Wednesday, October 22, 2008

Thomas Friedman's Mixed Emotions

Folks, Thomas Friedman, op-ed columnist for the New York Times and renowned author of the books The World is Flat and The Lexus and The Olive Tree, has some good news and some bad news. The good news is that 2.00 gas prices are back. Last week the average price for gas fell to 2.91 a gallon - the lowest it's been in nearly a year. The bad news is that with cheaper gas prices, we just might be tempted to go out and buy more of the stuff.

Mr. Friedman is given pause when Americans are finally feeling some modicum of relief at the gas pump while commodity prices rise ever higher and stock indexes spiral towards an uncertain fate. Surely, now is not the time to congratulate ourselves for using public transportation, walking, carpooling, or biking to work during those hard months this past summer. According to Mr. Friedman, now, more than ever, is the perfect time for us to feel more guilty.

He's afraid that affordable gas will be the death knell for the green revolution. That Americans, drunk on their maniacal power to freely consume affordable gas, will stop demanding green-tech cars from Detroit and will stop seeking alternative means of transportation and energy altogether. Never mind, that food, clothes, and shelter (read:houses) are now more expensive and harder to get than they have been in decades. Friedman thinks that at the first whiff of lowered gas prices, Americans will go back to buying gas guzzling SUVs and sports cars. We will abandon our dreams of a cleaner environment and better energy alternatives, regarding them as faddish and naive, to drag our cigarette boats with our Dodge Rams over America's congested roadways and into steadily more polluted lakes and reservoirs. Only, when our planet has been polluted beyond habitability will we lift our clenched fists to the sky and cry, "Why? Why, didn't our governments and authority figures regulate our horrible, irresponsible choices?"

Never fear. Mr. Friedman has the solution. He wants a government standard put on all utilities to produce at least 20% of their emissions from clean energy sources - wind, solar, hydro, nuclear, biomass - by 2025. He points out that more than half the states already have this standard, but apparently states can't be trusted not to pollute the environment, so the feds have to step in and take credit for a standard that already exists in most states in America. But, what happens if a state is not particularly abundant in clean energy resources (no wind, very little solar, etc.) or if the people of a state oppose nuclear energy? What if meeting the standard just costs a state too much money? Too bad, says Friedman, you have to save the environment or go broke trying.

It gets better. Friedman also wants Washington to require state utilities to switch to a system called "decoupling-plus." As far as I can tell, this is fancy economist-speak that means that utilities pay you more for getting you to use utilities less. Constant reader, I am no economist, but let me try to understand this. Let's say that a utility company sells bananas instead of heating gas. Using decoupling-plus, the banana company convinces me to buy less bananas because my banana consumption is completely out of control and the company is being forced to conserve the world's bananas. They actually pay me NOT to buy bananas. Their plan works. I only buy one banana per week. So, they keep paying me not to buy their bananas, but if they keep paying me more than I pay them, they're losing money. Who will bailout the poor, beleaguered banana company who now has no more money after decoupling-plus? I'll give you three guesses.

He also suggests "targeted investments" to mass-transit and clean-tech manufacturing, which is an old stand-by for social engineers like Friedman who see American tax dollars as so many pawns on a chessboard. If the government throws enough money at new ideas, maybe they'll work. The government's track record for keeping pace with innovation is lackluster to say the least. Remember, when Bush was first elected he invested in hydrogen without really doing the homework on hydrogen actually being expensive, scarce and overall not a good energy alternative? Still, will we ever get that money back to put it into something more worthwhile? Moreover, why would Friedman suggest more government spending when, by nearly all accounts, we are teetering on the brink of recession? As Ronald Reagan once eloquently put it, "Here we go again."

To read Friedman's article for October 22, 2008 visit:


chesh said...

I'd suggest that if states oppose nuclear power, they need to suck it up and realize that fears that were justifiable 20 years ago aren't so much now, thanks to -gasp- the technology having advanced over the last 20 years to prevent any more disasters!

rmangum said...

It's clear that Friedman, like most of our quasi-socialist public intellectuals, knows little and cares less about the role of the price system in efficiently allocating resources, especially "natural" resources. He sees in prices only a potential tool for social engineering. It's true that people will probably use more gas if the price goes down. In economic terms, gas is an "elastic" product, meaning people's buying habits are highly sensitive to changes in price. But this is actually not the worst problem as far as pollution goes. A greater problem for the environment than cheap gas can be categorized as "road socialism". There is no price system in place either for constructing or using the roads. I pay the same taxes whether I choose to drive only to work, choose to walk or bike instead of driving at all, or if I happen to like dragging main blasting metallica all day. There is no incentive for anyone to economize on this resource, a problem known as "the tragedy of the commons". The only thing making this particular commons less tragic is the associated products (gas, cars, etc.) which are not socialized and have operating price systems. But they won't if the Thomas Friedmans of the world get the King's ear.

Socialism is bad for the environment, as the industrial cesspool of former Soviet-bloc countries in east Europe attest to.

Capitalism not only tastes good, it's good for you!