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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

none are so blind as .... « Previous | |Next »
March 22, 2005

Alan Moran from The Institute of Public Affairs.

He has an op. ed. in the Australian Financial Review about how the national electricity market is working well in terms of the price mechanism ensuring the synchronisation of supply and demand. He says the problem we need to be aware of is government intervention and regulation. It is the standard free market economics that we have come to expect from the very economic rationalist IPA.

Now, we do need people (Platonists) to cut reality according to the utopian cloth of perfectly competitive markets (Forms) as they usefully remind us that a degraded reality in inferior to the purity of the ideal (understood in terms of mathematical entities).

Problems start when Moran unpacks what he means by government intervention and regulation. He says:

The green power measures introduced by some states and the commonwealth can also suppress incentives for efficient new [energy generation] plant, as can the environmental barriers put in the way of the most efficient new generators (those fuelled by coal) in NSW and Victoria.

One problem here is that 'efficiency' is the only value recognized or accepted by Moran. Yet the Australian liberal state also recognizes sustainability as a value and public policy goal. Moran seems to have forgotten the constant Canberra spin that Australia is on target to meet its obligations under Kyoto. In fact it is one of the few nation states to do so. Is that not is a recognition and acceptance that public policy is concerned with both efficiency and sustainability.

Seccondly, Moran does not understand the workings of markets. He justifies very high peak pricing in summer conditons as the market doing its job when demand exceeds supply. Solar power on household roof tops can easily perform this function, feed the excess power into the national grid, and provide the reserve power that is needed in SA. So green power measures are not barriers to the generation of energy.

Thirdly, the faith that reality can be cut at its joints by the utopian logic of perfectly competitive markets ignores the negative externalites. The efficient coal-fired power stations pollute the atmosphere with CO2 and other particles, thereby causing global warming and global dimming. The green power measures have been introduced to deal with the externality problem, which is a case of market failure.

We can give a bit of help to Moran here by reminding him of Plato's Syracuse option.

| Posted by Gary Sauer-Thompson at 12:47 PM | | Comments (0)
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