I sometimes struggle, when teaching about unemployment, to explain just why work matters. It’s straightforward enough to note that elevated unemployment leads to loss of economic output, lower tax payments, and greater need for government welfare benefits. I can refer to evidence on how unemployment is connected to social ills like bankruptcy, divorce, depression, and even suicide. But this listing of consequences, while a necessary part of teaching the economics of unemployment, doesn’t quite touch the human heart of the issue. The poet Marge Piercy, in her 1973 poem “To be of use,” gives a more concise and powerful sense of why useful work matters so much.
“To be of use”
The people I love the best
jump into work head first
without dallying in the shallows
and swim off with sure strokes almost out of sight.
They seem to become natives of that element,
the black sleek heads of seals
bouncing like half submerged balls.
I love people who harness themselves, an ox to a heavy cart,
who pull like water buffalo, with massive patience,
who strain in the mud and the muck to move things forward,
who do what has to be done, again and again.
I want to be with people who submerge
in the task, who go into the fields to harvest
and work in a row and pass the bags along,
who stand in the line and haul in their places,
who are not parlor generals and field deserters
but move in a common rhythm
when the food must come in or the fire be put out.
The work of the world is common as mud.
Botched, it smears the hands, crumbles to dust.
But the thing worth doing well done
has a shape that satisfies, clean and evident.
Greek amphoras for wine or oil,
Hopi vases that held corn, are put in museums
but you know they were made to be used.
The pitcher cries for water to carry
and a person for work that is real.
Marge Piercy (1973)
Note: I have quoted this poem previously in 2013 and 2019, but it felt as if sufficient time had passed to mention it again on this Labor Day Holiday.
Each year, more than half of the total or gross investment by US firms just makes up for depreciation in older equipment and knowledge. in recent year, it’s more like 75% of current year investment just offsets depreciation. Here are the figures from the ever-useful FRED website run by the Federal Reserve Bank of St. Louis.
In this graph, the top line shows gross investment, while the bottom line shows “net” investment after subtracting out depreciation of older capital. As you can see from the gray bars showing periods of recession, firm investment typically drops during a recession. In the pit of the Great Recession back in 2009, all of the gross investment went to replacing depreciated capital, so the US capital stock as a whole did not grow.
The next figure just divides net investment by gross investment. Back in the 1970s, net investment was often around 40% of gross investment, but the share has been slumping over time. For the last decade or so, net investment has been about 25% of the gross–that is, about three-quarters of gross investment is just making up for depreciation of the pre-existing capital stock, and only one-quarter of gross investment is adding to the capital stock.
The likely reason for the growing gap between gross and net investment is that modern investment is more likely to be related to information technology, and less likely to be related to large physical machinery–and the information technology depreciates more rapidly and thus needs to be replaced and updated more often. A challenging implication is that, if we want the average US worker to be using a greater amount of capital on the job–which is one of the key drivers of rising labor productivity in the past–it now takes a bigger rise in gross investment to lead to a given rise in net investment compared to a few decades ago. Moreover, the US has not been a high-investment economy in the first place.
Maybe my perceptions are incorrect on this point, but my sense is that a lot of people believe that the US economy is making strong progress toward clean non-carbon energy, driven by increases in solar and wind power. I don’t see it that way. My own reading of the evidence is that the solar/wind presence in the US energy sector is barely getting underway, with some high hurdles to come.
For an overview, here’s a figure showing the US energy sector from the the US Energy Information Administration website. The left-hand categories show the primary sources of energy. Electricity is not a “primary” source, because it needs to be generated from the primary sources, but instead is a method for transmitting energy. Thus, the electricity sector in shown in the bottom center. The main sectors of energy use are on the right.
Some thoughts from this figure:
1) In 2025, after several decades of discussion of risks of climate change and the need to reduce carbon emissions, fossil fuels are 81% of US primary energy. Petroleum is by far the largest primary source for transportation. Natural gas is the single largest primary source for industrial, residential, and commercial use, as well as for generating electricity.
