Arguing with economics (economists)

  • #1

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And with a conservative for the matter...

How do you argue with economics? Let's take the example of fossil fuel production. If fossil fuels get the job done cheaper (in terms of energy production) then the common sense thing to do is to invest in fossil fuels, such as by expanding offshore drilling or fracking. The fracking boom has resulted in cheaper gas and oil for most Americans. This has increased, through various means of cost reductions and productivity gains, net GDP.

So, how do you argue with this logic or 'common sense' economic rationale, which is being fed to the masses? When and where does policy come into play? It seems abundantly clear to most people on this forum that this logic is flawed, and as I have previously pointed out by not factoring in all externalities, both negative and positive. Yet, the majority of Americans are either oblivious to these negative externalities, as if going to a luxurious restaurant and not being able to pay for the meal or rather having nobody there to clean up the mess left over by everyone.

So, what is the conceptual gap I am missing in understanding this issue? Is it simply a matter of 'ignorance' or an uninformed or even misinformed public?
 

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  • #2
Drakkith
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So, what is the conceptual gap I am missing in understanding this issue? Is it simply a matter of 'ignorance' or an uninformed or even misinformed public?
All of the above.
 
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  • #4
russ_watters
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So, what is the conceptual gap I am missing in understanding this issue? Is it simply a matter of 'ignorance' or an uninformed or even misinformed public?
To be perfectly honest, I have no idea what your issue/question is. Nothing you said implies a problem. I feel like you have a position you feel is so obvious you didn't need to say it. Based on your opening line about arguing with a conservative, I'm guessing its liberal politics driving you to dislike economic realities, hence the title. I'm not sure we can help with that in a way that fits with PF's rules, but consider this:

You cannot change the physical laws of economics or human nature, but you can use value judgments and government laws to change the structure of the game -- with associated risks. For example, if you don't "like" fossil fuels, but they are cheap so people buy them -- tax them. Then they won't be cheap anymore and people will buy less. But be prepared to deal with consequences that might not be what you hoped for.
 
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  • #5
To be perfectly honest, I have no idea what your issue/question is. Nothing you said implies a problem. I feel like you have a position you feel is so obvious you didn't need to say it.
My issue is using economic 'common sense' in the opening post to justify continuing utilizing fossil fuels as a means to produce energy. As I think most people know, which I am hinting at the obvious here, that is detrimental to the economy as a whole via climate change. As to why this is the case, that people use 'common sense economics' to justify a self-destructive means of energy production, baffles me. Maybe people like easy answers or something? As if negative externalities didn't exist?

Hope that clarified it.
 
  • #6
Based on your opening line about arguing with a conservative, I'm guessing its liberal politics driving you to dislike economic realities, hence the title.
Let me give you a better context. There are multiple schools of thought in economic theory. One is classical economics which is predominantly embraced by conservatives, which I have a gist with here. I do realize that ultimately reality gets to decide what economic theory is of most utility in predicting economic outcomes.

Now, the economic outcome that the conservatives (which need not be addressed here) have professed via classic economic theory is leading us to an outcome that is undesirable via climate change.

How do you then argue, to be more precise in terminology, with a classical economist who would use such 'common sense' economic theory, which strongly appeals to people?
 
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  • #7
russ_watters
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My issue is using economic 'common sense' in the opening post to justify continuing utilizing fossil fuels as a means to produce energy. As I think most people know, which I am hinting at the obvious here, that is detrimental to the economy as a whole via climate change. As to why this is the case, that people use 'common sense economics' to justify a self-destructive means of energy production, baffles me. Maybe people like easy answers or something? As if negative externalities didn't exist?

