If solar and wind power really worked then the demand for electricity would rocket as prices fell

Gerard Jackson
29 August 2029

The prime motive behind the green movement is not concern for the environment but anti-capitalism. Every green intellectual and leader is driven by a hatred of capitalism. What the greens give us are humbugs peddling claptrap for the ignorant and the gullible. The utter balderdash produced by Marxist lecturers like Christopher Pollard1, Susie Moloney and Lauren Rickards2 are typical of the anti-capitalist nonsense that permeates the left. (As is par for the course, Australia’s blinkered right has failed to take note of the Australian Greens’ naked loathing for capitalism).

Their argument that capitalism’s drive for profit is endangering the planet, squandering its resources and causing man-made warming, even though there has been no warming in 14 years despite the continuous growth of Co2 , are utterly fallacious. Their solution to these non-existent problems is, is as always, consists of politicians, advised by green leaning experts, mandating so-called energy policies that, we are told, will produce clean cheap energy.

This argument is rests on the assertion that the market, meaning capitalism, is inherently inefficient as well as destructive. In short, capitalism is terrible for the environment.  It needs to be understood that it is not technical efficiency that matters but economic efficiency, which means getting more for less. In other words, reducing the unit costs of production. One does not need to be a trained economist to see that any improvements that greatly reduced the use of a vital input are also reducing the cost of that input per unit of output. This is the equivalent of reducing its price. As we all know, or should, reducing the price of a good raises the demand for its services.

Assume that a particular process requires x dollars of energy to produce one unit of P. If someone now invents a technique that reduces energy costs to one-third of x then this will lead to an increase in output which in turn will lower the price of price of P thereby raising the demand for its services. Therefore an increase in productivity is an increase in efficiency and real wages. It means we are now getting more for less. One could say that this process is what defined the Industrial Revolution.

Without any guidance from politicians, bureaucrats or green fanatics the Clyde Iron Works in 1832 was producing on a weekly basis 65 tons of pig iron at a cost of 2.5 tons of fuel as against an earlier cost of 7 tons of fuel to produce 45 tons of pig iron. This was a 306 per cent increase in productivity brought about by a tremendous increase in fuel efficiency. From 1769 to 1900 coal consumption coal consumption per horse-power per hour from 30 pounds to 1 pound, a 96.7 per cent drop in coal consumption per horse-power. Or, to beat a dead horse, a 2,900 per cent increase in productivity.

The steam engine is an excellent example of this process. Before Watt’s innovations the steam engine was horrendously wasteful. The introduction of his separate condenser reduced coal consumption per unit of output by about 66 per cent. This saving increased the demand for coal and hence steam engines. This early example of ‘energy conservation’ was brought about by market forces, not meddling politicians or ignorant ‘journalists’, and its reverberations were quickly felt throughout the British economy — and beyond — by stimulating economic growth and raising the demand for labour. Now there is nothing new in what I have just said. It was the British economist Stanley Jevons who correctly observed more than 100 years ago:

It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth3.

That increased energy efficiency has the effect of raising the demand for more energy is something that only appears paradoxical to those economic illiterates who infest politics and the media. No wonder they were surprised when Professor Terry Williamson, of Adelaide University’s School of Architecture and Urban Design pointed out that the government’s policy of insulating residential buildings would actually produce an increase in the demand for energy. The insulation industry apparently calls this phenomenon the “comfort creep” or the “rebound effect”. The correct name is the Jevons effect.

So what are we to think on discovering that the 2010 CANZ-Deloitte economic study that was used by Australia’s Labor Government to justify a massive subsidy for insulation did not take account of the Jevons effect? How are expected to put any credence in economists who cannot even figure out that reducing the cost of any product will increase the demand for its services? These are the same brilliant analysts who still cannot grasp the enormous damage that trying to substitute sunbeams and wind for centralised electricity generation is doing to the economy and will do to Australia’s standard of living.

We have seemingly reached the absurd situation that someone who has spent four years at university studying economics can leave with a first class honours without having acquired the ability to apply sound economic reasoning when called for, despite having learnt a whole array of fancy statistical techniques. Making it worse are a bunch of politicians, green fanatics  and closet Marxists4, and so-called journalists who in turn cannot tell the difference between a hot cross bun and set of supply and demand curves.

Notwithstanding what the public has been told, the market is the only means of producing cheap energy. It does not need the misguided hands of politicians, bureaucrats and activists to find the cheapest and most efficient way of producing a service. And it certainly does not need the advice of a lip-pursing teenage Swedish scold who looks like a member of the Adams Family.

Wind and sunbeams will only produce intermittent energy at ruinous prices regardless of Professor John Quiggin’s fatuous assertion that sunbeams will deliver electricity “too cheap to meter.”

 Tell that one to the Europeans who will freeze during the impending winter.

1Christopher Pollard is a tutor in Philosophy and Sociology, Deakin University.

2Susie Moloney and Lauren Rickards lecture at the Royal Melbourne Institute of Technology.

3William Stanley Jevons, The Coal Question, Macmillan and Co Limited, 1906, p.140.

4Adam Paul Bandt is the Greens’ Federal Parliamentary Leader. He is also a Marxist. So if solar and wind are more efficient and hence cheaper than centralised power generation why would an enemy of capitalism support it? I’ll have something to say about Mr Bandts’ motives at a later date.

3 thoughts on “If solar and wind power really worked then the demand for electricity would rocket as prices fell”

  1. Another great hit job, Gerard. Yours is the only Australian web site I get any real history and economics. I don’t get much from Quadrant. I think the IPA is hopeless. I get depressed when I see how many left wing sites are floating around.
    Anyhow, keep up the good work

  2. I went through this post a second time. Theres a lot there to think about. It really got me thinking. Why would anybody who hates capitalim want to give it cheap energy? I cant understand why nobody on the right has spotted these contradictions.
    Keep it up Gerard.

  3. Call me Gerry.

    I think the people on what we call the right miss the contradictions because they live in what seems to be an impenetrable bubble. Several friends of mine came to the same dismal conclusion ages ago. This must be why there is no genuine economic debate in this country. For example, there is one view of Australia in the 1930s depression and one view alone. All other views are to be ignored. Everything must to come from within the bubble.

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