Ross McKitrick: Save the economy, ditch the ‘green recovery’ plans 

Posted: August 23, 2020 by oldbrew in government, greenblob, opinion, Subsidies
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Any ‘green’ ideas were never about economic sanity anyway, but that problem is now even more acute.

H/T The GWPF
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Green technologies that were known money-losers before the pandemic are still money-losers today.

There’s a curious idea floating around that the COVID crisis undid the principles of economics, says Ross McKitrick.

Nobody puts it exactly like that, but it’s implied in the various proposals for restructuring the post-pandemic economy so that it will look very different from the one we experienced up to the end of January.

Amid the buzzwords about “Resilient Recovery” and “Building Back Better” are proposals for an investment push into green technologies and new environmental policies, including initiatives that failed to pass standard economic tests before the pandemic.

So how, exactly, did the pandemic change the criteria for evaluating policies, investments and major public projects?

The short answer is: it didn’t, and any claim otherwise is untrue.

The recovery from the pandemic shutdown should not be seen as an “opportunity” to make bad investments and policy decisions. Bad ideas prior to the pandemic are still bad ideas today.

Policies that failed cost-benefit tests before the shutdown are even more likely to fail such tests now that unemployment has soared, public debt has exploded and business investment is faltering. Green technologies that were known money-losers before the pandemic are still money-losers today.

The only thing that’s changed is that we have even less money to work with, so the need to avoid wasting it is higher than ever. It’s critical to choose investments that will lead to real growth and job creation.

When it comes to choosing good investments, the guiding principle is profit. Will the new capital generate a revenue stream greater than the cost of acquiring it? If yes, the jobs that accompany the capital investment will be sustainable, at least as far as we can reasonably surmise. If no, the project will lose money and will either end quickly or will require subsidies funded by adding costs elsewhere in the economy.

“Sustainability” does not mean using fewer resources or cutting energy consumption, though it can involve those things. It means value-creation in a competitive marketplace where the concept of value can be expanded to include (but not consist solely of) natural and environmental capital.

A profitable investment is one where, after all costs are paid (including environmental costs), the outputs are worth more to society than the inputs, including the labour costs. Profitable investments are sustainable. Unprofitable investments are not.

This principle has long been the foundation of economic analysis for both policies and projects. The pandemic did not change it. The only thing COVID-19 might have done is make it even more valuable for society to increase employment and decrease non-essential demands on the public purse.

Full article here.

Comments
  1. Paul Vaughan says:

    Ross wrote: “we can’t simply keep borrowing hundreds of billions of dollars to keep everyone locked down at home.”

    Ross, remember: Their incomprehensibly hubristic leaders are financial terrorists, networked thoroughly and dangerously into every corner of our society.

    You’re not going to reason with them bro. They are open to reason only optically. It’s ok to be more forthright with your writing when circumstances warrant it.

    At this point what matters is compassion. There are a lot of formerly good, hard-working people on the verge of not being able to pay rent. Like more than 20% of renters.

    Wealthy people do not understand the terror of such a reality because they’ve never come even remotely close to such a situation, never mind getting caught sustained in it.

    These people are sending out FLOODS of resumes and getting NO response. Remember that these people were working hard and contributing solidly before being LOCKED out.

    Their independence — and their ability to be independent — was FORCIBLY attacked. They are truly weakened. When they get back on their feet they may be wobbly for months.

    Remember that they were attacked by explosively hubristic ideology that put the vital needs of a million weak people before the vital needs of several billion people of all types — regarded equally with no special favors paid to any population segment.

    The applied savagely hubristic ideology increased the number of weak people worldwide by billions.

    The virus didn’t do that. It was the chosen response. The chosen response was opportunistically predatorial, darkly cunning, and let’s be duly frank: IT WAS CRIMINAL

    Even optically the activism was directed absolutely by false univariate assumptions (the technocratic public front for an unyielding totalitarian movement), underscoring failure to exercise due regard for a vast set of vital indicators WITH NO REMORSE.

    Ross wrote: “we can’t simply keep borrowing hundreds of billions of dollars to keep everyone locked down at home.”

    Ross: They have transformed into financial terrorists — and they have to be dealt with as such. A resolutely formidable response is necessary — and please do not forget the victims of the financial terrorist attack.

    Take the attackers from their homes and give their homes and bank accounts to their victims if necessary. Financial terrorism should not be tolerated in our society — and yet we see the attackers assuming impunity.

    The hubristic insanity arose and overinflated from uncontrolled government freedom to engage — like power-tripping savages — in financial attacks, underscoring severe legal loopholes in our governance.

    Plea

    Put all the ideology on hold until all innocent victims are breathing independently — and stably. After what they’ve been through these people are going to need reliable stability for the rest of their lives. No more games.

  2. pochas94 says:

    Paul, what you are suggesting would require a beneficent and intelligent monarch. There have been some but they invariably end up handing over power to their idiot offspring.

  3. oldbrew says:

    Green technologies that were known money-losers

    Which would be most of them.
    – – –
    As the American wit HL Mencken once said: “There is a well-known solution to every human problem — neat, plausible and wrong.” Among these may be the thought that we can dash to very high levels of renewables with the aim of achieving net zero in the short timetables many countries are setting themselves.

    https://www.ft.com/content/65ebb6df-b102-4272-a76c-ecb2bf7dfd1d

    Even some of the media fanboys are starting to work out that there’s a massive problem coming right at them and their fellow ‘net zero’ arm-wavers: unreliable, expensive and inadequate electricity supply.

  4. gds44 says:

    Reblogged this on Gds44's Blog.

  5. Paul Vaughan says:

    pochas94 wrote: “Paul, what you are suggesting would require a beneficent and intelligent monarch. There have been some but they invariably end up handing over power to their idiot offspring.”

    Diana. Compassion. Brexit. Hong Kong. All different if she was here. Tragic. I adored and loved her when I was a kid. I never realized the cost of her departure — until now. You’ve opened my eyes pochas94. My guess is President Xi would have loved her as much as I did. I bet he would have been willing to change for her. It starts with the smallest genuine gesture. A very sobering moment.

  6. oldbrew says:

    Re-stating the obvious – renewables are unreliable, not just now but forever. The ‘conundrum’ is a fact of life facing every government that thinks it can enforce a futile ‘net zero’ policy.

    California’s Renewable Energy Conundrum
    Aug 23, 2020

    The warning to Californians about the outages and strained grid should serve as a warning for policymakers and system operators across the United States and elsewhere: a rush to boost renewable energy power generation should be coupled with – and even preceded by – more careful planning on how to ensure the reliability and stability of the power grid.

    https://oilprice.com/Alternative-Energy/Renewable-Energy/Californias-Renewable-Energy-Conundrum.html

    ‘More careful planning’ of what? Once they turn away from coal, gas and nuclear there is no careful plan to go to*. The problem is they can’t accept that, so stumble around looking desperately for non-existent options while the self-induced fragility of their electricity grids gets worse by the year.

    (*except for a few places with abundant hydro-electric resources due to their particular geography)

  7. Gamecock says:

    Green recovery. Pick one.