Advancements are often initially dismissed as being too expensive to realize. We need to learn from past mistakes, Lars Jaeger writes in an essay for finews.first.
This article is published on finews.first, a forum for authors specialized in economic and financial topics.
(a modern fairy tale by Walter Mielentz, with thanks to the author)
Once upon a time, people fetched water from a well and had to drag it home. The water was often dirty and people got sick. Some came up with the idea of building a water pipe with fresh, clean water in every house and apartment.
Some shouted: «This is far too expensive; it never pays off!» But still, it was done, although it was indeed very expensive. But people now had clean water and no longer got sick from it.
There was also a time when all the sewage and garbage was simply poured onto the street. There it smelled terrible and rats were running around in it. Their fleas transmitted the plague and many people died from it. Some came up with the idea of collecting the garbage and disposing of it properly.
«Of course, it was all expensive, but the advantages made up for it»
The wastewater was to be collected in pipes and cleaned in a sewage treatment plant before it was discharged into the rivers and lakes. And again some shouted that it was priceless. It actually cost a lot of money, but it was done anyway, and everything got better.
There was also a time when the cities were only connected with bumpy and muddy dirt roads. They had a lot of puddles and potholes and traveling by stagecoach was very slow and difficult. Then someone invented a new means of transportation that rolled quickly on iron rails.
This made it much easier to travel and move goods. Tens of thousands of kilometers of these railways were built, as well as train stations, tunnels, bridges and signaling systems. Of course, it was all expensive, but the advantages made up for it.
«Some people made a great invention»
Later, cars were invented that could drive without horses, but there were still no passable roads for them. One had to build it first. In the course of time, a huge network of streets and motorways developed, which cost enormous amounts. But it was built because of the advantages and convenience of traveling and the distribution of goods.
There was a time when people only had pine chips and candles to light up. It was very difficult to work and read with those. Some people made a great invention and called it electricity. One could use it to make nice lamps, drive machines and much more.
«One day a bad man with a mustache appeared»
Factories were built that produced the electricity and lines were laid across the country and in every house and even in every room so that everyone could take advantage of electricity. That also cost a lot of money, but it was still done, and everyone benefited from it.
One day a bad man with a mustache appeared. He was so terribly angry that he started a war. A lot of bombs were dropped in it, which destroyed a lot of cities, as well as the railway lines, including train stations and bridges. Factories and churches also fell into ruins and much more.
After the war, people saw the terrible destruction and wept bitterly. They wailed and did not think that one could rebuild it all. But then they took new courage, got their act together in and rebuilt everything, although of course that also cost a lot of money.
«Hopefully the energy transition will also turn into a modern fairy tale!»
And finally, there was and still is a time when coal and smashed atomic nuclei were burned to produce electricity, but this had many disadvantages. It harmed the climate and generated hazardous waste that no one knew where to put. Clever people came up with the idea of using wind, water, and sun so that one day the old dirty power plants would no longer be needed. Then there was a huge shout from parts of business and politics: «Muuuuch too expensive, uuuuuunaffordable, the industry is going broke, we are totally impoverished!»
But people still started the changeover, although it was actually very expensive, but that was the progress in the past. And so hopefully the energy transition will also turn into a modern fairy tale!
And the moral of the tale: «too expensive, does not work» will surely fail. Much is possible to do if you just want to.
Lars Jaeger is a Swiss-German author and investment manager. He writes on the history and philosophy of science and technology and has in the past been an author on hedge funds, quantitative investing, and risk management. He is the founder and CEO of Alternative Beta Partners and currently serves asset manager GAM as Head of Alternative Risk Premia.
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