It is just ridiculous to starve public investment funding

This Post Has 22 Comments

1. Professor Mitchell, don’t you realize that we in the U.S. are more productive than we used to be and have newer and better technology and are more wealthy now also? So of course we cannot afford to maintain things like we would like to. If only the government could get some money somehow…

2. If things looked bad under Bill Clinton, G W Bush and Obama, the downward slide of the U.S. into the sewer is about to accelerate under Trump. It looks like the promised massive investment in infrastructure is being planned from the outset to be a scam of epic proportions to enrich the private partners such as Goldman Sachs in the preferred Public Private Partnership development model.

   Bill Black – Associate Professor of Economics at UMKC discusses this aspect:
   https://www.youtube.com/watch?v=3gouEq-tr34&feature=youtu.be

3. And congrats on the blog ranking. Your blog is consistently extraordinary in the quality and quantity of analysis in my opinion. Plus you are also almost always right. Except for occasional lapses in the quiz questions.

4. Don’t worry Bill, I’m happy to keep taking the Facebook bullet for you and linking relevant blogs (I have the Labor party in my feed, I’m hoping someone will pay attention!).

   Poor Obama, though – inherits the GFC and had to deal with a hostile Republican congress for most of his term. It would be interesting to see the data broken up in to Congress majorities instead of presidents.

5. I was troubled to see that you listed “renewable energy” as your second priority for public purpose. I hope I’m not being picky but that sounds worryingly like the misguided EU targets. What matters is protecting the climate and ensuring energy security. The EU targets for renewable energy have resulted in a move away from nuclear power to instead having wind and solar together with the inevitable gas back up for when it is dark and not windy. That has dire consequencies for CO2 emissions, energy security and energy costs. Wind can make sense for providing <25% of electricity but trying to get a high proportion of electricity supply from wind and solar has never been demonstrated to work despite considerable efforts. In the EU we have the crazy situation where targets and subsidies ignore the need to cut consumption via efficiency etc and instead target production of more wind and solar electricity as though that were an end in itself. IMO gas should be reserved for developing countries to provide cheap electricity and in the developed world we should go nuclear as the only proven way to transition away from fossil fuels in time (France and Sweden transitioned away from fossil fuels to nuclear in the 1970s and 1980s).

6. Coming from New York City, we were taught the Myth that: ‘The Federal Reserve always acted independently of the White House, Congress etc.’ and having lived through a 21% percent prime rate during Carter… I was a believer…. (and thereafter voted for Ronald Reagan) Being a cynical New Yorker, I have the impression that Ms. Yellen wanted to raise the rate since Sept. but declined to do so, in fear of how it may adversely impact the economy, the current administration & election cycle. And, in light of the marketing boom after the election of Pres Elect Trump, she executed her diabolical plan and the world did not end… OF course, the Speaker of House (Ryan) would like to advance the funds for infrastructure BUT wants it ‘revenue neutral’ which means – something ‘cut or subtracted’…. Funny thing, every time Pres Obama went to a “climate conference’ he doled out ‘billions’ ! ??? If I was on standing on line to accept his check – I’d believe in global warming! Congrats on your FB rating and appreciate the irony of you NOT having a FB account!? (we’re around the same age and I don’t have one either for the same reasons) Certainly, this fact and status supports Chris Hedges assertion that social media is a ‘virtual hallucination’ but your should do an FB page for your band… (caught your vid on Youtube) In Indonesia now keenly awaiting the next meltdown and studying for your quiz.. Many thanks for your informative blogs and emails. I know it’s quite time consuming. I will direct all my friends on FB to vote for you forthwith. Thanks Again, all the best for the New Year and much success with your new book launch.. After that, you’ll be ready for a TV reality show…. HERETIC : HIGH PRIEST OF FINANCE.. (kind of like my favorite show in Oz,,, ‘Rake’ but more irreverently religious as Economics goes – the new post industrial age religion.)

