At 11:11 AM 21/06/2007, jim asked:
> are there any economic "laws" which are always true, | |
> the way the law of gravity is? | |
| |
Economic laws have a similar status as the "law" \ /
that it is impossible to balance a needle on its tip. \ /
It is physically possible, if the needle tip has the \_/
shape indicated here, and if its center of gravity is
in a right angle somewhere above the flat bottom piece.
But in practical situations needles will always fall down.
Here is a detailed example from my present experience. I am fully
convinced that the capitalist system is structurally unable to
generate the appropriate responses to global warming. The Utah governor
Huntsman is seriously interested in ecological policies, but here are
the obstacles he must contend with:
(1) the Utah constitution has a clause that gas taxes can only be
used for road building
(2) there is a regulation that Utah public utilities have to buy
energy from the lowest-price source
(3) Utah has a lot of sun and a lot of geothermal energy. One should
therefore expect these two energy forms to be the centerpiece of the
energy policy. But what is the centerpiece? Renewable Portfolio
Standards RPS (requiring utilities to acquire a certain percentage of
their energy from clean sources) -- presumably because everybody knows
that before long this will be required on a Federal level anyway.
Although RPS is a necessary step, it is not enough, especially for the
Utah needs, for the following reasons:
(a) European experience and experience in Texas etc shows that RPS
favors the one presently cheapest alternative energy (wind) and can do
little to incentivize homeowners to put solar panels on their roofs.
For this you need Feed-In Tariffs (FIT) as in Germany which
deliberately pay a high enough price for solar energy that investment
in solar panels is profitable today.
(b) But of course US utilities cannot be bothered with this.
Schwarzenegger's million solar roofs program in California is a
complete flop because the utilities put everyone on a timed tariff who
wants to sell solar power back to the utility. Timed tariff charges
and refunds electricity at variable rates based on time of day etc.
Timed tariffs are intrinsically more expensive than the flat tariffs,
and this difference eats up all the benefits from the solar panels.
(c) The Federal government just this year has discontinued certain
policies helping geothermal energy along.
(4) Another fad is cap and trade. I haven't studied it carefully enough,
but I think it is also an unproductive policy. But Schwarzenegger and
Huntsman do not get the kind of advice which tells them what is wrong
with cap and trade.
(5) The Utah legislators are so conservative that they approve any
tax incentives to induce the coal companies to become cleaner and
more efficient, but they are unwilling to approve the necessary programs
which cost money and therefore raise taxes.
(6) Most policy makers involved are very aware of private property
issues. You cannot force homeowners to sign on to a distributed heat
system coming from the local geothermal resources because this affects
their freedom. You cannot prevent urban sprawl because then the land
developers feel expropriated.
It is like a labyrinth. If you make zero mistakes and have a long
breath (think about the timed tariffs ahead of time, start now a
campaign to change the Utah constitution), you may get through, but
the overwhelming chance is that you get stuck, fooled by something
which looks good initially but is a dead end, or because it takes 2
years and several million dollars to collect the signatures necessary
to change the Utah constitution. etc.
Shall we give up? No, on the contrary. The numerous activist groups
concerned about the environment must learn their way around the
labyrinth. They must become the best experts about the potentialities
and pitfalls of the policy maze, better than the sweet-talkers from
industry or the staff in the state bureaucracy. If they are able to
pressure the government to move in the right direction, then they will
realize over time that the grass roots, through their democratically
elected representatives, should be the ones who control the means of
production.
In other words, I am arguing that we have to learn how to stand up
a needle by its tip, and that by learning this we will foster the
necessary social changes.
--
Hans G. Ehrbar http://www.econ.utah.edu/~ehrbar [EMAIL PROTECTED]
Economics Department, University of Utah (801) 581 7797 (my office)
1645 Campus Center Dr., Rm 308 (801) 581 7481 (econ office)
Salt Lake City UT 84112-9300 (801) 585 5649 (FAX)
