Wednesday
Mar302016
by 
Bishop Hill
Bishop Hill Jolly green giants toppled
Mar 30, 2016 Energy: wind 
Two of the headlines on Greenpeace's daily news review stuck out at me this morning.
Coal: Nearly $1 trillion could be wasted on unneeded plants
Renewables: SunEdison on brink of bankruptcy, Abengoa files
The companies named in the second headline are two of the largest players in the renewables field, so it's pretty big news that they are on the brink of exctinction, despite all the millions in taxpayers' money that has been poured into them by wise and noble politicians.
Who knows, perhaps there might be room in the marketplace for coal-fired power stations after all.
Reader Comments (159)
@Dork of Cork
Dork, does your gob ever get tired ?
kellydown
In fact I agree with everything you say except that yon inadequate troll wrote other than abusive gibberish. The problem is not the markets themselves so much as the daft ideas of the followers of this church of the invisible hand. That's where the ideology part comes in. Some free markets become only free for criminals because humans have never been the rational units idealised by the devotees. I know very well about government interference stifling growth like any business owner but the recent market crash is a stark reminder of what happens when rules are just too relaxed. Of course trade wars are not nice but some folk just don't play the game. But almost worse than the crash is the stultifying arrogance and stupidity of the economists who said it couldn't possibly happen, that debt didn't matter, that service jobs can replace manufacturing and all the other blather associated with the Friedmanites. It is the refusal to see the blindingly obvious facts that disprove the theory that reminds me of the enviro-nuts; two competing and equally vacuous religions; the magic invisible hand versus the fragile mother earth.
JamesG
> church of the invisible hand.
Just another of your straw creations, a product of blinkered ideological stance you constantly parade here.
The invisble hand refers to how consensual interaction can coordinate different peoples's activities, with no overlord required. A fact plain all sane people can easily see.
> Some free markets become only free for criminals because humans have never been the rational units idealised by the devotees.
Incoherent gibberish. Even if we assume humans are not rational, that would not make markets unfree. And if humans are not rational, what is the alternative? A totalitarian/unfree system to your liking run by other irrational humans?
> I know very well about government interference stifling growth like any business owner but the recent market crash is a stark reminder of what happens when rules are just too relaxed.
Government meddling drives most serious crashes.
> Of course trade wars are not nice but some folk just don't play the game.
If other countries choose to lose money subsidising something, we should take their cheap goods and switch our production in line with our altered comparative advantage.
> that debt didn't matter,
Another strawman
> service jobs [can't] replace manufacturing
So service jobs (and so services) aren't real then? This is the sort of ignorant rubbish that those who say Friedmanites have blather, come up with.
> It is the refusal to see the blindingly obvious facts that disprove the theory
You are the only one doing this.
> that reminds me of the enviro-nuts; two competing and equally vacuous religions; the magic invisible hand versus the fragile mother earth.
Do you have a random phrase generator or did you actually write that bilge?
Punksta, you're right but I don't see the need to lower yourself to insults.
JamesG, you're still going on about ideology as though the theory of free markets comes before the actuality.
It doesn't, any more than evolution only happened after Darwin first articulated his theory. You appear to have heard of Friedman and the Chicago school. So have I heard of them, but I've never studied their writings either.
Like "Friedmanites", "Chicago boys", "church of the invisible hand" - most of what I hear is by people denigrating them, never a good way to learn. At least you haven't stopped to throwing out "neo-liberal", "trickle down" and other misconceptions.
I'd hope a good Scottish patriot like yourself would be more familiar with Adam Smith, from his own words rather than what some
... rather than what some anti-free marketeer paraphrases and distorts.
Some of us remember the 'Ground Nut Scheme'
A bit older there was 'The South Sea Bubble' .
Now renewable energy !!
kellydown
"you're still going on about ideology as though the theory of free markets comes before the actuality"
That was not my intent and I cannot imagine how you read it that way.
There was a good documentary on last night presented by Dan Snow about the rise of the UK railway industry which was largely driven by the free market. From the initial technology the market was flooded with speculators leading to boom and bust. From the ashes of the bust there was at least still a good infrastructure which still benefitted everyone and so the market rose again - until the next bust. During both booms there were criminals galore and after both busts there were investors committing suicide and widespread misery. This is the actual free market in reality with all its roses and thorns. Nobody ever seems to learn that structure, planning and application of laws and rules are required to avoid these overheating, overgearing and miserable busts. In the absence of self-regulation this falls to responsible government. However the government must not be so heavy-handed as to stifle the entire project. In this I think we surely agree.
