Strengthening Constitutional Self-Government

No Left Turns

Kudlow’s Coal Strategy

Lawrence Kudlow, in the context of making a very clear argument for getting government out of the business of picking winners and losers in the energy markets, makes a very astute observation about the location of the majority of the country’s coal deposits . . . an observation that Sen. McCain would do very well to take in, absorb, and contemplate as he moves forward in his bid for the Presidency. Of course, if everything Kudlow implies about the workability of this coal-to-liquid technology is true, it probably tears to bits my argument for considering Lieberman for the VP position, since he’s sponsoring legislation that effectively would eliminate it . . . but I think it’s possible that this coal strategy is better in both the narrow electoral sense and in the larger national interest sense. It would certainly be wonderful for Ohio. Curious about what our Mr. Hayward knows and thinks about this coal technology . . .

Discussions - 5 Comments

Mr Hayward probably has a career to think of and doesn't want to sully himself by speaking dangerously on the topic. In the preface to the road to Serfdom Hayek says: "I have every possible reason for not writing or publishing this book. It is certain to offend many people with whom I wish to live on friendly terms; it has forced me to put aside work for which I feel better qualified and to which I attach greater importance in the long run; and above all, it is certain to prejudice the reception of the results of more strictly academic work to which all my inclinations lead me."

Being that I always seem to know enough to get into trouble, and seeing as how my interest turns more to political economy than to serious economics proper I will field this one.

The article is not horrible, in fact Kudlow is probably right in the utopian sense, but he is largely counting on the misinformed. What deregulation of the energy market means is very difficult to tell and several treatises long. As far as I can tell energy economics is unbearably complicated and full of democrats and lawyers.

But if I can speak falsely from oversimplification alone the basic picture looks like this...

Almost all global warming models are carbon based...which means that only policies that attack carbon emmissions will show any results in terms of international agreements/reducing CO2 or do anything about gobal warming (or at least how it is measured).

Therefore defending coal is bad policy for McCain (since he is almost sure to be blasted for it as a sign that he doesn't really care about global warming)...look coal has made great strides...but it still puts off a lot more carbon than nuclear. As far as I can tell good cap and trade programs(if any exist) are based at least off the ETS system which is used in Europe. All cap and trade programs do hurt the coal industry...they hurt the coal industry because they force the coal industry to internalize the cost of the externality(Co2) which is linked to global warming by all the models that measure such things.

Basically the cost of nuclear energy(which is the only energy that is forced by a ton of regulation to fully internalize costs...) is currently on par with the cost of coal...

But...some studies/models (again it is all about how externalities are calculated) show that coal is as much as 10 times more costly than nuclear and this is not even counting global warming. Studies such as these take into account liberal favorites such as the health of human beings who work in coal mines and the environment, and in some cases the dangers of coal mine collapses.

Let me pause a second to wonder about the actual interests of west virginia coal miners...(I am not capable of doing this, J.S. Mill was right about local prejudice, so I will spare you moral indignation.) But let me tell you that it isn't a pretty picture for coal.

In any case on the rosiest picture for Nuclear...things are a grand slam.

If Cap and Trade hurts Coal it also helps Nuclear...it helps Nuclear because in terms of determining if we are to invest in Nuclear relative costs are important. Since the Nuclear industry already runs relatively even to coal right now...anything that makes coal internalize the costs of CO2 helps Nuclear in a big way.

Anything that helps Nuclear does the most to score points on how Kyoto is measured...but even this is way too simple, it allows us the easy escape of simply chalking it up to interest group fight...in fact it is the intersection of many interests/models/ideology on many levels.

I really like Nuclear, but I would trust a McCain-Lieberman ticket to account and ballance exuberance with externalities in Nuclear on the National Security/Iran front.

Even George Soule could say in 1934, planned capitalism is not capitalism at all.

There's little difference between Lieberman and McCain on climate-change issues, and we are stuck with McCain. Maybe McCain can explain to America why he is against capitalism, especially why that is a conservative position. I'd love to hear all about it.

McCain can't come right out and explain to people why he is against Capitalism but I am more than happy to take all commers on this issue.

Greenspan might have started out with Ayn Rand but he certainly didn't refer back to the Capitalist Manifesto when he had to run our planned capitalism.

If you want to be honest and serious you will adopt the political economy and economics of Alan Greenspan and reject Ayn Rand. If you want to be serious you will explain why you told your son that a vote for Ron Paul is naive. If you want to be serious you will quit reading pamphlets on gold as a currency and look at the speech made by Lord Keynes before the House of Lords in May 23, 1944. In this eloquent speech Keynes convinces the British that Bretton Woods departs from the strictures of the gold standard, while at the same time the U.S. congress was told the opposite.

At this early date we see the wordsmithing of economists...and we see that congress itself must relly upon experts...This is not an idle observation to be squandered...in our day and age in my opinion almost all politics can be explained by the conceptual gap between citizens and experts in various fields. So much so that I no longer seek to be aware of what I know, but of all the things I do not know. I might even go so far as to focus upon economics itself on the basis of imperfect information and the opportunity cost of information.

