Thomas G. Donlan: "Contrary optimism" about the economy

Looking ahead, a compelling reason to expect a strong recovery is bull-headed contrarianism: Few experts expect one.

Most experts on the left believe the economy won't expand without more commands and more controls and more borrowed stimulus money from Washington. Most experts on the right say the command, controls and stimuli are so overwhelming that they have made business leaders afraid to take risks.

Both are wrong. The U.S. economy is still a powerful engine of productivity. Growth will come despite the heavy burdens of health care, climate control and regulation.

Business has survived vigorous enforcement of old antitrust rules, old securities regulations, old labor laws and old restraints on banking. It can survive the creation of new ones. Indeed, entrepreneurs can invent around the subsidies and penalties imposed by those who claim to know exactly what we need to build a new era.

~ Thomas G. Donlan, "All Gone for Nought?," Barron's, January 11, 2010

Thomas Donlan on Peak Oil

We have no idea how much oil is still to be found. What we do know is that the more oil prices rise, the more oil will be produced. Furthermore, the more oil that is produced, the more likely it is that prices will fall.

A quick look around the world finds uneconomic oil in many places. Venezuela has more oil than Saudi Arabia, if you count its ultra heavy crude and tar sands. Canada has more than Saudi Arabia, if you count tar sands. The U.S. has more than Saudi Arabia many times over, if you count its oil shale and coal, which could be converted to gasoline and diesel fuel.

Price is the problem, not geology.

~ Thomas G. Donlan, A World of Wealth (2008), p. 14

Thomas Donlan on nuclear power

The U.S. has 103 nuclear power plants, generating about 20 percent of American electricity needs. But no plants have been ordered since the accident at the Three Mile Island plant in 1979. No accidents have occurred in the U.S. since 1979, and even that accident did not kill or sicken anyone. Dozens of people die every year in U.S. coal-mine accidents, hundreds are injured, and hundreds more suffer before death from black-lung disease, but American utilities have ordered many big coal-fired power plants since 1979.

The explanation is that many people are afraid of nuclear power. They associate nuclear fission with the bombs that so shockingly destroyed Hiroshima and Nagasaki at the end of World War II. They don't understand the science and engineering that makes nuclear power generation different from atomic bomb-making, and they have little faith in those who tell them it's safe. The 1979 accident at Three Mile Island, which was dangerous but caused no serious damage to anything but the reactor, took its toll on public trust in nuclear power. The deadly Soviet accident at Chernobyl in 1986 was even more shattering. Unfortunately, some wild estimates of deaths and long-term damage were current in the news at the time and never reduced in the public mind to reflect reality.

~ Thomas G. Donlan, A World of Wealth (2008), p. 14

Thomas Donlan on democracy and the 80-20 Rule

Democratic government has this fundamental problem: In broad terms, 20 percent of the people do most of the productive work and create most of the nation's wealth, but the other 80 percent command a heavy majority of votes. It's a pleasant surprise that democracies foster much investment and productivity growth at all.

~ Thomas G. Donlan, A World of Wealth (2008), p. xxi

Thomas Donlan on the business of Wall Street

The work of Wall Street often is to introduce people who should not borrow to people who should not lend.

~ Thomas G. Donlan, Barron’s editor