Hope that clarified it.
Yeah, that's what I thought; so my response was on point. One thing though:
As I think most people know, which I am hinting at the obvious here, that is detrimental to the economy as a whole via climate change.
That just isn't true - YET. And as such, it isn't really well incorporated into economic decision making. As I said, you can affect the outcome by changing laws such as taxes, but you can't really make peoples' buying habits change just by wanting them to agree with you on a political issue.
How do you then argue, to be more precise in terminology, with a classical economist who would use such 'common sense' economic theory, which strongly appeals to people?
In a democracy, you have to convince people the long term future outcome you want is worth the considerable immediate pain you want to inflict to achieve it. That's not an easy sell. Particularly since the approach being sold is so flawed.
 
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  • #8
StatGuy2000
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To be perfectly honest, I have no idea what your issue/question is. Nothing you said implies a problem. I feel like you have a position you feel is so obvious you didn't need to say it. Based on your opening line about arguing with a conservative, I'm guessing its liberal politics driving you to dislike economic realities, hence the title. I'm not sure we can help with that in a way that fits with PF's rules, but consider this:

You cannot change the physical laws of economics or human nature, but you can use value judgments and government laws to change the structure of the game -- with associated risks. For example, if you don't "like" fossil fuels, but they are cheap so people buy them -- tax them. Then they won't be cheap anymore and people will buy less. But be prepared to deal with consequences that might not be what you hoped for.
Then let me ask you the following -- if you accept that climate change is real (which is implied in your post here, and which you've addressed elsewhere before), what specific policy proposal would you advocate to make a real impact on carbon emissions?

I know you've posted before about being a major advocate for nuclear power, but as you yourself state, you can't change the "physical" laws of economics (which isn't actually physical, but that's nitpicking) or human nature (and thus wish more nuclear power to happen on its own), so you pretty much have to change the structure of the game through government laws or value judgments. What actions on the part of governments in the US, both state and federal, would you want to see done?
 
  • #9
russ_watters
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Then let me ask you the following -- if you accept that climate change is real (which is implied in your post here, and which you've addressed elsewhere before), what specific policy proposal would you advocate to make a real impact on carbon emissions?

I know you've posted before about being a major advocate for nuclear power, but as you yourself state, you can't change the "physical" laws of economics (which isn't actually physical, but that's nitpicking) or human nature (and thus wish more nuclear power to happen on its own), so you pretty much have to change the structure of the game through government laws or value judgments. What actions on the part of governments in the US, both state and federal, would you want to see done?
You have correctly answered your own questions, but the last is for me(short version):
1. Government needs to stop violating the law and open the Yucca Mountain Repository. I think this is happening.
2. Limit or end subsidies on "renewables" that can't do the job.
3. Provide a nationally directed and funded program to do what France did decades ago.

That's our part, and if we do it, yay for us. But we'll still need those new dikes in New Orleans and New York.
 
  • #10
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Is it possible you have an issue with traditional economics and the notion of the "Homo economicus." i.e. "portraying humans as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally."

There was a great episode of the Freakonomics podcast awhile back that might inform the discussion you're having a bit. "Should We Really Behave Like Economists Say We Do?"

I don't know a lot of traditional economics. Enough to know I think it's b*******. Bit I really like what Richard Thaler had to say here and I could get on board with that. Basically he's taking the more subtle aspects of human psychology into account, and when I say 'psychology' I mean that which has been solidly backed by research into behavioral economics.

Sorry if this has nothing to do with your question, but some of what you said made me think of it.

-Dave K
 
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  • #12
StatGuy2000
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You have correctly answered your own questions, but the last is for me(short version):
1. Government needs to stop violating the law and open the Yucca Mountain Repository. I think this is happening.
2. Limit or end subsidies on "renewables" that can't do the job.
3. Provide a nationally directed and funded program to do what France did decades ago.

