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Broken window fallacy. Redistributing capital to renewable energy sources means that more money is needed for the same amount of energy (at least right now) whi

Broken window fallacy. Redistributing capital to renewable energy sources means that more money is needed for the same amount of energy (at least right now) which means that money which could have been used for other purposes like food, water, the US infrastructure, houses, or medical bills now must go into satisfying this absurd need to conform to some arbitrary green standard. Its called opportunity cost, go read up on it. TANSTAAFL.

skorgu 18y ago
It's only broken windows if there is no net benefit. Bringing externalities into consideration by the market is the function of government to a first approximation. And, ahem, "some arbitrary green standard" cite please?
- Prrometheus 18y ago
  Yes, if central planners know the optimal way to spend each marginal dollar, then there is no broken window fallacy. I haven't heard any such case made for the popular green schemes.
  - skorgu 18y ago
    I don't know what "popular green schemes" you're referring to, but a carbon tax or a cap-and-trade scheme are very nearly equivalent and require no central planning at all (save that required to enact, collect and enforce the tax of course) yet both bring externalities under market purview quite nicely.
    - newt0311 18y ago
      And what happens to all that extra cash collected in the name of climate change? Oh the federal govt. centrally plans on how to waste it on congressional pork.
      - skorgu 18y ago
        Sorry for replying so late. As long as the tax revenue isn't spent on directly contradictory pursuits (tax breaks for SUVs or something) the increase in costs will do its job no matter how stupidly the government spends money. I think we should just blow it all on a space elevator personally but that's why I'm not in office I suppose.
        newt0311 18y ago
        The point is not that the carbon tax/cap-and-trade/you favorite policy will work but that they will impose an unacceptably high cost in the process. Your comment does not respond to that concern. All that revenue for federal tax/subsidy policies will come out of the private economy which eventually means that it will come out of yours and my pocket and spent by the federal govt. Unless this is offset by corresponding decreases in income/payroll/corporate taxes, this will result in a loss to us and from the numbers that I have seen, this loss is unacceptably high.
        skorgu 18y ago
        (Nearly) all spending by the gov't comes right back to (someone's) pockets so in the aggregate it's only a loss of the frictional losses to run the bureaucracy not the entire revenue base. Granted there are valid concerns about how the money is spent but you can't just take the dollar amount of revenue from the tax and say that's too high a price. It's much more complicated, sadly. Also, what cost? What numbers?
GHFigs 18y ago
That argument is shaky when you consider the opportunity cost associated with the inevitable increase in the cost of energy from non-renewable sources caused by both increasing demand and decreasing supply. The redistribution of capital to renewable sources is just a matter of when.
- newt0311 18y ago
  Possibly, and understand that when is a very important question. Notice how if you place money in a bank, it gains interest. Similarly, the private capital system is very effective at deciding where and when to allocate resources. Allocating resources in an industry too early often means that all that money is lost or that it was not invested in another industry which could have had a significantly higher payoff. If history has anything to say about this matter, private markets are much better at allocation of resources (see famines of USSR and the "great leap forward" in maoist communist china).

skorgu 18y ago

It's only broken windows if there is no net benefit. Bringing externalities into consideration by the market is the function of government to a first approximation. And, ahem, "some arbitrary green standard" cite please?

Prrometheus 18y ago
Yes, if central planners know the optimal way to spend each marginal dollar, then there is no broken window fallacy. I haven't heard any such case made for the popular green schemes.
- skorgu 18y ago
  I don't know what "popular green schemes" you're referring to, but a carbon tax or a cap-and-trade scheme are very nearly equivalent and require no central planning at all (save that required to enact, collect and enforce the tax of course) yet both bring externalities under market purview quite nicely.
  - newt0311 18y ago
    And what happens to all that extra cash collected in the name of climate change? Oh the federal govt. centrally plans on how to waste it on congressional pork.
    - skorgu 18y ago
      Sorry for replying so late. As long as the tax revenue isn't spent on directly contradictory pursuits (tax breaks for SUVs or something) the increase in costs will do its job no matter how stupidly the government spends money. I think we should just blow it all on a space elevator personally but that's why I'm not in office I suppose.
      - newt0311 18y ago
        The point is not that the carbon tax/cap-and-trade/you favorite policy will work but that they will impose an unacceptably high cost in the process. Your comment does not respond to that concern. All that revenue for federal tax/subsidy policies will come out of the private economy which eventually means that it will come out of yours and my pocket and spent by the federal govt. Unless this is offset by corresponding decreases in income/payroll/corporate taxes, this will result in a loss to us and from the numbers that I have seen, this loss is unacceptably high.
        skorgu 18y ago
        (Nearly) all spending by the gov't comes right back to (someone's) pockets so in the aggregate it's only a loss of the frictional losses to run the bureaucracy not the entire revenue base. Granted there are valid concerns about how the money is spent but you can't just take the dollar amount of revenue from the tax and say that's too high a price. It's much more complicated, sadly. Also, what cost? What numbers?

GHFigs 18y ago

That argument is shaky when you consider the opportunity cost associated with the inevitable increase in the cost of energy from non-renewable sources caused by both increasing demand and decreasing supply. The redistribution of capital to renewable sources is just a matter of when.

newt0311 18y ago
Possibly, and understand that when is a very important question. Notice how if you place money in a bank, it gains interest. Similarly, the private capital system is very effective at deciding where and when to allocate resources. Allocating resources in an industry too early often means that all that money is lost or that it was not invested in another industry which could have had a significantly higher payoff. If history has anything to say about this matter, private markets are much better at allocation of resources (see famines of USSR and the "great leap forward" in maoist communist china).