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From the article: Economists are inclined to frown on the strategy of dumping giant piles of government money onto budding technologies that ar

by avar 8y ago

From the article: Economists are inclined to frown on the strategy of dumping giant piles of government money onto budding technologies that are in need of scaling up. They prefer market mechanisms, tech-neutral incentives, and nudges that maximize the free choices of market participants. In any economic model, such policies will perform better. And that’s well and good. But sometimes problems are big and urgent, you need scaled-up solutions quickly, and you just don’t have time to mess around. I think the author is fighting a strawman here and not giving those economists enough credit. What China's with solar panels and electric buses has been narrow and centrally planned, they wanted to solve those problems in particular. Whereas the argument on the other side is that you should be equally aggressive with something like a carbon or pollution tax, because then you start solving the same problem in parallel across the entire economy instead of just in some specific sectors. What China's been doing right is having the political will do actually spend money on the problem, as opposed to most of the west. But that doesn't mean their method of doing so is optimal, if we were similarly willing to turn the screws on via carbon or pollution tax I think we could make more gains than they're making.

toomuchtodo 8y ago
Whatever method brings about action is optimal, as the largest developed countries don’t have the will to enact carbon or pollution taxes.
- jadedhacker 8y ago
  Carbon taxes have to be astronomical to actually affect market behavior. Better to take direct control and titrate down carbon fuels while ramping other methods. The market can't do it except by perhaps a happy accident, an accident that would be resisted by the established players. Look for the big oil companies to buy up green startups and kneecap them to keep the oil money flowing. Consumables are much more profitable than capital purchases like solar panels, ask the printer makers about their ink.
  - avar 8y ago
    Then carbon taxes should be astronomical, they need to offset the currently huge free externality of releasing carbon into the atmosphere. Surgical interventions like subsidizing solar only address part of the problem, and do nothing about e.g. pricing in the real cost of livestock carbon release.
    - aninhumer 8y ago
      The parent was not suggesting subsidies, they were suggesting nationalising the entire energy industry and managing it to address the problem directly. A carbon tax might work in theory, but the political reality is that as long as fossil fuels are a profitable business, any such tax will be fought tooth and nail at every step of the way. It is now far too late to expect the market to turn itself around. If we want to fix the problem, we need to take away the power that maintains it.
nothrabannosir 8y ago
Quote without indent for mobile: Economists are inclined to frown on the strategy of dumping giant piles of government money onto budding technologies that are in need of scaling up. They prefer market mechanisms, tech-neutral incentives, and nudges that maximize the free choices of market participants. In any economic model, such policies will perform better. And that’s well and good. But sometimes problems are big and urgent, you need scaled-up solutions quickly, and you just don’t have time to mess around.
jillesvangurp 8y ago
Government sponsored R&D can yield great results. The US sponsored an actual 'moonshot' last century, with well known results. That spawned a lot of industrial activity. What China is doing here is both smart and strategic and they have been doing it for decades. Their solar activities can be traced back to the 1980s. They are creating new export industries and stimulating economic growth by investing in disruptive things where they believe they can succeed. Meanwhile the US is pretending coal is fine, and the EU is pretending Diesel is fine or that shifting from either to the euphemistically called natural gas is an actual solution. Change is slow there because politicians are not acting to provide the necessary incentive for industries to do what is needed. As a consequence, there are several major industrial players at risk of disappearing or being marginalized. This will hurt, a lot. Politicians are afraid to do what is necessary. This creates the opportunity for China to take over; they spotted that years ago; and they are now succeeding.
- mywittyname 8y ago
  Maybe China's dominance will eventually dispel the myth that government is always bad an ineffective.
  - deleted 8y ago
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  - deleted 8y ago
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- brightball 8y ago
  The reason that there is an incentive for natural gas is because the same people who own the mineral rights to oil own the mineral rights to natural gas.
  - merpnderp 8y ago
    Or, you know, nat-gas is cheaper, pollutes far less, is cheap, and provides much better operational capabilities for mass transit than electric, etc etc. Or you can hand wave that all away and shout conspiracy theories.
trophycase 8y ago
In a perfect world they may be right, but externalities, government subsidies of incumbent tech (directly or indirectly), and network effects completely destroy and hope of a real free market. And if global warming is really as bad as they say it is then those externalities are basically uncalculable, skewing the equation far far more.
scarejunba 8y ago
Because you’ll lose when your neighboring country doesn’t apply that tax, and then you’re forced to impose a tariff on their products so it doesn’t ruin your economy, but then you realize that you’re effectively taxing your citizens with that tariff while you’re incurring all the costs of your neighbours pollution.
- NTDF9 8y ago
  You fail to realize how much those neighboring countries will bow to have access to Chinese markets.
im3w1l 8y ago
If China invests in industry and US invests in taxes the result will be that US companies/individuals will import Chinese industry products. Then some orange-haired US president will have to add tariffs to counter the trade imbalance thus isolating the US from global trade.
clairity 8y ago
while market mechanisms like a carbon tax can definitely spur parallel innovation and direct economies toward desirable solutions, it's less clear that it's an obvious efficiency win (it's not even clear that optimal efficiency is the most desirable feature of a solution, since it trades away resiliency). what is often missing in the market efficiency argument is that the efficiency-killing waste is concentrated for government projects and distributed for markets. that makes it eaiser to "see" the government waste (especially if the government has transparency rules that don't apply to corporations), and makes the waste of market-based solutions less obvious (because it needs someone to aggregate it properly). in market-based economies, many companies will try and fail for a given opportunity (e.g., the thousands of instagram & facebooks that didn't make it), and that's "wasted" economic activity. and sometimes, it takes a market economy a few tries and many years to get something right (internet search as another example), which also lowers overall efficiency. markets work well in many cases, but they aren't a cut-and-dried answer to every economic challenge. when the risks are low, central planning can potentially "beat" a market-based approach. in any case, it's not an either-or choice--countries are continually experimenting to find the best blend of the two. (for the record, i'm all for pricing in externalities with mechanisms like a carbon tax)

by avar 8y ago

toomuchtodo 8y ago

Whatever method brings about action is optimal, as the largest developed countries don’t have the will to enact carbon or pollution taxes.

