Cafe Hayek - Latest Comments in Great minds think alike

Re: Great minds think alike

Daublin — Sat, 24 Mar 2007 13:43:28 -0000

Cute!

It sounds, though, like Gore is bugging up his anti-nuclear stance. Here's David Friedman talking about this issue:

http://daviddfriedman.blogs...

As David writes, nuclear plants leap to mind if you want to fight CO2 emission, so Gore has to come up with some excuse not to subsidize nuclear. It seems he is pushing the idea that big plants are bad, and nuclear plants are big, and so we should do something else.

Just my impression. I don't know whether it's true, but it's what it looks like.

Re: Great minds think alike

Bill — Fri, 23 Mar 2007 14:57:59 -0000

Spencer, a car that can go 200-250 miles on 10 minutes of charging from a regular 110-volt line is not possible. Even if the car only produced 1 horsepower, which would be extremely inadequate, the charging operation would be drawing several hundred amps.

Re: Great minds think alike

Aschkan — Fri, 23 Mar 2007 06:58:28 -0000

Golddog, you appear to forget our third option, which is to have distorted incentives and polluted air (with regulations). Perfectly implemented (and politically feasible) pigouvian taxes are of the same rare breed as perfectly executed regulation. Moreover, given the inherent and historical uncertainty in climatological forecasts (and the economic consequences predicted by said forecasts), there are few instances where the law of unintended consequences could be any stronger.

Re: Great minds think alike

golddog — Fri, 23 Mar 2007 05:56:28 -0000

"The govt creating incentives is not the same thing as a market solution. A real, free market solution; that is, the kind that works, is made possible by the govt not interfering in the entrepreneurial efforts of the citizenry."

The problem is that in this case the "free market" solution is inefficient. No one is taking into account the costs of pollution. The incentives are already distorted.

Ideally, only a perfectly implemented pigovian tax would eliminate the distortions. Since the political feasibility of this occurring is low, the next best solution is regulation.

I will be the first to agree that regulation distorts incentives and leads to an inefficient equilibrium, but keep in mind that if we do nothing, we already have an inefficient equilibrium. We have two options: have distorted incentives and polluted air (without regulations), or have distorted incentives and clean air (with regulations). I would prefer the latter over the former.

Re: Great minds think alike

Paul Zrimsek — Fri, 23 Mar 2007 02:11:51 -0000

My objection dealt not with the ability of the batteries to absorb the requisite amount of power but with the ability of ordinary house wiring to deliver it.

Re: Great minds think alike

colson — Fri, 23 Mar 2007 01:59:14 -0000

Paul Zrimsek - pick up the latest issue of Popular Science (has an image of a new jump-jet on the cover) as the car company is discussed in that issue. Basically they are using newer lithium-ion batteries to speed up the charging process. And if I remember correctly, the cost of the car was something like $60,000 - although you may want to double check that figure

Re: Great minds think alike

Mike — Thu, 22 Mar 2007 23:43:34 -0000

"Is there evidence of perfect causality as a result of the advent of the E.P.A and the subsquent decline of polutants?"

Climate modelers point to the fact that the mid-20th Century cooling happened more in the Northern Hemisphere than in the Southern Hemisphere as proof that sulphate aresols (i.e., pollution) was the cause of the cooling.

But the EPA is just in the USA. The environmental movement more generally is more likely to be the main cause of man-made global warming.

Re: Great minds think alike

Ray G — Thu, 22 Mar 2007 19:38:19 -0000

Hodak:

"I think you're referring to the Juan Trippe of the Aviator. The real Juan Trippe, while not above a little rent-seeking, built a great airline in the market environment of his day."

Never saw the movie.

I'm thinking of the real Juan Trippe. Not so much a businessman but a ruthless manipulator of people and polticians.

It's not really my point to distract this post to create a debate as to Juan Trippe's virtues as a person or businessman, but Pan Am was not that great, as evidenced by its death in the 90s.

I've been in and out of aviation for the past 18 years, and I've become very well educated to many of it's lores, facts, and fictions, and Mr. Trippe was a ruthless builder of subsidized empire. Period. Nothing personal of course, never knew the guy.

And not having seen the movie, I don't know just how badly they portrayed him so I can't say if it is accurate. But he was not a good businessman in his own right.

Re: Great minds think alike

Paul Zrimsek — Thu, 22 Mar 2007 19:25:57 -0000

For example, one of the small companies they are supporting has developed a largely aluminum car that has a battery good for 200 to 250 miles that can be recharged in 10 minutes from a 110 power line.

That would be your standard 3000-amp household circuit, yes?

I would dearly love to have the opportunity to short that VC fund.

