JIM COOMBS: The source of our current “economic imperatives” and crises, especially in the fields of energy, is that we can’t see beyond the “neoliberal” (does it have a meaning?) insistence that only a “market solution” answers economic problems. Surely, “economics” is better than that.
Can we get back to basics, because they don’t. The “Economic Question” remains: What is the optimum allocation of resources, given that these are by definition limited, to competing ends, the desired results. To assume, just because, in a market situation, supply always equals demand, i.e. Says Law (a trivial truth), that that is the only way for the allocation of resources, or even the best, is an act of blind faith, and no more. It is obvious, except to the ideologically purblind, that there are other criteria which can determine the optimum allocation of resources. The case of Public Goods, about which I have written regularly before, is a case in point: where “market” considerations are irrelevant and questions of equal access and removal of absurd and unnecessary wasteful “competitive activity” are clearly closer to the optimum.
Now look at the present “crisis” over energy supply. Everyone who knows says that we have abundant sources of energy, coal (which is dirty and bad for our environment, and for global warming, the survival of humanity’s planet), gas (still carbon emitting) and renewable: nuclear, based upon an unsustainable fuel cycle, expensive and slow to construct, hydro, dependant on other power to pump water uphill, wind, solar and thermal, the last three, needing some back-up, though the man from Tesla says he can do it with battery storage. The adoption of PV roof-top solar has far exceeded government expectations by a considerable margin, and is getting cheaper virtually by the minute. So there’s plenty of energy out there for the taking.
So where’s the crisis ? We should reject any further coal-fired power generation as firstly bad for our environment, and for climate change, not to mention costly and long-winded to install (even the generators say it won’t happen). Gas still produces carbon, so it should only be for back-up. Hello ! Renewables, solar, wind and thermal, all constant resources, step forward. Will a “market” provide the best allocation of resources to provide energy from these sources ? There is presently a “market” offering these solutions. In terms of a distribution system, it is silly to duplicate the mechanism, which is what the “market” has given us in energy, but also telecommunications, merely to protect the profits of the duplicated providers – so much for competition !. As to power generators into that distribution system, there may be some competitive pressure, although the “markets” for telecommunications, petroleum and groceries should be a warning. The big generators are already looking at solar farms, wind energy, and underground thermal heat power. They can see where the future (and their profits) lies.
So, back to basics: in a modern (post industrial) society, a reliable energy supply seems to be needed. Short of giving in to “the market” to benefit the rich and the powerful, power should be a Public Good, available to all. Unless a genuine benefit from multiple providers is shown, a government (controlled) monopoly makes sense.
All this can be done by government if it has the will (as used to be the case a century ago).
So isn’t all this talk about energy “markets” nonsense ? And the “crisis“,non-existent ?
JIM COOMBS is a retired magistrate and sometime economist