I ALMOST always agree with you, but, whereas, as usual, i learned from your article, i think one paragraph overstates, even overrlooks a major point:
"Every bit of economics says that the common market, the European Union, and the euro should have boosted European economies. Why should one, big, integrated market languish 30% or so behind the US, and now fall behind? The hard to quantify drag of over regulation is an obvious answer."
I don't agree: it may be an (even) major contributor, but i don't think it is the (sole) obvious answer. I believe that, despite its own obvious political and regulation drags, the US economy is stronger, healthier, more vibrant, with greater productivity growth than the EU. I was surprised by the strength of your thought here.
I think the efficiency implications of the regulatory policies in the EU, and energy regulations in the US, are broadly understood. The are working as intended -- to destroy capitalism.
The issue is never the issue. The issue is only ever the revolution.
The present administration has binged on regulations and the virtually unaccountable administrative state. The other has repeatedly stated that the deep state (administrative state) is out of control, likely unconstitutional, costly to the tune of almost $1 trillion annually and is in vital need of scrutiny and change. The article seems to be inappropriately apolitical.
The article makes a solid attempt to examine the facts, regardless of one's beliefs about the Cato Institute. Unfortunately, Trump's passion for tariffs, not to mention some of his other hare-brained economic ideas, have the potential to create real problems for this economy. However, his only opponent is an incompetent, word-salad bobble-head, capable of massive economic damage, as well.
"Perhaps 2028 will feature the Abundance Agenda candidate."
You don't have to wait until 2028. Trump IS the 'abundance agenda' candidate. Currently he is promoting his 'drill baby drill' policies, but that implicitly (at least to me) means that he supports energy abundance and energy independence here in America. In that environment, SMR nuclear may find fertile soil.
I don't think you are wrong, but I also agree with John it is surprising no one is campaigning on these issues specifically. A 90's style Contract With America RE: Growth platform would be really exciting to see, with president and congressmen running on an agreed upon list of reforms they promise to implement.
Maybe it wouldn't help in our current political environment, but it would make me happy. :)
This piece illustrates the law of unexpected consequences when government interferes with markets, with the corollary that the costs (unexpected consequences) are positively correlated with the size of the interference (large interference --> high economic costs):
> Between 2010 and 2023, US GDP grew by 34%, while the EU grew by 21%.
> In 1990, US GDP per capita was 16% higher than EU; by 2023, the difference had doubled to more than 30% (depressing and damaging)
Germany's voters may have to confront these stark statistics and start a GEREXIT petition. Back to the US, there is abundant evidence that nuclear energy's benefits make economic sense -- the next election will determine whether we continue down the path more trillion dollar IRA programs or start imposing more rigid cost-benefit analysis to emerging rules and regulations spewing like smokestacks out of DC, cuz that is what they know how to do...
My quibble on energy is if you read Robert Bryce's substack, measuring on cost per kilowatt might not be the ultimate measure. Energy density might be a better measure along with the cost to produce energy, and solar has no energy density. Nuclear is incredibly dense. This means a little uranium can power huge swaths of the economy where solar would take gigantic solar farms to do the same---and the negative externalities of solar are far greater than nuclear.
That is an undervalued observation. Especially as one moves north into less solar efficient areas, the amount of land needed to be nothing but acres of solar panels gets pretty troublesome. A nuclear reactor plus 500 acres of wild land seems a better deal environmentally than 500 acres of solar panels.*
*(I can't recall the exact ratios there, but someone did do a paper on the relative sizes of plants needed to produce X amount of energy, and it was pretty massive.)
Easy. China has decided to export its way out of its economic doldrums. They are exploiting their comparative advantages.
First solar cells are made out of silicon. The process of making silicon requires 3 things: sand, carbon in the form of metallurgical coke, and electricity. The Chinese have and import lots of coal that they can use to make coke and electricity.
They have built and are still building lots of coal fired electric generation plants. The type that are being shut down in the US and Europe to "save the planet". China is now far and away the leading producer of CO2 emissions. You can't run a process like silicon refining on "renewables". Shutting down the process because the weather won't co-operate is just a disaster. Coal is the ultimate in reliability. Weather is not a factor. They don't have to import it. They don't have to rely on pipelines. Coal can sit outside the plant for months waiting to be used.
The once the cells have been manufactured, they have to be assembled into panels. It is sort of like sewing coats or building radios. the Chinese have lots of slave labor from Uyghurs and political prisoners to do it.
Isn't capitalism great.
BTW: your source article contains a chart showing that solar electricity is now very cheap. The claim is nonsense. As I type this, it is 11:00 pm in the Eastern time zone. No solar electricity is being produced anywhere in continental North America. The price of solar electricity right now is not $68/MWHr it is 1÷0 -- undefined, i.e. +/- infinity. Run a factory, you can't run my house.