2) In the “renewables” sources of energy, which is 9% of the total, only about one-third of that is solar and wind–call it 3% of total US energy production. About 60% of renewables are “biomass,” including wood and the corn that goes into ethanol, with the rest being mostly hydroelectric (that is, dams).
3) Nuclear power as a primary energy source is about equal to the entire renewables sector, which means that it is about three times the size of solar and wind combined.
4) Within the electricity sector, 59% of the energy that goes into the sector is lost within the system itself, including “line losses” as electricity is transmitted and other factors involved in balancing the electricity grid. The figure shows that total energy flowing into the electricity sector is 33.5 quadrillion BTUs, while the amount flowing out is 13.8 quadrillion BTUs. Thus, about 35% of all primary energy flows into the electricity sector, but electricity accounts for only 18% of actual end-sector energy use. If the goal is to increase production of electricity to replace fossil fuels–say, electric cars to replace gasoline-fueled cars, or electric heating and cooling to replace natural gas–it will be necessary to generate more than twice as much electricity to replace the energy content of the fossil fuel source, to make up for electricity lost within the system. This holds true for increased production of nuclear energy and hydroelectric power as well, which feed into the electrical grid.
I’m not making an argument here about whether greater electrification of the US energy sector is good or bad, or the health costs of conventional polllution from burning fossil fuels, or the risks of climate change. This is an argument about numeracy.
If the US economy was to run primarily (say, more than half) on electricity from solar and wind, these energy sources need to rise by an enormous multiple. Solar/wind are currently 3% of US primary energy, so multiplying them twenty-fold would be 60% of current US primary energy. But remember that the electricity system for transmitting energy has losses in its operation, so to replace energy from fossil fuel use, we would need to (say) double solar/wind energy output again. It’s also necessary to “overbuild” capacity for solar/wind, so that when it’s dark and/or the wind isn’t blowing, energy can be stored for later use; for example, in the battery of an electric vehicle. We also seem to be entering a period when demand for electricity is rising due to developments in information technology, which means electricity production from solar/wind would need to rise still farther.
It seems foolhardy to put an ultimate number on how much solar/wind would need to expand if they are to become the predominant energy source for the US economy. But expanding by a multiple of 20 would be the extreme low end–which is what I have in mind when I say that if the vision for the future of US energy is to be predominantly solar/wind, the current levels of these energy sources are barely a beginning.
Of course, generating the additional electricity is only the first step. Remember that electricity is only about 18% of final energy use, so substantially greater electrification of the economy will requires a dramatic increase in the size and scope of the electrical grid–and it currently takes about a decade to build high-voltage interstate transmission lines, about half of which is spent on regulatory permissions. In addition, certain geographic locations work much better for solar and wind than others. Thus, this isn’t just a matter of expanding capacity of existing electricity lines, but of building additional transmission lines in new places. A US energy sector that relied heavily on intermittent sources of power like solar and wind would also need to build out city-scale battery storage capacity.
The growth of solar and wind power in size and efficiency has been a remarkable event in the US energy sector in the last two decades, such that they have come to play a cost-effective role in the electricity grid in many locations. (It seems worth noting that the withdrawal of existing subsidies for solar and wind power generation would truly demonstrate their cost-effectiveness.) But the numbers tell me that renewables as a group (counting hydroelectric) are about 11% of electricity input from primary sources; like all electricity, less than half of that input to the electricity sector reaches end-use sectors; and electricity itself only accounts for 18% of total US energy consumption.
Solar and wind power have a role to play in the US energy future. But taking seriously the numbers on sources and end-uses of energy, along with the role of the electricity sector, suggests that it will not be a predominant role any time soon.