That's our part, and if we do it, yay for us. But we'll still need those new dikes in New Orleans and New York.
On this front, I am (with reservations) in agreement with you on opening (or re-opening, depending on perspective) Yucca Mountain Repository for storing nuclear waste (I haven't heard anything from the Trump administration on this front, so we'll see if this is happening)

And if we are serious in putting more resources on cleaner, less polluting, or cleaner power (including nuclear power, but also renewable power as well, such as wind, solar, or biomass power using waste products, as Sweden does), I agree with you that a nationally directed and funded program is critical. That being said, having a nationally directed and funded program goes against point #2 on limiting or ending subsidies.
 
  • #13
russ_watters
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That being said, having a nationally directed and funded program goes against point #2 on limiting or ending subsidies.
If you finish the sentence, you'll see that no, there is no contradiction.
 
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  • #14
StatGuy2000
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If you finish the sentence, you'll see that no, there is no contradiction.
I am aware of the full sentence you wrote above ("Limit or end subsidies on "renewables" that can't do the job").

This raises the following questions:

1. What types of renewable energy are unable to do the job of reducing carbon emissions to either reduce the impact of climate change or possibly even to halt further carbon emissions in the atmosphere?

2. What criteria are using to determine whether "renewables" are in fact doing the job?

After all, if the goal is to redirect funds being allocated to renewables because they are "not working", then one needs to have some criteria to determine whether it is.

As an aside, I should also note that the Congressional Budget Office (CBO) has found that until 2008 (i.e. prior to the Obama administration), most energy subsidies went to the fossil fuel industry as a way to encourage more domestic energy. See the following link below from Scientific American.

https://www.scientificamerican.com/article/making-renewable-energies-competitive/
 
  • #15
russ_watters
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1. What types of renewable energy are unable to do the job of reducing carbon emissions to either reduce the impact of climate change or possibly even to halt further carbon emissions in the atmosphere?

2. What criteria are using to determine whether "renewables" are in fact doing the job?

After all, if the goal is to redirect funds being allocated to renewables because they are "not working", then one needs to have some criteria to determine whether it is.
Wind and solar; as Germany shows us, heavy emphasis on wind and solar at the expense of nuclear power increases carbon emissions. Or to put it another way: wind and solar, on their own, cannot provide more than about 25% of a country like the USA's and Germany's electricity. At least half will need to come from fossil fuel or nuclear. Germany is emphasizing solar and wind at the expense of nuclear and the result is spending a lot of money to increase carbon emissions.
As an aside, I should also note that the Congressional Budget Office (CBO) has found that until 2008 (i.e. prior to the Obama administration), most energy subsidies went to the fossil fuel industry as a way to encourage more domestic energy. See the following link below from Scientific American.

https://www.scientificamerican.com/article/making-renewable-energies-competitive/
They're down now, but great: that's more money we could allocate to nuclear power instead of fossil fuels or intermittent "renewables".
 
  • #16
StatGuy2000
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Wind and solar; as Germany shows us, heavy emphasis on wind and solar at the expense of nuclear power increases carbon emissions. Or to put it another way: wind and solar, on their own, cannot provide more than about 25% of a country like the USA's and Germany's electricity. At least half will need to come from fossil fuel or nuclear. Germany is emphasizing solar and wind at the expense of nuclear and the result is spending a lot of money to increase carbon emissions.
I believe you and I are in agreement (and the evidence backs up our stance) that wind and solar power in its current form, on its own, cannot provide sufficient energy to sustain the economy of the US or other large developed countries such as Germany.

That being said, 25% of the energy needs in the US is a significant number, and I think it behooves us to include wind and solar as part of the energy mix, along side nuclear power and biomass energy (e.g.using waste products to create energy) as part of the energy mix to reduce and ultimately eliminate the use of fossil fuels.
 
  • #17
So, what are the factors preventing nuclear from making a comeback in the US? Kind of off-topic but relevant.

In a democracy, you have to convince people the long term future outcome you want is worth the considerable immediate pain you want to inflict to achieve it. That's not an easy sell. Particularly since the approach being sold is so flawed.
Do you think nuclear faces opposition from the very American public that enjoys said democracy or is this more of a structural issue? If so, how does one combat this inherent 'irrationality' present in a population? This is where I begin to admire (and envy to some extent, blasphemous, I know) centrally planned economies such as China, when it comes to energy production.