Sadly, even cutting off the stupid subsidy programs for "renewables" won't help. We have to do that. But we also have to double the defense budget, refinance social security, and stop the deficit bleeding. No way out except major tax increases. The forecast is cloudy and 100% chance of pain.
on solar, I have one small counterpoint. Small. Solar can work in decentralized ways. I put it on my house (thanks everyone for the subsidy and transfer of wealth). I can power my house with it and when I am not using electricity, I passively send to the grid. Solar is not good for on demand I need it now energy in large doses but it can work in small decentralized applications. Still, nuclear is cheaper.
That does not compute. Solar is not dispatchable unless you build pyramids of lithium. The cost to convert is massive deforestation, huge investments in grids, and 4-5 times the current GDP. Nuclear is becoming less expensive in spite of government regulations and law suits. Small nuclear reactors will blossom in the coming years and there are around two dozen companies vying for the business (even the sclerotic EU is looking into qualifying providers).
Those Silicon Valley Greens need server farms, and these are leading to restarting big nukes in the US. Big Nukes ain’t cheap the way we do them, but they could be competitive.
And then there are real environmental studies which show the warming affect of CO2 declines as PPM reaches around 430 or so. What does that mean? We might burn coal and not see much more effect — and so far the effects have not been near what was claimed. As to severity of storms, forest fires, droughts, tornadoes, lightning, etc., no data base shows this is worsening. The earth is actually greening — CO2 is oxygen for plants.
The earth is emerging from a cooling cycle and we can’t differentiate between the long cycle and fossil fuel effect. So maybe it is time to face up to the facts, Solar is for the beach and remote locations. Grids need on-call energy. Oh, and never forget, economic growth began to grow at prodigious rates when we freed ourselves from solar energy (animals, water, wind, human), and turned fossil fuels into products, comfort, education, knowledge, and care.
The strategic error that Europe made was to go for the Euro and the regulations necessary to make trade policies "fair." If they had just stuck with a FTA with freedom of factor movement, they would have saved themselves a lot of grief. Probably would have attracted more members, too
Great commentary on how good intentions and bureaucracy stifle growth. The problem with government is that once they embark on a program or an agenda they never end it. This is due to their ability to deficit finance (now >$35 trillion) that does not force an evaluation of a programs efficacy. The reason we need the private sector is they are capital constrained by poor decision making. Just ask Boeing how it's going. This capital efficiency process rewards success and punishes bad decision making.
And don't get me started on lobbying for legislative favors.
Remember that these decisions are not being driven even primarily by economic factors. Voters gonna vote, and the EU is a thing with which France deals with Germany as the rider on the horse.
As for Nuclear, please ask the petrochemical lobby who got Greenpeace to shout about nukes.
“The solar vs. nuclear debate for power abundance is fun, but I don’t really care who wins. Centrally, both sides offer a vision of energy abundance vs. the freeze-in-the-dark energy scarcity that dominates policy discussions, even among economists.”
You are far too kind to (most of) the solar side.
Because most of that side is trying to throttle or even eliminate fossil fuels ASAP - by government edict, not by winning in the marketplace. And not caring how much they hurt the billions of the world’s poorest who lack low cost highly available energy in the process.
If solar is cheaper, then why does it need subsidies and mandates any longer?
And lacking mega storage technology breakthroughs, the cited costs of solar are artificially low, because solar can’t do reliable always available power.
Nuclear’s cost increases are entirely due to regulations.
I have not read all the comments here, but it is worth noting that there would have been no nuclear energy plants built in the USA without a hidden federal government subsidy. I forget what the name of the law was, but it limited or eliminated the utility’s liability from a nuclear power plant accident. A fellow graduate student’s dissertation in the late ‘70’s showed that if private sector utilities were not granted this liability protection the possibility of a catastrophic accident made investments in nuclear power plants too risky. Unfortunately for said graduate student, the three Mile island accident created a lack of interest in his work because as a practical matter at that time the building of new plants was out of the question.
I ALMOST always agree with you, but, whereas, as usual, i learned from your article, i think one paragraph overstates, even overrlooks a major point:
"Every bit of economics says that the common market, the European Union, and the euro should have boosted European economies. Why should one, big, integrated market languish 30% or so behind the US, and now fall behind? The hard to quantify drag of over regulation is an obvious answer."
I don't agree: it may be an (even) major contributor, but i don't think it is the (sole) obvious answer. I believe that, despite its own obvious political and regulation drags, the US economy is stronger, healthier, more vibrant, with greater productivity growth than the EU. I was surprised by the strength of your thought here.
swk
I think the efficiency implications of the regulatory policies in the EU, and energy regulations in the US, are broadly understood. The are working as intended -- to destroy capitalism.
