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Soviet economics for the Golden State
Posted By Michael Ackley On 04/11/2011 @ 12:00 am In Commentary | Comments Disabled
Editor’s note: Michael Ackley’s columns may include satire and parody based on current events, and thus mix fact with fiction. He assumes informed readers will be able to tell which is which.
California Democrats are pushing harder for “green” power, with a mandate that state utilities derive 33 percent of their energy from renewable sources by 2020.
State law now sets the goal at 20 percent.
The Dems haven’t noticed that this sort of thing is akin to the historic Soviet five-year plans. There is an old story about a Soviet mandate that a plant produce a billion nails per year. So, the managers tooled up and produced a billion two-penny nails.
Frustrated, the dictators next commanded that the plant produce 10,000 tons of nails annually, and the managers responded by producing just that tonnage – in 10-penny spikes.
Our legislators haven’t tumbled to the basic economic fact that utilities can meet the chimerical, green-energy goal most easily by simply producing less energy until the pittance ascribable to solar, wind and geothermal constitutes 33 percent of the total.
Those who see this as counterproductive, turn on all your incandescent bulbs tonight at 10 p.m.
The same kind of wishful economics obtains in President Barack Obama’s recently unveiled “Blueprint for a Secure Energy Future.” The man who bragged about the green-energy “investment” included in the “Recovery and Reinvestment Act” continues to believe that dragging down the oil-based economy will force America to “innovate our way to clean energy,” thereby creating “millions of jobs.”
The Recovery and Reinvestment Act included more than $80 billion for green technologies. Where are those millions of jobs? As a matter of fact, just how many new jobs has this sector produced?
One also might ask: What school of economics teaches that you can create markets for new products?
In his March 30 speech, Obama said American could get to a “clean energy future” “by creating markets for innovative clean technologies that are ready to deploy …” and added that “creating a market for new technologies will be central to charting a path to a clean energy future.” Get out your Samuelson’s “Economics” and look at the graphs that had such a soporific effect on you when you were an undergrad. Find the one that shows the intersection of the demand and price curves. That’s the point at which a product becomes economically viable.
Government can, in fact, create markets for new products by pushing the point of intersection, but it can do so only in two ways. It can subsidize a product to lower its cost, or it can suppress competing products by making them more expensive – most easily by limiting supply. Behold the price of oil. As for subsidies: Remember Jimmy Carter’s effort to push green technologies. Where did that get us?
We can thank the president for making the “dismal science” almost comical. Sadly, the chief executive’s grasp of the subject is not a matter of amusement.
While Obama may not have finished at the top of his economics classes (unless you count those covering the Marxist viewpoint), he clearly understands the economics of political campaigns.
San Francisco Chronicle writer Carla Marinucci reports the president plans a fundraising dinner in the City by the Bay. Admission: a mere $35,800. We’re sure this includes appetizer, soup and salad. It is unclear whether the bar will be no-host.
This will give well-healed Democrats – and there are many – a chance to salve their consciences for accepting last fall’s extension of the Bush tax cuts.
For the less affluent, Marinucci reports there will be a “low dollar” event with tickets ranging from just $25 to $2,500. The latter gets you a seat in the first three rows of the auditorium, and a photo op.
At the high-end dinner it is promised that the president will visit each table and speak with each attendee. This will be followed by a breakfast in Los Angeles. For this, tickets are $5,000 and $10,000. For the latter, you can have your photo taken with the president – and get an extra side of bacon!
All right, we made up the last part, but it seems reasonable.
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