The weird idea that the market is best left unregulated without any role for government has never actually worked in practise. A bit of both worlds has always been required. the idea that government intervention is always bad is totally refuted by the post-war growth which coincided with the most socialist governments as yet seen in the UK, Germany, France, US, Japan, Canada, Australia. This was why everyone revered Keynes. Keynes of course, unlike his caricature, reacted according to the situation and was not stuck in one particular dogma (his later work even contradicted his earlier work). The abjectly dumb idea, spouted above, that government sparks all recessions is just blind ignorance. It was the UK government that gave us the National Grid for the betterment of everyone. It was the French government that created the nuclear power infrastructure that the rest of Europe now relies on. And yes it was government that created the internet.
The most recent crash was caused by people believing their own hype that fancy models had somehow mitigated the risk of dodgy investments. Anyone who bothered to think about it (and this was mostly right-wing libertarians and left wingers) realised it was baloney, based on bad debt and the queer notion that house prices could not fall. I was one of those who predicted a crash btw and I even predicted 4 months earlier that it would be Lehman Brothers that would kick it off (at that time I was buying/selling commodities). I also told all my friends the crash was coming but most were sceptical because - hey the consensus says different. Well the pundits and economists with their crap models turned out once again to be full of BS and the contrarians were once again correct. There are huge parallels, if you look, to the AGW scare. The most potent parallel is that neither of these dismal professions care about actual data, preferring instead their failed dogmata: Humans have an enormous capacity for self-delusion! We are now sitting at twice the toxic debt level than just before the last crash and the too big to fail banks are even bigger so logically another crash is due along with yet another bailout from helicopter money.
I have read Adam Smith avidly and he was not in the least advocating that the market always knew best. The 'invisible hand' was mentioned exactly once - as an allegory - It was never meant to be the basis of any free market doctrine. If the market knew best we wouldn't be using qwerty keyboards or Microsoft windows. We entropy towards what becomes convenient, standard or what has been better sold. The markets by contrast seems to jump on anything that is apparently rising in value despite the inherent crappiness of its business plan. On Smith it is wiser to take the Wealth of Nations and the Theory of Moral Sentiments together as the combination give a more rounded picture of his philosophy.
As I patiently explained before (despite attempts to pigeonhole me), I have no ideology about economics beyond observance of what works and what doesn't and that getting into crazy debt in the hope of a miracle is not much of a plan. I'm as likely to promote a good right wing idea as a good left wing idea -if either works. The trouble is that most of the time we just hear bad ideas based not on practise but on some book by academics who have never even run a successful business (as far as I know only Keynes can stake that claim). The main thing that stands out with all economic theories is that they all turn out wrong about really important stuff because they make ridiculously simplistic assumptions. History shows there is no one true path to success and that the world is not as black and white as the simplistic platitudes of one theory or another.
And frankly you should not encourage the inadequate troll* just as you should not lie down with pigs - at least until he becomes civil or sobers up.
*a person who sows discord on the Internet by starting arguments or upsetting people, by posting inflammatory, extraneous, or off-topic messages in an online community with the deliberate intent of provoking readers into an emotional response or of otherwise disrupting normal on-topic discussion often for their own amusement.
JamesG.
A really interesting piece with which I could not quibble.
In fact the parallels between the predictive abilities of economic theorists and climate change modellers has been one of my best arguments against the certainties expressed by those self same climate modellers.
kellydown > you're still going on about ideology as though the theory of free markets comes before the actuality"
Jamesg> That was not my intent and I cannot imagine how you read it that way.so
It's because you come up with these ideological outbursts like that free markets must always lead to massive booms and busts and suicides. Yes, poor information can lead to overinvestment in a market, leading to losses and cutbacks. But investors have an obvious interest in getting it right, and information is always imperfect, so sometimes things need to be actually tried out to establish information. But does/can government have better information? How? And even if it does, can it not just publish it?
A boom or bust in one market is one thing. A boom or bust in all markets at once is quite another, requiring some macroeconomic agency. Messing with the central bank money supply; being always ready to bail out failed banks with public money, thereby encouraging them to take excessive risk in the first place, etc. This is how government creates broad booms and busts.