7. Congratulations on the blog ranking, and also congratulations to New Economic Perspectives. Let’s hope you both get even higher in time.
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   I must echo Stone in favour of nuclear power. For many years (decades even ) I was strongly against it, and pinned all my hopes on renewables. But while there is still a place for renewables, there is no chance they will displace the majority of fossil fuel power sources. The only way to do that is with nuclear, and the good news is that we don’t have to wait for fusion, because molten salt reactors look like a realistic way to go (with or without thorium). There is no reason at all why the USA and the UK at least aren’t going full-speed ahead on developing a range of prototypes, and figuring out what is best in practice. There is at least one UK design which (subject to regulatory approval) could go ahead tomorrow if the will and the funds were there. It uses almost no new, unknown, technology, and the physics is well established. Apparently, the UK’s Harwell and the USA’s ORNL were actively collaborating on MSR in the 60s and 70s. What seemed to kill it in the UK was the “success” of the fast breeder reactor at Dounreay. That apparently generated power for 20 years and then was shut down, and the site is slowly being decommissioned. No more FBRs were built in Britain. There were in passing a whole catalogue of problems which you can read about in Wikipedia.
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   The nuclear industry hasn’t exactly done itself many favours over the years, and no wonder people are sceptical. However, it really does seem that MSRs can be built with much more inherent safety than the early generations of reactors, and they are also much more fuel efficient, and offer a way to deal with existing waste. The only thing that might stop them other than regulatory problems is a lack of real resources, specifically skilled and knowledgeable people. We know that governments like the USA and the UK can “afford” to build them if they want to. They can afford to educate the necessary people too.

8. Mike Elwood, the problem with nuclear is only governments will underwrite them for insurance with no limits to liability. The private sector as far as I know won’t underwrite them for insurance as the risks are so huge and timeframes longer than modern human history for the waste storage. That’s the biggest problem. Fukushima is still a disaster in radioactive water being collected and leaking. There needs to be a discussion on how much that will cost long term. Chernobyl finally just got a concrete bunker recently and again how long and at what cost had that disaster added up to. I’m still not confident in humans ability particularly with neoliberal economics behind the scenes cutting costs short term at long term expense.

9. Congratulations on getting top ratings for this blog (again). You (and the group at UMKC) clearly put a great deal of thought into every entry and we’re very fortunate to have such high quality resources available. I always get thanks from people for referring them here for trustworthy information.

   Mike Ellwood: People keep telling me about the wonderful new nuclear technology and that all my fears are unwarranted. Perhaps the new technology is worth taking a close look at, the idea of having a fireplace that never needs re kindling and doesn’t contribute to agw is appealing here in Canada, though I can’t help but wonder if starting down the soft energy path of renewable s wouldn’t deliver better long term results in terms of employment and wiser use of our remaining real resources.

   I can see were a clean source of abundant energy while solving one problem might just perpetuate others.

10. We need an energy mix of renewables, nuclear, gas and storage. The tech already exists, the resources are there, we just lack the will and political leadership.

11. Jason H, I struggle to see how you conclude that nuclear power has a poor safety record. Your argument seems analogous to saying that we should travel by motorbike and not by train because 200 people were killed in the Quintinshill rail disater. Chernobyl was a disaster, Chernobyl was a screw up in a floundering communist country. The Banqiao Dam collapse is a comparable event in renewable energy history and killed 171000 people.

    The Fukushima “nuclear disaster” did not kill anyone. It was a massive screw up but compare it to the “business as usual” 23000 deaths per year in the EU from coal power plant air pollution. burning wood in power stations gets touted as a way to provide reliable “renewable” electricity. That would create at least as much air pollution as coal. How many deaths from air pollution are worth one death from radiation in your view? Is it a million? A billion?

    People talk about energy storage riding to the rescue for intermittent wind and solar. For heating, low grade heat can be stored effectively underground (see Drake Landing) BUT there is no feasible technology on the horizon for electricity storage on the scale that would be needed. The UK would require at least 8TWh of storage if we were to have a wind and solar and tide based electricity system. If all geographically feasible sites for pumped storage hydro were developed, then that would only provide the UK with 100GWh (ie only 1/80th that required).

