Green Rants

Friedman continues on his green is good rant with his latest:

George Bush may think he is preserving the American way of life by rejecting a gasoline tax. But if he does not act now - starting with his State of the Union speech - he will be seen as the man who presided over the decline of our way of life. He will be the American president who ignored the Sputniks of our day.

He's right in concept, but the problem is that he is looking for love in all the wrong places. There won't ever be gasoline tax that raises prices to those levels. Change, when it does occur (and it will), will come from the ground up. The Federal government can't even deal with massive budget overruns, ballooning entitlement programs, endemic corruption, and a turgid defense bureaucracy. Why does he expect that they will be able to create innovative programs (that really work) that diminish our demand problems (oil, drugs, etc.). Belief in the power of large nation-states is a cold war relic. It's legacy. The sooner people realize that the Feds can't and won't solve their problems, the better off we all are (in fact, I would argue that the machinations of the Federal bureaucracy is making things worse...).

Comments

[rjh]

I think that this belief in the power of government is more a return to childhood when your parents could solve every problem if only you could get them to pay attention. Many adults take on a child-parent relationship with government when faced with a problem too large to solve on their own.

More optimistically, the marketplace is quietly making important changes. Energy use efficiency has improved steadily in the market driven commercial segment. Often this is hidden as part of general productivity improvement. Each 1% labor productivity improvement comes with an associated roughly 0.8% energy efficiency improvement. There is a regular ROI or IRR evaluation of energy efficiency improvement projects, and with oil holding above $50/bbl more projects cross the investment threshold. A lot of this is well hidden because it is just a footnote in the details of the business news.

The big problem areas remain transportation, where the capital equipment life is measured in decades; households, where there is rarely a careful cost accounting of energy costs or investment returns; and government, where PR and votes matter more than energy costs.