Re: Great minds think alike

M. Hodak — Thu, 22 Mar 2007 17:59:17 -0000

Ray,

I think you're referring to the Juan Trippe of the Aviator. The real Juan Trippe, while not above a little rent-seeking, built a great airline in the market environment of his day.

Re: Great minds think alike

Ray G — Thu, 22 Mar 2007 16:57:12 -0000

"Gore's proposal would would create incentives for those companies that were able to create alternatives."

The govt creating incentives is not the same thing as a market solution. A real, free market solution; that is, the kind that works, is made possible by the govt not interfering in the entrepreneurial efforts of the citizenry.

The only venture capitalists chomping at the bit for this kind of action are essentially just rent seeking. Think Juan Trippe for an example. Not so much a great businessman but just very well connected in Washington, and ruthless enough to make it work.

Re: Great minds think alike

Tense Alcyoneus — Thu, 22 Mar 2007 16:05:03 -0000

Although I have gone over to the dark side of Socialism, I find persuasive Russ' argument by analogy.

Re: Great minds think alike

Bruce Hall — Thu, 22 Mar 2007 15:54:02 -0000

From my comments above, this is the most complete version of how plasma-arc technology would work:

http://www.popsci.com/popsc...

Re: Great minds think alike

Bruce Hall — Thu, 22 Mar 2007 15:40:23 -0000

While I don't believe Al Gore's global warming pitch farther than I can throw him, there are elements of energy policy and environmental policy that could potentially benefit from a move away from traditional fossil-fuel generated electricity. I'm not writing about nuclear energy, although that more neatly fits into a carbon-neutral system than CO2 sequestering from coal-fired plants. Rather I am talking about the emerging plasma-arc incinerator/generator plants that are being developed and could be situated at large landfills.

After a brief use of external power to get the plasma arc up to 30,000 degrees, the system is self-sustaining by grinding up landfill debris and feeding the small chucks into a plasma arc chamber where the material is broken down to its constituent elements (yes, CO2 becomes carbon and oxygen). Solid residue becomes a glass-like inert substance that can be buried and takes up only a fraction of the space of the original waste material. The deconstruction of the wastes generates tremendous heat which powers turbines which keeps the plasma arc powered and creates a tremendous excess of electric power which can be used locally.

Estimates are that this type of system in the future could power a city's electric needs with the city's waste and end up with a much smaller landfill requirement.

Here is one example:

http://money.cnn.com/2007/0...

http://www.pyrogenesis.com/...

http://www.usatoday.com/new...

It does meet Al Gore's vision without breaking the bank the way Mr. Gore envisions.

Re: Great minds think alike

David — Thu, 22 Mar 2007 15:28:26 -0000

I couldn't help but wonder skeptically, as I do of anyone in politics and on a platform, why Al Gore is so dogmatic in driving this point. Then I heard yesterday that investment firms he controls have a huge stake in companies that will benefit from a government-mandated rush to clean energy. It's classic, right: if you can't influence market share and corporate growth in the marketplace, seek to legislate the action. Would someone in the media, or a relevant blogger, more likely, shine some light on what he stands to gain financially from his crusade, i.e., more money to purchase carbon credits for the use of his private jet that burns 1000 gallons per hour?

I'm excited about free market solutions to improving energy efficiency; Spencer's post is encouraging and not surprising. Make the motivation legislative, though, and filled with onerous regulation, and watch innovation slow and the few influencers like Gore benefit at the detriment of the rest-and at the detriment of innovation itself.

Re: Great minds think alike

Python — Thu, 22 Mar 2007 14:11:41 -0000

Spencer,

Please clarify how conservation has anything to do with what the Professor is writing in this post - which is about electricity generation.

Re: Great minds think alike

Python — Thu, 22 Mar 2007 14:09:03 -0000

There are two you can take what Gore said. If he meant that free market entrepreneurs should go around the big boys to create their own energy, I am fine with that. If he meant that we need to restrict the big boys and rely on small players, I am against that. Based upon other things that he said, I think he meant the latter.

Both my wife and I work in the Energy business. My wife writes the contracts to organize energy transfer from small players to the monopolized utility. There are several small players in our area that generate up to 50 MW each, using wind, solar, and geothermal. But make no mistake, there are large capital costs involved in these set-ups and the average "home brewed" solution at this stage is nothing more than solar on your roof.

California will have a new law in 2010 or so which requires developers to give a solar panel option on all new homes.

I haven't decided how I feel on this one. On the surface, making it an option sounds good, but I'm not sure how developers will decide which solar panels to offer. My point is that we are currently in a stage where solar is not that efficient, and I would not be happy to find that the new California law leads to less efficiency because developers took a short cut, or started using the brother of the owner's company's solar panels.

