Joseph Stiglitz on Gambling with the Planet

In the end, those gambling in Las Vegas lose more than they gain. As a society, we are gambling – with our big banks, with our nuclear power facilities, with our planet. As in Las Vegas, the lucky few – the bankers that put our economy at risk and the owners of energy companies that put our planet at risk – may walk off with a mint. But on average and almost certainly, we as a society, like all gamblers, will lose.

As you may guess, the quotation above is not by me – it is a summarizing passage from the new article by Joseph Stiglitz, “Gambling with the Planet”. Mr Stiglitz wrote a very interesting piece on the similarities between the sub-prime crisis, the meltdown in Fukushima, and the climate crisis humanity faces.

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10 thoughts on “Joseph Stiglitz on Gambling with the Planet

  1. So here we are again. This time prof. Stiglitz ( no doubt a master in his field) tries to tell us that there is a conspiracy of “a power generation mafia”. Fine, lets assume that this is the case. We have identified our enemies: coal based power generation no.1, nuclear power generation no.2. So we close them down, we eliminate them once and for all. But how are we going to produce the goods which are part of our life? As things are we are dependent on the raw materials, their processing and convertion into goods. That requires energy most often than not on 24/7/365 basis. Where do we get it from? I know the answer: wind and solar energy and some other less spectacular inventions. Well, to supply the same amount of energy as a 1800 MW power station ( not a giant ) we would need +- 3000 wind turbines but there is still no guarantee that the stated 3000 will provide the same amount of energy on day and night basis over 365 days. So we will have to leave that 1800MW of conventional power while we operate those 3000 wind turbines and build another 1800 MW power station when due to increasing demand installation of another 3000 wind turbines is required. I am not joking but this is how it is and does not want to comply with wishful thinking of some people.
    I will not comment on prof. Stiglitz’s contention about the PS in Japan – they are simply bizarre.

    Regards,

  2. First of all: modern onshore wind mills yield about 1 MW, so your calculation is not quite right. Nevertheless, it will not be not easy to replace all the fossil fuel based and nuclear energy generation capacity with renewables, indeed. There are a lot of studies showing how to achieve this (not over night, of course) – though they admittedly require rather optimistic assumptions. My question would be here: what is the alternative? The alternative is rapid climate change and the persistent danger of a nuclear disaster. I would claim that it is better to risk some short-term loss in comfort of living (due to, e.g., less energy supply) than to take into account long-term (possibly irreversible) losses. We can’t afford it to wait for a “savior technology”.

    What do you mean by “PS”?

  3. Well if it is 1MW only than it is even worse ( I have taken 2MW as per some of the local reports where it has been claimed that 30 000 MW could be installed in South Africa) . At 1MW per unit one would need to built around 6000 units with “ifs and buts” attached. PS = Power Station. My apologies.
    The climate is changing, that is right. However, I am not sure about “persistent danger of a nuclear disaster”. I think that recent developments in Japan should be seen in some perspective. If Chernobyl was a near disaster on a grand scale than Fukushima is a serious accident. Further, the source of the accident has very little to to with the power station itself, unlike Chernobyl.
    No problem with some loss of comfort as a result of power shortages as long as it concerns our domestic consumption ( this is at the most 20% of the total). Around 70% of power supply is consumed by industry. There is a lot of problems here. A deep mine consume up to 50% of its power demand without producing anything ( ventilation, cooling, water pumping etc.) and you cannot stop power supply. The same applies to many industrial processes. And I do not think that a “saviour technology” will ever arrive. There is a practical example which I frequently give. Just look at the transportation of goods in Europe. Currently, the railways carry below 30% of the volume ( I do not have statistic handy so this is a ball park figure) which, taking into account the well developed rail network is really strange. All these years rail transport has been the most efficient when taking into account distance and volume ( the longer and bigger the better) but has been relegated to the secondary role. In the current “political” climate there is persistent talk about energy efficiency and some half baked solutions are proposed . Here we have a situation when things can be changed with the benefit of utilisation of a proven technology. Lets do it!!!

    Regards,

  4. I guess, you were right with the 2 MW. I just took the average number for Germany’s installed capacity – modern windmills shall yield decisively more. Onshore, offshore it is still more.

    As I already said, there are many proposals how to achieve the trasition to a low carbon economy – see, e.g., that by Greenpeace. I would prefer to recommend a government strategy or so, but I only know of ones from Germany, thus written in German.

