Reply To: Wealth of Nations, and Economics of Abundance

[Brian H]

Lerner wrote:
…
If the decision is to bail them out at the consumer’s expense, then the electricity cost will come down very slowly.
…
once the tight control over supply is broken by substantial deployment of FF generators, the price of fossil fuels will fall towards the cost of production.
…
I agree with Duke’s goals for spending money. The best way to do these things is to have them funded by the government. But that does not mean a Stalinist model or even a Western bureaucratic model. The ideal way to run things is democratically, with those doing the work, and those affected by it, involved in the decisions. Doing that is tough, because, like FF itself, it has never been done before.

Eric

Bailing: there would be an implementation lag in the best of circumstances, but still … I doubt that kind of bailout could be mounted. There are too many “linked” industries. As I noted above, the industrial users would put the screws on hard to get their own generators, fast. The comparative advantage of having cheap power would be way too great to leave even a small delay in impolementation.

Fossil fuels: the first casualty would be investment, ongoing and prospective. Those taps would shut off with a deafening CLUNK. Then a simultaneous fire-sale of petroleum products would ensue, combined with a feverish hunt for new uses. Incidentally, the prices of plastics would also crash. The Graduate would have oily egg all over his face.

Government: too slow, and too subject to pressure group manipulation attempting to direct the benefits and channel the expenditures, much as is now happening with the AGW lobby (which keeps tens of thousands of scientists and technologists, not to mention promoters and hucksters, employed). When this much money is at stake, principle becomes a fig leaf. I’m no Randian, but I’d have far more faith in market chaos than regulatory committees in this instance. Safety and interoperability are the sole areas where top-down control could be useful. The beauty of the small size of the FF generators is that even relatively sparsely populated areas could readily afford and justify installing one or more.

Even international comparative advantage comes into play. Countries would de facto be competing to see who could bring down energy costs the fastest. As an interesting sidelight, all those mega-towers on the Gulf will make fine diving platforms. The ME may develop a sudden serious Sheikh Shortage. 😉