12. Stone: What scale is “needed”? Could it be that if we took a close look we might actually get by with far less energy? An amount that could be met with renewable energy sources with simpler less hazardous technology.

    All of the pro nuclear arguments I have been hearing, and there are many popping up all of the sudden, possibly due to electric vehicle market wishers trying to reinvent Fordism, assume away the possibility that if we put our minds to it we could do without fossil fuels and nuclear energy altogether. This is something I believe to be a real possibility based upon personal observations.

13. J Christensen, as I said, the UK has the geographic potential to have 100GWh of pumped hydro electricity storage. That would be 1/80th the amount of energy storage required for a wind/solar/tidal based electricity supply system to meet current UK electricity demand. If you are expecting UK electricity use to reduce by 98.75%, then yes, a colossal fleet of windturbines and solar PV and tidal generators and pumped hydro systems could provide reliable electricity at 1.25% of current use levels.

    You say that renewable energy is “simpler”. Providing reliable electricity from wind/solar/tide is not only not simple, it is a pipe dream with current technology.

    In my view we need to do what we can do with current technology. That is to make realistic cuts in energy usage (say 30% cuts). Have very tight restrictions on energy efficiency. So only small low powered fuel efficient cars can be sold. Only small AAA+ freezers can be sold. Have free public transport and big fossil fuel taxes. Building regulations to Passivehaus standard. Try and supply all heating and cooling of buildings and water from wind and solar via inter-seasonal heat/cold stores (see Drake Landing as an example). BUT that still leaves a LOT of energy demand. We need reliable electricity to power electric trains, machines, electronics etc etc. Nuclear has been shown to work at the scale we need. France and Sweden built their nuclear power fleets in the 1970s and 1980s at a pace per capita that would do the job for everywhere now.

14. Further to my previous comment, the key point about wind/solar/tidal power is that it is extremely easy to use it to provide lots of electricity as and when nature dictates but extremely hard indeed to use it to provide reliable electricity. If you want electricity <70% of the time, then it makes sense. Otherwise it doesn't and no foreseeable technological advance can change that.

15. Stone: I live in Ontario Canada. Some of the coldest most desolate northern locations here have seen the best results in terms of carbon offset through use of renewable s. In those areas, economic realities have been a big driver toward using these technologies, there is little hope of getting a nuclear plant and a grid anywhere near these locations anyway. In one location in the arctic, they have managed to reduce fossil fuel use about 23% in less than 2 decades using mostly wind and solar development. They have not just reduced the carbon footprint from their own use of energy, but also the carbon footprint of the heavily subsidised industry that produced and delivered fuels.

    In Ontario, the average residential PV installation already offsets more than the equivalent of 2300 Kg of coal use per annum, and it’s possible to sell what you don’t use back through the grid. In fact the addition of so much new energy to the grid occasionally results in industrial consumers in Canada and some northern US states getting energy for free. Storage would be nice but it seems like most of the energy can be consumed somewhere on the grid.

    But none of this is really my point. Do I think we will perish if we have far less energy available? No. I think necessity will still be the mother of new invention going into the future and if we return to a system that rewards people for finding real solutions to real market failures we will continue to develop better living standards despite vastly less energy consumption.

    I’m not a fan of the idea of trying to maintain the same living modalities we developed into around fossil fuels or nuclear. I’m eager to see us return to thinking and working at real jobs in a real economy again. I haven’t tried it yet but I know other people who live on off grid power and I think I could manage on the equivalent of 2300 Kg of coal per annum; that seems reasonable to me.

    Ontario, went for nuclear technology in a big way in the 1960’s and 70’s and we had only a few notable incidents in that time; however what really brought the nuclear industry down was the cost involved in maintaining and eventually upgrading the plants as they grew older. These costs were not factored into the energy pricing correctly it seems.
    Electricity was so cheap many abandoned oil and coal for electric heating. A mistake many homeowners have paid dearly for; although a few smart people noted that in winter and fall the wind seems to blow more and so put up a wind turbine to heat the home with the electric heating systems.

