Saturday, October 02, 2010

A lesson in economics for George Osborne: Investment

Class, settle down. Gorge Osborne, stop kicking Liam under the table.  Would the Treasury Civil Servants at the back please stop talking among themselves and LISTEN.

Today we are going to do Investment.

Investment, according to the Economist's dictionary, means:
Putting MONEY to work, in the hope of making even more money. 

Let us take an example. The UK is running out of oil, we are importing gas, and Thatcher shut down our coal mines. We have got in any case to stop using carbon based energy because it is wrecking the planet.

This means that we must invest, first in things that mean that we have to use less carbon energy, and second, in renewable energy technologies including the pan-European HVDC grid.

All clear so far? Stop fidgeting, George, and pay attention.

So money provided to create work in insulating houses and businesses up and down the country will save more money in the future because we will not have to import so much energy in the future.

The money paid to the low-skilled workers who insulate houses will save money that would be paid in unemployment benefits, and the extra money that they earn will be spent into the local economy, keeping the local community in a more healthy state, raising popular morale generally.

Yes George? You say there is no money. Quite. So what do we do if we have no money? We first try to borrow some from the bank. But right now, the banks are feeling very sorry for themselves and are not lending any money to anyone.  So we have to go to the same place the banks go when they have no money, to the Bank of England. The BoE, as we call it, can create necessary money in exactly the same way that banks create money.  That is, by creating two values that balance each other out - an asset and a liability

The asset is the positive side: the promise that energy will be saved, jobs created, and the economy stimulated. The liability is that people might just run off with the money and not insulate any houses. The liability is protected by checking up that the work gets done. Got it? Good.

For your homework, I want you all to find out how many jobs will be created, at what financial costs, and how much energy will be saved as a result, together with the financial value of the energy saved, taking into account the rising price of carbon energy as resources dry up, and internalising its ecological costs.

You're the bloody economists, after all, this is your job. I'm just an ill-paid primary school teacher. Now, off to PE. Liam, I saw that. See me afterwards.


GE said...

Sorry to be (more) annoying (than usual) Richard, but please dispel my bafflement by explaining why HVDC is a renewable technology?

DocRichard said...

Don't be sorry, it is little known, but a keystone to the whole renewable energy solution. HVDC can efficiently transmit electricity over long distances. This allows us to even out the mismatches between renewable supply and demand, so if there is a lot of wind in the North, but cloud in the South, wind power can supply the need in the South. And vice versa, southern sun can feed North if there is no wind. This transforms the picture; vast solar resources in the Sahara can meet Europe's power needs. :)

GE said...

IC. Thanks for explaining. It sounds more of a mediating technology, rather than what I would call "renewable" myself.

Are you sure that HVDC is really such a blessing?

Perhaps more of a curse.

For a start, is it not actually the key to colonising and industrialising the last wildernesses on Earth, and any promising rural areas with relatively low populations to object. Wildlands could be covered with gargantuan machinery for generating electricity by any means necessary and possible. The countryside in between them and the megalopoli will similarly be criss-crossed by the giant buzzing pylons carrying power.

This power will be owned and run by the great corporations, and turned to their usual ghastly purposes.

Is that really a healthy future?

DocRichard said...

Well, the alternative is to do without energy altogether, but that has serious implications for the future of humans.

Even the most basic form of energy - biomass burning for heat and food - has adverse effects, namely pressure on forests, smoke and CO2.

Renewables have costs. Wave power is going to annoy the surfing community to some extent. Loss of desert areas being the main one. It is distressing if you have a particular emotional tie-in with a particular bit of desert that gets developed into a solar generating plant, but it is not as if we are short of deserts. Mankind is pretty good at creating deserts. Carthage was very productive of food before it went to war with Rome. Now it is Tunisia, famous for its sand.

IN short, it is the case that we can meet our energy needs with solar income energy, but at a cost in terms of loss of desert &c. The alternative is a future marked with climate change, resource wars and massive population die off. I choose the former. Sorry if this disappoints.

