Why the Free Market Fails Consumers in Sustainable Energy Innovation
March 13th, 2007There is no free market, of course, but this article is worth reading in conjunction with Energy Scarcity vs. Cost of the War in Iraq. Why the Soviet Style Command Economy in Drag Fails Consumers in Sustainable Energy Innovation would be a more accurate reflection of the situation on the ground, but let’s not get too picky…
Via: Jeff Vial:
Let’s start off with an assumption: humanity must rapidly replace our reliance on non-renewable energy sources with truly sustainable alternatives. The conventional wisdom—at least that advanced by corporate “Main-Stream Mediaâ€â€”is that free markets are the best source of innovation. Now a question: is free-market innovation the best way to develop viable, sustainable energy alternatives?
The free market will ignore solutions that can’t turn a profit. Any firm that fails to follow this simple maxim won’t be in business for long. The corollary to this maxim is that the free market will ignore any solution that cannot be controlled, either through property interests (enforceable intellectual property, monopoly licenses, etc.) or because economies of scale demand centralized operation. This means that free market innovation is structurally incompatible with a huge portion of the universe of possible energy solutions.
Free markets love non-renewable energy sources because they are readily controlled. In countries where mineral rights are privately owned (only the US and Canada), these resources can be controlled via property rights. In the rest of the world, they can be controlled equally easily through exclusive contracts with governments. But renewable energy presents a serious control challenge to the free market’s need to profit.
Research Credit: Anonymous
Some big names have been sighted advising people to put their money in real dirt farms over speculative real estate, derivatives, fiat scrip, etc.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aQZ5eJo0T7b4&refer=home
“Jim Rogers, the hedge fund manager who predicted the start of the commodity rally in 1999, said global warming will hinder crops and has advised purchasing farmland for at least a decade.”
And people are flipping farms if you can believe that: “A 200-acre Iowa farm increased 14 percent in a month when it sold for $5,700 an acre in October, [Monty Meusch, 55, a vice president for Farmers National Co] said.”