunities are simply enormous and occur in many different disciplines and industry verticals, almost something for everybody.

This all leads me to make the following proposals:

  • Create a broad list of key problems that require solving for the new economy (examples are energy storage, hydrogen economy, materials for a truly circular economy, more efficient education systems, decentralised waste management, decentralised energy generation, electrified regenerative agriculture systems)
  • Create a global Perpetual Bond system to finance everything.
  • Greatly increase and expand government grant systems for start-ups and fundamental research focussing on the key problem list, particularly initiatives like ARPA-e in the USA and the Green Deal in the EU
  • End fossil fuel subsidies
  • Double-down on education, please refer to my prior article on the subject in the Currency on how this should be spent. Furthermore, where applicable student debt should be eliminated and never be re-introduced. It simply makes no sense to have our most educated minds taking jobs purely to pay down debt instead of focussing on humanity’s greatest problems.
  • Building on this, some form of limited UBI should be introduced initially to keep economies running, but supplanted over-time to become an incentivisation system for people to work on ideas to address items in the key problem list while they form companies or research groups and apply for grants within the vastly expanded grant system.
  • To overcome the time problem, the successful start-up innovations must then be inserted into our Private Industry War Factory. These industry giants understand scale in a way that is difficult for start- ups to understand as very few start-up leaders, if any, had worked at a genuinely global scale. This is true of Elon Musk, imagine if instead of releasing the Model S, all the technology was delivered to Ford in War Factory Mode, where they were instructed to take the principles of the technology and instead go straight to the Model 3 mass production by creating a new factory and working in conjunction with the Tesla team. Once ready, the public infrastructure subsidy scheme would guarantee a capital cost below $30k with payback terms superior to anything offered to purchase a fossil fuel equivalent. But the industry incumbents won’t work with the start-ups?

This brings us to the bold step…

The bold step

For the non-Irish reader, the bold step is the equivalent of a “time out” for naughty children. It is also an apt term for the step we need to take with industry incumbents given what happened with the post-2008 stimulus programs.

The financial system collapsed due to a lack of transparency which enabled financial institutions to take mad bets on collateralized debt products they did not seem to understand. This was confounded by a free-wheeling race to the bottom on debt issuance to individuals and companies with analysis of their ability to actually repay the debt eventually approaching almost 0 – you all know the stories.

To bail out this grotesque casino where the house and the gamblers lost, the national debt was placed on many global citizens, along with the steep increase in annual interest payments that in some countries still exceeds annual education spending today. This very much reminds me of the Dark Ages coinciding with the Church taking a ~10% tithe on everything, perhaps removing that spare/disposable wealth that might otherwise have been spent on research and development that would have enabled humanity to get out of the Dark Ages faster. For the market fundamentalists who said we couldn’t let the financial institutions/gamblers fail, this is their church and we spent a lot more than 10% of our GDP to keep them going. They pedalled the myth that if they failed, western society would fail and we listened to them.

As their financial sorcery was so complex, the stimulus packages could not come with strings attached, only the financial institutions themselves could save the economy and stimulus conditions would restrict their ability to do so. But they promised to reform and never do it again. We bought their steaming, putrid bullshit and here we are today. I remind you of the FRED chart above, I also remind you that many financial institutions are now paying hundreds of millions for not lending money due to negative interest rates while continuing to gamble on the markets. Insanity is doing the same thing over and over again and expecting a different result.

It’s happening again but in even more industries. There are already some incredible stories. The Guardian reported that Tesco received £585m in bailout tax relief and immediately paid £635 million to their investors, many of whom are incredibly wealthy. When queried about this, without any sense of irony Tesco said it was a fair reward to the investors for supporting them when their market cap lost hundreds of millions for Tesco amid a 2014 financial scandal.

Meanwhile, the FT report that only 2,500 of the much-heralded small business loans have been awarded after receiving over 300,00 enquiries. Rishi Sunak claimed to be shocked that the banks weren’t lending even though they’d been told to, he is obviously not a student of history. In the USA, the small business relief under the CARES Act is being administered by the banks via a slow and unwieldy vehicle benignly called the 7a programme when it would have been far more simple to issue a type of tax rebate via the IRS. The CARES Act gives the banks 100% loan guarantees, reimbursable interest and 5% administration fees on these loans, so they’ll get a nice windfall while locking out or slowing down many desperate small companies and start-ups due to the needless intricacies of the 7A programme. No one would have received additional funds other than small businesses were the relief routed through the IRS.