    I don’t think there will be a “saviour technology” as well. Though a future economist, I don’t share the belief of most economists that technology and innovation can fix everything. And therefore we have to need what we’ve got: wind, solar (PV as well as thermo-solar power stations), geothermal, improvements in grid structure (“smart grids”), energy efficiency… According to many studies (by economists as well as by others), they can potentially make it. At a cost, of course, but not that high.

    With regard to nuclear energy, there are many cons – see my post here. The possibility of a meltdown is not the only one, not even the most important in my eyes. And: tell the Japanese living in its neighbourhood that Fukushima has been a serious accident.

    With regard to the railroads: you are perfectly right. As I already have written, we have to need what we already have got. I think, in this particular area the problem is one of misincentives. E.g., in Germany the government claims that it wants to move transport from roads to railways. At the same time, it invests huge amounts of money in new/bigger highways. Or the Deutsche Bahn (a state-owned company) builds new railroads, which are merely prestige projects (costly ones). It would help to put incentives right (e.g. by really drastically taxing gasoline). The problem is, as usual, politicians and people generally.

  5. I have looked at the Greenpeace “thing”. Well, what can I say – a wish list. Not going into details I would like to know ( in detali, in detail) how they are going to produce at high cost, sell at low to be affordable to all and on top of that create millions of jobs.
    With all due respect it does not tie up – unless we invent a completly new economy. Several years ago there was that thing called “.com economy” but it went bust if my memory serves me well.
    Yes, you are right that we may have a mixed type power generation where domestic use will be satisfied by solar or wind generators while the industry will have conventional power stations.
    Disaster in Japan and in the area around the power station has not been caused by the power station. I am not saying the consequences are of no importance but why project elsewhere what happened there . There are lessons to be learned but from that perspective this is not unique. The sinking of RMS Titanic resulted in a regulation which stipulated that any ship should carry such a number of boats as to cater for the total complement of the passangers and crew. Unortunately this is how it is.
    ” It would help to put incentives right (e.g. by really drastically taxing gasoline).”
    This something what I do not understand. Why tax? Going back to my transportation example. In Australia 48% of the goods is transported by rail. Mining companies build their own railway lines because it makes financial sense, not because of special taxes on road transport. What is different in Europe? Maybe Dembisa Moyo is right in her book ” How the West was Lost” by saying that the West has lost its economic bearings and in fact drifts aimlessly?

    Regards,

  6. You cannot just say, when it works in Australia, it should work in Europe. There are many differences – geographic, administrative and so on, that may play a role. And: when you recognize that it doesn’t work in Europe, something must be done. Merely saying “Let’s do it!” won’t change anything. And taxes are a possible additional incentive.

    Several years ago there was that thing called “.com economy” but it went bust if my memory serves me well.

    I see no similarity here. Dot-com was something totally different.

    More when I find some time to answer.

  7. unless we invent a completly new economy.

    I am afraid that this is the only way we can go. And, at the same time, the reason why I am rather pessimistic about humanity’s future. I don’t think the “doom scenarios” will become true, but, indeed, to straighten out what we have been doing wrong for at least 150-200 years already, we have to change a lot. The way economy works is a rather minor problem – the bigger one it the way people think.

  8. When I referred to the example of Australia it was because it shows that rail transport has not lost anything of its efficiency. I am puzzled why Europe with so well developed railway system managed to not to use it to the full potential. There is something strange in our attitudes. We like grand schemes to such a degree that the assets we have are forgotten – we have become wasteful.
    “Let’s do it” was meant to be a figure of speech.

    Regards,

  9. We like grand schemes to such a degree that the assets we have are forgotten – we have become wasteful.

    Here I (exceptionally;-) totally agree. My idea why in Europe rail transport has not been embraced yet is that the population/infrastructure density is much higher – in wide, “empty” lands as in Australia the case it may be better to use railways. But in Europe there is the problem that often you anyway have to use road transport – for the first or last few kilometers maybe, but it is often necessary… Another possible problem may be that Europe is not a country – there may be a European Union, but every country has a railroad company of its own.

    But all this is pure speculation by myself.

  10. Rail transport is efficient providing that certain conditions are met. One of them is distance . Trucks will be more efficient when short distances and small volumes are considered. If I remember correctly UE has set that cut off point at 300 km ( which I think is rather high). Yes Europe is densly populated but it has over decades developed an extensive railway grid. As a matter of historical fact. German war effort during II world war was dependent on the railway system. There was no viable alternative. Somehow that lesson has been forgotten.

    Regards,

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