GE said...

"the alternative is to do without energy altogether"

What an extraordinarily black and white view, Richard, I'm surprised at you!

No it's not. The alternative is to be greener, cutting back on our energy usage/wastage, and producing the much smaller quantities we will then need locally, not this massive industrialisation you are apparently proposing.

DocRichard said...

Sure GE, but in order to save energy, we first need to have some energy to save. If we agree that carbon and uranium are just no-nos, that only leaves us with renewables, and the HVDC grid is the way to make renewables meet anything like our present energy demands.

I know that Paul Kingsnorth

takes a very dim view of this kind of approach. That's fine for him. He is an individual writer. However, the Green Party has to take a view on how to deal with things as they are now, and plan a way out of the present carbon/uranium mess.

Small, local energy has a very important role, and I am trying to practice this myself, but we must accept that there is a need for overarching structures, for transportation, which has huge energy demands. HVDC allows us to meet these demands, once they are scaled down by optimal conservation.

GE said...

I'm afraid Richard, that you are playing the part here of what is described by politicians in technical terms as a "useful idiot"; cheerleading for further trashing of the planet by industrialism.

You'll be telling us next that we have to have GM to "feed the world"

DocRichard said...


How do you envisage that we will satisfy our energy needs?
You have mentioned locally generated energy (solar heating, PV, CHP (fired by local biomass?). Sadly it seems that small scale wind turbines are not productive.

Those measures will just about cover domestic demand, which is good. But how will you cover demand for transportation, NHS, agriculture and the cities?

Remember agriculture is highly energy dependent both for fertilisers and land management (ploughing and havesting). Yes, organic is more efficient in energy terms, but less productive, which implies more food imports. And they still use tractors.

Transport is the main challenge, dependent on oil. Yes, we can reduce the demand for transport, but we will still need it. If we are to substitute that oil, we are going to need a mass of renewable electricity from somewhere. The HVDC supergrid answers that question. Without that - what happens?

This is the question for GE.

GE said...

Our modern society is completely unsustainable - as you say - period.

Our "civilisation" [sic] is unsustainable in more than even environmental terms. It is unsustainable economically, politically, socially and psychologically.

This was obvious to many people, including myself, a quarter of a century ago. Some older and more farsighted people foresaw the crash before world war two. People won't listen of course ... they never do.

The little tizzy about climate change is just a part of the wider engulfing whole.

Don't expect poor little me to come up with some magic wand for this godalmighty avalanche of consequence that humans have brought upon themselves!

This is another Fall of Rome scale event, and just as ineluctible.

DocRichard said...


You may be right.

Forgive me if I continue to amuse myself in trying to get my parachute out. (In fact parachutes on hang gliders are very effective...)


GE said...

Well, we all need some amusement.

What amazes me is how the alternative movement is always re-inventing the wheel.

Technofixes, like other kinds of violence, are no solution to problems of the kind we face.

Many alternative-minded people knew this in the 1880s, in the 1920s, and in the 1960s, so why are we forgetting it now?

To solve our problems, all we need to learn is to_change_our_minds.

Captcha word: dumbyte

DocRichard said...


I agree absolutely - we need to change our mindset. That is what in my small way I am trying to do here.

Technofix. We rejected this when it meant we can carry on in the same destructive way, and technology will fix the problems.

However, I prefer to think things through rather than deal in good/bad words.

We all do technology. We are homo faber. Fire is technology. Woodwork is technology. Gardening is technology. Technology either fixes things (eg woodwork, which stored carbon &c) or breaks things (bombs).

We need to examine the technology, find what is eco-positive and what is eco-negative.

Remember, if we could magically abolish CO2 emissions tomorrow, we would still need to find a way of sequestering atmospheric carbon. For me, first comes ecologically and socially sound reforestation.
Would you have a problem with that?