The issue is never the issue. The issue is only ever the revolution.
The present administration has binged on regulations and the virtually unaccountable administrative state. The other has repeatedly stated that the deep state (administrative state) is out of control, likely unconstitutional, costly to the tune of almost $1 trillion annually and is in vital need of scrutiny and change. The article seems to be inappropriately apolitical.
Talk is cheap and you're perhaps a tad gullible.
https://www.cato.org/regulation/winter-2023-2024/was-trump-deregulator
Cato hates Trump and won’t give him credit for anything
The article makes a solid attempt to examine the facts, regardless of one's beliefs about the Cato Institute. Unfortunately, Trump's passion for tariffs, not to mention some of his other hare-brained economic ideas, have the potential to create real problems for this economy. However, his only opponent is an incompetent, word-salad bobble-head, capable of massive economic damage, as well.
"Perhaps 2028 will feature the Abundance Agenda candidate."
You don't have to wait until 2028. Trump IS the 'abundance agenda' candidate. Currently he is promoting his 'drill baby drill' policies, but that implicitly (at least to me) means that he supports energy abundance and energy independence here in America. In that environment, SMR nuclear may find fertile soil.
I don't think you are wrong, but I also agree with John it is surprising no one is campaigning on these issues specifically. A 90's style Contract With America RE: Growth platform would be really exciting to see, with president and congressmen running on an agreed upon list of reforms they promise to implement.
Maybe it wouldn't help in our current political environment, but it would make me happy. :)
Pennsylvania voters know. Second largest producer of natural gas
Some know, but mostly in the northern parts. Down around Philly people have no idea I am afraid.
We can only hope...
Biden was massively pro drilling as well. Maybe not vocally but policy wise.
Externalities reflect preferences in tradeoffs and how and what to manage.
This piece illustrates the law of unexpected consequences when government interferes with markets, with the corollary that the costs (unexpected consequences) are positively correlated with the size of the interference (large interference --> high economic costs):
> Between 2010 and 2023, US GDP grew by 34%, while the EU grew by 21%.
> In 1990, US GDP per capita was 16% higher than EU; by 2023, the difference had doubled to more than 30% (depressing and damaging)
Germany's voters may have to confront these stark statistics and start a GEREXIT petition. Back to the US, there is abundant evidence that nuclear energy's benefits make economic sense -- the next election will determine whether we continue down the path more trillion dollar IRA programs or start imposing more rigid cost-benefit analysis to emerging rules and regulations spewing like smokestacks out of DC, cuz that is what they know how to do...
Reading Peter Zeihan's book on demographics and the next century Germany is screwed.
One has to wonder how much of the growth in GDP is related to growth in government and the administrative state, in both the US and EU???
My quibble on energy is if you read Robert Bryce's substack, measuring on cost per kilowatt might not be the ultimate measure. Energy density might be a better measure along with the cost to produce energy, and solar has no energy density. Nuclear is incredibly dense. This means a little uranium can power huge swaths of the economy where solar would take gigantic solar farms to do the same---and the negative externalities of solar are far greater than nuclear.
That is an undervalued observation. Especially as one moves north into less solar efficient areas, the amount of land needed to be nothing but acres of solar panels gets pretty troublesome. A nuclear reactor plus 500 acres of wild land seems a better deal environmentally than 500 acres of solar panels.*
*(I can't recall the exact ratios there, but someone did do a paper on the relative sizes of plants needed to produce X amount of energy, and it was pretty massive.)
This is an excellent point!
Also, as Alex Epstein has made clear, solar is unreliable/intermittent.
Another good commentary from the conference on ideas of dynamism and stasis in Postrel's "The Future and Its Enemies"
https://knowledgeproblem.substack.com/p/progress-and-its-enemies
"Why is solar improving so quickly? "
Easy. China has decided to export its way out of its economic doldrums. They are exploiting their comparative advantages.
First solar cells are made out of silicon. The process of making silicon requires 3 things: sand, carbon in the form of metallurgical coke, and electricity. The Chinese have and import lots of coal that they can use to make coke and electricity.
They have built and are still building lots of coal fired electric generation plants. The type that are being shut down in the US and Europe to "save the planet". China is now far and away the leading producer of CO2 emissions. You can't run a process like silicon refining on "renewables". Shutting down the process because the weather won't co-operate is just a disaster. Coal is the ultimate in reliability. Weather is not a factor. They don't have to import it. They don't have to rely on pipelines. Coal can sit outside the plant for months waiting to be used.
The once the cells have been manufactured, they have to be assembled into panels. It is sort of like sewing coats or building radios. the Chinese have lots of slave labor from Uyghurs and political prisoners to do it.
Isn't capitalism great.