    Those plants once sustained a large manufacturing sector but once the publicly subsidised cheap energy left so did the industry and the jobs and Ontario went from a very prosperous province to a struggling province. I’d like to see us moving forward and not falling into the trap of repeating old mistakes.

    We need to develop around the little surpluses nature can bring us with investments of our own efforts. Breathing new life into hard energy consumption just guarantees we will continue to destroy nature in ways beyond AGW.

16. J Christensen, I think a big confusion comes from extrapolating from 25% wind and solar to trying to rely on them totally. I agree wind and solar will produce electricity efficiently as and when nature dictates and can be used to reduce fossil fuel use some of the time. If we say that we will ruin the climate in 50years if we use x amount of fossil fuels, then displacing 25% of the fossil fuels with wind and solar will give us 72years and then we will have our ruined climate. What we need though is to transition to a system where we STOP using fossil fuels SOON.

    Unless you can see a way to do entirely without electricity for days at a time, then wind and solar won’t work.

    The problem you mention about “correct” pricing of nuclear power comes from what discount rate to use for the cost of capital. Because nuclear power plants have a very long life and almost all of the cost comes at the start, the overall cost of the power is predominately determined by the financing discount rate. In the 1970s, nuclear power was a government enterprise and so was funded at the rate of government borrowing -so a discount rate similar to the inflation rate. Today, in Europe anyway, there is this notion that it needs to be funded privately at a discount rate that takes into account the political risk that some Angela Merkel type politician will close the plant when it still has 50years of life left in it. That means a collossal financing cost. That isn’t a real constraint. It is just political nonsense. France and Sweden have thrived with their nuclear power systems. They didn’t create a cost drag. They saved tens of thousands of lives that otherwise would have been lost to air polution.

17. I’m desperate to try get across the nature of the obstacle ahead of trying to totally replace fossil fuels with wind/solar/tide based electricity supply (rather than with nuclear which has been shown to work ever since the 1970s).

    Consider solar power in the UK. Solar PV in the UK has an 11% capacity factor. That means that over the course of a year, the panels produce an average power output 11% of the maximum output they produce when it is at its most sunny. So if you want to have 11% of UK electricity supply from solar, then some of the time ALL of UK electricity demand will be met by solar and ALL other supply will need to be unused. Likewise with wind power that has a 25% capacity factor. At some times there will be strong winds, bright sun and a spring tide. That means that as you try to displace a significant proportion of annual fossil fuel production, you end up having situations where more and more solar/wind/tide power has to be left unused because it is at the wrong time. To try and get the final 15% replaced requires so much over-capacity that you run up against the constraint that it takes more energy to build the systems than you get out of them.

    Obviously hydro and volcanic geothermal energy are different but very few parts of the world have the geography. Unless you live in Norway or Iceland or Costa Rica or somewhere like that, you don’t have that option.

18. Public infrastructure becomes obsolete and in need of replacement for three main reasons:
    – The facility has deteriorated and become either at risk of collapsing or very expensive to maintain,
    – The facility no longer meets current design standards and is unnecessarily hazardous to its users,
    – It has inadequate capacity to meet present and projected demand.

    Just before and after World War II there was a rapid increase in car ownership in the USA and at the same time there was a shift from rail to road freight haulage. This rapid increase in demand gave rise to the Interstate system and many other roads and bridges. Some of these facilities are now obsolete for one of the reasons stated above but many are not. Although their original life span was assumed to be about 30 years, these facilities are useable after 50 or 60 years. Just because the level of investment has fallen, one cannot assume that the level of service has fallen, too.

