Here’s a letter that I sent to the New York Times:
Bob Herbert has peered into his crystal ball and discovered that the best energy sources in the future will be the sun and wind (“Watching China Run,” Feb. 13). Perhaps his ball is right. But Mr. Herbert is wrong to conclude that China’s leadership in producing solar panels and wind turbines is bad for America.
The ultimate goal is to use equipment that productively harnesses solar and wind energy. And the use of such equipment will come sooner, and be more widespread, the lower is its price. So what if the Chinese are world-leading producers of such equipment? Specializing in the production of other goods and services – things that we produce more efficiently than the Chinese – we Americans can then buy solar panels and wind turbines from the Chinese for use in our homes and offices. Doing so will bring all the clean-energy benefits revealed by Mr. Herbert’s crystal ball. The latitudinal and longitudinal coordinates of the factories where the final assembly of such equipment occurs are irrelevant.
Sincerely,
Donald J. Boudreaux
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Proof of the ineptitude of central planning? Why is China pissing money on 'green' (read: dud) technology?
I think it could be argued that without centralized energy production by governments we would have a much higher level of solar and wind production. Nearly unlimited energy virtually anywhere on earth? Not exactly dud technology.
As with roads, the goals of the left would be far better served if the government had less control over our current options.
http://blogs.wsj.com/chinarealtime/2009/06/29/s...
The question I have is simply will what the Chinese produce be like this building, looks good but buying into it was the wrong decision.
Don,
I understand the metaphor that the “longitudinal and latitudinal coordinates . . . are irrelevant.” The point is that comparative advantage (and economies of scale, as Russ points out in his well done podcast on international trade) are what can drive things so as to most increase social wealth.
Not to be picky, and I know you understand this, but location can matter a great deal to the extent there are transportation costs and demographic and cultural factors particular to particular locals. This is one of Thomas Sowell's points of emphasis in this recent book “Intellectuals and Society” as well as in some of his previous books. Sowell puts it well in saying that it is not by accident that “location, location, location” is a time honored adage in real estate markets.
http://www.solyndra.com
they are building a giant solar panel manufacturing plant in Fremont, Ca.
Joe Biden teleconferenced in to the groundbreaking.
they also recieved a $450 million loan guarantee from the DOE, funded by the stimulus.
Who wouldnt invest in solar panels when your losses are covered by uncle sam!
Hurray for China, they are actually getting CO2 free power installed. Not only are they doing solar and wind on a significant scale, they are doing nuclear plants that are being planned, approved and constructed in a few years rather than decades. They expect to have 50 new units on line in the next 10 years and 30 units in the next few years.
Meanwhile, we have some 15 units under review? The permit time, costs, and regulatory complexity makes our reactors uneconomical and obsolete before they are even built. Decades ago when I worked as an engineer I had an idea that would save about 10 million dollars on a reactor we were building and my boss told me to forget it, it would cost more to get the change approved through the NRC bureaucracy than it would save.
Without the possibility of upgrading the designs from experience and new technology, our plants will be obsolete before they are built.
In the case of innovative solar and wind, we have given veto power to every “stakeholder” who may not want a power line, solar plant or windmill in his back yard. Look at geothermal power in Imperial Valley that has not been able to get to San Diego because of the lack of a power line permit or the proposed wind farm within view of Martha's Vineyard.
If someone invented something that was really cost effective and the demand was expanding at 100% or more per year, you couldn't get the permits to build the plants fast enough to put the production in the US. This is why all the exploding market items are manufactured outside the US. Try to get a permit and build a plant using 500 employees in less than 12 mo. in the US. You can do it in 3 mo in China and if you wait another 9 mo in an exploding market, you lost the market to the company who did build his factory in China.
Yes China, with its Communist Leninist government, and its layers of corruption, its endless bribes, its state owned enterprises and endless demand for bribes is winning in the solar field because…..its less regulated than the United States?
In fact having actually been to China several times and having done a great deal of business with China I can say few markets are as directly controlled by the center as is China. Nothing gets done without direct government approval and generally with a lot of bribes in the way.