BTW: your source article contains a chart showing that solar electricity is now very cheap. The claim is nonsense. As I type this, it is 11:00 pm in the Eastern time zone. No solar electricity is being produced anywhere in continental North America. The price of solar electricity right now is not $68/MWHr it is 1÷0 -- undefined, i.e. +/- infinity. Run a factory, you can't run my house.
Sadly, even cutting off the stupid subsidy programs for "renewables" won't help. We have to do that. But we also have to double the defense budget, refinance social security, and stop the deficit bleeding. No way out except major tax increases. The forecast is cloudy and 100% chance of pain.
You forgot Medicare insolvency which I don’t have a problem with
The real tax is what government spends not what it collects
on solar, I have one small counterpoint. Small. Solar can work in decentralized ways. I put it on my house (thanks everyone for the subsidy and transfer of wealth). I can power my house with it and when I am not using electricity, I passively send to the grid. Solar is not good for on demand I need it now energy in large doses but it can work in small decentralized applications. Still, nuclear is cheaper.
“Solar vs. Nuclear”
That does not compute. Solar is not dispatchable unless you build pyramids of lithium. The cost to convert is massive deforestation, huge investments in grids, and 4-5 times the current GDP. Nuclear is becoming less expensive in spite of government regulations and law suits. Small nuclear reactors will blossom in the coming years and there are around two dozen companies vying for the business (even the sclerotic EU is looking into qualifying providers).
Those Silicon Valley Greens need server farms, and these are leading to restarting big nukes in the US. Big Nukes ain’t cheap the way we do them, but they could be competitive.
And then there are real environmental studies which show the warming affect of CO2 declines as PPM reaches around 430 or so. What does that mean? We might burn coal and not see much more effect — and so far the effects have not been near what was claimed. As to severity of storms, forest fires, droughts, tornadoes, lightning, etc., no data base shows this is worsening. The earth is actually greening — CO2 is oxygen for plants.
The earth is emerging from a cooling cycle and we can’t differentiate between the long cycle and fossil fuel effect. So maybe it is time to face up to the facts, Solar is for the beach and remote locations. Grids need on-call energy. Oh, and never forget, economic growth began to grow at prodigious rates when we freed ourselves from solar energy (animals, water, wind, human), and turned fossil fuels into products, comfort, education, knowledge, and care.
The strategic error that Europe made was to go for the Euro and the regulations necessary to make trade policies "fair." If they had just stuck with a FTA with freedom of factor movement, they would have saved themselves a lot of grief. Probably would have attracted more members, too
Great commentary on how good intentions and bureaucracy stifle growth. The problem with government is that once they embark on a program or an agenda they never end it. This is due to their ability to deficit finance (now >$35 trillion) that does not force an evaluation of a programs efficacy. The reason we need the private sector is they are capital constrained by poor decision making. Just ask Boeing how it's going. This capital efficiency process rewards success and punishes bad decision making.
And don't get me started on lobbying for legislative favors.
Some of the folks have good intentions. Many/most do not.
See the Bootleggers and the Baptists problem.
I'm not crazy about tariffs but there are more important issues than free trade.
From Cato:
The conclusion remains that the Trump administration presided over a plateau in the growth of formal federal regulation, not deregulation.
Splitting hairs
Remember that these decisions are not being driven even primarily by economic factors. Voters gonna vote, and the EU is a thing with which France deals with Germany as the rider on the horse.
As for Nuclear, please ask the petrochemical lobby who got Greenpeace to shout about nukes.
“The solar vs. nuclear debate for power abundance is fun, but I don’t really care who wins. Centrally, both sides offer a vision of energy abundance vs. the freeze-in-the-dark energy scarcity that dominates policy discussions, even among economists.”
You are far too kind to (most of) the solar side.
Because most of that side is trying to throttle or even eliminate fossil fuels ASAP - by government edict, not by winning in the marketplace. And not caring how much they hurt the billions of the world’s poorest who lack low cost highly available energy in the process.
If solar is cheaper, then why does it need subsidies and mandates any longer?
And lacking mega storage technology breakthroughs, the cited costs of solar are artificially low, because solar can’t do reliable always available power.
Nuclear’s cost increases are entirely due to regulations.
I have not read all the comments here, but it is worth noting that there would have been no nuclear energy plants built in the USA without a hidden federal government subsidy. I forget what the name of the law was, but it limited or eliminated the utility’s liability from a nuclear power plant accident. A fellow graduate student’s dissertation in the late ‘70’s showed that if private sector utilities were not granted this liability protection the possibility of a catastrophic accident made investments in nuclear power plants too risky. Unfortunately for said graduate student, the three Mile island accident created a lack of interest in his work because as a practical matter at that time the building of new plants was out of the question.