I'd be interested in exactly what home brewed solution Al Gore has in mind. For the most part, you need land and a lot of money to get enough energy to pay for itself. Most solar doesn't pay for itself until you include the tax breaks and government refunds. And solar gets less efficient the further north and east you go. Check out this map with particular attention to the small map in the upper right. The big map is meant for big developers where there still exists large chunks of unowned land, whereas the one in the upper right shows general solar capabilities.

Re: Great minds think alike

spencer — Thu, 22 Mar 2007 13:04:42 -0000

I had lunch yesterday with an old friend that manages a "green" venture capital fund.

We had a long discussion of the economics of such things as battery technology, wind power

and solar energy involved in reducing use of carbon based poser.

For example, one of the small companies they are supporting has developed a largely aluminum car that has a battery good for 200 to 250 miles that can be recharged in 10 minutes from a 110 power line. He says such cars will be on the roads in 2 to 3 years.

The problem is that the capital cost is high, but because the operating cost is so low -- including replacing the battery -- that the total operating cost is lower then a gasoline car.

It sure seem strange that a free market advocate like you has so little faith in the free market finding ways to reduce energy consumption that when Gore talks about it

you have to imply that he is proposing communist solutions.

If comparing gore to Mao the best economic analysis you can do?

Re: Great minds think alike

spencer — Thu, 22 Mar 2007 12:54:19 -0000

March -- I see you have mastered the process of winning argument by insult rather then by facts.

My point was that there has b...........

why bother your mind is made up and will not be confused by the facts.

Re: Great minds think alike

steep — Thu, 22 Mar 2007 11:10:45 -0000

I imagine that as soon as Congress decides they need to spend even more of our money on alternative energy, some of these new companies will become profitable, at least for their original stockholders. Lunch may not be free, but it can feel that way when someone else is buying.

I personally would love to be able to experiment in my backyard with alternate energy technologies. It's only the multiple layers of regulations and associated prison time that dissuades me.

Re: Great minds think alike

Mr. Econotarian — Thu, 22 Mar 2007 09:50:44 -0000

At the birth of the "commercial Internet," it was a bunch of small entrepreneurial companies connecting to some extent with existing networks developed by a mixture of public funding and university funding.

But rapidly the small Internet service providers became huge. I was at a company that went from 2 guys with servers in the basement to a 300 person publicly traded company, and went through about five acquisitions and is now part of Verizon.

Re: Great minds think alike

Russ Roberts — Thu, 22 Mar 2007 09:36:06 -0000

Golddog,

I have a position in the Mercatus Center. I wasn't trying to pull a "gotcha" on you. Just wanted anyone reading to know that Mercatus isn't conservative in the way it's usually used.

There are self-described conservatives with a strong libertarian streak. There are also libertarians with a conservative streak. Personally, I try and keep the two terms distinct for a wide variety of reasons.

When forced to label myself, I like the term "classical liberal" with the characteristics of being in favor of personal liberty with limited (not zero) government.

Classical liberals see a role for government, certainly as enforcer of contracts and sometimes more including potentially beneficial environmental regulation. My real reaction to your opening comment up above is that saying that banning leaded gasoline was a good thing and that the catalytic converter reduced pollution is a very mild claim about the virtues of the EPA. I'll try and write more in a formal post.

Re: Great minds think alike

Greg Rehmke — Thu, 22 Mar 2007 07:57:05 -0000

Government intervention in U.S. energy industry has a long history, including government-enforced monopolies for electrical utilities. At the least (and at the most) state and federal government should get out of the way and allow private electricity providers to operate and innovate. Marvin Olasky reports the amazing story of AT&T and Chicago Edison's public relations campaign to convince the American public that utilities were a "natural" monopoly (even bribing economics textbook authors of the time). (Article here: http://www.fee.org/publicat...

We can't know how a electric utilities might have developed and we can't know how they will develop with further deregulation and privatization.

Re: Great minds think alike

march — Thu, 22 Mar 2007 07:45:46 -0000

Oops, forgot the second paragraph...

The disparity in capital costs per ton is also the product of unions; unionized steel companies have long had to substitute capital for their inflexible labor to try to remain competitive. So, Nucor's non-union workers not only offer management more flexibility (and lower operating costs), but also less incentive to replace them with capital.

BTW, on a variable cost basis, each Nucor worker costs as much as 50% more than each unionized worker, after bonuses.

Re: Great minds think alike

march — Thu, 22 Mar 2007 07:33:37 -0000

Spencer, you should take off your clown suit and visit one of these mini-mills in Indiana or North Carolina. You would see that the per ton capital cost you're citing is not a variable cost, as in they can dump $150 in someone's back yard and get a ton of steel. That cost is spread over millions of tons coming out of a single plant.

Sorry I had to use numbers. I know it's confusing for you.