What Could You Do With A Trillion Dollars?

The title's question, asking you to imagine putting a trillion dollars to good use, unfortunately does not presume there actually exists a pot of that many dollars for you to allocate. Indeed, in the fiscal crisis now confronting our country, big pots of money are hard to contemplate. While so many exceedingly important but hideously expensive activities—rescuing our financial system from ruin, transforming our health care system, transforming our energy economy—need and have needed to be done, the requisite resources aren't anywhere to be found. The grownups may finally be in charge, but not before the kids have squandered the family fortune and maxed out all the credit cards. It is a profoundly sorry situation in which we find ourselves.

It's difficult to not despair at the fiscal devastation we have permitted. Forward looking idealism seems all but unthinkable, now that backward looking regret fills up all the spaces that should be reserved for possibility. How did we allow our priorities to be so easily and thoroughly corrupted?

Economists speak of the "opportunity cost" of a particular action, which is defined as some alternative action that is necessarily forgone in favor of the one that is chosen. Consider, for example, the opportunity cost of the Iraq war.

Serious economic studies have estimated the ultimate cost of the Iraq war will be between one and three trillion dollars. We are already approaching, in money actually spent, the low end of that range. Yet to be spent is the cost of continuing operations in theater, plus the massive costs of extricating and reconditioning, or replacing, huge amounts of military hardware. And that's not nearly all. The long term cost of providing lifelong medical care to the tens of thousands of seriously injured Iraq war veterans will be considerable. This will have been a very expensive war indeed. What is its opportunity cost? What could we have done instead with that one to three trillion dollars?

The Obama administration estimates a ten year price tag of $900 billion for its health reform initiative, and there is much anguish over how to pay for it. Even so, reforming health care as contemplated by the president is easily less than the cost of the Iraq war. How is it that our choices have been so skewed?

What about the Bush tax cuts, where the richest one percent (who were already doing quite well, thank you very much) of Americans reaped nearly 40 percent of the benefit? Where the richest five percent reaped nearly 50 percent of the benefit? Even if allowed to expire, the Bush tax cuts will have cost around $1.6 trillion, with little to show except for a widening gap between rich and poor. What is the opportunity cost of those cuts?

The true legacy of eight years of negligent mismanagement of the nation's affairs is the perilous fiscal hole in which we find ourselves, particularly at this time of great need. Generational investments need to be made to deal with the problems of global warming, fossil fuel depletion, Social Security and Medicare*, and more. And we are still the only industrialized democracy that doesn't guarantee basic health care to all its citizens.

What would you do with a trillion dollars? Here's my fantasy.

Consider buying a trillion dollars worth of solar panels. How much electricity could you generate? Let's use a ballpark price of four dollars per rated watt of panel capacity. Prices are actually now lower than that, especially when buying in quantity. With a trillion dollars you could thus buy 250 billion watts of rated capacity.

Continuing our back-of-the-envelope calculations, assume the panels are installed in a location where they get, on average, four hours of full sunlight per day. That means we're generating one trillion watt-hours of electricity each day.

One trillion watt-hours is one billion kilowatt-hours (KWh). How much is that? It's 3.3 KWh per day for each of the nation's 300 million citizens. My two-person household uses less than 25 KWh per day during the summer air conditioning season, and around half that the rest of the year. (But we're not typical; you probably use more.) For much of the year, 6.6 KWh would supply around half the electricity needed by my household.

Admittedly, this is a simplistic example that ignores a number of important considerations, such as the need to derate, installation cost, and the cost of equipment needed to connect our panels to the electrical grid. Perhaps most significant, worldwide manufacturing capacity isn't nearly large enough to supply a trillion dollars worth of solar panels. But giving the photovoltaic industry a much needed shot in the arm is one of the benefits of our buying spree. And the massive economies of scale would surely drive prices way down—another big benefit. Finally, realize that once installed, solar systems require little ongoing maintenance, and need no fuel—only sunshine!—to produce clean, reliable power for the several-decades life of the panels.

What could you do with a trillion dollars?

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* A report by the Brookings Institution said that "Over the long run, making the [Bush] tax cuts permanent would cost as much as repairing the shortfalls in the Social Security and Medicare Hospital Insurance trust funds. Thus, to the extent that Social Security and Medicare are considered major long-term fiscal problems, making the tax cuts permanent should be seen as creating a fiscal problem of equivalent magnitude."

Copyright (C) 2009 James Michael Brennan, All Rights Reserved