There is no halo over the EU either. Instead of issuing their own version of Perpetual Bonds and offering stimulus to all EU nations in an effort to foster community and togetherness when it is most needed, they are continuing to try and behave as though normal market rules apply while long-term supporters like the Dutch are beginning to adopt a transactional, Brexit-like “what have you done for me lately?” approach (ignoring the longest period of peace and prosperity Europe has ever experienced).  Most gallingly, BlackRock has been appointed as an advisor to the European Commission on environmental, social and governance factors for the upcoming stimulus program. Using multiples of the €5 billion per year for €1 trillion stimuli cited earlier to address the lack of financial support across the EU would likely solve the various community problems on a financial level, each €5 billion increment costing less than 3% of the annual EU budget.

Instead, they are asking Blackrock what to do, which will almost definitely involve normal market rules. In addition, the Guardian recently reported that Blackrock is a top-three investor in all eight of the world’s largest oil companies, the largest fossil fuel investor in the world overall and a top 10 investor in the 12 of the most systemically important banks in the world. This feels like paying Harvey Weinstein to consult on a new treatment program for victims of rape. This sort of thing will continue to occur all over the world if we don’t heed the lessons of 2008.

So what to do?

We have covered Perpetual Bonds as the financing tool, but now we need to consider how the money is applied. The EU has been suggesting “green strings” for stimulus and I believe this is the clear path forward, with the strings hopefully resembling some of the proposals I have made above. In addition to green strings, all companies receiving stimulus should be required to have full transparency on the allocation to the final cent as proposed by the IMF. Modern financial software makes this a trivial exercise. They should also not be able to simply return all the money to their shareholders or perform other forms of financial engineering that does not benefit greater society. Longer-term we need to introduce stiff market rules and regulation that ensures economic activity must benefit humanity to end the previously discussed cycle of humanity serving the market. This is all incredibly complicated and will require many iterations over the coming years, there will be some failures and problems as with everything new, but the focus on a clean, equitable future should not be lost.

Tell the building material companies they must switch to circular materials and so forth. All of this will be painful, but will ultimately generate enormous wealth

The primary problem, as with the financial crisis, will be with the incumbents playing ball and genuinely reforming and signing up to our new future. For any organisation that pleads for opacity and no-strings the message should be stark and firm: If you don’t like it we are happy to let you fail – this is the Bold Step.

The reality is “too big to fail” companies will simply be placed in administration like any bust business. So those energy companies that are requesting help while already receiving billions in fossil fuel subsidies should be allowed to fail if they refuse the stimulus package. Their incalcitrant, unrepentant boards and management will be fired and replaced with experienced equivalents who understand the broader, long-term thinking required to deliver a positive future. The stimulus package the previous board and management rejected will now be accepted and the organisation capitalised. The jobs will not disappear overnight, they will be retained. The share price will be savaged, but this is already happening anyway and will happen again if pricing climate change into the markets is further postponed. The non-wealthy shareholders adversely impacted will be supported by one or more of the various stimulus packages proposed above. When the economy stabilises the share price will go up again, it always does. This is what should have happened in 2008, this is what should happen now.

So as the airlines are being bailed out, let’s get them to agree that all aircraft under 500km must be electric by 2030, that beyond this they must be hydrogen-powered. Let’s tell the car companies they are now only permitted to build electric vehicles. Tell the building material companies they must switch to circular materials and so forth. All of this will be painful, but will ultimately generate enormous wealth as we did in the ashes of WW2. The list is endless, but the point is simple: all industries in all countries must commit to substitution for stimulus.

What does it look like for Ireland?

I appreciate this is supposed to be an innovating Ireland series, but this is a global problem we are a minnow in. However, we wield unusually large soft power on the global stage and have a small economy that can be manipulated rapidly. For this reason, I think our goal should be to set ourselves as an example of what can be done to the rest of the world. There are so many things we can do and I’ll be returning to this subject in coming articles, but for now, let us list some of the more clear items:

