Cities like New York currently have ineffective systems in place to clean litter, which consists mainly of spent cigarettes. The way it works now is that workers walk along the sidewalks with brooms and dustpans and sweep stray bits of trash into the dustpans. It works to some degree, but there is no incentive for the worker to make sure to get every single item. By instituting the deposit system of cigarettes, cities would reduce the need for these workers, and replace them by an army of “freelancers”. Within a week, the streets and gutters could be free of all remnants of cigarettes.

I can foresee a few criticisms of this plan. It’s unsanitary and could spread disease. While questionably true, I would argue that a homeless person who collects 200 cigarette butts and then buys a sandwich at a deli is going to be far healthier than one who eats a sandwich or other food from the trash. Cigarettes already have enough taxes added on to them. While I am not in favor of taxing, part of the deposit could be offset by the reduced cleaning costs to the city. The other portion could be written into part of an environmental-type budget. It’s difficult to accurately count the cigarette butts. While there is no machine that currently exists to count them, I guarantee that such a system could quickly be built given some economic incentive. I picture basically a two-stage device — the first stage would be a rough filter that would allow items the size of cigarette butts though, and the second stage some sort of device that measures the volume of material.

What are we waiting for? Enacting this simple solution will reduce litter, give basic jobs to hundreds of people, and provide a (admittedly small, but still existent) boost to the economies of cities.

However, times have changed, and they have changed quickly. Only four months ago, the Wall Street dream was still alive, albeit somewhat muffled by a poor economy. Things were bad, but everyone “knew” that we were simply in a cyclical recession that would be over in a few quarters. The landscape changed with the bankruptcy of Lehman Brothers and the near failure of other major financial firms. Today, even the most golden of Wall Street firms are borrowing billions of dollars from the government to stay afloat and keep themselves from suffering a similar fate at the hands of short sellers and ratings downgrades. Mighty Wall Street, who once all-but-dictated fiscal policy for the US, is now beholden to Uncle Sam for hundreds of billions of dollars.

What does this mean? The most immediate impact that will be felt by bankers over the next few years is the evaporation of bonuses. At the end of 2007, the average employee at a major Wall Street investment bank received a bonus of $175,000, according to the New York Times. Considering that this number includes everyone from the assistants to the CEO, the payout is simply staggering. Up to that point, the firms had generated the returns to justify such compensation. However, in the last 12 months, decades of profits have been wiped out, and the government now has a hand in every bank. What this means, as news outlets have covered ad nauseum, is that bonuses are no longer being paid out of profits — instead, they come out of government subsidies. Needless to say, taxpayers will not fund such compensation. It will take years to repay the billions borrowed, and even then, regulations will undoubtedly be put in place to remedy the compensation asymmetries that led to this situation. Therefore, the days of easy money on Wall Street have passed, at least for the foreseeable future.

Contrast this with careers in the sciences and technology. Several billion worth of TARP funding is going towards research in areas like battery technology, fuel cell research and alternative energy. While all of these areas are extremely important and have a very bright future, alternative energy in particular is poised to become the next billion-dollar industry. Although the plunge in gas prices has taken the market-driven component out of ideas like fuel cell cars and biodiesel engines, the push from the government for technologies like this is bringing them closer and closer each day to the cost-effective level needed to supplant oil for much of our energy. Bloomberg News had an article yesterday titled Obama’s Billions for Energy Fuel Stanford, MIT Research Dreams where it highlighted the research labs that will benefit from TARP funding. The paragraph I found perhaps most interesting:

Balsara, a chemical engineer, has assembled a team of 15 scientists that applied for $25 million over five years from the U.S. Department of Energy to improve batteries by modifying their materials. Money for energy projects is part of an $819 billion stimulus, passed by the U.S. House of Representatives, that Obama says is critical to saving the economy.

$25 million, over five years is what it takes to get research for improved batteries on track at some of the top research institutions in the world! Why not triple it and fast-track these technologies. How much will a battery that lasts twice as long as current models contribute in revenues to our economy? I guarantee that you’ll be hard pressed to find a better way to spend that money. This is one project — there are a dozen more that all are starved for cash but once funded would be tremendously valuable to our economy if we got them moving.

Ultimately, the great thing about technology is that it is by nature accretive and self-catalyzing. Discoveries that you make today are the basis for new developments tomorrow. The best example of this is microprocessors, which are created with sophisticated algorithms to lay out the circuits on the chips. More complex algorithms can create faster chips. But faster chips can run more complex algorithms! So the processor that you create today will run better software than last years model, and as a result you can keep ratching up your production because what you produce becomes an input to the system. Because of this positive-feedback, technology grows exponentially with time. Contrast this with investment banking or trading, where the deals or trades you did last year only contribute in a minor way to the trades or deals you do this year. Finance, therefore, grows linearly.

In many ways, the doldrums of Wall Street will help to put our nation back on the same playing field with our competitors. If the events of the last six months had never happened, and our brightest minds continued to choose Wall Street over careers in technology, nations like India and China would quickly outpace us because the linear growth rate of finance would soon fall behind the exponential growth rate of technology.

Therefore, although it will create much short-term pain, the current economic situation will ultimately help the USA by encouraging the smartest minds to seek out a variety of careers. By removing the short-term incentive of massive paychecks in favor of longer-term goals of progress and value creation, the recession will end up spurring a new generation of entrepreneurs who will develop the science and technologies vital to keeping the USA at the forefront of progress.