Last I recall, levelized costs of energy production for nuclear are still comparatively higher than gas and coal, and growing.
 
  • #18
russ_watters
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So, what are the factors preventing nuclear from making a comeback in the US?

Do you think nuclear faces opposition from the very American public that enjoys said democracy or is this more of a structural issue?
Public opposition was so strong and so successful it has now become essentially structural. Some of those forces have abated, but my perception is that it isn't significant enough for a strong resurgence. We just had a President willfully violate several federal laws for almost his entire term in order to hold back nuclear power. That sort of opposition power is really tough to overcome.
If so, how does one combat this inherent 'irrationality' present in a population?
I don't have a good answer to that. Lacking real leadership on the issue or a general improvement in scientific literacy of the public, I don't see this being easy. But if New York starts to look a lot like Venice and New Orleans like Atlantis, that will provide a powerful education. Panic is a good motivator.
This is where I begin to admire (and envy to some extent, blasphemous, I know) centrally planned economies such as China, when it comes to energy production.
Sure but you can't trust the individuals in power to have better opinions than anywhere else -- and typically more corruption and less "care" about the public (such as the million people displaced by the Three Gorges Dam.
Last I recall, levelized costs of energy production for nuclear are still comparatively higher than gas and coal, and growing.
I believe that is true. One thing that may help is that it appears to me that legal challenges to unfair/contradictory policies and illegal government actions may change the direction the wind is blowing. For example, I've been using the word "renewable" in quotes in this thread for a reason: even in laws and government policy, "renewable" or "clean" energy are manipulatively defined to exclude nuclear power regardless of the fact that it fits the main goal we're all after: less carbon emissions. But challenges are underway and making progress:
While "no nukes" was once a top rallying cry within the environmental movement, at least five states now hope to subsidize older nuclear plants in order to meet clean energy goals.

Nuclear subsidies have passed in New York and Illinois, legislation has been introduced in Connecticut, a bill will soon be introduced in Ohio, and a program is being considered in New Jersey, according to the trade publication Utility Dive.

Several states are pursuing "zero-emission credits" where the plants would receive payments for each unit of carbon-free power they produce.....

The costs of the subsidies would be borne by ratepayers.

Nuclear plant owners say they can't compete in wholesale electricity markets where natural gas generators enjoy a strong advantage, and where renewables benefit from various incentives. Many nuclear generators are facing the risk of early closure.

At the same time, nuclear advocates say the plants provide major round-the-clock generation without producing carbon dioxide, a greenhouse gas that contributes to climate change.

Each of the states considering nuclear subsidies have adopted strong renewable portfolio standards with the goal of reducing emissions. The standards require that an increasing portion of electricity come from low-carbon sources.
http://www.masslive.com/news/index.ssf/2017/04/nuclear_power_subsidies_on_tap.html

If you incentive "renewables" while ignoring or worse punishing nuclear power, you end up in a self-contradictory situation like Germany.
 
  • #19
For example, I've been using the word "renewable" in quotes in this thread for a reason: even in laws and government policy, "renewable" or "clean" energy are manipulatively defined to exclude nuclear power regardless of the fact that it fits the main goal we're all after: less carbon emissions.
Well, that's a travesty. :bugeye::olduhh:

I thought breeder reactors made nuclear practically limitless.

Here's from wiki on breeder reactors:

Breeder reactors could, in principle, extract almost all of the energy contained in uranium or thorium, decreasing fuel requirements by a factor of 100 compared to widely used once-through light water reactors, which extract less than 1% of the energy in the uranium mined from the earth.[8] The high fuel efficiency of breeder reactors could greatly reduce concerns about fuel supply or energy used in mining. Adherents claim that with seawater uranium extraction, there would be enough fuel for breeder reactors to satisfy our energy needs for 5 billion years at 1983's total energy consumption rate, thus making nuclear energy effectively a renewable energy.[9][10]
Sounds like a conspiracy to me as to label nuclear as "non-renewable".
 