  • Our existing undersupply of housing of 75k units with 25k units required annually from there should only be built with A rated BER, heat pumps, LED lighting and induction cooking units with a plan to add decentralised waste treatment over time as well as green or solar cladding.
  • Increase education spending and quality as per my previous article
  • Cancel the Shannon Shale Gas terminal
  • Cancel all plans for new fossil fuel energy generation and replace with solar and wind
  • Increase green-focussed fundamental research via bodies like Science Foundation Ireland
  • Increase grant funding via vehicles like Enterprise Ireland, ISIF and the NDRC
  • End fossil fuel subsidies
  • Shift all Irish agriculture to regenerative systems within an agreed timeline
  • Immediate phase out of non-electric heating systems
  • Immediate phase out of non-LED lighting
  • Create Circular Material Ombudsman
  • Ban the sale of non-electric cooking units
  • Introduce personal finance packages to facilitate the purchase of electrical consumer goods ahead of fossil fuel equivalents
  • Phase out the sale of fossil fuel cars from 2025 onwards and introduce subsidy programs or remove VAT & VRT from electric car purchases.
  • End fossil fuel exploration and exploitation in Irish territories.
  • Lobby the EU to introduce Perpetual Bonds
  • Create new economy re-training programs for old-economy industry employees

The above is just a tiny start and I fear many readers will have howled with outrage before they completed the list, but we need to be incredibly brave and bold. If you believe the climate numbers and models, were it not for isolation you should be in the streets demanding the above, reminding our political class they serve us, not economic memes or multinationals. If we make our stimulus program as aggressive as this the whole world will talk about Ireland positively, we can be a shining light of progress. We will go from among the bottom of the EU carbon class to the top as we did economically after the last crash. Focusing industry on the inevitable carbon-free future will create companies and entrepreneurs that are highly valued all over the world and we can export our green innovations globally in the manner Denmark has led the wind generation globally thanks to her foresight and Government action.

Table by David Connolly, CEO of Wind Association Ireland

For this to happen, we need plain speaking from our political leaders, in the same manner, we have seen in our Covid response. Statements like “We are not going to sign up to a program for government that decimates rural Ireland” from senior politicians are not helpful, particularly given no suggestions to decimate rural Ireland have been proposed. Indeed it sounds like the willfully divisive, straw man logic we see from the Trump Administration. Putting down the parish pump and explaining in detail how all society will equally share the burden and ultimately prosper from addressing Climate Change would be far more productive and progressive. The Greens need to behave this way too. A recent post by David Connolly, the CEO of Wind Association Ireland, detailed in specific terms how a 7% annual improvement in carbon emissions may be achieved. To be clear, I don’t agree with all of these options, but this is the type of approach and dialogue our leaders must use to frame debate and ensure everyone is clear on the path we must take, in the same way, we now have a Lockdown Roadmap

Get busy living

You cannot solve a crisis if you deny it exists. If you accept it exists, you must acknowledge it.  Upon acknowledgement, then you must admit there’s something you can do about it. This creates a responsibility to act, leading to solutions. Blaming others – individuals, countries or organisations – merely acts as an impediment to corrective action.

This paragraph could have been written about the Covid Crisis or the Climate Crisis or the Chernobyl meltdown that began this article. It will not stop being true, we can focus on futile efforts to return life to normal after Covid, or accept the science, the measurements, the experts and agree that there is no more normal, our generations’ World War has begun and we need to act now. I don’t have all of the answers, very far from it. I am sure I have made some factual errors or some of my points will ultimately prove to be foolishly naive. Instead of using these as an excuse to ignore the broad themes of the piece, think deeply about everything you’re seeing around you today, the constant confirmation of Climate Change facts over the last 50 years and what the future solutions should be if not this. Use all the channels to debate the issues with everyone you know while in isolation and when out of isolation, as this debate will go on for years and define our generation. I have never been more certain in anything and will continue to promote these ideas. You should too, especially if you have children or grandchildren. Like Covid, as measurement grows I am confident these warnings will become more and more prescient. Don’t ignore this, do your own research.  We have a choice.

In the Shawshank Redemption, having finally become relatively comfortable in prison, Andy Dufresne told Red that “Life comes down to a simple choice: You’re either busy living or busy dying.” He escaped that night. Trying to return to normal will be getting busy dying, choosing to stay in prison. Accepting the greater crisis of the Climate, acknowledging it, channelling the fear, uncertainty, sadness and rage into productive problem solving and lobbying to solve the Crisis is getting busy living. Like Andy, we have a high probability of failure and a tunnel of shit to crawl through while an army of people try to stop us, but decades of prosperity and the future of our children, their children and all the amazing things civilisations’ descendants can achieve awaits the other side.

Let’s start paying down our debt to the truth, let’s get busy living.

Much of the better insight in this article came from years of conversation with Saul Griffith, Pete Lynn and their colleagues in the incredible Otherlab community in San Francisco.