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Comment by jhancock | Hacker News Reader

spending trillions, whether its for cleaner energy, or buying iPhone fart apps, _is_ an economy. Nothing is "lost".

"spending trillions, whether its for cleaner energy, or buying iPhone fart apps, _is_ an economy. Nothing is "lost"."

True, and False. Yes, it is the economy, but saying nothing is lost is debateable. Simple mental experiment....consider a few scenarios of projects society could undertake in a year:

a) Spend $500 Billion developing several different versions of iPhone Fart applications b) Spend $500 Billion dropping bombs on any arbitrary country c) Spend $500 Billion on having holes dug in the ground by one crew, and then filled up by another crew d) Spend $500 Billion installing solar/wind power infrastructure using the currently most efficient technology we have e) Spend $500 Billion building plants to manufacture a variety of useful products

In each case, it is perfectly true that we have a $500 Billion economy, but if you look at your balance sheet at the end of the year, there most definitely would be differences.

Well and concisely put. This is the actually the one fact we should try to get into these people's heads. The only change is in the _distribution_ of wealth.

What we should be worried about is not wealth but welfare. And I'm not sure polluting the environment and using up non-renewable resources improves anybody's welfare. Not even that of the people profiting from it.

You are incorrect, the distribution of wealth means less money spent on healthcare or drug research, or growing food. If it takes more effort, that effort has to come from somewhere.

Okay, so the _re_distribution of wealth by a certain political action implies less money spent somewhere. Yes, that's what redistribution of wealth means.

But again, how would spending less effort on digging up non-renewable resources negatively impact healthcare? True, the effort must come from somewhere and it comes from not doing certain things we're doing that we now know are impacting us negatively.

It's not spending less effort on non-renewable resources; it's spending more effort on renewable resources to achieve the same amount of production from the non-renewable resource. So to maintain current levels of production the level of effort would have to increase, when switching which means everyone works harder/longer for no increase production.

Determining the distribution is the sole purpose of an economic system. Don't trivialize it.

Broken window fallacy. Redistributing capital to renewable energy sources means that more money is needed for the same amount of energy (at least right now) which means that money which could have been used for other purposes like food, water, the US infrastructure, houses, or medical bills now must go into satisfying this absurd need to conform to some arbitrary green standard. Its called opportunity cost, go read up on it. TANSTAAFL.

It's only broken windows if there is no net benefit. Bringing externalities into consideration by the market is the function of government to a first approximation.

And, ahem, "some arbitrary green standard" cite please?

Yes, if central planners know the optimal way to spend each marginal dollar, then there is no broken window fallacy. I haven't heard any such case made for the popular green schemes.

I don't know what "popular green schemes" you're referring to, but a carbon tax or a cap-and-trade scheme are very nearly equivalent and require no central planning at all (save that required to enact, collect and enforce the tax of course) yet both bring externalities under market purview quite nicely.

And what happens to all that extra cash collected in the name of climate change? Oh the federal govt. centrally plans on how to waste it on congressional pork.

Sorry for replying so late.

As long as the tax revenue isn't spent on directly contradictory pursuits (tax breaks for SUVs or something) the increase in costs will do its job no matter how stupidly the government spends money.

I think we should just blow it all on a space elevator personally but that's why I'm not in office I suppose.

The point is not that the carbon tax/cap-and-trade/you favorite policy will work but that they will impose an unacceptably high cost in the process. Your comment does not respond to that concern. All that revenue for federal tax/subsidy policies will come out of the private economy which eventually means that it will come out of yours and my pocket and spent by the federal govt. Unless this is offset by corresponding decreases in income/payroll/corporate taxes, this will result in a loss to us and from the numbers that I have seen, this loss is unacceptably high.

(Nearly) all spending by the gov't comes right back to (someone's) pockets so in the aggregate it's only a loss of the frictional losses to run the bureaucracy not the entire revenue base.

Granted there are valid concerns about how the money is spent but you can't just take the dollar amount of revenue from the tax and say that's too high a price. It's much more complicated, sadly.

Also, what cost? What numbers?

That argument is shaky when you consider the opportunity cost associated with the inevitable increase in the cost of energy from non-renewable sources caused by both increasing demand and decreasing supply. The redistribution of capital to renewable sources is just a matter of when.

Possibly, and understand that when is a very important question. Notice how if you place money in a bank, it gains interest. Similarly, the private capital system is very effective at deciding where and when to allocate resources. Allocating resources in an industry too early often means that all that money is lost or that it was not invested in another industry which could have had a significantly higher payoff. If history has anything to say about this matter, private markets are much better at allocation of resources (see famines of USSR and the "great leap forward" in maoist communist china).

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