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  • #20
Is it possible you have an issue with traditional economics and the notion of the "Homo economicus." i.e. "portraying humans as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally."

There was a great episode of the Freakonomics podcast awhile back that might inform the discussion you're having a bit. "Should We Really Behave Like Economists Say We Do?"

I don't know a lot of traditional economics. Enough to know I think it's b*******. Bit I really like what Richard Thaler had to say here and I could get on board with that. Basically he's taking the more subtle aspects of human psychology into account, and when I say 'psychology' I mean that which has been solidly backed by research into behavioral economics.

Sorry if this has nothing to do with your question, but some of what you said made me think of it.

-Dave K

Half of what's going on in economics nowadays is figuring out why people are so darn irrational in contrast with classical and neo-classical economists who think that rational agents acting in their own self-interest will always produce the optimal outcome. That was my take while at college taking economics.
 
  • #21
Public opposition was so strong and so successful it has now become essentially structural. Some of those forces have abated, but my perception is that it isn't significant enough for a strong resurgence.
I'm going on a limb here; but, I suspect that the Cold War had something to do with scaring the daylight out of people related to anything nuclear. I feel as though that ingrained some negative image or connotation in peoples minds about nuclear technology and "weapons" or "weapons of mass destruction". Sorry if that came of as political, I think it's more armchair historical analysis though.

Edit: I just educated myself on nuclear energy by watching a documentary called Pandora's Box (you can find it on youtube) . It's superb.
 
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  • #22
Vanadium 50
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Since the politics of AGW are apparently again an open topic, the situation as I see it is that the following position is advanced:

1. AGW is such a existential threat to humanity that we all (well, all in the non-Davos set, anyway) have to give up some of our freedoms and quality of life to fight it. This is true even if the same models that indicate there is a problem tell us the actions will be ineffective.
2, AGW is not such an existential threat to humanity that we should build more nuclear power plants.
 
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  • #23
russ_watters
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Since the politics of AGW are apparently again an open topic...
I'm trying to be as detached/politics-blind and factual as I can here.

And I agree on how you describe the current overall political "climate".
 
  • #24
2, AGW is not such an existential threat to humanity that we should build more nuclear power plants.
Perhaps, I'm unenlightened; but, I don't see how that conclusion follows. I would think the point made in this thread is that nuclear is the only available choice at our disposal at this time to actually combat AGW.
 
  • #25
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Then let me ask you the following -- if you accept that climate change is real (which is implied in your post here, and which you've addressed elsewhere before), what specific policy proposal would you advocate to make a real impact on carbon emissions?
This is oversimplified. The need of policy proposals requires more than just acceptance "that climate change is real." It also requires acceptance of several other propositions:
1) "Climate change is harmful." This is a big question, but in the context of an economic discussion it may be simplified to the proposition that "Climate change will cause net harm to the economy."
2) "Climate change is anthropogenic and dominated by carbon emissions."
3) "The course of climate change can be altered through public policy on carbon emissions."
4) "The course of climate change cannot be altered through education or voluntary private action without public policy change."
5) "The best public policy is to try and arrest climate change rather than planning for it."

What actions on the part of governments in the US, both state and federal, would you want to see done?
This give rise to another necessary proposition:
6) "Policy proposals on a subset of carbon emitters the size of the US can have a significant impact on climate change."

Good economics views expensive policy proposals in terms of cost-benefit. I don't think I've seen a compelling economic analysis that the benefit of most US (state or federal) policy proposals relating to climate change are worth the anticipated costs. It's as if there is an unstated presupposition that the benefits are guaranteed to outweigh the costs.
 
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