19. Mr Stone,
    In regard to your statement Dec 23rd post: ‘The Fukushima “nuclear disaster” did not kill anyone’
    Sir, I beg to differ with you – there were several deaths due to radiation contamination and I believe the Mayor of Fukushima died after a year from exposure.. The Fukushima is far worse than currently reported. (if you are really interested, I can provide you with the citations.. I am not making this up…)
    There should indeed be great cause for concern related to ‘safety issues’ with nuclear considering the increase in volcanic activity and earthquakes – which are on the rise and plenty of data available that supports this.
    What is often overlooked as it relates to energy alternatives is: Natural Gas – which is abundant, clean and efficient. Although overlooked in the USA, the Inpex project as well as the latest massive gas pipeline project connected with Australia & Japan (which should be online within a year I think…they just finished the final fabrication in Thailand.. but these projects tend to always be late)
    Going forward, we should remain optimistic – such as the roll-out of energy produced vis a vis ‘electromagnetics’ – there are working units however, not released to the general public – for many reasons. Expect roll-outs and commercial units available within the next 15 years.. Considering the debt ‘overhang’ – in the trillions in the oil and gas industry – it will take time to sort this out and it has to be otherwise, if it implodes, it will be like the subprime crisis and defaults. (the MNC’s involved are consolidating, liquidating assets etc. – so they are on it. ) There is also a good interview with the former CEO of Shell, who admits we’ve reached peak oil ‘consumption’ and its demand is expected to decrease over the next decade. He knows what he’s talking about and senior directors in the O&G industry concur and are acutely aware of this, unless of course there is a major World War. (sorry Hilary)
    You may wonder, ‘If EM energy production is available, why aren’t we seeing it? Same reason why in the 1970’s the US govt had computer with clock speeds over 600 and the current models (govt) are 20-30X faster than the CPU you are using to read this.. (BTW John Searle in UK has a working prototype) but there are many reasons why the planning connected thereto is done long term as to not create chaos in the existing global models.. (see below the VLOOP – if a tube train could travel 1200-1500 MPH – what would that do to the airline industry? – you get the point- your economists)
    Meanwhile, in UAE – Elon Musk is working on a protoype VLOOP – transport that incorporates MagLev with a Vacuum tube – which can attain a speed of approx 1200mph (actually it can faster but the challenge is ‘slowing it down – it’s operate in a Vacuum & you should have studied Physics 101) http://www.arabianbusiness.com/after-all-hype-what-s-future-for-hyperloop-one–653311.html (although the article is a bit critical – new technology takes time especially cutting edge.. but achievable,,,because it already exists..)
    I appreciate the comments in this blog and am encouraged by the critical thinking, and debate in exploring alternatives to meet the demands and challenges for future generations – you’re the future leaders and you have your work cut out for you.. Unless you’re planning to take that ‘one-way’ trip to Mars..
    Respectfully,
    stephen

20. I think an intransient congress contributed to the lack of Infrastructure spending for both Obama and Clinton, they don’t mind spending as long as its by ‘their’ teams president.
    congrats,great news on the high ratings.

21. stephen,

    “Also, in a May 11 e-mail to CNSNews.com, Jaya Mohan, information officer for the United Nations Scientific Committee on the Effects of Atomic Radiation (UNSCEAR), said “no deaths directly caused by radiation exposure after the accident at the Fukushima-Daiichi nuclear power plant have been reported.””

    That’s 11 May 2016.

    Whatever you have been reading is likely scare stories.

    This is from a nuclear power plant built in the wrong place and that had its life expectancy extended far too far.

    It’s like saying we should stop using modern cars because a Jaguar E type has dodgy brakes.

    Modern nuclear plants are better than ones built in the 1970s. Just like everything else.

    Natural Gas generates greenhouse emissions – both of methane from leaks and CO2.

22. Disregarding the continuing severity of Fukushima in particular the radioactive water problem is a grave mistake: http://mobile.nytimes.com/2016/03/11/world/asia/japan-fukushima-nuclear-disaster.html

    By all means say you want nuclear power but please read up on it first. We are talking time scales way beyond modern humans for the waste.

    If you have seen the horrific deformation of babies from Chernobyl which that will be occurring for many generations over hundreds if not thousands of years. Japan will have the same problem in these areas. I don’t think it’s worth the risk.