The rise of China's economy on so many fronts raises serious questions for anyone who embraces Richardo's economics without question. If you were a hard core Hayek follower you should be amazed China is not starving.
Actually I am man enough to admit I am amazed by China success. 20 years ago I would have guessed they would have collapsed by now, but they continue to grow and continue to become the credit center of the global economy. I have no idea how a nation so corrupt, so centrally managed, and so dishonest without transparent legal systems or open processes can continue to grow like that.
China scares the shit out of me. They are creating a system against all our values of freedom, legal protection, and free trade. And they are doing it in such a way that we can't do anything about it.
Even a Hayek ass kisser finds himself standing up for their domination of yet another line of production to the NYT. If only the Soviets had China's imagination in thinking how to control us.
Government policy stymied the market for rural wind power and other energy alternatives with the Rural Electrification Program.
Back in 1984, I visited china before the present rapid growth rates. In discussions with their scientific, technical and business people, it became clear that they knew that the only reason that the western world had dominated this planet for the last 300 years was superior technology and our human capital in using that technology. It wasn't our politics, religions or culture, just science, technology and human capital and they were going after technology and human capital directly. Why do you think that they would allow businesses in who would offer to bring new technology and they would pay for training all the workers and you could get a green field factory build and operating in 90 days. Yes, we didn't consider the skill of making the little coils that go into ethernet devices as high tech skills, but for the women coming off the farm, learning how to wind coils under a microscope was a big jump in human capital.
I also concluded that Mao was the best thing that ever happened to the US. He prevented China from growing at the rates of Hong Kong and Japan, he gave us time. However, we squandered that time and will become a second rate power. Real national power will be technological and economic while military power is becoming irrelevant. You can put a gun to a mans head and say turn that lathe, but you can't put a gun to a mans head and say invent the new i-phone — he will be thinking about how to kill you instead of inventing.
China is turning out 10 times more STE (science, technology and engineering) graduates that we are. Their next move is into research and innovation and they have been increasing their R&D budgets by 20+% per year for the last decade. We are seeing the impacts of this STE commitment in their solar, wind and nuclear power programs.
We have a legal regulatory system that allows “stakeholders” to shake down any new project and allows existing industries to prevent new competition, especially disruptive competition. Is this not fundamentally corrupt with the only difference being which group gets the goodies. In todays world, the vacuum tube industry that controlled the electronic business, could have used the political, legal and regulatory systems to prevented or slow the development and implementation semi-conductors and other solid state devices (national defense could have been the legal justification, as tubes were more resistant to EMP's from nuclear bombs).
We can't develop an offshore aquaculture industry as the ENGO's and commercial fishermen try to pass legislation go give the existing fishermen veto power over any aquaculture competitor. In China, they are now the largest aquaculture producer in the world.
We are not free, we are bureaucratically frozen with the illusion of being free. We have a legal system that behaves more like a parasitic system to create conflict and collect from both sides. Contracts are only worth the lawyers you can afford. We do have fewer local bribes, but isn't lobbying and contributions to politicians who sit on committees that control your business also just bribes with a different name. So, why again should China not be doing better than we are?
Calm down, you're hysterical.
Your Bastiat-like moments are always refreshing. Thanks.
You raise some really good issues and ask some serious questions.
I wonder, could the reason China is demonstrating the growth they do, not necessarily because of a huge improvement in their education, technical ability, and productivity; but, because in spite of being centrally controlled as you point out, they offer foreign businesses easy access to huge labor pools obtained at a nominal price compared to most the rest of the world. Hence, huge sums of capital pour into China driving ability to offer more labor at cheap prices while also funding China's training and educational process?
Possible? What import does it all have to you and I here on the ground in the USA? I certainly don't know enough to even have an opinion yet.
You sir also offered a fine comment.
Where do we go from here?
I have a friend who is importing some plastic bags and has visited the factories many times. These factories, Chinese owned, are state of the art and more technically advanced that his US suppliers. This type of factory has very little labor relative to capital cost and lots of automated technology. So cheap labor is not the advantage.