jadedhacker 8y ago
Carbon taxes have to be astronomical to actually affect market behavior. Better to take direct control and titrate down carbon fuels while ramping other methods. The market can't do it except by perhaps a happy accident, an accident that would be resisted by the established players. Look for the big oil companies to buy up green startups and kneecap them to keep the oil money flowing. Consumables are much more profitable than capital purchases like solar panels, ask the printer makers about their ink.
- avar 8y ago
  Then carbon taxes should be astronomical, they need to offset the currently huge free externality of releasing carbon into the atmosphere. Surgical interventions like subsidizing solar only address part of the problem, and do nothing about e.g. pricing in the real cost of livestock carbon release.
  - aninhumer 8y ago
    The parent was not suggesting subsidies, they were suggesting nationalising the entire energy industry and managing it to address the problem directly. A carbon tax might work in theory, but the political reality is that as long as fossil fuels are a profitable business, any such tax will be fought tooth and nail at every step of the way. It is now far too late to expect the market to turn itself around. If we want to fix the problem, we need to take away the power that maintains it.

nothrabannosir 8y ago

Quote without indent for mobile: Economists are inclined to frown on the strategy of dumping giant piles of government money onto budding technologies that are in need of scaling up. They prefer market mechanisms, tech-neutral incentives, and nudges that maximize the free choices of market participants. In any economic model, such policies will perform better. And that’s well and good. But sometimes problems are big and urgent, you need scaled-up solutions quickly, and you just don’t have time to mess around.

jillesvangurp 8y ago

Government sponsored R&D can yield great results. The US sponsored an actual 'moonshot' last century, with well known results. That spawned a lot of industrial activity. What China is doing here is both smart and strategic and they have been doing it for decades. Their solar activities can be traced back to the 1980s. They are creating new export industries and stimulating economic growth by investing in disruptive things where they believe they can succeed. Meanwhile the US is pretending coal is fine, and the EU is pretending Diesel is fine or that shifting from either to the euphemistically called natural gas is an actual solution. Change is slow there because politicians are not acting to provide the necessary incentive for industries to do what is needed. As a consequence, there are several major industrial players at risk of disappearing or being marginalized. This will hurt, a lot. Politicians are afraid to do what is necessary. This creates the opportunity for China to take over; they spotted that years ago; and they are now succeeding.

mywittyname 8y ago
Maybe China's dominance will eventually dispel the myth that government is always bad an ineffective.
- deleted 8y ago
  [deleted]
- deleted 8y ago
  [deleted]
brightball 8y ago
The reason that there is an incentive for natural gas is because the same people who own the mineral rights to oil own the mineral rights to natural gas.
- merpnderp 8y ago
  Or, you know, nat-gas is cheaper, pollutes far less, is cheap, and provides much better operational capabilities for mass transit than electric, etc etc. Or you can hand wave that all away and shout conspiracy theories.

trophycase 8y ago

In a perfect world they may be right, but externalities, government subsidies of incumbent tech (directly or indirectly), and network effects completely destroy and hope of a real free market. And if global warming is really as bad as they say it is then those externalities are basically uncalculable, skewing the equation far far more.

scarejunba 8y ago

Because you’ll lose when your neighboring country doesn’t apply that tax, and then you’re forced to impose a tariff on their products so it doesn’t ruin your economy, but then you realize that you’re effectively taxing your citizens with that tariff while you’re incurring all the costs of your neighbours pollution.

NTDF9 8y ago
You fail to realize how much those neighboring countries will bow to have access to Chinese markets.

im3w1l 8y ago

If China invests in industry and US invests in taxes the result will be that US companies/individuals will import Chinese industry products. Then some orange-haired US president will have to add tariffs to counter the trade imbalance thus isolating the US from global trade.

clairity 8y ago

while market mechanisms like a carbon tax can definitely spur parallel innovation and direct economies toward desirable solutions, it's less clear that it's an obvious efficiency win (it's not even clear that optimal efficiency is the most desirable feature of a solution, since it trades away resiliency). what is often missing in the market efficiency argument is that the efficiency-killing waste is concentrated for government projects and distributed for markets. that makes it eaiser to "see" the government waste (especially if the government has transparency rules that don't apply to corporations), and makes the waste of market-based solutions less obvious (because it needs someone to aggregate it properly). in market-based economies, many companies will try and fail for a given opportunity (e.g., the thousands of instagram & facebooks that didn't make it), and that's "wasted" economic activity. and sometimes, it takes a market economy a few tries and many years to get something right (internet search as another example), which also lowers overall efficiency. markets work well in many cases, but they aren't a cut-and-dried answer to every economic challenge. when the risks are low, central planning can potentially "beat" a market-based approach. in any case, it's not an either-or choice--countries are continually experimenting to find the best blend of the two. (for the record, i'm all for pricing in externalities with mechanisms like a carbon tax)