Thanks to the power of musical theater and the genius of Lin-Manuel Miranda, I can now speak in public spaces about Alexander Hamilton and the First Bank of the United States without watching people’s eyes glaze over in real time. And I am duly grateful. But there is a preceding chapter to this story, which Matthew Wells tells in “The Bank of North America,” subtitled “Before the First Bank of the United States, another, less well-known institution helped the fledgling United States find its financial footing (Econ Focus: Federal Reserve Bank of Richmond, Third Quarter 2026). Wells sets the stage:
The nascent country’s financial situation was a major source of uncertainty. The weak and decentralized federal government created under the 1777 Articles of Confederation, along with the states, carried a debt burden of at least $70 million, owed to domestic lenders, as well as Dutch banks and the French and Spanish governments. To put the debt in context, the colonial GDP prior to the war was about $170 million. After five years of war, that number was undoubtedly much lower, possibly making the new country’s cumulative debt equal to a significant portion of its annual economic output. To make matters more complex, the U.S. currency was all but worthless thanks to the Second Continental Congress’ decision to finance the war by just printing money without the necessary gold or silver specie to back it (giving rise to the expression that items of little or no value were “not worth a Continental”).
Hamilton’s First Bank of the United State began operation in 1791. But a decade earlier in 1781, the Congress chartered the Bank of North America, which began operations in 1782. Hamilton was a strong supporter of this earlier bank. The basic goal of this “bank” was to centralize federal borrowing: that is, the Bank of North America would start off by purchasing all national debt, and then reselling it through an organized market. As Wells writes:
Hamilton was committed to the idea of a national bank well before the end of the [Revolutionary] war. … [I]n a series of essays, … he called for the United States to adopt such an institution to act as the country’s fiscal agent, supplying funding to the government, handling its accounts, and managing its debt. … The national bank would also put forward a new, stable currency, as the Continental dollar had fallen to below one-eighth of its original value by the end of 1779 and would fall further still. Through prudent financial administration, Hamilton believed it would be able to pay off any war debt in just a few decades, making it “a national blessing … [a] powerfull [sic] cement of our union.”
Wells tells the step-by-step story of how the Bank of North America established itself, and thus came to serve as a testing ground and predecessor for Hamilton’s later and more famous bank. The original president of the Bank of North America, Thomas Willing, would also be the first president of the First Bank of the United States. For a few years in the early 1780s, it worked pretty well. Wells writes:
During this time, the bank performed its key operations, allowing the nation to begin finding its financial footing. Most importantly, it extended short-term loans to the federal government (as well as to Pennsylvania) for payroll, supply contracts, and debt servicing. It even loaned Philadelphia money to light the city’s streets and feed its citizens who could not afford food. These governments could then repay the bank whenever they received revenue, which allowed them greater flexibility and the chance to avoid default. … The circulation of a stable national currency also brought confidence to the new country’s financial system. The national government and the states could all conduct transactions, including taxation, without the frictions that came with the different actors having to determine the value of competing and overlapping currencies.
But the Bank of North America was also deeply controversial, often in ways that have an echo in modern arguments. For example, no less an authority than James Madison argued that creating the Bank of North America exceeded the power of Congress, but he was outvoted. (Remember, at this time the US Constitution had not yet been written.) There were complaints that the bank charged interest rates that were too high, and that the internal workings of the bank were entangled with conflicts of interest and foreign money. Wells summarizes the (not unfounded!) complaints of the critics: “Characterizing the bank as the root of most economic problems, they accused it of favoritism, extortion, and undue commercial and political influence. They also argued it engaged in systematic usury, leading many borrowers to financial ruin …”
The state of Pennsylvania revoked the bank’s state-level charter in 1785, then reinstated it in 1787. The bank’s national charter expired in 1789 with the end of the “Conferation Congress” of that decade and the start of the US Congress. The Bank of North American continued to operate as a Pennsylvania-chartered commercial bank under that name up through 1929, and after a series of mergers over the decades, it became part of Wells Fargo in 2008.