I think a big advantage is a culture that stresses hard work and education. Just visit some biotech, computer science lab or other strong STE aera in the US and you can see that culture at work. These same cultural traits also have driven the Japanese, Vietnamese (many of which are ethnically Chinese) to excel in our society, while many of our children lay around playing video games and imagine becoming a football star by getting fat eating junk food. Note that many of these same cultural characteristics like a stress on education and knowledge has helped the Jewish community perform above their actual numbers.
The best thing that every happened to Orange County, California was a large Asian immigration at the end of the Vietnam war. That 10% of the county population forced our schools and students to improve and compete and my children did compete with hard work and education and are still competitive domestic and foreign.
Some cultures may just not be effective in the coming world. If someones culture, friends, family, etc. say the earth is 7,000 years old and they actually believe that nonsense, you can't be a player in the STE game.
Interesting food for thought about China. Thanks. And, for the rest, I certainly agree.
“I also concluded that Mao was the best thing that ever happened to the US.”
You believe the deaths of 20 million or more people in the Cultural Revolution was 'worth it'?
Gee elsewhere wouldn't you be arguing that wind farms are nothing more than a waste of taxpayers' money?
1. I made no mention of wind farms.
2. I would argue that government subsidizing of wind farms is a waste of taxpayer money.
3. Without the REP, there was a market for wind/alternative power in rural areas. After REP, many windmills on farms and ranches fell into disuse.
Would you elsewhere gloat that solar and wind power are not serious alternatives for providing base-load electrical generation? Gee, farmers in the 1930's would have loved the electricity they got on only windy days. Besides plenty of anti-greenies certainly gloat that solar and wind are only 'viable' because of heavy subsidies.
There is no convincing evidence solar and wind will lead the a renewable energy future. This factless based assumptions are second only to ethanol being a “green” energy solution.
What we need is to challenge these assertions to make them better not just follow the crowd like so many lemmings.
Because I really don't care if the future cure for cancer comes from China or the US, and I don't believe that the US did a good job of running the world as the dominant power, it probably wasn't worth 20 million dead.
We may be doing a better job trying to run the world than China would if they were the super power of the world. However, it is hard to really say whether our approach of trying to accommodate some innately hostile cultures will be better, in the long run, than their possible approach of just crushing them. If the religious nuts around the world end up using nuclear weapons to get into their “heaven”, perhaps that 20 million may look like a small number.
In other words, we will never know whether the 20 million was worth it. Perhaps China now understand much better than we do the danger of following a belief with religious zeal all the way into their graves. The future Mao's of the world are now using much more powerful religious themes, along with hate and envy of “the west”, when Mao just used hate and envy combined with a secular belief in a dead Marx. Maoists were not suicide bombers planning on taking the fast train to their heaven.
1. I've never made any claim about the viability of energy alternatives. My argument is about the value of subsidizing such which actually interferes with the discovery of viable strategies.
I wish I didn't have to explain everything, but apparently I must.
2. Along with alternative energy production, there is the matter of energy storage which is a fundamental part of development of alternate energy sources. Windmills were first used as pumps.
With the development of electrical technology, generators can be driven by windmills and the output stored in a variety of ways.
Why should manufacturers invest in R&D in a technology supplanted by subsidized distribution of electricity?
Are we that far on the Road to Serfdom?
If solar and wind technologies were left to the market (i.e. no subsidies) then we would hardly hear about it.
Because there is no money in it. The only reason you're hearing about it now, is because your government (and mine) are stealing money from us and giving it to corporations to build solar panels, and turbines.
If you think these are viable technologies, invest your money yourself so that you can reap the returns, because if the government makes the investment for you, (on the infinitesimal chance that the government actually makes a sound investment) it's also going to claim the return on that investment .
If solar and wind technologies were left to the market (i.e. no subsidies) then we would hardly hear about it.
What you are suggesting is that these technologies aren't worth investing in, meaning that they will cost more than they are worth in potential returns. That's why proponents want these technologies subsidized.
If solar and wind technologies were left to the market (i.e. no subsidies) then we would hardly hear about it.
What you are suggesting is that these technologies aren't worth investing in, meaning that they will cost more than they are worth in potential returns. That's why proponents want these technologies subsidized.
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