But Kate, I notice in fact that you are a professor of literature, and a kind soul who on the basis of previous posts does not believe that what is rational can be strictly determined by a calculus, yet if you are to rationally and seriously hold to such a view you must realize what sorts of implications this has for a conceptualization of capitalism itself.

Essentially then I will turn the tables back around on all so called conservatives or libertarians or americans period. You cannot simply mix and match assumptions and conceptual foundations of capitalism. If you wish to hold McCain to a view of capitalism that is the one held by Ron Paul then you should have simply voted for Ron Paul. Or you can reconceptualize political economy itself on the assumption that human beings do mix and match assumptions...but rest assured that McCain is a practical man, he doesn't have time for wishing that capitalism=bastiat anymore than he has time for wishing that War on Terror=capturing Osama, nor is he out to lie to the american people about our planned capitalism or mission accomplished in Iraq. For McCain the focus is on solutions to how things are not speculation on how we would wish them to be.

McCain and Lieberman appologize in advance for hurting the feelings of libertarians and conservatives...they are neither strictly realists nor strictly idealists, but the thing they understand about economics is that you have to prioritize, and you have to look at the world to the best of your ability as it is, and then communicate honestly to the american people what is is and what you are going to do about it.

It has been alleged by some such as Dr. Lawler that McCain doesn't care about issues like gay marriage...to this I simply ask how one is honestly able to be an expert in so many fields, and I wonder how Lawler has somehow elevated what is possible in american democracy beyond Toqueville...I think McCain's general philosophy isn't far from what is articulated by Toqueville...in army parlance: maintain your sector of fire/post/stay in your lane/hold your position.

Toqueville says "I have no fear that the poetry of democratic peoples will be found timid or that it will stick too close to the earth. I am much more afraid that it will spend its whole time getting lost in the clouds and may finish up by describing an entirely fictitious country. I am alarmed at the thought of too many immense, incoherent images, overdrawn descriptions, bizzare effects, and a whole fantastic breed of brainchildren who will make one long for the real world."

Toqueville also says: "The more one reflects on what happens in the United States, the more one feels convinced that the legal body forms the most powerful and, so today, the only counterbalance to democracy in the country."

So McCain is a conservative who stays in his sector of fire and accepting his limits realizes that he must relly upon experts in fields outside his expertise... He can in all seriousness only manage what he knows, and when he goes beyond his expertise he realies upon experts. McCain is only as good as his best information...but McCain like a good military commander is wary of ideological slant on the intelligence that he acccepts, and knows that the only chance he has is to identify those who speak the truth, and the reasonable shortcut that he is forced by circumstance to make is to relly on the experts and institutions. If the experts and institutions whose intelligence he accepts happen to be liberal then this is a circumstance of the times that he is not capable of transcending...and yet he will honestly try to pick the truth from the rubbish.

One can criticize McCain all one wants but I hardly see how any human beings transcend the problem of imperfect information and the curse of specialization in modernity.

Yes, I recall McCain said he did not know much about economics. It's not his area of expertise. I'll buy that. But, surely, by now, now that he is the presumed candidate for president representing the Republican Party, SOMEONE is telling him "that cap-and-trade 'would impose the most extensive government reorganization of the American economy since the 1930s,' including a huge tax increase, higher prices across-the-board, and significant losses to economic growth in the decades ahead." You know? It could be done in an "Oh, by the way, here's something you really ought to know...." kind of way. Someone might a slip a note under the door of the hotel room with the breakfast tray while he's on the campaign trial. Evidently, he's NOT relying on experts in the field, neither of economics nor reliable folk on environmental science and that is a really a worry.

I don't care about Ayn Rand or about Ron Paul. I'll take Kudlow, or Sowell, or what the heck, just have McCain read The Economist if reading The Wall Street Journal or Forbes or some other conservative publication is too much to ask. Honest, John Lewis, McCain doesn't have to be an idealist in the area of capitalism to satisfy me, (who probably only has a dilettantish understanding of just about anything, being as non-specialized as anyone can be and certainly not modern.) His being a realist, pragmatic about economics, would do just fine. If he could think one or two steps ahead, considering the economic implications of his environmental proposals, for example, I would be content. He does not have to be passionate about economics, nor about gay marriage, (or the economic implications of that, much less the moral ones) but if I had the sense that he was trying to "honestly try to pick the truth from the rubbish" then, maybe, I would not be so discouraged about the next few years.

I made some phone calls and suggested a two week immersion course. I reminded them that the economy will no doubt loom large in the televised debates, and he isn't going to be able to skate around the issue trotting out some soundbites. So I suggested a two week immersion course, during which he can be jetting around hitting some fund raisers at night, but during the day, he can be brought up to speed on the basics of supply side economics.

I suggested the same for environmental issues. We'll see.

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